Intel makes Israel’s biggest ever investment
Largest investment ever made in Israel
This morning, September 22, the ministries of economy and finance approved Intel’s investment programme during a meeting of the Ministry of Economy Investment Centre administration, headed by Nahum Itzkowitz in Jerusalem.
RIGHT: Intel, HP and Micron already operate these production plants in Kiryat Gat
Intel’s investment in upgrading the Kiryat Gat plant will be around $6 billion, in line with the business plan submitted to the Investment Centre. The Israeli government will contribute a further $300 mil for the project.
“Approving Intel’s arrival in Israel with the greatest investment in the history of the state is a historic occasion for all its citizens, but particularly for the residents in the south of Israel, where hundreds will be employed at the new plant,” said the Minister of the Economy Naftali Bennett today.
The members of the Investment Centre administration include, in addition to representatives from the ministries of economy, representatives from the ministry of finance, the Israel Tax Authority, ministry of agriculture, the Manufacturers Association of Israel and representatives of the general public.
3 500 new jobs and huge purchasing
As part of the programme, Intel will employ another 1 000 workers and an additional 2 500 employees will be indirectly employed as a result of the plant upgrading. In addition, the company is committed to a reciprocal purchase in Israel of around $550 mil and additional local purchases of around NIS180 mil annually.
Intel committed to employing most of its additional workforce from southern Israel.
As part of the approval, Intel Corp – which will turn its Kiryat Gat plant into the most advanced plant for microchip technology in the world – will be given special preferred enterprise status, as approved by the ministry of finance, says Director General Yael Andorn, Ministry of economy Director General Amit Lang, and Israel Tax Authority Director General Moshe Asher.
The special preferred enterprise status will be decreed according to the Law to Encourage Capital Investment after it was proven that the plant will contribute fundamentally to Israel’s economic activity and produce a high yield for the economy – and has the ability to advance national targets for Israel’s economy.
This status will grant Intel eligibility for 5 per cent corporate tax over a period of 10 years (until 2023), and grants of $300 mil to be spread over 5 years. For the first time, the State has determined clear criteria which will be constantly reviewed throughout the eligibility period. These include:
1. Increasing the export capacity relative to the previous eligibility period, in addition to revenue targets.
2. Eliminating the possibility of reducing employment targets if investment rates decline.
LEFT: Another Intel building in Petah Tikva
3. Increasing local purchasing demands, so that it is assured that there will be an increase of at least 10 per cent relative to 2013 and a $100 mil increase in reciprocal purchase.
4. The number of workers who will move to the periphery was increased to 50 per cent of all employees (relative to 50 per cent of the incremental workers).
5. Adding an investment in academic research institutions alongside financing tuition fees for students, and defining a minimum sum of $1 million annually.
6. A commitment that Israeli workers and suppliers will implement the required set-up activities.
7. Preventing workers in the group being moved to beneficiary companies to meet employment targets.
Israel attractive as FDI destination
“The investment of $6 bil, jobs for thousands of Israelis, and future income of millions of dollars from taxation makes this tremendous news for the Israeli economy which is beginning the new year with a giant step forward and positioning Israel as an attractive investment destination by international criteria,” said Minister of the Economy Naftali Bennett today.
Minister of Finance Yair Lapid, said that “Intel’s investment is a strategic asset for Israeli industry. This is the largest investment ever made by a foreign company in Israel, and is additional proof that Israel is at the forefront of the technology industry and innovation.”
“The factory’s upgrade will lead to the creation of around 1 000 new jobs which will provide work for residents of southern Israel. We will continue to work to create an attractive business environment so as to increase investment in the State of Israel.”
Contribution to growth in the economy
“Approval of the investment programme and grant concludes work conducted jointly by the Ministry of Finance, Ministry of Economy, and the Israel Tax Authority, in which we succeeded in creating the conditions for awarding a grant and tax benefits. The conditions ensure meeting measurable targets in the fields of employment, local purchasing, and increasing production in a manner which will contribute to growth in the economy,” said Director General of Finance Yael Andorn.
Intel’s investment “brings with it real tidings for strengthening Israeli industry, Israel’s economic development, and, in particular, for reinforcing and increasing employment rates in southern Israel,” said Director General of Economy Amit Lang.
“We need to remember that this investment carries many and broader influences on the Israeli economy, such as the reciprocal purchase, research and development, training skilled manpower, etc.”
Added Nahum Itzkowitz, director of the Investment Centre at the Ministry of Economy: “This is the largest investment ever made in Israel by a foreign company.”
All aspects of the investment were scrutinised by professionals and it was proven that it will bring many high-quality benefits to the State of Israel, he said.
What’s not to like?
Among these, he said, would be “an increase in employment with high productivity, increased employment and direct and indirect economic activity, influence on research and development for many companies, expanding the activity of suppliers and service providers in Israel, various tax and dividend receipts, improving and training a professional high-quality workforce, etc”.
And, said Itzkowitz, “Intel’s decision to continue investing in Israel has strategic importance and serves as a fundamental and significant contribution to Israel’s image as a leading country in technological innovation, and serves as an attractive focal point for investors and companies in Israel and around the world.
“Today is a day of celebration for the growth and empowering of Israel’s economy.”