Fortnightly, 16 May 2018

Fortnightly, 16 May 2018

May 16, 2018


16 May 2018
2 Sivan 5778
1 Ramadan 1439




1.1  Bank of Israel Approved Most Bank Branch Closing Requests
1.2  The Bank of Israel Increases Deterrence Against Counterfeiting of Banknotes
1.3  Indiana Gov. Holcomb Works to Advance Innovation & Agbiosciences Partnerships in Israel
1.4  Israel, Cyprus & Greece Promote East Med Gas Pipeline to Europe
1.5  Netanyahu Government Approves NIS 2 Billion for Residents of Eastern Jerusalem
1.6  U.S. Treasury Secretary Mnuchin Discusses Tax Reform with his Israeli Counterpart


2.1  AVM Orders 58 EV Busses from Israeli Transport Company
2.2  IFF to Combine with Frutarom to Create a Global Leader in Taste, Scent & Nutrition
2.3  Delta Galil to Acquire Leading French Men’s Underwear Group “Eminence”
2.4  Israel’s Online Supermarket BringBring Challenges the Big Chains
2.5  OurCrowd & Bangkok Bank Strategic Alliance Formed as Asia Expansion Continues
2.6  BriefCam to be Acquired by Canon
2.7  Sckipio Raises $50 Million to Date with New $10 Million Funding
2.8  SafeBreach Announces $15 Million Series B Led By Draper Nexus
2.9  Foresight Signs an Agreement to Merge its Eye-Net Activities with Tamda
2.10  Minerva Labs Recognized as 2018 Red Herring Top 100 Europe Winner
2.11  Velostrata Partners with Google Cloud to Accelerate Enterprise Cloud Migration
2.12  Protego Secures $2 Million in Seed Funding for Serverless Security Platform
2.13  ISA and TAU Ventures Launch Startup Accelerator
2.14  SolarEdge to Acquire Gamatronic, a UPS Technology Leader
2.15  My Size Files Patent Applications for Its Smartphone Based Measurement Technology
2.16  Intel Submits Plan for $5 Billion Kiryat Gat Expansion


3.1  Sharp Increase in Russian Traffic at Dubai World Center in First Quarter
3.2  Insurtech Startup Aqeed Raises $18 Million
3.3  Saudi Appetite for Organic Food Said to be Growing
3.4  La Reina Raises $1 Million from Algebra Ventures & 500 Startups
3.5  Saudi Arabia’s Syarah Secures $2 Million in Funding


4.1  Israel to Invest NIS 25 Million in Car Charging Stations to Boost Clean Energy
4.2  Natural Gas Generates 93% of Jordan’s Electricity
4.3  WHO Says Cairo is World’s Second Most Polluted City
4.4  In Less Than 3 Years 90% of Air in UAE Will Be Pure


5.1  Lebanon’s Trade Deficit Dropped by 5.3% in First Quarter
5.2  Lebanon’s Industrial Exports Climbed by 6.3% y-o-y to $187 Million in January 2018

♦♦Arabian Gulf

5.3  Kuwait to Postpone VAT Implementation to 2021
5.4  IMF Says for MENA, Dubai Powering UAE’s Growth
5.5  Saudi Arabia’s Non-Oil Revenue Jumps 63% to $14 Billion

♦♦North Africa

5.6  Egypt’s Minister of Finance Plans to Cut Deficit by 2020
5.7  Egyptian Remittances Record $17.3 Billion in 8 Months
5.8  Egypt’s Unemployment Rate Drops to 10.6% in First Quarter
5.9  More Than 50% of Egyptians are Health Insurance Subscribers & Beneficiaries
5.10  USAID to Contribute $19 Million to Help With Egypt’s Family Planning Efforts
5.11  Egyptian Parliament Approves Controversial Clinical Trials Law
5.12  Morocco’s Fiscal Deficit Narrowing Slowly in 2018 and 2019


6.1  EBRD Foresees 4.4% Growth for Turkey in 2018
6.2  Cyprus’s Growth Forecast Revised to 3.2%
6.3  Cyprus’ First Quarter Trade Deficit Drops by 47% to €669 Million
6.4  Greek Consumer Price Inflation Increases to 0.5% in April
6.5  Greek February Unemployment is the Eurozone’s Highest at 20.8%



7.1  Israel’s Netta Barzilai Wins Eurovision 2018 Song Contest
7.2  US Embassy in Jerusalem Inaugurated


7.3  Hezbollah Sweeps Lebanon’s First Parliamentary Elections in Nine Years
7.4  Ramadan Work Hours for UAE Private Sector Announced
7.5  Egypt Had 3.031 Million Students Enrolled in Higher Education in 2016/2017


8.1  Biggest Agricultural Tech Expo in Israel’s History Held in Tel Aviv
8.2  Aleph Farms Beefs Up Clean Meat
8.3  Healthy Height High-Protein Shake Helps Children Grow
8.4  INSIGHTEC Announces First Parkinson’s Patient Treated With Incisionless Brain Surgery
8.5  Agrotop & Poultrix Provide Smart Management Technology for Poultry Farms
8.6  Hebrew University’s Yissum Launches Ag-Tech Accelerator
8.7  Kedrion & Kamada Begins Shipping of KEDRAB (Rabies Immune Globulin [Human])
8.8  CollPlant Files U.S. Patent Application for Next Generation Dermal Filler
8.9  Evogene & Marrone Announce Phase Advancement in their Insect Control Collaboration
8.10  3NT Medical Announces Initial Closing of $15 Million
8.11  Tyson Ventures Announces Investment in Future Meat Technologies
8.12  Rootility Raises $10 Million
8.13  Algatech Partners With Sphera on Microalgae
8.14  Cancer Treatment Developed at Ben-Gurion University Shows Ability to Reprogram Cancer Cells
8.15  Allium Medical Receives CFDA Clearance to Market its Minimally-invasive BPH Implant Stents
8.16  BrainQ Raises $8.8 Million to Treat Neurodisorders with Artificial Intelligence


9.1  Regulus Cyber Publicly Announces a Technology to Secure Autonomous Vehicles
9.2  Vayyar Imaging Unveils the World’s Most Advanced CMOS SOC for mmWave 3D Imaging
9.3  Safe-T Announces New Worldwide Channel Partner Program
9.4  Typemock Launches C/C++ Mocking Framework for Linux
9.5  SecBI to Support Orange Polska in Augmenting Its Managed Cyber Services
9.6  Coneuron Turns Toward Screenagers to Create a Positive Vibe in Social Networks
9.7  Amiad Launches New Sigma Series for Improved Irrigation Filtration
9.8  PureSec Unveils First Serverless Security Solution for MS Azure Functions
9.9  Cognigo Collaborates with Microsoft AIP to Secure Critical Data Assets
9.10  TowerJazz & Newsight Imaging Announce Advanced CMOS Image Sensor Chips
9.11  Cheetah Mobile Boosts Traffic Quality & ROI on Ad Spend with Protected Media
9.12  Saguna & GridRaster Partner to Bring VR/AR Experiences to Mobile Devices
9.13  AR Drone Startup Edgybees Wins Techsauce Israel Challenge
9.14  Luminate Achieves Rigorous SOC 2 Type II Certification
9.15  Anodot Selected Coolest Business Analytics Vendor in CRN’s 2018 Big Data 100 List
9.16  Shieldox Announces Collaboration with Microsoft Information Protection to Protect Data in Motion
9.17  Boeing & Assembrix to Collaborate on Secure 3D Printing
9.18  Time2Market Selects AudioCodes Virtualized SBC for Growing Hosted Skype for Business
9.19  Epsilor to Deliver Rechargeable Batteries to South Asian Army for Harris Falcon Radios
9.20  Alcide Named a Gartner Cool Vendor in Cloud Security for 2018


10.1  Home Prices Continue Falling While April CPI Rises by 0.4%
10.2  Israel Defense Exports Increase by 40% in 2017
10.3  Israeli Startups Begin Strong 2018 with Raised Capital of Over $1.5 Billion in First Quarter
10.4  Israeli Tourism Increases by 25% in 2018 to Reach New Record
10.5  IATI 2018 Israeli Life Sciences Report: Local Industry Continues to Grow and Mature
10.6  Passenger Traffic at Ben Gurion Airport Rises by 16% in 2018


11.1  ISRAEL: Israel’s Imports of Goods by Country of Origin 2017
11.2  ISRAEL: Report on the Investment of Israel’s Foreign Exchange Reserves in 2017
11.3  JORDAN: EBRD Says Jordan Economic Growth Will Improve Slightly in 2018
11.4  OMAN: Sultanate of Oman ‘BB/B’ Ratings Affirmed; Outlook Stable
11.5  EGYPT: Egypt Upgraded To ‘B’ On Improving Macroeconomic Fundamentals; Outlook Stable
11.6  EGYPT: Egypt Establishes a Sovereign Fund
11.7  TURKEY: Turkey Ratings Lowered On Deteriorating External Performance & Higher Inflation


1.1  Bank of Israel Approved Most Bank Branch Closing Requests

The Bank of Israel approved 96% of the requests by banks to close branches, according to figures obtained from the Bank of Israel.  Two years ago, an amendment to the Banking Law went into effect stating that closing a branch required approval from the Bank of Israel.  Figures obtained by Globes show that over a two-year period, 125 of the 130 requests submitted for closing branches were approved.  For the sake of comparison, only 17 requests to open branches were received.  While 94 of the requests were immediately approved, the Bank of Israel approved 31 of the requests with conditions (e.g. operating a mobile branch or leaving an ATM in place of the closed down branch). Five requests to close branches were rejected.

Banking sources said that a high proportion of requests were approved because the banks are not seeking to close down branches in difficult places, such as location in outlying areas where there is only one branch.  The banks are also seeking an unofficial pre-ruling from the Bank of Israel in the matter; they are submitting an official request only after getting an indication that there is no problem about closing down the branch.

The figures show that 263 bank branches have been closed in Israel since the beginning of 2012.  The trend has gained momentum over the years, reaching a peak in 2016, when 69 branches were closed down.  The trend has since slowed; 46 branches were closed down in 2017 and only two branches in 2018.  At the same time, most of the closures take place in the final months of the year, so the current figure for 2018 is misleading.  The banks predict that the pace of bank branch closures will continue to slow, with a total of 30 branches closing down in 2018.  Most streamlining in the banks currently focuses on cost-cutting within branches – cutting down on space and closing teller positions, which frequently results in customer complaints.

The figures provided to the Movement for Freedom of Information by the Bank of Israel give a glimpse of various features of the process of closing down branches.  For example, 60% of the branches closed down were in the central region, of which more than half were in Tel Aviv.  On the other hand, less than 7% of the branches closed down were in the southern region and 17.5% were in the Haifa and northern regions.  The trend towards closing down branches is accompanied by an increasing switch to the use of technological means of conducting bank transactions, with banks charging a smaller fee for a transaction conducted through a direct channel than one conducted through a bank employee in person.  (Globes 03.05)

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1.2  The Bank of Israel Increases Deterrence Against Counterfeiting of Banknotes

On 8 May, a suit was filed on behalf of the Bank of Israel, the first of its kind, against defendants convicted of counterfeiting banknotes.  This step comes in addition to intensive enforcement measures carried out by the Israel Police and reflects the close cooperation between the Bank of Israel and law enforcement authorities, using a variety of tools and methods to protect the public against currency counterfeiting, and to bring the full extent of the law against counterfeiters.  The suit will send a clear and deterring message that in addition to criminal law, counterfeiters will also face civil lawsuits for significant amounts.  The suit was filed on behalf of the Bank of Israel by the Civil Enforcement Unit of the State Prosecution and the Southern District (Civil) Prosecutor.

In addition to deterrent and enforcement measures, the Bank of Israel acts through a variety of channels to ensure that the banknotes provided to the public are authentic and secure.  The security features on the new series of banknotes were created with advanced technology and are among the best in the world.  Counterfeiters have so far been unsuccessful in any attempt to mimic the security features, and the Bank of Israel’s public information and awareness efforts, under the slogan “It’s simple to make sure that it’s secure” are intended to acquaint every citizen with the security features and easily check that the banknotes in his or her possession are authentic and secure.  The Bank of Israel will continue cooperating with law enforcement authorities, as well as various entities in the business sector, to maintain the quality and authenticity of the banknotes in circulation.  (BoI 08.05)

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1.3  Indiana Gov. Holcomb Works to Advance Innovation & Agbiosciences Partnerships in Israel

Indiana Governor Eric J. Holcomb and the Indiana agbiosciences delegation joined officials of the Israel Innovation Authority (IIA) to discuss opportunities to propel innovation through private sector partnerships between Indiana and Israeli businesses.  Through a memorandum of understanding signed on 9 May between the Indiana Economic Development Corporation (IEDC) and the IIA, Indiana and Israel will identify 21st century challenges in agbiosciences, life sciences, technology and cybersecurity and connect respective companies to work collaboratively on developing innovative solutions.  The two states plan to begin work within the agbiosciences sector and anticipate issuing a call for proposals from Indiana and Israeli companies within the next couple of months.

In Tel Aviv, the delegation also attended the Agritech Israel summit, where the governor provided welcoming remarks, sharing Indiana’s story as a pro-growth business climate that is committed to encouraging innovation across diverse sectors.  The governor, Secretary of Commerce Jim Schellinger, Indiana Department of Agriculture Director Bruce Kettler and the delegation also met with a number of innovative companies and organizations to discuss opportunities to partner, including OurCrowd, an equity crowdfunding platform built for investors to provide venture capital funding for early-stage startups and Copia-Agro, which invests in agricultural and food technologies developed by Israel’s research institutes.

The Indiana Economic Development Corporation (IEDC) leads the state of Indiana’s economic development efforts, helping businesses launch, grow and locate in the state.  The IEDC manages many initiatives, including performance-based tax credits, workforce training grants, innovation and entrepreneurship resources, public infrastructure assistance, and talent attraction and retention efforts.  The IEDC is represented in Israel by Atid, EDI, an international business consulting firm which, over the past two years, has assisted three Israeli companies to establish their U.S. facilities in Indiana, creating 300 jobs in the state.  (IEDC 09.05)

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1.4  Israel, Cyprus & Greece Promote East Med Gas Pipeline to Europe

The leaders of Israel, Cyprus and Greece said on 8 May that they are determined to push ahead with plans for a pipeline that would supply east Mediterranean gas to Europe as the continent seeks to diversify its supplies.  Prime Minister Netanyahu of Israel called the East Med pipeline a “very serious endeavor” that was important for Europe, which is looking for new sources of energy.  Cypriot President Anastasiades said the three countries aim to sign an agreement this year to nudge the pipeline project forward.  Greek Prime Minister Alexis Tsipras called the project “emblematic” of the cooperation between the three countries.

The EU is looking favorably on the project, too, since the 28-member bloc has paid €34.5 million ($41 million) to fund a technical study, the Cypriot president said.  The pipeline is estimated to cost over €6 billion ($7 billion) and would take six to seven years to build.  It will stretch from Israel to Italy and pass through Cyprus and Greece.  Among the pipeline’s advantages, officials say, is that it would not have to cross many national borders and will be less vulnerable to sabotage than it would be if it passes through Turkey.  The pipeline would potentially carry gas from recently discovered deposits in the eastern Mediterranean, including in the waters of Cyprus and Israel.

Israel, Cyprus and Greece were expected to sign a trilateral agreement for the prevention and treatment of maritime pollution, as well as a memorandum of understating aimed at fostering cooperation in laying fiber optic cables.  (IH 09.05)

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1.5  Netanyahu Government Approves NIS 2 Billion for Residents of Eastern Jerusalem

A comprehensive five year plan for narrowing economic and social gaps for residents of eastern Jerusalem was approved by the Israeli cabinet on 15 May.  The NIS 2 billion plan is designed to help Arab residents of eastern Jerusalem integrate in Israel’s society and economy.  The plan includes allocations for improving transportation, education, employment, welfare, and health.  The new five year plan continues the current plan that finishes at the end of the year.  The new plan allocates considerably more money than the old plan in which only NIS 150 million was actually used.  The budget for the new plan includes NIS 850 million from government ministries, NIS 950 million in additional allocations from the Ministry of Finance and NIS 200 million that the Jerusalem municipality has undertaken to pay for.

The Ministry of Finance budget division prepared the new plan in cooperation with the Ministry of Jerusalem Affairs and Heritage and professional personnel, with the Jerusalem municipality fulfilling an operational role.  There are some 332,000 Arab residents live in eastern Jerusalem.

NIS 445 million will be invested in education over the coming five years, with nearly half of this amount being invested in informal education in eastern Jerusalem, mainly in a long school day or enrichment lessons in schools.  Nearly NIS 200 million will be injected into educational institutions teaching the Israeli curriculum (for physical development and renting buildings for institutions and advising and developing special programs.  (Globes 13.05)

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1.6  U.S. Treasury Secretary Mnuchin Discusses Tax Reform with his Israeli Counterpart

U.S. Secretary of Treasury Mnuchin and Israeli Minister of Finance Kahlon met on 14 May and discussed the possible ramifications of President Trump’s tax reform for Israeli businesses, Israel’s Ministry of Finance announced.  The two officials also discussed changes to the U.S.-Israel tax treaty that may benefit companies in both countries, as well as collaborations on joint financial projects between Israel and the Palestinian Authority, according to a statement.  Mr. Mnuchin is visiting Israel for the inauguration ceremony of the new U.S. embassy in Jerusalem.  (Various 14.05)

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2.1  AVM Orders 58 EV Busses from Israeli Transport Company

Los Angeles’ AVM has signed a memo of understanding with UBSI, the commercial transportation and logistics arm of the Afifi Group, Israel and the Palestinian Authority’s largest, privately held transportation, tourism and real estate group, to purchase 58 of AVM’s commercial electric vehicles.  The MOU also includes plans to purchase a network of AVM’s 350 kW CCS 2.0 high-powered chargers which provide under 10-minute charging times along with a centralized fleet management system, AI-based route optimization software and Bluetooth beacon hardware.  First deliveries are planned for Q1/19.

Based in Israel and Palestinian territories, the Afifi Group is a privately held conglomerate of 16 companies spanning transportation, logistics, information technology, tourism, hospitality and real estate.  Founded in 1927 with a single commercial transport truck, today the Afifi Group has one of the largest public transport and logistics operations in the region with a fleet of over 800 buses servicing 618 routes and over 23 million rides annually.  (AVM 02.05)

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2.2  IFF to Combine with Frutarom to Create a Global Leader in Taste, Scent & Nutrition

International Flavors & Fragrances and Frutarom have entered into a definitive agreement under which IFF will acquire Frutarom in a cash and stock transaction valued at approximately $7.1 billion, including the assumption of Frutarom’s net debt.  Under the terms of the agreement, which has been unanimously approved by the Boards of Directors of both companies, Frutarom’s shareholders will receive for each Frutarom share $71.19 in cash and 0.249 of a share of IFF common stock.

By combining with Frutarom, IFF is accelerating its Vision 2020 strategy to create a global leader in taste, scent and nutrition.  The combination unites two industry-leading, innovative companies with complementary customers, capabilities and geographic reach, resulting in more exposure to fast growing end markets and an enhanced platform to deliver sustainable, profitable growth.  The combined company’s customers will have access to comprehensive and differentiated integrated solutions with increased focus on naturals and health and wellness.

Haifa’s Frutarom is a flavors, savory solutions and natural ingredients company, with production and development centers on six continents.  It markets and sells over 70,000 products to more than 30,000 customers in over 150 countries.  Frutarom is primarily focused on natural products, which drive more than 75% of its sales.  Frutarom’s product portfolio consists of innovative and integrated solutions combining taste and health, natural and clean label products.  In addition, Frutarom mainly serves local and mid-size customers, and has a compelling presence in fast-growing adjacent and complementary categories such as natural colors, health and beauty ingredients, natural food protection and enzymes.  Frutarom has a strong track record of growth, with expected sales of above $1.6 billion in 2018, and their previously announced target of $2.25 billion in sales by 2020.

Following the close of the transaction, IFF will remain headquartered in New York City and will maintain a presence in Israel.  IFF’s stock at closing will be listed on the New York Stock Exchange (NYSE) and the Tel Aviv Stock Exchange (TASE).  (IFF 07.05)

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2.3  Delta Galil to Acquire Leading French Men’s Underwear Group “Eminence”

Delta Galil Industries signed an option to acquire Eminence SAS and its subsidiaries, which includes leading French underwear brands for men, women and children: Eminence and ATHENA and the Italian brand Liabel.  The transaction is expected to close in the third quarter of 2018 and is subject to the fulfillment of French law requirements applicable to the transfer of a company (in particular, an obligation to consult with Eminence’s works council).  For 2019, Eminence is expected to contribute approximately €100 million of revenue and approximately $0.40 to $0.45 to Delta’s earnings per share, excluding transaction and other deal-related expenses.  This transaction would accelerate Delta revenue to exceed $1.5 billion.

Eminence would bring to Delta a men’s premium French brand, which has the second largest men’s underwear market share in France, with products ranging from undergarments to polo and technical shirts to Eminence Tech+.  ATHENA adds a sporty and athletic, family mass market French undergarment brand that is modern and cool.  In addition to the French brands, the transaction includes Liabel, an Italian brand, founded in 1851, which stands on heritage and tradition and brings strong brand awareness as a mass market Italian t-shirt and underwear brand for the entire family.

Caesarea’s Delta Galil Industries is a global manufacturer and marketer of branded and private label apparel products for men, women and children.  Since its inception in 1975, the Company has continually strived to create products that follow a body-before-fabric philosophy, placing equal emphasis on comfort, aesthetics and quality.  Delta Galil develops innovative seamless apparel including bras, shapewear and socks; intimate apparel for women; extensive lines of underwear for men; babywear, activewear, sleepwear, and leisurewear.  Delta Galil also designs, develops, markets and sells branded denim apparel under the brand 7 For All Mankind and ladies apparel under the brands Splendid and Ella Moss.  (Delta Galil 07.05)

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2.4  Israel’s Online Supermarket BringBring Challenges the Big Chains

An Israeli online food retail startup called BringBring is trying to prove that a venture providing online shopping can be profitable.  The startup, in which food and beverage giant Coca-Cola Israel (Central Bottling Company) has invested, promises to facilitate supermarket deliveries to the consumer within only four hours, by sending them from nearby supermarkets.  The site was developed in order to provide a new and innovative service for purchasing products online while creating an easy shopping experience and providing high quality service.  This is another venture that is trying to leverage the relative growth in the private retail market and compete with online supermarket websites for orders over NIS 200.

When asked how deliveries are expected to be carried out logistically, the company said that mini-markets assemble the order using the store clerks and delivery personnel.  The business owner receives the proceeds of the larger cart purchased, minus a percentage of commission.  In addition to supermarket deliveries, the venture has a support network with field personnel and shell companies, and that consumers will receive uniform deliveries with the BringBring logo and packaging.

The venture promises competitive prices that will tempt consumers to prefer buying through BringBring, rather than through existing platforms such as Shufersal, Rami Levy Chain Stores Hashikma Marketing  or Victory Supermarket Chain.  It is estimated that the online market for food products and consumption reaches an annual volume of more than NIS 2 billion.  Today there are about 7,000 private supermarkets that do not belong to the large chains.  However, not every private supermarket can participate in the venture.

