TMT Minister Ben Eliezer: Investment in R&D brings more people to work

The chief scientist at TMT Eli Ofer added: "Without an addition of approximately 450 million shekels, hundreds of quality R&D programs will remain unanswered and 4,000 direct employees in R&D may be fired" * Two new plans of the scientist: establishment of development centers of Large companies in the periphery and the laying off of hi-tech workers in traditional industry

The Minister of Industry, Trade and Employment, Binyamin (Fouad) Ben Eliezer and the Chief Scientist in his office, Dr. Eli Ofer, presented today (Tuesday) current data about the activities of the Chief Scientist in general, and in light of the economic crisis in particular.

The Minister of Taxation, Binyamin (Fouad) Ben-Eliezer, says that "as you have seen in recent months, our entire goal in recent times is to help industrialists, exporters, manufacturers and small and medium-sized businesses. Whoever says that we have already come out of the crisis - does not know what he is talking about. According to all explanations, we are expected to continue the trend of expanding unemployment. Our actions try to reduce unemployment as much as possible, but the crisis is still not behind us. It should be remembered that every increase of 0.1% in unemployment means an increase of 3,000 net unemployed, that is an increase of about 150 unemployed and 150 families every working day in the economy.

"I closely follow all of our actions, each of the issues that we have defined as a target for treatment by the ministry's many aid tools. In all our actions, there is a welcome and important activity of the chief scientist. The activities of the Ministry of Science and Technology and the chief scientist within it are many times more important in these days of a global economic crisis. Investing in research and development directly results in more employees in the economy.

I welcome the fact that the Chief Scientist adapts himself to the current policy of dealing with the crisis and adding more employees, as well as the fact that he came out with a number of special tools in 2009 in order to help the industry alleviate a little of the distress it is in, tools such as the spread of payments, increased funding and flexibility.

"When I took office, I instructed the chief scientist in the office to prioritize as much as possible in his approvals, the projects that bring as many working hands as possible to the Israeli economy, while promoting the periphery.

"As part of this, we are embarking on a new plan by the chief scientist, to establish development centers for large companies in the periphery, which have a very large influence in creating mechanisms for the emergence of a center of high-quality employment and economic activity in its geographical environment. The route is intended for large Israeli companies, and its uniqueness is that it allows a company that moves significant activity from the center to the periphery relative certainty regarding long-term planning for a period of up to three years.

"In addition, since I took office, I have emphasized the great importance of the cleantech issue as an innovative field with tremendous potential for the local and global economy. In the R&D fund, 40 projects were approved, with a budget of 91 million NIS, and grants of 49 million NIS were given. We are in the process of establishing "green" technology centers in the Negev - a water technology center with a five-year budget of NIS 35 million; A renewable energy center with a five-year budget of NIS 57 million. An academic steering committee for the promotion of water technologies - began to operate. Also in the magnet track we have invested in a number of conglomerates dealing in the cleantech field as well as in the technology incubators".

Minister Ben Eliezer went on to say that "Together with the Ministry of Finance, we approved a new program that will incentivize high-tech workers to work in factories in traditional industries in order to help in the processes of assimilating innovation, R&D and innovative work methods in traditional companies. As part of the conclusions of the Makov Committee report, which spoke about steps to strengthen traditional industry through innovation and sophistication, and comprehensive development in the periphery with the aim of providing equal opportunities and removing barriers, the possibility of recruiting high-quality workers in the branches of traditional industry arose.

"The current economic crisis is an opportunity to implement this recommendation, since the hi-tech companies had to lay off thousands of workers and now instead of paying these workers unemployment benefits, the state will be able to place them in factories that need their skills. The absorbing factories will use the skills of the absorbed workers, which will increase the competitiveness of the factories in the local and global markets and will allow an increase in the number of employed in the medium and long term. I tasked the Office of the Chief Scientist to establish the program.

