Israel must improve efficiency and cut bureaucracy

BoI Governor Stanley Fischer said Israeli gov't bureaucracy was the biggest obstacle to foreign investment and economic growth.

By MATTHEW KRIEGER
January 1, 2008 08:27
3 minute read.
shipping biz zim 88 224

shipping biz zim 88 224. (photo credit: Ariel Jerozolimski)

 
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Israel must improve efficiency and reduce bureaucratic holdups in its import and export sectors to boost its candidacy for acceptance into the Organization for Economic Cooperation and Development (OECD), the Manufacturers Association of Israel said Monday. Its comments were in response to the World Bank's recently released Logistics Performance Index, a measure of the performance of the supply chain in international trade, which ranked Israel No. 33 out of 150 countries. Singapore was ranked No. 1. At a speech Sunday to the Manufacturers Association, Bank of Israel Governor Stanley Fischer said Israeli government bureaucracy was the biggest obstacle to foreign investment and economic growth. "Israeli bureaucracy is a problematic and disturbing factor in doing business," he said. "The government must deal with this in spite of all the difficulties in grappling with issues of this sort." The Logistics Performance Index study pinpoints the places where it's easy or difficult to ship goods across countries, into and out of ports and over borders. The countries with the most predictable, efficient and best-run transportation routes and trade procedures are also the most likely to take advantage of technological advances, economic liberalization and access to international markets. "The biggest source of costs is not really transportation cost (such as freight costs), port and handling charges, procedural fees (such as bonds), or even agent fees and side payments, it is the predictability, the reliability and the quality of services that are much more important than the cost," wrote Jean Francois Arvis, the study's lead coauthor. Countries with "higher overall logistics costs are more likely to miss the opportunities of globalization," said Arvis and coauthor Monica Alina Mustra of the World Bank's Poverty Reduction and Economic Management group. "What matters most is reliability of the supply chain - whether the goods can be delivered on time," Mustra noted. Some 800 freight forwarders and express carriers working in the international logistics business in 100 countries rated countries in a Web-based survey on such things as whether customs brokers or rail transport service providers were competent, export shipments were cleared and shipped as scheduled and criminal activities occurred or information payments (bribes) were sought, the World Bank's Web site said. Respondents were asked to evaluate the shipping experience in terms of logistics performance, environment and institutions in support of logistics operations in the country where they were working in a number of categories, including efficiency of the clearance process by customs and other border agencies; quality of transport and IT infrastructure for logistics; ease and affordability of arranging international shipments; competence of the local logistics industry; traceability and trackability of international shipments; domestic logistics (transportation) costs and timeliness of shipments in reaching their destination. Afghanistan was ranked last in the survey. Developed, high-income countries, such as the G-7, are all top performers, while the performance of developing countries, even those with similar income levels, varied considerably, the report said. China was No. 30, while some higher-income oil exporters, such as Algeria (No. 140), performed below their potential logistically, according to the study. "In this highly competitive world, the quality of logistics can have a major bearing on a firm's decisions about which country to locate in, which suppliers to buy from and which consumer markets to enter," the study said. Israel ranked behind many OECD countries, prompting the Manufacturers Association of Israel to call on the government to work to raise the country's standing to No. 20 within three years. "What we are asking is for the government ministries, including the Finance, Infrastructures and Transportation ministries, as well as the director-general of the Prime Minister's Office, Ra'anan Dinur, to look at their activities and figure out how they can make this country more efficient and well-run when it comes to import and export logistics," Zvi Plada, chairman of the Manufacturers Association's Transportation Department, told The Jerusalem Post. Israel was ranked No. 43 in customs, No. 37 in infrastructure, No. 31 in international shipments, No. 32 in logistics competence, No. 29 in tracking and tracing, No. 145 in domestic logistics costs and No. 41 in timeliness. It takes considerably longer to import and export products from Israeli ports than it does for many other countries around the world, according to the Manufacturers Association. Plada said that could be rectified with the proper infrastructure in place. "We need to construct railways that not only go directly to the ports, but that can properly handle the amount of goods coming into and out of the country, and we need the government to streamline the customs process here as well," he said. "There needs to be serious investments made to our logistics sector in order to advance our world standing, and while our acceptance into the OECD may not be totally dependent on our logistics ranking, it is certainly not helping our cause that we are not ranked higher."

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