BringBring was founded in 2017, and its headquarters is in the Azrieli Rishonim office tower in Rishon Lezion.  Today, BringBring employs 25 people, half of them in technology and the rest in customer service and operations.  The project is headed by seven entrepreneurs, who have been joined by private investors and the Wertheim family’s Central Bottling Company.  (Globes 07.05)

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2.5  OurCrowd & Bangkok Bank Strategic Alliance Formed as Asia Expansion Continues

OurCrowd, a global leader in equity crowdfunding, announced its further expansion in Asia, with an innovative partnership with Bangkok Bank Public Company Limited (BBL), one of Thailand and Southeast Asia’s premier commercial banks.  OurCrowd and BBL have already launched their cooperation in support of Thailand’s tech ecosystem which will create key relationships for Thailand’s major corporations seeking next generation technology.  The collaboration empowers OurCrowd to deliver deeper exposure for BBL’s SME and major corporate clients to Israeli and global technologies.  As a strategic partner, Bangkok Bank will have the ability to provide direct access into OurCrowd’s portfolio on behalf of its corporate and SME clients.  The collaboration additionally targets opportunities for the Bangkok Bank network to actively access one of the world’s largest equity crowdfunding platforms, which has raised over $700 million from over 25,000 investors across 150 countries for over 150 early stage companies.

Jerusalem’s OurCrowd is a global investment platform, bringing venture capital opportunities to accredited investors worldwide.  OurCrowd vets and selects companies, invests its own capital and invites its accredited membership of investors and institutional partners to invest alongside in these opportunities.  OurCrowd provides support to its portfolio companies, assigns industry experts as mentors, and creates growth opportunities through its network of strategic multinational partnerships.  (OurCrowd 09.05)

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2.6  BriefCam to be Acquired by Canon

BriefCam announced its acquisition by Tokyo, Japan’s Canon, a world leader in digital imaging solutions.  The addition of BriefCam to Canon’s market leading Network Video Solutions products portfolio complements the Canon Group’s previous acquisitions of AXIS Communications and Milestone Systems with a breakthrough, innovative video content analytics solution.  The acquisition will drive further, rapid innovation in video analytics by BriefCam as well as new co-innovation activities with Canon and its market leading portfolio companies.  In addition, it will enable BriefCam to enter new markets, deliver stronger vertical solutions, and serve its global customers even more effectively.  BriefCam will continue to remain an open platform, working seamlessly with other third party products in the market ecosystem, providing customers with freedom of choice.  Closing of the deal is subject to customary closing conditions.

Modi’in’s BriefCam was founded in 2007, based on the Video Synopsis technology developed at The Hebrew University of Jerusalem.  BriefCam is the industry’s leading provider of Video Synopsis® and Deep Learning solutions for rapid video review and search, smart alerting and quantitative video insights.  By transforming raw video into actionable intelligence, BriefCam dramatically shortens the time-to-target for security threats while increasing safety and optimizing operations.  (Canon 09.05)

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2.7  Sckipio Raises $50 Million to Date with New $10 Million Funding

Sckipio Technologies, the leader in Gfast chipsets, announced at the Intel Capital Global Summit that it has raised $50 million to date with its latest $10 million round led by semiconductor leader MegaChips. Intel Capital, Pitango Venture Partners, Genesis Partners, Gemini Israel Ventures, Amiti Ventures, Aviv Ventures, CIRTech Fund and Axess Ventures also invested in the round.  The additional investment will be used to support the global rollout of Gfast with tier-1 service providers.  In a recent survey by Broadbandtrends, 80% of service providers plan to deploy Gfast by the end of 2018.

Ramat Gan’s Sckipio, the leader in Gfast, develops award-winning, standards-compliant Gfast modems used to enable ultra-broadband access and mobile backhaul.  Sckipio partners with more than 30 companies globally on Gfast and is one of the leading contributors to the ITU-T standard.  (Sckipio 08.05)

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2.8  SafeBreach Announces $15 Million Series B Led By Draper Nexus

SafeBreach announced new funding, new product capabilities and record growth.  Bookings increased more than 470% year-over-year with expanded traction in the Fortune 100.  The company added $15 million in strategic funding led by Draper Nexus with participation from PayPal and existing investors Sequoia Capital, Deutsche Telekom Capital Partners and HPE Pathfinder.  The company also introduced major new capabilities that set it apart by allowing customers to not only simulate attacks and assess risk, but more effectively prioritize areas for remediation, and take action to stay ahead of attacks.

SafeBreach offers the most comprehensive Breach and Attack Simulation platform in the industry – with a playbook of over 3400 breach methods, along with the most flexible prioritization capabilities and most extensible remediation options.  The platform is designed to be continuous, automated and intuitive, removing human testing biases and eliminating the need for manual creation of methods.  As a result, the SafeBreach platform has been able to uncover unknown or unexpected security issues in the most sophisticated security environments.

Tel Aviv’s SafeBreach is a leader in the category of Breach and Attack Simulation.  The company’s groundbreaking platform provides a “hacker’s view” of an enterprise’s security posture to proactively predict attacks, validate security controls and improve SOC analyst response.  SafeBreach automatically executes thousands of breach methods from an extensive and growing Hacker’s Playbook of research and real-world investigative data. Headquartered in Sunnyvale, California, the company is funded by Sequoia Capital, Deutsche Telekom Capital Partners, Draper Nexus, Hewlett Packard Pathfinder and investor Shlomo Kramer.  (SafeBreach 08.05)

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2.9  Foresight Signs an Agreement to Merge its Eye-Net Activities with Tamda

Foresight Autonomous Holdings signed a merger agreement with Tamda and its controlling shareholder, Ipax Issues.  According to the agreement, Foresight will spin off its activities dedicated to the development of its Eye-Net accident prevention system into its wholly owned subsidiary, then merge it into Tamda.  The Eye-Net V2X (vehicle-to-everything) cellular-based accident prevention solution is designed to provide real-time pre-collision alerts to pedestrians and vehicles by using smartphones and relying on existing cellular networks.

According to the agreement, Foresight will establish a wholly-owned subsidiary and transfer to the Subsidiary all of Foresight’s rights, including intellectual property, for no consideration.  Upon closing, Foresight will begin to provide development and other services to the merged company, as required periodically by the merged company, for further development of the Eye-Net system.

Foresight recently announced that it successfully completed a multi-user trial of its Eye-Net accident prevention system and achieved all of the pre-defined objectives. 120 Android and iOS users from across Israel participated in the trial, part of which consisted of simulating collision scenarios in two different locations in a safe and controlled manner. The simulated scenarios included two vehicles moving towards each other with no direct eye contact between them, and an additional scenario simulating an accident between a vehicle and a pedestrian.  In all of the simulated scenarios, the Eye-Net application successfully alerted all users in a manner that enabled them to brake safely and on time.  The information was streamed in real-time to a control room at the company’s headquarters and accurately displayed the location of the simulated collisions on a map.

Ness Tziona’s Foresight Autonomous Holdings, founded in 2015, is a technology company engaged in the design, development and commercialization of stereo/quad-camera vision systems and V2X cellular-based solutions for the automotive industry.  Foresight’s vision systems are based on 3D video analysis, advanced algorithms for image processing and sensor fusion.  The company, through its wholly owned subsidiary Foresight Automotive, develops advanced systems for accident prevention which are designed to provide real-time information about the vehicle’s surroundings while in motion.  The systems are designed to improve driving safety by enabling highly accurate and reliable threat detection while ensuring the lowest rates of false alerts.  The company’s systems are targeting the Advanced Driver Assistance Systems (ADAS), semi-autonomous and autonomous vehicle markets.  (Foresight 09.05)

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2.10  Minerva Labs Recognized as 2018 Red Herring Top 100 Europe Winner

Minerva Labs has won the Red Herring Top 100 Europe award, which recognizes Europe’s leading private companies and celebrating startups’ innovations and technologies across their respective industries.  Minerva Labs was recognized by Red Herring for its entrepreneurial success in the cybersecurity space.  Minerva’s Anti-Evasion Platform is a comprehensive endpoint security solution that prevents file-based and fileless malware attacks that are designed to evade existing defenses.  The platform deceives the threat in a way that causes it to self-terminate if it attempts to evade security measures.  Minerva built a product that both improves security without overlapping with other tools, while overcoming operational challenges common to most enterprise endpoint security products.

Petah Tikva’s Minerva Labs is an innovative endpoint security solution provider that protects enterprises from today’s stealthiest attacks without the need to detect threats first, all before any damage has been done.  Minerva’s Anti-Evasion Platform blocks threats that bypass antivirus and other baseline protection solutions by deceiving the malware and controlling how it perceives its environment.  Without relying on signatures, models or behavioral patterns, the solution causes the malware to disarm itself, thwarting the attack before the need to engage costly security resources.  (Minerva Labs 08.05)

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2.11  Velostrata Partners with Google Cloud to Accelerate Enterprise Cloud Migration

Velostrata announced its partnership with Google Cloud in response to increasing enterprise demand in mass migrating on-premises workloads into Google Cloud Platform (GCP).  The GCP-Velostrata-integrated solution takes a holistic approach to TCO reduction by not only being offered free of charge, but also dramatically accelerating the speed of cloud migrations, often by more than five times than that of conventional approaches.  It does this while simultaneously maximizing application up-time.  This speed-to-cloud translates into reduced customer spend on both CAPEX and OPEX associated with dual infrastructure costs when customers are forced to run parallel workloads on-premises and in the cloud until full data replication and cut-over are complete and application performance in the cloud verified.

Velostrata achieves this speed and performance at scale by relying on an agentless real-time streaming technology that is highly differentiated from conventional replication-based approaches.  The agentless aspect of the architecture eliminates up to 5 hours of IT labor per server during migrations and obviates the need to open up firewall ports, while the streaming technology decouples compute from storage and automatically transforms workloads to run in their GCP instance.  These two facets of the architecture combined with advanced WAN optimization enables workloads to run in the Google Cloud within minutes.  Meanwhile, remaining data transfers transparently in the background without compromising performance or data consistency.  Finally, customers are de-risked with the option of knowing they can perform an instant rollback of workloads to on-premises, further reassuring them of a robust, enterprise-grade experience.

Netanya’s Velostrata software enables accelerated cloud migration and workload mobility with speed, scale, simplicity, and safety.  Unlike replication-based approaches, Velostrata’s agentless platform moves applications to the cloud in minutes.  The software is easy to deploy and manage and can significantly reduce the risks associated with migration.  Velostrata is backed by Intel Capital, Norwest Venture Partners and 83 North and is headquartered in San Mateo, California, with research and development in Israel.  (Velostrata 09.05)

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2.12  Protego Secures $2 Million in Seed Funding for Serverless Security Platform

Protego has secured $2 million in seed funding from a team of investors led by Gula Tech Adventures, Glilot Capital Partners and several security industry pioneers.  According to Gula, serverless computing represents a transformative step in leveraging the full potential of the cloud, but it will require enterprises think and act differently about application security.  Protego works by continuously scanning your serverless infrastructure, including functions, logs and databases, to help increase the application’s security posture and minimize the attack surface.  Using machine-based analysis and deep learning algorithms, Protego builds a model of normal function behavior to effectively detect threats, anomalies, and malicious attacks as they initiate and propagate.  Protego also identifies and prevents attacks in real time and provides the “minimum effective dose” of protection in the right place, maximizing your security while minimizing your costs.

Recently, Protego won the Startup Competition for the most innovative cyber initiative at the Cybertech Tel Aviv 2018 Conference.  The competition, powered by YL Ventures, selects the startup that suggests an innovative technology or groundbreaking solution, and demonstrates the best potential to become a successful company.

Recognizing the inadequacy of traditional application security paradigms, Jerusalem’s Protego Labs designed the first comprehensive solution built with the unique constraints and opportunities of serverless in mind.  Through continuous serverless security posture, dynamic serverless intelligence, and elastic defense, Protego helps organizations achieve control over the security of their applications.  (Protego 09.05)

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2.13  ISA and TAU Ventures Launch Startup Accelerator

The Israel Security Authority (ISA) (Shin Bet) and venture capital fund TAU Ventures, founded by Tel Aviv University, have launched a startup accelerator in Israel.  The first class will focus on early-stage entrepreneurs working in artificial intelligence (AI), primarily natural-language processing (NLP) technologies, robotics, and data science.  The program, which will be called The Xcelerator, is aimed at connecting entrepreneurs who have a technological proof of concept and who are not necessarily oriented toward the homeland security industry.  The first group of the program, which will begin this June, will have six startups participating and will run for four months.  The participating startups will be chosen by a joint committee of professionals from the ISA and the TAU Ventures fund, and each of them will receive a $50,000 grant from the ISA, with no equity and no restrictions.

The startups that will be chosen for the program will be offered office spaces by TAU Ventures in a recently renovated complex within the venture capital fund’s offices.  This complex includes various sizes of workspaces to meet the different needs of the participating entrepreneurs.  The chosen startups will benefit from the dedicated support of content experts and tech experts from the ISA alongside ongoing mentoring and consulting by experts from the university and the tech industry.  The cooperation with the ISA will offer opportunities to jointly explore new capabilities, look into potential cooperation, and take advantage of short feedback loops.  (Globes 09.05)

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2.14  SolarEdge to Acquire Gamatronic, a UPS Technology Leader

SolarEdge Technologies, a global leader in smart energy, will enter the field of Uninterruptible Power Supply (UPS) by signing an asset purchase agreement with Gamatronic Electronic Industries, a technology leader in the field. SolarEdge intends to leverage its track-record of technological innovation, operational excellence and power electronics expertise, in combination with Gamatronics’ intellectual property, know-how, and market presence to build a leading global UPS business.  Through this acquisition, SolarEdge will expand and diversify its business and continue to develop innovative technology that drives progress in smart energy and transforms the way the world produces and consumes energy.

SolarEdge is purchasing substantially all of Gamatronic’s assets, including its intellectual property, brand and tangible assets.  Upon closing of the agreement, approximately 100 of Gamatronic’s employees will be rehired as SolarEdge employees.  The agreement is subject to customary closing conditions and is expected to close by the end of the second quarter of 2018.

Jerusalem’s Gamatronic develops, manufactures, and sells UPS electrical devices that provide emergency power to appliances when the input power source fails.  The company’s products include UPS systems of a wide range of outputs and monitoring and control solutions for power systems.

Herzliya’s SolarEdge provides an intelligent inverter solution that has changed the way power is harvested and managed in solar photovoltaic systems.  The SolarEdge DC optimized inverter system maximizes power generation at the individual PV module-level while lowering the cost of energy produced by the solar PV system. Supporting increased PV proliferation, the SolarEdge system consists of power optimizers, inverters, smart energy management and a cloud-based monitoring platform.  SolarEdge’s solutions address a broad range of solar market segments, from residential solar installations to commercial and utility-scale solar installations.  (SolarEdge 09.05)

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2.15  My Size Files Patent Applications for Its Smartphone Based Measurement Technology

My Size has filed patent applications for its latest technology titled “A system for and a method of measuring using a handheld electronic device” in seven key markets including the U.S., Europe, Russia, Japan, Australia, China and Israel.  These applications were filed through the Patent Cooperation Treaty and the Company plans to file the same patent application in numerous additional countries that participate in the PCT.

My Size’s technology is protected by three patents issued in each of Russia, Japan and the U.S. and one patent-pending application. Furthermore, we intend to submit additional patent applications which are currently in process.  My Size’s patent application titled “A system for and a method of measuring using a handheld electronic device” focuses on a method of measuring a path over a 3-dimensional object using a handheld electronic device comprising an acceleration sensor.

Airport City’s My Size has developed a unique measurement technology based on sophisticated algorithms and cutting-edge technology with broad applications including the apparel, e-commerce, DIY, shipping and parcel delivery industries.  This proprietary technology is driven by several algorithms which are able to calculate and record measurements in a variety of novel ways.  (My Size 10.05)

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2.16  Intel Submits Plan for $5 Billion Kiryat Gat Expansion

On 15 May, Intel submitted a business plan for expanding its fab in Kiryat Gat to the Ministry of Economy and Industry as part of the company’s preparations for meeting its future needs.  The company has not yet published the timetable for its new plan, the amount of its planned investment, or the technology that will be installed in its expanded fab.  The investment is believed to be about $5 billion.  The US company is likely to ask the Israel Investment Promotion Center for grants and benefits under the Law for the Encouragement of Capital Investments.  The state has already given Intel billions of shekels in grants in exchange for its investments in Israel.  Intel Israel, Israel’s leading high-tech exporter, accounted for $3.6 billion in exports in 2017, 8% of all Israeli high-tech exports.  (Globes 15.05)

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3.1  Sharp Increase in Russian Traffic at DWC in First Quarter

The number of passengers from Russia and the surrounding countries using Dubai World Central increased by 217% during the first quarter of this year.  The latest figures from Dubai Airports showed that passenger traffic from the Commonwealth of Independent State grew to 191,026, when compared to the same quarter last year, which the airport said was due to the increase in Russian charter aircraft operating to the airport following the waiver of visa requirements for Russian travelers to the UAE.  Overall passenger traffic at the airport showed a marginal 0.2% growth in the first three months, reaching 334,455.  Eastern Europe was the second largest contributor to the traffic at DWC with 60,592, followed by the Middle East (23,404).

A total of fifteen passenger carriers operate an average of 153 flights weekly to more than 30 international destinations across 10 countries from DWC in Q1/18, which is also home to 20 scheduled cargo operators that fly to as many as 68 destinations around the world.  Cargo traffic at Dubai World Central (DWC) grew 8.9% during the first quarter, handling a total of 229,831 metric tons of freight between January and March 2018.  (AB 06.05)

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3.2  Insurtech Startup Aqeed Raises $18 Million

Aqeed, a Dubai-based insurtech startup, has raised $18 million in funding.  The investment came from its corporate founders, who are the shareholders behind Barents, an A-rated international Reinsurance group, and Choueiri Group, a leading media and marketing group of the region that has previously invested in Jordan’s Mawdoo3, Golden Scent, The Luxury Closet and STEP Group.  Launched last April, Aqeed claims to be the first digital insurance platform in the region that allows customers to not only buy their insurance online but manage and service it as well.  Currently only available in the UAE, Aqeed plans to expand to Saudi and Lebanon very soon and expand their insurance offering by adding travel and home insurance within the next few months and health insurance later in the year.  (ArabNet 07.05)

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3.3  Saudi Appetite for Organic Food Said to be Growing

The appetite for organic foods in Saudi Arabia is on an upward trajectory, with a third of consumers (33%) purchasing more in the last 12 months compared to the previous year, according to a new survey.  The poll, conducted by YouGov and commissioned by Arla Foods, also revealed that over half of Saudi consumers (55%) purchase organic foods more than once a month.  The leading driver of this trend is health reasons (64%) with 49% of consumers believing organic food to be healthy, more natural (45%) and safer for consumption (44%) when compared to non-organic food due to production methods that are free from pesticides, added hormones and antibiotics.  According to the survey, over half of Saudi consumers (51%) also believe organic products to taste better.

Ethical food choice motives – concern for environment (19%) and animal welfare (12%) – also have a strong influence on consumers’ attitudes in Saudi Arabia, it added.  Fruit and vegetables is the dominant organic category, making up 66% of the market, followed by dairy (50%), eggs (49%), poultry (45%), cereals and bakery (44%), fish (36%), followed by red meat (35%).  Of the 24% of consumers that never purchase organic, 51% of consumers are simply not in the habit of purchasing organic. This may be attributed to the fact that one in four (25%) said that there is limited availability in stores.  Price is also considered a major barrier cited by almost a third (32%) of respondents.

In January, Arla launched Arla Organic Milk across markets in Riyadh, Jeddah and Dammam, as part of its commitment to make organic accessible and affordable to families in the Middle East.  (AB 09.05)

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3.4  La Reina Raises $1 Million from Algebra Ventures & 500 Startups

La Reina, Egypt’s first online platform for rental couture, announced a Series A $1 million funding round led by Egypt’s largest venture capital fund, Algebra Ventures, with participation from global VC fund, 500 Startups.  Founded in 2016, La Reina, Egypt’s largest couture closet, allowing women to rent their evening and bridal gowns to each other.  It has been making waves in the local market for two years, with hundreds of new evening dresses and bridal gowns being added to their curated, expanding collection every month.  La Reina caters to women standing on either side of a demand and supply equation – with designer dresses as their meeting point.  The company’s database is currently full of millennials who appreciate fashion, and who are economically-savvy. To date, the platform has garnered more than EGP 3.5M for dress owners.  (ArabNet 01.05)

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3.5  Saudi Arabia’s Syarah Secures $2 Million in Funding

Riyadh-based startup Syarah closed a new Series A round of $2 million in investment led by BECO Capital, Raed Ventures and Vision Ventures.  This is the second round of investment in Syarah, with the first being raised in 2016.  Syarah is an online marketplace for buying and selling cars in Saudi Arabia.  In addition to car listings, Syarah offers a variety of value added services to help facilitate the process of buying cars, including providing Mojaz car history reports (Saudi version of CarFax), as well as facilitating car financing.  The platform attracts more than 1.7 million visits every month and has more than 17 thousand active car listings of both new and used cars, making it the leading cars listing platform in the country.  More than 400 dealers across the country and thousands of individual users have listed their cars on the platform and around 400 cars per year are being financed on the platform, with a combined gross value of more than SAR 20 million.  Saudi Arabia is the largest auto market in the Middle East, accounting for an estimated 40% of all vehicles sold in the region.  The country has also imported approximately 1 million vehicles in 2016 alone.  (ArabNet 07.05)

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4.1  Israel to Invest NIS 25 Million in Car Charging Stations to Boost Clean Energy

The Israeli public is willing to buy electric cars, but only if charging stations are available at home and in the workplace, according to a new survey conducted by the National Infrastructure, Energy and Water Resources Ministry.  Titled “Willingness, Obstacles and Motivation Among the Israeli Public on the Matter of Transitioning to an Electric Car,” the survey questioned 1,290 drivers.

The survey find that 9% said it was highly possible they would buy an electric car, even under the current conditions.  However, 87% said they would not purchase an electric car if they could not install a charging station at home; 77.5% responded that aside from at home, they would be happy if charging stations were installed at work.  The survey found that other factors that could persuade the public to buy electric cars would be a charging time of around 30 minutes, a battery that enables travel of 350 kilometers (215 miles) without recharging, and a distribution of easily accessible charging stations.  Unsurprisingly, price was also found to be an important factor, along with expectations of reasonable depreciation and maintenance costs.

The survey revealed a general lack of knowledge on the topic, prompting the ministry to consider launching an awareness-raising campaign about the advantages of electric cars: savings on gas, lower maintenance costs, attractive purchase prices due to tax benefits and long-term warranties on batteries.  The ministry found that Israel’s electric car market would gain traction if 4,000 to 8,000 electric cars were added to the roads every year.

