Israel counts the climbing cost of coronavirus

Financial Affairs: As Israel has limited ports of entry by land, the fear of traveling through international airports could hit the country particularly hard.

By EYTAN HALON
THE ARRIVALS HALL at Ben-Gurion Airport – will it turn into a ghost town? (photo credit: WIKIPEDIA)
THE ARRIVALS HALL at Ben-Gurion Airport – will it turn into a ghost town?
(photo credit: WIKIPEDIA)
If the prospect of another inconclusive round of elections was not scary enough, the outbreak of the novel coronavirus has truly left the Israeli public in a state of panic.
Perhaps as a result of strict and wide-ranging travel restrictions imposed by Israeli authorities on both foreign citizens and nationals returning from abroad, the first non-isolated case of COVID-19 disease in Israel was only identified on Thursday – in a citizen who returned from Italy earlier this week.
Two previous individuals who tested positive for the virus within the country had already been placed in quarantine at Sheba Medical Center after returning from the Diamond Princess cruise ship in Japan.
Despite rigid measures implemented worldwide, great uncertainty still remains surrounding the outbreak, which has killed 2,744 people in China. The death toll has risen to 13 in South Korea, 12 in northern Italy and an increasing number of infections have been recorded across Europe.
Already bearing the brunt of the outbreak is Israel’s business sector. From exporters to hoteliers and farmers, Israelis are facing mounting economic costs. According to Finance Ministry forecasts, different scenarios could see Israel’s economy lose sums ranging from NIS 3.6 billion ($1 billion) to NIS 14b. ($4b.).
A situation room established by the Manufacturers Association of Israel has been inundated with calls from business owners eager to find new sources of raw materials, solutions for supply chain delays and support for cash flow issues. On Tuesday, a French cargo ship destined for Ashdod Port, carrying food and medication, was refused entry after one crew member was found to have recently visited South Korea.
“There is a lot of confusion because the situation is very unclear,” Manufacturers Association president Dr. Ron Tomer told The Jerusalem Post. “One of the problems when evaluating the impact is that we don’t have a similar crisis to learn from. The situation has caused a lot of financial stress to businesses in some sectors, for example the construction field and self-employed individuals who are required to isolate themselves.”
The impact of the coronavirus, Tomer said, serves as an urgent reminder of the need for greater industrial strength and independence, with reduced reliance on supplies from the Far East. At a meeting on Tuesday with Prime Minister Benjamin Netanyahu and senior financial leaders, Tomer urged the establishment of a government-backed “financial fall safety net” to ensure short-term stability for Israeli companies.
Chinese construction workers work during a media tour of the construction of a new port in the southern city of Ashdod, Israel April 12, 2016. The new port in Ashdod together with another one in Haifa are both under construction and are planned to start operating at the end of 2021. (Credit: Reuters)
Chinese construction workers work during a media tour of the construction of a new port in the southern city of Ashdod, Israel April 12, 2016. The new port in Ashdod together with another one in Haifa are both under construction and are planned to start operating at the end of 2021. (Credit: Reuters)
“For workers in isolation, Israel cannot put the burden of compensation on the business sector, as it cannot support a large quantity of sick days,” said Tomer. “Growing the industrial sector is one of the major sources of financial and commercial independence. I hope the government will find partners for the short-term solution and, for the long-term, change its attitude to be a strong country industrially, and not just militarily.”
REFLECTING DIFFICULTIES faced by the aviation industry worldwide, El Al chief executive Gonen Usishkin said “painful decisions” may be required to manage a drop in revenues now estimated to reach $50m.-70m. for the period between January and April. On Thursday, the Israeli flag carrier canceled all flights serving Italy and Bangkok, after having already halted routes to Beijing and Hong Kong.
On Wednesday, the Health Ministry took the extraordinary step of calling Israelis to reconsider all non-essential international travel. The inauguration of El Al’s highly-anticipated route to Tokyo, originally scheduled to commence operations on March 11, has been postponed until April.
While Israeli inbound tourism has broken records for three consecutive years, reaching an unprecedented 4.55 million visitors last year, tourism expert Dr. Eran Ketter said the coronavirus outbreak could pose a “significant threat to that positive momentum.”
