Export head predicts toughest year in 2 decades

Head of the Israel Export Institute says small- and medium-sized businesses will need “arsenal of tools” to assist export.

illustrative-ship imports exports 311aj (photo credit: Ariel Jerozolimski)
illustrative-ship imports exports 311aj
(photo credit: Ariel Jerozolimski)
Small- and medium-sized Israeli manufacturers can still find export opportunities during the expected global economic downturn, but they will need an “arsenal of tools” to assist them, according to the head of the Israel Export Institute.
“We are very worried. We don’t expect any increase in exports in 2012,” IEI chairman Ramzi Gabbai told Army Radio late Wednesday. This year would be the toughest year for Israeli exporters in more than two decades, he predicted.
Gabbai nevertheless praised the government for its willingness to assist exporters, singling out Industry, Trade and Labor Minister Shalom Simhon’s recent announcement that the budget of the Israel Foreign Trade Risks Insurance Corporation will be doubled to NIS 4 billion per year.
The government-owned corporation, better known by its Hebrew acronym Ashra, encourages Israeli exports by insuring medium- and long-term export credit transactions and investments abroad.
The Export Institute and the government cannot boost the sales of each individual exporter, Gabbai said, but what they can and must do is give exporters the necessary tools to allow them to sell on their own. Increased government funding for marketing would help exporters to stand out at trade fairs and to catch the eyes of potential buyers, he said.
Gabbai’s recommendation came as Finance Minister Yuval Steinitz told Bloomberg News, while on a visit to New York, the government is preparing an “emergency plan” for the possible collapse of the euro zone. The 17-nation euro bloc accounts for about 30 percent of total Israeli exports.
Gabbai told Army Radio his institute has spent years encouraging Israeli manufacturers to redirect exports from Europe and the United States toward emerging markets such as China, India and Brazil. Although this strategy has been successful, there is still plenty of room for growth, he said. While there is huge demand in Asia for hi-tech imports such as medical devices, there is almost no demand for imports from traditional industries like textiles, he added.
According to figures released earlier this week by the Export Institute, China and India were Israel’s two fastest-growing export destinations over the last five years. Exports to China, excluding diamonds, rose 162% between 2007 to 2011, while exports to India increased 99%. Exports to the United Kingdom and Turkey, two other fast-growing trade partners, rose 90% and 58%, respectively, in the same period.
Gabbai also played down worries that trade with Egypt could stall following the election of an Islamist majority to the country’s parliament. There has been no decrease in exports to Egypt, he said, adding that the Qualifying Industrial Zones, which allow Egypt to export to the US duty-free if the products contain a certain proportion of input from Israel, continue to function.
In addition, Israel still sends a “reasonable amount” of exports to Arab countries via third countries, Gabbai said. Regarding Offis Textile, the company he chairs, he said: “We even exported jalabiyas [traditional Arab garments] to Kuwait, and the buyers have no idea that what they are wearing is made in Israel.”