Beginning from next year and continuing for three years, the Energy Ministry plans to invest NIS 25 million ($6.9 million) in building the necessary infrastructure to support an electric vehicle industry.  This involves constructing 2,000 charging stations in the first stage of a future countrywide charging network.  The ministry is also examining the possibility of requiring new buildings to install electric vehicle charging stations.  (IH 07.05)

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4.2  Natural Gas Generates 93% of Jordan’s Electricity

Imported natural gas contributes to the production of 93% of the electricity generated in Jordan, while the share of renewable energy is the remaining 7%, the National Electric Power Company (NEPCO) announced.  The power plants in the Kingdom are currently relying on imported natural gas coming through Aqaba Port.  The power generation plants currently consume about 320 million cubic feet of gas per day, and in terms of electrical loads, the outcome ranges between 2,450 MW and 2,500 MW, while the combined generation capacity is 3,800 MW.

In early 2014, NEPCO signed an agreement with Shell International under which the company will supply 150 million cubic feet of natural gas per day for a period of five years.  The selection of Shell International came after the Ministry of Energy and Mineral Resources and NEPCO offered global competitive bids for Liquefied Natural Gas (LNG) purchase from global markets.  Renewable energy contributes to the total energy mix in the Kingdom by about 500 MW, as part of a drive to reach 2,700 MW of the total generation capacity of the Kingdom by 2021.

Jordan used to rely on Egyptian natural gas before the 2011 Arab Spring revolts but the pipeline became a target for frequent terrorist sabotage attacks that caused disruptions and finally a complete halt of the gas flow.  The country had to rely on the more costly heavy fuel to operate its generation facilities before switching to LNG after building a special terminal in Aqaba to handle the incoming shipments.  (JT 05.05)

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4.3  WHO Says Cairo is World’s Second Most Polluted City

Cairo has been ranked as the second most polluted large city in the world, according to a report issued by the World Health Organization (WHO), which studied air pollution globally from 2011 until 2015.  In 2017, the United Nations Environment Program stated in a report that 40,000 people in different parts of Egypt all died from pollution.  The report pointed to the absence of trees within Egypt’s capital as leading to the increase of air pollution.  The UN report explained that Cairo is similar to Iran’s capital Tehran and the US city of Los Angeles in their air pollution ratios.  The situation in Cairo differs slightly as the topography allows for an effective decrease in air pollution compared to the other two cities.  India’s city of New Delhi topped the list at first place while two other Indian cities, Kolkata and Mumbai, occupied the fourth and fifth places on the list.  Turkey’s Istanbul came in at the eighth place.

The WHO report noted that seven million people worldwide die from exposure to polluted air, adding that nearly 4.2 million people died in 2016 from air pollution; pollution from fuel exhaust also resulted in the death of 3.8 million people in 2016.  Being that it is the capital of the country, hosting a population of 19.5 million, Cairo is considered to be the most congested city in Egypt.  The Qalyubia, Giza and Cairo provinces together represent what is known as Greater Cairo.  (Al-Masry Al-Youm 15.05)

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4.4  In Less Than 3 Years 90% of Air in UAE Will Be Pure

The UAE announced that 90% of the air in the emirates will be pure in less than 3 years.  At a Federal National Council session, members questioned the Minister of Climate Change & Environment about concerns over toxic gases and pollution produced by some factories. The minister said factories violating the law will be punished.  Some 55 factories were fined between 2014-2017 after the ministry conducted 3,000 surprise visits to such establishments.  The minister also shared that 6.5million metric tons of non-hazardous waste is generated in the UAE each year.  A person on an average produces 1.2 to 1.3kg of waste per day.  (Alamy 08.05)

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5.1  Lebanon’s Trade Deficit Dropped by 5.3% in First Quarter

Lebanon’s trade deficit for Q1/18 stood at $3.9B, falling from $4.2B in Q1/17, on the back of total imports that fell by an annual 2.9% to $4.8B, while total exports grew by a yearly 11.2% to $814.5M.  Mineral products were the leading imports to Lebanon in Q1 2018, grasping a 17.8% stake of total imported goods.  Products of the chemical or allied industries followed, constituting 11.69% of the total, while machinery and electrical instruments grasped 11.3% of the total.  Meanwhile, the value of chemical or allied industries recorded a rise of 6.39% y-o-y to settle at $562.5M and that of machinery and electrical instruments also rose by 21.2% over the same period to $546.6M.

In terms of top trade partners, Lebanon primarily imported from China, Italy and Greece with shares of 9.6%, 8.5% and 6.9%, respectively, in the month of March 2018.

As for exports, the top category of products exported from Lebanon were pearls, precious stones and metals, which grasped a share of 29.1% of total exports, followed by a share of 14.4% for base metals and articles of base metal and 13.1% for prepared foodstuffs, beverage, and tobacco over the same period.  In details, the value of pearls, precious stones, & metals surged in Q1 2018 to reach $237.4M, compared to $178.5M in Q1 2017. In turn, the value of base metals and articles of base metal increased by 14.4% y-o-y to $117.3M. Meanwhile, the value of prepared foodstuffs, beverage, and tobacco slid by a yearly 5.05% to $106.9M.

In March 2018, the UAE, followed by South Africa and Saudi Arabia were Lebanon’s top three export destinations, respectively constituting 12.5%, 6.9%, and 6.3% of total exports.  (MoI 13.05)

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5.2  Lebanon’s Industrial Exports Climbed by 6.3% y-o-y to $187 Million in January 2018

According to the Lebanese Ministry of Industry, the value of industrial exports rose by an annual 6.3% from $175.9 million in the first month of 2017 to $187M in January 2018.  Specifically, the main exported products in the first month of 2018 were base metals and articles of base metal whose value reached $38.5M, notably rising from $26.07M in January last year.  The category’s main export market was Turkey which imported 38% of Lebanon’s total exported base metals and articles of base metal.

As for exports of products of the chemical industries, they came in second position with a total value of $37.7M in January 2018 and recorded a significant uptick from $22.2M in January 2017.  France alone imported 26.8% of the country’s total products of the chemical industries in Jan. 2018.  In turn, products of machinery and electrical equipment came in third with $33.8M worth of exports, of which 22.5% were imported by Iraq in the first month of 2018.  However, exports of this category contracted by 20.5% year-on-year (y-o-y) on the back of declined machinery imports by major markets like Syria, Libya, the UAE and Qatar.  A smaller component of industrial exports, Plastics, rubber and articles thereof, also supported the 6.3% uptick in total industrial exports over the period as it increased by 32.2% y-o-y to stand at $11.9M in January 2018.

In terms of imports of industrial machinery and equipment, they climbed by a yearly 14.7% to settle at $24M in January 2018. In details, imports of machinery for the food industry were the largest at a value of $4.7M, of which 34% originated from Italy.  In their turn, imports of machines used in packaging followed, amounting to $3.3M of which 94% were mainly German packaging machines imported to Lebanon in January 2018.  (MoI 12.05)

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►►Arabian Gulf

5.3  Kuwait to Postpone VAT Implementation to 2021

Kuwait will not implement value-added tax before 2021 but will push ahead with introducing excise tax, parliament’s budget committee said on 15 May.  The finance ministry saw the need to expedite measures for excise tax on select products such as tobacco, energy drinks and carbonated drinks.  The Gulf Arab countries originally agreed to introduce VAT at a 5% rate at the start of this year and Saudi Arabia and the United Arab Emirates have done so, while the other four countries delayed.  Gulf governments also agreed jointly to introduce an excise tax on tobacco and sugary drinks, which will raise much less money than VAT.  Kuwait’s finance minister said that he expected parliament to approve the excise tax during its next session, which begins in October.  (Various 15.05)

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5.4  IMF Says for MENA, Dubai Powering UAE’s Growth

The UAE non-oil economy is set for a strong rebound with a projected growth of 2.8% in 2018 and 3.3% in 2019 after a slowdown to 1.9% last year, the International Monetary Fund said.  Dubai is identified as a key driver of the resilience with its non-oil economy on track to record a 3.7% growth in 2018 compared to 3.3% in the previous year.

Abu Dhabi’s non-oil GDP is poised to grow by 1.1% this year from 0.7% negative growth in 2017.  The emirate’s oil GDP, which was -2.4% in 2017, is expected to show a flat growth this year and rebound in 2019, the IMF official said while unveiling the fund’s latest Regional Economic Outlook.  According to the IMF, the UAE will need oil prices to average $71.5 and $64.8 per barrel respectively in 2018 and 2019 to balance its budget, while Saudi Arabia requires $87.9 and $77.9.  The UAE, Saudi Arabia and other GCC states need to pursue their reform agenda in order to prepare for a post-oil order.

Across the GCC, non-oil GDP is on track to grow to 2.7% in 2018 and 2019 from 1.8% in 2017 while oil GDP is expected to recover from -2.8% in 2017 to 0.6% and 2.2% respectively in 2018 and 2019.  The partial recovery in oil prices will be a boost for the GCC after the region saw its overall economic growth shrink by 0.2% last year, impacted by a 0.7% contraction by the Saudi economy.

With growth estimated to have bottomed out in 2017, the overall outlook is little changed from the last quarter of 2017.  Economic activity is projected to accelerate in 2018-19, but remain low relative to pre-2014 levels over the medium term.  Specifically, overall growth for MENAP region is projected at 2.8% this year and 3.3% in 2019.

Despite the improved economic forecast, the IMF estimated cumulative overall fiscal deficits in the region to be $294 billion in 2018-22.  Around $71 billion of government debt is expected to mature during the same period.  Voicing concern over the rapid buildup of debt in many MENA countries, the IMF said debt has increased by an average of 10%age points of GDP each year since 2013, with countries financing large fiscal deficits.  According to the IMF, the economy of oil-importers should grow by 6.2% annually to maintain unemployment at the current rate of 10%.  MENA countries need to create 25 million new jobs over the next five years.  At 50%, Oman has the highest percentage of youth unemployment of any Arab country.  Some 70% of women in Oman are also outside the labor force, according to the IMF.  In countries like Egypt and Saudi Arabia, more than 30% of youth are unemployed and close to 80% of women are outside the labor force.  (KT 02.05)

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5.5  Saudi Arabia’s Non-Oil Revenue Jumps 63% to $14 Billion

Saudi Arabia’s non-oil revenue climbed 63% in the first quarter of 2018, propelled by improved tax collection as part of a drive to reduce the economy’s reliance on income from oil exports.  Revenue rose to 52.3 billion riyals ($14 billion), partly due to the introduction of value-added taxation and measures taken over the past two years, including a levy on expatriates working in the world’s biggest oil exporter, the Finance Ministry said on 7 May.  The collection of zakat, an Islamic tax, also “significantly improved.”

Crown Prince Mohammed bin Salman is spearheading a plan that seeks to prepare the Saudi economy for the post-oil era and shore up public finances.  In addition to the VAT, the government has raised fuel and utility prices and briefly curtailed public-sector allowances.  The reforms, however, have hurt economic growth, prompting authorities to boost planned spending for this year and push the timeline for balancing the budget to 2023 from 2019.

Oil revenue reached 114 billion riyals, a 2% increase compared with the same period a year earlier. Spending rose 18% in the first quarter from a year ago, to 200.6 billion riyals, in line with efforts to stimulate the economy, the ministry said.  Finance Minister Mohammed Al-Jadaan said first-quarter figures suggested measures to curb spending and diversify income sources were working.  The data show “rapid and significant progress in economic reform to help achieve the medium-term fiscal balance program goals for 2023,” he said.  The first-quarter budget deficit was 34.3 billion riyals, about 18% of estimated annual shortfall, the ministry said.  (AB 07.05)

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►►North Africa

5.6  Egypt’s Minister of Finance Plans to Cut Deficit by 2020

Egypt’s Ministry of Finance is working on a plan to reduce the deficit from 107-108% of GDP during the previous fiscal year to 80% by 2020, Egypt’s finance minister Amr Al-Garhi said.  The minister explained that the plan aims to reduce the overall deficit in the budget and achieve an initial surplus of 2% of the GDP.  The finance minister highlighted that the plan also aims to increase the average per capita income, which would result in a “remarkable” rise in living standards.

He explained that the unemployment rate has dropped from 13% to 11% this year amid reform measures taken by the government.  El-Garhi also said that the government is working on implementing structural reform policies for the industrial sector and other economic sectors.  He added that a law concerning a simplified system for tax accounting for small projects is being drafted in an effort to boost this sector by 10 to 15%.  The minister added that over the past five years, Egypt’s public debt has increased almost five-fold from EGP 800 million.  (Ahram Online 06.05)

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5.7  Egyptian Remittances Record $17.3 Billion in 8 Months

The value of remittances from Egyptians working abroad during from July 2017 to February 2018 reached $17.3 billion, up from $13.9 billion between July 2016 and February 2017, rising by $3.4 billion (24.1%), according to the Central Bank of Egypt (CBE).  The CBE stated that February 2018 saw an increase in the remittances of Egyptians working abroad by 11.6% to reach $2 billion, up from $1.8 billion in February 2017.  Remittances of Egyptians working abroad are among the most important sources of foreign exchange for Egypt. The country is ranked sixth among the middle-income countries that receive remittances.

CBE Governor Tarek Amer said recently that Egypt has received inflows of $120 billion since the flotation of the pound on 3 November 2016.  He pointed out that these flows came in the form of international bonds, foreign direct investment and remittances of Egyptians abroad, as well as tourism and other sources of foreign exchange, pointing to the decline in the balance of the payments deficit by 64% next to a surplus of balance of payments of $10 billion in six months.  According to Amer, the total foreign direct investment during the past period reached about $35 billion. Egypt attracted $25 billion in foreign investments in treasury bills and $10 billion from the Egyptian Exchange.

Egypt’s foreign exchange reserves hit $44.03 billion at the end of April 2018, up from $42.611 billion in March, realizing a record high of reserves for Egypt since the beginning of registering reserve data in the early 1990s.  (Ahram Online 15.05)

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5.8  Egypt’s Unemployment Rate Drops to 10.6% in First Quarter

 Egypt’s unemployment rate dropped to 10.6% in the first quarter of 2018, in comparison to 12% in 2017 and 12.7% in 2016 for the same period, official statistics agency CAPMAS announced on 15 May.  Unemployment also declined 0.7% from Q4/17.  Egypt’s labor force was estimated in Q1/18 to total 29.186 million, down 37,000 from Q4/17.

According to CAPMAS, about 3 million Egyptians are currently unemployed.  Youths (15-29 year olds) make up 75.2% of total unemployment.  President Abdel-Fattah El-Sisi has pledged to reduce unemployment during his tenure, by attracting private sector and foreign investments to boost the economy.  Since 2014, the government has been implementing a set of economic reforms to lower budget deficits, including floating the local currency, cutting energy subsidies and putting in place a Value-Added Tax.  (CAPMAS 15.05)

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5.9  More Than 50% of Egyptians are Health Insurance Subscribers & Beneficiaries

The Central Agency for Public Mobilisation and Statistics (CAPMAS) announced on 15 May that 50.9% of the Egyptian population are subscribers to or beneficiaries of health insurance.  The CAPMAS also said that 10.3 million families live in urban areas compared with 13.1 million families in rural areas.  Concerning the average size of a family, the CAPMAS stated that it is four persons—3.9 in urban areas and 4.2 in rural areas.  In terms of the illiteracy rate, the CAPMAS stated that it is, on average, 25.8% among the Egyptian population (10 years and over), while the percentage among females is 30.8% versus 21.1% for males.

Concerning the access of Egyptian families to public utilities, 99.7% of households are connected to the national electricity network – 99.8% of urban households and 99.6% of rural households.  The CAPMAS reported that an average 7% of Egyptian households live in a dwelling according to the old rental system—12.9% in urban and 1.1% in rural areas.  Meanwhile, 7.2% of households reside in a new rental housing, 11% in urban and 3.4% in rural areas; 55.3% of households have an owned home (47.3% urban, 63.5% rural) and 6.6% of households have a donated home (3.5% urban, 9.6% rural).  (Ahram 15.05)

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5.10  USAID to Contribute $19 Million to Help With Egypt’s Family Planning Efforts

Responding to a request by the Government of Egypt to contribute to Egypt’s family planning efforts, the USAID Mission Director joined Minister of Health and Population Rady to launch a new program to strengthen Egypt’s family planning in response to Egypt’s rapid population growth.  This new effort comes in response to calls by Egyptian officials, including President Sisi, to recognize how overpopulation poses a threat to Egypt’s national development, and is part of the U.S. government’s commitment to stand with Egypt in its economic and social development.  USAID will provide technical assistance and training to the Ministry of Health and Population to strengthen its Family Planning and Reproductive Health Program. Activities will help increase demand for family planning services and enhance the quality of services, aiming to improve contraceptive use and reduce fertility over time.  The 5 year, $19 million program will be implemented in nine governorates in Upper Egypt and areas of Cairo and Alexandria.

Since 2017, Egyptian officials have described the country’s rapid population growth as an “actual catastrophe” that threatens national development plans and demands immediate attention, just like the country’s war against terrorism.  Last year, President El-Sisi said that the current rate of population growth poses a threat to the nation and restricts Egypt’s progress.  In October 2017, Egypt announced that its population had reached 104.2 million, with 94.98 million living within Egypt and 9.4 million Egyptians living abroad.  In 2016, Egypt saw the birth of 2.6 million babies, according to statistics by the country’s state run statistics agency CAPMAS in 2017.  CAPMAS said during the same year said the annual rate of population growth in the country was 2.4%.  (Various 12.05)

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5.11  Egyptian Parliament Approves Controversial Clinical Trials Law

On 13 May, the Egyptian Parliament approved a draft law submitted by the government to govern organizing medical clinical research trials, known as clinical trials.  The draft contains 12 articles, including establishing a Supreme Research Council under the supervision of the minister of health, which aims to set ethics and standard principles for research.  One of its main responsibilities is to send clinical research studies to the General Intelligence Service for questioning.  The law is meant to impose strict controls on trials that were conducted in hospitals outside the Ministry of Health’s control, as it includes articles to punish those who will not commit to it.

The punishments range from imprisonment and fines from EGP 50,000 – 100,000 for anyone conducting research without obtaining the approval of patients being subjected to clinical trials.  Meanwhile, it stipulates rigorous imprisonment sentences and an EGP 500,000 fine if experiments lead to permanent disability. If they lead to a patient’s death, the perpetrator(s) will be imprisoned for 10 years, and fined EGP 1 million.  The Egyptian Doctors and Pharmacists Syndicates expressed some concerns over the law, stressing that research and medical interventions must be according to international standards in order to maintain Egyptian patients’ safety.

Egypt is considered the second-largest African country for foreign pharmaceutical companies to run clinical trials, according the National Health Institution.  It has witnessed a steady increase in the numbers of trials it hosts, as in February 2016, there were 57 active international drug trials in the country, according to report released in 2016 by the Egyptian Initiative for Personal Rights.  (Various 13.05)

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5.12  Morocco’s Fiscal Deficit Narrowing Slowly in 2018 and 2019

In 2018 and 2019, Morocco’s fiscal deficit is expected to narrow slower than in recent years, according to a new report by BMI Research.  The report reveals that Morocco’s fiscal deficit will “shrink over 2018 and 2019, although more slowly than in recent years,” due to Morocco’s growing revenue, government subsidies, and public wage expenditures, which will soon improve the government’s fiscal position.  On the downside, the report anticipates that the government’s spending on several projects in line with Morocco’s five-year development vision may disrupt the country’s fiscal balance.

BMI also expects fiscal consolidation to slow as the government will miss its 2018 target of a budget deficit at just 3.0% of GDP.  The government set the target to reduce its deficits of debt stock, but BMI predicts the budget deficit will come in at 3.3% of GDP in both 2018 and 2019, albeit down from 3.6% in 2017.  The report continues in an optimistic tone, stressing that the slowly shrinking fiscal deficit will decrease Morocco’s debt-to-GDP ratio.

With respect to the government’s revenue, BMI forecasts that it will experience continued growth over the upcoming quarters at 3.6% in 2018 and 3.2% in 2019, down from 5.2% in 2017 when it accelerated with strong GDP growth which widened the tax base.  The budget focused on business-friendly tax cuts instead of revenue-raising measures for 2018 and expectations for revenue growth have been lowered to 4% and 3.5% respectively in 2018 and 2019.

BMI points out that the government’s efforts to improve the fiscal balance through limited spending are paying off. Morocco slashed food and energy subsidies between 2012 and 2015, in addition to the implementing an organic budget law.  BMI insists that cutting the government wage bill “will strengthen budgetary monitoring and accountability” and “increase contractual employment.”

Despite the good news, BMI warns that increased spending will hinder fiscal consolidation and offset wage spending gains.  Government spending on wages increased from 18.7% of its total spending in 2013 to 24.5% in 2017 and will continue at this rate in future years.  Not only that but also the government’s initiatives such as the green project dedicated to reducing “the impact of drought through innovative technology [provided] to small-scale farmers” will consume increased funds in 2018 and 2019.  (BMI 08.05)

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6.1  EBRD Foresees 4.4% Growth for Turkey in 2018

The European Bank for Reconstruction and Development (EBRD) has revised up economic forecasts for Turkey.  Growth in Turkey is projected to moderate from 7.4% in 2017 to 4.4% in 2018 as the effect of fiscal stimulus wears off and as limits to credit growth lead to a cooling-down of domestic demand, the Bank said in a statement on 9 May.  “But this may be partly offset by higher exports, reflecting weakness in the lira and rising demand in key export markets,” it added.  Growth is expected to moderate further in 2019, according to the Bank.

After suffering acutely during the global financial crisis, countries where the EBRD invests initially struggled to get back on a path to growth, but recovery took hold in earnest during 2017, the Bank said.  With expansion now seen in every one of the EBRD’s economies this year and next, the Bank’s new Regional Economic Prospects report is predicting average growth of 3.3% in 2018, an upward revision of 0.3%age points from the forecast last November.  It expects growth of 3.2% for 2019.

The report said economic momentum remained strong but that growth might now have peaked.  The 2018 and 2019 predictions represent a slowdown from 3.8% in 2017, reflecting lower rates of productivity growth in advanced and emerging economies compared with levels seen before the 2008-09 crisis, as well as adverse demographic trends.  The EBRD’s Chief Economist Sergei Guriev said the lower productivity growth reflected the fact that most EBRD economies had exhausted the growth levers that had delivered rapid expansion until the onset of the crisis.  “In order to develop new sources of growth, these countries need to carry out structural reforms of product, capital and labor markets.  (EBRD 09.05)

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6.2  Cyprus’s Growth Forecast Revised to 3.2%

The European Bank of Reconstruction and Development (EBRD) said that it had revised its forecast for the Cypriot economy to 3.2% for 2018 from a previous 2.5%.  In 2019, economic growth is expected to slow down to 3%.  “However, the legacies of the crisis, such as high public and private sector debt and a large overhang of non-performing loans (NPLs), remain important downside risks.

