Fortnightly, 6 February 2019

Fortnightly, 6 February 2019

February 6, 2019


6 February 2019
1 Adar Aleph 5779
1 Jumada Al-Akhirah 1440




1.1  Israeli Government Approves Medical Cannabis Exports


2.1  OurCrowd Launches Investment in Leading Global Cannabis Technology Fund
2.2  Hebrew University’s Yissum Launches Cooperation Centers in US, China and South America
2.3  StreamElements Raises $11.3 Million Series A to Expand Live Video Creation Platform
2.4  Vonetize Inks Deal With RecordTV to Distribute Its SmartVOD Service in Brazil
2.5  Intel to invest NIS 40 Billion in Israel Over Next 5 Years
2.6  Verbit Raises $23 Million
2.7  Splitit Raises A$12 Million in ASX IPO
2.8  Cato Networks Secures $55 Million Investment as Bookings Accelerate by 352%
2.9  BGU and Rafael Sign Strategic Research Collaboration
2.10  Samsung Acquires Corephotonics for $155 Million
2.11  IAI Signs $93 Million Worth of Follow-Up Agreements
2.12  Pliops Raises $30 Million in Series B Funding
2.13  Foresight Receives $1 Million Investment from RH Electronics at $4.08 per ADS
2.14  Augury Secures $25 Million Series C to Grow Impact on Machine Health
2.15  Nano Dimension Prices $12,000,000 Public Offering
2.16  Sapiens Rebrands as a Unified Global Provider of Insurance Software SolutionsO
2.17  CoreTigo Raises $10 Million in Series A Funding Led by Qualcomm and Sierra Ventures
2.18  Connecticut’s $5 Million Global Venture Challenge Opens Applications to Early-Stage Companies


3.1  IVF Market Grows to $1 Billion Amid Rise in GCC Male Infertility Cases
3.2 to Protect Arabic-Speaking Gamers Through In-depth Casino Reviews
3.3  Mexican Cinema Giant Enters Arabian Gulf with Bahrain Launch
3.4  Majid Al Futtaim Signs Deal With I.AM+ US Tech Firm
3.5  OPPO Pursues Middle East Expansion with New Regional Hub in Dubai
3.6  Energy Recovery Awarded $4.4 Million for Desalination Projects in the Sultanate of Oman


4.1  Saudi Arabia Launches New $1.5 Billion Phase of Solar Energy Plan
4.2  Saudi Arabia Plans First Hydrogen Fuel Cell Vehicle Fueling Station
4.3  Yellow Door Energy Raises $65 Million to Scale the Solar Energy Transition in MEA
4.4  Chinese Power Firm Plans $1 Billion Saudi Solar Park


5.1  Number of Tourists to Lebanon Posted a 5.77% Improvement in 2018 to Some 2 Million
5.2  Analyzing Lebanon’s Labor Market in the Digital Sector
5.3  Jordan’s Exports Increase and Imports Decrease During First 11 Months of 2018
5.4  Jordan & Saudi Arabia Agree on Feasibility of Connecting Power Grids
5.5  Jordan Exempts Iraqi Goods Imported Through Aqaba of 75% of Fees

♦♦Arabian Gulf

5.6  Kuwait Forecasts Smaller $25 Billion Deficit Despite Spending Pledge
5.7  The UAE & Saudi Arabia Plan to Use Common Digital Currency
5.8  Pakistan Hails UAE Economic Support Following $3 Billion Deposit
5.9  UAE’s Nine-Month Non-Oil Foreign Trade Amounts to $330 Billion
5.10  Total UAE Banking Reserves Rise to $77.1 Billion
5.11  UAE Increases Duty on Some Steel Imports to 10%
5.12  Dubai Launches International Bus Route to Muscat
5.13  New $272 Million Medical City in Emirate of Ajman Set to be Launched Later This Year
5.14  Oman Tourism Falls by 2.8% in 2018 Despite Rise in Hotel Revenues
5.15  Saudi Cinemas See 59,000 Moviegoers per Month Since Lifting of Ban

♦♦North Africa

5.16  IMF Approves $2 Billion Loan Payment for Egypt
5.17  Egypt Postpones Electricity Interconnection with Sudan to March
5.18  Direct Flight to Connect Morocco and China by Early 2020


6.1  Turkey’s Exports Reach $13.2 Billion in January, Recording a Nearly 6% Rise
6.2  Turkish Central Bank Reserves at $93 Billion at End of 2018
6.3  Turkish Poverty Threshold Rises 3.5% in January
6.4  Turkey’s Natural Gas Imports Decrease 14% in November
6.5  Cyprus Improves on Corruption Perception Index
6.6  Greece Raises €2.5 Billion from 5 Year Bond



7.1  AJC & U.S. Conference of Mayors to Partner on Israel Visits


7.2  UAE Leaders Receive Pope Francis
7.3  Greek Parliament Approves Historic Macedonia Name Deal


8.1  Together to Set Up Medical Cannabis Factory in Uganda
8.2  Eximo Medical Announces First Commercial Case of Its B-Laser Atherectomy System in the US
8.3  Senecio Robotics AI Based Machine Supports Efforts to Combat Mosquito Borne Diseases
8.4  Manufacturing of Clinical Grade FasL Enables Cellect to Expedite U.S. Clinical Programs
8.5  Cannabics Pharmaceuticals and NewCanna Hub to Manufacture SR Capsules in Colombia
8.6  Medigate Raises $15 Million
8.7  Omeq Medical Penetrates Epidural Market in China Through $3 Million Funding
8.8  New Kanabo Research Study Offers Encouraging Results for Insomnia Treatment
8.9  Insightec Completes Glioblastoma Chemotherapy Cycles Using Focused Ultrasound
8.10  Cannassure Therapeutics Announces Strategic Partnership With Cannika Holdings
8.11  OWC Reports Positive Data for Medical Grade Cannabis Ointment for Skin Disease Treatment
8.12  Nucleix’s Bladder EpiCheck, Urine Test for Bladder Cancer, Chosen by Radboud University
8.13  Check-Cap Announces $7.5 Million Registered Direct Offering
8.14  Advanced Medical Solutions Group Acquires Sealantis
8.15  Laminate Completes a Capital Raising Round of $12 Million
8.16  CathWorks Announces Completion of $30 Million Financing
8.17  BioLineRx Receives FDA Orphan Drug Designation for its BL-8040 Treatment of Pancreatic Cancer


9.1  Inomize Selected to Supply HP Indigo Next Generation ASIC for Digital Press
9.2  Catholic Order of Foresters Launches SAPIENS Electronic Insurance Application Software
9.3  Gilat Launches 5G-Ready Satellite Backhaul Solution
9.4  Perception Point Integrates With Box to Enhance Security and Threat Detection
9.5  Telrad Networks LTE Selected by Evertek for Network Upgrade
9.6  Ethernity Networks Releases Affordable, All-Programmable 100G ENET vRouter
9.7  SuperCom Launches National Electronic Monitoring Project in Estonia
9.8  QuantLR & PacketLight Secure Next-Generation Networks Against Cyber Attacks
9.9  Banco del Bajio Selects Guardicore Centra Security Platform To Protect Data Center
9.10  AudioCodes & Jabra Deliver Unified Communications and Contact Center Voice Solutions


10.1  The Composite State of the Economy Index for December 2018 Increased by 0.2%
10.2  Israeli Cybersecurity Companies Raised a Record $1 Billion in 117 Deals in 2018


11.1  ISRAEL: Israel Ratings Affirmed At ‘AA-/A-1+’; Outlook Stable
11.2  ISRAEL: Vertex Israel and TLV Partners the Most Active VC Funds in 2018
11.3  SYRIA: Race for Reconstruction Heats Up as Syrian War Winds Down
11.4  KUWAIT: Staff Concluding Statement of the 2018 Article IV Mission
11.5  KUWAIT: Staff Concluding Statement of the 2018 Article IV Mission
11.6  UAE: UAE Furniture Market is Expected to Reach Around AED 11 Billion in Revenues by 2022
11.7  EGYPT: Fiscal Deficit Falls to 9.8% of GDP in FY18 from 12.5% in FY16
11.8  EGYPT: Fiscal Deficit Falls to 9.8% of GDP in FY18 from 12.5% in FY16
11.9  MOROCCO: Morocco Ranks 75th on World Index of ‎Economic Freedom, Up From 86th
11.10  TURKEY: Turkey’s Metal and Building Industries in Coma


1.1  Israeli Government Approves Medical Cannabis Exports

The Israeli government has given its long-awaited approval for the medical cannabis export law, paving the way for the country to become a leading medical cannabis exporter and participant in a thriving sector that is expected to soar to $33 billion by 2022.

The Israeli Health Ministry announced on 27 January that following long deliberations, an inter-ministerial committee made up of officials from the health, finance, public security, foreign affairs, tourism and agriculture ministries recommended exports be allowed to proceed to “turn medical cannabis into a medical product like any other product that patients receive according to labels and dosages.”  In December, lawmakers voted in favor of the exports bill, part of a set of reforms first approved in 2016, in second and third readings in the Knesset, pending cabinet approval.

According to Israeli government research, medical cannabis exports is set to bring in an estimated $1 billion in revenue per year.  Since the government announced the reforms two years ago, some 400 Israeli farmers applied for permits to grow cannabis, the Israeli Health Ministry said last year, with another 242 receiving preliminary approval.  The ministry also said it received some 200 applications for cannabis nurseries seeking to distribute cannabis plants, 95 requests to set up cannabis pharmacies, 60 applications for processing facilities, and 44 requests to set up stores selling cannabis products.

The revised law provides a budget for police to monitor, track and control the production and delivery of cannabis for export, and prevent said spill over.  Recreational use of cannabis in Israel is still not legal but licensed medical cannabis consumption for vetted physical and mental health issues has been allowed for a decade.  The law also specifies that any foreign investment of more than 5% in an Israeli cannabis company will require regulatory approval.  (NoCamels 27.01)

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2.1  OurCrowd Launches Investment in Leading Global Cannabis Technology Fund

OurCrowd announced that it will invest and partner with 7thirty to build the world’s leading global cannabis technology venture capital fund.  The new $30 Million fund is focused on emerging cannabis technology companies in med-tech, ag-tech, retail, e-commerce, marketplaces, SaaS solutions and the deep-tech research in Cannabis.  The fund, headquartered in Boulder, Colorado, will be active globally and include activities in Israel, Canada and the United States.

The 7thirty Opportunity Fund is led by the U.S.’s most active early stage Cannabis Technology investor, Micah Tapman.  Prior to founding 7thirty, Tapman was a co-founder at CanopyBoulder, where he led investments in over 90 cannabis related companies.

Jerusalem’s OurCrowd is a global investment platform, bringing venture capital opportunities to accredited investors worldwide.  A leader in equity crowdfunding, OurCrowd is managed by a team of seasoned investment professionals.  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 23.01)

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2.2  Hebrew University’s Yissum Launches Cooperation Centers in US, China and South America

Yissum, the technology transfer company of the Hebrew University of Jerusalem, announced on 23 January that it was launching three new centers of international cooperation in Chicago, Asuncion, Paraguay, and Shenzhen, China to facilitate regional commercialization of cutting-edge technologies from the university.  These centers will enable the local adaptation of technologies to their respective markets, and foster multiple collaboration models between Hebrew University researchers and local industries

In Chicago, Yissum will participate in the Discovery Partners Institute (DPI), a joint education, research and innovation institute led by the University of Illinois System, its three universities and other partners including Tel Aviv University.  At DPI, Yissum says it will “enhance applied innovation through academic and industry collaboration, with the initial focus on entrepreneurship, biosciences, computer science including AI, big data and cybersecurity, as well as food and Ag technologies.

Yissum is the technology transfer company of The Hebrew University of Jerusalem.  Founded in 1964, it is the third company of its kind to be established and serves as a bridge between cutting-edge academic research and a global community of entrepreneurs, investors, and industry.  Yissum’s mission is to benefit society by converting extraordinary innovations and transformational technologies into commercial solutions that address our most urgent global challenges.  (Yissum 23.01)

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2.3  StreamElements Raises $11.3 Million Series A to Expand Live Video Creation Platform

StreamElements announced it has raised $11.3 million in Series A funding led by Pitango VC and previous investors State of Mind Ventures, Rainfall VC, Samsung Next and others.  The new funding comes on the heels of a year of tremendous growth for StreamElements, in which the company grew its user base by more than 600%.  Donations to streamers grew to $15M and $1M delivered through brand partnerships.  Based on the company’s current growth trajectory, StreamElements expects creator revenue to exceed $40M in 2019 alone.  By the end of 2019, StreamElements predicts that it will become the dominant streamer production platform on Twitch.

StreamElements and its creator community partnered on successful marketing campaigns with companies like Red Bull, Sennheiser, Warner Brothers, Trojan, 7-11 and more.  With this new funding, StreamElements is growing its global Brand Partnership team.  As a technology and service platform that is central to live streaming, StreamElements provides valuable marketing tools for the ecosystem at large. Brands, talent agencies, publishers, eSports teams, and influencer marketing firms can all benefit from these centralized solutions.

