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Intel to invest $6 billion in Kiryat Gat facility
By NIV ELIS
04/30/2014
Investment will potentially create thousands of jobs in Israel; company did not specify the technology it would be installing at plant.
 
The Intel Corporation announced on Wednesday it would invest $6 billion to upgrade its Kiryat Gat facility, potentially creating thousands of jobs in Israel in the coming years.

Intel did not specify the technology it would be installing in the plant. However, it had been expected to make a decision this year as to whether it would build one to produce its next generation of chips in Israel or in Ireland, where it built previously.

Prime Minister Binyamin Netanyahu said the government has been working with Intel for several years to attract the investment, and praised Intel as an example for other multinational firms.

“Israel is a focal point of global technology, and investing in it generates profits both to the investors and the citizens of Israel,” he said.

Finance Minister Yair Lapid estimated that the investment would create thousands of jobs directly, and tens of thousands of jobs around them for various suppliers.

“This is a vote of confidence in the Israeli economy,” he said.

Economy Minister Naftali Bennett called the announcement “the best gift we could ask for on our 66th Independence Day.”

Intel would send its formal application to the Economy Ministry’s capital investment center and be advanced for signing “in the near future,” he added.

Creating incentives for foreign investment has been the subject of some controversy in Israel, which like many countries offers companies tax incentives for large capital investments, especially in high-priority areas such as the periphery. As a result, many of the biggest companies operating in Israel pay a very low tax bill.

In 2010, for example, the government paid out NIS 5.6b. in tax credits for capital investments, 70 percent of which went to just four companies. Among them: Teva Pharmaceutical Industries, Check Point Software Technologies, Israel Chemicals and Intel. Although the corporate tax rate was 25%, they paid an average of 3% tax.

Teva paid next to nothing.

Yet the promise of new jobs and boosting economic development are, in the eyes of many policy- makers, well worth it. Intel Israel, which employs nearly 10,000 workers, boasts that it has exported a total of $35b. in the 40 years since it opened its first offices, over a 10th of which was in 2013 alone.

Intel Israel president Mooly Eden has unabashedly argued that the state needs to encourage more capital investments.

Last year, several months after Israel lost the bid for Intel’s latest plant to Ireland, Eden said Israel was in danger of losing its status as the “Start-up nation.”

“This isn’t forever,” he said at the company’s annual conference.

“Are we investing enough in Israel on a national level, so that in the future we will a have ‘Israel: The Start-up Nation, Part Two,’ or will this be a history book?”
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