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Overview of The Palestinian Private Sector

Overview of The Palestinian Private Sector. June, 2011. Chronological development of the Palestinian private sector. The Palestinian private sector is a recent phenomenon.

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Overview of The Palestinian Private Sector

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  1. Overview of The Palestinian Private Sector June, 2011

  2. Chronological development of the Palestinian private sector • The Palestinian private sector is a recent phenomenon. • The business community was nascent in the period between 1967 until the Oslo agreements and deeply connected with Israeli suppliers . • The number of private Palestinian companies was low and the depth of know- how was shallow. • Export-focused activities were almost non-existent given Israeli restrictions and constraints.

  3. Nevertheless, the seeds of the locally grown private sector, which was able to maintain itself through the hardest times became the foundation on which the Palestinian business community was built. • With the advent of the Oslo Peace Accords the Palestinian private sector took on a new complex dynamic. • A handful of investment firms were established thus facilitating the flow of capital into the economy. • Many Palestinians returned to Palestine to work, bringing skills and expertise into the market.

  4. New private sector firms were established: the first Palestinian telecommunications company, new hotels, banks, an information technology sector&more. • The Palestinian economy, although tiny, was a rapidly shifting economy. It started moving from traditional practices to modern ones, from an agricultural base to a service sector and became more export-orientated.  • Donors assisted in the creation of sector associations and provided firm level assistance to some extent, but a strategic approach to the private sector never materialized. 

  5. The Second Intifada which started in 2000 and the unilateral Israeli implementation of separation lead to the deterioration of the Palestinian private sector. 

  6. General Economical Indicators • GDP (2009): 5,147.2 M. USD • GDP per Capita: 1,389.9 USD • GNI (2008): 5,249.0 M. USD • GNI per Capita: 1,459.4 USD • GDI (2008): 2,271.3 M. USD • GNP (2007): 1925.8 M. USD • Total Palestinian Deposits in Banks (2009): 6295.29 M. USD • Population(2008): 3,937,309

  7. Private Sector Overview Around 116 000 operating establishments 44.1% of GDP 63.6% of total employment The vast majority (over 95%) of the private firms operating in the private sector are small firms with less than 10 employees; most are family owned and run. Services Agriculture, Forestry, Fishing 5.6% of GDP 13.4% of total employment Internal Trade, Tourism, Transportation, ICT, Financial Livestock production, Fruits & Vegetables, Olive Oil, Cut Flowers, Export Oriented cash Crops Manufacturing & Mining 13.8% of GDP 12.1% of total employment Construction 6.2% of GDP 10.9% of total employment Quarrying and stone, Textile & Garments, Chemical Industries, Pharmaceuticals, Food Processing, Furniture

  8. Palestinian Export Markets & Sectors

  9. Destinations of Palestinian Exports Israel (90%) “Most of Palestinian exports to Israel are re-exported to 3rd countries;mainly Europe and USA” Arab Countries: Jordan, Saudi Arabia, Yemen, Oman, Bahrain. EU: France, Netherlands, UK, Germany, Italy, Belgium, Spain, Austria, Greece, Cyprus, Ireland. USA Other: Switzerland, Turkey, Japan, China

  10. Export Sectors / Investment Opportunities

  11. Bethlehem Industrial Zone

  12. Key Strengths

  13. Trade Agreements • The PNA benefits from preferential trade arrangements with: • United States of America • Canada • European Union (EU) • European Free Trade Association (EFTA) • Turkey • Russia • GAFTA

  14. Why Invest in Palestine? Exemptions on custom duties on the fixed assets of an enterprise needed for developing, establishing or enlarging an existing enterprise. Special exemptions or incentives for investments in hospitals or hotels. Exemptions and incentives may be granted to enterprises engaged in export activities. Income tax exemptions granted for investments exceeding US 100,000$, with nominal tax rates charged on net profit thereafter, for a given period.

  15. Why Invest in Palestine?

  16. Special Incentives for Investment – MIGA The Multilateral Investment Guarantee Agency (MIGA) is a member of the World Bank group. It promotes foreign direct investment in emerging economies to support economic growth, reduce poverty and improve people's lives by providing guarantees (Political risk insurance) to investors and lenders.

  17. Thank You

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