When setting out on the trip, there were several reasons why business with Israel seemed particularly desirable; it is a country that is relatively easy to access geographically from Jersey and where English is widely spoken, and the standards of regulation, like our own, are extremely high.
Additionally, Israel has come out of the global slowdown quickly, experiencing limited impact. Its GDP is now at about 4-5% and its nominal GDP is about $215bn (£134.2bn, €151.1bn). Similarly to Jersey, it has experienced no banking stability issues, having a trend for conservative lending.
Also like Jersey, Israel has gone through difficulties with industries going into decline, and has been forced to reinvent and develop itself, with little outside help. We have moved from cod fishing, to knitting (and a little privateering), to agriculture, tourism and relatively recently to financial services. Israel is now focused on high tech and bio-medical industries, and cleantech has emerged as a major economic activity.
Volatile relations
Israel has many entrepreneurs, focused on diversifying their expertise and wealth as much as possible. I believe this attitude in particular has contributed to the strong growth in Israel, although as one person there commented to me, “economic success is everywhere, but the political progress is nowhere”, with the relations between Israel and its near neighbours continually volatile.
Despite and perhaps because of, the complexities of the political situation, business is booming, and there are now concerns about the potential for the economy to overheat, driving a desire to invest outside of Israel.
Private client possibilities
While traditionally in the past Israel has looked to the US for this sort of opportunity, they are also now beginning to look to Europe, and I believe Jersey would be a useful partner for corporate business. With many individuals building personal wealth through business start-ups, there is a potential for Jersey to secure private client business.
A small number of Jersey firms have already committed to this market and are seeing returns. Foundations could also be a good differentiating platform given Jersey’s high quality offering, and this in turn could produce trust, private client and private banking business. The company formation and funds markets look more challenging given the Israelis have established patterns of using Delaware companies for listing high tech companies on NYSE or NASDAQ for capital raising activity.
However, the advent of e-gaming and IP capabilities could change this, as companies look at the Jersey offering which may drive spin-off establishment, structuring and corporate services provision. Institutional investors in the form of pension and insurance funds have funds available due to the high savings ratio in Israel and success of the economy.
Discovering the meaning of chutzpah
Finally, there is a saying I learned during the trip, used to describe extreme audacity, which is “chutzpah”, but it was also explained to me in the context of business, as being an attitude of “do it now”. It expresses the attitude that trying, and learning lessons from intelligent, imperfect action, is more important than discussing perfect theory, and there are times when I think this could be usefully applied to balance out Jersey’s tendency towards lengthy debate. Especially now, post-recession, it is a time for action, for us to find our own sense of chutzpah, and get on with it.
