Bernardo M. Villegas
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Land of Milk and Honey (Part 2)

          Closer economic and cultural ties of the Philippines with Israel can help us accelerate the improvement of both our educational system and our technological sector.  As reported in Wikipedia, Israel’s quality university education and the establishment of a highly motivated and educated population are largely responsible for ushering in the country’s high technology boom and outstanding economic development.  Its highly developed educational system, especially at the university levels, coupled with an effective incubation system for new cutting edge ideas to create value driven goods and services have allowed the country to create a high concentration of high-tech companies financially backed by a strong venture capital industry.  It has a central technology hub called “Silicon Wadi” only second in importance to the original Silicon Valley in California, USA.  A  good number of Israeli companies have been acquired by global corporations for their reliable and quality technical personnel.  The country was the destination for Berkshire Hathaway’s first investment outside the U.S. when it acquired ISCAR Metalworking, and the first research and development center outside the U.S. established by high-tech giants Intel, Microsoft, and Apple.

         Because of its impressive track record for creating profit driven technologies, Israel has become the first choice for many of world’s leading entrepreneurs, investors, and industry giants.  The very dynamic environment of the country has attracted attention from international business leaders such as Bill Gates of Microsoft, investor Warren Buffet, real estate developer and now U.S. President Donald Trump and telecommunications giant Carlos Sim.  In September 2010, Israel was invited to join OECD, the organization of highly developed countries all over the world.  It also has signed free trade agreements with the European Union, the U.S., the European Free Trade Association, Turkey, Mexico, Canada, Jordan, Egypt, and in 2007 became the first non-Latin American country to sign a free trade agreement with the Mercosur trade bloc.

         In the past few years, Foreign Direct Investments have flowed into Israel in massive amounts, as companies that formerly shunned the Israeli market now see its potential contribution to their global strategies.   In fact, my own experience when I recently visited Israel for a three-week study and tour made me realize that foreign media oftentimes exaggerates the dangers to visitors from the geopolitical realities in Palestine.  Despite some alarming news concerning the controversy generated by the announcement by President Trump of the US that Jerusalem would be made the Capital of Israel, there was not a single day that we felt threatened by untoward incidents.  The Israeli government is extremely competent in securing the land and the status quo among the various groups—the Jews, Arabs and Christians in the Holy Land—has maintained peace and order very well.  As the Financial Times reported “bombs drop, yet Israel’s economy grows.” 

         The effectiveness of the security forces is fortunately complemented by equally effective macroeconomic policies which have resulted in the country being a net lender rather than a borrower nation.  The Bank of Israel refused to succumb to pressure by the banks to appropriate large sums of public money to aid them in the crisis of the early 2000s resulting from the dotcom crash.   This conservative monetary policy limited the banks’ risky behavior.  Another prudent measure was the implementation of the recommendations of the Bah’ar commission in the early and mid-2000s which recommended decoupling the banks’ depository and investment banking activities, contrary to the global trend, especially in the United State, of easing such restrictions which had the effect of encouraging more risk-taking in the financial systems of these countries.

         The conservative monetary policies of the Bank of Israel has created an environment conducive to the growth of the venture capital industry, which has played an important role in funding the country’s booming high-technology sector.  There are now hundreds of prosperous Israeli private equity and venture capital firms looking to invest in the next potential million or billion dollar business startup.   A good number of Israeli high-tech companies have been acquired by global corporations for its reliable corporate management and quality personnel.  In addition to venture capital funds, many of the world’s leading investment banks, pension funds, and insurance companies have a strong presence in Israel, employing their fund to support Israeli high-tech firms and benefit from its prosperous high-tech sector.  These institutional investors include Goldman Sachs, Bear Sterns, Deutsche Bank, JP Morgan, Credit Swiss First Boston, Merrill Lynch, CalPERS, Ontario Teachers Pension Plan, and AIG.  It would be well for our own fledgling venture capital sector to study closely the experiences of their counterparts in Israel to learn some important lessons.

         The sector that I was able to observe at close range is, of course, the tourism industry which is one of Israel’s major source of income.  In 2017, it attracted 3.6 million foreign tourists.  This may appear puny, considering the tens of millions of foreign visitors that visit countries like Thailand, Malaysia, Singapore, etc. annually.  But considering the “bombs falling” over the last few decades, such a figure can still be considered a real feat.  As people all over the world—especially among Christians who are attracted to the holy places of Israel—realize that it is relatively safe to visit the country, it would not be impossible to duplicate in the coming years the recent record at which tourist visitors increased by 25 percent from 2016 to 2017.  The main attraction is, of course, Jerusalem which holds the unique distinction of being the “Holy City” for half the human race—for Jews, Christians, and Muslims. When I visited Jerusalem and the surrounding holy sites last January 10 to February 1, 2018, I coincided with numerous Chinese and South Koreans, who are among the top Asian tourists anywhere in the world today.   In addition to the holy sites, the most popular secular site is Masada, a fortress built on top of a mountain about 110 kilometers south of Jerusalem.  Herod the Great used this fortress as a stronghold for himself and his family for fear of being deposed by the Roman Emperor Mark Anthony and even by his own Jewish followers.  This impressive site is well-known for one of the most dramatic and moving stories of mankind.  Here in 73 AD, 960 men, women and children, having withstood a prolonged siege, chose to die by their own sword rather than submit to Roman slavery.  For comments, my email address is