StreamElements is the fastest growing platform for live stream production, monetization and audience engagement, offering a full production-technology and business stack with legendary customer support.  The platform already serves over 200K Monthly-active-channels on Twitch and YouTube, serving more than 15 million viewers who watch over 12 billion minutes each month.  Some of the world’s top streamers, including Shroud, TimTheTatMan, SodaPoppin and Casey Neistat use StreamElements to enhance their live stream capabilities.  Leading consumer brands such as Red Bull, Razer, AMD, NVIDIA and more also trust StreamElements to power their Twitch channels. The company was founded in 2017 and has offices in Silicon Valley and Tel Aviv.  (StreamElements 24.01)

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2.4  Vonetize Inks Deal With RecordTV to Distribute Its SmartVOD Service in Brazil

Vonetize PLC has signed an agreement with Brazilian TV network Radio e Televisio Record S.A.  Record TV is the second-largest TV network in Brazil, offering 14 TV channels which are viewed by more than 50 million viewers daily.  Record has recently launched “PlayPlus”, a TV Over-the-Top (OTT) service, which offers on-demand viewing of its programs and channels, acquiring over 3 million users within one month from launch.  Vonetize’s SmartVOD Hollywood movie service will be available on this platform.

Vonetize’s SmartVOD services will be distributed to Record’s subscribers in Brazil on an exclusive basis.  As a result, Vonetize’s content will constitute the exclusive film service on record’s platform.  Vonetize SmartVOD’s service will be promoted by Record as alongside its other OTT services, including on TV, in the electronic media, radio, press and more.  Vonetize SmartVOD service will also be advertised on the main screen of Record’s OTT service.

Netanya’s Vonetize offers video on demand (VOD) and over-the-top (OTT) content services, and technology platforms as fully-managed services for set-top boxes, smartphones, smart TVs and other Internet-connected devices.  The company offers multiscreen end-to-end video content solutions including premium content from Hollywood studios; cloud-based digital video delivery of live and VOD content; content management systems; billing; CRM; and marketing/business intelligence (BI) analysis systems.  (Vonetize 28.01)

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2.5  Intel to invest NIS 40 Billion in Israel Over Next 5 Years

Intel Corp will invest NIS 40 billion ($11 billion) over the next five years on a new semiconductor fabrication plant in Israel.  Finance Minister Kahlon secured the deal in a meeting on 28 January with Intel Israel production plant CEO Benatar and General Manager of Intel Israel Garty.  The news follows a commitment by Intel in May last year to invest about NIS 18 billion ($4.9 billion) to upgrade its existing factory in the southern Israeli city of Kiryat Gat between 2018 and 2020.  The new plant will also be located in Kiryat Gat.  The investment equates to NIS 8 billion per year – around 0.7% of Israel’s gross domestic product – which will have a tangible impact on the country’s growth numbers in the coming year.  The country agreed to allot some 91 acres to the new plant.

Israel competed with bids from Singapore and Ireland, where Intel had also considered opening the aforementioned plant.  According to the deal, Intel will receive a 10% tax incentive.  The chipmaker said it will not disclose any details, including the schedule, costs and technologies of the new project in Israel.  Santa Clara, California-based Intel is one of the biggest employers and exporters in Israel, where many of its new technologies are developed.  (IH 29.01)

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2.6  Verbit Raises $23 Million

After completing an $11 million seed round last year, Verbit announced that it has raised a $23 million Series A financing round led by Viola Ventures and with previous investors HV, Vertex Ventures, Holtzbrinck Ventures and Oryzn Capital, as well as Vintage Venture Partners, with the aforementioned investors and HV Ventures, Vintage Venture Partners, and Access Industries.

Since its seed round in March 2018, Verbit reports 350% growth in revenue, which is measured in the millions of dollars from hundreds of customers.  Over that period the company has grown from 30 to 70 employees with 55 of them based in Israel and the rest in New York.  Following the latest financing round, which will fuel growth, the company hopes to end 2019 with 140 employees, 100 of them in Israel.

Verbit‘s transcription and captioning platform combines AI and human levels with a team of 5,000 freelance writers and translators.  With offices in Tel Aviv and New York, the company was founded in 2017.  (Verbit 29.01)

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2.7  Splitit Raises A$12 Million in ASX IPO

Splitit has raised $8.6 million through its initial public offering on the Australian Securities Index (ASI) at A$0.20 a share, reflecting a company value of A$54 million ($38.7 million).  Splitit provides retailers with software that lets shoppers split payments into interest- and fee-free monthly installments.  The company had processed $67.3 million across 118,000 transactions by the end of Q4/18.

The system can be implemented into online, mobile and in-store systems that work with both credit and debit cards.  Splitit seeks to drive higher average order values and reduce cart abandonments by providing more flexible payment options, while maintaining a seamless checkout process.  Splitit will use the money from its IPO to strengthen its sales and marketing efforts and penetrate additional market verticals and countries. The solution provider also will develop new offerings, including next-generation mobile solutions and a mobile wallet.

Herzliya’s Splitit is the world’s only global cross-border payment solution enabling customers to pay for purchases with an existing debit or credit card by splitting the purchase into fee and interest-free monthly instalments, without the need for registration, application or approval.  (Splitit 29.01)

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2.8  Cato Networks Secures $55 Million Investment as Bookings Accelerate by 352%

Cato Networks announced an investment of $55 million led by Lightspeed Venture Partners with the participation of all current investors — Aspect Ventures, Greylock Partners, Singtel Innov8, USVP and co-founders Shlomo Kramer and Gur Shatz.  This investment brings the total funding raised to date to $125 million.  The new funding caps an incredible 2018 that saw bookings grow by 352% year-over-year with business from the channel increasing fivefold.  Over 300 enterprises worldwide with thousands of branch locations across all verticals now rely on Cato to connect and secure their corporate networks.

The new funding demonstrates the investors’ confidence in Cato’s vision of a global, cloud-native carrier, connecting and protecting all enterprise locations, mobile users, and cloud resources.  Cato is seeing stellar growth in customer adoption.  During 2018, Cato expanded its customer base to over 300 enterprises, signed up its first 1,000-site organization, and added several enterprises with more than 30,000 employees.  In addition, numerous enterprises attested to Cato’s value and simplicity as WAN edge infrastructure and managed SD-WAN services on Gartner PeerInsights.

Tel Aviv’s Cato Networks is building the new Software-defined WAN, in the cloud, protected by a tightly integrated set of security services.  The Cato Cloud connects all business resources including data centers, branches, mobile users and cloud infrastructure into a simple, secure and unified global network.  No more costly connectivity services, complex point solution deployments, capacity constraints, maintenance overhead, or restricted visibility and control.  (Cato Networks 29.01)

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2.9  BGU and Rafael Sign Strategic Research Collaboration

Rafael Advanced Defense Systems and BGN Technologies, BGU’s technology transfer company, announced a strategic, multi-year research collaboration, in which Rafael will collaborate with BGU in a variety of fields, including cyber security, smart mobility, robotics, and artificial intelligence (AI).  The agreement was signed at the Cybertech 2019 conference in Tel Aviv by the chief executive officer of BGN Technologies and the executive vice president and head of Rafael’s R&D and Engineering Division.  This partnership follows Rafael’s decision to build an R&D center of excellence in Beer-Sheva’s high-tech park, which is located adjacent to BGU, to benefit from the University’s talents and expertise in these fields.  The new center – to be launched later this year – will focus on different aspects of advanced autonomous systems.

The first two projects will focus on exploring the risk of cyber security breaches in sensors of autonomous cars and how these threats might be mitigated.  Autonomous driving requires the use of multiple sensor systems including cameras, radars, and LIDAR-based systems, all of which can be targets of cyberattacks.  AI and machine learning techniques will be used for identifying and mapping the different possible security breaches, and then solutions to protect against these threats will be developed.

Rafael has had vast experience in the cyber arena over the past 25 years.  As a leader in the field, Rafael has implemented cyber defense projects around the world. In Israel, this includes the national Cyber Emergency Response Team (CERT), considered one of the world’s most advanced, and the cyber defense system for Israel National Central Credit Registry and Israel’s Railways Authority.  (BGU 30.01)

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2.10  Samsung Acquires Corephotonics for $155 Million

Samsung signed a deal to acquire Tel Aviv’s Corephotonics for $155 million, following talks that have been under way since early January.  Corephotonics has developed dual camera technologies for mobile devices.  The company aims to provide superior image quality by combining novel optics, mechanics and computational photography technologies.  Its end-to-end multi-aperture solutions support a wide range of photography capabilities, such as optical zoom, low-light performance, Bokeh and depth features, and optical image stabilization.

To date, the company has raised over $50 million from investors including Samsung Ventures, a Samsung investment arm, Foxconn, Horizon Ventures, OurCrowd, SanDisk, Magma VC, Amiti Ventures and OurCrowd.  In late 2017, Corephotonics filed a lawsuit against Apple, alleging that the US tech giant copied its patented camera technology and incorporated it into one of its most popular products, the iPhone.  The suit, filed in November 2017 in federal court in California, said Apple used the Israeli company’s dual camera tech in the iPhone 7 and iPhone8 Plus without Corephotonics’s permission.  (Various 29.01)

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2.11  IAI Signs $93 Million Worth of Follow-Up Agreements

Israel Aerospace Industries (IAI) has entered into agreements worth $93 million for provision of Naval MRSAM (Medium Range Surface-to-Air Missile) systems.  The contracts were entered with the Indian Navy and Cochin Shipyard Limited (CSL). Under the contracts, IAI will provide complementary systems for the air defense system (ADS).  They involve follow up orders for a range of maintenance and other services for various sub-systems of IAI’s advanced MSRAM ADS.

Recently, the Indian navy, in collaboration with IAI, held an interception test aboard INS Chennai, which assessed for the first time potential collaboration between ships.  The interception scenario, which was executed successfully, demonstrated how the operational force of the defense system can be doubled regionally, rather than topically.

The MRSAM family is an operational air-defense system used by Israel’s navy as well as by India’s naval, air and ground forces.  It has been uniquely developed by IAI in collaboration with Israel’s Ministry of defense, India’s Defense Research and Development Organization (DRDO), RAFAEL, IAI’s Elta and additional industries in India and Israel.  To date, MRSAM achieved over $6 billion in sales.  It provides broad as well as topical defense against a range of assault air, marine and ground threats.  MRSAM comprises several key state-of-the-art systems, including a digital radar, command and control, launchers, and interceptors with advanced homing seekers.  (IAI 30.01)

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2.12  Pliops Raises $30 Million in Series B Funding

Pliops has received a $30 million Series B funding led by Softbank Ventures Asia, with participation from all Series A investors including Intel Capital, State of Mind Ventures (SOMV) and Viola Ventures, along with strategic investors Western Digital Capital and Xilinx.  The oversubscribed round brings the total invested in Pliops to date to $40 million, including the October 2017 Series A funding of $10 million.

Pliops will use the funds to accelerate development of its storage processor technology for cloud storage and database applications, including expansion of its teams in the US, Israel and China.  Recently-appointed president and chief business officer Steve Fingerhut, based in San Jose, will spearhead global expansion and oversee the company’s product debut planned for mid-2019.

With eight core patents pending to date, the Pliops storage processor allows cloud databases like MySQL or Cassandra deployed on disaggregated Flash to scale more efficiently via a 90% reduction in compute load, a 20x reduction in network traffic, a 50x improvement to latency and over 10x application throughput.  The Pliops product delivers step function improvements across compute, networking and storage infrastructure to enable more scalable and cost effective cloud services.  Organizations whose core business is experiencing rapid storage growth can benefit from Pliops’ offering, which uses standard APIs to easily integrate with major cloud databases, as well as big data, software defined storage (SDS), hyper-converged infrastructure (HCI), high performance computing (HPC), telco, edge and all flash array (AFA) architectures.

Ramat Gan’s Pliops was founded in 2017 by flash storage industry veterans from Samsung, M-Systems and XtremIO.  Pliops is creating a new category of product that enables cloud and enterprise data centers to access data up to 50X faster with 1/10th of the computational load and power consumption.  Its technology collapses multiple inefficient layers into one ultra-fast device based on a groundbreaking patent-pending approach.  Pliops’ solution solves the scalability challenges raised by the cloud data explosion and the increasing data requirements of AI and ML applications.  (Pliops 30.01)

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2.13  Foresight Receives $1 Million Investment from RH Electronics at $4.08 per ADS

Foresight Autonomous Holdings entered into a development services agreement, a binding memorandum of understanding (MOU) for manufacturing and engineering consulting services, and an investment agreement with RH Electronics.  According to the agreement, RH, a primary contractor in the manufacturing and assembly of electronic systems, will invest in Foresight, while Foresight will retain RH’s services for a multi-phase project to develop FPGA and ASIC solutions for Foresight’s QuadSight vision system.

Under the investment agreement, RH will purchase approximately 1% of Foresight’s issued and outstanding share capital for a total consideration of $1,000,000 at a price per ADS of approximately $4.08 (reflecting the price of NIS 3.00 per ordinary share), representing a 133% premium over the share market price on Nasdaq and TASE as of January 28, 2019.  The closing of the investment agreement is subject to customary closing conditions and is expected at the beginning of February 2019.

