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TOP STORIES
TABLE OF CONTENTS:
1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Knesset Approves 2009 - 2010 Budget
1.2 Fischer Says Israel One of World's Safest Places for Investors
1.3 Ministry of Finance to Fight Organized Crime
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2: ISRAEL MARKET & BUSINESS NEWS
2.1 Pennsylvania's USM Aerostructures Signs Exclusive Relationship for the Israeli Market
2.2 Fairfax County Chooses DS Apex Mergers to Work with Israeli Companies Interested in U.S. Expansion
2.3 Israel Corp Achieves "Fortune" Global 500 Listing
2.4 Electronic Control Security Announces Exclusive Distribution Agreement with Israel's El-Go Team
2.5 Nogacom Raises Capital to Support International Expansion & Development
2.6 Elbit Systems to Establish Mission Planning Center for Israeli Air Forces Fighter Pilots
2.7 N-Viro International Announces Construction of Licensed N-Viro Soil Facility in Tel Aviv, Israel
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3: REGIONAL PRIVATE SECTOR NEWS
3.1 Jordan Eyes Lucrative US Health-Care Market
3.2 $1 Billion Jordan Water Project Set To Start
3.3 GM Sales in Jordan Drop 20% During 1st Half of 2009
3.4 Defenshield President Visits Iraq, Plans Return Trip Soon
3.5 American Airlines & Etihad Airways Announce Codeshare Agreement
3.6 Saudi & UAE Steel Imports To Drop in 2009
3.7 American Science & Engineering Receives $8.6 Million Follow-on Order from Abu Dhabi Customs
3.8 T3 Motion Secures $51 Million Exclusive Distributor Contract for Saudi Arabia
3.9 Suez Canal Revenues Up In June
3.10 Egypt's Convergence, Broadband & Internet Markets
3.11 GE Transportation & Egyptian National Railways Commission 80 Evolution Locomotives
3.12 ISV Deploys GO-Global to Web-enable Laboratory Application
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4: ISRAEL MACRO-DEVELOPMENTS
4.1 Tel Aviv Will Require Pollution Survey for Building Permits
4.2 Noble Energy Announces Successful Tamar Appraisal in Israel and Increases Resource Size
4.3 Israel & Dominican Republic to Improve Business Ties
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5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Jordan Ranks 44 in ICT Competitiveness Report
5.2 Jordan's Imports of Crude Oil Dropped By 64.7% During First Five Months of 2009
5.3 Jordan & Iraq Sign Air Transport MoU
5.4 Gulf Air to Resume Iraqi Service
5.5 UAE Approves New $272 Million Rail Company
5.6 UAE Cities Race Up 'Most Expensive' List
5.7 Oman Economic Growth To Grow At Slower Pace
5.8 Egypt's Growth May Slow Down to 3.5% in 2009
5.9 Egypt Oil Demand Expected to Increase by 14% by 2013
5.10 Egypt's Inflation Drops To 9.9% In June 5.11 ExxonMobil Commences Drilling Libya's First Deepwater Well
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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS
6.1 Cypriot Unemployment Shows Sharp Increase
6.2 Cyprus Only Eurozone Member With Positive Growth In Q1 2009
6.3 Cyprus Blocking Turkey on EU Energy Chapter
6.4 Greek Industry Indicates Recession
6.5 Greece's EYATH Stake Set To Go Up For Sale
6.6 Greece & Italy To Explore Reverse Gas Flow
6.7 Bulgaria Inflation Slows Down to 3.7% in June
6.8 IMF Says Bulgaria Economy Faces Head-Spinning Decline
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7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 Tisha B'Av to Be Observed
*REGIONAL:
7.2 Turkey Smoke Ban Extends To Bars
7.3 Cyprus Votes For Smoking Ban
7.4 Bulgaria Election Winner Opts for Individual Approach to Partners
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8: ISRAEL LIFE SCIENCE NEWS
8.1 FDA Approves Plan B One-Step, a New One-Pill Emergency Contraceptive
8.2 Swiss Use Transcranial MR-Guided Focused Ultrasound to Treat Brain Disorders
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9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 BackFlip Software Launches BackFlip Process Communications On Demand for ISV's
9.2 TraceSpan Launches VDSL2 Lawful Interception System
9.3 KIT Selects Voltaire 40 Gb/s InfiniBand & Unified Fabric Manager Software for Cloud Computing Research
9.4 Tower Semiconductor's Power Management Process Selected by 3PEAKIC Microelectronics
9.5 Alvarion Offers New Premium Point-to-Multipoint Wireless Solution for License-Exempt Frequency Bands
9.6 AIG-Israel Selects Raz-Lee's iSecurity for its System i Security Infrastructure
9.7 Hutchison Selects Ceragon for Mobile Network Migration to IP
9.8 BluePhoenix Completes IT Modernization Project for Export-Import Bank of the United States
9.9 Techtium Unveils the TEC103 - First Dedicated Li-Ion Solar Charging IC
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10: ISRAEL ECONOMIC STATISTICS
10.1 Israel's Annual Inflation Rises To 3.6% On Tax Hike
10.2 Israel's State of the Economy Index Rises
10.3 Israel's June Trade Deficit Narrows as Exports Rise
10.4 Number of Israeli Jobseekers Increases
10.5 Rate of Car Theft in Israel Falls Sharply
10.6 Tel Aviv Falls to 17 On Expensive City List
10.7 Ben Gurion Airport Sees 12% Drop in International Travelers
10.8 Coca-Cola is Again the Leading Brand in Israel
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11: In Depth
11.1 ISRAEL: Summary of Israeli High-Tech Company Capital Raising for Q2 / H1 2009
11.2 ISRAEL: Fiscal Challenges - Clear, Present but Manageable
11.3 ISRAEL: Analysis of the Pharmaceuticals and Healthcare Industry
11.4 LEBANON: Pharmaceuticals and Healthcare Report Q3 2009
11.5 KUWAIT: Pharmaceuticals and Healthcare Report Q3 2009
11.6 EGYPT: Whither Economic Reform?
11.7 LIBYA: 2009 Article IV Consultation Preliminary Conclusions of the IMF Mission
11.8 PAKISTAN: Economy Crisis Averted?
11.9 GREECE: Pharmaceuticals & Healthcare Report Q3 2009
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1: ISRAEL GOVERNMENT ACTIONS & STATEMENTS
1.1 Knesset Approves 2009 - 2010 Budget
On 15 July, the Knesset passed the two-year 2009-10 Budget Law in its second and third readings, its first ever biennial budget proposal. The vote was 58 in favor and 36 against. Ahead of voting on the biennial budget proposal, the Knesset approved its traditional addendum – the 2009-2010 Arrangements Act – in a vote which carried 63 to 45. The Arrangements Act includes, among others, a section pertaining to social security benefits, new taxes and granting new employee rights. Sections pertaining to the reform in the Israel Land Administration and commercial television, as well as forming a fifth HMO were cut from the final bill proposal.
The state budget will total NIS 316.5 billion in 2009. The budget deficit will be 6% of GDP. The budget will total NIS 321.5 billion in 2010, with a deficit of 5.5% of GDP. The mandated 1.7% increase in annual government spending was raised by additional 1.35% in both 2009 and 2010. The increase will revert to 1.7% in 2011. (Globes 16.07)
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1.2 Fischer Says Israel One of World's Safest Places for Investors
Israel remained relatively free from severe damage in the worldwide financial crisis and stands to be one of the world's safest places for investors, Bank of Israel Governor Stanley Fischer told Fox News recently. He took partial credit for Israel's economic stability, noting that his massive purchase of dollars in the past year along with the government's spending limitations helped avert a serious crisis. The economy is in a recession and thousands of people are out of work, but recovery appears to be around the corner. Major Tel Aviv Stock Exchange indexes still are 30% higher than they were five years ago while American shares generally have lost value. “I feel much, much better that if there's any future crisis, we are in a very strong position, much stronger than a year ago, because of our currency purchases,” Fischer told Fox. The Standard & Poor financial services company affirmed Israel's stability recently and retained the government's “double A” bond rating. Fischer said that the central bank continues to focus on price stability, with the consumer price index remaining below the maximum target of 3%. He noted that several foreign companies, such as Microsoft, Yahoo and Google have recently opened production and development centers in the Jewish state. Israel is “a safe place to invest,” Fischer stated. “Americans tend to be very concerned about pictures on TV of the violence. In terms of capital investment, exporting and importing, that part of business is relatively easy. Israel has a highly-skilled work force that's highly motivated. It's an exciting place, but most impressive is the talent and the interesting people.” (IsraelN19.07)
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1.3 Ministry of Finance to Fight Organized Crime
The Jerusalem Post reported that Israel's Finance Ministry is setting up a special task force to fight organized crime by destroying its financial structure, as announced by Finance Minister Steinitz. The special unit will be under the auspices of the Israel Tax Authority and will work in cooperation with the police and other enforcement agencies to combat money laundering. Deputy Finance Minister Cohen met with representatives of the ITA recently to deliberate the plan. They decided to recruit about 30 staff members to train as investigators, giving preference to accountants, lawyers and veterans of IDF special units. In the past, ITA officials were said to be demanding "risk bonuses" in exchange for their collaboration with law-enforcement agencies in the fight against organized crime. Steinitz has been pushing for the implementation of a program aimed at eradicating organized crime and violence from the streets as a way to revive and strengthen the economy. He says this is how former New York mayor Giuliani saved his city when he was in office from 1994 to 2002. Improved security and safety encourage tourism and shopping as people leave the house more and boost private consumption, Steinitz says. A strong feeling of personal safety encourages citizens to open new businesses and foreigners to invest in the country, he said. (JP15.07)
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2: ISRAEL MARKET & BUSINESS NEWS
2.1 Pennsylvania's USM Aerostructures Signs Exclusive Relationship for the Israeli Market
Israel's BMT Systems & Components announced that that Wyoming, Pennsylvania's USM Aerostructures, Corp of Wyoming , Pennsylvania, has appointed BMT Systems as their exclusive representative in Israel and for all Israel based projects. USM Aerostructures Corp. specializes in the fabrication of structural and sheet metal aerospace components, as well as assembly and integration of aerospace modules. USM Aerostructures also services industrial requirements for pressing, stamping, punching and forming for a variety of applications. Ra'anana's BMT Systems is an independent distribution agency focusing on the defense industry. Clientele includes the Ministry of Defense; IDF - the Israel Defense Forces (e.g. Air Force, Computing Division, Technology & Logistics Divisions, Navy, Military Intelligence), Israeli defense industries and others. Based on years of direct personal experience, BMT has valuable personal connections with key decision-makers in these organizations. The agreement was facilitated by Atid, EDI (http://www.atid-edi.com), an Israel based consulting firm that serves as Pennsylvania's trade attaché in Israel and the Middle East. (BMT10.09)
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2.2 Fairfax County Chooses DS Apex Mergers to Work with Israeli Companies Interested in U.S. Expansion
The Fairfax County (Virginia USA) Economic Development Authority, which promotes Fairfax County as one of the world's best business locations, has chosen DS Apex Mergers & Acquisitions, an Israeli investment house/bank, as its representative to work with Israeli companies interested in expansion to the United States. DS Apex Mergers & Acquisitions will work with the FCEDA to establish relationships with Israeli companies to promote Fairfax County, located between Washington, D.C., and Washington Dulles International Airport, as a business location and technology hub. More than 360 foreign-owned companies, including almost 20 from Israel, have a presence in Fairfax County. In addition to Tel Aviv, the FCEDA's aggressive international outreach efforts include marketing offices in Bangalore, Frankfurt, London and Seoul. (FCEDA14.07)
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2.3 Israel Corp Achieves "Fortune" Global 500 Listing
Globes reported that Ofer Holdings Group subsidiary Israel Corporation is the only Israeli company to make the "Fortune" Global 500 for 2009. The companies are ranked by revenue in 2008; Israel Corp. had $19.8b revenue and a net profit of $320m, putting in 466th place. The company has 18,574 employees and $14.7b in assets. "Fortune" lists the company's business as "petroleum refining" "Fortune" also ranked Israel Corp. as the tenth fastest growing company in 2008 out of the Global 500 companies, with 81.5% growth compared with 2007. Royal Dutch Shell is the top ranked company, followed by ExxonMobil. (Globes 13.07)
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2.4 Electronic Control Security Announces Exclusive Distribution Agreement with Israel's El-Go Team
Clifton, New Jersey's Electronic Control Security has entered into an exclusive marketing, distribution and after market support agreement for the United States and its protectorates with El-Go Team to provide bollards, lift gates, barriers, tire shredders, traffic lights and signage that will integrate with the Company's new line of entry control products for vehicles and personnel at government and commercial facilities to address homeland security and critical infrastructure protection requirements. Even Yehuda's El-Go Team is a leading developer and manufacturer of security and access control systems for over 15 years. El-Go Team delivers "turn-key" solutions and maintenance for large institutions and armed forces around the world. Every product is designed with care and is tested by security experts to ensure its capabilities and specifications. ECSI is recognized as a global leader in perimeter security and an effective quality provider for both the Department of Defense and Homeland Security programs. (ECSI13.07)
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2.5 Nogacom Raises Capital to Support International Expansion & Development
Tel Aviv's Nogacom (http://www.nogacom.com), a leading provider of automated data classification software solutions for information management and information governance, announced that it has successfully closed a funding round of private investment from existing investors. The capital raised will fund growth and international expansion programs, as well as support the Company's strategic focus on product development in preparation for the next major release of its information management suite, due out in Q4/09. Nogacom also announced that it is recruiting employees for key Sales, R&D and Professional Services positions for its head offices in Israel and Germany. Nogacom's customers include leading financial institutions, retail, communications and technology companies. AccessLogic is an information access and management software solution for business users. With AccessLogic users no longer need to search for business information. AccessLogic automatically identifies, classifies and organizes data based on its business context. Now users simply select the information they need using their own business terms and AccessLogic automatically retrieves it from any application or data repository across the organization. (Nogacom 13.07)
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2.6 Elbit Systems to Establish Mission Planning Center for Israeli Air Forces Fighter Pilots
Elbit Systems was awarded a contract from the Israeli Ministry of Defense for the establishment of a mission planning center for the Israeli Air Force's (IAF) pilots of F-16C/D and F-16I fighter aircraft. The center will be operated through a PFI (Private Financing Initiative) concept, and will include, among others, a development phase as well as instruction and maintenance services for duration of 15 years. The project is valued at approximately $55m, subject to necessary approvals during the project. The new mission planning center marks a significant breakthrough in the operational training sector. The system enables training in various mission scenarios in varying operational zones and in the relevant threat environment of each zone, a new training capability which has not yet been available to the IAF. With its high quality operational training capabilities, the new center will allow the IAF to operate some of the training sorties onboard the trainers, instead of the fighter jets, thus allowing maximized use of existing resources. Haifa's Elbit Systems (http://www.elbitsystems.com) is an international defense electronics company engaged in a wide range of defense-related programs throughout the world. The Company, which includes Elbit Systems and its subsidiaries, operates in the areas of aerospace, land and naval systems, command, control, communications, computers, intelligence surveillance and reconnaissance (C4ISR), unmanned air vehicle (UAV) systems, advanced electro-optics, electro-optic space systems, EW suites, airborne warning systems, ELINT systems, data links and military communications systems and radios. (Elbit Systems 15.07)
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2.7 N-Viro International Announces Construction of Licensed N-Viro Soil Facility in Tel Aviv, Israel