"The Ministry of Finance certainly understands the importance of the Ministry of Taxation in stopping the wave of layoffs and encouraging growth and increasing employment. Unfortunately, the severe economic crisis led in 2009 to an increase in requests for R&D support from the chief scientist - about 20 percent more than the previous year. R&D requests amounting to about two billion NIS that are in the pipeline without a response and according to the estimates of the chief scientist's office, an additional budget of about 450 million NIS is required to respond to quality requests. As of today, from the pool of plans in the pipeline (about NIS 2 billion), 154 plans with a total investment of over NIS 700 million have been reviewed and found to be of high quality and due to the lack of a budget cannot be approved.

"For example, today the chief scientist is faced with a company with 3 R&D programs in the field of cellular communications, it is working against an American competitor that has development in India and offers similar products at low costs. Failure to approve plans in the pipeline will result in lower competitiveness, layoffs and loss of its technological advantage. We cannot comply with such a request, and similar requests like it, which in total can bring 4,000 additional directly employed people to the economy.

Referring to the prestigious "Eureka" program, the minister said that "the choice of Israel to serve as president of the "Eureka" program for 2010 is an unprecedented achievement in the field, especially against the background of the fact that Israel is the only non-European company in Eureka. This will be an excellent opportunity to show the beautiful face of Israel, and to strengthen the investment here in blue and white technologies."

Below are the main points presented by the chief scientist at the office:

1. The economic crisis

• In 2008, the global economic crisis brought the companies in the world and in the Israeli economy in particular, to a credit crunch. The characteristics of the economic crisis may bring the investment in R&D to a secondary order of priority since the full resources of the companies are directed at this time to issues that have an immediate effect on the cash flow, such as reducing expenses by way of reducing wages and laying off workers, reducing the production line, moving activities abroad to countries where "A is cheaper like East Asian and Eastern European countries.
• The chief scientist's commitment budget for 2009 is NIS 1.47 billion, compared to a budget of NIS 1.49 billion in 2008. The year 2009, in light of the economic crisis, is characterized by an increase in R&D requests, and there is an increase of about 20% compared to 2008.
• There are requests in the pipeline for an additional 2 billion NIS that will remain unanswered. In order to respond to these requests, an additional budget of over NIS 450 million is required for the chief scientist. Responding to these requests will result in a total investment in R&D of approximately NIS 1.5 billion. The translation of this investment, according to the chief scientist, is estimated in terms of employment by approximately 20,000 additional employees, of which 4,000 are directly employed and approximately 16,000 are indirectly employed. The total budget shortfall according to the R&D tracks: competitive R&D for product development: NIS 310 million, greenhouses NIS 70 million, magnet NIS 70 million and momentum NIS 3 million.
• There is great importance in ensuring the continuous activity of the R&D funds operated by the chief scientist, both in order to participate in the risk and thereby ensure the execution of the R&D, and in order to enable the execution of the R&D in time and the arrival of its products to the world markets on time.
• Companies that continue and invest in R&D even during the crisis will be more competitive and attractive in the long run. R&D means possibilities for developing a new and more attractive product line, which will lead to sales and jobs. The government must be the one that sees the long term and incentivize the companies to invest in R&D through which the goals of employment, exports and economic growth will be achieved in the long term.

2. Special tools given in 2009 to the industry in order to alleviate the distress:

• - Increasing the advance rate from 25% to 35%; Increasing current funding by an additional 5% from 15% to 20%.
• - Providing a layout for the reimbursement of royalties to companies that are in difficulties.
• - Marathon discussions of the research committee for granting approvals for R&D programs.

• - Issuance of letters of approval with a significant reduction of the schedule: until June 2009, letters of approval in the amount of 760 million NIS were transferred to the industry compared to 526 million NIS in the corresponding period last year (an increase of 44.4%). By the end of July, the base budget is fully exhausted and the Office of the Chief Scientist is awaiting the budgetary changes in order to issue approvals for the additional budget.
• - Disbursement of payments on a shorter schedule: until July 2009, 742 million NIS were paid to the industry compared to 615 million NIS in the corresponding period last year (an increase of 21%); Flexibility in the requirement to present supplementary financing: companies in difficulties will be approved for payment against performance instead of proof of supplementary financing in advance.