Under the development services agreement, Foresight has retained RH’s services, mainly through its approved contractor, E.G.M. Ton-Son Ltd., to design, develop and produce prototypes of a chip-based FPGA solution embedding Foresight’s proprietary image processing software for the QuadSight™ four-camera vision system.  The FPGA-board platform offers substantial performance and cost benefits for long-term mass production in comparison with other off-the-shelf alternatives such as CPU boards.  Pursuant to the agreement, RH will provide a proof of concept for an FPGA-board platform by the end of 2019.  The basic consideration payable to RH (mainly to Ton-Son) under the development agreement (without taking into consideration possible future changes in Foresight requirements, which will be charged on an hourly basis) aggregates to approximately $1.25 million.  The consideration will be paid in several installments, contingent upon achievement of agreed milestones.

Ness Ziona’s Foresight Autonomous Holdings, founded in 2015, is a technology company engaged in the design, development and commercialization of stereo/quad-camera vision systems 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 Ltd, 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.

Established in 1984, RH is a leading EMS (Electronics Manufacturing Services) and CM (Contract Manufacturing) provider based in Nazareth Elite, Israel, with factories around the world, including in the United States, Europe and China.  RH has advanced production technologies in the fields of electronics PCBA, mechanics, cables and machining. RH is active in the field of top turnkey solution of design, engineering, testing, manufacturing and subcontracting services.  (Foresight 30.01)

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2.14  Augury Secures $25 Million Series C to Grow Impact on Machine Health

Augury closed its Series C funding round of $25 million led by Insight Venture Partners, with support from existing investors Eclipse Ventures, Munich Re/HSB Ventures, Pritzker Group Venture Capital, and Lerer Hippeau.  Augury helps drive digital transformation for industrial and commercial organizations by providing machine health and performance visibility to improve productivity and increase uptime. With this new funding, Augury will expand its global operation and enhance its industrial analytics capabilities.

To date, Augury has received more than $51 million in funding with contributions from Eclipse Ventures, Munich Re/HSB Ventures, Pritzker Group Venture Capital, Sound Ventures, First Round Capital and Lerer Hippeau.  The company holds OEM relationships with Grundfos and PSG Dover, as well as dozens of industry-leading customers from Commercial & Industrial and manufacturing in the Fortune 500 spanning the CPG, Food & Beverage and Pharma Manufacturing industries.  As Augury expands its existing customer base, it is actively looking for new talent to join its growing team.

Augury also completed its acquisition of Alluvium – a startup whose computing platform provides simple, real-time machine insights to support safe, stable and efficient industrial operations.  Through Alluvium, Augury becomes the first industrial analytics company to provide both mechanical and operational insights on a unified platform to provide a holistic view of an operation.  Not only does this acquisition enhance Augury’s analytics capabilities, but also incorporates Alluvium’s team to Augury to further drive innovation.

Haifa’s Augury is making machines more reliable by combining two key shifts in the industry: artificial intelligence and the Internet of Things.  The intersection of these trends allows Augury to provide industry leaders with full visibility and control of the health and performance of their machines, thereby greatly accelerating productivity, safety, and positive environmental impact.  (Augury 31.01)

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2.15  Nano Dimension Prices $12,000,000 Public Offering

Nano Dimension announced the pricing of an underwritten public offering of units consisting of 16,000,000 American Depositary Shares together with Warrants to purchase 16,000,000 American Depositary Shares and Rights to Purchase 12,000,000 American Depositary Shares, at a combined price per unit to the public of $0.75.  The gross proceeds to the Company from this offering are expected to be approximately $12,000,000 before deducting underwriting discounts, commissions and other offering expenses.  The Warrants will have an exercise price of $0.8625, will be exercisable upon issuance and will expire five years from the date of issuance.  The Rights to Purchase will have an exercise price of $0.75, will be exercisable upon issuance and will expire 6 months from the date of issuance.  Nano Dimension has granted the underwriter a 45-day option to purchase additional units to cover over-allotments, if any.

Nano Dimension intends to use the proceeds of the offering for scaling up sales and marketing globally, increasing production capabilities and general corporate purposes.  A.G.P./Alliance Global Partners is acting as the sole book-running manager for the offering.

Ness Ziona’s Nano Dimension is a leading electronics provider that is disrupting, reshaping, and defining the future of how cognitive connected products are made.  With its unique 3D printing technologies, Nano Dimension is targeting the growing demand for electronic devices that require increasingly sophisticated features.  Demand for circuitry, including PCBs – which are the heart of every electronic device – covers a diverse range of industries, including consumer electronics, medical devices, defense, aerospace, automotive, IoT and telecom.  (Nano Dimension 31.01)

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2.16  Sapiens Rebrands as a Unified Global Provider of Insurance Software Solutions

Sapiens International Corporation unveiled a complete rebrand to reflect the company’s evolution into a unified global provider of innovative digital insurance solutions.  Sapiens’ new master brand architecture now features descriptive product names, offering clarity regarding the main function of each product.  Sapiens insurance platforms are comprised of suites that feature standalone solutions for core, data and digital needs.

The rebranding includes a complete redesign of the company’s website, logo, graphics and templates.  Sapiens’ new brand assets include a clearer blue and white logo, along with visual elements that utilize simple, yet bold graphics to convey complex solutions in relatable ways.  The brand features a circle as the leading visual concept, symbolizing the holistic solutions Sapiens offers.

Holon’s Sapiens International Corporation empowers insurers to succeed in an evolving industry.  The company offers digital software platforms, solutions and services for the property and casualty, life, pension and annuity, reinsurance, financial and compliance, workers’ compensation and financial markets.  With more than 35 years of experience delivering to over 450 organizations globally, Sapiens has a proven ability to satisfy customers’ core, data and digital requirements.  (Sapiens 05.02)

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2.17  CoreTigo Raises $10 Million in Series A Funding Led by Qualcomm and Sierra Ventures

CoreTigo announced a Series A investment of $10 Million by Qualcomm Ventures and Sierra Ventures who led the round, Magma Venture Partners, Cardumen Capital and Meron Capital.  The financing will be used to accelerate the development of CoreTigo’s core technology and IP, to further build end to end solutions, and expand CoreTigo’s strategic and business partner ecosystem.

CoreTigo is further opening the door to Industrial IOT by addressing the manufacturing need for interoperable wireless communication between sensors, actuators and controllers.  The company’s technology promises to further lower deployment and cabling costs, and reach more applications and systems, such as robotic arms, rotating tables and other mobile systems. IO-Link Wireless enables legacy machines to be monitored and easily connected to the cloud.

Kadima’s CoreTigo is leading the revolution of wireless mission critical communication for the Industrial IOT market.  Through the reinvention of existing network and connectivity concepts, their solutions reduce complexity of industrial automation systems, create a safer manufacturing environment, enable flexible access to more valuable data across the enterprise, and increase operational efficiency.  CoreTigo’s technology is based on the IO-Link Wireless standard and creates a more connected industrial world that is not bound by cables in the most reliable and cost-effective manner.  (CoreTigo 04.02)

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2.18 Connecticut’s $5 Million Global Venture Challenge Opens Applications to Early-Stage Companies

Connecticut Innovations (CI), Connecticut’s strategic venture capital arm and one of the leading sources of financing and ongoing support for innovative, growing companies on the east coast, announced the launch of the application period for VentureClash.  In its fourth year, VentureClash is Connecticut’s $5 million global venture challenge for early-stage digital health, financial technology, insurance technology and industry 4.0 companies.  The investment award pool is $5 million, with a top investment award of $1.5 million. The remaining $3.5 million will be determined by the judges’ panel on the day of the event.

In addition to the annual pitch event, VentureClash will be hosting a pitch competition in Tel Aviv on 23 May 2019.  The event will invite promising companies from Israel to compete for a $500,000 investment from Connecticut Innovations, a semifinalist spot in VentureClash 2019 and a $5,000 grant to visit Connecticut in August.  To apply for the Tel Aviv pitch competition, companies must submit applications by 15 March 2019.

Managed by Connecticut Innovations, VentureClash is Connecticut’s global venture challenge focused on early-stage companies.  The challenge, launched in 2016, identifies high-potential companies in digital health, fintech, insurtech and industry 4.0 that will compete for investments from a $5 million award pool.  Connecticut Innovations 04.02)

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3.1  IVF Market Grows to $1 Billion Amid Rise in GCC Male Infertility Cases

The in vitro fertilization (IVF) market is now a $1 billion business in the Middle East and North Africa amid rising demand for treatments in the region, according to Colliers International, which said the global IVF market is estimated to be worth up to $12 billion, revealed that compared to 10% of cases worldwide, infertility in the MENA region is 15% or higher.  It said male infertility is a growing problem and occurs in approximately 50% of the cases in the GCC and Middle East due to lifestyle, diabetes, obesity and genetics related factors.

The report highlighted that although the population in the MENA region has increased from over 100 million in 1950 to 380 million in 2017, fertility rates have decreased from seven children per women in 1960 to just three in 2017.  IVF is not only sought after locally but is one of the leading treatments undertaken by medical tourists in the UAE, especially in Dubai.  Based on Colliers’ discussions with leading operators, medical tourism accounts for 10-15% of the IVF patient volumes.  According to the report, new innovations and improved testing techniques are gradually creating paradigm shifts in the field of assisted reproductive technology.  (AB 25.01)

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3.2 to Protect Arabic-Speaking Gamers Through In-depth Casino Reviews, a brand new online casino review website in Arabic, has recently been launched.  The new website provides unprecedented quality analysis of a wide range of the most popular virtual gaming venues.’s close inspection includes in-depth scrutiny of everything that might affect the online gamer’s experience, including welcome bonuses, gaming platform quality, casino game variety, cash out options & much more.’s immediate purpose is to prevent Arabic speaking gamers from falling victims to fraudulent behavior on the part of virtual casino operators. serves a crucial function in breaking down the components of welcome bonuses and other tempting offers in reviews to provide its visitors with an impartial inspection. is committed to responsible marketing & a secure operating environment.  Additionally, features comprehensive game guides for both beginner as well as seasoned gamers.  These include roulette, blackjack, slot machine and poker manuals. Arabic-speaking gamers visiting will enjoy free gaming platforms (designed to hone the player’s skill before plunging into real money play), real-time jackpot counters, applicable gaming lessons, a soon-to-be-launched discussion forum and other helpful features.

Qatar’s is a newly launched online casino review website in Arabic.  In addition to comprehensive reviews of online casinos, the website also features free gaming platforms, recent gaming industry news, diverse casino game guides, player discussion forum & much more.  Now celebrating its first year of operation, is a rising force in the Arabic-speaking gaming community.  ( 28.01)

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3.3  Mexican Cinema Giant Enters Arabian Gulf with Bahrain Launch

Cinépolis, the world’s fourth largest cinema exhibitor, has opened its first location in Bahrain as the brand announces its official entry into the GCC’s movie theatre sector.  The biggest cinema chain in Latin America, Cinépolis, which also operates theatres in the US, Spain and across India, has launched its new location at the Atrium Mall, Saar, Bahrain.

Founded in Mexico in 1971, Cinépolis boasts more than 338 million guests and 5,707 screens worldwide. Bahrain expands the company footprint to 16 countries.  The Arabian Gulf’s first Cinépolis features 13-screens, including Bahrain’s first-ever junior theatre and 4D E-motion viewing experience, as well as a range of seating options including rocking leather chairs and fully reclining leather seats, along with gourmet food and drink options.

Cinépolis Junior allows families to enjoy a movie within a space that caters specifically to their needs.  The only children-focused cinema screen in Bahrain, Cinépolis Junior is equipped with a Jungle Gym, bean bag seating and provides a 15-minute intermission to allow youngsters to take a break.  As well as serving traditional cinema snacks such as popcorn and nachos, the in-house ‘Coffee Tree’ venue offers gourmet items and concessions including Paninis, crepes and high-quality specialty coffee drinks.  (AB 04.02)

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3.4  Majid Al Futtaim Signs Deal With I.AM+ US Tech Firm

Dubai-based retail giant Majid Al Futtaim announced a partnership with Los Angeles-based technology company, I.AM+, founded by global music artist,  Under the deal, I.AM+ will offer Majid Al Futtaim its Omega platform, an AI-powered conversational and contextual voice assistant that will enable a new level of experiential retail at various customer touchpoints.  Projected to be the next wave of convenience and technology in retail, the Omega platform engages consumers in conversational and contextual style interactions.  The technology delivers deep cross domain knowledge for a seamless customer experience, by passing and sharing common traits across several industries and services.

Majid Al Futtaim said the solution addresses a rising gap between what consumers want from their shopping experience and the level of satisfaction with their experiences across various domains.  It is part of Majid Al Futtaim’s digital transformation journey which aims to merge physical and virtual experiences through seamless omni-channel offerings.

As part of the partnership with Majid Al Futtaim, I.AM+ announced the ARC, a coalition of retailers, brands and service providers who will offer a neutral voice AI platform that is private by design.  Majid Al Futtaim is the first retail conglomerate to be announced as a member.  (AB 22.01)

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3.5  OPPO Pursues Middle East Expansion with New Regional Hub in Dubai

OPPO, a global smartphone brand, has opened its second regional hub within the UAE and will make Dubai its new center for operations in the Middle East and Africa (MEA) region.  This is the brand’s latest move in the region after announcing its plan of launching the R17 Series in Saudi Arabia earlier this month, which will also be the first time OPPO launches its mid to high end R series in the region.  The opening is part of OPPO’s global growth strategy and recognizes Dubai’s unique position as a regional nexus for business and technology innovation.