Toledo, Ohio's N-Viro International Corp., an environmental and materials operating company that owns patented technologies to convert various types of waste into beneficial reuse products, including the renewable biofuel N-Viro Fuel and N-Viro Soil, has announced that construction has started on an all-new N-Viro Soil facility that will serve the Dan region of Israel, which includes Tel Aviv. The facility has lately received its permits and construction has commenced. It is believed that the facility can be operational in 2009. The facility will be owned and operated under a license by the Shafdan, the utility provider in the Dan region. N-Viro and its Israeli partner, CRM Military and Civilian Technologies, are both very pleased at reaching this important milestone. The N-Viro Processes are used for the recycling of wastewater biosolids from municipal wastewater treatment facilities. N-Viro Soil produced according to the N-Viro Process specifications is an "exceptional quality" Class A (Class AA in Florida) biosolid product meeting all regulatory standards. (N-Viro 15.07)
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3: REGIONAL PRIVATE SECTOR NEWS
3.1 Jordan Eyes Lucrative US Health-Care Market
Jordan, already established in the Middle East as a top health-care destination, is stepping up efforts to tap into the multibillion-dollar medical-tourism market with a campaign to lure US citizens weary of soaring health-care costs. The push, which includes a Web campaign and a visit by a group of US health-care specialists and insurers, is a key part of the country's strategy to develop new services and industries. Unlike many of its neighbors, Jordan lacks oil wealth and relies on tourism, worker remittances, foreign investments and aid for its revenue. Jordanian officials hope the medical-tourism industry will provide some sorely needed cash. With health costs climbing 8% each year in the US, experts say medical tourism has been drawing more Americans looking for anything from cardiac care to plastic surgery. Jordan already draws in Arabs from around the Middle East, as much for its medical care as its temperate climate. The World Bank ranked Jordan number one in the region as a medical-tourism destination, followed closely by Dubai and Abu Dhabi in the United Arab Emirates, and Israel. It said the kingdom ranked fifth in the world in terms of medical-tourism destinations. The country's medical tourism revenues in 2007 exceeded $1b., while more than 250,000 patients from 84 countries were treated here last year, according to a recent Private Hospitals Association study. The majority were medical tourists; others were vacationers who were ill or injured during their stay. Working in Jordan's are their English-speaking doctors, who are trained or affiliated with top US institutions such as the Mayo Clinic, Cleveland Clinic and Johns Hopkins. (JP14.07)
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3.2 $1 Billion Jordan Water Project Set To Start
Following the finalization of the funding for the $1 billion project to supply water to Northern Jordan by GAMA Energy, construction is expected to begin in July. GAMA Energy is a joint venture between GAMA Holding, a unit of global contractor GAMA and GE's GE Energy Financial Services. The Disi Water Conveyance Project includes construction of a 325-kilometer pipeline that will pump water from the Disi aquifer in Mudawarra to Jordan's most populous city, the capital of Amman. The investment will create jobs and promote private sector participation in Jordan's development. It is expected to supply Amman and surrounding areas with more than 100 million cubic meters of water a year. The use of water from the reservoir in Disi-Mudawarra started in the early 1980s for municipal and industrial purposes in the city of Aqaba. The Disi project is the largest privately financed water supply project in Jordan and the surrounding countries. GAMA Energy, based in Ankara, will invest approximately $190 million, the Ministry of Water and Irrigation of Jordan will provide a $300 million grant and the Overseas Private Investment Corporation of the US, the European Investment Bank (EIB) and Proparco of France will collectively provide $455 million in debt financing. The Disi Water Conveyance Project will account for approximately 6% of Jordan's total consumption projected in 2015. (TradeArabia 08.07)
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3.3 GM Sales in Jordan Drop 20% During 1st Half of 2009
Sales of General Motors (GM) cars in Jordan dropped by 20% during H1/09, much better than what agents in Jordan and the Middle East expected due to stagnation in the market. The general manager of Abu Khader Automotive, GM dealer in the Kingdom, said the demand is low on all types of cars and not only the GM brand. Stressing that the Abu Khader agency in Jordan has not been affected by the bankruptcy or the sale of most of GM's assets in the United States, he blamed financing for the lower sales. GM Middle East said that auto sales in general dropped by 21% in the region during the first quarter of 2009 compared to the same period of 2008, while GM sales in the region dropped by 19%. General Motors Middle East is a separate company from the one in the US and it is financially independent; cars for the region are manufactured in various factories across the world such as Australia, South America and Asia. The operations of the company in the Kingdom continued without interruptions following the bankruptcy news. (JT10.07)
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3.4 Defenshield President Visits Iraq, Plans Return Trip Soon
East Syracuse, N.Y.'s Defenshield President Collins White recently traveled to Iraq for meetings with several Iraqi ministers regarding the equipment needs of the Iraqi Army as it establishes its own public security infrastructure. Meetings were held with Raid Fahmi Jahid -- Minister of Science and Technology, Faruq Abd Al-Qadir - Minister of Telecommunications, Fawzi Hariri - Minister of Industry and Minerals, and Dr. Sami Al-Araji -- Chairman of the Iraqi National Investment Commission to discuss the feasibility of establishing assembly facilities in Iraq for Defenshield product lines. Conversations will continue later this month when White returns to meet with additional security organizations and industry representatives. In Bagdad, White stayed at a U.S. Department of Defense compound within the International Zone. While touring the area, several Defenshield Mobile Defensive Fighting Positions (MDFPs) were seen being used at Camp Victory for physical security and anti-terror operations in an area charged with monitoring all personnel and materials activity in and out of the former Bagdad International Airport. Commanders in the area also indicated that MDFPs are in widespread use in the northern territories of the country. Defenshield Inc. is a veteran-owned, SBA-certified small business specializing in armor systems for law enforcement, public security, homeland defense and the military. The Defenshield product line offers the highest level of security, defeating armor-piercing weaponry, assault and sniper rifles, as well as handgun and shotgun rounds. (Defenshield 14.07)
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3.5 American Airlines & Etihad Airways Announce Codeshare Agreement
American Airlines and Etihad Airways, the national airline of the United Arab Emirates (UAE), have announced a new codeshare agreement which will pave the way for closer commercial cooperation between the two airlines (subject to government approval). The codeshare agreement will further extend each partner airlines' global network and offer customers a smoother, more convenient travel experience when travelling between the United States and the UAE. Under the new arrangement, American Airlines will place its 'AA' code on services operated by Etihad Airways between New York (JFK), Chicago (ORD), Paris (CDG), Dublin, Frankfurt, Manchester and Milan (MXP) to and from Abu Dhabi. Etihad Airways will place its 'EY' code on a number of trans-Atlantic services operated by American between the United States and Europe, plus flights between New York (JFK) and Washington (DCA), Los Angeles and San Francisco as well as flights between Chicago (ORD) and Washington (DCA), Los Angeles, San Francisco, and Houston (IAH). Subject to regulatory approval, the new codeshare agreement is expected to coincide with the launch by Etihad of its new service to Chicago at the beginning of September. Once the codeshare agreement is in effect, customers transferring between the two carriers can purchase a single ticket for their journey and enjoy the convenience of being able to check their luggage to their ultimate destination. (AA09.07)
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3.6 Saudi & UAE Steel Imports To Drop in 2009
Steel imports to Saudi Arabia and UAE are expected to drop dramatically this year as the two Arab countries' local industries come closer to meeting demand, it was reported. A decline in demand for steel as a construction boom in the Gulf came to a halt was also expected to hit imports of the metal as the global financial crisis continued to weigh on the property sector. Last year, Saudi Arabia imported just under 1 million tonnes of steel while demand for steel is expected to drop to 5.1 million tonnes from 7.2 million in 2008. There are no official bodies in the Gulf region that publish monthly statistics on steel supply and demand levels and the majority of data is collected from traders in the sector. In the UAE, steel imports in June stood at 100,000 tonnes, or a quarter of their level in the corresponding period in 2008, steel traders in the Gulf region. Increased production mainly from state-run Emirates Steel Industries and other manufacturers in the northern region of the UAE did make a contribution to this trend. (BI-ME13.07)
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3.7 American Science & Engineering Receives $8.6 Million Follow-on Order from Abu Dhabi Customs
Billerica, Massachusetts' American Science and Engineering, Inc. (AS&E), a leader in X-ray detection technology, has received a $8.6 million follow-on order from Abu Dhabi Customs Administration for multiple Z Portal X-ray screening systems. The Z Portal systems will be used to scan vehicles at a strategic border checkpoint in Abu Dhabi, the largest emirate of the United Arab Emirates. For maximum threat detection capability, the Z Portal systems will be configured with three Z Backscatter imaging modules for left, right, and top-down imaging of the vehicle. The Z Portal system is the most comprehensive screening system available with multi-view, drive-through screening for left, right, and top-down imaging of cars, vans, trucks, and their cargo. (AS&E09.07)
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3.8 T3 Motion Secures $51 Million Exclusive Distributor Contract for Saudi Arabia
California's T3 Motion announced a three-year contract valued at approximately $51 million to supply the T3 i-Series electric stand-up vehicle (ESV), accessories, and servicing with a distribution company based in Saudi Arabia. Interest from the Middle East region in the T3 i-Series personal mobility vehicles have grown dramatically since the T3 Series was originally launched in October 2006. In the UAE, T3 i-Series vehicles are already in use by the Abu Dhabi Police who proudly announced their acquisition of T3 i-Series ESVs at the recent IDEX trade show held in Abu Dhabi, U.A.E. Reaching speeds up to 15 m.p.h. [25 k.p.h.] and designed with the input of law enforcement and security industry professionals, the T3 i-Series feature a zero-degree turning radius and compact design--perfect for maneuvering through crowds and tight spaces. Also unique to the T3 i-Series is the most user-friendly intuitive operation of its kind, giving the rider a sense of superior stability. T3 Motion revolutionized the world of personal mobility with the introduction of their flagship T3 Series law enforcement electric stand-up vehicles. T3 Motion is dedicated to raising the bar on environmental standards and law enforcement, government/military, and security capabilities in personal mobility technology. (T3 Motion 09.07)
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3.9 Suez Canal Revenues Up In June
Suez Canal revenues totaled $348.2 million in June, up from $342.4 million the month before, according to results released on 8 July. The latest figures from the Suez Canal Authority indicate a slight recovery from the dismal numbers it posted over much of the first half of the year. This improvement signals a broader recovery for the canal, which hit its low in February, bringing in only $301.8 million. The recovery of the canal has been important for the Egyptian government, which plans to run a deficit this year, until the global economy gets back on track. Canal revenues are a critical contribution to the state's overall revenue. Despite signs that the canal's monthly revenue may be on an upswing, the numbers indicate that the waterway is operating at revenue levels far beneath 2008. Revenues in June were down 26.1% over numbers a year earlier - arguably a more significant statistic given the cyclical nature of the canal. Still, it's an improvement on the 28.6% year-on-year decline that occurred in May. Despite the decline, revenue for the 2008/09 fiscal year flirted with record territory, establishing the second highest earning year in the canal's history. Revenue for the past 12 months hit $4.74 billion, only surpassed by the previous year's revenue of $5.11 billion. Despite the woes of the past year, the annual revenue for the fiscal year beat 2006/07 numbers by more than half a billion dollars. Revenues peaked in 2007-2008, because record energy prices meant that using alternative routes was no longer feasible. When energy prices tumbled and the economy slowed over the past year the government took steps to retain the sort of vessels that were forced to plow the canal's waters when energy prices were high.
Despite an improvement in revenue, the incentives to keep ships running through the canal appear to be yielding mixed results. A total of 1,401 ships passed through the canal in June, as opposed to 1,468 in May. There was an 8.1% drop in the number of ships passing through between fiscal year 2007/08 and 2008/09. Current efforts to deepen the canal, though, may help reverse course on the sliding number of ships that pass through each month. The Canal Authority is undertaking a project to deepen the canal from 62 feet to 66 feet, a project it says will be finished by the end of 2009. However, plans to deepen the canal to 72 feet were scrapped early on because it would make room for only a small percentage of more ships. (DNE08.07)
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3.10 Egypt's Convergence, Broadband & Internet Markets
Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "Egypt - Convergence, Broadband & Internet Markets" report to their offering. Supported by forward-looking government programs, Egypt has become one of the leading Internet markets in Africa in terms of users, international bandwidth and services offered. The country is well connected by several international submarine fibre optic cables in combination with a national fibre backbone infrastructure, and the international bandwidth market has been liberalised. The entire sector is highly competitive with more than 200 Internet and data service providers, which has led to some of the lowest prices for ADSL services on the continent and broadband packages with up to 24Mb/s delivered to residential households. VoIP Internet telephony has been liberalised, and several companies are rolling out next-generation networks to provide converged IP-based voice and data services. The country's three mobile network operators are entering the market with third-generation (3G) mobile broadband systems, and each of them holds a controlling stake in a leading data and Internet service provider: Orascom/Mobinil (LINKdotNET), Vodafone (Raya Telecom) and Etisalat (EgyNet). (R&M15.07)
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3.11 GE Transportation & Egyptian National Railways Commission 80 Evolution Locomotives
Erie, Pennsylvania's GE Transportation and the Egyptian National Railways (ENR) announced that the 80th and final Evolution Series locomotive has been commissioned and was officially released to ENR at the end of June. The commissioning process prepares locomotives to be released for revenue service. The locomotives have been successfully hauling freight and transporting passengers over the past several months and have logged tens of thousands of kilometers and transported hundreds of thousands of passengers. This is the ENR's first order of GE's Evolution Series, the most technologically advanced diesel electric, heavy-haul locomotive in the world. The Evolution Series locomotive, the first AC locomotive used by ENR, is an industry breakthrough that delivers modern and efficient AC locomotive technology, replacing the older, less fuel-efficient DC technology. AC traction, for instance, provides these locomotives with higher pulling capability and less wheel slippage thanks to individual axle adhesion control. The Evolution Series locomotives are the most powerful locomotives in ENR fleet and will transport almost 30% more passengers and 60% more wagons of freight compared to the current locomotives.