The Cypriot economy which emerged in 2015 from a prolonged recession, expanded 3.9% last year, the highest rate since 2008, and 3.4% in 2016, allowing the unemployment rate to drop this year to a single digit for the first time in years.  The EBRD said that last year’s growth was driven by both investment and private consumption adding that fixed capital formation exceeded one fifth of economic output last year for the first time since 2010.  Still, net exports were the only drag on growth as imports, supported by rising private consumption and investments, grew by a higher rate than exports.  (EBRD 09.05)

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6.3  Cyprus’ First Quarter Trade Deficit Drops by 47% to €669 Million

Cyprus’s trade deficit in the first quarter of the year fell an annual 47%, to €669.2m, on an increase of exports.  Total exports in January to March rose 110%, to €1.3 billion, while imports rose 3.2%, to €1.9 billion, compared to the respective three-month period of 2017, Cystat said.  The value of exports and imports in March was €870.3 million and €705.5 million respectively and included the transfer of ships worth €649.1 million and €202.3 million respectively.  Exports to member states in the first quarter rose an annual 6.6%, to €240.6 million, while imports from the EU rose 5.1%, to €1.2billion, Cystat said.  Exports to and exports from third countries rose 172%, to €645.1 million, and 0.6%, to €774.6 million.  (Cystat 10.05)

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6.4  Greek Consumer Price Inflation Increases to 0.5% in April

Greece’s annual EU-harmonized inflation rate accelerated in April, statistics service ELSTAT data showed on 10 May.  The reading in April was 0.5% from 0.2% in March.  The data showed the headline consumer price index flat at zero year-on-year from -0.2% in the previous month.  Greece had been in a protracted deflation mode since March 2013 based on its headline index, as wage and pension cuts and a multi-year recession took a heavy toll on Greek household incomes.  Deflation in the country hit its highest level in November 2013 when consumer prices registered a 2.9% year-on-year decline.  The economy emerged from deflation in June 2016.  (ELSTAT 10.05)

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6.5  Greek February Unemployment is the Eurozone’s Highest at 20.8%

Greece’s jobless rate inched up to 20.8% in February from an upwardly revised 20.7% in the previous month, data from the country’s statistics service ELSTAT showed on 10 May.  Seasonally adjusted data showed the number of unemployed at 978,072 people, with younger persons aged up to 24 bearing the brunt of being out of work.  Among younger persons aged 15 to 24, the jobless rate eased to 45.4% from 46.4% in the same month in 2017.  Greece’s jobless rate, which hit a record high of 27.9% in September 2013, has been coming down since but remains the highest in the euro zone.  The government expects the unemployment rate to fall to 18.4% this year, based on projections in its 2018 budget.  Unemployment in the 19 countries sharing the euro was stable at 8.5% in March according to Eurostat.  (Elstat 10.05)

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7.1  Israel’s Netta Barzilai Wins Eurovision 2018 Song Contest

Israel’s Netta Barzilai won the Eurovision final in Lisbon, Portugal, on Saturday night, 12 May, with her song “Toy.”  Earlier Saturday, Israel was ranked in second place in the betting charts, but ultimately trounced the other competitors, taking 529 points overall, to Cyprus’s 436, in second place.  Many countries’ juries gave 12 points – the highest possible – to Israel, including France, Finland, Austria, San Marino and the Czech Republic.  Israel also got the most points from the televoters.  On the Eurovision’s official YouTube channel, the music video for “Toy” became the 10th most watched video of all times, with over 25 million views in only two months.

Israel won the contest exactly 20 years ago, in 1998, and 40 years ago, in 1978 (plus in 1979).  Once the voting opened, even Prime Minister Benjamin Netanyahu gave Barzilai an endorsement on his Twitter account and Gal Gadot posted an image of her on her Instagram feed, urging her followers to cast their votes for Israel.  In a boon for Israel’s capital, the event will now be held in Jerusalem in 2019.  (Various 13.05)

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7.2  US Embassy in Jerusalem Inaugurated

On the afternoon of 14 May 2018, 800 invited guests witnessed the opening of the US Embassy in Jerusalem’s Arnona neighborhood.  The transfer of the embassy from Tel Aviv consists for the moment of a new plaque on the existing premises of the US consulate. The ceremony was attended by the president of the State of Israel Reuven Rivlin, speaker of the Knesset Yuli Edelstein, government ministers and party leaders.  The event was opened by US Ambassador David Friedman.  US Treasury Secretary Mnuchin unveiled the dedication plaque designating the consular building as the new US Embassy in Jerusalem.  (Globes 14.05)

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7.3  Hezbollah Sweeps Lebanon’s First Parliamentary Elections in Nine Years

The initial, unofficial results of Lebanon’s first parliamentary elections in almost a decade showed on 7 May that the Shiite Iran-backed Hezbollah group and its political allies gained more than half of the seats in the legislative body, which is expected to increase Tehran’s influence in the region.  Meanwhile, Lebanese Prime Minister Saad Al-Hariri’s party, the Saudi-backed Future Movement lost some seats in its traditional strongholds to competing candidates, gaining 21 seats compared to 33 in the last elections in 2009.  However, he is still viewed as the country’s preeminent Sunni Muslim leader, holding the largest bloc in parliament, which makes him the most likely candidate to form the next government, which is expected to be a coalition between all the main parties.

Meanwhile, the Lebanese Forces, a Christian party and former militia, gained 15 seats rather than eight, while the Free Patriotic Movement (FPM), also a Christian party, failed to obtain the percentage it was seeking.  More than 500 candidates belonging to different religious sects were running for the 128 seats in the Lebanese parliament.

Fewer than half of Lebanon’s registered voters, 49.2%, cast their ballots, according to the country’s Interior Ministry, compared to 54% in 2009.  Since its last elections, Lebanon has faced economic and social upheavals, violence, and a refugee crisis due to the Syrian civil war.  More than 1 million refugees were sent to the small country that has a population estimated at only around 4.5 million.

Last November, crisis erupted in Lebanon after Prime Minister Al-Hariri surprisingly resigned from office while in Saudi Arabia, Iran’s regional foe, saying that he feared for his life and accusing Tehran of sowing “fear and destruction” in several countries, including Lebanon.  His resignation raised speculation that he had been forced to make the announcement by Saudi Arabia, especially after some Lebanese politicians accused Riyadh of “holding” him hostage.

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7.4  Ramadan Work Hours for UAE Private Sector Announced

Working hours for the UAE’s private sector will be reduced by two hours from the company work hours during the month of Ramadan, according to the Federal Authority for Government Human Resources.  The federal government and ministry employees will be working from 9:00 to 14:00 during Ramadan and schools will follow a 5 hour school day during the month.  Ramadan is expected to start on 16 or 17 May, but an official announcement is expected on Tuesday, 15 May.  Parking timings for UAE residents was announced, with free parking during the day and paid parking divided up into two time slots.  (Gulf News 15.05)

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7.5  Egypt Had 3.031 Million Students Enrolled in Higher Education in 2016/2017

Egypt’s Central Agency for Public Mobilisation and Statistics (CAPMAS) announced on 6 May that the total number of students enrolled in higher education increased by 2.1% to reach 3.031 million students during the 2016/2017 academic year, up from 2.969 million students in 2015/2016.  According to CAPMAS’ annual bulletin of enrolled students and faculty staff members in higher education for the 2016/2017 academic year, 2.274 million students are enrolled in public universities and Al-Azhar, representing 75% of total students enrolled in higher education during the 2016/2017 academic year compared to 2.230 million students in 2015/2016, an increase of 2%.

The bulletin stated that 154,800 students enrolled in private universities, representing 5.1% of total higher education students in 2016/2017, up from 138,100 students in 2015/2016, an increase of 12.1%.  Concerning private higher institutes, the CAPMAS revealed that the number of students enrolled at higher private institutes represented 13.6% of total higher education enrollees in 2016/2017, as there are 410,800 students enrolled, compared to 407,800 in 2015/2016, an increase of 0.7%.

Meanwhile, it revealed that there are 123,300 students enrolled in public and private above-intermediate technical institutes, representing 4.1% of the total higher education enrollees in 2016/2017, compared to116,900 in 2015/2016, an increase of 5.5%.  (CAPMAS 06.05)

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8.1  Biggest Agricultural Tech Expo in Israel’s History Held in Tel Aviv

The largest agricultural technology event ever held in Israel, Agritech 2018, was held in at the Tel Aviv fairgrounds on 8 – 10 May.  The theme for Agritech Israel 2018 conference was “Agriculture in arid and semi-arid regions”.  Some 200 agricultural and industrial companies had booths at this year’s Agritech, along with a number of agrotech startups and research and development facilities.  Participation is almost evenly split between local companies and firms from 100 other countries around the world.

Agritech welcomed some 50 government delegations and 80 business delegations.  The largest delegation, with 1,500 participants, is coming from India.  In addition, the companies marketing their technology, the expo is putting on a series of lectures by professionals on topics ranging from protecting plants to international projects in arid areas of China, India and Africa.

The conference also hosted guided tours of farms in the Negev and Galilee so visitors can see how Israeli agricultural developments are implemented.  Visitors will be taken to places that a few decades ago were barren and are now covered in fields, with fruit and flowers that are exported worldwide.  (IH 09.05)

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8.2  Aleph Farms Beefs Up Clean Meat

Aleph Farms, one of only a handful of clean meat companies globally, is announcing two significant advances in the production of  clean meat: expanding the composition of the meat itself and growing it in a more structured way.  Until now, clean meat – animal meat grown in a clean setting rather than in an animal – has often been limited to simple structures of one or two types of cell tissue, limiting its applications to ground meat.  Aleph Farms’ 3D technology relies on creating a complex tissue composed of the four core meat cell types.  They are then able to grow these cells on an intricate proprietary three-dimensional platform.  Aleph’s clean meat mimics traditional cuts of beef in both structure and texture, but without beef’s huge environmental impact, its heavy resource requirements, or its contribution to climate change.

Ashdod’s Aleph Farms‘ name reflects its roots and values of respect for the planet and its inhabitants. Aleph, the first letter of an ancient alphabet, was originally derived from a hieroglyph depicting an ox’s head.  The letter gave rise to the Greek letter “Alpha,” a symbol of leadership and new beginnings.  Aleph Farms (previously Meat-the-Future) was co-founded in 2017 by Israeli food-tech incubator The Kitchen, a part of the Strauss Group, and the Technion.  (Aleph Pharms 02.05)

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8.3  Healthy Height High-Protein Shake Helps Children Grow

Nutritional Growth Solutions (NG Solutions) is introducing Healthy Height, a kids’ protein shake clinically shown to improve children’s height, to the European market.  This kid-friendly protein shake mix, available in tasty vanilla and chocolate flavors, is high in whey protein, vitamins and minerals.  According to a recent clinical study, Healthy Height can help young children who are short and lean grow taller.

Healthy Height has 12 grams of high-quality bone- and muscle-building whey protein in each serving, and is fortified with vitamins and minerals.  This hormone-free, gluten-free shake is a good source of amino acids that are key to growth.  This product contains no soy and none of the artificial colors, flavors or preservatives that parents want to avoid.  Some parents resort to human growth hormone (HGH) therapy, which may help some children with diagnosed disorders.  However many children in Europe are not eligible for growth hormone therapy.

Healthy Height sells in the USA, Asia Pacific and Israel, with GMP-certified production facilities in the USA, Germany and Israel.  The product has patent applications pending in the USA, Canada, Australia, Israel, India and the EU.  Healthy Height gives pediatricians a new nutrition-boosting alternative for children who are short and lean.  The product is sold to retailers and companies for private label branding.

Petah Tikva’s Nutritional Growth Solutions develops, manufactures and markets innovative, proprietary clinically tested shake mixes for children.  For years, their world-renowned scientists, doctors and researchers in the Schneider Children’s Medical Center of Israel have focused on child nutritional growth retardation, irrespective of race, religion or nationality.  In 2010, Schneider’s experts took this wealth of practical and clinical information and developed a great tasting shake mix to help children of short stature grow to the right height for them.  (NGS 02.05)

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8.4  INSIGHTEC Announces First Parkinson’s Patient Treated With Incisionless Brain Surgery

INSIGHTEC announced the treatment of its first patient in the FDA pivotal study for addressing advanced Parkinson’s disease in patients who have not responded to medication.  INSIGHTEC’s Exablate Neuro medical device uses focused ultrasound together with magnetic resonance (MR) imaging to treat a target deep within the brain.  For Parkinson’s disease patients, treatment is intended to improve motor function and reduce dyskinesia.  Dyskinesia is one of the debilitating symptoms that presents as uncontrolled, involuntary movement of the arms and legs, which often occurs as a side effect of medication.  The device is FDA-approved to treat patients suffering from essential tremor who have not responded to medication.  The Parkinson’s disease study represents the next stage in addressing other movement disorders.  The Neuravive treatment for medication-refractory essential tremor is currently being performed on a routine basis at leading medical institutions worldwide.

Haifa’s INSIGHTEC is a global medical technology innovator transforming patient lives through incisionless brain surgery with MR-guided focused ultrasound.  The company’s award-winning Exablate Neuro is used by neurosurgeons to perform the Neuravive treatment for immediate tremor relief in patients.  Research for future applications in the neuroscience space is underway in partnership with leading academic and medical institutions. INSIGHTEC is headquartered in Haifa, Israel, and Miami, with offices in Dallas, Tokyo and Shanghai.  (INSIGHTEC 02.05)

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8.5  Agrotop & Poultrix Provide Smart Management Technology for Poultry Farms

Agrotop has partnered with Poultrix to jointly offer an easy-to-use technology enabling broiler and layer farmers to efficiently manage every aspect of their farms.  Poultrix has developed an innovative system that provides chicken farmers with a remote, real-time monitoring system to ensure operational efficiency and reduce costs.  The technology is easy and simple to use, enabling managers to run their farms in the most professional and economical manner to improve growth cycles.  As part of the partnership, Agrotop will implement Poultrix’s solution in its full livestock vertical integration projects around the world.  The two companies have already successfully completed the integration of the new solution in several poultry farms constructed by Agrotop in Israel, and recently began a pilot project as part of the Chirina plant in Georgia.

The Poultrix system provides cloud-based business intelligence tools for long-term savings and efficiency for managing poultry, breeder, layer and turkey farms. It can be used by both large integrations or smaller individual farms.  Automatic data collection provides more precise and reliable information which can be used for analyzing reports. Poultrix enables farmers and managers to use its software from any internet-connected device, such as computer, tablet or cellular phone anywhere and anytime.

Moshav Timmorim’s Agrotop is a leading global player in livestock turnkey projects.  The company provides a full range of services for realizing livestock and agro-industry construction projects, while focusing on its clients’ visions and maximizing their business results.

Tel Aviv’s Poultrix is a developer of an automated technological solution focused on organization of information and documentation of production, starting from the first stage in the chain of production, parent flocks, and following through to the sale of meat products and table eggs.  (Agrotop 07.05)

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8.6  Hebrew University’s Yissum Launches Ag-Tech Accelerator

Yissum Technology Transfer Company of the Hebrew University of Jerusalem in collaboration with its seed investment fund AgrInnovation, announced the launch of HUGrow, a new food and ag-tech accelerator. The accelerator will focus on emerging technologies based on research conducted at Hebrew University.  HUGrow is the third acceleration track of HUstart, the Hebrew University’s Entrepreneurship Center.  Eight projects were selected to participate in the accelerator’s first cohort, four of which are general ag-tech and four of which are water and food-tech oriented.

The two-stage program includes three months of weekly meetings offering top-level entrepreneurial training from a successful and professional team of lecturers, mentors, and business leaders.  During this period, entrepreneurs will also develop a detailed work plan to cover any critical gaps in the technology, followed by up to six additional months of development work.

Jerusalem’s HUGROW is designed to identify and nurture the precious seeds of new translational research at the Robert H. Smith Faculty of Agriculture, Food, and Environment. The program is structured so that every participating entrepreneur will graduate with the necessary materials to bring their early stage groundbreaking concepts to the fundable stage.  (Various 08.05)

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8.7  Kedrion & Kamada Begins Shipping KEDRAB (Rabies Immune Globulin [Human])

Fort Lee, New Jersey’s Kedrion Biopharma and Kamada, two leading human-derived protein therapeutics companies, announced that KEDRAB [Rabies Immune Globulin (Human)] has been launched in the U.S. and initial shipments are now reaching healthcare practitioners across the country.  Deliveries have been timed to meet growing demand for this product as the height of the 2018 spring/summer rabies season approaches.  KEDRAB, a human rabies immune globulin (HRIG), received US FDA approval for passive, transient post-exposure prophylaxis of rabies infection, when given immediately after contact with a rabid or possibly rabid animal and concurrent with the rabies vaccine.  Prior to FDA approval of KEDRAB, U.S. healthcare professionals had only two HRIG therapy options from which to choose to prevent the onset of rabies in someone who may have been exposed to the deadly virus.  KEDRAB, the newest entry into the $100 million plus U.S. rabies market, represents another safe, effective treatment choice for healthcare professionals seeking an alternative to currently available HRIGs.

KEDRAB [Rabies Immune Globulin (Human)] is a human rabies immunoglobulin (HRIG) indicated for passive, transient post-exposure prophylaxis (PEP) of rabies infection, when given promptly after contact with a rabid or possibly rabid animal. KEDRAB should be administered concurrently with a full course of rabies vaccine.

Rehovot’s Kamada is focused on plasma-derived protein therapeutics for orphan indications, and has a commercial product portfolio and a late-stage product pipeline.  The Company uses its proprietary platform technology and know-how for the extraction and purification of proteins from human plasma to produce Alpha-1 Antitrypsin (AAT) in a highly-purified, liquid form, as well as other plasma-derived Immune globulins.  AAT is a protein derived from human plasma with known and newly-discovered therapeutic roles given its immunomodulatory, anti-inflammatory, tissue-protective and antimicrobial properties.  (Kedrion 08.05)

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8.8  CollPlant Files U.S. Patent Application for Next Generation Dermal Filler

CollPlant, a regenerative medicine company utilizing its proprietary plant-based rhCollagen technology for tissue repair products (recombinant human, “rhCollagen”), announced that it has filed a provisional patent application with the U.S. Patent and Trademark Office (USPTO) for photocurable dermal fillers comprised of rhCollagen and hyaluronic acid, for the aesthetics market.

Ness Ziona’s CollPlant is a regenerative medicine company focused on 3D bioprinting of tissues and organs, and on the development and commercialization of tissue repair products for orthobiologics and advanced wound care markets.  The Company’s products are based on its rhCollagen (recombinant human collagen), which is produced with CollPlant’s proprietary plant-based genetic engineering technology.  CollPlant’s products address indications for diverse fields of organ and tissue repair, and are ushering in a new era in regenerative medicine.  The Company’s flagship rhCollagen BioInk product line is ideal for 3D bioprinting of tissues and organs, and the unique Vergenix line of rhCollagen products includes a soft tissue repair matrix to treat tendinopathy and a wound repair matrix to promote a rapid optimal healing of acute and chronic wounds.  (CollPlant 08.05)

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8.9  Evogene & Marrone Announce Phase Advancement in their Insect Control Collaboration

Evogene and Davis, California’s Marrone Bio Innovations, a leading global provider of bio-based pest management and plant health products, announced advancement of genes into Phase I in their insect control collaboration following positive results in model plants.  Novel genes isolated from MBI’s microbial assets were discovered as part of Evogene’s Ag-Seeds division collaboration with MBI and showed insecticidal activity against numerous insects from the Lepidoptera and Hemiptera orders in model plants.  Selected genes are now being advanced to soybean validation in greenhouse and field trials.  Soybean is one of the most valuable crops in the world with the current soybean seed market estimated at $8 billion and the soybean insecticide market estimated at $2.5 billion annually.

The Evogene Ag-Seeds division and MBI insect control collaboration was initiated in July 2014 with the mission of bringing to market novel microbe-based insect control solutions viz. seed traits and bio-insecticides.  The Collaboration, which was supported with funding from the Binational Industrial Research and Development (BIRD) Foundation, is based on the utilization of Evogene’s Computational Predictive Biology (CPB) platform for the analysis of genetic potential of MBI’s extensive and proprietary insecticidal microbial collection.

Incorporating deep scientific understandings and advanced computational technologies, such as machine learning and other predictive discovery capabilities, the CPB platform successfully identified a group of microbes containing candidate genes, which were validated against multiple insect species in model crops.  Selected candidate genes will now be further developed by Evogene’s Ag-Seeds division, as an insect control seed trait in crops such as corn, soybean and cotton, while MBI has the continuing right to develop and commercialize the microbials as bio insecticide products.  The companies have agreed to share revenues from any products that may result from this collaboration.

Rehovot’s Evogene is a leading biotechnology company developing novel products for major life science markets through the use of a unique Computational Predictive Biology (CPB) platform incorporating deep scientific understandings and advanced computational technologies.  This platform is utilized by the Company to discover and develop innovative ag-chemical, ag-biological and ag-seed products (GM and non GM), and by two subsidiaries; Evofuel, focused on castor seeds, and Biomica, focused on human microbiome therapeutics.  (Evogene 08.05)

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8.10  3NT Medical Announces Initial Closing of $15 Million

3NT Medical (3NT) announced the initial closing of a major portion of its $15 million financing round from Hoya Corporation.  The funds will be used to complete 3NT’s family of specialty single-use endoscopes and therapeutic devices and initiate commercialization of the Sinusway platform in the U.S. and Europe, advancing care of ear, nose and throat (ENT) disorders.  The financing round is led by Japan’s HOYA Corporation and is its first venture investment in an Israeli company.  HOYA joins current investors LongTec China Ventures and an elite group of angel investors, medical device industry veterans and ENT practitioners in their support of the company.

3NT Medical is a privately held medical device company based in Israel, devoted to pushing the boundaries of endoscopy for ENT surgeons.  3NT is the developer of Sinusway Drivable Endoscope, which enables minimally invasive access, visualization and treatment of the farthest reaches of the nasal anatomy; transforming diagnosis and treatment of nasal disorders across all settings of care.  (3NT Medical 08.05)

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8.11  Tyson Ventures Announces Investment in Future Meat Technologies

Future Meat Technologies has announced a $2.2 million seed investment round co-led by Tyson Ventures, the venture capital arm of Tyson Foods.  Tyson Foods is a Fortune 100 company, and one of the world’s largest food producers.  In addition to Tyson Ventures, the Neto Group, one of the largest food conglomerates in Israel, S2G Ventures, a Chicago-based venture capital fund, BitsXBites, China’s first food technology venture capital fund, and Agrinnovation, an Israeli investment fund founded by Yissum, the Technology Transfer Company of The Hebrew University, participated in this round. New York-based HB Ventures also joined the round.

Animal fat produces the unique aroma and flavor of meat.  Future Meat Technologies is now the only company that can produce this fat, without harvesting animals and without any genetic modification.  Future Meat Technologies expects to use the funds to establish its engineering activities and increase its biological research. The company is currently recruiting engineers, chefs and scientists.

Jerusalem’s Future Meat Technologies is a ground-breaking biotechnology company advancing a distributive manufacturing platform for the cost-efficient production of cultured meat. It is the only company worldwide holding an unlimited cell source that was not genetically modified, capable of differentiating to both muscle and fat.  The technology was exclusively licensed from The Hebrew University of Jerusalem.  (FMT 02.05)

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8.12  Rootility Raises $10 Million

Rootility has closed a $10 million series C financing round led by ADM Capital’s Cibus Fund and with the participation of existing investors GreenSoil Investments and Middleland Capital.  The new investment round will enable the company to expand its sales in new markets and further develop new generations of its unique rootstock breeding solutions for a wider variety of crops.