The new hub will be OPPO’s base for Middle East’s regional sales, distribution and marketing operations, as well as being a point from which OPPO will look to deepen technology partnerships with other private and public-sector entities.  The hub will also oversee OPPO’s continued expansion in the Middle East with OPPO already evaluating a potential entry into markets like Saudi Arabia in 2019.

Within the last year, OPPO has started to adjust its product line in the region.  This has included the launch of its flagship OPPO Find X smartphone in the UAE in September 2018.  This year, OPPO will continue to adjust its product line to offer more premium series to young consumers in the region.  The company recently announced that it would raise its global R&D investments to around $1.43 billion in 2019, a 150% year-on-year increase.  This will allow OPPO to further explore areas of 5G, artificial intelligence (AI) and smart devices, which are recognized as key priorities in developing the UAE’s technology infrastructure.

In 2015, OPPO entered the Egyptian market.  In 2016, OPPO set up its Middle East & Africa Sales Center in Cairo.  The markets OPPO has entered in Middle East and Africa include: Egypt, Algeria, Morocco, the UAE, Qatar, Oman, Kenya and Nigeria.  OPPO MEA has launched in two new markets – Tunisia and Nigeria.  Also, OPPO MEA has prepared for entering the smartphone market of Saudi for over 6 months since June 2018.  OPPO set up its factory in Algeria in 2017, which made OPPO the first Chinese brand setting up factory in North Africa.  Now, the factory goes into production.  (OPPO 28.01)

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3.6  Energy Recovery Awarded $4.4 Million for Desalination Projects in the Sultanate of Oman

San Leandro, California’s Energy Recovery, the leader in pressure energy technology for industrial fluid flows, announced total awards of $4.4 million to supply its PX Pressure Exchanger technology for desalination projects in the Sultanate of Oman.  These desalination projects are expected to ship in Q2 and Q3 of 2019.

Energy Recovery will supply its PX-Q300 Pressure Exchangers for multiple facilities, which will collectively produce up to 200,000 cubic meters (m3) of water per day, the equivalent of filling 80 Olympic-size swimming pools.  Energy Recovery estimates the PX devices will reduce the facilities’ power consumption for all projects by 16 MW, saving over 138 GWh of energy per year and helping the facilities avoid over 82,800 tons of CO2 emissions per year.

Energy Recovery, Inc. (ERII) is an energy solutions provider to industrial fluid flow markets worldwide.  Energy Recovery solutions recycle and convert wasted pressure energy into a usable asset and preserve pumps that are subject to hostile processing environments.  Headquartered in the Bay Area, Energy Recovery has offices in Houston, Shanghai, and Dubai.  (Energy Recovery 24.01)

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4.1  Saudi Arabia Launches New $1.5 Billion Phase of Solar Energy Plan

The Renewable Energy Project Development Office of Saudi Arabia’s Ministry of Energy, Industry and Mineral Resources (MEIM) has launched the next phase of the kingdom’s renewable energy plans.  Expressions of interest are being sought for seven solar projects during the launch of the National Industrial Development and Industrials Program.  The announcement represents the next phase in Saudi Arabia’s ambitious renewable energy plans, which seek to achieve over 25GW of wind and solar power generation in the next five years, and close to 60GW over the next decade, of which 40GW will be generated from solar energy, with a further 16GW of onshore wind.  With a combined generation capacity of 1.51 GW, the newly announced seven projects will supply enough energy to power 226,500 households, a statement said, adding that the total investment is expected to be worth $1.51 billion, creating over 4,500 jobs during construction, operations and maintenance.

The projects include Qurrayat (200 MW), Madinah (50 MW), Rafha (45 MW), Alfaisaliah (600 MW), Rabigh (300 MW), Jeddah (300 MW) and Mahad Duhab (20 MW).  The projects come as the kingdom aims to create over the next decade a global hub of renewable energy capability upwards of 200 GW, spanning the entire value chain from local manufacturing to project development, domestically and abroad.  The $500 million project will be Saudi Arabia’s first utility-scale wind farm, and is the second tender to be issued as part of the National Renewable Energy Program under the auspices of the King Salman Renewable Energy Initiative.  (AB 29.01)

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4.2  Saudi Arabia Plans First Hydrogen Fuel Cell Vehicle Fueling Station

Saudi Aramco and Lehigh Valley, Pennsylvania’s Air Products have announced the signing of an agreement to jointly-build the first hydrogen fuel cell vehicle fueling station in Saudi Arabia.  The two companies will establish a pilot fleet of fuel cell vehicles for which high-purity compressed hydrogen will be dispensed at the new fueling station.  Air Products’ proprietary SmartFuel hydrogen fueling technology will be incorporated into the new station to supply the vehicles with compressed hydrogen.  The collected data during this pilot phase of the project will provide valuable information for the assessment of future applications of this emerging transport technology in the local environment.  The hydrogen refueling station, the first in the kingdom, is expected to be operational in the second quarter of 2019.

The hydrogen refueling station will be located within the grounds of Air Products’ world-class Technology Center in the Dhahran Techno Valley Science Park.  Toyota Motor Corporation will supply Toyota Mirai Fuel Cell Vehicles for testing in this pilot project.  Toyota has been investing in hydrogen for over 20 years and in 2014 introduced the Mirai, its first mass-produced hydrogen fuel cell vehicle.  The Mirai is a zero-emission vehicle which runs on compressed hydrogen gas and only emits water.  (Air Products 25.01)

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4.3  Yellow Door Energy Raises $65 Million to Scale the Solar Energy Transition in MEA

Yellow Door Energy, a UAE-based leading solar developer, has raised $65 million in Series A financing to scale its investments in solar energy and energy efficiency solutions in the Middle East and Africa.  This is one of the Middle East’s largest private placements in distributed solar.  The investment comes from International Finance Corporation (IFC), a World Bank member, Mitsui & Co., Equinor Energy Ventures (Equinor), Arab Petroleum Investments Corporation (APICORP) and UAE-based Adenium Energy Capital (Adenium), the founding investor of Yellow Door Energy since 2015.

The funding marks an important milestone for Yellow Door Energy, which has doubled its revenue since last year and has an impressive portfolio of customers including multinational corporations in consumer goods, retail and logistics, among many others.  Yellow Door Energy provides solar leases and energy savings contracts to commercial and industrial businesses to help them reduce energy costs, improve power reliability and lower carbon emissions.

Yellow Door Energy is a leading provider of solar and energy efficiency solutions for commercial and industrial customers in the Middle East and Africa.  Founded in Dubai in 2015, the company has since grown exponentially to advance its vision of powering emerging economies reliably, efficiently and sustainably. Its projects enable customers to reduce energy costs, improve power reliability and lower carbon emissions.  (Yellow Door Energy 28.01)

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4.4  Chinese Power Firm Plans $1 Billion Saudi Solar Park

China-based Hanergy Thin Film Power Group has signed an investment cooperation agreement with Ajlan & Bros to launch a $1 billion solar thin-film industrial park in Saudi Arabia, the first in the Middle East region.  The agreement was signed at the launch event of Saudi Arabia National Industrial Development and Logistics Program (NIDLP), which is one of the 12 programs initiated as part of Saudi Vision 2030, focusing on transforming Saudi Arabia into an industrial powerhouse.  Under the agreement, the two companies will collaborate to develop renewable energy manufacturing facilities in Saudi Arabia and jointly seek relevant investment opportunities.

The agreement comes as Saudi Arabia has been trying to reduce its dependence on oil and go through a major transition towards more diversified and sustainable energy resources.  In 2011, oil was the source of over 50% electricity in the country and there was only 0.003 gigawatts of solar power capacity installed nationwide.  The government then announced that Saudi Arabia would develop 41 gigawatts of solar capacity by 2032.  (AB 02.02)

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5.1  Number of Tourists to Lebanon Posted a 5.77% Improvement in 2018 to Some 2 Million

According to the Ministry of Tourism, the number of tourists visiting Lebanon, in 2018, displayed a 5.77% year-on-year (y-o-y) progress, where the total number of tourists went up from 1.86M to 1.96M.  This increase is owed to the yearly growths recorded in tourist arrivals from Europe and America which together comprised 54.16% of total tourists in Lebanon.  In a geographical breakdown, Lebanon witnessed a growth in the number of European tourists that constituted 35.95% of the total; it grew by 10.37% y-o-y to 705,969 by December 2018 on the back of the rise of the number of tourists from the majority of the European countries.

Specifically, the progress in the number of tourists coming from UK, Italy, Turkey, France, and Germany by 12.93% to 79,104 , 8.57% to 37,013, 8.40%  to 32,744 , 6.79% to 181,321 and 5.31% to 104,167 respectively, outpaced the slight  decrease of 0.96% recorded by the arrivals from Sweden that stood at 39,480 in 2018.  Arab countries, representing 28.64% of all tourists, recorded a slight increase of 0.22% to stand at 562,535 in 2018 on the back of the significant rise in the number of Egyptian arrivals from 83,405 in 2017 to 92,173 in 2018 and in the number of Jordanian tourists by 2.04% to stand at 92,920 in 2018.  However, this increase wasn’t enough to outweigh the plunge in the number of GCC and Iraqi tourists.  Tourists from the United Arab Emirates, Iraq, Saudi Arabia and Kuwait decreased by 7.86% to 1,770, 7.82% to 211,589, 2.96% to 61,547 and 1.62% to 40,382 respectively.  As for the numbers of American and Asian travelers, they respectively rose by 9.23% and 3.01% in 2018 to 357,764 and 140,716 tourists.  In December alone, tourist numbers reflected a healthy 14.45% progress to reach 162,506 compared to the same period in 2017.  (MoT 25.01)

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5.2  Analyzing Lebanon’s Labor Market in the Digital Sector

Within the framework of the European Union-funded “Promotion of Social Justice” project, the Lebanese Ministry of Labor published a report shedding light on the Lebanese digital sector.  The report was based on face-to-face interviews conducted on a total of 149 company owners/top managers.

The study revealed that the digital sector in Lebanon provides enormous opportunities for the Lebanese economy and acts as its 3rd largest contributor.  Nurturing the sector can increase employment by 15% which would add a 5% expansion in the overall economy.  However, the report highlighted the fact that almost half of respondents (46%), stated that they did not employ women.  Moreover, 23% of businesses did not employ any youth members in their company even though this sector is supposed to be youth-oriented.  In addition, many companies which are registered offshore are benefitting from cheap labor and outsourcing their tasks to foreigners, specifically from countries like Pakistan, which is known as one of some major destinations to outsource digital development and coding work.

Despite the BDL 331 circular which supported the digital industry, the report stated some skills gaps within the sector, namely communication skills, Time Management, Teamwork Abilities, Communication, presentation skills, software development as well as Information Technology and CCE skills.  Also, regarding the number of skilled employees, the report finds that Micro and small businesses had a higher percentage of skilled employees than large businesses that needed more manual laborers for installation, maintenance, and reparation of systems.  (28.01)

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5.3  Jordan’s Exports Increase and Imports Decrease During First 11 Months of 2018

The statistical data issued by Jordan’s Department of Statistics indicate that the value of total exports reached JOD4.967 billion during the first 11 months of 2018 [i.e., an increase by 3% compared with the same period of 2017].  Meanwhile, the national exports value reached JOD 4.193 billion during the first 11 months of 2018 [i.e. an increase by 3% compared with the same period of 2017].  The value of re-exports reached JOD 774.5 million during the first 11 months of 2018, which indicates an increase by 2.9% as compared with the same period of 2017.  Imports reached JOD13.082 billion during the first 11 months of 2018, thus decreasing by (0.8%) compared with the same period of 2017.

The deficit in the trade balance, which is calculated by deducting the value of imports from the value of total exports, has reached JOD 8.115 billion therefore; the deficit has decreased during the first 11 months of 2018 by (2.9%) compared with the same period of 2017.  The imports coverage by total exports has become 38% during the first 11 months of 2018 while it was 36.6% for the same period of 2017, which means an increase by 1.4%.  (JDS 28.01)

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5.4  Jordan & Saudi Arabia Agree on Feasibility of Connecting Power Grids

A Jordanian-Saudi technical committee has approved the feasibility of connecting the electric power grids of the two countries through a 170 km transmission line linking eastern Amman and Saudi Arabia’s Qurayyat.  National Electric Power Company (NEPCO) Director General Rawashdeh said that the two sides, during meetings held in Amman recently, drew a preliminary timetable for implementing the project, which is expected to be operational in 2022.

Studies show that the Saudi consumption of electricity during daytime, especially in the summer, is higher than during the evening hours, Rawashdeh said, while in Jordan the opposite is the case, and in light of the introduction of solar power stations to the Kingdom’s grid, electricity consumption would exceed that of Saudi Arabia during the early hours, particularly during winter.  Accordingly, exporting electricity to Saudi Arabia during the daytime is possible and would allow future and contracted renewable energy power stations to be established, provided that electrical power would be imported from Saudi Arabia after sunset.  The projected exchange of electric power will not hinder either country’s ability to meet its own power needs at any time of the day, the director general added, but would achieve optimal exploitation of electricity generation resources in the two kingdoms.