GE has been present in Egypt since 1974. Through the years, GE has partnered with government entities and private businesses on projects across the country in various sectors such as power, healthcare and transportation. Today, there are more than 100 employees working for GE in Egypt. GE is committed to remaining a long-term partner in the economic development of the country. (GE13.07)
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3.12 ISV Deploys GO-Global to Web-enable Laboratory Application
Santa Cruz, California's GraphOn Corporation, a leading worldwide developer of application publishing and Web-enabling software solutions, announced that Infomed C.S., a leading independent software vendor (ISV) headquartered in Athens, Greece, has selected GraphOn's GO-Global software to provide Web-enabled, thin-client access to its sLis software application, a Windows-based information system for medical analysis laboratories. Favored by ISVs around the world, GO-Global is a fast, affordable, and secure application delivery solution that instantly provides thin-client or Web-enabled access to server-based Windows applications from any remote platform and operating system, including Mac OS X, UNIX, Linux, Windows, Windows Mobile, and Pocket PC. With GO-Global, there is no need for ISVs to modify existing applications for the Web or deploy complex infrastructure such as Microsoft Windows Terminal Server or Citrix. (GraphOn13.07)
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4: ISRAEL MACRO-DEVELOPMENTS
4.1 Tel Aviv Will Require Pollution Survey for Building Permits
A new master plan, which comes into effect next month, is expected to signal a revolution in checking and handling polluted ground. Under the plan formulated by the Ministry of Environmental Protection and the Ministry of Interior's Planning Administration, all applicants for a building permit in the Tel Aviv District will be required to conduct land surveys, to find out if it is polluted and represents an environmental or health threat. The pilot project which is being implemented in the central district will gradually be extended to the entire country. A senior official in the Ministry of Environmental Protection told Globes that up until today there have been cases where the need to check the ground was told to the developer two days before receipt of the building permit thus delaying the project. Now every developer wanting to build will must conduct checks in the project's planning stage. The contractor will be responsible for dealing with any pollution that is found. (Globes 21.07)
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4.2 Noble Energy Announces Successful Tamar Appraisal in Israel and Increases Resource Size
Noble Energy announced results from its Tamar appraisal well, known as Tamar-2, offshore Israel in the Matan license. At a total depth of 16,880 feet and in 5,530 feet of water, the well is located approximately 3.5 miles northeast of the original discovery, Tamar-1. The results of Tamar-2 have considerably reduced the uncertainty in previous resource estimates for the structure. Accordingly, the gross mean resource estimate for Tamar has been raised to 6.3 trillion cubic feet, which represents a 26% increase from the estimate made following the Tamar-1 drilling and double the original pre-drill resource estimate for the prospect. In order to further confirm Tamar drilling results, a reservoir consulting firm has been retained to prepare an independent assessment of the discovered natural gas resources. Noble Energy operates the Matan license with a 36% working interest. Other interest owners in the well are Isramco Negev 2 with 28.75%, Delek Drilling with 15.625%, Avner Oil Exploration with 15.625% and Dor Gas Exploration with the remaining 4%. Houston, Texas' Noble Energy is a leading independent energy company engaged in worldwide oil and gas exploration and production. (Noble07.07)
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4.3 Israel & Dominican Republic to Improve Business Ties
Dominican Republic President Fernandez, accompanied by a delegation of some 30 diplomats and businessmen, was in Israel and met with Foreign Ministry officials and local business leaders to discuss ways the two countries can increase trade and commerce. Fernandez cited his country's firm relationship and support for Israel since 1948. The potential for improved business ties was a "win-win opportunity within our reach," he said. Closer cooperation could lead to a "radical transformation" of the Dominican Republic's economy and business pursuits, by making the "economy more diversified and competitive" through advanced technologies and partnerships, he added. Trade between Israel and the Dominican Republic was up 5% in 2008, according to the Israel Export and International Cooperation Institute. Some 100 Israeli companies were represented at the meeting on Tuesday, the institute said. The Foreign Ministry wants local companies to invest in the Dominican Republic and foster better relations with Latin American countries. (JP16.07)
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5: ARAB STATE & PAKISTANI DEVELOPMENTS
5.1 Jordan Ranks 44 in ICT Competitiveness Report
Jordan ranked 44 among 127 in the Information and Communications Technology Competitiveness report and 76 among 154 countries in the Communications Technology Development Index. The results reflect the extent of progress and openness Jordan is witnessing, adding the mobile services have widely spread as the number of subscribers jumped to 5.5 million compared to 389,000 in 2000. In order to keep pace with development in the IT sector, Jordan drew up the 2007 - 2011 strategic plan for the information and communication technology sector to ensure that internet use would reach 50%, increase growth of the sector from $1.5 billion to $3 billion and increase the number of employees from 17,000 to 35,000 by the end of 2011. (Petra08.07)
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5.2 Jordan's Imports of Crude Oil Dropped By 64.7% During First Five Months of 2009
Jordan's imports of crude oil during the first five months of 2009 dropped by 64.7% to stand at JD312m compared to JD884.4m during the same period in 2008. In May only, the value of imported crude oil declined by 78.5% to stand at JD43.6m compared to JD202.6m during the same month last year, figures on external trade released by the Department of Statistics (DoS). Jordan's imports of diesel during January-May period went down by 47.2% to JD63m compared to JD119.4m during the same period in 2008, while the country's gas imports stood at JD44.2m during the first five months of this year compared to JD64m. The Kingdom's imports of petrol during the January-May period stood at JD20m compared to JD28.4m during the same period in 2008, according to the figures, which showed that Jordan's imports of natural gas rose by 25.8% during the first five months of this year as it stood at JD112.8m compared to JD89.6m during the same period last year. (Petra14.07)
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5.3 Jordan & Iraq Sign Air Transport MoU
On 21 July, Jordan's Civil Aviation Regulatory Commission CARC and the Iraqi Civil Aviation Authority signed a Memo of Understanding MoU which would open wider scopes of cooperation in air transport between the two neighbors. Under the document, the two sides would operate passenger and cargo flights without specifying capacity or type of aircraft at a weekly rate of seven passenger and three cargo flights between Amman and Baghdad for each carrier. The agreement also allows for four weekly passenger and two cargo flights between Amman and Basra, four weekly passenger flights between Amman and Suleimaniyeh plus eight passenger flights between Amman and Irbil, two passenger and two freight flights between Amman and Mosul and three passenger flights between Amman and Najaf. The King Hussein International Airport in Aqaba had introduced the open skies policy, giving concerned Iraqi institutions the right to use the airport for transport purposes. Under the MoU, the two countries would assign two carriers each, as Jordan had named Royal Jordanian RJ and the Royal Falcon Company as its national carriers, while Iraq had named Iraqi Airways and "any other carrier for the purpose of implementing this memo." The memo stipulates that Jordan offer the required facilities to concerned Iraqi air transport institutions and deregulate issuing visas for Iraqi travelers. (Petra21.07)
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5.4 Gulf Air to Resume Iraqi Service
On 15 July, Bahrain's national carrier Gulf Air announced it would resume flights to Iraq, 33 years after grounding services to the country. Following talks between the Bahrani and Iraqi governments recently, direct services are set to operate between Bahrain and four cities in Iraq, with seven flights a week to Baghdad and 12 to Iraq's holy city of Najaf. Flights to Baghdad will start in September and services to Najaf will begin pending further work on its airport,. Demand, particularly from Bahrani nationals, has put pressure on the carrier to resume services to Iraq. According to Iraqi officials around 25,000 visit visas were issued to Bahrainis last year. Gulf Air first started flying to Iraq's capital Baghdad in 1976. The airline was founded in 1950 and is owned by the $10bn Bahrain Mumtalakat Holding company, the investment arm of the Bahraini government. (GN16.07)
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5.5 UAE Approves New $272 Million Rail Company
On 8 July, the UAE government approved a federal law to set up a $272m railway company. The Etihad Trains Company, which would be 100% owned by the government, would transport goods and passengers and would invest in a countrywide rail network that would link the emirates. Run by at least seven board members, the new company would specialize in leasing, owning and selling trains. The outgoing boss of UK rail and bus group National Express is expected to act as chief executive of Etihad Trains. (AB08.07)
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5.6 UAE Cities Race Up 'Most Expensive' List
Dubai and Abu Dhabi have both raced up the rankings in the latest list showing the world's most expensive places to live for expats. While the vast majority of European cities have fallen in the ranking, most Middle Eastern cities have experienced a reverse trend, the Mercer Cost of Living Survey showed. Both Dubai and Abu Dhabi have risen significantly in the ranking, moving from 52nd to 20th and 65th to 26th respectively. Report authors said this was mainly due to the UAE dirham being fixed to the US dollar. Tel Aviv remained the most expensive city in the Middle East, although it is the only one in the region to move down in the world ranking, from 14th to 17th. The cost of living for expats based elsewhere in the GCC also rose with Kuwait City moving from 94th to 77th, Manama from 112th to 82nd, and Riyadh from 119th to 90th. Jeddah was the least expensive city in the region ranking 109th from 126th. (AB07.07)
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5.7 Oman Economic Growth To Grow At Slower Pace
The economy of Oman, the largest Gulf Arab oil producer that isn't a member of OPEC, will grow at a slower pace this year because of lower crude prices, the country's central bank said in its annual report. It said that the slump in oil prices since Q4/08 and weak international demand for goods will contribute to significant decline in Oman's economic growth. The bank does feel that the real GDP growth in Oman is likely to remain in the positive territory in 2009 due to sustained domestic demand and continued capital expenditure. The government expects oil production to run at a daily rate of 805,000 barrels this year and calculated its budget on an average price of $45 a barrel. Oman last year produced crude oil at a rate of 728,000 bpd, according to BP. (BI-ME 20.07)
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5.8 Egypt's Growth May Slow Down to 3.5% in 2009
Egypt's economic growth for fiscal year 2009/2010 could slow down to 3.5%, Cairo investment bank HC securities predicted in a report released on 14 July. The report's prediction of a drop to 3.5% growth rate is optimistic compared to research done by other local analysts. Cairo investment bank EFG-Hermes, for example, recently forecasted a 3.1% growth rate for fiscal year 2009/2010. According to the report, the “second round” effects of the financial crisis have yet to fully impact Egypt in the areas of foreign direct investment (FDI), shrinking export markets and currency depreciation. Continued slowdown in these areas will negatively impact the country's economy well into the coming fiscal year. The effects of a global slowdown will be most acutely felt in the areas of tourism, Suez Canal revenues, remittances from Egyptian expatriate workers and export markets. While economic links with the developed work are vital to Egypt's continued growth, dependence on external economic factors is a negative area demanding reforms, says the report. The report cites FDI and currency depreciation as major areas of concern for the coming fiscal year. According to the report, FDI has peaked for this economic cycle, and inflows of foreign investment can be expected to slow down throughout the current fiscal year, due to budget constraints faced by international corporations. The author predicts that it could take a minimum of two years for FDI levels in Egypt's non-oil sectors to regain momentum. (DNE16.07)
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5.9 Egypt Oil Demand Expected to Increase by 14% by 2013
Oil demand in Egypt is expected to rise 14% by 2013 from an estimated 671,000 barrels per day (bpd) in 2008 to 771,000 bpd, according to a report. The latest Egypt Oil & Gas report forecasts that the country will account for 18.90% of Africa's oil demand by 2013, while providing 6.03% of the supply. In 2007, Egypt was producing 664 bpd down from its highest record of 950 bpd in 1995, according to the Energy Information Administration (EAI), the US government's official energy statistics. The sharp decline in Egypt's car market in 2009 is a step in the right direction. Egypt consumed an estimated 30.28% of the region's gas in 2008, and its market share is expected to be 23.46% by 2013. While it contributed an estimated 26.03% to regional gas production in 2008, by 2013 it is expected to account for 23.87% of supply. Lately there has been debate on the subsidies allocated to petroleum and gas products, with some pushing for redirecting the gas subsidies to education and the healthcare. (EOG13.07)
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5.10 Egypt's Inflation Drops To 9.9%
In June Egypt's urban consumer inflation dropped to 9.9% in June, down from 10.2% in May, an 18-month low, according to figures released by the Central Authority for Public Mobilization and Statistics (CAPMAS) on 9 July. The drop came despite expectations that inflation pressure would continue to rise into H2/09 due to the summer holidays and the upcoming month of Ramadan. Though inflation levels have been steadily dropping in recent months, the consumer price index (CPI) has seen a 10% rise year-on-year for June from 121.5 in June 2008, to 133.6%. This increase was in line with the expectations of analysts at EFG-Hermes, CI Capital and Beltone Financial, who had predicted an expansion of CPI by 9.5 to 9.9%. The CPI rose 0.4% from May, due to an increase in the prices of food products, recreation services and miscellaneous items by 0.5%, 4.6% and 0.1% respectively, though the prices of the items declined year-on-year for May. Monthly changes in CPI levels peaked at 1.7% in April before declining again to current rates. (DNE09.07)
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5.11 ExxonMobil Commences Drilling Libya's First Deepwater Well
On 16 July, ExxonMobil Exploration Company announced that its affiliate, ExxonMobil Libya Limited, has started drilling the first deepwater exploration well in Libya. The A1-20/3 well is being drilled in Contract Area 20 (CA 20) located offshore in the Sirte Basin, northeast of the city of Misrata, in the Libyan Mediterranean Sea. The rig, contracted from Noble Africa Limited and named the Noble Homer Ferrington, is capable of operating in water depths up to 7,200 feet (2,195 meters), and can drill to a depth of 30,000 feet (9,144 meters). It is designed for high efficiency and safety, and is able to operate in many global deepwater environments. Elsewhere in Libya, ExxonMobil Libya Limited has completed two 3D seismic surveys in offshore Contract Areas 20 and 21, and three 2D seismic surveys in offshore Contract Areas 44, 20 and 21. (Exxon16.07)
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6: TURKISH, CYPRIOT, GREEK & BULGARIAN DEVELOPMENTS
6.1 Cypriot Unemployment Shows Sharp Increase
The number of Cyprus' unemployed has jumped by 60% monthly comparisons with last year show. According to the Statistical Services there were 59% more people out of work in June than in the same month last year. On June 30, 2008 the unemployment figure stood at 10,509, while on the corresponding day this year it had jumped to 16,740. In May the figure was 15,158, while the previous year it had been 9,253. Government figures show the unemployment level now stands at 4%. The sectors that received the biggest blows since June 2008 were construction at 1,806 and trade-related services at 1,119. However, while the rate of increase is still positive, it is no way near the huge spikes recorded in the final months of last year. The government's figure of 4% unemployed is rather lower than the 5.3% given by a Eurostat report. In comparison with the rest of the EU, Cyprus was fairing the economic crisis and unemployment surge better than others, with the figure of 5.3% unemployment standing at third best in Europe after Holland and Austria. In comparison, at the bleaker end of the table was Estonia with 15.6%, Lithuania at 16.3% and Spain at a record 18.7%. (Cyprus Mail 04.07)
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6.2 Cyprus Only Eurozone Member With Positive Growth In Q1 2009
Cyprus is the only country in the eurozone to have seen positive growth continue in Q1/09, the European Commission's DG for Employment, Social Affairs and Equal Opportunities July 2009 monthly monitor on the EU employment situation and social outlook has said. It added that “even though Cyprus has so far been the only country in the euro area to escape recession, according to the IMF the unemployment rate has increased since September 2008 to reach 5.3% in May 2009, slightly up year-on-year.” “However, this rate remains one of the lowest recorded in the EU, while the employment rate, at 69.5%, remain relatively high,” the July 2009 monthly monitor said, adding that according to the District Labor Offices in June 2009 registered unemployment increased by 1.4% on the previous month and amounted to 17,900. According to the report, Cyprus' GDP has remained relatively stable over the last few months. After posting growth of 3.7% in 2008, Cyprus is the only country in the euro area to have seen positive growth continue in Q1/09. It is also noted that according to the latest Commission forecast, it is even expected to remain on a growth trajectory in 2009 and 2010, however at a more moderate pace than in the previous years: +0.3% and +0.7% respectively. The IMF predicts it might even grow by 2.1% in 2010, while the Finance Ministry already sees one% growth for 2009. (CNA13.07)
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6.3 Cyprus Blocking Turkey on EU Energy Chapter
On 20 July, Cyprus said it would keep up its block on Turkey opening its energy chapter with the European Union, accusing its neighbor of being a "bully" in a dispute with the island over oil exploration. Cyprus, which joined the EU in 2004, is at loggerheads with Turkey over its long-running division and over plans the island has to start hydrocarbons exploration in the east Mediterranean. Turkey and the breakaway Turkish Cypriot state in north Cyprus say Greek Cypriots have no authority to explore for oil or gas. Cyprus has been split between its ethnic Greek Cypriot and Turkish Cypriot communities since a Turkish invasion in 1974 triggered by a brief Greek-inspired coup, creating tensions between NATO allies Greece and Turkey. Reunification talks started in September 2008 with no indication so far of a breakthrough that might end a major stumbling block in Turkey's bid to join the EU. The internationally recognized Greek Cypriot government represents Cyprus in the EU, where Turkish membership talks have been blocked in several areas because of the island's division. Cyprus had last year said Turkish warships harassed vessels contracted by the island to carry out research off the island's southern rim. It has divided the sea to its south and south-west into exploration blocks and plans to open bids for oil and gas exploration by early 2010, conducting one round in 2007. (FM20.07)
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6.4 Greek Industry Indicates Recession
Virtually all industry sectors in Greece took a battering in May, according to the National Statistical Service. From basic metals to electronics and from machinery to chemicals and apparel, the drop was across the board. Greek industry is in free fall, data related to turnover and new orders have shown, vindicating forecasts that the economy is very close to, if not already in, recession. National Statistical Service (NSS) data showed on 20 July that the country's industrial turnover declined by 30.7% in May, while prospects for the coming months are exceptionally negative, as new orders in May posted a tremendous drop of 37.7%. The fall in turnover and more significantly in new orders will have a particularly negative impact on growth and the unemployment rate in the coming period.
