The Cabinet, at its weekly meeting on Sunday morning 14 Teves, approved Prime Minister Binyamin Netanyahu’s proposed plan to strengthen economic links and cooperation with Japan. The plan constitutes a roadmap for various government ministries regarding a focused effort to strengthen economic links by investing tens of millions of shekels over three years. The plan is based on identifying areas of interest common to both countries and is designed – inter alia – to enable the full utilization of the latent economic potential for the Israeli economy.

Prime Minister Netanyahu emphasized, “The State of Israel must vary the markets in which we are active. In the last two years, I have met with the leaders of China, Japan and India as part of a comprehensive policy of turning to major markets including Latin America and Africa.”

Economy Ministry

Opening a trade office in Osaka, in addition to the trade office in Tokyo; increasing the number of commercial attaches in Tokyo; strengthening business activity in Japan; branding doing business with Israel in Japan; increasing Israeli companies’ exposure to Japanese firms and vice-versa; expanding the Economy Ministry Chief Scientist’s activity in Japan; enlarging the India-China Fund so as to include Japan.

Finance Ministry

Advancing negotiations on a bilateral agreement to encourage and protect investments.

Science, Technology and Space Ministry

Increasing joint research grants by 50% in 2015; increasing space cooperation; strengthening ties between Israeli and Japanese researchers.

Foreign Ministry

Advancing plans for a visit by 500 young leaders from Japan to Israel over three years. The young leaders will be in Israel for approximately one week during which they will be exposed to various aspects of the economy, culture, administration and life in Israel.

Tourism Ministry

Plan to increase the number of Japanese tourists by 45% by 2017.

Transportation and Road Safety Ministry

Increasing cooperation in various transportation technologies and infrastructures with emphasis on public transportation; transportation research and development.

Advancing plans for bilateral cooperation by the ministries of Health, Agriculture and Rural Development, Culture and Sports, as well as regarding alternative fuels.

It should be noted that Israel and Japan have become significantly closer in the past year. In this context, there has been an increase in the frequency of official visits between the two countries. Prime Minister Netanyahu visited Japan this past May as a guest of Japanese Prime Minister Shinzo Abe.

Since the visit, there has been an increase in Japanese interest in cooperation with – and investments in – Israel which is finding expression in the arrival in Israel of parliamentary, government and economic delegations. Last November, Prime Minister’s Office Director-General Harel Locker led an economic delegation to Japan consisting of economic leaders as well as government, and academic and economic organizations. Locker delivered to his Japanese counterpart an invitation from Prime Minister Netanyahu for Prime Minister Abe to visit Israel. In July 2014, the Japanese Economy Minister led a delegation of industrialists to Israel.

Against the background of the foregoing and in light of the desire to vary and expand the Israeli economy’s trade targets, Prime Minister Netanyahu has instructed that economic ties and cooperation with Japan be moved forward. This decision anchors the government staff work that has been carried out on the issue and constitutes a roadmap for continued activity and expresses the principles that were included in the joint statement by the Israeli and Japanese prime ministers regarding the building of a new and comprehensive partnership between the two countries, which was issued following Prime Minister Netanyahu’s recent visit to Japan.

The Japanese economy is the third largest economy in the world (after China and the US) with a 2013 GDP of approximately $4.7 trillion. Israeli exports to Japan have been stagnant in recent years and amounted to approximately $720 million in 2013. However, the relative size of Israeli exports to Japan, in the context of Israel’s overall exports, has been shrinking. Currently, exports to Japan constitute only around 1.3% of overall Israeli commercial exports. Israeli exports to Japan are relatively varied and the leading sectors are machines and machine tools, electronic equipment, optical machines and tools, medical devices, chemical products and processed food products. There is considerable cartelization in exports to Japan with approximately 9% of exporters being responsible for approximately 75% of total exports.

Deepening trade ties with Japan contains several advantages for the Israeli economy: Boosting exports to Japan is an important goal in and of itself but also serves an additional goal – expanding the geographic scope of Israeli exports by helping additional Israeli companies to penetrate the Japanese market, with an emphasis on small- and medium-sized businesses. There is demand in Japan for Israel technologies and know-how which have yet to realize their market potential, for example in the following fields: Pharmacology and medical equipment, cyber and information security, agricultural technology, and green energy and the motor vehicle market. Increasing the number of companies marketing overseas and varying the marketing sectors will lead to a wider diffusion of risks in Israel’s foreign trade.

Opening a trade office in Osaka will promote broader access to local industry in the Kansai region. The GDP of Kansai alone is approximately $1 trillion. Thus, if Kansai were a country, its GDP would rank it as the 16th largest economy in the world. Many of Japan’s and the world’s largest companies are located in Kansai; therefore, the region has commercial potential for Israeli companies vis-à-vis cooperation with Japanese firms and in terms of exports. In order to realize the commercial potential of the Kansai region, it has been proposed to expand the activity of the trade mission in Tokyo by establishing an office in Osaka to be staffed by two advisers.

According to Economy Ministry Foreign Trade Administration data, Israeli exports to Japan in 2013 constituted approximately 0.1% of Japan’s total imports. To underscore the potential of exports to the Japanese market, it is possible to compare Israel’s 2013 exports to Japan (worth approximately $720 million) to exports to Japan by countries similar in size to Israel: Austria — $1.6 billion, Denmark — $1.9 billion, Belgium — $2.5 billion, and Ireland — $3.5 billion.

The government’s goal is to increase exports to Japan by 50% by 2020 such that exports will amount to approximately $1.1 billion per annum. An additional government target is to increase the number of Israeli exporters to Japan which export over $500,000 per annum to 33% by 2020, i.e. that there will be over 210 such exporters.

In the framework of the decision, a follow-up team – led by the Foreign Ministry Director General – will be appointed. The staff work for preparing the aforesaid roadmap was led by Prime Minister’s Office Deputy Director General Yossi Katribas.

(YWN – Israel Desk, Jerusalem)