Ministry of Industry and Trade and Labor

Office of the Chief Scientist

Dr. Shaul FreireichDeputy Chief Scientist

July 2010

Source: OECD and Israel CBS

Expenditure on Civilian R&D as a percent of theGDP in Israel and in OECD Countries 2008

4.5

3.6 3.43.22.7

2.52.32.2 2.12.0 2.01.91.81.61.6 1.6

1.4 1.4 1.41.11.01.0 0 .9 0.90.7

0

1

2

3

4

5

Isra

el

Sweden

Finla

nd

Japan

Switzer

land

Korea

Germ

any

Icel

andUSA

Denm

ark

France

Belgiu

m

Nether

lands

Austria UK

Norway

Canad

a

China

Austra

lia

Brazil

New Z

eala

nd

Italy

Russia

Spain

India

Greec

e

3.2

EIS

Scientists & Technicians per 10,000 Workers

140

83 80

6055 55

45 43

33 33 3225

0

20

40

60

80

100

120

140

Israel US Japan Germany Canada Switzerland Taiwan UK Ireland Italy Singapore Spain

LEGAL BASIS

R&D Law

Directives of the Director General

Regulations&

Procedures

International Cooperative Agreements

O.C.S circulars

Encouragement of Industrial and Development Law 1984 -

Objectives

• Development of Science Based Industries Based on Technological Infrastructure and Existing Human Resources.

• Enhance the Benefit of R&D to the Economy Beyond the Direct Benefit to the Developer.

• Improve Israel’s Balance of Payments Through the Manufacture and Export of High-Tech Products.

• Creation of Job Opportunities and Absorption of Scientific and Technical Manpower.

Office of the Chief Scientist (OCS)

• Policy – R&D Law, Directives, Procedures.

• Programs – R&D Fund, “Magnet”, “Incubators”, “Tnufa” etc’.

• Proposals –(Projects)- Proposal and Evaluation.

Bi-National Funds

U.S, Canada, Singapore, South

Korea

Activities of the O.C.S.Chief

Scientist

International ActivitiesActivities in Israel

European Union Programs

Eureka ,Eurostars FP -7.Bi-National

Agreements

India, Italy, China, Germany France and

many more

Support for Industrial R&D

MagnetMagneton

Nofar

Technological Incubators

Tenufa

International Cooperation(1)Bi-National Funds for Industrial R&D

• Existing FundsBIRDF Israel-United StatesCIIRDF Israel-CanadaSIIRD Israel-SingaporeKORIL-RDF Israel-South Korea

Essentials:A pair of companies from the two countries may make a joint application to the directorate of the fund for a R&D grant.

Grants: Up to 50% of the approved budget.Obligation to pay royalties.

• Objective:– Support Joint Programs– The approval process & grant payment is carried out

by each governmental support agenciy.– Final approval is conditioned on approval by each

country. Existing Agreements: India France Portugal Holland Spain Sweden Ireland Germany Italy China Finland Hong-Kong

Grants: Generally 50% of the approved budget. Obligation to pay royalties.

International Cooperation(2)Agreement for Parallel Support for R&D

International Cooperation(3)

• Associated State in the FP 7.

• Member in Eureka & Eurostars. • Member in AAL (Ambient Assistant

Living), Galileo and other EU programs.

• Observer status in CERN.

International Cooperation(4)EUREKA PROGRAM

• European inter-governmental framework for 40 European inter-governmental framework for 40 R&D national programs directed to support R&D national programs directed to support industrial innovation.industrial innovation.

• Approves yearly 300 industrial R&D projects with Approves yearly 300 industrial R&D projects with total budget of €1.5 B.total budget of €1.5 B.

Israeli companies participate in 40 cooperation Israeli companies participate in 40 cooperation projects a year – more than 10% of total activity.projects a year – more than 10% of total activity.

• Israel was elected to chairmanship in 2010-Israel was elected to chairmanship in 2010-2011.2011.

Examples Foreign Companies investing in Israel

U.S. Europe Asia

Microsoft SAP LG Group

Intel Phillips Medical Samsung

IBM Siemens Sun Pharma.

GE Health Nestle Jain Irrigation

Johnson & Johnson Danone Sony

Perrigo Ferrig Acer Computers

Hewlett Packard Vilmorin Toyo Ink

Policy – Some Dilammas

• Should the Government take a more Should the Government take a more active role? (e.g.:providing preference active role? (e.g.:providing preference to certain sectors?)to certain sectors?)

• How to promote both foreign & local How to promote both foreign & local investments? investments?

• What about traditional industries & What about traditional industries & unemployment? unemployment?

OCS Grants by technological sectors 2009

Chemicals, 3.2%Life Sciences, 27.7%

Communications, 30.4%

Electronics, 13.2%

Electro-Optics, 5.5%

Misc., 8%

Software, 12%

OCS Annual Budget (million $) by funds

317281

216196176205

58

53

4646

41

41

47

49

3333

3125

279255

280300

41633

430

200920082007200620052004

R&D Fund MAGNET Technological incubators Other

International cooperation in OCS(M$)2009

27.3

43.3

54.4

66.4

2000 2007 2008 2009

R&D Indirect Support .

•Tax Relief

•All R&D expenses are tax deductible

over a three year period.

Under section 20a of Income Tax Ordinance, for OCS approved project, R&D expenses are fully deductible in the year in which they were incurred.

Technological IncubatorsPre-Seed & Seed R&D

2009 Budget – NIS 186 M ( 50M$). A framework for nascent companies to

develop their innovative technological ideas into start-ups that can attract private investors.

Suitable facilities for R&D activity & administrative and logistic support to projects.

24 Incubators;8-10 projects in each: Grants up to 85%.

MAGNETGeneric R&D

2009 Budget – NIS 225 M ( 61M$). Supports consortia of industrial companies

and academic institutions. Target: jointly develop generic, pre

competitive technologies or dissemination existing new technologies.

The technology cannot be acquired from commercial sources at competitive prices.

Grants of up to 66% - royalty free.

Principal steps in relation to project proposals

•Submission.

•Evaluation.

•Decision.

•Monitoring.

•Audit.

R&D GRANT Requirements

• Technological Innovation• Export Potential• Management Ability

Grants are usually 30-50%In designated development areas, additional 10-25%

R&D GRANTS Terms and Conditions: Obligation to Pay Royalties (up to 100% of grant)

Evaluation possibilities

• One or two-stage evaluation.

• A single or a group of evaluators .(Peer Review).

• Site visit or remote evaluation.

• A committee decision (considerations )or a priority list ( “automatic” process).

Formulating the evaluationGrading from 1-5( 1 – not recommended…..3 – Average…5 – highly

recommended Section Head Tech. evaluator

Reasons Grade Reasons Grade Criteria Technological

Aspects Economic

Aspects Company

Capability Quality of co-

operation in bilateral project

Clarity and Supporting

Data Total Grade

ProceduresWorking program for the Technical Evaluator

• Functions of the evaluator.• Functions of the Section Head.• Evaluation of the Proposal.• Presentation of opinion to the Section Head.• The Section Head’s presentation to the

Research Committee.• Decision.• Auditing the project while in process and upon

completion.

Extend of Evaluation work at OCS

•Approximately 2000 evaluations in all programs.

•Evaluators participate in ca.60 committee meetings.

•70 evaluators, all on special contract.

Last remark

Before I came here I was confused about this subject. Having listened to your lecture, I am still confused, but on a higher level.

Enrico Fermi ( Nobel Prize 1938)