Unemployment soared to 9.4% in April 2009, compared to 7.7% in the same month in 2008. Almost one in every three jobs created in the March-May period was part-time work, while about 5,900 jobs were reduced from full-time to part-time as companies try to offset the drop in sales with a reduction of staff outlays. Virtually all industry sectors took a battering in May, according to the NSS. From basic metals (down 54.2%) to electronics (37.3%) and from machinery (32.2%) to chemicals (29.6%) and apparel (28%), the drop was across the board. Only the pharmaceutical sector posted some growth (up 1.7%). The drop in turnover by 30.7% may well have been affected by the decline in international fuel prices but this is not the only reason behind the drop, as all sectors are showing signs of the crisis. Manufacturing saw turnover shrink by 30.9%, mostly due to the fall in demand for textiles (down 28.8%), oil and coal products (50.5%), basic metals (42.9%) and electrical equipment (39.6%). The turnover of products on the domestic market fell by 26.5%, while that for exported products shrank by 40.7%. May has also been the 13th consecutive month of decline for industrial production, which fell by 7.2%. In total, it has contracted by 8.7% in the first five months of the year compared to 2008. This makes for a very tough current year, which seems to indicate recession, at least for the duration of 2009. (Ekathimerini21.07)
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6.5 Greece's EYATH Stake Set To Go Up For Sale
The Greek government will launch a tender to sell a minority stake in the Thessaloniki Water Supply and Sewage Company (EYATH) to a strategic investor as part of an effort to raise 1b euros in privatization revenue that will go toward trimming public debt. A joint ministerial privatization committee approved the sale of the minority stake in EYATH, in which the government holds 74%, via an international tender. The Greek government intends to hold onto 51% of the company whose shares are listed on the Athens bourse. France's Suez Environnement holds 5.01% of EYATH, which has a market capitalization of €258.4m. Revenues from Greece's privatization agenda, estimated by the economy ministry to reach about €1b this year, will go toward narrowing public debt, the second highest in the eurozone after Italy. The news follows comments from a senior Suez Environnement official recently, saying that the company is in close talks with Greek construction group Ellaktor concerning a possible joint bid for the stake but will wait to see the final terms of the sale. The Greek government said it intends to retain the right to determine EYATH's rates policy. (Ekathimerini14.07)
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6.6 Greece & Italy To Explore Reverse Gas Flow
Greece and Italy agreed to study the feasibility of upgrading a planned undersea pipeline to send natural gas in both directions. The agreement followed meetings between Greek Development Minister Hatzidakis, Italian Economic Development Minister Scajola and executives from Milan-based Edison SpA. Hatzidakis was in Milan to attend a conference. Last year, Edison and Greek gas monopoly DEPA agreed to set up a company to build and operate the Neptune pipeline, bringing gas from the Caspian Sea region to Italy through Greece and Turkey. The partners will now look at the technical aspects of having gas flow from Italy to Greece as well, according to the statement. (Bloomberg21.07)
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6.7 Bulgaria Inflation Slows Down to 3.7% in June
Bulgarian consumer price inflation eased to 3.7% year-on-year in June from 3.9% a month earlier, mainly due to a drop in food prices, statistics office data showed on 20 July. On a monthly basis, consumer prices fell 0.4% after falling 0.3% in May, the data showed. In the first six months of the year, consumer prices climbed 5.1% compared to last year. Food prices in June fell 2.3% on a monthly basis due to a drop in prices of vegetables and meat, while non-food prices went up by 1.1 % on the month mainly due to an increase in tobacco product prices. Service prices increased by 0.3%. This is the twelfth month in a row that Bulgaria's inflation rate registers a drop on an annual basis and the second consecutive month that sees a deflation on a monthly basis. Meanwhile, the harmonized index of consumer prices rose 2.6% year-on-year in June compared to a 3% rise in May. Month-on-month, the HICP was up 0.1%, after remaining flat in May. The outgoing Socialist-led government's end-year target for consumer price growth has been set at 4%, while the central bank sees annual inflation at 2.5% at end-2009. The International Monetary Fund expects inflation to fall to 1.5%. High inflation has been one of the key obstacles for the adoption of the European single currency in Bulgaria, which currently operates in currency board regime and the lev is pegged to the euro. Bulgaria's gross domestic product (GDP) has contracted by 3.5% in Q1/09 on an annual basis, the first time that the country's GDP marked a drop year-on-year since the financial and economic crisis in 1997. (Novinite13.07)
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6.8 IMF Says Bulgaria Economy Faces Head-Spinning Decline
The head of IMF Mission to Bulgaria said that the latest forecasts are much gloomier than the figures previously published. The IMF expects the Bulgarian economy to shrink by 7% in 2009 and another 2.5% the next year. The latest forecasts beat considerably the figures previously published and come amid new analyses for the world economy. Bulgaria, the European Union's poorest member, has already entered recession with its economy shrinking 5% from January to March and contracting 1.6% in Q4/08 on a quarterly basis. Bulgaria's gross domestic product (GDP) contracted by 3.5% in Q1/09 on an annual basis, the first time that the country's GDP marked a drop year-on-year since the financial and economic crisis in 1997. Bulgaria currently operates in currency board regime and the lev is pegged to the euro. The opposition party of Sofia Mayor Boyko Borissov, which won by far the most votes in the recent general elections, advocates taking a loan from the IMF and World Bank, similar to those given to Latvia, Romania, Hungary and Ukraine, to support Bulgaria's currency peg to the euro, a move the defeated Socialist-led government rejected. Economists have warned that Bulgaria's next government faces a deepening recession and an imminent loan agreement with the International Monetary Fund. (Novinite09.07)
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7: GENERAL NEWS AND INTEREST
*ISRAEL:
7.1 Tisha B'Av to Be Observed
This coming 29/30 July, Tisha B'Av, the Fast of the Ninth of Av, will be observed in Israel and around the world. It is a day of mourning to commemorate the many tragedies that have befallen the Jewish people, many of which coincidentally have occurred on the ninth of Av. Tisha B'Av means "the ninth (day) of Av." Tisha B'Av primarily commemorates the destruction of the first and second Temples in Jerusalem, both of which were destroyed on the ninth of Av (the first by the Babylonians in 586 B.C.E.; the second by the Romans in 70 C.E.). Although this holiday is primarily meant to commemorate the destruction of the Temple, it is appropriate to consider on this day the many other tragedies of the Jewish people, many of which occurred on this day, most notably the expulsion of the Jews from Spain in 1492.
Tisha B'Av is the culmination of a three week period of increasing mourning, beginning with the fast of the 17th of Tammuz, which commemorates the first breach in the walls of Jerusalem, before the First Temple was destroyed. During this three week period, weddings and other parties are not permitted, and people refrain from cutting their hair. From the first to the ninth of Av, it is customary to refrain from eating meat or drinking wine (except on the Sabbath) and from wearing new clothing.
The restrictions on Tisha B'Av are similar to those on Yom Kippur: to refrain from eating and drinking (even water), washing, bathing, shaving or wearing cosmetics, wearing leather shoes and engaging in sexual relations. There is also a prohibition to refrain from studying Torah, save for those sections relating to Jerusalem's destruction. Work in the ordinary sense of the word is also restricted. People who are ill need not fast on this day. Many of the traditional mourning practices are observed: people refrain from smiles, laughter and idle conversation, and sit on low stools. In synagogue, the book of Lamentations is read and mourning prayers are recited. The ark (cabinet where the Torah is kept) is draped in black.
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*REGIONAL:
7.2 Turkey Smoke Ban Extends To Bars
Turkey has extended an existing ban on smoking in public places to all bars, cafes and restaurants. The ban has come into force despite opposition from some bar and cafe owners who fear losing business. The move comes after the government banned smoking from most enclosed public spaces in May last year in an effort to improve the nation's health. Turkey has more than 20 million smokers but polls suggest 95% of people support the ban. Anyone caught lighting up in a designated smoke-free area faces a fine of 69 liras while bar owners who fail to enforce the ban could be fined from 560 liras for a first offence up to 5,600 liras. Local authorities have hired thousands of extra staff to track down smokers and impose the fines. A no smoking rule has been in place for the past 15 months in government offices, workplaces, shopping malls, schools and hospitals. All forms of public transport, including trains, taxis and ferries, are also affected but there are exemptions for special zones in psychiatric hospitals and prisons. (Xing19.07)
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7.3 Cyprus Votes For Smoking Ban
The Cypriot House plenary, after a long debate, approved on 9 July by majority vote a new law banning smoking completely in all closed public places. The law is set to come into effect on January 1, 2010. Out of the 31 MPs who took part in the vote, 27 voted for the proposed bill to ban smoking, 3 voted against while there was 1 abstention. The bill had been drawn up and submitted by the main opposition party, the Democratic Rally. Smoking is allowed only in open and outside areas. The law provides for a fine for those who violate its provisions but no prison sentence. In particular, the law provides for no more than €1,000 as penalty for not posting a sign indicating that smoking is not allowed in a specific area, while whoever violates the provisions of the law as a smoker or owner of an establishment, he/she will have to pay a fine of no more than €2,000. (FM10.07)
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7.4 Bulgaria Election Winner Opts for Individual Approach to Partners
GERB party, winner in the recent general elections, said it will sign three separate memorandums in an attempt to form a minority government. Three separate memorandums with the conservative Law, Order and Justice (RZS), the nationalist Ataka and the right-wing Blue Coalition will be signed, Deputy Parliament Speaker Lachezar Ivanov announced on 17 July. Bulgaria's Blue coalition, which brings together the two biggest right-wing parties, said earlier in the day they will not sign the memorandum for political partnership offered by election winner GERB in a bid to secure support for its minority government. This emerged following talks between the leadership of Democrats for Strong Bulgaria and the Union of Democratic Forces. The rightists, however, stressed that they will support Bulgaria's new government when it is put to the vote in parliament, most probably on July 27. Meanwhile the Order, Law and Justice Party (RZS) said they consulted with their EU partners in the European Conservatives and Reformists Group (ECRG) and have decided not to sign the memorandum proposed by GERB. The conservative center-right GERB claimed 116 MP seats in July 5 vote, shattering Prime Minister Sergey Stanishev's Socialist Party and falling just five seats short of holding a majority in the 240-seat unicameral parliament. GERB has proposed a draft memorandum, which highlights the unity and consolidation of the majority, support for the future cabinet and the adoption of constitutional amendments. The memorandum for political partnership and support for the new government will be offered to all parliamentary parties except for the ones that participated in the outgoing Socialist-led three-way coalition. (TSW18.07)
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8: ISRAEL LIFE SCIENCE NEWS
8.1 FDA Approves Plan B One-Step, a New One-Pill Emergency Contraceptive
Teva Pharmaceutical Industries announced that the U.S. FDA has approved its New Drug Application (NDA) for Plan B® One-Step emergency contraception (levonorgestrel tablet, 1.5 mg). Now, with new Plan B® One-Step, women can help prevent an unintended pregnancy after unprotected sex or contraceptive failure with just one pill in one dose. The FDA is expanding over-the-counter (OTC) access to Plan B® One-Step for consumers age 17 or older; women younger than age 17 will require a prescription. The product will be available at licensed U.S. retail pharmacies within the next month. Plan B One-Step will be available OTC at the pharmacy for consumers age 17 or older with government-issued proof-of-age identification. Teva Pharmaceutical Industries (http://www.tevapharm.com), headquartered in Israel, is among the top 20 pharmaceutical companies in the world and is the world's leading generic pharmaceutical company. The Company develops, manufactures and markets generic and innovative human pharmaceuticals and active pharmaceutical ingredients, as well as animal health pharmaceutical products. (Teva13.07)
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8.2 Swiss Use Transcranial MR-Guided Focused Ultrasound to Treat Brain Disorders
InSightec announced that a team at the University Children's Hospital Zurich has completed a feasibility study testing the use of non-invasive transcranial MR-guided focused ultrasound surgery (MRgFUS) for the treatment of neuropathic pain. Ten adult patients diagnosed with chronic neuropathic pain successfully underwent non-invasive deep brain ablation surgery (central lateral thalamotomy) with transcranial MRgFUS and showed improvement in pain scores and reduction of pain medication with no adverse effects at three months follow-up. This is the first study in the world to test non-invasive transcranial focused ultrasound as a treatment modality for functional brain disorders. Neurosurgeons currently treat patients with functional neurological disorders such as neuropathic pain or Parkinson's disease by inserting a tiny probe through the cranium and brain to reach and ablate damaged tissue. The Swiss research team is planning a larger study for functional brain disorders and expands its clinical research to movement disorders, such as Parkinson's disease and tremor, and to other functional neurological disorders later this year.
