Executive Summary:
The changing map of foreign investment in Israel demands a new balance between market access and investment review. The Israeli government has not yet communicated to the global investment community its vision for foreign investment in Israel, especially in the banking, insurance, commodities and defense markets. This vision is crucial so that multinational companies can make informed investment decisions. Current ambiguities in this regard leads to policy inconsistency, resulting in the fact that many potential foreign buyers avoid penetrating the Israeli market altogether.
Israel needs new legislation that would establish an interdisciplinary, comprehensive and consistent review mechanism for foreign investment, especially in relation to sensitive and strategic assets. Israel also needs a better and more consistent integration of national security considerations in its foreign investment and economic review processes.
A more qualified workforce familiar with the investment-security nexus, a better integration of economic thinking into the national security establishment, and a stronger and more structured participation of the National Security Council in investment decisions – are all important steps towards a more effective review process of foreign investment in Israel.