Ashkelon’s Rootility‘s methods are GMO-free, based on sophisticated simulation and empirical work in combination with well-known breeding techniques, which enable the Company to cross and screen crops at a large scale and high speeds.  Rootility focuses on roots as drivers of tolerance to environmental changes and performance improvements.  The Company cooperates closely with leading seed companies and food processors.  The large scale deployment of processing tomato grafted plants in California is an excellent showcase of how Rootility’s approach and technology can change current practices, increase yields, substantially improve tolerances to heat, cold and soil borne diseases like fusarium, thereby building an exciting growth market for the company.

Rootility has successfully applied its technology in a number of crops in different regions globally.  Large scale field trials have been conducted over a period of five years and commercial sales have already been initiated.  (Rootility 09.05)

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8.13  Algatech Partners With Sphera on Microalgae

Algatechnologies (Algatech) is teaming up with the Italian R&D company, Sphera Encapsulation, to develop innovative functional ingredient formats.  Based on Sphera’s propriety encapsulation technology, the partnership will focus first on development of innovative new delivery forms of ingredients derived from microalgae.  This debut product, expected to launch in the coming months, is a water-soluble powder of AstaPure, an all-natural astaxanthin.  The powder is formulated with natural ingredients only, and becomes a clear solution in water.  It is odorless and has a neutral flavor.  The new powder technology also boosts bioavailability. Algatech and Sphera will introduce the new powder at Vitafoods, Geneva, to a selected list of companies.

Kibbutz Ketura’s Algatechnologies is a rapidly growing biotechnology company, specializing in the commercial cultivation of microalgae.  Founded in 1998, Algatech is a world leader in the production and supply of AstaPure, a premium natural astaxanthin-one of the world’s most powerful antioxidants-sourced from the microalga Haematococcus pluvialis.  (Algatech 10.05)

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8.14  Cancer Treatment Developed at Ben-Gurion University Shows Ability to Reprogram Cancer Cells

BGN Technologies and the NIBN announced that a research group led by Prof. Varda Shoshan-Barmatz, the Department of Life Sciences, and the National Institute for Biotechnology at Ben-Gurion University (BGU) is developing a novel molecule for the treatment of cancer, which has shown not only inhibition of growth of cancer cells, but also the ability to reprogram the cancer cells back to normal-like cells.  The novel treatment is based on preventing the expression of VDAC1, a protein that is highly overexpressed in many solid and non-solid tumors.

VDAC1 serves as the gate-keeper of the mitochondria, organelles that control cell metabolism, and is therefore crucial for supplying the high energy demands that characterize malignant cells.  Studies by show that silencing VDAC1 expression using the siRNA method, leads to inhibition of cancer cell growth, both in vitro and in mouse models of glioblastoma, lung cancer, and triple negative breast cancer. Importantly, treatment of cancer cells with VDAC1 specific siRNA induces metabolic rewiring of the cancer cells, reversing their oncogenic properties and diverting them towards normal-like differentiated cells.

Beer Sheva’s BGN Technologies is the technology transfer company of Ben-Gurion University, Israel.  BGN Technologies brings technological innovations from the lab to the market and fosters research collaborations and entrepreneurship among researchers and students.  To date, BGN Technologies has established over 100 startup companies in the fields of biotech, hi-tech, and cleantech and has initiated leading technology hubs, incubators, and accelerators.  The NIBN, a unique research institute located within BGU, is the first self-organized, independent research entity established as a company under the auspices of a University in Israel.  (BGN 10.05)

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8.15  Allium Medical Receives CFDA Clearance to Market its Minimally-invasive BPH Implant Stents

Allium Medical received regulatory clearance from the China Food and Drug Administration (CFDA) to market its portfolio of urological systems in China.  The Company has an exclusive strategic agreement with a leading distribution organization in China’s urology market and expects to generate significant revenue in 2018.  The Company’s urological implants are especially designed to treat ureteral and urethra obstructions over long indwelling period while ensuring continuous intraluminal flow with full patency.  The implants are covered with a special polymeric coating that prevents stone formation, tissue ingrowth and recurrent obstructions.  The procedure for insertion of the implant is minimally invasive which significantly reduces the risks and complications versus surgery.  Over 12,000 systems for the treatment of BPH, and Bulbar and Ureteral strictures have been implanted to date in major international markets.

Caesarea’s Allium specializes in minimally invasive medical devices and owns a range of technologies and product lines in this field.  The company’s strategy is to create value by developing its own devices and technologies and by acquiring additional products and technologies that were developed by other parties.  The company is led by highly experienced professionals who possess extensive knowledge and experience of accelerated promotion of products from the development stage to commercialization, while securing long-term funding and economies of scale.  (Allium Medical 14.05)

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8.16  BrainQ Raises $8.8 Million to Treat Neurodisorders with Artificial Intelligence

BrainQ announced the completion of a financing round, making the total investment in the company to date stands at $8.8 million.  The financing included Qure Ventures,, Norma Investments, IT-Farm and other strategic angel investors.  BrainQ is developing breakthrough technology that utilizes its proprietary AI algorithms to identify high resolution spectral patterns in patient’s brain waves (Electroencephalogram or EEG).  These patterns are interpreted and then translated into a tailored electromagnetic treatment protocol aimed to treat disabilities following neurodisorders such as stroke and spinal cord injury.  These are conditions that globally affect tens of millions of people each year.  The company’s technology has already been applied in animal studies and early stage human clinical trials which have shown very promising results.  The company’s unique AI technology largely stems from developing and owning one of the largest known Brain Computer Interface (BCI) based EEG databases for motor tasks.

BrainQ will use the funding to further develop its non-invasive, BCI-based simulation device towards commercialization activities in various markets.  Funds will also be used to support clinical trials and grow the unique BCI-based EEG database.

Incorporated in 2011, Jerusalem’s BrainQ is developing a breakthrough AI powered, technology which enables non-invasive treatment for a variety of neurodisorders.  BrainQ’s solution helps these patients get back on their feet and restore their ability to perform activities of daily living.  BrainQ has secured its patents in major global markets and is conducting clinical trials in multiple world leading centers.  In 2017, BrainQ was named as one of four companies in the world expected to transform healthcare with AI and is currently participating in Google’s prestigious Launchpad Studio program in San Francisco.  (BrainQ 15.05)

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9.1  Regulus Cyber Publicly Announces a Technology to Secure Autonomous Vehicles

Regulus Cyber has come out of stealth and announced a $6.3 million Series A financing round from Sierra Ventures, Canaan Partners Israel, the Technion and F2 Capital.  The company has developed end-to-end solutions that provide security and mission reliability to the communication and sensor suite of autonomous cars and trucks, robots and drones, ensuring safety and operational robustness.  Regulus Pyramid GPS SP (GPS Spoofing Protection) for autonomous vehicles and drones is a standalone module that integrates seamlessly with any vehicle. It is designed to protect the GPS system from spoofing attacks by differentiating between reliable GPS signals coming from satellites versus attack signals coming from illegitimate sources.  The Pyramid GPS SP is a very small module (under 50 grams, 2 ounces) and is the first commercial grade solution to detect spoofing attacks on a Global Navigation Satellite System (GNSS).

Regulus has also developed the Pyramid CSM (Communication & Security Manager) to guard drones from hacking and mission interference.  Regulus Pyramid CSM is an external plug-and-play solution that protects drones from hackers via encryption and authenticity, ensures the safety of the communication and data being transmitted, and provides a visual heat map of the drone’s quality of communication so that remote pilots can have a comprehensive view of each drone’s flight path to assist in planning of future missions.

Haifa’s Regulus Cyber enables drones, robots and autonomous vehicles to operate safely, without malicious or accidental interference to the operation of their mission – by fully securing their systems, adding remote threat detection, and comprehensive operational robustness.  (Various 02.05)

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9.2  Vayyar Imaging Unveils the World’s Most Advanced CMOS SOC for mmWave 3D Imaging

Vayyar Imaging announced the launch of the world’s most advanced System on a Chip (SOC) for mmWave 3D imaging, which integrates an unprecedented number of transceivers and an advanced DSP creating high-resolution contour with high accuracy.  The new Vayyar chip covers imaging and radar bands from 3GHz-81GHz with 72 transmitters and 72 receivers in one chip.  Enhanced by an integrated, high-performance DSP with large internal memory, Vayyar’s sensor does not need any external CPU to execute complex imaging algorithms.  Breaking through current constraints in today’s sensor technology, Vayyar’s new chip supports very high bandwidth, which produces unprecedented levels of accuracy and a high-resolution image.  Vayyar’s sensor differentiates between objects and people, determines location while mapping large areas, and creates a 3D image of the environment.  The sensor can simultaneously detect and classify a variety of targets in real time.

Yehud’s Vayyar Imaging is changing the market for imaging and sensing with its cutting edge 3D imaging sensor technology.  Vayyar’s sensors quickly and easily look into objects or any defined volume and detect even the slightest anomalies and movements – bringing highly sophisticated imaging capabilities to your fingertips.  Utilizing a state-of-the-art embedded chip and advanced imaging algorithms, Vayyar’s mission is to help people worldwide improve their health, safety and quality of life using mobile, low-cost, and safe 3D imaging sensors.  (Vayyar Imaging 02.05)

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9.3  Safe-T Announces New Worldwide Channel Partner Program

Safe-T®, a leading provider of software-defined access solutions for the hybrid cloud, announced the launch of its global channel partner program.  The goal of the new program is to support Safe-T’s business expansion plans worldwide and recruit new partners in key territories in order to meet growing demand for Safe-T solutions.

Following significant growth in 2017, Safe-T has plans to continue the momentum by partnering with value-added resellers and systems integrators who play in the highly evolving IT landscape and customer technology environment.  The Safe-T channel partner program offers myriad benefits, including direct sales and technical support, an exclusive portal with sales and marketing tools, product and solution training, marketing development funds, monthly newsletters, webinars and more.

Herzliya’s Safe-T®, a wholly owned subsidiary of Safe-T Group, is a leading provider of software-defined access solutions which mitigate attacks on enterprises’ business-critical services and sensitive data.  Safe-T solves the data access challenge by masking data at the perimeter, keeping information assets safe and limiting access only to authorized and intended entities in hybrid cloud environments.  Safe-T enhances operational productivity, efficiency, security, and compliance by protecting organizations from data exfiltration, leakage, malware, ransomware, and fraud.  (Safe-T 02.05)

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9.4  Typemock Launches C/C++ Mocking Framework for Linux

Typemock announced the launch of Isolator++ for Linux.  For over a decade, Typemock has been the smart way for developers to unit test .NET and C/C++ on Windows, and with this new release, developers will be able to easily unit test their code on Linux as well.  Isolator++ for Linux includes all the features which established Typemock as the leading unit testing solution.  With Typemock, there is no need to change your production code for testing. Developers can mock fields, members and concrete classes, as well as non-virtual, private and static methods without the need to use templates or redefined classes. Typemock Isolator++ for Linux also provides more coverage with a powerful mocking framework that supports testing legacy code.

Tel Aviv’s Typemock was founded in 2006 to help companies prevent bugs and become Agile through unit testing. The company has since established itself as a leading unit testing innovator by offering the first mocking framework for legacy code and the first AI-generated test suggestions.  Thousands of companies around the world from a wide range of sectors, including financial services, telecommunications, technology enterprises and others rely on Typemock solutions.  (Typemock 02.05)

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9.5  SecBI to Support Orange Polska in Augmenting Its Managed Cyber Services

SecBI announced an agreement with Orange Polska, a convergent operator in the Polish market and member of the Orange Group, in the field of network security.  The agreement includes active cooperation to broaden Orange’s network security competence and extends to joint marketing activities and network security knowledge sharing, including joint participation in industry events and conferences.  The agreement will also allow both sides to exchange technology knowledge through reference visits, share information from conducted research, and undertake actions to further enhance mutual market leadership.  The strategic partnership was signed following a proof-of-concept (PoC) by SecBI running several use cases — ranging from advanced malware detection to Bitcoin mining — that resulted in the identification of numerous threats.

SecBI’s Autonomous Investigation technology is based on unsupervised machine learning that analyzes network traffic to detect complex and stealthy cybersecurity threats.  It instantly unveils an attack’s full scope, accelerating detection and threat hunting, and optimizing response and mitigation.  Security analysts are presented with complete attack narratives including actionable information, giving them visibility of all users, devices and infection points involved in an attack, enabling rapid and accurate remediation.

Tel Aviv’s SecBI has developed a revolutionary approach to network traffic analysis to deliver automated threat detection and investigation for security operations centers (SOCs) and managed security service providers (MSSPs).  Their value is best understood in contrast to solutions that offer detection via random alerts and anomalies requiring manual correlation and investigation.  Their Autonomous Investigation technology incorporates machine learning to uncover a full scope report on every suspicious incident, including all affected entities (e.g. users, domains, devices) within minutes.  Without the need to deploy special appliances or agents, the solution can be deployed on premise or in the cloud, and is currently used by financial institutions, telecoms, retailers, and manufacturing enterprises worldwide.  (SecBI 02.05)

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9.6  Coneuron Turns Toward Screenagers to Create a Positive Vibe in Social Networks

Coneuron, a startup in stealth mode focusing on making kids’ virtual world a better place, announced the build of a global dream team to tackle the challenges of the screenagers’ generation.  Coneuron arms young people with the ability to sense peer intent and feedback of their own online behaviors and interactions.  With the goal to empower young people, Coneuron enables them to increase social skills, confidence, and ability to digest potential criticism in a private way.  The company develops a mobile application and platform based on a unique patent-pending technology that applies artificial intelligence on social media interactions and combines the expression of youth feelings regarding individuals’ activities in social networks.

Founded in November 2017, Herzliya’s Coneuron aims to provide teens with a space and interactive environment to develop positive and socially online consciousness.  Stemming from a strong background in the cybersecurity arena, the Coneuron team is stacked with global technology leaders aiming to have a big impact on improving social skills, reducing cyberbullying and other negative online interactions.  (Coneuron 03.05)

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9.7  Amiad Launches New Sigma Series for Improved Irrigation Filtration

Amiad Water Systems announced the launch of a new Sigma series for superior water filtration in the irrigation market.  The new product range, which is being launched today at Agritech Israel exhibition and conference, is led by the introduction of the Mini Sigma – an innovative automatic self-cleaning filter that is both lightweight and durable with maximum installation flexibility.  The new range consists of the Mini Sigma (available in three sizes) and Sigma Pro automatic filters, and the ADI-P electronic controller.  Alongside Amiad’s existing Media, Disc, Screen and Microfiber filtration solutions, this is offering customers a more complete package for their irrigation filtration requirements.

Kibbutz Amiad’s Amiad Water Systems is a leading global producer of automatic, self-cleaning water treatment and filtration products and systems.  Through its engineering skills and ability to innovate, Amiad provides cost-effective “green” solutions for the industrial, municipal, irrigation, oil & gas and ballast water markets.  In these segments its patented products are being integrated into the core of systems for filtration and water treatment, micro irrigation and membrane protection, wastewater and potable water treatment, cooling systems and sea water filtration.  (Amiad 08.05)

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9.8  PureSec Unveils First Serverless Security Solution for MS Azure Functions

PureSec launched a beta version of their serverless application security solution for Microsoft Azure Functions, Microsoft’s serverless platform.  The adoption of serverless architectures on cloud providers like Microsoft Azure is growing exponentially, at an estimated annual rate of 700%.  Organizations adopting serverless are still responsible for designing robust applications and making sure that application code doesn’t introduce application-layer vulnerabilities.  However, since organizations that use serverless architectures do not have access to the physical (or virtual) server or its operating system, they can’t deploy traditional security layers such as endpoint protection, host-based intrusion prevention, Web application firewalls, or RASP (runtime application self-protection) solutions.

PureSec’s SSRE platform is designed exclusively for serverless applications and can defend against application layer attacks such as NoSQL/SQL injections, remote code execution, attempts to subvert function logic and unauthorized malicious actions.  PureSec’s beta Serverless Security Runtime Environment for Azure Functions marks a new and significant partnership with Microsoft, one of the biggest cloud providers.  This makes PureSec the world’s first Multi-Cloud Serverless Security Runtime Environment.

The SSRE is serverless in itself and requires no installation of appliances, or maintenance of cloud infrastructure.  It seamlessly integrates into all serverless functions and scales together with customer serverless applications.  PureSec provides DevSecOps teams with unparalleled deep visibility into serverless functions behavior and security events in real time.

As the global leader in serverless architecture security, Tel Aviv’s PureSec enables its customers to build and maintain secure and reliable serverless applications.  The company’s end-to-end serverless security solution is the industry’s first and most comprehensive Serverless Security Runtime Environment (SSRE).  (PureSec 07.05)

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9.9  Cognigo Collaborates with Microsoft AIP to Secure Critical Data Assets

Cognigo announced a collaboration with Microsoft AIP to protect organizations from data breaches by classifying all data assets, both structured and unstructured, on-premises and in the cloud, automatically and at scale.  The partnership enables organizations to gain visibility and investigate how users use data, resulting in human-free data protection and GDPR readiness, right inside Microsoft Azure Information Protection suite.

Cognigo’s DataSense and Microsoft AIP provide a comprehensive human-free data protection through Cognitive Computing. It maps every bit of your data to discover the undiscoverable, enforces data accountability and protects sensitive assets.  DataSense is the only solution that provides data-agnostic Supervised and Unsupervised categorization, data clustering, structured and unstructured data fusion, AI-driven Personal Data recognition, searchable index, and an actionable policy center.  From a compliance perspective, this integration is a crucial factor in achieving “security by default” as required by the EU GDPR.

Tel Aviv’s Cognigo was founded in 2016 by an experienced team of machine learning experts with cyber security and enterprise data security veterans.  Their mission is to ensure that critical data assets, which are now critical than ever before, will not fall into the wrong hands.  Cognigo DataSense is a single point of control to manage and secure critical data assets and PIIs. Gain deep and context-aware visibility into enterprise-wide data. Achieve GDPR compliance in days, not months.  (Cognigo 09.05)

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9.10  TowerJazz & Newsight Imaging Announce Advanced CMOS Image Sensor Chips

TowerJazz and Newsight Imaging announced production of Newsight’s advanced CMOS image sensor (CIS) chips and camera modules, customized for very high volume LiDAR and machine vision markets, combining sensors, digital algorithms and pixel array on the same chip.  Newsight’s CIS chips are used in ADAS (advanced driver assistance systems) and autonomous vehicles as well as in drones and robotics.

LiDAR (Light Detection and Ranging), a detection system which works on the principle of radar, but uses light from a laser, is considered a must have for autonomous driving due to its high resolution at long distances, and market growth is expected to be exponential once L4/L5 autonomous vehicles become mainstream.  By utilizing TowerJazz’s advanced 180nm technology, featuring a wide range of customizable pixel architectures and technologies, Newsight is well-positioned to address the vast opportunities in the automotive market as well as in the security, defense, medical, industrial, and consumer markets.

Newsight’s innovative image sensor chips are ideal for high volume, competitive applications requiring cost effectiveness, low power consumption, high performance, and analog and digital integration.  The NSI3000 sensor family, currently in mass production at TowerJazz’s Migdal HaEmek, Israel facility, offers extremely high sensitivity pixels, enabling the replacement of expensive CCD (charge-coupled device) sensors in many applications and is designed for programmable high frame rate speeds, allowing better analysis and reaction to events.

Migdal HaEmek’s Tower Semiconductor and its subsidiaries operate collectively under the brand name TowerJazz, the global specialty foundry leader.  TowerJazz manufactures next-generation integrated circuits (ICs) in growing markets such as consumer, industrial, automotive, medical and aerospace and defense.  TowerJazz’s advanced technology is comprised of a broad range of customizable process platforms such as: SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, integrated power management (BCD and 700V), and MEMS.  To provide multi-fab sourcing and extended capacity for its customers, TowerJazz operates two manufacturing facilities in Israel (150mm and 200mm), two in the U.S. (200mm) and three facilities in Japan (two 200mm and one 300mm).

Ness Tziona’s Newsight Imaging develops advanced CMOS image sensor chips, providing 3D solutions for high volume markets.  The chip’s sensor is manufactured using CMOS technology with ultra-high sensitivity pixels, replacing more expensive CCD sensors and other camera modules in LiDAR applications for robotics, automotive (ADAS and Car safety) and drones as well as in other markets, such as mobile depth cameras, AR/VR, Industry 4.0 and barcode scanners.  (Newsight 09.05)

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9.11  Cheetah Mobile Boosts Traffic Quality & ROI on Ad Spend with Protected Media

China’s Cheetah Mobile, the leading developer of mission-critical mobile utility and security applications has implemented Protected Media’s fraud detection and prevention solutions to identify and mitigate in-app advertising fraud and measure viewability.  As part of their commitment to providing quality traffic and optimize ad spend, Cheetah Mobile is taking proactive, preventive fraud protection measures, increasing transparency and protecting marketing budgets.  Cheetah Mobile apps have nearly four billion global installs with more than 580 million monthly active users.

As publishers and advertisers worldwide suffer from increasingly sophisticated fraud schemes, Cheetah Mobile is taking a pioneering step, leveraging a cutting edge solution comprised of both AI technologies and traditional cyber security methodologies, in order to protect their premium advertisers and the integrity of their market leading applications.  Protected Media’s solution for advertisers and publishers provides multi-layered ad fraud detection and prevention, to accurately identify the source of bad traffic at the most granular level, providing both publisher and advertiser with transparency and trust.

Petah Tikva’s Protected Media‘s solutions enable buyers and sellers of digital advertising to ensure that display mobile and video ads are properly located visible, and seen by real people.  Protected Media’s technology provides in-depth information at the impression level to detect problematic traffic so agencies can work side by side with publishers to identify and eliminate suspicious activity to dramatically increase overall ad quality.  (Cheetah Mobile 09.05)

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9.12  Saguna & GridRaster Partner to Bring VR/AR Experiences to Mobile Devices

GridRaster, a California-based VR/AR startup and Saguna announced their partnership to enable high-quality, immersive VR/AR experiences on mobile devices by leveraging edge cloud computing technologies.  Virtual reality and augmented reality (VR/AR) applications can improve productivity, reduce cost and increase revenues in aerospace, automotive, industrial design and retail.  However, high quality VR/AR experience require heavy computing resources and immediate response times. Requirements, which current cloud-computing and network infrastructure are unable to effectively deliver.

To address this market-need and accelerate adoption of VR/AR applications for enterprises, GridRaster and Saguna have teamed up to create a joint solution.  This solution features GridRaster VR/AR software platform operating on Saguna Open-RAN multi-access edge computing solution.

Saguna’s Multi-access Edge Cloud Computing (MEC) solution, Saguna Open-RAN, creates cloud-computing ‘cloudlets’ at the access network; close to end users and connected devices.  It enables communication service providers (CSPs) to transform their networks into powerful cloud computing infrastructures, where new Edge Applications can be easily developed and deployed.