Ketter, a lecturer at Kinneret College’s Department of Tourism and Hotel Management, said the Israel Incoming Tour Operators Association (IITOA) had reported a 20% decline in reservations, but that the figure might be “very conservative.” True figures may reflect the impact on France’s tourism sector, for example, which has witnessed a 30-40% drop in demand following the outbreak.
As Israel has limited ports of entry by land, the fear of traveling through international airports could hit the country particularly hard. Each tour bus of tourists traveling around Israel for eight days, he said, is worth as much as NIS 250,000 ($72,000) to the Israeli economy.
“We have to remember that when we think about the tourism industry, we are only seeing the tip of the iceberg,” Ketter said. “When there is a drop in occupancy rates in Jerusalem, it means there will be less work for the hotel, but also for those working in souvenir shops, those supplying food products and in restaurants. It affects the Aroma cafe between Tiberias and Nazareth, all the way to the guy doing the hotel laundry.”
Despite the likely impact, Ketter says there are still reasons to be positive, including expectations that the tourism industry will recover quickly once the outbreak is under control. The diversity of Israel’s tourism source markets and product also provides cause for optimism.
“Unlike countries including Thailand and Japan where the majority of tourists are [going there] from China, Israel is very diverse and welcoming tourists from all over the world. If one or two source markets are affected, we still have other markets to look at,” said Ketter.
“The number one reason for coming to Israel is to visit friends and family – representing 30% of all tourists coming to Israel. A second important tourism product is religious pilgrimage. These are two segments that are very resilient,” Ketter said, highlighting the tourism industry’s strong recovery from the violence of the first and second intifadas.
WHILE INBOUND tourism drops, some kind of compensation will be supplied by an increase in domestic tourism. Leading Israeli hotel chains have already increased their domestic marketing efforts, especially ahead of the busy Passover holiday.
Also feeling the pinch of the outbreak are the agriculture and construction sectors, which are heavily reliant on foreign workers from the Far East.
The majority of workers on Israeli farms are of Thai origin, with as many as 24,000 workers currently employed under bilateral agreements between the Israeli and Thai governments. At least 100 Thai workers scheduled to work in Israel have been unable to travel to date.
“Unfortunately, it looks like there will not be a quick solution to the issue of the coronavirus, and the agriculture sector in Israel is waiting for the workers – they are in trouble,” said Itzhak Shoham, a former Israeli ambassador to Thailand and chairman of the committee on foreign workers at the Jerusalem-based Center for International Migration and Integration (CIMI).
A Thai worker picks Etrogs, a citrus fruit used in rituals during the upcoming Jewish holiday of Sukkot, in a grove in the southern community of Nave, near the border with the Gaza Strip and Egypt, October 6, 2014. Sukkot starts at sundown on Wednesday. (Credit: Reuters)
A Thai worker picks Etrogs, a citrus fruit used in rituals during the upcoming Jewish holiday of Sukkot, in a grove in the southern community of Nave, near the border with the Gaza Strip and Egypt, October 6, 2014. Sukkot starts at sundown on Wednesday. (Credit: Reuters)
While the government approved the extension of visas for approximately 1,700 Chinese workers currently in Israel until the end of June, Shoham said that travel restrictions will certainly impact Chinese-managed projects.
“CIMI is helping to bring construction workers from Ukraine and Moldova, but they are for different projects. The Chinese workers are a definite problem,” he said.
The employment of some 30,000 caregivers from the Philippines, however, has not faced the same disruption, he added. Despite its proximity to centers of the outbreak, the Philippines has confirmed only three cases of the coronavirus to date, including one death – and all were Chinese citizens.
“We know that in the last 20 years, there have been fewer and fewer Israelis ready to do these jobs, and the solution was to encourage foreign workers to come to Israel. It is part of the global economy, and we are part of it,” Shoham said.
“All of us are waiting for this sad situation to pass, and not only because of the foreign workers. Once a solution is found for the coronavirus, then we will also solve the problem of the workers. Their entry will quickly return to its former rhythm.”