Last week, the Association of Manufacturers urgently appealed to the Prime Minister, the Minister of Finance, and the Minister of Economy and Industry, following a change proposed by the Ministry of Finance to make in regards to mutual procurement from Israeli businesses.
We will explain: Reciprocal procurement is an obligation of the selling country to purchase products in a certain proportion of the scope of the transaction from the purchasing country, with the aim of balancing the commercial balance between the two entities.
In the latest draft of the law, which is expected to be submitted to the government on Thursday, the Ministry of Finance proposes to cancel the mutual procurement obligation from Israeli businesses in essential infrastructure projects.
Hundreds of billions of shekels
According to the manufacturers' association's estimate, this means renouncing an economic contribution amounting to hundreds of billions of shekels in Israeli businesses, and renouncing tens of thousands of jobs for Israelis, which are created directly as a result of the mutual procurement.
Dr. Ron Tomer, President of the Industrialists' Association, photo: Yossi Aloni
"The national infrastructure projects are the largest and most extensive projects that will be carried out in Israel in the coming decade. The cost of the projects is estimated at hundreds of billions of shekels which will be spread over several years and will change the infrastructure system in Israel," the petition states.
"An economic-conservative analysis, the findings of which were backed up by additional studies and were not hidden by the Ministry of Finance, illustrates the tremendous contribution of the implementation of the regulations in the infrastructure projects. According to the analysis, the implementation of the provisions of industrial cooperation and mutual procurement in the metro project alone, is expected to lead to an increase of more than - 22 billion shekels in the national product, and according to the data of the Ministry of Economy and Industry, to create more than 57 thousand direct jobs with high productivity and tens of thousands of additional jobs in the peripheral circles, all the more so for the national infrastructure projects.
"Furthermore, mutual procurement is a basis for certifying Israeli manufacturers as authorized suppliers of a wide variety of international companies, and allows them to have their supply chain all over the world and promote them in the worlds of export," wrote the President of the Association of Manufacturers, Dr. Ron Tomer.
They didn't learn anything
Tomer strongly opposes the bill, and writes that he was surprised to see that the government "learned nothing" from the events of recent years, regarding the enormous importance of strengthening the local economy for the sake of national resilience.
"In order to ensure that the development of the infrastructure in Israel will contribute to the growth and employment of the Israeli economy, we must insist that in the implementation of the projects, care will be taken to maximize the use of Israeli products and direct procurement from the Israeli industry."
Nir Barkat, photo: Noam Rivkin Fenton
Minister of Economy and Industry, Nir Barkat: "Reciprocal procurement is an excellent tool for strengthening local industry, and connecting it to global markets through huge companies. This is a business opportunity. Despite various attempts to exempt various projects from this obligation - we will stand for the continuation of the commitment in the budget discussions."
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