Yokneam’s Saguna Networks, a leader and pioneer of Multi-access Edge Cloud Computing, transforms communication networks into powerful Edge Cloud computing platforms that minimize latency, boost performance, and reduce costs by operating as close as possible to end users and connected IoT devices.  Compliant with ETSI MEC standard, Saguna’s Open-RAN enables communication service providers and application developers to develop and deploy innovative, revenue generating Edge Applications and Services for Internet of Things, virtual and augmented reality, connected cars, content delivery, enterprise applications and more.  (Saguna 09.05)

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9.13  AR Drone Startup Edgybees Wins Techsauce Israel Challenge

Edgybees has won the Techsauce Israel Innovation Challenge.  The event, organized by Upround Ventures and Singtel Innov8, with participation by GE Ventures, startup advisor, Hillel Fuld and media partner, Silicon Dragon Ventures, identified the startups most relevant for SE Asian markets.  Edgybees will represent Israel at the Techsauce Global Summit, a tech event focused on uniting East and West, in Bangkok, on 22-23 June 2018.  The event will showcase startups from 19 cities across Asia Pacific with Israel as the 20th country selected.

Edgybees’ First Response app was successfully deployed by emergency teams responding to Northern California wildfires and post-hurricane flooding in Florida.  New security uses of the application include safeguarding against school shootings, bridge collapses and border security measures.  Currently, Edgybees is being used by dozens of police and fire departments in the US and around the world.  The company’s platform is aptly suited to serve a range of industries, from manufacturing & chemical factories, to smart cities, automotive, defense and broadcast.

Tel Aviv’s Edgybees created the world’s first augmented reality development platform for fast-moving platforms like cars, airplanes and UAS, and body-worn accessories.  Edgybees has offices in Europe and the United States.  Edgybees recently announced a $5.5 million funding round with participation by OurCrowd, Verizon Ventures, Motorola Solutions Venture Capital, 8VC and NFX.  (Edgybees 10.05)

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9.14  Luminate Achieves Rigorous SOC 2 Type II Certification

Luminate Security announced the completion of a stringent AICPA audit to obtain the SOC 2 Type II certification, and become the first secured access cloud service provider to achieve four audited controls.  SOC 2 is the officially recognized auditing standard for service organizations demonstrating adequate controls and processes.  A SOC 2 Type II certification indicates that an independent accounting and auditing firm has examined the organization’s control objectives and activities, and has tested them to ensure their effective operation.  Luminate implemented controls and went through auditing for four principles of security, availability, processing integrity, confidentiality and most importantly privacy.

The privacy chapter of the report positions Luminate as GDPR ready, confirming that Luminate’s platform complies with the privacy principles in the delivery of service to its customers.  In addition, Luminate’s Secure Access Cloud platform provides organizations with the GDPR-requested measures of data access visibility and governance.  It addresses the GDPR requirements prompting the critical need for governing sensitive data, including the manageability and traceability of actions taken against data.  Luminate’s full audit trail of application usages provides a strong foundation for GDPR compliance while reducing overall data attack surface and customer risk.

Tel Aviv’s Luminate is a software-as-a-service security platform that allows CISOs, CIOs and CTOs to securely manage access to all their corporate resources from any device anywhere in the world.  Based on Software Defined Perimeter principles, Luminate gives users one-time access to the requested application, while all other corporate resources are cloaked, without granting access to the entire network.  This prevents any lateral movements to other network resources and eliminates the risk of network-based attacks.  (Luminate 10.05)

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9.15  Anodot Selected Coolest Business Analytics Vendor in CRN’s 2018 Big Data 100 List

Anodot announced that it has been named one of the 30 Coolest Analytics Vendors on the 2018 CRN Big Data 100 List.  This annual list recognizes the ingenuity of tech suppliers bringing to market innovative offerings for harnessing the increasingly large amounts of data generated in today’s digital world, raising the bar for data management and challenging established IT practices.

Anodot’s AI analytics detects business incidents in real-time, investigating their root causes and turning them into business insights.  Using machine learning technology, Anodot analyzes massive amounts of data to identify issues, alerting analysts and managers to take advantage of business opportunities and avoid losses for both revenue and reputation.  In December, Anodot raised $23 million in Series B financing and announced that the company tripled its revenue in the past year.

Ra’anana’s Anodot illuminates business blind spots with AI analytics, so companies will never miss another revenue leak or brand-damaging incident. Its automated machine learning algorithms continuously analyze all business and IT data, detect the business incidents that matter, identify why they are happening, and predict upcoming threats and opportunities.  Dozens of customers in ad-tech, e-commerce, gaming, fintech, web and mobile apps, and other data-heavy industries use Anodot to drive real business benefits like significant cost savings, increased revenue and upturn in customer satisfaction.  (Anodot 10.05)

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9.16  Shieldox Announces Collaboration with Microsoft Information Protection to Protect Data in Motion

Shieldox announced a new collaboration with Microsoft Information Protection (MIP), to extend the protection capabilities of information collaboration within the walls of an organization and beyond, while in motion.  Shieldox is in the forefront of the new category- Information Protection in Motion.  Using their advanced artificial intelligence technology, Shieldox knows who can or cannot access sensitive documents, keeping them safe, at all times.  The industry shaping solution will work alongside Microsoft Information Protection as an add-on solution for Microsoft Office 365.  Together, Shieldox with Microsoft Information Protection help ensure that documents, files and emails are only seen by authorized persons, inside or outside the organization’s perimeter.

Shieldox and Microsoft Information Protection working side by side will enable organizations using Office 365 to detect, protect and control sensitive information based on pre-determined policies.  Data will be able to be classified and applied into categories, based on sensitivity.  This will enable businesses to easily take protective actions, including encryption, access restrictions and the remote wiping of devices.  Once the data is in motion, businesses using the Shieldox add-on for Office 365 will be able to monitor their data with advanced reporting, alerting and remediation capabilities.

Shieldox is an add-on to Office 365 that enables information protection in motion. Users can enjoy secure collaboration with colleagues and business partners beyond the boundaries of an organization and the Microsoft ecosystem, with full tracking, visibility and control of all their data. The Shieldox Information Protection Solution is compliant with GDPR and other regulations.

Tel Aviv’s Shieldox’s mission is to provide easy, secure and frictionless collaboration for members of all organizations.  An AI-backed security company combining the worlds of security (information protection), and collaboration (information in motion), Shieldox is uniquely positioned to establish and ensure the success of Information Protection in Motion.  (Shieldox 14.05)

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9.17  Boeing & Assembrix to Collaborate on Secure 3D Printing

Boeing and Israeli company Assembrix signed a Memorandum of Agreement (MOA) that will enable Boeing to use Assembrix software to manage and protect intellectual property shared with vendors during design and manufacturing.  Assembrix’s software will enable Boeing to transmit additive manufacturing design information using secure distribution methods to protect data from being intercepted, corrupted or decrypted throughout the distribution and manufacturing processes.  Boeing is focused on leveraging and accelerating additive manufacturing to transform its production system and support the company’s growth.  The company currently has additive manufacturing capabilities at 20 sites worldwide and partners with suppliers across the globe to deliver 3D-printed parts across its commercial, space and defense platforms.

Tel Aviv’s Assembrix developed a cloud-based platform that virtualizes industrial 3D printing, enabling simpler, secured and more efficient processes. It oversees the entire additive manufacturing thread from the initial part model to the verified physical part and beyond. The platform enables allocation and monitoring of industrial 3D printers for multiple in-house users or external clients, leading to a fully-automated and self-controlled process, higher printer utilization and higher ROI.  (Boeing 14.05)

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9.18  Time2Market Selects AudioCodes Virtualized SBC for Growing Hosted Skype for Business

AudioCodes announced that Time2Market, a USA-based leading unified communications system integrator and cloud service VoIP provider, has selected AudioCodes Mediant Virtual Edition (VE) SBCs to power the core of its growing Cloud Complete hosted Skype for Business offering.  Time2Market also selected AudioCodes 400HD IP phones to deliver a high quality user experience.  The service and virtualized SBCs provide scalability and high voice quality while also utilizing the SILK voice codec.  The AudioCodes VE SBCs deliver secured SIP trunk connectivity and are deployed in an active-active geo-redundancy configuration for continuous service availability.  Multi-tenancy support facilitates efficient usage of cloud resources while enforcing strict isolation between tenants.  The 400HD IP phones enhance worker productivity, are intuitive for adoption and empower IT organizations with management tools that help control operational expenditure (OpEx).

Lod’s AudioCodes is a leading vendor of advanced voice networking and media processing solutions for the digital workplace.  AudioCodes enables enterprises and service providers to build and operate all-IP voice networks for unified communications, contact centers, and hosted business services.  AudioCodes offers a broad range of innovative products, solutions and services that are used by large multi-national enterprises and leading tier-1 operators around the world.  (AudioCodes 14.05)

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9.19  Epsilor to Deliver Rechargeable Batteries to South Asian Army for Harris Falcon Radios

Epsilor-Electric Fuel won a contract to deliver military rechargeable batteries for Harris Falcon manpack and handheld radios (PRC-117 and PRC-152) to a South East Asian military customer.  Epsilor’s batteries passed a series of compatibility and operational testing which included mechanical, electrical and communication interface verification.  The operational tests verified that Epsilor’s battery performance equals and even exceeds the performance of the OEM batteries in terms of operating endurance, charge time and power density.  Epsilor is among a handful of companies that manufacture compatible batteries for Harris Falcon radios.  The company’s BB-2590 family of products services military forces and defense users around the world, including the Israel Defense Forces (IDF) and several NATO nations.

Dimona’s Epsilor is a globally recognized developer and manufacturer of custom and standard batteries, chargers and mobile power systems for the defense, medical, aerospace, industrial and marine markets.  The company offers a wide variety of electro-chemistries, smart electronics and sophisticated battery management systems (BMS).  The company’s products have won several awards for their innovation and smart operational approach.  (Epsilor-Electric Fuel 15.05)

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9.20  Alcide Named a Gartner Cool Vendor in Cloud Security for 2018

Alcide has been named a Gartner Cool Vendor in Cloud Security for its Data Center & Cloud Ops Security Platform.  In the “Cool Vendors” report, Gartner notes that Alcide offers a unique way to protect the cloud with real-time visibility of cloud operations combined with deep analysis and controls to manage today’s complex hybrid cloud.  These controls include enforcing application-aware embedded policies, detecting malicious internal activity, blocking data exfiltration, and restricting inappropriate access.  The platform enables DevOps and security teams an innovative approach to the shared responsibility methodology that is so crucial in today’s cloud-native world.

Alcide emerged from stealth in December 2017 with a seed round led by Intel Capital and Elron.  In April 2018, the company announced the general availability of its security platform designed to meet the complex needs of the modern data center, including hybrid, multi-compute and multi-cloud data environments.

Tel Aviv’s Alcide delivers a cloud-native security platform designed for any combination of container, VM and bare metal data centers operated by multiple orchestration systems.  Alcide empowers DevOps, Security and Engineering teams with simplified and autonomous control to manage and secure the evolving data center and hybrid cloud, at any scale.  Offering real-time, aerial visibility and granular perspectives of both infrastructure and applications, Alcide secures the data center against cyber-attacks, including malicious internal activity and data exfiltration.  (Alcide 15.05)

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10.1  Home Prices Continue Falling While April CPI Rises by 0.4%

The Consumer Price Index (CPI) rose 0.4% in April, after rising 0.3% in March. Inflation over the past 12 months is 0.4%, finally beginning to move towards the government target of between 1% and 3%.  Notable price rises in April were in fresh fruit and vegetables (4.1%) and clothing and footwear (2.2%).  Notable price drops were in cars (1.4%).

The fall in home prices continues according to the latest figures published by the Central Bureau of Statistics on 15 May.  Home prices fell 0.2% in March 2018 and have now fallen 0.1% in the past 12 months.  Moreover, the fall in house prices of 0.2% in February has now been revised downwards to 0.5%.  This is the first time in 10 years that housing prices have fallen over a 12-month period.  In February-March 2018, housing prices rose 1.2% in Jerusalem and by 0.4% in Haifa and the north but fell 0.9% in Tel Aviv and 1.5% in the south.  The price of new homes fell 1.2% with 28.2% of new homes sold in the Israeli government’s buyers fixed price program.  (CBS 15.05)

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10.2  Israel Defense Exports Increase by 40% in 2017

The Ministry of Defense’s Defense Export Division (SIBAT) announced that In 2017 Israeli defense exports signed new contracts worth $ 9.2 billion, an increase of 40% compared with 2016.  During the year, The defense industries, with the support of SIBAT and the other Defense Ministry entities, signed dozens of significant contracts, which led to the continued trend of Israel’s strengthening in the global defense market.  The leading defense exports in 2017 were: communications & communications systems (9%), observation and optics (8%), missile systems & aerial defense systems (17%), UAVs (2%), marine systems (1%) and satellites and space (1%).  Defense exports by geographical breakdown were as follows:  Asia and the Pacific – 58%, Europe – 21%, North America – 14%, Africa – 5% and Latin America – 2%.

The dramatic rise in defense exports is attributable to a series of huge deals last year by Israel Aerospace Industries in India, headed by the $2.5 billion deal to supply Barak 8 missile defense systems.  These deals took many years of preparation and joint development with the Indian defense authorities.  At the same time, the Ministry of Defense said that in addition to this huge deal, other substantial defense deals also contributed to the steep rise in defense exports in 2017, and this trend is projected to continue in 2018.  The Ministry of Defense’s figures indicate that the bulk of defense exports (80%) consisted of missile and air defense systems, followed by deals involving exports of radar and electronic warfare systems and upgrading of weapons platforms and avionics.  (MoD 02.05)

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10.3  Israeli Startups Begin Strong 2018 with Raised Capital of Over $1.5 Billion in First Quarter

Israeli high-tech startups and companies raised some $1.52 billion in capital in 181 deals over the first quarter of 2018, signaling a strong start to the year and a marked increase from the first quarter of 2017 with $1.06 billion in 155 deals, according to a report released by the IVC Research Center and the law firm ZAG-S&W Zysman, Aharoni, Gayer & Co.  Three deals, each of $100 million or more, accounted for 23% of total capital raised in the first quarter according to the report, including Israeli social trading company eToro with $100 million in a Series E funding in March and Israeli fintech company Behalf, which provides loans and on-demand payment tools to large and small business in the US, with $150 million (in debt financing) in February.  The report found that more cybersecurity companies (34) raised $328 million in capital in the first quarter this year, almost double the number of deals (18) in Q4/17.  Capital raising by companies in earlier stages, including R&D and Round A, grew by 60%, raising $451 million compared to the quarterly averages in 2017.

An analysis of the deals and financing rounds according to sector shows that Israeli software companies continue to attract investors, raising $754 million in the first quarter, compared with $592 million in the fourth quarter and $411 million in the first quarter of 2017.  Israeli fintech companies raised $328 million in the first quarter, up 141%, compared with the first quarter of 2017.  The number of deals by Internet of Things (IoT) companies continued to increase, with $265 million being raised in 29 deals. IVC says that this is the most raised in the past five years.  (NoCamels 07.05)

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10.4  Israeli Tourism Increases by 25% in 2018 to Reach New Record

The Ministry of Tourism announced 1.36 million tourists entered Israel in January-April 2018, 25% more than in the corresponding period last year.  The Ministry of Tourism plans to increase the number of tourists this year by means of large-scale marketing efforts.  Some 408,000 tourists entered Israeli in April 2018, 17% more than in April 2017, when 350,000 visited Israel.  The Ministry of Tourism says that revenue from tourists in April exceeded NIS 2.1 billion.

The Ministry of Tourism is also optimistic about taking advantage of the momentum created by the exposure gained by Israel in the Giro d’Italia events.  Some 238,000 of the 408,000 tourists in April, more than half, came from Europe, especially France, Germany and the UK.  In the framework of the preparations for the Giro d’Italia bicycle race, the number of visitors from Italy in April was 15,000, 48% more than in April last year.  The number of tourists from the UK fell 13% to 19,300.  Another 105,000 tourists came from North America, including over 80,000 from the US, 16% more than last year and 14,000 tourists came from Central and South America, 41% more than in April 2017.  Almost 18,000 tourists came from Poland one of the countries cited by the Ministry of Tourism as a target. This number of tourists was 146% more than last year.

The number of visitors from Asian countries totaled just 35,700, still a very low number, but 32% more than in the preceding year.  Fewer than 10,000 tourists visited from China in April, a 24% increase, following a decline in the preceding month.  The presence of Air India is also having an effect – 9,400 Indian tourists came in April, a 45% increase.  (MoT 09.05)

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10.5  IATI 2018 Israeli Life Sciences Report: Local Industry Continues to Grow and Mature

The IATI’s 2018 Israeli Life Sciences Report, which was published on 14 May, found that the Israeli life sciences industry continues to thrive with a growing number of Israeli life sciences companies established every year.  Approximately 1,450 life sciences companies are active now in Israel, employing more than 85,000 people, an increase of approximately 10,000 employees compared to 2017.  Israel Advanced Technology Industries (IATI) is the umbrella organization of the hi-tech and life sciences industry in Israel.

As many as 1,307 life sciences companies were established in Israel in the last decade (2008-2017), and half of them are still active.  A record $1.2 billion flowed into the industry in 2017, representing an increase of 40% over the prior year and an increase of approximately 400% compared to a decade ago.  The report shows that the trend of increase in the share of investments going to later stage companies, those with initial revenues and revenue growth, continues in 2017, as well as an increase in the number of deals.

Financing:  Of the total $1.2 billion that was invested in life sciences companies in 2017, as much as $476 million (40%) came from local investors.  This is a significant increase relative to previous years – $323 million in 2016 and $267 million in 2015.  According to the report, interest in the Israeli life sciences sector by both local and foreign investors is growing for the fifth consecutive year.  Israeli VC investments in life sciences companies in 2017 was $141 million, which represents 12% of the total investments in Israeli life sciences companies.

Digital Health as a National Growth Engine:  In March 2018, the Government approved a National Program for Promoting the Digital Health Field, at a cost of $264 million over five years.  This is part of the plan to promote medical research and innovation transparently, thus placing the Israeli health system at the forefront of world medical innovation.  The plan is also expected to attract global companies and encourage them to open R&D centers in Israel.  By doing that, the plan not only contributes to Israeli startups in the life sciences industry, but also to the increase of Israel’s global presence.  (IATI 14.05)

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10.6  Passenger Traffic at Ben Gurion Airport Rises by 16% in 2018

Almost 1.9 million passengers went through Ben Gurion Airport in April 2018, 7.5% more than in April 2017.  The number of passengers in January-April was 6.1 million, 16% more than in the corresponding period last year.

El Al was the leader in April with over 480,000 passengers, the same number as in April 2017.  Low-cost airlines, however, such as Wizz Air and easyJet, substantially increased the number of their passengers.  Wizz Air was in third place with almost 90,000 passengers, 85% more than in the preceding year.  The increase is attributable to the increase in the number of Wizz’s routes to and from Israel, among other things.  easyJet flew 82,000 passengers, 20% more than in the corresponding period last year, putting it in fourth place.

Turkish Airlines, which finished in second place, was again the strongest foreign airline in Israel with 97,000 passengers in April.  Aeroflot was in fourth place with 68,000 passengers, followed by Turkish company Pegasus.  Turkish Airlines, Aeroflot and Pegasus all offer connection flights to various destinations, with most of their passengers continuing on to destinations in Europe, the US, and the Far East.

The leading destination for Israeli passengers in April was Turkey (mainly as an interim stop), followed by the US, Italy, Germany, France and Russia.  One destination that posted a big gain in popularity, 75%, was Poland, while the number of passengers flying to Bulgaria rose 55%.  Other destinations with increases in the number of passengers flying there included India (a new route by Air India was opened), Portugal, and Azerbaijan, which also has direct flights from Israel.  (Globes 09.05)

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11.1  ISRAEL:  Israel’s Imports of Goods by Country of Origin 2017

The Central Bureau of Statistics announced on 7 May the final import and export statistics for Israel for 2017.  Imports of goods by country of origin (excl. diamonds) in 2017 were $62.4 billion (an increase of 6.3% compared with 2016).  Some 14.4% ($9 billion) of the total imports (excl. diamonds) originated from China, an increase of 0.8% compared with 2016.  11.4% ($7.1 billion) of the total imports (excl. diamonds) originated from USA, down by 0.9% compared with 2016.

 Imports by country of origin (incl. diamonds)

The main countries of origin (at least $2 billion) in 2017 were: China ($9.0 billion), USA ($7.9 billion), Germany ($4.9 billion), Belgium ($3.4 billion), Italy ($3.3 billion), Turkey ($2.9 billion) Japan ($2.4 billion) and Russian Federation ($2.1 billion) (graph 2).

Imports by country of origin (excl. diamonds)

The main countries of origin (at least $2 billion) in 2017 were: China ($9.0 billion), USA ($7.1 billion), Germany ($4.9 billion), Italy ($3.2 billion), Turkey ($2.9 billion) and Japan ($2.4 billion) (Graph 3).  Imports from these six countries constituted nearly half of Israel’s imports in 2017.

Compared with 2016 there was a significant decrease in imports (of at least 20% in countries where at least $50 million worth of imports originated) that originated from: Slovenia (69.5%), Ireland (68.1%), and Australia (22.4%).  Conversely, there was a significant increase in imports (of at least 20% in countries where at least $50 million worth of imports originated) that originated from: Georgia (811.9%), Egypt (178.0%), Belarus (107.7%), Greece (48.1%), Chile (45.1%), Slovakia (40.5%), Portugal (36.5%), Ukraine (31.7%), Vietnam (27.5%), Mexico (22.9%), Sweden (20.8%) and the Netherlands (20.6%).

Differences between imports by country of origin and imports by country of purchase (incl. diamonds)

Due to accelerated growth in international trade, in globalization, in trade on the stock market and in the number of international companies, the country from which a good is purchased is not necessarily the country from which the good originated.  The countries with significantly more imports by country of purchase than imports by country of origin were: Switzerland, U.K., Netherlands, Singapore, Belgium, Hong Kong and Sweden (countries with a plus sign in table 3 and graph 4).

 The countries with significantly less imports by country of purchase than imports by country of origin were: China, Russian Federation, Ukraine, Italy, Japan, Czech Republic and Malaysia (countries with a minus sign in table 3 and graph 5).

 (CBS 07.05)

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11.2  ISRAEL:  Report on the Investment of Israel’s Foreign Exchange Reserves in 2017

The annual report on the investment of Israel’s foreign exchange reserves for 2017 was published on 8 May 2018.  Following are the main points in the report:

-Israel’s foreign exchange reserves totaled $113 billion at the end of 2017, an in7crease of $14.6 billion over the course of the year.  The main factors in the increase were gains, income, price and exchange rate differentials (mark to market), which totaled a combined $7.5 billion, and Bank of Israel purchases of $6.6 billion within the framework of monetary policy.

-At the end of 2017, the level of reserves was slightly above the upper bound of the range of the appropriate level of reserves, of $70–110 billion, and was equivalent to 33% of GDP.

-In 2017, the holding rate of return on the reserves portfolio was 3% in numeraire terms, which is a basket of currencies – primarily comprised of the dollar and euro.  This rate of return is the highest since 2009 and greater than the average return over the past three years of 1.7%.

