Multi-National Corporations and Israel

Do we really know what these companies do for the good of Israel?

By MEIR HALBERSTAM, DR. SHLOMO MARKEL

SEPTEMBER 20, 2016 17:32

Top Israeli tech executives talk (photo credit: Courtesy) — Top Israeli tech executives talk

(photo credit: Courtesy)

Israel’s high-tech is famous for its huge number of small innovative startups and their great exits like Waze, acquired by Google in 2013 for $1.3 billion and others. Of course, also for being number 3 (!) with the amount of companies IPO on NASDAQ, trailing behind after the US and Canada only. Take for instance, the IPO of Mobileye, which raised $890 million at a valuation of $5.31 billion.

However, there is yet another Israeli record breaking sector in the high-tech, which is sometimes seen wrongly as “not beneficiary for Israel” in some of the public’s eyes. This is the over 250 large multinational corporations (MNCs) that have made their way to Israel to establish research and development centers. Isn't it most common to think that these BIG MNCs come to Israel to shop, eat and clear out, or alternatively, just stay in Israel to avoid taxes, but for sure not to support the local economy, or even contribute to Israel’s STEM (Science, Technology, Engineering and Math) education?

But do we really know what these companies do for the good of Israel? Companies like Intel, Broadcom, IBM, General Motors, Qualcomm, EMC. Deutsch Telekom, Apple and Google contribute tremendously to Israel’s economy and its education, in more ways than one and in many cases, much more than the so called “Israeli” companies.

Let’s think about the economics. It’s not all only about the tax percentage rates that MNC’s are eligible for. Even if the MNCs receive

tax breaks, they still end up paying huge amount of corporate tax in absolute numbers and let’s not forget the high salaries their employee’s receive and pay taxes on. In addition their employees all receive stock packages from these Fortune 500 companies, which are all taxable to the Israel Tax Authorities. Add on all the 3rd party companies that provide services to these large R&D centers….. we'll let you calculate the economic benefits for the State of Israel. No wonder, that the Chief Economist of the Ministry of Finance presented just recently the significant contribution to Israel Productivity and Growth Domestic Production (GDP) by the MNC's in Israel, with a significant part of the total Israel Taxes and Exports. Especially, when its performed via relatively very modest percentage, within the state employed population.

Now, let’s take it a step further and see if the MNCs really care about Israel. What is more Israeli and important then supporting, developing and contributing to Israel’s Education? Most of the MNC are members in the IATI (Israeli Advanced Technologies Institute), which has as its mission to “support community activity through promoting the level of technology education". All of the MNCs have employees volunteering across Israel in schools, universities and peripheral areas that need their support.

One of these MNCs is Broadcom Semiconductors Israel, with hundreds of employees, of which more than 90 percent are engineers, who are striving to be part of Israel’s STEM solution. Israel’s Ministry of Education tapped Broadcom's commitment and brain power to help bring project based learning in STEM to the middle and junior school students. Since 2013, many dozens of Broadcom engineers have answered the call to serve as volunteers in multiple locations throughout Israel. They regularly visit their schools and allocate their time and expertise as mentors in the classroom and participate as judges of student science projects at the Israel National School Science Fair (INSSF), which is sponsored by the Broadcom Foundation.

“We are honored to have been asked by the Ministry of Education to assist with what is a global problem: getting kids excited about STEM,” said at INSSF event, Meir Halberstam, director, finance and office services at Broadcom Israel. “In just a few years, we have been able to grow our programs from a few volunteers to many in multiple locations and schools throughout Israel and collaborating with other MNC".

“STEM education is a very high priority for Israel, a country known as the ‘Startup Nation,’” noted Dr. Shlomo Markel, Vice President at Broadcom. “By expanding the reach of our programs to students from all cultures throughout Israel, we hope to increase the talent pipeline of children, who will someday be the next inventors and innovators.”

To see this program now called “Reaching the STARS” grow and students excel in STEM, gives a great satisfaction and hope that it inspires other Broadcom, as well as other MNCs employees to get involved in it. Especially, because there is a growing need to teach and encourage the next generation of engineers.”

So, are there ZIONISTIC MNCs?

Dr. Shlomo Markel is Vice President at Broadcom.

Meir Halberstam is Director of Finance & Corporate Services at Broadcom

Broadcom is a member of IATI (Israel Advanced Technology Industries).