ExAblate is the first system to use the MR guided focused ultrasound technology that combines MRI - to visualize the body anatomy, plan the treatment and monitor treatment outcome in real time - and high intensity focused ultrasound to target brain tissue non-invasively. MR thermometry allows the physician to control and adjust the treatment in real time to ensure that the targeted area is fully treated and surrounding tissue is spared. The ExAblate 4000 is a platform for a variety of transcranial indications, such as brain tumors, functional neurosurgery, stroke and targeted drug delivery. Tirat HaCarmel's InSightec (http://www.insightec.com) is a privately held company owned by Elbit Imaging, General Electric, MediTech Advisors, LLC and employees. It was founded in 1999 to develop the breakthrough MR guided Focused Ultrasound technology and transform it into the next generation operating room. (InSightec 14.07)
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9: ISRAEL PRODUCT & TECHNOLOGY NEWS
9.1 BackFlip Software Launches BackFlip Process Communications On Demand for ISV's
BackFlip Software announced the availability of BackFlip Process Communications On Demand for ISV's. This unique platform enables providers of services, business applications and process applications to complement their existing offerings with robust multi-channel communications-enabled business processes (CEBP) capabilities. BackFlip is the first communication service to provide a truly secured multi-channel environment for user-to-system and system-to-user communications through voice, instant messaging, text messaging, mobile browsing, IP Phones and email technologies. By leveraging BackFlip's expertise and proven on demand solution, software providers can now expand their solutions to access a variety of communication channels while continuing to focus on their core competencies. BackFlip Process Communications On Demand for ISV's comes with instant worldwide coverage for voice and text messaging networks. Modularly designed, the service easily integrates into business applications and can be embedded into any business process to extend interaction to new communities of end users. The BackFlip service is customizable to suit various levels of adoption and requirements.
Kfar Saba's BackFlip Software (http://www.backflipsoftware.com) is a driving force of business process communications. BackFlip's Process Communications On Demand service empowers organizations with the ability to receive, access and communicate information at any time through any communication channel. Business applications can invoke the BackFlip service easily and securely whether they are hosted or lie behind the corporate firewall. (BackFlip Software08.07)
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9.2 TraceSpan Launches VDSL2 Lawful Interception System
TraceSpan Communications released its VDSL Phantom 3838, a passive Lawful Interception (LI) monitoring solution for VDSL2 lines. VDSL Phantom is a passive tapping device that records and stores broadband digital information, offering many unique advantages to Law Enforcement Authorities (LEA). VDSL Phantom is non-intrusive, allowing the LEA to monitor information without being detected. It supports high bit rates and can monitor both upstream and downstream data simultaneously. VDSL Phantom can be installed at virtually any location (Central Office or street), while the data can be monitored remotely. VDSL Phantom is a new member of TraceSpan's Phantom family of passive Lawful Interception solutions for broadband data lines. It follows DSL Phantom 3000, the company's field-proven monitoring solution for ADSL, ADSL2 and ADSL2Plus, which is widely accepted and is being used by a variety of LEA worldwide. Ra'anana's TraceSpan Communications (http://www.tracespan.com) develops and manufactures innovative broadband monitoring solutions. Empowered by patent-pending breakthrough technology, TraceSpan's performance analysis and Lawful Interception products enable non-intrusive monitoring of data in broadband networks. (TraceSpan09.07)
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9.3 KIT Selects Voltaire 40 Gb/s InfiniBand & Unified Fabric Manager Software for Cloud Computing Research
Voltaire announced that the Karlsruhe Institute of Technology (KIT) has selected Voltaire 40 Gb/s InfiniBand switches and Unified Fabric Manager (UFM) software for an HP supercomputer dedicated to cloud computing research. KIT's new supercomputer will serve as one of the centers of excellence for Open Cirrus, an open cloud computing research testbed designed to support research into the design, provisioning and management of services at a global, multi-data center scale. The HP supercomputer consists of 334 HP ProLiant DL2x170h G6 and HP ProLiant DL4x170h G6 servers based on the Intel Xeon processor 5500 series and is interconnected with two Voltaire Grid Director 4700 switches. The Grid Director 4700 features 324 ports of 40 Gb/s InfiniBand connectivity, with the option to double capacity to 648 ports using double-density fabric boards. The double-density fabric boards are the basis for the HyperScale architecture, a unique stackable architecture for building larger configurations into the hundreds and thousands of nodes, with lower latency and greater simplicity than alternative solutions.
Ra'anana's Voltaire (http://www.voltaire.com) is a leading provider of scale-out computing fabrics for data centers, high performance computing and cloud environments. Voltaire's family of server and storage fabric switches and advanced management software improve performance of mission-critical applications, increase efficiency and reduce costs through infrastructure consolidation and lower power consumption. (Voltaire 13.07)
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9.4 Tower Semiconductor's Power Management Process Selected by 3PEAKIC Microelectronics
Suzhou, China's 3PEAKIC Microelectronics Inc., a provider of high-end analog and mixed-signal electronic products, and Tower Semiconductor announced Tower will manufacture 3PEAKIC's energy saving light emitting diode (LED) driver ICs used for backlight LED panels in handheld devices such as cell phones, PDAs and personal navigation devices (PNDs). LEDs present many advantages over traditional light sources including lower energy consumption, longer lifetime, and smaller size as well as faster switching, useful in communications technology. LED driver ICs need the current to be tightly controlled between channels which requires superior mixed-signal modeling and analog device characterization available from Tower's power management process (TS18PM). Due to the large well-modeled passive device offerings in TS18PM, 3PEAKIC's LED Driver IC (3P3208) requires lower power and fewer components on the PCB (printed circuit board). Tower's TS18PM process includes 20v-60v scalable Rdson NLDMOS/PLDMOS devices as well as advanced 0.18-micron CMOS and bipolar NPN devices needed in today's complex power management chips. It also includes industry leading RF and Thermal modeling, predictive parasitic extraction switch, high voltage ESD solutions, and extremely dense 5v and 1.8v digital cell libraries for “digital intensive” designs. Migdal Ha'Emek's Tower Semiconductor (http://www.towersemi.com) is a global specialty foundry leader and its fully owned subsidiary Jazz Semiconductor, a Tower Group Company is a leader in Analog-Intensive Mixed-Signal (AIMS) foundry solutions. Tower and Jazz manufacture integrated circuits with geometries ranging from 1.0 to 0.13-micron and provide industry leading design enablement tools to allow complex designs to be achieved quickly and more accurately. (Tower13.07)
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9.5 Alvarion Offers New Premium Point-to-Multipoint Wireless Solution for License-Exempt Frequency Bands
Alvarion announced an enhanced portfolio of BreezeACCESS VL product family for license exempt bands of 5 GHz and 900 MHz. A high-capacity, point-to-multipoint wireless broadband solution, BreezeACCESS VL provides optimized bandwidth allocation to best fit a wide range of data, voice and video applications with enhanced networking capabilities that reduce network overhead and improve quality of service (QoS). The new BreezeACCESS VL 900 premium point-to-multipoint solution provides long range capability and a net throughput of 8 Mbps. It also enables fast deployment capabilities leveraging improved automatic algorithms based on statistics collection, for ease of installation and maximized performance. In addition, the BreezeACCESS VL 900 has an extended non-line-of-sight (NLOS), with a superior QoS for voice data and video applications. The enhancements to existing BreezeACCESS VL for 5 GHz include enhanced QoS, Dynamic Frequency Selection (DFS) capabilities and new subscriber unit options. This product provides secure links in both line-of-sight and NLOS applications, reaching more than 30 kilometers (18.6 miles) with a net capacity of up to 32 Mbps per sector. It provides enhanced QoS for voice, video and data applications for a variety of markets including operators, WISPs, municipalities, public safety and enterprises; and offers cost-effective connectivity for both urban and rural deployments. This product portfolio includes a wide range of subscriber units supporting various vertical applications, enabling flexible deployment scenarios and scalable upgrade options.
Tel Aviv's Alvarion (http://www.alvarion.com) is the largest WiMAX pure-player with the most extensive WiMAX customer base and over 250 commercial deployments around the globe. Committed to growing the WiMAX market, the company offers solutions for a wide range of frequency bands supporting a variety of business cases. Through its OPEN WiMAX strategy, superior IP and OFDMA know-how, and ability to deploy end-to-end turnkey WiMAX projects, Alvarion is shaping the new wireless broadband experience. (Alvarion15.07)
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9.6 AIG-Israel Selects Raz-Lee's iSecurity for its System i Security Infrastructure
Raz-Lee Security announced that AIG-Israel, a leading Direct Insurance company affiliated with the AIG group, has selected an information security solution from Raz-Lee Security for the protection of AIG's server infrastructure. AIG-Israel attaches high importance to the protection of its System i (IBM-AS/400) servers, as they are the central servers of the organization. The insurance company chose iSecurity based on their previous experience with Raz-Lee Security's products, and following the recommendation of independent professional advisors. The iSecurity system selected by AIG-Israel provides a comprehensive security solution for preventing breaches and potential damage to the organization's activities. iSecurity enables AIG to block break-in attempts from external sources, to receive detailed reports on employee activities (including actual screen captures of user activity), and to control user's rights to view data. In addition, the system continuously informs relevant staff regarding changes in the business-critical databases of the company, using real-time alerts and timeline reports displaying all changes relating to any subject. These reports can integrate information from all the company's systems (financial, purchase and manufacturing). Herzliya's Raz-Lee Security (http://www.razlee.com) is the leading security solution provider for IBM's System i (AS/400) computers. Drawing upon its 25 years of expertise in the System i Performance and Optimization market, the company designs, develops and markets a comprehensive suite of advanced security software solutions - iSecurity. (Raz-Lee Security 15.07)
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9.7 Hutchison Selects Ceragon for Mobile Network Migration to IP
Ceragon Networks signed a multi-year global supply agreement with the Hutchison 3 Group, a leading global player in the 3G telecommunications arena. Under the Global Supply Agreement, Ceragon will provide Hutchison with its Next Generation high capacity Ethernet solutions including the leading edge FibeAir IP-10 platform, in support of the Hutchison's network migration plans from TDM to IP. The move will enable Hutchison to enhance network capacity quickly and cost effectively, allowing it to successfully meet the growing demand for data and multimedia services across its multi-national mobile networks. Ceragon's FibeAir IP-10 offers a first-of-its-kind combination of advanced native TDM and native Ethernet networking in a single, highly integrated mobile backhaul platform. Supporting a wide capacity range of 10Mbps to 500Mbps over a single radio carrier, FibeAir IP-10 utilizes a single RF unit across the entire licensed frequency spectrum - from 6GHz to 38GHz. Advanced Adaptive Coding & Modulation (ACM) helps to maximize spectrum utilization and ensures the industry's highest capacities over any given bandwidth - and under changing environmental conditions.
Tel Aviv's Ceragon Networks (http://www.ceragon.com) is a leading provider of high capacity wireless backhaul solutions that enable wireless service providers to deliver voice and premium data services, such as Internet browsing, music and video applications. Ceragon's wireless backhaul solutions use microwave technology to transfer large amounts of network traffic between base stations and the infrastructure at the core of the mobile network. Ceragon designs solutions to provide fiber-like connectivity for circuit-switched, or SONET/SDH, networks, next generation Ethernet/Internet Protocol, or IP-based, networks, and hybrid networks that combine circuit-switched and IP-based networks. (Ceragon15.07)
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9.8 BluePhoenix Completes IT Modernization Project for Export-Import Bank of the United States
BluePhoenix Solutions has completed a major IT modernization project for Export-Import Bank of the United States (Ex-Im Bank). The extensive project, involving the migration of core business applications, associated databases, and their re-hosting from a mainframe platform to a Windows environment, took approximately 9 months to complete. The sizeable resulting reductions in licensing and maintenance costs saw Export-Import Bank realize a return on project investment in 12 months. In addition to reducing operating costs, this project has helped the Ex-Im Bank consolidate database platforms, reduce data redundancy and build a data warehouse, thereby further improving efficiencies for accessing and reporting on mission critical business information and metrics. The modernization initiative was carried out using BluePhoenix's proven IT modernization methodologies, automated modernization tools and experienced professional services team.
Herzliya's BluePhoenix Solutions (http://www.bphx.com) is the leading provider of value-driven legacy IT modernization solutions. The BluePhoenix portfolio includes a comprehensive suite of tools and services from global IT asset assessment and impact analysis to automated database and application migration, re-hosting, and renewal. BluePhoenix provides modernization solutions to companies from diverse industries and vertical markets such as automotive, banking and financial services, insurance, manufacturing, and retail. (BluePhoenix15.07)
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9.9 Techtium Unveils the TEC103 - First Dedicated Li-Ion Solar Charging IC
Techtium unveiled the TEC103 solar application, a breakthrough power conversion solution for portable solar applications such as mobile phones, handheld solar chargers, Bluetooth headsets and Bluetooth car-kits. The TEC103 IC for solar applications boosts a single PV cell voltage (from 0.4-0.5 VDC) to Li-Ion voltage and controls the device's single cell Li-Ion battery charging. This IC utilizes a synchronous DC-DC boost converter and optimal Li-Ion charge controller to reach conversion efficiencies of up to 85% of the solar PV power transferred to the Li-Ion battery. Techtium's TEC103 solar solution works at the single PV cell maximum power point and provides up to 2x more power compared to alternatives like multi-cell solar modules and up-to 10x more power can be supplied in partly shaded conditions, dramatically raising the performance while offering cost effective solutions. Tel Aviv's Techtium (http://www.techtium.com) is a fabless mixed signal analog company specializing in battery, hybrid, and power management, and active in this market since 2001. (Techtium 19.07)
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10: ISRAEL ECONOMIC STATISTICS
10.1 Israel's Annual Inflation Rises To 3.6% On Tax Hike
The Central Bureau of Statistics announced on 15 July that Israel's annual inflation rate rose to 3.6% in June, the first increase in three months, following the government's raising taxes on gasoline to compensate for a drop in revenue caused by the recession. For June, the CPI increased by 0.9%. Inflation accelerated from a 2.8% annual rate the month before. Inflation has eased from a peak of 5.5% in September and October, enabling the Bank of Israel to lower its benchmark lending rate by 3.75% to a record low of 0.5%. The government increased the tax on gasoline by NIS 0.30 per liter on May 21. Its annual inflation target is 1% to 3%. The economy will shrink about 2% this year as the global financial crisis undermines demand for exports, the OECD said on June 24. Unemployment is likely to rise to 8.5% in 2009 and 9.3% in 2010, it said. (Various16.07)
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10.2 Israel's State of the Economy Index Rises
On 19 July, the Bank of Israel announced that the composite state-of-the-economy index rose 0.2% in June. The rise was the first since July, 2008. The Bank of Israel said it is still too early to estimate whether the rise signals a turning point in Israel's economy. The June rise reflects gains in foreign trade-related components of the index - export and import of goods. However, most of the other components fell. The May index was revised upward, to -0.3% from -0.5%. The change followed upward revisions by the Central Bureau of Statistics in the export and import of goods, and the export and import of services indices for that month. For May, the manufacturing production index fell 1.5%, following a 0.9% drop in April. The trade and services revenue index fell in May by 0.6^, following a drop of 3.1% in April. Goods exports rose 1.5% in June, following a jump of 7.8% in May. The imports index rose 3.7% in June, after a drop of 3.6% in May. The consolidated index takes into account various factors, both in the month being measured as well previous months. (BoI19.07)
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10.3 Israel's June Trade Deficit Narrows as Exports Rise
On 13 July, the Central Bureau of Statistics announced that Israel's foreign trade deficit narrowed in June as imports declined at a more moderate pace and hi-tech exports rose. The June deficit, excluding diamonds, ships and aircraft, was a seasonally adjusted $200m, down from $1.2b in the same month last year. This was attributed mostly to a weaker dollar against the euro and other world currencies. The dollar fell 3.1% against the euro, 6.9% compared to the British pound and 0.3% versus the yen. In the first six months of the year, the deficit dropped to a monthly average of $300m., compared with a deficit of $13.2b last year. During June, $3.9b was spent on imports of goods, including 40% for raw materials, 17% for machinery and 27% for diamonds, aircraft and ship materials. In the first six months of the year, imports of raw and rough diamonds were worth $1.8b, down from $5.1b during the same period last year. The data pointed to a slowdown in the rate of the decline of imports of goods, excluding diamonds, ships and aircraft, the bureau said.
