Luxembourg hopes to attract Israeli ICT companies

The European country wants to establish financial ties with Israeli hi-tech companies.

Partizia Luchetta 370 (photo credit: Shai Eithan)
Partizia Luchetta 370
(photo credit: Shai Eithan)
Luxembourg, a country about one-10th the size of Israel, is probably not one of the first European states in which Israeli companies would consider establishing a foothold.
The duchy’s government hopes that will eventually change, according to Partizia Luchetta, director of new technologies and life sciences in Luxembourg’s Ministry of Economy and Foreign Trade, and Itai Horstock, head of Luxembourg’s Trade and Investment Office in Israel. They sat down with The Jerusalem Post at this week’s Go4Europe conference in Tel Aviv.
Two and a half years ago, Luxembourg made a decision to include Israel as one of 15 non-EU countries in which to establish a strategic presence, Luchetta said. Most of the others on the list were larger economies such as the United States, China, South Korea, the United Arab Emirates and Taiwan.
Initially, Luxembourg identified Israel’s ICT (information and communications technology) sector as a potential area for cooperation, Luchetta said, but it has since broadened its search to include material sciences, biotechnology, environmental technologies such as photovoltaics and wind energy, and banking security.
The Grand Duchy of Luxembourg, as it is formally known, has long positioned itself as a hub through which companies can access Europe.
Thanks to its geographic location in between France, Germany and Belgium, the lowest VAT rate in the European Union (15 percent) and high English fluency, it has managed to encourage leading companies such as Amazon, eBay, Skype and PayPal to set up operations there.
“In Luxembourg, you can do business in French, German or just English,” Luchetta said. “Even company bylaws can be written in English, so you can survive if that is the only language you know.”
Raval, a producer of fuel venting systems based at Kibbutz Revivim in the Negev, was one Israeli company that established itself in Luxembourg even before cooperation became government policy.
In 2002, as the company expanded its activities in the European automotive market, it established a facility just outside Luxembourg City.
According to Horstock, Raval is about to double the size of its production plant, which currently employs about 200 locals.
The largest business-to-business deal involving companies from Israel and Luxembourg occurred in August last year, when Gilat Satellite Networks was selected by SES to deliver its consumer ka-band equipment for satellite-based Internet service ASTRA2Connect.
SES is the world’s second- largest telecommunications satellite operator by revenue.
With per capita GDP of almost $90,000 – the highest or second-highest in the world, depending on who is counting – labor is certainly more expensive in Luxembourg than in China or India.
But that should not deter Israeli companies from setting up manufacturing and distribution centers in the country, Luchetta said.
“Luxembourg is not a low-cost country, but as a lot of today’s production is automated and companies have less personnel, it does not really matter where they do it,” she said. “For some industries, the goal of maintaining high quality is so important that the expense of producing in a high-cost country is not so great.”
Most of the big multinationals “initially arrived for tax purposes,” Horstock said, “but they stayed for substance.”