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Israel must double down on exports amid Covid-19 crisis, urges export institute chairman

Adiv Baruch says Israel’s industrial capabilities have outgrown its market capacity and must look outwards, even as the global economy shrinks

Ctech | 16:50  23.08.2020
“Export is the engine that has for years pulled the Israeli economy out of every crisis,” Adiv Baruch, the Chairman of the Israel Export & International Cooperation Institute said in an interview to Omri Milman that was broadcast on Sunday as part of Calcalist’s “Israeli exports in the days of Covid-19” online conference.

Responding to criticism over the tax incentives offered to exporters during the Covid-19 crisis, while the bigger national economic challenge lies in encouraging companies that hire more workers, Baruch said that the local market is too small to sustain the local industry and that long-term investment in human capital over the years had born fruit, landing Israel on high spots on many international rankings, including exports per capita and R&D investment per capita. He explained that tax incentives were meant to lure in foreign investors to back Israeli tech companies, but offered the reminder that not all exporters were tech companies that were backed by VC money and that many of them had to build their own markets after realizing that they had hit the local market’s ceiling.

Baruch stressed that helping exporters was not all about tax incentives or grants and that assistance to Israeli companies included round-the-clock monitoring of possible market failures, helping open doors to Israeli companies, and encouraging marketing capabilities, including by helping brand Israel as the “Startup Nation.”

Baruch highlighted the need for continuous “seeding of the export market,” particularly amid the Covid-19 crisis. “When global trade shrinks, it means that competition gets tougher,” he said, noting that Israel was under pressure from two vectors: the need to increase local production and the high logistical expense of exports. “The discourse of every politician, every policymaker, must address the need for encouraging additional exports as a critical discourse for pulling the country out of the crisis.”

When asked whether Israel could learn from other countries when it comes to export policies, Baruch noted that because of Israel’s geographical and geopolitical circumstances it was different than most other countries and that the government needed to make adjustments for each sector or industry. He added that the export institute works opposite parallel organizations in other countries and has seen a difference in the way various countries tackled the challenge. Baruch highlighted Canada, Australia, and the EU as places that had invested hundreds of millions of dollars to encourage exports since they had recognized that the global competition was increasing.

Baruch spoke out against what he called “a paradigm” in which the first departments to be cut from companies during a crisis are the marketing and business development departments since they were seen as not generating income. He said that in other Western countries the policy was the other way around, with crises encouraging investment in outward-looking avenues and urged Israeli businesses to follow their course.

Speaking about the recently announced normalization agreement between Israel and the UAE, Baruch said the realization that diplomatic relations could generate exports was an important one that supported the export institutes’ 62-year mission.

“If this political move with the UAE will serve as an example for the region,” said Baruch, “there is no doubt it will be a harbinger that will drive the peace economy forward.”

“Every crisis brings about opportunities,” concluded Baruch. “That was the export institutes theme when the coronavirus outbreak began. Our first thesis was global business continuity.”

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