Between April to June, imports of goods fell at an annualized rate of 13.4%, after falling at an annualized rate of 43.4% in the months January to March. In June, exports of goods were worth $3.7b, including 87% for industrial items, 11% for diamonds and 2% for agriculture products. The data indicated that exports of goods, excluding diamonds, rose by an annualized 1.2% in the months April to June, after falling by annualized 23.9% from January to March. The monthly average decline of exports of goods was 2.4% from January to March. The figures for hi-tech exports, which represent 51% of total exports of goods, were up by an annualized 20.5% in the months April to June, after rising by an annualized 14.5% from January to March. Exports of electronic components rose by 129.3% from April to June. In the months January to June, exports of raw and rough diamonds were $2.4b, compared with $600m during the same period last year. (CBS13.07)
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10.4 Number of Israeli Jobseekers Increases
On 15 July, the Israel National Employment Service announced that the number of jobseekers rose by 0.8%, or 1,900 persons, to 231,500 in June from 229,600 in May. Some 15,600 people lost their jobs in June. The number of jobseekers without higher degrees and who do not receive income support rose by 3.6%. The number of jobseekers with higher degrees rose by 3%, while the number of jobseekers who receive income support fell by 1.5%. Some 33% of jobseekers, 76,300 persons, have been unemployed for at least 270 days in the past 12 months. The Employment Service received 24,900 requests for workers in June, 8% more than in May. It placed 12,700 persons in June, 34.8% more than the 9,400 placements made in June 2008. Quarterly figures show that new lay-offs slowed to an average of 14,400 per month in Q2/09 from 19,200 per month in Q1/09. Monthly lay-offs averaged 11,600 in 2007-08. (Globes 15.07)
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10.5 Rate of Car Theft in Israel Falls Sharply
The Israel Police's Etgar anti-car theft unit reports that 10,759 vehicles were stolen in H1/09, 11.3% fewer than the 12,100 vehicles stolen in H1/08. Car theft is now well below the average of 13,900 vehicles stolen in the first half of each of the past six years. Car theft is down even more as a proportion of the number of registered vehicles. There were 2.85m registered vehicles at the end of June 2009, and the rate of theft was down to 7.9 per 1,000 vehicles, compared with 8.9 thefts per 1,000 vehicles in 2008 and 11.6 thefts per 1,000 vehicles in 2007. The Etgar Unit reported that it found 28% of cars stolen in 2008. In other words, of the 8.9 thefts per 1,000 vehicles, 2.49 per 1,000 vehicles were recovered. The Subaru Leone continues to be the thieves' choice: 753 were stolen in H1/09, 7% of all vehicles stolen. Ssanyong scooters are the second most popular vehicle stolen, averaging more than 100 per month. Kwang Yang scooters are in third place, followed by the Mitsubishi Lancer sedan, Volkswagen Golf, Fiat Uno, Honda Civic, Mazda 323, Skoda Octavia and Subaru Impreza, in tenth place. The list of top stolen vehicles indicates they do not include the latest models, and that older models are the thieves' preferred targets. Among vehicles less than four years old, Ssanyong & Kwang Yang scooters and Mazda 3 cars are the most frequently stolen. (Globes 14.07)
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10.6 Tel Aviv Falls to 17 On Expensive City List
Tel Aviv is in 17th place in the 2009 Mercer Worldwide Cost of Living survey of 143 cities. As reported by Globes, Tel Aviv remains the most expensive city in the Middle East, although it is the only one in the region to move down in the ranking, from 14th in 2008 to 17th place. Tokyo is the most expensive city in the world, ousting Moscow, which fell to third place, behind Osaka. London was relegated from the top ten for the first time since 2001, and is now in 16th place, thanks to plummeting rent. New York is used as the base city for the index and scores 100 points, all cities are compared against New York and currency movements are measured against the US dollar. The survey measures the comparative cost of over 200 items in each location, including housing, transport, food, clothing, household goods and entertainment. A significant reshuffle of cities can be observed in this year's ranking, mainly due to considerable currency fluctuations worldwide. (Globes 07.07)
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10.7 Ben Gurion Airport Sees 12% Drop in International Travelers
The Israel Airports Authority announced that the number of international passengers at Ben Gurion Airport in June 2009 was down 12.5% compared with June 2008. The airport handled 941,945 travelers on 7,768 international and domestic flights in June. There were 7,130 international flights in June, 6% fewer than in June last year. The number of travelers to Turkey was halved in June, compared with June last year. Israeli airlines carried 396,430 passengers in June, 44.1% of the total passenger traffic at Ben Gurion Airport for the month and 3% less than in June 2008. El Al Israel Airlines, bmi, and Delta Airlines had the largest increases in activity. The Ben Gurion Airport-Heathrow Airport in London was the most popular route in June, with 63,700 passengers, 18.6% more than in June last year. By country, US was the most popular route for Ben Gurion Airport passengers, with 131,521 arrivals and departures, 14.6% of total passenger traffic for the month. (Globes 12.07)
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10.8 Coca-Cola is Again the Leading Brand in Israel
According to the annual "Globes" brands survey, for the seventh consecutive year, Coca-Cola is the leading brand in Israel, despite losing some ground. The Coca-Cola brand was worth NIS 2.25b at the end of 2008, 2.53% less than a year earlier. Seven of the top ten brands lost value in 2008, while three boosted their value: Cellcom, Bank Leumi, and Nokia. The "Globes" brands survey is conducted jointly with consulting firms Tefen Ltd. and Giza Singer Even. orange, of Partner Communications, is the second ranked brand, with a value of NIS 2.03b at the end of 2008, 2.27% less than a year earlier. Microsoft was in third place, with a value of NIS 1.95b, down 0.53%. The aggregate value of the top ten brands was NIS 13.9b at the end of 2008, 4% less than the NIS 14.37b a year earlier. Cellular operator Cellcom in fourth place with a value of NIS 1.76b at the end of 2008, up 5.8% from a year earlier. Hewlett-Packard in fifth place, with a value of NIS 1.29b at the end of 2008, down 9%, due to the computer industry's high risk level as a result of the recession. Intel in sixth place, with a value of NIS 962m at the end of 2008, down 12.6%. Bank Hapoalim was in seventh place, with a value of NIS 938m at the end of 2008, after a stormy year that affected its image. The cigarette brand Marlboro in was in eighth place, with a value of NIS 921m at the end of 2008, down 12%. Bank Leumi was in ninth place, with a value of NIS 915m at the end of 2008, up 2% Nokia was in tenth place, with a value of NIS 882m at the end of 2008, up 3%. 61 of the top 100 brands lost value in 2008, mostly due to fourth quarter results and risk and uncertainty about 2009. 31 brands were able to boost their value. (Globes 13.07)
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11: In Depth
11.1 ISRAEL: Summary of Israeli High-Tech Company Capital Raising for Q2 / H1 2009
The following are the findings of the Quarterly Survey conducted by the IVC Research Center, which for more than 10 years has been at the forefront of high-tech, venture capital and private equity research in Israel. This Survey reviews capital raised by private Israeli high-tech companies from Israeli venture capital funds, foreign investors and other investors. The Survey is based on reports from 80 investors of which 46 are Israeli management companies and 34 are other – mostly foreign – investment entities.
In the second quarter of 2009, 122 Israeli high-tech companies raised $279 million from venture investors – both local and foreign. The amount was 40% below the $465 million raised by 115 companies in the second quarter of 2008, but 5% higher than the amount raised in the first quarter of this year. In the first half of 2009, capital raised by Israeli high-tech companies was $544 million, 50% below H1 2008 levels of $1.1 billion (the highest since 2001). “We are not surprised by these numbers,” said Koby Simana, CEO of IVC Research Center. “The amount and rate of capital raised are in line with our earlier forecast of $1 billion for the full year.”
The average high-tech financing round was $2.29 million, compared to $4.04 million in the second quarter of 2008 and $2.85 million in the first quarter of 2009. Seventy-four companies attracted more than $1 million each. Of these, 13 companies raised $5 million to $10 million each, and four companies raised $10 million to $20 million each.
Israeli VC Fund Investment Activity
In the second quarter of 2009, Israeli venture capital funds invested $113 million in Israeli companies, 30% below Q2 2008 levels of $161 million, but 7% higher than the previous quarter's $106 million. In the first half of 2009 Israeli VCs invested $219 million in Israeli companies, a 48% decrease from the $423 million invested by Israeli VCs in H1 2008. The sharp fall in investment activity will undoubtedly have an impact on the number of start-ups that will be able to operate in Israel in the future.
Israeli VC funds accounted for 40% of the total amount invested in Israeli high-tech in Q2 2009, compared to 35% in the second quarter of 2008. The remainder of capital came from foreign investors as well as from non-VC Israeli investors.
Even though the proportion of investments between Israeli and foreign investors has been maintained, total amounts invested in Israeli high-tech companies have decreased by 50% compared to the previous year.
First investments accounted for 38% of total dollar investments by Israeli VCs in the second quarter and 34% in the first half of 2009, compared to 22% and 35% in the second quarter of 2008 and H1 2008, respectively. The average First investment by Israeli VCs was $2.87 million, while the average Follow-on investment was $0.83 million.
Capital Raised by Sector and Stage
In the second quarter of 2009, the Life Sciences sector attracted $76 million or 27% of total capital raised, followed by Software with $64 million or 23%.
The Communications and the Life Sciences sectors led capital raising in H1 2009 with $126 million or 23% of capital raised, followed by Software with $120 million or 22%.
In the second quarter of 2009, Seed companies attracted 9% of capital raised, compared with 5% raised in the previous quarter and in the second quarter of 2008, respectively. Early Stage (R&D) companies captured 40% of total capital raised.
In the first half of 2009, Seed companies attracted 7% of capital raised, compared with 5% in H1 2008. Early Stage (R&D) companies captured 37% of capital raised.
IVC Research Center (http://www.ivc-online.com) is Israel's leading research center providing business leaders with an unmatched wealth of data on Israeli high-tech, venture capital and private equity industries. IVC products and services are used regularly by high-tech companies, venture capital funds, private investors, financial investors and institutions, as well as public entities such as the Office of the Prime Minister, the Central Bureau of Statistics, the Bank of Israel and the Office of the Chief Scientist. (IVC15.07)
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11.2 ISRAEL: Fiscal Challenges - Clear, Present but Manageable
Morgan Stanley (http://www.morganstanley.com) commented on Israel, observing a sharp rise in the budget deficit in June. The budget yielded a deficit of NIS 6.9 billion in June, bringing the cumulative year-to-date deficit to NIS 17.7 billion. The June data indicated a substantial rise in the monthly deficit of 78%Y and a full swing from a cumulative surplus of NIS 2.1 billion recorded in H1/08. The main reasons behind the sharp rise in June's budget deficit had been associated with seasonal factors but also on the back of one-off effects such as the transfers to the old pension scheme and payments to public employees. Despite the acceleration in the overall headline deficit, it looks like the year-end budget deficit ceiling set at NIS 44.8 billion (or 6% of GDP) might be attainable. This might especially hold if the Knesset adopts the current version of the draft budget later in the month, without material changes in spending limits.
Mimicking the global theme - lower revenues and higher spending: In June, the weak domestic and external demand kept the lid on revenue growth while government spending remained elevated such that the cumulative year-to-date rise in expenditures reached 15%Y while revenues dropped by 14%Y. Clearly, this had been a global theme so far this year, with dramatic moves in monetary and fiscal stimulation efforts by the central banks and fiscal policymakers. Israel remained no exception, and we expect the current practice to linger throughout the year and most of 2010. In order to cap the expected rise in the debt/GDP ratio from around 78% to around 87% during 2009-10 and to bring it back onto a sustainable path in the following years, we believe that the government needs to take fiscal action. A range of these had been included in the prospective budget, but there are signs of emerging challenges, especially on the political front, making policymaking and implementation an even harder job.
On the financing front, we expect domestic issuance to remain at highly elevated levels for 2009 and 2010.
General VAT rate hike in effect: The Israeli government raised the general VAT rate by 1pp to 16.5% starting July 1, and this will be effective until end-2010. The move had been part of the effort to boost fiscal revenues by an estimated NIS 2.4 billion in 2009 and as much as NIS 4.8 billion in 2010 amid concerns surrounding the widening fiscal deficit. On January 1, 2011, the VAT rate will be lowered to 15.5%.
The government stepped back from the decision to introduce VAT on fresh produce: Another measure that was aimed to revamp tax revenues had been to introduce VAT on fruit and vegetables. According to MoF projections, the move would contribute as much as NIS 1.8 billion or around 0.25% of GDP to the budget (the figure might be overestimated as some of the state bodies such as the Defense Ministry are estimated to provide a third of the projected revenue, i.e., NIS 600 million, which would not be considered as additional income). The move that created a heated debate among the ruling coalition members had been revoked by PM Netanyahu, which will likely create a shortfall in achieving the annual budget target.
The planned cuts in corporate and income tax rates are cut: In an effort to bridge the possible gap associated with the abolition of VAT on fresh produce, the government decided to cancel the 1pp cut in the corporate tax rate to 25%. However, the planned 1pp cut to be introduced in January 2010 had been kept intact. In addition, the government decided to halve the planned 2pp reduction in the maximum rate of personal income tax (currently 46%) to 1pp, to take effect as of January 1, 2010.
Good for inflation and not so good for growth: The changes in the tax-related decisions will have marginal but opposing effects on inflation and growth, while possibly offsetting positive and negative implications on the budget. The potential revenue loss associated with the decision to keep fresh produce free from any tax is expected to be compensated by the delay in the corporate tax rate cut in 2009. In addition, the lower-than-planned reduction in corporate and personal income tax rates in 2010 should provide a further cushion in achieving the fiscal targets.
