OECD: Red tape hinders Israeli businesses

Report on Israel's business environment finds bureaucracy presents large challenges in comparison with other advanced economies.

May 21, 2013 22:49
1 minute read.
Bayit Yehudi leader Naftali Bennett

Bayit Yehudi leader Naftali Bennett 370. (photo credit: Marc Israel Sellem / The Jerusalem Post)

An interim Organization for Economic Cooperation and Development report on Israel’s business environment found that despite an educated workforce and support for entrepreneurs and startups, the country’s bureaucracy and red tape still presented significant challenges in comparison with other advanced economies.

The report, carried out by the Economy Ministry’s Testing and Evaluation Committee, gave Israel low marks on encouraging non-tech companies and said it failed to make the process of registering and licensing new small businesses easier. Israel did not do enough by way of legislation or regulation to aid new businesses, the report said.

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Among the worst offenses was failure of local authorities and various nongovernmental public bodies in paying obligations to small and medium enterprises, it said.

“The Israeli bureaucracy relating to small and medium businesses is tough,” Economy and Trade Minister Naftali Bennett said, citing the story of his wife’s struggle with red tape when she tried to open up a small business. “We are working to remove barriers, make business complications with the bureaucracy lighter and aiding small and medium businesses through state-guaranteed loans.”

Despite the difficulties, the report also had some bright points. Israel has good systems in place to support startups and excels at making its products accessible to world markets, it said. The highly educated workforce provides the keys to drivers of Israeli economic growth: entrepreneurship and innovation, the report said.

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