The connection would reduce power production costs and reflect consumers’ electricity bills in both countries and this is expected to have a positive impact on various sectors.  The Jordanian-Saudi electric connection will increase the networks’ reliability, especially the Jordanian grid, as it is the smaller in terms of size and capacity.  The link would also minimize the risks of sudden blackouts in generating units or the fluctuations in renewable power stations, which are affected by weather conditions.  At the end of last year, Jordan signed another agreement with the Iraqi government that would see the Kingdom’s electrical grid connected to Iraq’s as well.  (JT 29.01)

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5.5  Jordan Exempts Iraqi Goods Imported Through Aqaba of 75% of Fees

The Jordanian and Iraqi sides agreed to activate the decision of the Iraqi Council of Ministers adopted in 2017 to exempt some Jordanian goods from customs duties after negotiations aimed at determining the list of goods which are not produced in Iraq.  The Jordanian government also decided to exempt Iraqi goods imported through the port of Aqaba from 75% of the fees charged by Aqaba Special Economic Zone Authority, so that the amount paid by the Iraqi importer is 25% of the handling fees.

This came at the end of the talks between Jordanian Prime Minister Dr. Omar Razzaz and his Iraqi counterpart Dr. Adel Abdul-Mahdi, in the presence of ministers and officials of both sides and ambassadors of the two countries at the Tarbil Border Crossing.  A joint statement emphasized the strategic brotherly relations between the Hashemite Kingdom of Jordan and the Republic of Iraq, after the visit of Iraqi President Barham Salih to Amman on 15 November 2018.  (Roya 02.02)

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►►Arabian Gulf

5.6  Kuwait Forecasts Smaller $25 Billion Deficit Despite Spending Pledge

Kuwait has unveiled budget proposals that forecast a slightly smaller deficit despite higher spending, but little sign of the reforms the finance minister says he endorses.  The deficit for the year starting 1 April is forecast at 7.7 billion dinars ($25.4 billion), 2.1% below the current year’s estimate. That’s after the transfer of 10% of total revenue to the Future Generations Fund, which invests overseas and is managed by the sovereign wealth fund.  Finance Minister Nayef Al-Hajraf said spending is projected to rise 4.7% to 22.5 billion dinars, significantly lower than the 30.5 billion dinars predicted a month ago.  The cabinet approved the budget and submitted it to parliament.

Last year, Al-Hajraf said that projected spending would be capped at 20 billion dinars in FY19/20 and 21 billion dinars the following year.  Asked about the 2.5 billion dinar discrepancy this year, the minister said spending had been adjusted in accordance with “real needs” including new hiring and anticipated additional parliamentary outlays.

Like other Gulf economies, Kuwait has sought to better manage subsidies and to introduce taxes since the slump in oil prices from 2014 triggered a budget shortfall.  But its efforts haven’t moved beyond a blueprint, derailed by domestic political opposition and rising crude prices.  Tumultuous relations between the elected parliament and the government appointed by the country’s hereditary emir have produced seven administrations in as many years.  Lawmakers continue to voice strong opposition to any government bid to tax Kuwaitis or reduce handouts.  There’s even a push in the legislature to reduce gas prices, after the government cut fuel subsidies in 2016.

Al-Hajraf warned last year that the country’s finances were under pressure from higher spending and urged economic and fiscal reform. Kuwait ran up a total budget deficit of 14.6 billion dinars in the three full financial years after oil prices began to drop sharply in 2014.  (AB 22.01)

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5.7  The UAE & Saudi Arabia Plan to Use Common Digital Currency

The Saudi Arabian Monetary Authority (SAMA) and the UAE Central Bank has announced more details about plans to launch a common digital currency.  The Aber project will be used in financial settlements between Saudi Arabia and the UAE through Blockchain and distributed ledgers technologies.  It will also establish an additional means for the central financial transfer systems of the two countries and enable banks to directly deal with each other in conducting financial remittances.  SAMA and the UAE Central Bank said they “share the same desire” to launch pilot projects in the use of these technologies to learn how to benefit from them.

The project will also enable them to consider using the project as an additional reserve system for the domestic central payments settlement system in case of their disruption for any reason.  The Aber project will be restricted to a limited number of banks in each country initially while technical challenges are addressed.  The Aber project was first revealed recently as one of seven initiatives agreed by the Executive Committee of the Saudi-Emirati Coordination Council at its first meeting in Abu Dhabi.  (AB 29.01)

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5.8  Pakistan Hails UAE Economic Support Following $3 Billion Deposit

Tariq Bajwa, Governor of the State Bank of Pakistan (SBP) has hailed a $3 billion deposit from the UAE, saying it will help the country in meeting “current account challenges”.  Bajwa, who signed the agreement with the Abu Dhabi Fund for Development to formalize the deposit into the central bank of Pakistan, said that the UAE government’s assistance will ride over the short term difficulty Pakistan is facing.

In 2018, the UAE announced the deposit of $3 billion with the State Bank of Pakistan, under the directives of the UAE President Sheikh Khalifa bin Zayed Al Nahyan and Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi, to bolster Pakistan’s economy.  Prime Minister of Pakistan Imran Khan has made two trips to UAE since assuming power in August 2018.  These visits were aimed at strengthening ties between the two countries and discussing mutual interests.  Sheikh Mohamed bin Zayed Al Nahyan also visited Islamabad earlier in January, his first trip to Pakistan since 2007.

The UAE has provided a total of $731.3 million to Pakistan for 328 projects under UAE Pakistan Assistance Programme, UAE-PAP, in infrastructure development, education, health, water and humanitarian fields.  The UAE also provided $114.3 million for six vaccination campaigns in the second and third phases of the assistance program.  (AB 23.01)

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5.9  UAE’s Nine-Month Non-Oil Foreign Trade Amounts to $330 Billion

The UAE’s non-oil foreign trade totaled AED1.2 trillion ($330 billion) in the first nine months of 2018, according to preliminary statistical data of the Federal Customs Authority (FCA).  The authority said that direct non-oil foreign trade made up 62% (AED726.4 billion) of the total, with free zone trade accounting for 37% and the remainder seen at customs warehouses.

According to FCA figures, the value of non-oil imports amounted to AED697.2 billion, with native and semi-proceed gold the most popular, followed by telephone equipment and cars.  The value of UAE exports reached AED134.7 billion, with gold representing 22% of the total, followed by raw aluminum, cigarettes and gold ornaments and jewelry.  The value of re-exports amounted to AED342.2 billion compared to AED325.2 billion of the previous year period achieving a growth rate of 5%, the FCA added, with telephone equipment ranking first, followed by non-compounded diamonds, gold ornaments and jewelry.

The figures also showed that the Asia-Pacific region was the UAE’s biggest trading partner during the period, accounting for 42% of the total non-oil trade (AED460.6 billion), followed by Europe.  GCC countries continue to be a major component of the UAE’s trade relations, with Saudi Arabia named as the largest trading partner in the region.  (AB 28.01)

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5.10  Total UAE Banking Reserves Rise to $77.1 Billion

Total reserves at the Central Bank of the UAE increased to AED283.4 billion ($77.1 billion) by the end of November, a growth of 4.3% from AED271.6 billion during the same month of 2017.  The growth reflects the robust solvency position of the UAE banking sector and its compliance with international standards, including Basel III.  According to CBUAE figures, reserves have been growing steadily since the beginning of 2018, hitting a total of AED267 billion in the first half of the year before snowballing to AED283.4 billion by the end of November.  Certificates of deposits held by UAE banks, valued at AED125.8 billion by the end of November, account for 44% of aggregate reserves, while reserve requirements comprised 42.9%, or AED121.8 billion and current accounts of banks stood at 13.1%, or AED35.8 billion.

Last month, it was reported that UAE banks’ net international reserves hit a record high of AED404 billion by the end of November, up 23.1%.  The AED76 billion growth in net international reserves is reflected the country’s financial and economic status, which was affirmed by global credit rating agencies that classify the UAE as one of the key international hubs in the region.  (AB 01.02)

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5.11  UAE Increases Duty on Some Steel Imports to 10%

The UAE increased import duties on rebar and wire rod from 5% to 10% in an anti-dumping move that aims to protect the domestic steel industry.  The decision falls in line with a GCC-wide initiative to raise the duties across the Gulf region, according to the Federal Customs Authority (FCA).  According to the FCA statistics, rebar and wire rod trade stood at AED1.1 billion during the first nine months of last year, with imports accounting for AED656 million and exports AED392 million while re-exports valued AED26 million.  This hike will remain in effect for one year, after which it will be evaluated by the Ministry of Economy with the UAE Cabinet having the final say.  (AB 30.01)

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5.12  Dubai Launches International Bus Route to Muscat

The Public Transport Agency of the Roads and Transport Authority (RTA) has opened an international bus route between Dubai and Muscat.  The transport authority said the step aims to boost land transport and ease the mobility of passengers between the two countries.  Coaches operating on this route will start at Abu Hail Bus Station, and the one-way ticket will cost AED55.  (AB 28.01)

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5.13  New $272 Million Medical City in Emirate of Ajman Set to be Launched Later This Year

UAE-based healthcare firm Thumbay Group has announced that it will inaugurate a new AED1 billion ($272 million) medical city in Ajman in March.  Thumbay Medicity aims to serve more than 20,000 people daily, with advanced facilities in education, healthcare, research, leisure, luxury, fitness and entertainment.  Thumbay Medicity will house the Gulf Medical University, a private medical university, Thumbay University Hospital, a private academic hospital, Thumbay Dental Hospital and Thumbay Physical Therapy and Rehabilitation Hospital.  It will also have outlets of Thumbay Pharmacy and Thumbay Labs, in addition to leisure and hospitality amenities such as Body & Soul Health Club and Spa, Thumbay Food Court, The Terrace Restaurant and Blends & Brews Coffee Shoppe.  There will also be housing to accommodate 2,500 staff and students.

Gulf Medical University will have six colleges and 25 accredited programs while Thumbay University Hospital will feature 500 beds and over 120 clinics.  The hospital also includes a robotic pharmacy.  Thumbay Dental Hospital will be the biggest academic dental hospital in the region while Thumbay Physical Therapy and Rehabilitation Hospital will have 50 beds and a therapeutic garden and will operate in collaboration with internationally renowned Villa Beretta Rehabilitation Centre in Italy.  (AB 22.01)

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5.14  Oman Tourism Falls by 2.8% in 2018 Despite Rise in Hotel Revenues

The total number of guests in Omani hotels declined by 2.8% to 1.35 million in the first 11 months of 2018 compared to the year-earlier period.  The fall in visitors came despite upscale hotels reporting positive spikes in revenues for the period, recording a total revenue of OR188.7 million ($488.9 million), up 8.5%, according to figures released by Oman’s National Centre for Statistics and Information (NCSI).  The data also showed that hotel occupancy rates increased by 0.9% to 57% from January-November 2018.

Europeans topped the list of visitors to the sultanate with 476,875 – a decline of 7.8% over the same period of 2017.  This was followed by Omani guests (369,373 – down 3.5%), and 180,840 tourists from GCC countries, also down 8.8% compared to last year.  African, Asian, Oceanian and American visitors all rose by 15.8%, 17.3%, 3.3% and 0.8% respectively during the 11-month period, the data also showed.  (AB 23.01)

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5.15  Saudi Cinemas See 59,000 Moviegoers per Month Since Lifting of Ban

An average of 59,000 people are going to cinemas in Saudi Arabia each month since the Gulf kingdom lifted its ban last year, according to official figures.  As the latest cinema multiplex opened recently in Jeddah, the General Commission for Audiovisual Media (GCAM) revealed impressive attendance figures, with sell-out crowds on most days.  GCAM, the government body charged with developing and regulating the audiovisual industry for Saudi Arabia, said 77% of moviegoers are families with the rest being singles.

In addition to Vox, other operators to enter the Saudi exhibition sector include the US-based AMC and the Saudi concern, Al-Rashed Empire Cinema Consortium.  The newly-opened Vox multiplex in Jeddah has the region’s first cinema dedicated to children.  With 35 locations comprising 345 screens across the MENA region, Vox Cinemas, a division of Dubai-based Majid Al Futtaim Group, is the Middle East’s largest operator.

Authorities lifted the 30-year ban on cinemas, while cafes are filled with music previously considered immoral in the conservative kingdom.  Internationally known performers including Enrique Iglesias and Cirque du Soleil have packed arenas.  (AB 29.01)

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►►North Africa

5.16  IMF Approves $2 Billion Loan Payment for Egypt

On 4 February, the International Monetary Fund board approved a $2 billion loan payment to Egypt, the latest in the country’s three-year aid program.  The latest installment brings the total paid to Cairo to about $10 billion since the loan deal was signed in November 2016.  The previous loan tranche was approved in July of last year but this fourth review of Egypt’s program had been awaiting board approval since October, when IMF staff and government officials had finalized it.