On the inflation front, the lack of additional VAT taxes on fresh produce is clearly positive news, especially taking into consideration the marginal pressure that could have been imposed on prices associated the tax cuts on personal income. On the flip-side, the lower-than-envisaged tax cuts and the delays into 2010 might postpone the pick-up in domestic demand or at least lengthen the recovery period somewhat.
Domestic borrowing likely to continue at same pace: On the financing side, the main trends that had been in place remained almost unchanged, with net domestic borrowing reaching NIS 20 billion in 1H09. With the absence of capital income (i.e., privatization) and limited borrowing from abroad, the main channel of budget financing had been domestic issuance. Over the past 12 months, the total size of domestic borrowing reached around NIS 90 billion, of which NIS 50 billion materialized in H1/09. There is already anticipation in the market that the issuance will rise in the coming years such that the annual size might be around NIS 100 billion, which suggests a significant rise in bond supply. Issuance had been limited to NIS 43 billion in 2007 and NIS 70 billion in 2008. (MS09.07)
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11.3 ISRAEL: Analysis of the Pharmaceuticals and Healthcare Industry
Research and Markets (http://www.researchandmarkets.com) announced the addition of the "Israel Pharmaceuticals and Healthcare Report Q3 2009" report to their offering.
In BMI's updated Business Environment Rankings (BER) for Q3/09, Israel continued slipping down the table, now ranking seventh out of the 17 Middle East and African (MEA) markets surveyed. While the country scores strongly across the country structure and the country risk categories, a risky regulatory environment, particularly in regard to intellectual provisions (IP) provisions, serves to limit Israel's overall attractiveness for multinational drug makers. Moreover, although Israel's IP environment has been criticized for deteriorating in the past decade, the country seems to have no plans to improve the situation, which will continue to weigh down on Israel's placement within BMI's MEA matrix.
In the meantime, Israel once again featured in the 'Priority Watch List' of countries with deficient IP regimes, which is produced as part of the 2009 version of the Special 301 Submission by the Pharmaceutical Research and Manufacturers of America (PhRMA). Key points of contention include the lack of adequate patent and data exclusivity protection and regulatory approval delays. While the latter has been addressed to a degree, insufficient budgetary support remains a major obstacle to establishing a better system for processing marketing applications, which will continue to be biased against foreign made patented drugs.
In addition to the IP issues that stifle the development of the innovative patented market segment, the economic situation (such as the forecast 1.8% GDP contraction in 2009) and political environment will conspire to result in a slow growth of the Israeli pharmaceutical market over the next five years. From the 2008 market value of $1.53bn at retail prices, the market will grow to just $1.57bn in 2013, posting a compound annual growth rate (CAGR) of just 1.83% in local currency terms (and of just 0.62% in US dollar terms). Per capita spending on drugs will, however, stagnate at around $207 estimated in 2008, as cost-containment negates any volume increases. An increasing reliance on imports of non-patented medicines will also subdue growth as the government seeks to cut healthcare costs. While prescription medicines will continue to account for the majority of the market by value, economic recovery will once again boost the uptake of OTCs, especially in the face of a restrictive pricing and reimbursement environment. (R&M09.07)
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11.4 LEBANON: Pharmaceuticals and Healthcare Report Q3 2009
Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "Lebanon Pharmaceuticals and Healthcare Report Q3 2009" report to their offering.
Lebanon remains a strong pharmaceutical market in the Middle East and Africa (MEA) region. In BMI's updated Business Environment Ratings for Q309, Lebanon holds a respectable 13th position. The country's pharmaceutical market was worth $500mn in 2008, and is expected to grow to be worth $517mn in 2009. BMI forecast that the market will grow by around 21% over five years to reach $603mn by 2013, representing a compound annual growth rate (CAGR) of 3.82%. Its low ranking is due to a poor regulatory and intellectual property (IP) regime, small population size, political volatility and limited healthcare finances.
The country's IP environment remains lacking in relation to international standards, and drug patent laws are a particularly contentious issue. In October 2008 the Lebanese Council of Ministers approved implementing regulations for the 2003 Law 530, which establishes a new process for registering and importing pharmaceuticals. However, these regulations are yet to be implemented.
The Lebanese government introduced a new patent law in July 2000, granting 20 years of product patent protection and replacing 1924 legislation. However, standards remain poor and enforcement lax. The US based Pharmaceutical and Research Manufacturers of America (PhRMA) voiced concerns over a lack of both data exclusivity and pipeline protection, as well as the registration of unauthorized products. As a result of various deficiencies, the Office of the US Trade Representative (USTR) again listed Lebanon on its Priority Watch List in its 2007 Report on intellectual property rights (IPR), despite some progress in 2006 by a Lebanese IP rights task force. PhRMA's Special 301 Submission 2009 expressed on ongoing concern that significant market access and IP barriers characterize the Lebanese market. Key problems include lax IPR enforcement and the unfair use of commercial data aimed at securing marketing approval. The Ministry of Health failed to take into account the comments of PhRMA member companies in developing the content of the implementing regulations for Law 530 despite PhRMA member companies meeting with the minister of economy and trade in 2008.
Despite the reduction in costs, the generic market remains underutilized in Lebanon as doctors do not generally have information on the availability of therapeutically equivalent generics and are encouraged to prescribe only branded drugs. Additionally, the fact that many generic products in the country are of dubious quality is a deterrent, while the large number of pharmacists in the country makes for stiffer competition. This creates a preference for selling expensive, patented and branded drugs to obtain to higher profit margins.
The Lebanese Consumers Association (LCA) has emphasized that off-patent drugs should be better regulated and promoted and that pharmacies should be encouraged to purchase more generic medicines so patients can make an informed choice. (R&M10.07)
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11.5 KUWAIT: Pharmaceuticals and Healthcare Report Q3 2009
Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "Kuwait Pharmaceuticals and Healthcare Report Q3 2009" report to their offering.
Kuwait's pharmaceutical market is small in regional terms. Combined sales of over-the-counter (OTC) and prescription drugs reached a total of $377mn in 2008, and we expect this to reach $462mn by 2013 - representing a compound annual growth rate (CAGR) of 4.17% in US dollar terms.
Pharmaceutical spending will account for 0.27% of GDP, with per capita expenditure at $136 by the end of the forecast period. We expect growth to be driven by the strong bias toward patented drugs, which still dominate the market.
With little or no enforced incentives for prescribers or dispensers to substitute for generics where possible, this looks likely to continue in the medium term. However, we note that import policies in the region have all been affected by unfavorable currency fluctuations against the euro when procuring EU medicines. We note that the Kuwaiti government is not actively encouraging a domestic manufacturing industry, which restricts choices on imports and in addition means the country is heavily reliant on those medicines.
BMI's Burden of Disease Database (BoDD) reveals that the number of disability-adjusted life years (DALYs) lost to communicable diseases in Kuwait will decrease from 29,836 in 2008 to 24,888 by 2030. Meanwhile, the DALYs lost to non-communicable disease will rise from 190,740 in 2008 to 258,306 by 2030. The main driver for this growth is attributed to the rise in obesity and obesity-related disorders including hypertension, diabetes, and cardiovascular disease.
We note that chronic conditions pose a significant burden on healthcare services and directly lead to a rise in prescription medication spending. This makes the patented drug market in these therapeutic areas particularly attractive to multinational drug makers looking for new export destinations in the Middle East. Generic drugs are slowly gaining market share, though government policy on substitution needs to be drafted and implemented to encourage further growth in this sector. (R&M10.07)
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11.6 EGYPT: Whither Economic Reform?
Ms. Anne Mariel Peters writes in the ArabReform Bulletin (http://carnegieendowment.org/arb) that the cabinet of Egyptian Prime Minister Ahmed Nazif, which marked its fifth anniversary in office on July 14, 2009, has revitalized Egypt's sluggish economic reform process, exchanged external finance for internal revenue, and eased restrictions on trade. Yet Nazif's policies have exacerbated social inequalities and tied some reform progress to U.S. economic aid, which now faces steep cuts. The global economic crisis has further increased resistance to reform and encouraged the government to engage in palliative spending at the expense of development. Under these conditions, the sustainability of Egypt's reform process is in doubt.
Egyptians have justifiably criticized successive governments for economic mismanagement and dependence on superpower patronage. Nazif's cabinet, however, initially provided much cause for critics to eat their words by streamlining regulations, reducing non-tariff barriers to trade, implementing tax reforms, and deepening the financial sector. In 2007, Egypt garnered 7% GDP growth and became the World Bank's top economic reformer. In the context of the global economic crisis, the Egyptian government has avoided risky levels of countercyclical spending and introduced a modest $5.4 billion fiscal stimulus package (much of which is to be invested in physical infrastructure). Inflation has fallen, and the economy achieved a 4.3% growth rate in the third quarter of FY 2008–2009, respectable in view of the global crisis. Egyptian officials have also reaffirmed their commitment to future reforms including a value-added tax, streamlined subsidies and a second round of privatization. A powerful business faction allied with Gamal Mubarak, the president's son and head of the ruling National Democratic Party's Policies Secretariat, supports Nazif's reforms.
At the same time, arrangements between corporatized labor and the Mubarak regime, as well as the ripple effects of the global financial crisis, limit the scope of reform. As of 2008, the government had privatized only 20% of the public sector, and the cancellation of bids for Banque du Caire in July 2008 suggests that further privatization will not be forthcoming. Between July 2008 and April 2009, subsidies increased by 31.5% and public sector salaries by 19.7%. In May, President Mubarak ordered Nazif to double the “social allowance,” a tax-free bonus that supplements public sector wages, to 10% of the base wage. The FY 2009–2010 government budget is not expansionary, but growing welfare transfers may cut into promised investment in physical infrastructure.
Labor unrest and clashes with the security services in 2008–2009 show the tenuousness of the reform project. During the past year protests have assumed a new dimension, as strikers demand the formation of independent unions (as opposed to the government-affiliated unions that dominate the system) and security forces employ increasingly violent tactics. Privatized companies have been steadily eliminating excess labor, while inflation and a large pool of beneficiaries have caused government salaries to lose real value. During the past five years, more than 1.5 million workers in the civil service, state-owned enterprises, and privatized companies have gone on strike for higher wages and bonuses. The pain of reform has been magnified by the global economic crisis, which left the country's conservative financial sector unscathed but has delivered a major blow to tourism, real estate, and manufactured exports. These industries have extensive linkages to other parts of the Egyptian economy, particularly through the small business and informal sectors that employ much of the population.
In this challenging environment, reforms that have succeeded owe much to innovations in foreign assistance that have helped reformers overcome political opposition and the low technical capacity of the bloated civil service. In addition to employing donor benchmarks as political coverage for unpopular reforms in the People's Assembly, reformist ministers have drawn on U.S. Agency for International Development (USAID) and UN Development Program funds to construct highly specialized technical units within major economic ministries, agencies, and boards. Technical units employ qualified Egyptian staff at market-competitive salaries and are free from government audit and parliamentary scrutiny during the regular budgeting process, two formal conduits by which labor is able to challenge economic reforms. The units engendered opposition from regular civil servants and rendered the institutional framework of the Egyptian economy akin to a seagull dragging the body of a beached whale, yet their technical expertise and insulation from political pressure has made them important to the reform agenda.
But recent changes in U.S. aid policy toward Egypt threaten to deprive Nazif and other reformers of the help that reform benchmarks and technical units have provided. In FY 2009, the United States cut economic assistance to Egypt from $415 million to $200 million, and in September 2009 USAID will terminate support to technical units. Those ministries wishing to retain experts must either self-finance or compete for counterpart currencies that are generated from other USAID programs and allocated by the Ministry of International Cooperation. In late 2007, the U.S. administration eliminated or scaled back most substantive reform benchmarks from Egypt's cash transfer. Meanwhile, U.S. military assistance remains a $1.3 billion annual commitment, and Congress is adding $260 million in military aid and $50 million to support security arrangements on the border with Gaza.
The U.S. administration and many Egyptian elites view military aid as critical, but few in Washington seem to have noticed the importance of economic aid and engagement to Egypt's small faction of reformers. In the past, Nazif and his cohort were able to manage labor opposition throughout periods of economic growth and abundant U.S. economic assistance. Today Egypt's reformers face heightened opposition, economic crisis, and aid reductions, challenges that are evident in the awakening of the shop floor and the growing largesse in the FY 2009–2010 budget. Now, more than any other time during Nazif's tenure, opposing forces in Egypt may be able to stall, halt, or even reverse the economic reform process.
Anne Mariel Peters is assistant professor of government at Wesleyan University in Connecticut and spent one year in Egypt as a Fulbright scholar. (ARBJuly2009)
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11.7 LIBYA: 2009 Article IV Consultation Preliminary Conclusions of the IMF Mission
1. The Libyan authorities have launched a number of initiatives over the past few years to modernize the economy. Notable progress has taken place in bank privatization, state budget unification, and encouraging the private sector, domestic and foreign. These achievements have contributed to the favorable sovereign ratings assigned to the country earlier this year by international rating agencies. The authorities are aware of the many challenges that remain to be addressed in order to achieve their objectives of increasing non-oil growth and creating viable employment opportunities.
2. The impact of the global financial crisis on Libya has been thus far limited to the decline in oil revenue. This was due to the lack of exposure of domestic banks to the global financial system. In addition, Libya's foreign assets consist mainly of foreign reserves, which are highly liquid, and the portfolio of the Libyan Investment Authority (LIA). The LIA started operations in June 2007 and a large part of its assets consists of bank deposits.
3. Preliminary data indicate that real GDP grew by about 3.8% in 2008. This reflected strong growth in non-oil activities (8%). Oil output increased slightly in the first three quarters of the year then declined in the last quarter in line with OPEC's decision to reduce quotas. As a result, production for the year as a whole was similar to its 2007 level. Inflation rose in 2008 to about 10% due to higher food prices and a marked increase in public expenditure.
4. The fiscal surplus remained at about 25% of GDP in 2008. Revenue increased by about 37% due to higher oil export prices and enhanced tax and customs administration. On the other hand, overall expenditure increased by an estimated 45%, reflecting 42 and 47% increases in current and capital outlays, respectively. Spending under the Wealth Distribution Program (WDP) was limited to LD 3.3 billion (equivalent to about 3% of GDP), compared to LD 4.6 billion approved in the budget.
5. The external current account surplus remained substantially high at about 41% of GDP in 2008. The rapid increase in imports (29%) was more than offset by a sharp rise in oil exports, resulting in a further build up of the net foreign assets of the Central Bank of Libya (CBL) and the LIA to about $136 billion.
II. Macroeconomic Outlook
A. Outlook: The Large Public Expenditure Will Moderate the Economic Slowdown
6. Real growth is projected to decelerate to about 2% in 2009, mainly reflecting an expected reduction in oil production by about 1.5%. However, non-oil activities are projected to grow at around 6%, which is high by regional and global comparison. Over the medium term, this performance is projected to continue to strengthen, while oil output is expected to recover and steadily grow with the planned expansion in production capacity. Inflation is expected to decelerate substantially in 2009 (to about 5%), in line with the decline in international commodity prices, and to moderate further over the medium term.
