The Office of the Chief Scientist will operate with a budget of NIS 1.1 billion for research and development grants in 2007, marking a cut in the country's R&D investment from the NIS 1.3b. allocated last year.
"It's a big mistake from the Finance Ministry to cut the budget because it has been proved that every penny invested in industrial R&D brings at least 15 times the investment from the private sector," said Rina Pridor, director of the Technological Incubator Program at the Ministry of Industry, Trade and Labor. "We are losing our competitive advantage as the US, Europe and the Far East are moving ahead and we cannot afford this. If we don't invest our money now in R&D we will see the results of being in a crisis situation in four to five years."
Pridor's comments came after the Trade Ministry released its end of year report on allocations made by the Office of the Chief Scientist in 2006.
Having received a total 2,000 requests for assistance, Chief Scientist Eli Ofer spread his budget mainly between the industrial R&D fund, its MAGNET program for the development of technological infrastructure and its incubator program.
Pridor's incubator program had a budget of NIS 147m. in 2006, funding 78 projects of start-up companies, which she said has been cut to NIS 135m. this year and may be sliced again.
The ministry noted that between January and October last year, 88 incubator companies had raised over NIS 170m. in fundraising rounds. In addition, it reported that three incubators privatized in 2006 so that 15 of the 24 incubators are now run outside the government's framework.
The Chief Scientists MAGNET program, which aims to encourage R&D collaboration between institutions, provided grants of NIS 204m. to nine consortiums during the year.
The bulk of the R&D funding for the year, however, went to the government's industrial R&D program, which gave out grants amounting to NIS 917m. in 2006, compared to NIS 750m. in 2005. The funding was allocated to 371 companies for 592 projects, after the research committee headed by Chief Scientist Eli Ofer considered 787 requests for funding, the ministry said.
The telecommunications sector took the largest chunk, or 33.4% of the total, while 26.1% went to life science programs, 15.7% to electronics companies, 8.2% to software industry and the balance distributed between electro-optics, chemical and other projects.
Among the companies, ECI Telecom received the highest government R&D grant of NIS 41.4m. followed by Applied Materials with NIS 29.5m., Teva Pharmaceutical Industries, which received NIS 25.5m., and defense company Elbit Systems with NIS 25.2m.
Within the R&D fund, the ministry participated in 59 joint projects between Israeli and international companies covering NIS 54m. of the NIS 117m. total budget in those programs.