Employment-creating R&D: R&D grants constitute 30% of the total total investment to carry out the R&D programs. 80% of the budget of the R&D programs constitutes the financing of the salaries of R&D workers in the programs approved by the Bureau. The budget of the Office of the Chief Scientist for 2009, with its changes, stands at 1,470 million NIS authorization to commit, a budget that generates direct employment for approximately 13,060 workers. Studies indicate that for every R&D worker, at least 4 other workers are employed in the economy, so that in total, the state's investment in R&D in 2009 generates total employment of about 63 thousand workers in the economy:

1,470 million NIS R&D grants - the Chief Scientist's budget for 2009, brings to 4,900 million NIS total investment in R&D (industry + state) equal to 3,920 million NIS total investment supporting employment (80%) which will result in 13,060 direct R&D workers, approximately 52,240 indirectly employed and 65,300 total employed.

A grant of 1 million NIS, results in a total investment in R&D of at least 3.5 million NIS, results in a total investment supporting employment of at least 2.8 million NIS, which results in the employment of 9 direct workers in the R&D program, 36 indirect workers and a total 45 are employed.

Recognition of preferred fields: The research committee made a decision on the recognition of preferred technological fields both in fields that have not received sufficient support in the past, such as traditional industry, and in fields that represent tremendous potential for future markets, such as nanotechnology and biotechnology. Preference for these areas is carried out by providing a maximum support rate of 50% for an approved program. It is important to note that the examination of the projects is done within the framework of the accepted criteria, that is - the basis of the decision is based on the quality of the project and emphasis is given to the criterion of innovation in each project.

Development centers of large companies in the periphery: as part of the policy of the minister for the development of the periphery and the promotion of research and development in Israel, the Scientist Chamber initiated a new route to encourage large companies to establish research and development centers in the periphery. R&D centers in the periphery have a very large influence in creating mechanisms for the emergence of a center of high-quality employment and economic activity in its geographical environment. In light of the economic situation, this route is part of a mechanism to reduce the significant gaps between the periphery and the center that are reflected, among other things, in salary and education levels. The route will be operated from the beginning of 2010 from the current budget of the Office of the Chief Scientist. The maximum annual budget for this program will not exceed NIS 100 million per year. The uniqueness of the route is that it allows a company that transfers significant activity from the center to the periphery relative certainty regarding the budgeting of the activity for a period of up to three years. The route is intended for large Israeli companies whose total turnover from operations in Israel in the year preceding the submission of the application for receiving the aid exceeded 100 million dollars.

General threshold conditions:

• Most of the production (over 50%) of the program's products will be done in the State of Israel.
• The program should have a high level of innovation.
• In the first, second and third year of support, at least 40%, 50% and 60% (respectively) of the jobs approved in the program will be for workers living in the periphery.
• The minimum scope of the total approved multi-year plans of that company will be NIS 60 million.

Biotechnology in the Office of the Chief ScientistBiotechnology was defined as a preferred field by the Office of the Chief Scientist. The Government of Israel/Chief Scientist's Office recognizes growth potential in the field of biotechnology in Israel, and promotes support mechanisms in order to realize the potential.

A program to place the hi-tech unemployed in traditional industry: The Ministries of Taxation and Finance are currently examining the establishment of a new program that will encourage high-tech workers to work in factories in the traditional industry branches in order to assist in the processes of assimilating innovation, R&D and innovative work methods in traditional companies.
The current economic crisis is an opportunity, since the hi-tech companies had to lay off thousands of workers and now instead of paying these workers unemployment benefits, the state will be able to place them in factories that need their skills. The absorbing factories will use the skills of the absorbed workers, which will increase the competitiveness of the traditional factories in the local and global markets and will allow an increase in the number of employed in the medium and long term. The minister tasked the Office of the Chief Scientist to establish the program, the details of which will be agreed upon with the Ministry of Finance for its implementation later this year.