7. The overall fiscal position is expected to register a surplus of about 10% of GDP in 2009 despite the projected decline in oil revenue by almost 40%. This is due to prudent public expenditure plans, which are expected to result in a small decline in public outlays after the very large increases in recent years. This reflects a reduction in capital spending by 20% and a 25% increase in current outlays. The overall fiscal balance is expected to strengthen steadily over the medium term with the projected increases in oil output and prices, which exceed the planned increases in public expenditure.
8. In line with the above developments, the external current account surplus is projected to narrow to about 17% of GDP in 2009. As a result of OPEC's output cuts and the sharp decline in oil prices, its exports are expected to fall by about 40%. Imports, on the other hand, are projected to increase by about 6%, broadly in line with non-oil GDP growth. Net foreign assets of the CBL and the LIA will continue to increase, albeit at a slower pace than recent years, to about $150 billion (equivalent to almost 250% of GDP) by end-2009. Further increases are projected over the medium term.
9. This medium-term outlook is subject to possible downside risks relating to a further worsening in global economic conditions or a wavering of the efforts to improve the quality of public expenditure. In particular, a more severe global recession could lead to a further reduction in both oil and non-oil growth. The prospects for inward foreign investment may also weaken. If these risks materialize, economic growth, as well as the fiscal and external balances, would be smaller than the above projections.
III. Policy Discussions
A. Fiscal Policy
10. The authorities' overall fiscal stance strikes an appropriate balance between short and long term considerations. The small decline in public expenditure planned for 2009 is prudent. It is a clear break with the very large increases in recent years, which have raised concerns about expenditure quality. At the same time, it reflects an appropriate decision to not allow the sharp reduction in oil revenue to translate into an abrupt reduction in public expenditure, with adverse implications for domestic economic activity, vital social and economic development programs, and projects that have already been initiated, with large sunk investments.
11. The authorities should, however, focus on the quality and composition of expenditure. In this connection, they are encouraged to reconsider the planned increase in the wage bill in 2009. The 14% planned increase is in large part due to the return to the civil service payroll of a portion of the large number of public employees that were previously transferred to a central labor office for retrenchment to the private sector. This development goes against the intention to reduce the size of the government and encourage the private sector. Apparent increases in other current outlays mostly reflect either improvements in classification or increased external grants to lower income countries. For example, part of previously implicit subsidies have now become explicit.
12. It is crucial to continue to advance the effort to strengthen public finance management. In this regard, the recent merging of the ministries of planning and finance is a welcome step, which will help enhance public expenditure planning, monitoring, and control. It would be important in the period ahead to improve the legal and administrative framework governing the state budget, with a view to streamline and modernize procedures. This would reduce the need for implementing investment programs through funds outside the new ministry. The 2009 budget is already allocating the equivalent of about 5% of GDP to such funds. While these funds offer greater flexibility than budgetary expenditure, they increase the magnitude of quasi-fiscal operations. Furthermore, even though these funds are intended to operate on a commercial basis and engage in activities where the private sector is absent or has a minor involvement, they can become under pressure to deviate from such objectives. A further proliferation of such funds would complicate public expenditure management, increase the potential for losses and price distortions, and crowd out the private sector. Strategic projects that are not sought by the private sector should be implemented either through the state budget or in the context of public-private partnerships with adequate safeguards.
13. The mission welcomes the intention of streamlining the bank accounts of government entities. An establishment of a treasury single account (TSA) at the central bank would importantly support this effort. A TSA would substantially enhance the management of cash flows. Staff stands ready to provide detailed technical advice in support of establishing a TSA and of the efforts to enhance the classification of expenditure and casting the annual state budget within a medium term framework.
14. The mission welcomes the decision to postpone the WDP. If the WDP program goes forward, it should be limited in scope and replace to the extent possible existing subsidies with more efficient well-targeted transfers.
15. The transparent start of the LIA in 2007 was encouraging. The authorities continue to enhance the LIA's operational and legal framework. In this connection, to best serve its core objectives, the focus of the LIA should be on conservative investments abroad on a commercial basis.
B. Monetary Policy and Financial Sector Reforms
16. It is crucial to address the factors behind the large liquidity in the banking system. In particular, on-lending of government funds by specialized credit institutions (SCIs) has been both hampering commercial banks' ability to conduct financial intermediation and contributing to excess liquidity. Furthermore, in the absence of a TSA, there are very large balances of government entities in the banking system. These factors have contributed to a liquidity overhang as evidenced by the large excess reserves. Addressing them would help increase the effectiveness of monetary policy tools. It would also help enhance commercial banks' financial intermediation and, thus, their role in promoting a viable private sector-led growth.
17. The introduction in May 2008 of CBL's certificates of deposit (CDs) was an important step in modernizing the monetary policy framework. They are currently issued at a fixed interest rate and have a single maturity (91 days). The mission supports the CBL's plan to expand the range of maturities for the CDs (especially by adding shorter maturities) and to develop an auction mechanism for them.
18. The mission welcomes the reduction of the budget allocation to SCIs and the initiation of a study on reforming them. It would be important to substantially strengthen their supervision by CBL and to steadily roll back their size and scope of operation to the norm for development banks. Converting them into commercial banks would be very risky in view of their weak technical capacity and the potential size of their NPLs.
19. Ongoing efforts to modernize the CBL and to strengthen supervision are commendable. The recent establishment of a credit bureau and the forthcoming production of financial stability reports are particularly noteworthy. Further efforts are, however, needed in improving coordination between the off-site and on-site supervisory units and to build capacity through additional staffing of qualified personnel and training.
20. Bank restructuring and privatization are making progress. An asset management company to deal with some of the bad loans has been established, capital requirements are being raised, and smaller banks are being encouraged to seek well-established foreign strategic partners. The mission welcomes the CBL's progress in selling its shares in banks.
C. The Exchange Rate
21. The dinar's peg to the SDR has served the economy well. This arrangement provides a strong monetary anchor, while allowing some flexibility in the dinar's exchange rate vis-à-vis individual major currencies. Preliminary econometric estimates indicate that the dinar's real effective value against other currencies has shifted from a moderate undervaluation in 2008 to a moderate overvaluation in 2009, in line with the developments in oil prices. These estimates, however, are not reliable or accurately point to the appropriate level of the equilibrium rate. The mission does not recommend any change in the policy or level of the exchange rate.
D. Other Structural Reforms
22. Progress has been made in customs and tax administration. However, the “service fee” on imports has recently been increased from 4 to 10%, and other ear-marked fees remain in place. The mission welcomes the recent decision to streamline exemptions, and encourages the authorities to adopt low income and corporate tax and customs rates, with very few brackets and limited exemptions. Furthermore, it would be useful to modernize the taxation system, with a view to gradually moving to self-assessment and risk-based auditing.
23. It would also be important to further enhance the regulatory framework in order to improve the business climate. All the above reforms would support the growth of private sector, diversification, and the creation of viable employment opportunities.
24. The mission urges the authorities to continue to improve economic and financial statistics and accounting standards in line with international practices in order to better guide analysis and policy making. In this connection, it welcomes the completion of a household budget survey in 2008 and the recent steps made to improve inter-agency cooperation on external trade statistics. The staff stands ready to continue to support the ongoing reforms in the areas of its expertise. (IMF14.07)
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11.8 PAKISTAN: Economy Crisis Averted?
The Economist Intelligence Unit (http://www.eiu.com) announced that Pakistan has averted an economic crisis, at least in the short term, thanks primarily to the disbursement of emergency financing from the IMF. In recent weeks several macroeconomic data releases have shown that the economy has stabilized. However, the Economist Intelligence Unit believes that the government's goal of improving economic stability will be severely compromised not only by the unfavorable international economic environment but also by a range of domestic factors.
Less than a year ago, Pakistan faced a balance-of-payments crisis and runaway inflation. The IMF stepped in, offering a $7.6bn emergency financing package in late 2008 that forestalled an economic meltdown. According to the organization, progress since then has been good overall. In the first formal review of Pakistan's arrangement with the IMF, in February, the Fund asserted that "the initial success in stabilizing the economy augurs well for the future, despite the risks associated with the deterioration in the global economy". An IMF report in late June confirmed this relatively optimistic assessment.
Among other signs of progress, the fiscal situation has improved, the currency's rate of depreciation has slowed and inflation has eased. The Pakistan government's latest Economic Survey put the fiscal deficit in the fiscal year 2008/09 (July-June) at a provisional 4.3% of GDP. The fiscal gap had been considerably higher than this in the first half of the fiscal year, and it was only a sharp reduction in development spending following Pakistan's acceptance of IMF funding that allowed the government to bring the deficit under control. After depreciating by 13.7% against the US dollar in 2008, the Pakistan rupee's rate of depreciation slowed following the finalization of the IMF assistance package amid rising investor confidence.
Inflationary risks have also abated. Year-on-year consumer price inflation fell to 13.1% in June, from 17.2% in April. Inflation has been on a declining trend since November 2008 and will continue to slow. It has not fallen nearly as rapidly as in many other Asian countries and remains very high. Nevertheless, weaker domestic demand and lower commodity prices will ensure that inflation does not return to the record levels that it reached last year, while reduced government borrowing from the central bank will also reduce inflationary pressures. We expect the annual average inflation rate to fall sharply from 20.3% in 2008 to 12% in 2009, and improving economic stability in 2010 should see inflation moderate further, to 5.5%, in that year.
Three risks
Despite these signs of progress, multiple risks remain. The first is that fiscal discipline will unravel. The government's recently unveiled budget for 2009/10 included plans to increase defense spending by 10%, public order and safety spending by 27%, and education spending by 28%. In addition, spending on the Public Sector Development Program, the flagship development program, will soar by 54% from its level in 2008/09. As a result, we believe that further fiscal consolidation will be impossible, particularly given the environment of slowing economic growth. In May the IMF relaxed its target for government revenue in 2009/10, and revised its target for Pakistan's fiscal deficit in that year to 4.6% of GDP, from a previous goal of 3.4%. The Fund argued that the less stringent target would provide fiscal space and boost economic growth. However, we expect the deficit to widen to 5.1% of GDP in 2009/10.
A second risk is that the fiscal squeeze, coupled with the impact of the global recession, will stifle growth. The global financial crisis has provoked a liquidity crunch in Pakistan. Investment, previously a crucial driver of economic expansion, is set to grow by only 1.7% in 2009/10. This compares with annual average growth of 15.7% during the boom years of 2004/05-2006/07. Meanwhile, the government's need to contain the fiscal deficit means that public consumption growth also will be significantly curtailed. Although private consumption growth will provide support to the economy, we estimate that real GDP will grow by just 2.8% in 2009/10, down from 3.7% in 2008/09. GDP growth will accelerate to 4.4% in 2010/11, driven largely by a resumption in investment as financial constraints ease.
Lastly, Pakistan's economy is threatened by the deterioration of the security situation. In large swathes of the country, the battle against the Islamist insurgency has escalated almost to the point of civil war, with the Pakistani army having launched large-scale offensives against the local offshoot of the militant fundamentalist Taliban movement. With the threat to national security in the foreground, issues of economic management are often put on the back-burner. Moreover, while many analysts are doubtful that the anti-militant campaign will be decisively won, it will certainly be extremely costly. In addition to direct military costs, the government will spend over $600m this year to provide relief, security and reconstruction efforts for the 2.5m Pakistanis displaced by ongoing battles. The recent budget also included a bonus of one month's salary for troops fighting the Taliban, an additional 15% allowance for all government employees, and a 15% increase in pensions for retired civil servants and military personnel.
Outlook
As these persistent risks suggest, Pakistan may have averted a crisis, but its economic stability remains tenuous. The country will continue to need generous dollops of loans and aid. Talks are currently under way between government officials and IMF representatives about the release of a third tranche, worth $875m, of the emergency funding package. Pakistan's acceptance of IMF assistance has simplified the task of the government and the central bank to a degree, in the sense that these institutions will lose a considerable amount of autonomy in economic policymaking. However, the government will continue to protest against some IMF directives, such as unpopular increases in electricity prices, torn between its need to restore economic stability and its fears for its political survival. (EIU10.07)
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11.9 GREECE: Pharmaceuticals & Healthcare Report Q3 2009
Research and Markets (http://www.researchandmarkets.com) has announced the addition of the "Greece Pharmaceuticals and Healthcare Report Q3 2009" report to their offering.
Greece's uncontrolled growth in drug expenditure, which increased by 59% between 2004 and 2008, has led the country to rank among the highest per capita spenders in Europe. While a proportion of this figure is likely attributable to the country's parallel export market, cost effective use of health funds must remain a key focus for the government. BMI calculates that the Greek drug market reached a value of $8.43b in 2008. However, growth looks set to drop off over the forecast period with a compound annual growth rate (CAGR) of 8.25% in local currency terms through to 2013.
The Minister of Health Dimitris Avramopoulos recently announced a number of reforms to the health system designed to constrain pharmaceutical expenditure. In January 2009, a new procurement system was implemented. The newly created Health Procurement Committee (HPC) will conduct all tenders for public health units, reducing bureaucracy in the system. The Greek Ministry of Health is expecting that the HPC will help save €500m per year. Indeed, as a result of its stronger bargaining position, the HPC has already agreed contracts for orthopaedic supplies that are 30% lower than usual prices. Meanwhile, the government is also looking to implement a 3% rebate on retail prices of prescribed pharmaceuticals, to be reimbursed by drug companies. This extra funding will be ploughed into the social security system. The health authorities calculate that this will generate €100m in savings, money that will be spent upgrading public health institutions.
In a highly positive move for the health system, repayments of the high levels of debt owed by Greek hospitals to suppliers and pharmaceutical companies should begin over the course of Q2/09. On March 14, through a system of government guarantees and certification of invoices, the Postal Savings Bank began the process of repaying the €5.2b ($7b) owed to the industry. BMI welcomes the move, although we note that without the implementation of more efficient prescribing regimes, more rational use of medicines and more transparent procurement procedures, debt may continue to accumulate. €1.8bn ($2.4bn) will be released initially, beginning with repayments of the oldest debts from 2005 and 2006. The remainder of the debt is due to be paid back by late 2009 or early 2010.
Greece remains in first place in BMI's Q3/09 Pharmaceutical and Healthcare Business Environment Ranking for Central and Eastern Europe (CEE), comprising of the 20 regional markets surveyed. The country's pharmaceutical market scores 63.2, well ahead of any other markets in the region, due to its strong growth and advanced intellectual property regime. (R&M10.07)
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- Israeli Shekel conversions done at a rate of NIS 4.00 = $1.00
- Turkish Lira conversions done at a rate of NTL 1.60 = $1.00
- Euro conversions done at a rate of € 1.00 = $1.25
- Jordanian Dinar conversions done at a rate of JD 1.00 = $1.41
- UAE Dirham conversions done at a rate of Dh 3.66 = $1.00
- Omani Rial conversions done at a rate of OR 0.385 = $1.00
- Pakistani Rupee conversions done at a rate of Rs 60 = $1.00
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