-The rate of return was achieved in a financial environment of low yields to maturity, and even negative yields, on a considerable portion of bonds issued by major European countries, in which about one-third of the reserves are invested.

-The rate of return was achieved mainly as a result of a long term process, in which the share of reserves invested in risk assets – equities and corporate bonds – was gradually increased.  This is within the framework of the risk level approved by the Monetary Committee.

-The contribution of active management—the investment’s actual deviation from the basic benchmark—was 273 basis points this year.  Most of the contribution, 219 basis points, came from the investment in equities that benefited from the continued strong performance of equity markets in the investment countries.  The rest of the contribution, 54 basis points, derived mainly from specific selection of duration and investment in spread assets, particularly in short term assets.

-The Monetary Committee decided to slightly increase the portfolio’s risk level, and the percentage of risk assets in the reserves portfolio continued to grow: the share of investment in equities increased to 13.3%, from 10.0%, and the share of investment in corporate bonds increased to 6.0%, from 4.8%.  For most of the year, the share of investment in corporate bonds was 7.5%, and it was reduced toward the very end of the year.

-Market volatility was exceptionally low this year, against the background of excess liquidity resulting from central banks’ actions and the increasing global growth alongside low inflation.  Therefore, the reserves portfolio’s level of volatility was lower than in the previous year, despite the increased share of risk assets, and was more worthwhile than in the past in terms of risk-adjusted yield.

-The Bank of Israel’s decision to invest part of the foreign exchange reserves in equities was taken with a long term view.  The investment in equities more than doubled the cumulative return of the reserves portfolio in the past 6 years, but as equity markets are cyclical and volatile, it is reasonable to expect price declines in the future as well.  (BoI 08.05)

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11.3  JORDAN:  EBRD Says Jordan Economic Growth Will Improve Slightly in 2018

Jordan’s economy is expected to witness a slight increase in 2018, reaching 2.5% against the backdrop of an improved outlook for the tourism sector and higher revenues from the sale of phosphates and other mining products, a report by the European Bank for Reconstruction and Development (EBRD) showed on 9 May.

Jordan’s economic growth is forecast to reach 2.7% in 2019, after 2% in each of the previous two years, the EBRD said during the bank’s 27th annual meeting and business forum at the Dead Sea.

“Jordan’s economy is expected to see a modest increase in the pace of growth this year, supported by stronger private consumption driven by a rising population of refugees and the implementation of structural reforms,” the EBRD’s Regional Economic Prospects report stated, highlighting a positive impact from the government’s program to offer citizenship to foreign investors under certain conditions, an improved global outlook and higher confidence stemming from fiscal consolidation.

“The rate of growth in Jordan remained subdued in 2017 at 2%, below the average of 2.5% recorded between 2010 and 2016, a period when the instability in Iraq and Syria and the large influx of Syrian refugees — estimated at 1.3 million — curbed growth.  This is compared to an average growth of 6.3% between 2001 and 2010,” the report indicated.

In 2017, the modest growth was driven by services (transportation, financial services and real estate), the strong rebound in mining and the slight pick-up in manufacturing and agriculture, while construction continued to slow down.  Tourism arrivals increased by 7.8%, for the first time since 2010, resulting in the best tourism season since the Arab Spring.  The EBRD pointed to several future risks, including the potential for slippage in the roll-out of reforms under the International Monetary Fund program, and the possibility of protracted conflict in Syria and Iraq which are Jordan’s main export markets.

The economy could also come under pressure from a further increase in the arrival of refugees and tighter liquidity in Gulf Cooperation Council countries, which are typically a source of funding for Jordan, the report said, noting that a surge in the US dollar would undermine competitiveness.

On the upside, any involvement of Jordanian businesses in the future reconstruction of Syria and Iraq would positively support growth.  Jordan’s exports would benefit from higher mining output, rising phosphate prices and the reopening in 2017 of the border with Iraq, the report stated, noting that growth in the EBRD regions averaged 3.8% year-on-year in 2017.  The acceleration, now sustained for two years, has been broad-based, with contributions from stronger investment activity and higher exports.

Average growth in the region may now have peaked, according to the report, which said it is expected to moderate to 3.3% in 2018 and 3.2% in 2019.  Despite the projected deceleration, the expected average growth in 2018-19 will be higher than in 2014-16, the report said, noting that the projections are in line with moderate estimates of potential medium-term growth in EBRD regions, which, in turn, reflect the lower levels of productivity growth compared with those seen before the 2008-09 crisis as well as adverse demographic trends.  (EBRD 10.05)

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11.4  OMAN:  Sultanate of Oman ‘BB/B’ Ratings Affirmed; Outlook Stable

On 11 May 2018, S&P Global Ratings affirmed its long- and short-term foreign and local currency sovereign credit ratings on Oman at ‘BB/B’.  The outlook is stable.


The stable outlook balances our expectation that Oman’s fiscal and external deficits will narrow over the next 6-12 months, against the risk that its still-significant external buffers will deteriorate further.

We could lower the ratings on Oman if external buffers at the central bank were to decline significantly below current levels.  We could also lower the ratings if debt-servicing costs substantially increase from our base case, or if fiscal deficits do not narrow in line with our projections.

We could consider raising the ratings on Oman if our forecasts for the sultanate’s fiscal and external positions substantially improve, perhaps due to a significant decline in government external debt accumulation or a sharp increase in usable foreign exchange reserves.


The ratings are supported by our expectation that the government will remain in a modest net asset position this year, and that Oman’s significant twin deficits will gradually improve.  The ratings also reflect potential support from other neighboring countries in the Gulf Cooperation Council, for example in the event of significant deterioration in its external reserves that support the Omani rial’s peg to the U.S. dollar.

The ratings are constrained by the country’s high dependence on the hydrocarbon sector, and large fiscal deficits predominantly financed by external borrowing, given limited domestic market funding. We view monetary policy flexibility as limited in light of the currency peg.

Institutional and Economic Profile: Stable oil production and solidifying growth in the non-oil economy support economic performance

-Oman’s economic performance remains vulnerable to volatility in energy prices and oil production volumes, but we expect it to improve this year and over the medium term, supported by stable oil production, rising oil prices, and solidifying growth in non-oil sectors.

-Oman’s institutions are relatively underdeveloped, in our view, with centralized decision-making.

Oman’s economy is still largely concentrated in the hydrocarbon sector, estimated at 30% of nominal GDP in 2017.  Thus, Oman’s economic performance remains vulnerable to energy prices and the volume of oil production.  Preliminary 2017 economic performance data suggests the overall economy declined in real terms by 0.3%, primarily due to a contraction in oil production following Oman’s voluntary implementation of the OPEC agreement.  The non-oil economy is still growing modestly, thanks to supportive oil prices, government infrastructure projects, and efforts to diversify the economy.  In per capita terms, real GDP growth is well below peers’.  We estimate the weighted-average rate over 2008-2018 at -0.4%, partly due to volatile population growth relating to emigration.  Our GDP per capita estimate for 2018 is close to $17,000.

We expect economic growth to pick up in 2018 to 3%, in real terms, and remain at least 4% over the forecast horizon.  We base our medium-term economic forecasts on stable oil production and rising oil prices.  We also expect an increase in gas output from the large Khazzan joint venture between BP (60%) and the government-owned Oman Oil Company Exploration & Production (40%), which began production in late September 2017.  Non-hydrocarbon growth prospects could be supported by Oman’s diversification strategy, which includes a multi-billion-dollar project for a special economic zone at Duqm.  The government is in the process of transforming the area into a seaport, tourism, and industrial hub.  In addition, a new internal Oman rail project has been announced, which is designed to connect the country’s three major ports (Salalah, Sohar and Duqm). Potential risks to the economic outlook include the possibility of a decline in oil prices next year without a subsequent recovery to the current level.

Sultan Qaboos bin Said Al Said exercises absolute power and holds the offices of prime minister, chief of staff of the armed forces, minister of defense, finance and foreign affairs, and chairman of the board of governors of the central bank.  However, we observe that decision-making has become more inclusive, with the Sultan consulting with the Council of Oman.  The Council of Oman implements general state policies, and is split into the upper chamber (the state council) and the lower chamber (the consultative council).  All members of the state council are appointed directly by the Sultan, while the consultative council is democratically elected.  In 2011, the Sultan granted legislative and monitory powers to the consultative council.  The current Sultan, who is 76 years old, has been in power since 1970.  In our view, Oman’s succession process is still untested.  Oman remains a neutral player when it comes to regional disputes, such as the conflict in neighboring Yemen, or Qatar’s dispute with Saudi Arabia, the United Arab Emirates, Egypt and Bahrain.  We note that regional tensions have increased trade activity in countries that have remained neutral in these disputes.

Flexibility and Performance Profile: Large fiscal and external deficits are eroding Oman’s external creditor and government asset positions

-Oman’s fiscal and external deficits remain large, requiring external financing.

-In our view, monetary policy flexibility is limited because of the pegged exchange rate regime.  That said, the peg has provided a stable nominal anchor for the economy.

Due to Oman’s dependence on the hydrocarbon sector (oil and gas) for export receipts, close to 60% in 2017, we expect current account deficits to remain very high over the forecast period, averaging close to 10% of GDP.  Apart from oil, the wide external deficits also stem from the fact that import levels, supported by ongoing government spending, have not adjusted as sharply as the oil price fall since 2014.  At the same time, gross external financing needs are large, averaging close to 150% of current account receipts and useable reserves in 2018-2021.  For countries that operate with pegged exchange rate regimes, we deduct the monetary base from gross reserves, reducing useable reserves, as we view reserve coverage of the monetary base as critical to maintaining confidence in the peg.  For Oman, we also subtract foreign assets placed by nonresidents in the banking system, given the direct foreign claim on these assets, from our estimate of the CBO’s usable reserves.  We do not include the government’s fiscal savings in the State General Reserve Fund as part of the central bank’s useable reserves, in line with our treatment of other sovereigns’ wealth funds managed outside of central banks.  Flowing from large external deficits financed by external borrowing, Oman lost its net external asset positon and became a net external debtor in 2017.

Over 2018-2021, we expect the net debtor position to persist, averaging less than 50% of current account receipts.  We also observed that, in 2017, increased inward foreign direct investment and portfolio equity inflows from the private sector mitigated the extent of net external borrowing needs.  If this trend were sustained over the forecast horizon, the accumulation of net external debt may be slower than we currently assume.

Around 70% of Oman’s fiscal receipts depend on the hydrocarbon sector.  Thus, the sharp fall in oil prices since 2015 has resulted in Oman running large double-digit fiscal deficits.  From a low base, oil prices have gradually increased in 2017 and 2018.  We expect the government will remain on the course of gradual fiscal consolidation through a combination of expenditure and revenue measures.  As some of the capital projects are being completed, we expect capital budget spending to decline over the medium term.  On the revenue side, the implementation of excise taxes, a value-added tax (VAT), and one-off revenues from the sale of assets could provide higher revenues than budgeted in the medium term.

Preparations for VAT are underway, and the tax could be implemented in the next 12 – 18 months.  Overall, we forecast that Oman’s annual average increase in general government debt – which is our preferred fiscal metric because in most cases it is more comprehensive than the reported fiscal deficit – will remain high, averaging close to 6% of GDP over 2018-2021.  We understand that the government will continue its stance of predominantly financing its deficits via the issuance of foreign currency debt, with the remainder financed by asset drawdowns.

Gross general government debt increased to 42% of GDP in 2017 from 30% in 2016, and we expect it will reach 50% of GDP in 2020.  At the same time, the share of foreign currency denominated debt has increased to 75% of total fiscal debt in 2017 from 25% in 2015, and we expect it will stay below 80% over the forecast.  This debt is predominantly held by nonresident investors.  Debt-servicing costs, measured by interest to revenues, are still low, averaging close to 5%, but on a rising trend.

We now estimate that the government will become a net debtor next year, from a still relatively strong net asset position of 14% of GDP in 2017.  We forecast general government liquid assets at close to 50% of GDP in 2017, including government deposits at the central and commercial banks, alongside the government’s investment funds, the largest component of which is the externally invested State General Reserve Fund.  We consider that the government could draw on these assets if it faced temporary external pressures.

We assess the Omani government’s contingent liabilities as limited, including those related to the banking system.  We classify Oman’s banking sector in group ‘5’ under our Banking Industry Country Risk Assessment methodology, with group ‘1’ indicating the lowest risk and ’10’ the highest.  We assess the Omani banking system as having relatively limited reliance on external funding, as banks are largely funded by domestic customer deposits.

In our view, monetary policy flexibility is limited because the rial is pegged to the U.S. dollar.  That said, the peg has provided a stable nominal anchor for the economy, particularly because contracts for oil, Oman’s main export, are typically priced in dollars.  The transmission of monetary policy is constrained by Oman’s underdeveloped capital market, although we view the recent commitment to build a local currency bond market as a positive development, supporting the growth of local debt and sukuk issuance over the next four years.  Nevertheless, we expect the peg to be maintained over the medium term. Inflation pressures are currently moderate, with inflation remaining below 2% in 2018.  However, the implementation of VAT within the next 12-18 months could result in some inflationary pressure.  (S&P 11.05)

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11.5  EGYPT:  Egypt Upgraded to ‘B’ On Improving Macroeconomic Fundamentals; Outlook Stable

On 11 May 2018, S&P Global Ratings raised its long-term foreign and local currency sovereign credit ratings on Egypt to ‘B’ from ‘B-‘.  The outlook is stable. We affirmed the short-term foreign and local currency sovereign credit ratings at ‘B’.  At the same time, we revised our Transfer and Convertibility (T&C) assessment to ‘B’ from ‘B-‘.


The stable outlook balances Egypt’s falling current account deficit (CAD), decreasing inflation levels, and stronger growth prospects against risks from still-high fiscal deficits and a high stock of relatively short-dated government debt issued at high interest rates.

We could consider a positive rating action if Egypt’s growth significantly outperforms our forecasts, if larger-than-anticipated improvements in the current account position sharply reduce Egypt’s external financing requirements and external debt levels, and if Egypt’s reform program successfully lowers government debt.

Negative pressure on the rating could arise if Egypt’s plan to gradually reduce government debt to GDP is derailed by fiscal slippages, higher borrowing costs, or more pronounced currency depreciation than expected, or if foreign exchange reserve levels were to fall significantly.  We could also see negative pressure on the rating if the security environment worsens, hindering the recovery in investment and tourism.


The upgrade reflects strengthening GDP growth and rising external foreign exchange reserves, alongside the implementation of reforms, which are supported by a three-year $12 billion International Monetary Fund (IMF) Extended Fund Facility (EFF) program.  The liberalization of the currency regime on 3 November 2016 has reduced external imbalances and boosted remittances and portfolio inflows, leading to higher foreign reserves.  The devaluation has also boosted export receipts, both of goods and tourism.  Although currency depreciation has undermined purchasing power, inflation has started to moderate, partly because of base effects but also reflecting the increasing effectiveness of the monetary framework.

We also anticipate that ongoing economic and fiscal reforms will underpin rising business confidence and sustain capital inflows.  One of our key assumptions is that, while a large portion of the fiscal deficit will be financed externally, these inflows will lead to an increase in Egypt’s foreign reserves.  In net terms, we project the key source of financing for the CAD will be net FDI averaging close to 3% of GDP per year over our outlook horizon.

The ratings remain constrained by the wide fiscal and external deficits, high public debt and low income levels.  Elevated fiscal deficits averaging around 12% of GDP over the past five years have reflected large current expenditures, including energy subsidies, wages, and high interest costs.  Borrowing costs and the fuel subsidy bill have also increased over the past year because of the larger-than-anticipated currency depreciation and high nominal interest rates.  As a result, government debt increased to above 100% of GDP.  We expect a downward trajectory in fiscal deficit and debt ratios, partly reflecting still-high levels of inflation.  Nonetheless, we project that Egypt’s debt-to-GDP and interest-to-revenue ratios will remain elevated and sensitive to exchange rate movements in either direction.

Institutional and Economic Profile: Growth will improve in 2018-2021 amid a broader economic recovery

-We forecast strong economic growth averaging 5.4% over the next four years.

-We believe Egypt will experience a more broad-based recovery and a slight move away from a consumption-driven economy toward an increasing contribution from investment and net exports.

-Our base-case scenario assumes ongoing political stability.  That said, continued high inflation, high unemployment, and/or worsening security conditions could affect growth and fiscal trajectories.

We expect growth to improve to 5.2% during the fiscal year 2018 (1 July 2017 – 30 June 2018), from 4.2% the previous year.  We have revised our growth forecasts up to 5.4% over the fiscal years 2018-2021, from an average of 4.4% previously, given the strong rebound in activity over the last six months of 2017 in several sectors including natural gas, tourism, construction and manufacturing.

Over fiscal 2018-2021, we project strong growth in investment, driven by a robust pipeline of investment projects, growing natural gas production, a likely rebound in tourism, and resilient remittances from Egyptians working abroad.  The current pipeline of infrastructure spending, including the New Suez Canal Economic Zone, new administrative capital city (45 kilometers east of Cairo), and expansion of the national road network, is also expected to sustain growth in the construction sector.

The macroeconomic environment is supported by ongoing legislative measures to improve the business operating environment including the implementation of the industrial licensing law, as well as laws related to investment, natural gas and bankruptcy.  At the same time, we think other factors will continue to weigh on domestic demand in the near term, particularly high (though gradually moderating) inflation and interest rates, and fiscal consolidation measures.

We believe that the recent re-election of President Sisi in March 2018 for a second four-year term bodes well for political stability and continuity of economic and fiscal reforms, anchored by the IMF program.  Nonetheless, the centralization of power raises succession and other risks.  The sociopolitical environment in Egypt remains fragile, in our view, on the back of high unemployment and inflation rates, with both expected to remain above 10%.  We believe that social discontent, especially from vulnerable groups as a result of the rising cost of living, remains a risk to the fiscal consolidation program and reforms.  At the same time, we understand that social protection and targeted compensatory measures are an important component of the reform program.

Security threats have largely remained contained to Northern Sinai, between the Egyptian security forces and militant groups affiliated with ISIS; however, there have also been some targeted attacks on police and military forces in Egypt’s mainland.  We note that potential terrorist incidents affecting civilians or tourists could significantly affect the recovery in tourism and dampen investor sentiment.

Flexibility and Performance Profile: Currency depreciation has helped the external position, but undermined the government’s fiscal position and debt levels

-We expect central bank foreign currency reserves to continue rising because of narrowing CADs, growing FDI inflows, and rising public sector external debt.

-Although on a declining trend, we forecast general government debt to remain high at around 87% of GDP by fiscal year 2021.

-Monetary flexibility is improving with gradually falling inflation levels and ongoing monetary reforms.

Exchange rate liberalization and a weaker currency have helped to address Egypt’s large external imbalances and bolster investor confidence.  We therefore expect a material reduction in the CAD along with reasonably strong capital inflows over the next four years.  During the first half of fiscal 2018, the CAD shrank more than we had expected, by 64% year-on-year to $3.4 billion, owing to a strong rebound in tourism and private remittance inflows and a stable merchandise deficit.  We expect the CAD to fall to 4.0% of GDP in fiscal year 2018, from 6.5% during the previous year, and decline to around 2.7% by fiscal 2021.

There are several factors driving the narrowing of Egypt’s external deficits.  Strong growth in domestic gas production from the Zohr and other gas fields will help reduce the energy import bill, particularly from around end-2019.  The resumption of Russian flights to Cairo in April, along with the ongoing diversification of tourists, should support growth in foreign currency receipts, barring a militant attack.  While we expect remittance inflows to remain resilient on the back of the elimination of capital controls and Egypt’s improving macroeconomic fundamentals, we expect flows to slow from recent quarters given that the increase was partly driven by high interest rates.  We forecast Egypt’s gross external financing needs falling close to 100% of current account receipts and usable reserves by fiscal year 2021, similar to pre-2015 levels.

We believe the CADs will be financed by rising FDI inflows primarily into the energy sector, and public external debt.  The government is benefiting from strong investor demand for Egyptian T-bills and Eurobonds.  Total foreign investment in T-bills reached$23 billion as of end-March 2018, representing almost 20% of total outstanding T-bills.  However, we expect further flows to be more volatile amid monetary tightening in the U.S. and falling interest rates in Egypt.  So far this year, the government has issued Eurobonds of $4 billion in February and €2 billion in April.  The government plans to continue issuing around $4 billion – $6 billion in Eurobonds over the next couple of years.  Egypt also receives concessional external funding from multilateral partners including the IMF, World Bank, and the African Development Bank.  Bilateral support includes deposits from the Gulf Cooperation Council countries, of which deposits from the UAE and Kuwait have been further extended, and a$2.6 billion currency swap agreement with China until 2019.

Although there is a risk of capital outflows given the recent surge in portfolio inflows into short-term government debt, Egypt’s external liquidity is more resilient now given the larger and rising foreign exchange reserves, as well as other foreign currency assets.  Net international reserves reached $44 billion at end-April 2018, relative to $28.6 billion at end-April 2017.  We project that usable reserves will cover 6.5 months of current account payments by fiscal 2021, from under three months in fiscal 2017.  The other foreign assets (which stood at almost $10 billion as of end-March 2018) are excluded from official reserves but mitigate liquidity risks in the event of potential outflows under the Central Bank of Egypt’s (CBE)’s repatriation mechanism.  The optional repatriation mechanism in place since the early 2000s offers the guarantee of capital repatriation to foreign investors for a small entry and exit fee but, importantly, does not guarantee the exchange rate at the time of withdrawal.

The fiscal position has benefited from front-loaded fiscal reforms under the IMF program, such as introducing value-added tax (VAT), subsidy reforms and government wage reforms.  However, the large currency depreciation and tight monetary policy partly offset the fiscal gains through higher fuel subsidies and interest costs.  We estimate that the general government fiscal deficit will reach 10.1% of GDP in fiscal year 2018, from 10.5% in the previous year, falling to 9.0% in fiscal 2019.

We project that Egypt’s general government fiscal deficit will decline to 6.8% of GDP by fiscal 2021 and average 8.5% over fiscal 2018-2021.  As per the government’s reform program, falling deficits will be underpinned by expenditure-side measures such as ongoing fuel subsidy cuts, electricity tariff hikes, and containment of the civil service wage bill.  On the revenue front, we expect growth in tax revenues from planned tax administration and collection reforms and higher economic growth.  The government plans to continue to channel some of the savings from subsidy reforms into constitutionally mandated higher spending on health, education, and social housing.

Egypt’s key fiscal challenge is the government’s interest bill, which makes up nearly all of the central government budgetary deficit at an estimated 9.7% of GDP for fiscal 2018, equivalent to 45.6% of all revenues.  Historically, this level of interest expenditure has only been sustainable because a large portion of the local currency debt stock has been inflated away on an annual basis, and real interest rates on domestic debt have remained negative.  The medium-term challenge for Egypt will be to move away from its previous reliance on high inflation to underpin debt sustainability.

Over fiscal 2018 and 2019, we expect government interest costs will increase because of high nominal interest rates and the reissuance of debt owed to the CBE of close to 14% of GDP at higher market rates.  While this transaction pushed up the state’s funding costs, in our view, it has contributed to the increased credibility of the CBE’s monetary policy and commitment to price stability, paving the way for lower real interest rates over the medium term.