Since the 2011 revolt that toppled former President Hosni Mubarak, the economy of the Arab world’s most populous country has received multiple shocks caused by political instability and security issues.  Egypt has imposed harsh austerity measures to try to right the economy and reduce the budget deficit, including hiking fuel prices and electricity rates.  The IMF has praised the “substantial progress” made by the Egyptian government on the reforms, which have boosted growth and cut unemployment to the lowest rate since 2011.  However, the IMF also urged the government move ahead with structural reforms that facilitate private sector-led growth and job creation.  The fund expects the nation’s economy to grow 5.5% this year.  (Al Ahram 05.02)

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5.17  Egypt Postpones Electricity Interconnection with Sudan to March

The Egyptian Electricity Transmission Company (EETC) postponed the first phase of 100 MW electricity interconnection project with Sudan to March due to a delay in the implementation of the project by the Indian multi-national construction firm, Larsen & Toubro Limited (L&T).  A source in the Ministry of Electricity said that the Indian company did not comply with the delivery date of the project, so the EETC fined the company and blacklisted it for future projects.  The EETC is obliged, however, to pay its dues to the Indian company in accordance with the contract.

Performance and operating tests are conducted daily for a period of two to three weeks.  After the tests were successful, the production capacity was connected to the electricity grid and other phases were entering successively.  The L & T is implementing the aerial dual-circuit line.  The interconnection begins in the first phase from Toshka 2 transformer station to the 220 KW transformer station in Aqin, Sudan.  The second phase will be 500 KW.

Cairo is seeking to complete the electricity linkage project with Sudan as soon as possible, as Egypt is keen to support the neighboring African countries of and the Nile Basin states to meet their electricity needs.  Egypt has the capability for the implementation of more electricity linkage projects with Arab and European countries, as it seeks to benefit from its surplus of production.  The government is also coordinating with Saudi Arabia, Cyprus, and Greece to implement electricity grid projects within Egypt’s strategic vision to be a regional hub for energy exchange.  (DNE 31.01)

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5.18  Direct Flight to Connect Morocco and China by Early 2020

A direct flight connecting Morocco and China is set to open between the end of 2019 and the first quarter of 2020, the Moroccan National Tourist Office (ONMT) director general told a press conference.  The new flight would connect Beijing, Shanghai, or both to Casablanca. El Fakir did not reveal which airline would operate the route.  Moroccan Minister of Transport and Tourism Mohammed Sajid, and the Civil Aviation Administration of China (CAAC) administrator, Feng Zhenglin, met in September to discuss an air transport agreement and a direct flight.  Over the past three years, the number of Chinese tourists in Morocco rose exponentially from 15,000 to nearly 180,000, following the relaxation of Moroccan visa restrictions.  (MWN 28.01)

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6.1  Turkey’s Exports Reach $13.2 Billion in January, Recording a Nearly 6% Rise

Turkey’s exports in January increased on a yearly basis, while imports went down, the Trade Ministry announced on 4 February.  According to the special trade system, exports amounted to $13.2 billion in January, up nearly 6% compared to the same month last year.  Calculated on the general trade system, the exports totaled $13.9 billion, up 6.3% year-on-year.  The general trade system is a wider concept, including customs warehouses, all types of free zones, free circulation area and premises for inward processing.

Turkey’s imports in January based on the special trade system were $15.7 billion, down 27% in annual terms, and based on the general trade system were $16.2 billion, falling $26.9% annually.  The foreign trade gap in January narrowed over 70% to $2.5 billion based on the special trade system and to $2.3 billion on the basis of the general trade system.  The exports-to-imports coverage ratio based upon special trade systems advanced to 83.85% last month, up from 57.8% in January 2018.  The figure was 85.7% based on the general trade system.

The top export markets for Turkish products were Germany, the U.K., Italy, Iraq and Spain.  The exports to Libya rose by 2.5 times and sale of Turkish products to Yemen doubled.  Exports to Germany were recorded at $1.3 billion.  The U.K. imported products worth $966 million from Turkish manufacturers.  The value of exports to Italy stood at $818 million. Russia came first in Turkey’s imports with $1.7 billion and was followed by China with $1.4 billion.  Turkish lira was the medium of exchange in exports to 167 countries and a total of TL 4 billion was generated in trade with local currency.  (MoT 04.02)

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6.2  Turkish Central Bank Reserves at $93 Billion at End of 2018

The Central Bank of the Republic of Turkey’s (CBRT) official reserves reached $93 billion as of the end of last year.  Official reserve assets climbed 2.2% in December 2018, compared to the previous month.  The bank’s foreign currency reserves totaled $71.4 billion in convertible foreign currencies, up 1.7% during the same period.  Gold reserves rose 4.3% to $20.1 billion including gold deposits and, if appropriate, gold swapped.

On a yearly basis, official reserves of the bank dropped nearly 14%, down from $107.7 billion at the end of 2017.  Some $8.7 billion of this amount belonged to principal repayments and $4.3 billion to interest repayments.  Contingent short-term net drains on foreign currency rose 1.8% month-on-month to $31.9 billion in December 2018.  (CBRT 28.01)

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6.3  Turkish Poverty Threshold Rises 3.5% in January

The poverty threshold for a family of four was TL 6,543 ($1,232) monthly as of January, a 3.5% increase from the previous month, the Confederation of Turkish Labor Unions announced.  The poverty line was TL 5,262 in January 2018.  The poverty threshold reflects the amount of expenditures necessary for a family of four to feed itself healthily, while also including sufficient spending for clothing, housing (rent, electricity, water and fuel), transportation, education, health and related outlays.

The CTLU also calculated that the hunger threshold was TL 2,009 liras in January versus TL 1,941 in the previous month and TL 1,616 a year ago.  The hunger threshold indicates the minimum amount of money needed to save a four-member family from starvation.  The monthly surveys carried out by the CTLU reflect the price changes of basic necessities on family budgets.

In Ankara, food costs of a family of four increased by 3.48% in January from December 2018, while the rise over the past 12 months was 24.34%, the survey also showed.  In December last year, the monthly minimum wage in Turkey was raised by 26% to TL 2,020 for 2019.  (CTLU 29.01)

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6.4  Turkey’s Natural Gas Imports Decrease 14% in November

Turkey imported a total of 4.7 billion cubic meters natural gas in November 2018, with a decline of 13.8 compared to the same month of the previous year.  The 3.6 billion bcm natural gas was imported by Turkey via pipelines whereas liquefied natural gas (LNG) of 1.1 bcm was also brought in, according to the Energy Market Regulatory Authority’s (EPDK) monthly report.

Russia was Turkey’s main source country for natural gas imports with 2.1 bcm in November 2018.  Iran followed with 839 million cubic meters of natural gas and Azerbaijan followed with 745 million cubic meters.  Algeria, Qatar, Nigeria and the United States were other natural gas exporters to Turkey.

Meanwhile, Turkey’s natural gas stock reached almost 3.4 bcm in November, with an annual increase of 15.7%.  Turkish power plants, households and industrial installations used a total of 4.1 bcm natural gas in November 2018, with a decrease of 21.4% compared to November 2017.  (EPDK 27.01)

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6.5  Cyprus Improves on Corruption Perception Index

Cyprus has moved up Transparency International’s corruption index, rising four places in the 2018 index to 38th place with a two-point improvement on the previous year.  Cyprus scored 59 out of 100 points from 57 points in 2017 to put it on level terms with the Czech Republic and Lithuania, but below Slovenia and Poland.  Despite the improvement, Cyprus’ score is still below the average for the EU/Western Europe region which a high of 66 and adrift from its 66 score in 2012.

The 2018 Corruption Perceptions Index, published by Transparency International, measures the perceived levels of public sector corruption in 180 countries and territories.  Drawing on 13 surveys of businesspeople and expert assessments, the index scores on a scale of zero (highly corrupt) to 100 (very clean).  The results paint a sadly familiar picture: more than two-thirds of countries score below 50, while the average score is just 43.

At the bottom of the Europe region, Bulgaria scored 42, dropping one point since last year.  Bulgaria is followed by Greece (45), which dropped three points since 2017, and Hungary (46), which dropped eight points over the last five years.  Denmark was top of the CPI with a score of 88 while Somalia was rock-bottom with a miserable 10.  (CM 30.01)

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6.6  Greece Raises €2.5 Billion from 5 Year Bond

Greece raised €2.5 billion from a new five-year bond at a relatively competitive yield, drawing strong demand in a small but significant step towards refinancing its debt from markets after years of tight supervision under bailouts.  The bond issue, yielding 3.6% and the country’s first since its third international rescue package ended in August, drew investor orders worth four times the issue’s size.  Athens has tested market appetite for its debt in recent years, while under the watch of its bailout creditors.  It sold €3 billion ($3.4 billion) of seven-year bonds nearly a year ago.

Greece has enough cash to repay roughly €12 billion in loans that fall due this year and can stay afloat up to 2021.  But it wants to return to bond markets as a regular borrower after nearly a decade in crisis.

Greece’s 10-year bond yield fell five basis points to 4%, its lowest level since early August.  Five-year bond yields were down 4 bps at 2.99% and not far off recent lows.  BofA Merrill Lynch, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley and SG CIB were joint lead managers for the transaction.  Greece has said it plans to raise up to €7 billion from the bond market this year.  As a safety net, Athens has built a €26 billion cash buffer from unused bailout loans and money raised from markets.  (Reuters 29.01)

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7.1  AJC & U.S. Conference of Mayors to Partner on Israel Visits

The U.S. Conference of Mayors and the American Jewish Committee (AJC) are partnering to further enhance U.S.-Israel ties at the municipal level across the country.  A Memorandum of Understanding was signed by AJC CEO Harris and U.S. Conference of Mayors leaders.  The highlight of the MOU is an annual delegation to Israel.  Participating mayors will be chosen by the Conference and AJC’s Project Interchange.  The MOU signing took place during the mayors’ annual meeting, in Washington, D.C.

In May 2018 and September 2017, bipartisan delegations of U.S. mayors, organized by AJC Project Interchange, visited Israel.  They were the latest mayoral visits to Israel with AJC.  The new MOU formalizes and expands this cooperation.  (AJC 25.01)

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7.2  UAE Leaders Receive Pope Francis

Sheikh Mohammed bin Rashid Al Maktoum, Vice President, Prime Minister and Ruler of Dubai, and Sheikh Mohamed bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the UAE Armed Forces, received Pope Francis, head of the Catholic Church in the UAE on 4 February.  Upon his arrival at the Presidential Palace, Pope Francis, accompanied by cavalry on Arabian horses, was accorded an official reception.  A 21-gun salute was fired in honor of the Pontiff, following which the Papal Anthem and that of the United Arab Emirates were played.

During the ceremony, the UAE leaders welcomed the visit of Pope Francis to the country and expressed happiness at the historic visit of a man famed across the world.  They expressed confidence that the visit would contribute to dialogue, brotherhood, coexistence, cooperation and respect among all human beings, and would enhance peace and security for people across the world.  After his meeting with Sheikh Mohamed, Pope Francis signed the Book of Honor and presented a framed medallion by the artist Daniela Longo.

The medallion depicts the encounter between St Francis of Assisi and the Sultan Malek el-Kamel which took place in 1219, an episode narrated in the ninth chapter of the Legenda Maior – one of the most important manuscripts of the Biblioteca Nazionale Centrale di Roma detailing the official biography of St Francis.  A Latin inscription of the apostolic visit can be found around the border of the medallion, whose imagery highlights the purpose of the trip, human fraternity and dialogue.

The Pope arrived ahead of the Global Conference of Human Fraternity, being held in Abu Dhabi.  The two-day conference at Emirates Palace has brought together more than 600 religious figures from across the world, to discuss and promote tolerance and inter-faith dialogue.  (AB 04.02)

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7.3  Greek Parliament Approves Historic Macedonia Name Deal

A three day debate in Greek Parliament, which ran longer than any other session in recent history, wrapped up the deliberations on the Prespes agreement, culminating in a historic vote in favor of the deal:  153 Members of Parliament voted in favor of the deal, 146 voted against and 1 abstained.  Under the agreement, Greece’s northern neighbor will rename itself North Macedonia, distinguish its cultural references from the Greek Macedonian heritage and Athens will drop its objections to the country joining NATO.  Greek Parliament speaker Voutsis hailed the vote as historic.  The vote settles a name dispute that has separated the two neighbors for nearly 30 years.  (Various 25.01)

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8.1  Together to Set Up Medical Cannabis Factory in Uganda

Together Pharma, which specializes in cultivating and producing medical cannabis, has reported that it is setting up a factory for drying and extracting medical cannabis, close to the company’s farm in Uganda, in coordination with the relevant regulatory bodies in Uganda.  Setting up the factory in accordance with the G.M.P. standard, will be under the control of Together, so that the company will be able to operate in the near future to sell its products in Canada and Germany, independent of other factories, and saving processing, conveyancing and security costs.  With the start of planting in the company’s Uganda farm, the company has also announced that it is currently working to certify its Uganda farm with the C.U.M.C. standard (as well as G.A.P.) and is undertaking this with assistance of representatives of the Peterson and Control Union.  (Globes 27.01)

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8.2  Eximo Medical Announces First Commercial Case of Its B-Laser Atherectomy System in the US

Eximo Medical announced the successful launch and first commercial use of the B-Laser™ Atherectomy System for treatment of peripheral vascular disease.  The Center for Cardiovascular Excellence in Orlando, Florida used the B-Laser™ Atherectomy System to successfully treat a patient with severe in-stent restenosis in the superficial femoral artery as well as a critical de novo stenosis in the proximal popliteal artery.

