Israel a global leader in exporting services

“Israel is no longer an exporter of products, it is mainly an exporter of services,” Adv. Uriel Lynn, president of the Federation of Israeli Chambers of Commerce (FICC) recently told The Jerusalem Post.

Lynn sat down with The Post on the occasion of its 90th anniversary to discuss the state of the Israeli economy, the growing trade and services sector, and the future of economic growth.

The FICC, established in 1919, is an umbrella organization responsible for representing the trade and services sector – the largest sector – in the Israeli economy.  

“For many years people thought that trade and services are not important, they believed that the most important sectors are manufacturing, building, and agriculture,” Lynn said.  “But the economy has changed and in most of the western world, trade and services is now the largest sector of the economy.”

Indeed, according to the latest available statistics, as of the beginning of 2022, the FICC represents 69% of the total product of the business sector in Israel and 73% of employees, or nearly 1.8 million people, in the business sector.

This includes both hi-tech and conservative sectors such as shipping, seaports, airlines, tourism, professional services, research and development, and software.

In Israel, Lynn explained, the growth of services has presented, “a real dramatic shift over the last 25 years.” 

“Israel is now the number two country in the world in the export of services in relation to the size of its economy according to an annual ranking by the IMD University in Lausanne, Switzerland,” he said. 

This impressive achievement is due in no small part to the FICC’s role in shaping and promoting this sector.

Over the past few decades, the organization has operated to minimize and limit strikes in seaports and has contributed to the opening of two new seaports in Israel. It has acted to reduce corporate taxes, promoted legislation to protect the rights of employers, acted to reduce excessive regulation, and has worked to implement a dramatic reform in imports, among its main achievements. 

Additionally, the FICC has also signed historic trade agreements with the United Arab Emirates, Bahrain, Sudan, and Morocco as well as created two free trade areas with Dubai. 

“We need to know how to take these achievements and bring them to the people at large to create a better spread of the resources we have,” Lynn said. 

In looking to the future, he believes there are five main challenges facing the Israeli economy.

“We need to ensure the continuing growth of our economy and increase our product per capita because Israel needs a lot of resources, more than other countries, to face its challenges,” he said.

Secondly, Lynn said it is imperative to control the rising cost of living.  “We are really contributing by increasing the competition and making imports easier, in procedure and standards – this is one of the main goals of our organization,” he added.

Additionally, he said the state needs to ensure it is possible for the young generation to buy an apartment as well as significantly invest in the development and education in the periphery.

Finally, Lynn said that the state needs to “restore the safety of the individual and eradicate crime, akin to what Rudy Giuliani did in NYC.” 

“If the government will be able to achieve these five goals we will be in a good position,” he said, adding that on the national level with regards to the economy Israel is currently in a “good” position. 

“Because the economy grew dramatically, export grew dramatically, the Israeli National Product is $485 billion– and that is quite remarkable,” he said. 

Still, Lynn said he is disappointed in state agencies, specifically the Israel Competition Authority which he said is not fulfilling its role, especially when it comes to Israel's seaports.

"Sea ports is where we swallowed the most unnecessary cost of living," he said. "They work under capacity - consciously, we are not using all of the piers available, and the Competition Authority are not really dealing with the places, like seaports, which are a true monopoly."

Despite this, Lynn said that today Israeli business is very strong and will continue to thrive in the future, especially if the government cuts down on excessive regulation. 

"The business sector does not need any assistance from the government, all it needs is that the government will not interfere," he said. "We are moving in the right direction but very slowly when it comes to relieving excessive regulation and burdening procedures is slowing down the growth of the economy."

Lynn added that he hopes this move forward will "allow Israel to grow and develop and share the nature and advantages of the Israeli economy to the world at large."

This article was written in cooperation with FICC