We expect government debt levels to fall gradually on the back of falling fiscal deficits and reach 87% of GDP by the end of fiscal 2021.  We project net government debt will fall to about 80% by the end of fiscal 2021.  Our debt-to-GDP projections also reflect our assumption that the nominal exchange rate will remain stable through to end fiscal 2018 and not depreciate sharply against the U.S. dollar over fiscal 2019-2021.

To address low average debt maturities of three years as of April 2018 and high debt servicing costs, the government is targeting the diversification of the debt structure, including by increasing external debt levels.  Gross foreign currency debt still remains relatively low, at less than 20% of GDP.  Nevertheless, sharply rising levels of foreign currency debt could leave the government open to foreign exchange risk.  Despite the large fiscal deficits and large domestic currency debt stock, we still expect the government to be able to raise debt locally.  A significant share of government domestic debt continues to be held by Egyptian banks and the CBE, and the banking system remains very liquid.

We assess Egypt’s monetary policy flexibility as improving from a weak base, reflecting our appraisal of the CBE’s exposure (along with that of the banking system) to the government’s domestic debt and high inflation, both albeit on a declining trend.  We view positively the limits on monetary financing of the deficit and higher portfolio investment flowing through the interbank markets in recent months, as they will improve the operational independence of the CBE and the monetary transmission mechanism.  However, financial services’ penetration into the economy is limited – for instance, the stock of banks’ credit to the domestic private sector is low, estimated at less than 30% of GDP in fiscal 2017.  Therefore, price changes are more likely to be dominated by external factors – such as imported inflation from a depreciating Egyptian pound – rather than changes in key CBE policy rates.

Egypt’s headline CPI inflation fell to 13.3% year-on-year in March, the slowest in nearly two years.  This is in line with CBE’s inflation target announced in May 2017 of 13% (+/-3%) by the fourth quarter of fiscal 2018, and single digits thereafter.  We expect inflation to gradually decline but remain high at around 11%, given the ongoing fiscal measures.  The drop in inflation has allowed the CBE to cut policy rates twice by a total of 200 basis points since the start of the year, taking the overnight lending rate to 17.75% and the overnight deposit rate to 16.75%.  We expect the CBE to take a cautious stance toward monetary easing to balance upcoming inflationary pressures with subdued private consumption and the government’s high debt servicing costs.  (S&P 11.05)

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11.6  EGYPT:  Egypt Establishes a Sovereign Fund

Menna A. Farouk posted in Al-Monitor on 2 May 2018 that the Egyptian government has moved to establish a sovereign fund as part of reforms intended to boost the economy and shrink unemployment.

Egyptian economists lauded the government’s 11 April approval of a draft law establishing a sovereign fund intended to make use of state assets with a capital of EGP 5 billion (about $285 million).  The Egypt Fund, which will be managed by the Ministry of Planning and the Finance Ministry, is seen as a crucial step to benefit from state assets and carry out several infrastructure projects, create job opportunities and reduce the budget deficit.

At a news conference at the Cabinet headquarters on 11 April, Minister of Planning and Administrative Reform Hala el-Saeed said that the fund seeks to achieve “sustainable economic development” and to manage state-owned assets “in accordance with the best standards and international rules and in cooperation with all the Arab and international funds as well as various financial institutions.”  Saeed added that the government “is working with a group of regional experts and partners from Arab countries to draw up the bylaws of the fund.”

According to Saeed, “Oil-rich countries that have a financial surplus were the first to create sovereign funds in the early 1950s.  Other countries followed in their footsteps to capitalize on their unused assets or other assets that needed upgrading” to maximize benefits and revenues.  The fund will have a board and a general assembly comprising the Finance Ministry and Ministry of Planning and Administrative Reform, as well as a representative of the Ministry of International Cooperation and Investment, Saeed added.

Economist Ahmed Koura said that sovereign funds promote good governance and transparency, as they are subject to financial supervision laws that monitor the management and utilization of these assets rather than leaving the job to disparate bodies.  “It is a financial tool used by many governments to manage their assets and financial surpluses with a view toward maximizing their revenues through investments in different financial markets, be they inside the country or abroad,” Koura told Al-Monitor.  He also said that the sovereign fund will enable the state to invest in the Egyptian market if private sector investments decline.  “The idea is more than excellent and will make great use of the state’s assets, the majority of which are not being properly managed now,” Koura added.

Since 2016, the Egyptian government has been taking measures that include floating the Egyptian pound against the dollar and reducing food and fuel subsidies in order to stimulate economic growth and create job opportunities, which increased exports, lowered unemployment rates and reduced the budget deficit.  The government kick-started the ambitious economic reform program after obtaining a loan of $12 billion from the International Monetary Fund in 2016.

These reforms have paid off, with the country’s budget deficit declining to 4.4% in the first half of the fiscal year 2017/2018 compared to 5% last year, according to the Egyptian Finance Ministry.  The country’s unemployment rate also edged down to 11.8% in 2017, compared to 12.5% the year before, according to the Central Agency for Public Mobilization and Statistics.  Foreign reserves rose to $42.524 billion by the end of February, compared to $38.209 billion in January, the Central Bank of Egypt stated. Inflation also fell to its lowest level in more than a year in February, standing at 14.4%, compared to 17.1% a month earlier.

Bassant Fahmi, an economist and a member of the parliamentary economic affairs committee, said that the move has long been awaited, particularly since several countries all over the world, regardless of their different political and economic ideologies, invest their financial surpluses in international markets through these funds.  Fahmi also said that with the imminent relocation of government institutions to the new administrative capital, a lot of buildings will be left unused and abandoned. “Based on that, said fund would be extremely important to … make use of [these assets],” she told Al-Monitor.

Nevertheless, the veteran economist said that in order for this fund to succeed, assistance from experienced international consultants will be required.

Menna A. Farouk is an Egyptian journalist who has been writing about social, political and cultural issues in Egypt since 2013.  She is an editor at The Egyptian Gazette newspaper. Farouk has covered stories about the unrest that followed the January 2011 revolution, press freedom, immigration and religious reforms.  (Al-Monitor 02.05)

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11.7  TURKEY:  Turkey Ratings Lowered On Deteriorating External Performance & Higher Inflation

On 1 May 2018, S&P Global Ratings lowered its unsolicited foreign currency long- and short-term sovereign credit ratings on Turkey to ‘BB-/B’ from ‘BB/B’ and its unsolicited local currency long- and short-term sovereign credit ratings to ‘BB/B’ from ‘BB+/B’. The outlook is stable.

At the same time, we lowered our unsolicited long-term national scale rating on Turkey to ‘trAA’ from ‘trAA+’ and affirmed our ‘trA-1’ short-term national scale rating.

We also lowered our transfer and convertibility assessment from ‘BBB-‘ to ‘BB+’.

As a “sovereign rating” (as defined in EU CRA Regulation 1060/2009 “EU CRA Regulation”), the ratings on Turkey are subject to certain publication restrictions set out in Art 8a of the EU CRA Regulation, including publication in accordance with a pre-established calendar.  Under the EU CRA Regulation, deviations from the announced calendar are allowed only in limited circumstances and must be accompanied by a detailed explanation of the reasons for the deviation.

In this case, the reason for the deviation is a deterioration in Turkey’s external, inflation, and fiscal outlook beyond our previous base case.  The next scheduled rating publication on the sovereign rating on Turkey will be on 17 August 2018.

We are downgrading Turkey because of what we view as increasing macroeconomic imbalances.  In this context, the downgrade reflects our concerns over a deteriorating inflation outlook and the long-term depreciation and volatility of Turkey’s exchange rate, notwithstanding the central bank’s recent decision to hike its late liquidity window rate.  The rating action also reflects our concerns over Turkey’s deteriorating external position and rising distress in the externally leveraged private sector. It also reflects our view of weakening in Turkey’s fiscal position as a result of continued public and quasi-public stimulus to the economy.


The stable outlook on Turkey balances risks from what we see as an overheating economy and growing macroeconomic imbalances, namely a deteriorating current account and fiscal deficit and a weaker exchange rate and inflation outlook over the next 12 months, against the buffer provided by still low general government debt.

We could lower the ratings on Turkey if external financing conditions and Turkey’s exchange rate deteriorate further, increasing vulnerabilities in Turkey’s private sector, which has large external refinancing needs.  In addition, we could lower the ratings if Turkey’s fiscal position on a stock and flow basis deteriorates further should the government continue to rely on fiscal stimulus measures to support the economy or should contingent liabilities mount or hit the government’s balance sheet, for example if stress in the financial sector were to rise.

We could raise our ratings on Turkey if the central bank manages to sustainably and credibly bring inflation within its 5% target range and if Turkey’s external position improves sustainably, both in flow and stock terms, such as through lower external refinancing needs, a reduced current account deficit, and more stable sources of funding.


Our downgrade reflects our view that there is a risk of a hard landing for Turkey’s overheating, credit-fueled economy.  In our view, this is reflected in the rising imbalances in Turkey’s economy, most notably in its widening debt-financed current account deficit and high inflation.  The ongoing weakness of the Turkish lira is not only fueling inflation, but also amplifying risks related to Turkey’s high external debt.  On 25 April, the central bank hiked its late liquidity window rate by 75 basis points and has, since then, announced its intention to simplify the monetary framework.  We think these steps will be insufficient to reduce by much the gap between inflation (at 11.1% last year) and the central bank’s 5% medium-term target, or to reduce the volatility of Turkey’s real effective exchange rate.  The central bank, which has been facing increasing political pressure, has not met its inflation target since 2012.

The lira has declined by 8% against the U.S. dollar since the beginning of the year, and by 41% on a trade-weighted basis since the end of 2013.  We expect this will make it more challenging for Turkey’s private sector to meet its foreign currency-denominated debt repayments.  We also believe the Turkish lira’s volatility, in nominal and real effective terms, will lead to another year of double-digit inflation.

The rating action also reflects fiscal weakening as the government continues to stimulate the economy amid growing concerns over distress in Turkey’s highly externally leveraged private sector, and as the weakening exchange rate accelerates the increase in government debt, 40% of which is denominated in foreign currency.

Turkey’s institutional setting is increasingly characterized by centralized decision-making processes, while the move toward an executive presidency may raise further concerns over checks and balances, which also constrains the rating.  We believe that the combination of these factors exacerbates the risks from Turkey’s large external financing needs.

Our ratings on Turkey are supported by the sovereign’s currently moderate debt burden and our base-case projection of an only modest accumulation of government liabilities relative to GDP over the next few years.  We also expect that Turkey’s flexible exchange rate regime will enable the economy to adjust to external shocks, although high dollarization, especially in the corporate sector, limits the benefits of a weaker lira to the economy.

Institutional and Economic Profile: Economic overheating and rising imbalances

-Fueled by government stimulus and a favorable external environment, Turkey’s economy is overheating.

-High inflation, a deteriorating current account deficit, and a depreciating exchange rate are signs of rising imbalances.

-Elections scheduled for 2019 will prevent a measured government response to rising imbalances.

Turkey’s economy is overheating. Real GDP grew by 7.4% in 2017, and we have now revised our 2018 growth forecast slightly upward to 4.4%.  Yet, despite very rapid GDP growth rates, in U.S. dollar terms Turkey’s 2017 GDP was 10.5% below its 2013 level, which gives a better indication for Turkey’s ability to service foreign currency debt.  Economic growth remains primarily driven by government measures targeted at stimulating the domestic economy.  To that end, Turkey’s government has recently decided on another new Turkish lira (TRY) 135 billion (3.8% of 2018 GDP) incentive package, mostly tax cuts for certain corporates, to boost economic growth.  This overstimulation of the economy has a range of negative side-effects, including a deteriorating current account deficit and persistent double-digit inflation.

In addition, the Turkish lira has been on a downward trend since the beginning of the year, which has accelerated in recent weeks.  Since our last publication on 23 February 2018, the lira has depreciated by 8%.  We believe the Turkish government will continue to push the economy, accepting the buildup of imbalances until parliamentary/presidential elections, which have been brought forward from November 2019 to June 2018.  Even after the elections, we do not expect a return to more prudent macroeconomic policies, as electoral considerations will continue to play a role in the run-up to local elections in March 2019.

The state of emergency will remain in place at least until the elections, de facto allowing the Turkish President to rule by decree.  The prolonged state of emergency and move toward the executive presidency underpins our concerns over centralized decision-making processes and an erosion of checks and balances.  These concerns are also supported by state asset seizures under the state of emergency over the past two years that raise questions about the durability of property rights in Turkey, as well as the transparency and accountability of government activities, and other aspects of country risk.  Overall, this results in a weak business climate that continues to drag on private sector investment activity.

The consequences of the credit-driven boom of the past two years are also starting to show.  Turkish banks have been lending heavily under the government-sponsored credit guarantee fund (CGF), under which the government covers the first 7% of losses on a portfolio basis.  Some of the loans under the CGF were used to rollover corporate loans that otherwise may have not been able to refinance their outstanding loans.  We are increasingly seeing signs of distress, such as some larger Turkish corporate holdings approaching creditors about restructuring their loans.  We think these trends could accelerate in the weak exchange rate environment, especially given the large net open foreign exchange position, which amounts to about 25% of GDP (as of January 2018).  Moreover, the banking system’s financing capacity is shrinking, given the strong loan growth last year, as well as the rising cost of wholesale funding and domestic deposits. In this respect, the CGF has delayed, but not prevented, a liquidity squeeze in Turkey’s private sector, which we think could become more apparent as credit conditions tighten during the remainder of 2018.

Exports continue to be a bright spot in the economy. In the first two months of 2018, exports increased by 10% year on year in value terms.  For the remainder of the year, we continue to expect strong export performance due to the ongoing expansion of Turkey’s main trading partners, especially the EU, and the anticipation of a stronger tourism season as indicated by strong pre-bookings, also from Western Europe.  The latter, however, is also vulnerable to the security situation in Turkey and neighboring countries.  The escalation of tensions in Syria, as well as Turkey’s incursion into Kurdish-controlled areas of Syria, in our view, does not bode well for the geopolitical situation in the region.  We remain concerned about potential clashes between Turkish and American troops should Turkish troops push further toward the Syrian city of Manbij.

Turkey’s relations with key allies and trading partners, including the U.S. and EU, remain complicated.  In particular, we understand that the U.S. government may consider imposing fines or other penalties on one or more Turkish financial institutions, including state-owned entities, and potentially companies in other sectors, for allegedly enabling Iranian counterparties to evade U.S. sanctions.  Turkey’s purchase of S-400 surface-to-air missiles from Russia could also potentially be sanctionable under the U.S.’s Countering America’s Adversaries Through Sanctions Act.  An escalation of tensions with the U.S. could have serious economic and financial consequences for Turkey, given Turkish banks’ reliance on external financing.  Turkey’s relations with certain EU members, which have recently thawed somewhat, could come under renewed pressure over Turkish politicians’ desire to campaign in those countries in the run-up to the June election.

Flexibility and Performance Profile: External financing needs loom large

-Turkey’s current account deficit continues to deteriorate.

-Fiscal and quasi-fiscal policy is playing a larger role in the economy.

-The weaker lira will continue to fuel inflation.

Turkey’s current account deficit (CAD) continues to deteriorate.  In February, the 12-month rolling CAD amounted to 6.1% of GDP or $53.3 billion.  The financing of the CAD, one of our key concerns at the time of our last report, has continued to deteriorate as well.  Up until mid-April, equity markets have seen net capital outflows from nonresidents and bond market flows remain highly volatile.  Should these capital outflows accelerate further, it would increasingly question Turkey’s ability to finance its large CAD – the third-largest in the world in nominal terms.  Overall, Turkey’s gross external financing requirements remain large.  For 2018, they will amount to 179% of current account receipts and usable reserves.  Our conservative estimate of usable reserves amounts to only 1.4 months of current account payments in 2018, down from 5.3 months in 2009 and the second-lowest in the emerging market peer group.  We exclude foreign exchange assets held instead of Turkish lira assets under the central bank’s reserve option mechanism from our calculation of usable reserves.  In our view, Turkey’s net foreign exchange reserves are therefore only a weak buffer.

We believe government incentives will continue to fuel imports.  Consequently, we forecast the CAD will widen to 6% of GDP in 2018. Rising oil prices – the price for a barrel of oil (Brent) has increased by over 12% since the start of the year – will also push up Turkey’s CAD, as the country is only able to meet around a quarter of its total energy demand from its own domestic resources.  Rising exports, especially from Turkey’s recovering tourism sector, will not be able to offset this growth in imports.  In addition, the tourism sector remains very susceptible to changes in the geopolitical environment and Turkey’s domestic security situation, increasing vulnerabilities in the case of an adverse shock.  As noted before, our forecast of Turkey’s current account deficit relies as much on our assumptions on the availability of external financing as it does on our projections for net exports.  For this reason, we highlight the shift in the composition of Turkey’s current account financing toward debt from equity.  As recently as 2015, foreign direct investments covered up to 55% of Turkey’s CAD.  During 2017, however, most of Turkey’s external financing came via more volatile portfolio inflows, especially in the government bond market.  Downward pressure on the Turkish lira, the anticipation of higher yields in advanced economies, and a gradual scaling back of extremely loose monetary policy globally can negatively affect Turkey’s ability to refinance itself externally, and increases the risk of a marked deterioration in external financing conditions.

Persistent CADs since 1998, which are common among rapidly expanding emerging market sovereigns, have pushed up Turkey’s external debt, which has more than quadrupled since then.  In 2017, Turkey’s narrow net external debt exceeded current account receipts (CARs) by about 137%, the third-highest ratio among the 20 largest emerging market sovereigns we rate.  This high external debt leads to average gross external financing needs of 180% of CARs over 2018-2021 according to our forecast.

We have also revised upward our forecast for the 2018 general government deficit to 2.4% of GDP.  We expect that the Turkish government will continue to use its own balance sheet to support the economy.  A recent announcement of another TRY135 billion incentive package for companies in certain sectors, such as defense, automotive, agriculture or health, consists mostly of exemptions from value-added tax and customs duty as well as a reduction of the recently increased corporate tax rate.  This continued stimulus of an already overheating economy follows temporary cuts to taxes on white goods’ sales and income tax exemptions provided last year.  As a result of these measures, the deficit already widened to 2% of GDP of the upwardly revised national account series last year.  Despite continued fiscal stimulus, general government debt remains low as a percentage of GDP, at 28.3% of GDP in 2017.  However, 19% nominal GDP growth masks the fact that, in lira terms, the debt stock grew by TRY139 billion, 1.5x the size of the prior year.  In part, this reflects the lira’s depreciation because approximately 40% of the central government debt was denominated in foreign currency at year-end 2017, up from its 2012 low of about 27% on the back of a 112% depreciation of the lira against the dollar.  The high share of foreign currency debt highlights Turkey’s vulnerability to adverse exchange rate movements.

Strong nominal GDP growth will contain the government debt ratio in our baseline scenario.  Still, in nominal terms we expect the debt stock will increase by another TRY443 billion (13% of 2018 GDP) by 2021.  However, contingent liabilities may represent a risk to our debt forecast.  The Turkish treasury strictly limits new guarantees, to a maximum of 0.5% of 2017 GDP ($4.5 billion); its outstanding guarantees currently amount to about 1.6% of GDP.  However, we understand that one of the government decrees extending the state of emergency (Decree 696) allows the treasury to on-lend to companies within the newly established so-called sovereign wealth fund, beyond the limits stipulated in the budget law.  This could become particularly relevant should U.S. sanctions be more significant than expected.

The lira’s continued weakening since the end of 2017 poses a major risk to banks’ capital levels and asset quality.  Asset quality has remained relatively resilient so far, with nonperforming loans (NPLs) amounting to only 2.9% of total assets as of 31 March 2018.  However, this ratio alone does not reveal the full picture regarding potential problem loans in Turkey.  If we add problem assets sold since 2010, the NPL ratio rises by 1.5%age points.  Furthermore, restructured loans in regulatory classifications Group I and II represent a further 3.8%.  Hence, when adjusted to include problem asset sales by large Turkish banks, and restructurings not included in NPLs, the NPL ratio rises to high-single-digits.  There is recent evidence of rising distress in pockets of the corporate loan book.  The debt of several highly leveraged borrowers had to be restructured recently, including that of Yildiz Holding and Dogus Holding.  These follow the ongoing problem relating to Otas (a company that was set up by Oger Telecom to acquire a 55% stake in Turk Telekom in 2005), where a few large Turkish banks are exposed through large loans.  We understand that the repayment problems of the latter relate to lira depreciation, while the former two relate to high leverage.  Despite escalated asset quality vulnerability, domestic banks remain well regulated and amply capitalized, which mitigates some of the risks.

Turkish banks have a structural lack of long-term lira funding, which makes them reliant on swaps to close their currency positions.  They use currency swaps to convert not only borrowing in foreign currencies, but also high amounts of domestic deposits in foreign currencies, owing to the use of dollars to fund lending in lira.  This is evident from the disparity between the loan-to-deposit ratio in lira and that in foreign currency. For lira, this ratio was a high 138%, while for foreign currency it was only 93% as of 31 December 2017.  We also note that the trend has been negative since year-end 2013, when the loan-to-deposit ratio in lira was about 120%.  These hedging instruments have shorter tenors (less than 24 months) than the liabilities they are hedging, which represents roll-over risk for Turkish banks.  Additionally, the swaps expose banks to counterparty risk if they become ineffective.  Moreover, state-owned banks are relatively large, representing about one-third of total banking system assets.  One or more of these institutions could potentially be subject to U.S. sanctions as a result of transactions that appear to have circumvented U.S. sanctions on Iran.  In our base case, we do not anticipate that any related fines will be large enough to create systemic risks for Turkey’s banking sector, but there remains a risk of more substantial repercussions.

Price pressures remain high and consumer price inflation averaged 10.3% in the first three months of the year, while year-end inflation expectations deteriorated simultaneously to above 10% average inflation at year-end 2018, according to data from the central bank survey.  We also revised upward our forecast for average consumer price inflation to 10.3% in 2018 given the continued lira weakness and its high pass-through impact.  In its last monetary policy council session, the Turkish central bank decided to hike the late liquidity window rate by 75 basis points, while keeping all other interest rates unchanged.  While slightly above consensus, this is well below previous episodes of exchange rate pressure.  For example, in January 2014 the central bank hiked its late liquidity window rate by 475 basis points and its overnight rate by 425 basis points.

Since introducing the 5% medium-term inflation target in 2012, the central bank has not been able to meet this target, while the Turkish lira exchange rate has been very volatile.  The central bank has been facing increasing political pressure over recent years, which in our view is impairing its effectiveness, often by delaying timely responses to rising inflation.  Even though we forecast inflation rates will gradually decline through to 2021, we expect they will remain well above the 5% medium-term central bank target.  More recently, the central bank has indicated a preference to return to a monetary framework focusing on a single policy rate, a decision that could improve the clarity of rate decisions.  However, in our view, the risk of taking a highly gradual approach to monetary tightening is that inflationary expectations become more entrenched, posing a greater challenge to authorities.  (S&P 01.05)

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