Eximo’s U.S. Pivotal data from 147 patients showed average reduction of some 34% from a fairly high baseline residual stenosis, without any complications requiring intervention and no distal embolization (verified by Core Lab) with only 8 embolic protection devices used (6 at initial phase of the CE study and only 2 at the beginning of the IDE study).  Clinical outcomes at 6 months shows a high patency rate of 85.6% in general, and a very similar rate in the ISR and CTO sub group, and an exceptional 95.7% patency at 6 months in the sub-group of severely calcified lesions which accounted for 26% of all patients in the studies.  This data coincides nicely with the very low rate of TLRs observed in the studies which was 3 out of 141 subjects (2.1%).

Rehovot’s Eximo Medical is an Israeli startup company with novel hybrid technologies for tissue resection in various vascular and gastrointestinal endoluminal applications.  (Eximo Medical 28.01)

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8.3  Senecio Robotics AI Based Machine Supports Efforts to Combat Mosquito Borne Diseases

In the fight against mosquitoes, the latest technology is the rearing and release of specially treated mosquitoes.  Senecio’s Compact State-of-The-Art Robotic Sex Sorting module based on deep learning technology, with mosquitoes being entered on the right side, with automated loading of male-only (none biting) mosquitoes on the left side into release boxes, after classification and sorting.

Some approaches are based on the fact the female mosquito mates only once, hence, the release of large number of sterile male-only mosquitoes (which are non-biting), leads to local population suppression, while other approaches suggest releasing of special treated males and females which prevent diseases transmission.  In collaboration with the unnamed partner, Senecio is working to significantly advance the speed, scale and cost of addressing these needs.

Promising results were obtained in trial size programs around the world, including USA, China, Singapore, Australia, Brazil and others.  However, when the solution needs to be applied in large scale, the mosquito factories are limited in their growth potential relying on tedious labor work for the sorting and packaging of the special mosquitoes.

Senecio has been developing a proprietary technology, providing mosquito factories, laboratories and governments with an affordable, compact solution for robotic handling, sorting and loading of mosquitoes in large scale.  The solution can also be combined with the traditional pesticides approach, for an integrated pest management approach, resulting in an effective solution to the mosquito problem.

Kfar Saba’s Senecio Robotics is an early stage technology company, developing automation solutions for large scale mosquito projects.  It is the holder of dozens of inventions from rearing, through sex sorting to loading, air and ground field release, utilizing proprietary proven technologies.  Backed by Ocean Azul Partners from Miami, with a global vision to support world efforts for eradicating the number one killer, Senecio is working to provide mosquito factories with a complete mobile automated unit, providing an affordable solution for one of the world’s most pressing needs.  (Senecio 28.01)

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8.4  Manufacturing of Clinical Grade FasL Enables Cellect to Expedite U.S. Clinical Programs

Cellect Biotechnology has concluded the scale-up development and manufacturing of clinical grade FasL in collaboration with its outsourced supplier.  Based on its process and the results of the ongoing clinical trial, the Company has scaled up manufacturing of FasL for hundreds of personal batches fully scalable to hundreds of thousands of batches for clinical and collaborative purposes.  The Company expects to form an alliance of clinical and commercial cell therapy centers using the ApoGraft™ technology.

The FasL protein is central to Cellect’s technology of cell separation and functional selection of stem cells and is the key active ingredient in Cellect’s ApoGraft™ and Apotainer product lines.  Cellect’s FasL based technology is intended to enable achieving stem cells for any indication in quality, quantity and at a competitive price; and is expected to improve the safety and efficacy of stem cell therapies and regenerative medicine.

Kfar Saba’s Cellect Biotechnology has developed a breakthrough technology for the selection of stem cells from any given tissue to any application of those cells.  The technology aims to improve a variety of cell-based therapies.  The Company’s technology is expected to provide research institutes, hospitals and pharma companies with the tools to rapidly produce stem cells in quantity and quality allowing cell-based treatments and procedures in a wide variety of applications in regenerative medicine.  The Company’s ongoing clinical trial is treating patients undergoing bone marrow transplantations in cancer treatment.  (Cellect 28.01)

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8.5  Cannabics Pharmaceuticals and NewCanna Hub to Manufacture SR Capsules in Colombia

Cannabics Pharmaceuticals announced, that Bogota, Colombia’s NewCanna Hub, a world leader in the field  of cannabinoids, have signed a non-binding letter of intent (LOI) at The World Economic Forum, in Davos, Switzerland to establish an equal joint venture that is intended to produce and market Cannabics’ Slow Release (SR) capsules in Colombia and, potentially, other regulated markets.  Pursuant to the terms of the LOI, the parties intend to develop a joint business plan for the joint venture within the next 30 days and execute a definitive joint venture agreement as soon as reasonably practicable.  As part of the new proposed joint venture, the SR capsules are expected to be produced at NewCanna’s Good Manufacturing Practice (GMP) certified facility in Columbia in various formulations.  The joint venture intends to seek international distribution agreements in relevant regulated territories.

Cannabics’ SR Capsule technology, delivered orally, enables the slow release of active cannabinoid compounds into a patient’s body.  The capsules were vetted as a part of a successful clinical trial undertaken at Rambam Hospital in Israel.

Headquartered in Tel-Aviv, Israel, Cannabis Pharmaceuticals is a U.S. publicly traded company that is developing a platform which leverages novel drug-screening tools and artificial intelligence to create cannabinoid-based therapies for cancer that are more precise to a patient’s profile.  By developing tools to assess effectiveness on a personalized basis, Cannabics is helping to move cannabinoids into the future of cancer therapy.  The company’s R&D is based in Israel, where it is licensed by the Ministry of Health to conduct scientific and clinical research on cannabinoid formulations and cancer.  (Cannabics Pharmaceuticals 24.01)

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8.6  Medigate Raises $15 Million

Tel Aviv’s Medigate, a startup developing a platform for securing and managing Internet of Medical Things (IoMT) devices, announced that it had raised $15 million in its Series A financing round.  The round was led by the US Venture Partners venture capital fund, with participation from YL Ventures and Blumberg Capital, which previously invested Medigate.  The current round brings the amount raised by the company to date to $20.4 million.

Medigate develops a platform that is connected to the networks of hospitals and medical centers.  It identifies the medical devices connected to the network, their regular activity, and the communications through them as part of this activity.  The platform makes it possible to manage the device connected to the network on the one hand and to protect them on the other.  Protection takes place when the platform detects abnormal behavior by one of the devices, for example a pacemaker trying to communicate with an IV device with which it has no connection.

Medigate’s accuracy stems from its ability to learn to read the communications protocols of the various medical device manufacturers.  Medigate plans to use the money it raised to expedite its growth and recruit research, development, marketing, and sales personnel over the next 18 months.  The company currently has 30 employees, 28 of whom are in Israel.  Medigate plans to expand to 60 employees over the coming year: 45 in Israel and the others in the US.  The company already has 10 customers in the US – hospitals supported by the platform developed by the company.  (Medigate 28.01)

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8.7  Omeq Medical Penetrates Epidural Market in China Through $3 Million Funding

Omeq Medical has signed an investment and commercialization agreement for its smart epidural device with Pharos Medical (Pharos), a Shanghai-based manufacturer and distributor of medical devices.  Omeq has developed a single-use, smart epidural device for safe, accurate epidural injections to thwart inaccurate needle placement – estimated at up to 30% of initial injections.  Using a standard epidural needle, Omeq’s device accurately detects needle penetration into the epidural space.  Omeq’s device prevents multiple insertions, saves physician time, improves analgesia/anesthesia success rate, and reduces needle placement complications.

The $3 million agreement between the companies includes commercialization of Omeq’s device in the Chinese market.  Pharos will establish a production line for Omeq’s product in China and will support Omeq’s efforts in the rest of the world.  Leveraging on the collaboration with Pharos, Omeq expects to complete CFDA clearance and to be in production by mid-2020.

Misgav’s Omeq Medical is developing a single-use, smart epidural needle for safe, accurate epidural injections.  Attached to a standard epidural needle, a special blunted probe repeatedly monitors the dynamic forces exerted by the surrounding tissues and accurately detects needle penetration into the epidural space.  Once successful positioning is confirmed with a visual signal, the safety mechanism of the device protects the patient from inadvertent puncture of the spine.  (Omeq Medical 29.01)

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8.8  New Kanabo Research Study Offers Encouraging Results for Insomnia Treatment

Kanabo Research presented the promising results of its pre-clinical trial, which brings the company one step closer to providing a safe remedy for insomnia and other sleep disorders, without the risk of dependency or the possibility of an overdose.  This in vivo study, evaluated the efficacy of varying compositions of active ingredients in cannabis to induce sleep, in comparison to Diazepam, the active ingredient in Valium.

Several formulations performed extremely well, reaching close to 100% of the efficacy of Diazepam, with one formulation in particular increasing sleep duration by 150%.  Kanabo Research was able to prove synergy, with greater efficacy when all three cannabinoids and terpenes were present than when used singularly.  When combined, even a small amount of each contributed to the efficacy of the formulation.

As a secondary finding, the study established the value of THC as an integral part of Kanabo Research’s formulations.  Even in small doses, THC generates a synergistic effect with other cannabinoids and terpenes.  This emphasizes and reiterates the value of the whole plant profile, especially when compared to isolates of cannabinoids.  These are promising results for patients in light of the well documented much less severe side effects associated with low THC compositions in comparison to Diazepam.

These early findings are promising and will be applied to the next stage of research – clinical trials for human use.  Kanabo Research is currently in the process of establishing the framework for such a study, and aims to perform the trials and report on successful results by the end of the year.

Ness Ziona’s Kanabo Research creates innovative solutions for the medical cannabis industry.  Kanabo focuses on building medically validated IP that includes delivery systems working in synergy with applications of patented formulations of cannabis oil.  (Kanabo Research 29.01)

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8.9  Insightec Completes Glioblastoma Chemotherapy Cycles Using Focused Ultrasound

INSIGHTEC and Korea’s Yonsei University announced that the first patient worldwide completed chemotherapy cycles in a clinical trial to investigate the safety and efficacy of focused ultrasound for disrupting the blood brain barrier (BBB) in patients with glioblastoma (GBM).  This first patient successfully completed all six sessions of their planned complete adjuvant temozolomide (TMZ) with BBB disruption treatment.  There were no complications or side effects following disruption of the BBB with focused ultrasound.

Glioblastoma is the most common primary malignant brain tumor in adults.  The blood brain barrier not only protects the brain from toxins, it also prevents the effective delivery of therapeutic agents to treat brain tumors, such as GBM, which is why disrupting the BBB is key for introducing treatment options.  The investigational Exablate Neuro device from INSIGHTEC delivers low frequency focused ultrasound without surgical incisions to temporarily disrupt the BBB.  In the clinical trials, following surgical resection and radiotherapy plus concomitant TMZ, focused ultrasound is delivered during the first treatment of each of the six maintenance cycles of TMZ.

Haifa’s INSIGHTEC is a global healthcare technology innovator transforming patient lives through incisionless brain surgery using MR-guided focused ultrasound.  The company’s award-winning Exablate Neuro™ is used by neurosurgeons to perform the Neuravive treatment to deliver immediate and durable tremor relief for essential tremor patients.  Research for future applications in the neuroscience space is underway in partnership with leading academic and medical institutions.  (INSIGHTEC 30.01)

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8.10  Cannassure Therapeutics Announces Strategic Partnership With Cannika Holdings

Cannassure Therapeutics announced its collaboration with Cannika Holdings.  Cannika will operate out of the Cannassure campus, utilizing their many facilities that are designed to meet the highest regulatory standards.  Start-ups joining the incubator will benefit from an extensive research platform and a community of scientists, researchers, and business professionals.  Cannika will provide medical cannabis start-ups with a complete R&D ecosystem that provides scientific financial and business expertise to advance cannabis related initiatives from concept to commercialization.

Ashdod’s Cannassure Therapeutics is a subsidiary of Solbar Food Technologies, a 57 year-old producer of plant based raw materials and solutions for the food and food additives industries.  Cannassure holds all the approvals required for establishing a vertically integrated medical cannabis operation and is working in all these areas from breeding, cultivation, extraction, storage, packaging and distribution.

Orot’s Cannika funds, cultivates, and commercializes technologies for the cannabis industry.  A unique R&D platform that includes a licensed grow area, labs, access to an expertise network, and other resources provides a complete ecosystem to early stage companies and initiatives.  Cannika is headquartered in Israel, the beating heart of scientific and technology innovation in this field. Led by a well-rounded team of experienced business, financial, and scientific experts, Cannika is focused on advancing the evolution of the cannabis industry.  (Cannassure Therapeutics 30.01)

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8.11  OWC Reports Positive Data for Medical Grade Cannabis Ointment for Skin Disease Treatment

OWC Pharmaceutical Research Corp. reported positive Phase 1 safety data for its medical grade cannabis MSG ointment for the treatment of skin diseases.  No severe adverse events were observed in the trial.  The Company is on track to initiate a Phase 2 trial of MSG ointment for the treatment of psoriasis during Q3/19.

This Phase 1 trial was a single center, prospective, placebo-controlled, study to assess the safety and tolerability of topical MGC ointment (3% CBD, 3% THC) in healthy subjects.  The study was conducted at Sheba Academic Medical Center in Israel between September 2017 when the first subject entered the study and January 2019 when the last subjected completed the study.  No severe adverse events were observed in either stages of the study.  Minor irritation was observed in one subject.