R&D centers in the academy in the field of nanotechnology: An aid program whose goal is to create and develop a technological infrastructure for the use of industry, with a long-term view that countries that invest in the field of nanotechnology now, will be at the industrial forefront of the developed countries in a few years. The program is operated using the method of the funding triangle - 1/3 government, 1/3 dedicated contribution to the nano research, 1/3 from the current budget of the institutions. The leverage of the government budget is tremendous and the cooperation within the framework of TLM of the Ministries of Technology, Science, Defense, Finance and the Ministry of Defense is a model to follow of combining interests and budgets in order to promote tasks at a national level without additional budgeting.

Technological centers for the promotion of water technologies and renewable energies: within the framework of government resolutions 3953 and 3954 of August 2008, for overall government activity to promote water technologies and renewable energies, the Office of the Chief Scientist was tasked with leading the establishment of technological centers in Sde Boker (water) and the Negev (renewable energies), these centers They will serve as a focal point for applied research in the aforementioned fields, in which the combined knowledge and experience of the main actors active in these fields from academia and industry will be concentrated.
As part of the decision, the government allocated a 5-year operating budget to the technological centers, the budget for the technological center for water is 35 million NIS, the budget for the technological center for renewable energies is 57 million NIS.

In recent months, office teams have been working on formulating the CEO's instructions for the operation of the technological centers, upon completion of the office work, the Office of the Chief Scientist will issue a public tender for the selection of the appropriate parties for the management and operation of the technological tenders.

Presidency of the Eureka Program

The Eureka program (www.EUREKA.be) is the leading industrial R&D program in Europe and the largest of its kind in the world. This is an intergovernmental initiative that was launched in 1985 by France and Germany, to which the European Union Commission also joined, and today almost all European countries (40 companies) participate in it with the aim of promoting joint R&D projects for industrial uses with the support of the national R&D programs in the countries the participants, and determine an R&D policy at the European level. Every year Eureka approves about 300 new projects in the amount of about 1.5 billion euros.
Eureka encourages research and development for industrial uses, and being "user friendly" it is open to business entrepreneurship and the participation of small and medium-sized companies: over 40 percent of Eureka project participants belong to this sector. Israel was accepted as a full member of the program in 2000, becoming one of the most active countries in the program, alongside France, Germany, Spain and the Netherlands. Israel's participation rate in Eureka is high: in recent years, Israeli companies participate in more than 10% of all approved projects in Eureka. The Chief Scientist serves as the Israeli national representative in the "Eureka" management, and TIMOP is the executive arm on behalf of the Chief Scientist, and works to expand the participation of Israeli companies in the various Eureka frameworks.

Israel's election to the Eureka presidency

Israel was chosen to serve as president of the program in the 2010-2011 working year, after Germany. The choice of Israel - which is the only non-European company in Eureka - is a precedent-setting achievement on a national level and is a significant landmark in strengthening the system of political and business ties with the European community. The Office of the Chief Scientist at the Ministry of Science and Technology will lead the presidency project in conjunction with the other government ministries, the President's House, the Knesset and other industrial organizations.

In the spirit of the slogan "Light to the Gentiles", and based on the status and prestige enjoyed by the State of Israel in the field of innovation and R&D, the Ministry of Science and Technology intends to reveal during the Israeli presidency the beautiful and positive face of Israel and in particular the unique achievements of Israel in the field of technology and industrial innovation, and to recruit the participants The program (governments and industries) for important national and regional projects.

Beyond the important added values ​​- improving Israel's status in Europe, strengthening and establishing Israel's positive image and emphasizing its relative advantages (innovation, entrepreneurship, scientific and technological base, multiculturalism, openness to the international market, a bridge between Europe and Asia, etc.), the presidency of the program will allow:

Mobilizing European support and/or knowledge to promote important national initiatives - for example, strengthening research and development in priority areas such as life sciences and water and environmental technologies; Promotion of national or regional projects - joint ventures with the Palestinian Authority and Arab countries, etc.

Strengthening the relationship with investment banks, venture capital funds and other factors in Europe to create new sources of funding for R&D activities and large projects in Israel.

The presidency will allow us to promote bilateral relations with key countries in Europe and in particular: Germany, France, Spain and Great Britain, as well as Russia and Eastern European countries which are prominently represented in the program. The cost of operating the program for the term of the presidency is about NIS 25 million.