Israel-Canada investment continues to boom

By SHARON WROBEL July 19 , 2005

Despite political and economic uncertainty in Israel, the volume of trade between it and Canada has quadrupled over the past five years.

There has been a growing trend not only of Canadian investment in Israel, but of Israeli investment in Canada. Only years ago the direction was only from Canada to Israel. The trend now goes both ways, Yehuda Raveh, President of the Israel-Canada Chamber of Commerce and Industry, told The Jerusalem Post. The Israel-Canada Chamber of Commerce is an independent voluntary organization that aims to facilitate bilateral trade and investment.

Today, Israel has become one of the largest sources of investment in Canada.

'The total Israeli investment in Canada over the past four years exceeds $4 billion. The reasons are that Israelis are very entrepreneurial, very innovative; they are looking for opportunities everywhere. But Canada has become an attractive target because it's one of the G8 countries, very wealthy countries, English spoken, very high-quality life, lower rate of crime and more quality oriented,' said Raveh.

The main area of Israeli investment in Canada has been in real estate. Israeli investors include Fishman or Gazit Globe, which own properties there in excess of $2b. But there are also non-real estate investments from companies such as Iscar Tools, Amdocs and Teva Pharmaceuticals.

At the same time, Canadian companies have found Israel an attractive place to do business. Since Canada and Israel signed a free trade agreement nine years ago, bilateral trade has quadrupled, exceeding $1b. a year.

Israel has a unique position in that it holds free trade agreements with both North America and Europe.

This enables Canadian exporters, if they meet the criteria, to ship products via Israel to Europe tax-free.

'This is not available in any other country, only in Israel. If you forget for one second the political problems, Israel is a very attractive country in terms of labor and export orientation. You can make an investment in Israel which is not necessarily for the Israeli market,' said Raveh.

In June this year, Canada's Potash Corporation of Saskatchewan, the world's largest fertilizer enterprise, purchased a bigger stake in Israel Chemicals for about $330 million, increasing its holding from 8.8% to 10.2%. Montreal-based Bombardier, one of the largest companies in transportation and aviation, has been working with Israel's railway authority and local subcontractors to supply double-decker trains as part of Israel's Railway 2000 project.

'Potential peace in the Middle East, which would connect Israel to the markets of Jordan, Egypt and the Palestinian territories, is another consideration which makes investment in Israel worthwhile' said Raveh.

Another major Canadian investment is the famous Highway 6, the country's largest infrastructure project, a $1.3b. undertaking which included Aecon and Canadian Highways and Housing and Construction Limited.

'The relationship between the Israeli aviation industry and the Canadian aviation industry has also received a substantial boost over the past year. There is a growing interest in both countries,' said Raveh.

In June 2005, Israel entered into a five-year, $20m program to promote collaborative research and development between Canadian and foreign scientists in areas such as biotechnology, the environment, energy, and information and communications technology.

'Israel is one of the best partners in the world from which to gain experience on technological partnerships because it has such superb technology and a globally positioned business and research community. At 4.8% of its gross domestic product, Israel has the highest rate of R&D investment in the world,' said Henri Rothschild, president of the Ottawa-based Canada-Israel Industrial Research and Development Foundation.