Ramat Gan’s OWC Pharmaceutical Research Corp., through its wholly-owned Israeli subsidiary, One World Cannabis, conducts medical research and clinical trials to develop cannabis-based pharmaceuticals and treatments for conditions including multiple myeloma, psoriasis, fibromyalgia, PTSD and migraines.  OWCP is also developing unique and effective delivery systems and dosage forms of medical cannabis.  All OWC research is conducted at leading Israeli hospitals and scientific institutions and led by internationally renowned investigators.  (OWC 30.01)

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8.12  Nucleix’s Bladder EpiCheck, Urine Test for Bladder Cancer, Chosen by Radboud University

Nucleix announced that Radboud University Medical Center (UMC) in Nijmegen, the Netherlands has chosen to add the company’s Bladder EpiCheck, a urine test for the monitoring of bladder cancer, to its standard-of-care for the detection of recurrence of bladder cancer.  Bladder EpiCheck’s accurate performance allows for it to replace some of the standard invasive and unpleasant cystoscopy procedures.  In addition, due to the precision of the innovative system, Radboud UMC can collect the urine samples from the patient’s home, thus avoiding unnecessary visits to the hospital.

Bladder EpiCheck’s high accuracy allows to significantly reduce the number of invasive follow-up procedures.  The system demonstrated a clinically relevant and very high negative predictive value (NPV) of 99%, indicating that if the test is negative there is a 99% chance that the patient does not have a dangerous tumor.  This is coupled with a low rate of false positive results. If the result of the urine test is negative, in approximately 85% of the time, the patient will not have to visit the hospital for a follow-up meeting.

Bladder EpiCheck is a CE approved urine test for monitoring bladder cancer that was clinically validated in several independent cohorts in leading hospitals and labs throughout Europe.  Bladder EpiCheck has shown in clinical trials best performance of a non-invasive tool in detection of bladder cancer recurrence when compared to the invasive standard-of-care.  The test is objective, operator-independent and requires standard laboratory equipment.  Bladder EpiCheck is based on Nucleix’s proprietary molecular biomarker technology, which combines innovative biochemical assays and sophisticated algorithms.  The technology is based on identification and analysis of subtle changes in DNA methylation patterns, a powerful tool for distinguishing between cancer and healthy cells and thus for detection of tumors in the body.

Rehovot’s Nucleix develops, manufactures and markets innovative, non-invasive, molecular cancer diagnostic tests.  Its highly sensitive and specific tests are based on identification of subtle changes in methylation patterns.  Nucleix’s technology is based on a combination of a new biochemical assay in conjunction with sophisticated algorithms.  The Company’s pipeline includes CE Mark Bladder EpiCheck, for the non-invasive detection of bladder cancer based on a urine test; Lung EpiCheck, a screening diagnostic blood test for early detection of lung cancer; Liver EpiCheck, a blood test for liver cancer detection in patients with cirrhosis; and Pan Cancer EpiCheck, a molecular diagnostic tool for early detection of multiple cancer types in blood samples, all based on Nucleix’s proprietary and innovative epigenetic platforms.  (Nucleix 30.01)

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8.13  Check-Cap Announces $7.5 Million Registered Direct Offering

Check-Cap has entered into definitive agreements with institutional investors for the purchase of 2,906,376 units, at a purchase price of $2.58 per unit, in a registered direct offering.  Each unit consists of (i) one ordinary share (or ordinary share equivalent), and (ii) a warrant to purchase one half ordinary share.  The ordinary shares (or the ordinary share equivalents) and the accompanying warrants included in the units can only be purchased together in this offering, but will be issued separately and will be immediately separable upon issuance.  The warrants will have a term of five years, be exercisable immediately and have an exercise price of $2.58 per ordinary share.  H.C. Wainwright & Co. is acting as the exclusive placement agent in connection with this offering.

The Company expects to receive gross proceeds of approximately $7.5 million at the closing of the offering.  The Company intends to use the net proceeds from the offering to advance the ongoing clinical development of its C-Scan system, and for general corporate purposes.  The offering is expected to close on or about 6 February 2019, subject to satisfaction of customary closing conditions.

Usfiya’s Check-Cap is a clinical-stage medical diagnostics company developing C-Scan, the first and only preparation-free capsule-based screening method for the prevention of colorectal cancer (CRC) through the detection of precancerous polyps.  The patient-friendly test has the potential to increase screening adherence and reduce the overall incidence of CRC.  The C-Scan system utilizes an ultra-low dose X-ray capsule, an integrated positioning, control, and recording system, as well as proprietary software to generate a 3D map of the inner lining of the colon. C -Scan is non-invasive and requires no preparation or sedation, allowing the patient to continue their daily routine with no interruption as the capsule is propelled through the gastrointestinal tract by natural motility.  (Check-Cap 04.02)

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8.14  Advanced Medical Solutions Group Acquires Sealantis

Winsford, UK’s Advanced Medical Solutions Group, the surgical and advanced wound care specialist company, has acquired Sealantis, a developer of an alginate-based tissue adhesive technology platform, for $25m (approximately £19m) in cash with royalties due until December 2027 on sales of any of its products that are currently in development.

Sealantis is an Israeli-based medical device company with a patent-protected alga-mimetic sealants technology platform with a wide range of potential surgical indications under development.  Its two most advanced surgical sealant products are Seal-G, an open surgery device already CE marked for reinforcement of the staple / suture line to minimize anastomotic leaks following gastrointestinal surgery, and Seal-G MIST (Minimally Invasive Spray Technology) the equivalent laparoscopic device for the same indication but performed through keyhole surgery.

As well as a world class extension of their longer-term product development capability, strategically, the acquisition provides AMS with a technology platform and delivery systems that have significant potential across a range of applications in the high-margin internal surgery market which includes the $1 billion internal sealant market.  These include the existing CE marked product to reinforce and protect gastrointestinal anastomoses, of which there are more than 6 million procedures performed annually worldwide1, with additional significant potential in Neuro, Orthopedic and Cardiovascular surgery indications.

Being alginate based, the technology and products have significant competitive advantages over existing market leading products in this space.  Importantly, the products do not need refrigerated transport or storage, can be delivered by spreading or spraying, do not require advanced preparation and do not contain proteins so carry lower risk of infection or adverse reaction.

Sealantis operates a state-of-the-art innovation and manufacturing facility, which includes an ISO class 6 clean room, at the world-renowned Technion – Israel Institute of Technology, in Haifa, Israel.  AMS intends to retain Sealantis’ team of 12 R&D staff, who will become a key part of AMS’s surgical R&D capability.  (AMS 31.01)

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8.15  Laminate Completes a Capital Raising Round of $12 Million

Laminate Medical Technologies, developer of a vascular support device that is implanted in patients requiring dialysis, announces a capital raising round of $12 million. This round brings total investment in the company to date to $24 million.  Participating in the current round is the leading dialyzer manufacturer in Japan, Asahi Kasei Medical, as well as the American investment company Tal Capital, and private investors such as Mickey Boodaei, Shai Agassi, Yuval Tal and Meir Barel.  They join the company’s existing investors, who include Chinese pharma giant Haisco, Nava and Yehuda Zissapel, Zohar Gilon, Eri Steimatzky, Henit Vitos, and Ari Raved.

A few months ago Laminate began the stage of clinical trials in the USA, and is working with 16 leading American hospitals in preparation for obtaining FDA approval.  The product developed by the company, the VasQ, already has CE approval in Europe.  Through Laminate’s local operation, it is in use in dozens of hospitals in Germany (and is included in the insurance companies’ approved reimbursements). Laminate has significantly expanded its activities in the German market following the approval of additional reimbursement coverage in 260 hospitals in the country.  It is also sold through a network of distributors in other countries, such as Italy, Sweden, and Austria.  In Israel the device is in use in two hospitals, Sheba and Hadassah Ein Kerem, with impressive results.

The special device developed by Laminate is a kind of sleeve placed over the vein, which creates the optimal geometrical configuration with the artery and reduces the tension in the vein, thus enabling appropriate blood flow during dialysis.  Research carried out to date indicates significant success in all accepted parameters in the performance of the fistulas.

Laminate Medical Technologies has its research and development center in Ramat HaHayal in Tel Aviv, with branches in the USA and Germany, and a network of distributors in a number of European countries.  The company has 18 employees.  (Laminate Medical Technologies 31.01)

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8.16  CathWorks Announces Completion of $30 Million Financing

CathWorks announced the completion of a $30 million Series C financing round led by Deerfield Management.  The CathWorks System received United States Food & Drug Administration 510(k) clearance in December 2018.  The predicate used for demonstrating substantial equivalence was conventional invasive FFR as demonstrated during the FAST-FFR clinical study.  The CathWorks FFRangio System quickly and precisely delivers the objective FFR guidance needed to optimize PCI therapy decisions for every patient across the full coronary tree.  It is non-invasive and performed intra-procedurally during coronary angiography without adding additional clinical risk or per-procedure costs.

Kfar Saba’s CathWorks is a medical technology company focused on applying its advanced computational science platform to optimize PCI therapy decisions and elevate coronary angiography from visual assessment to an objective FFR-based decision-making tool for physicians.  FFR-guided PCI decision-making is proven to provide significant clinical benefits for patients with coronary artery disease and economic benefits for patients and payers.  The company’s focus is specifically on bringing the CathWorks FFRangio System to market to provide quick, precise, and objective intra-procedural FFR guidance that is practical for every case.  (CathWorks 05.02)

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8.17  BioLineRx Receives FDA Orphan Drug Designation for its BL-8040 Treatment of Pancreatic Cancer

BioLineRx announced that the U.S. FDA has granted Orphan Drug Designation to its lead oncology candidate, BL-8040, for the treatment of pancreatic cancer.  BL-8040 is currently being investigated in clinical studies for the treatment of pancreatic cancer under two separate immuno-oncology collaborations – one with Merck & Co., Kenilworth, N.J. (known as MSD outside the US and Canada) and a second collaboration with Genentech, a member of the Roche Group.  Orphan Drug Designation by the FDA entitles BioLineRx to seven years of market exclusivity for the use of BL-8040 for the treatment of pancreatic cancer, if approved, plus significant development incentives, including tax credits related to clinical trial expenses, an exemption from the FDA-user fee, and FDA assistance in clinical trial design.

Modiin’s BioLineRx is a clinical-stage biopharmaceutical company focused on oncology.  The Company in-licenses novel compounds, develops them through pre-clinical and/or clinical stages, and then partners with pharmaceutical companies for advanced clinical development and/or commercialization.  BioLineRx has a strategic collaboration with Novartis for the co-development of selected Israeli-sourced novel drug candidates; a collaboration agreement with MSD, on the basis of which the Company is conducting a Phase 2a study in pancreatic cancer using the combination of BL-8040 and KEYTRUDA® (pembrolizumab), and a collaboration agreement with Genentech, a member of the Roche Group, to investigate the combination of BL-8040 and Genentech’s atezolizumab in several Phase 1b/2 studies for multiple solid tumor indications and AML.  (BioLineRx 04.02)

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9.1  Inomize Selected to Supply HP Indigo Next Generation ASIC for Digital Press

Inomize was selected by HP Indigo to develop an ASIC solution for their next generation of high-resolution industrial presses.  Inomize analog experts design will grant HP Indigo higher presses resolution than any other available commercial solution.  The Inomize team applied a new innovative architecture of mixed Analog-digital design to enable ultra-high end fine resolution.  The solution utilizes latest design approaches and methodologies to enable cutting-edge press capabilities.  It also involves an innovative high-density assembly approach that will enable the densest available pressing solution.  Inomize operations team will manage and execute the full supply chain for the ASIC.

Netanya’s Inomize is a professional Research & Development firm specializing in the design and delivery of hardware solutions.  Inomize offers a wide range of services tailored to meet your project needs and product constraints in terms of cost, performance and power consumption.  Inomize successfully delivers ambitious projects on time and on budget.  Inomize gets the maximum out of the available technology and, when necessary, pushes it to the limit using the latest advancements to meet the customer’s project needs.  With years of experience and a proactive project management approach, Inomize reduces development time and minimize risks of complex hardware design projects.  (Inomize 23.01)

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9.2  Catholic Order of Foresters Launches SAPIENS Electronic Insurance Application Software

Sapiens International Corporation announced that the Illinois-based Catholic Order of Foresters (COF), a fraternal benefit life insurance society since 1883, has launched Sapiens Electronic Application for its life business (formerly known as StoneRiver LifeApply).  The streamlined electronic insurance application software helps insurers increase efficiency and improve the life insurance buying experience.  Sapiens LifeApply operates with a modern, functionally rich and user-friendly interface, all in an extremely intuitive and easy-to-use system. COF’s entire field force will have the opportunity to use the solution immediately.

Sapiens LifeApply is easy to use for experienced and new agents alike, using wizard-based and self-directed navigation.  Content is dynamic and reflexive, with forms and questions appearing as needed and only valid options available for selection.  Pre-population of data from CRM, needs analysis or illustration systems eliminates duplicate data entry.  The system supports eSignature.

Holon’s Sapiens International Corporation empowers insurers to succeed in an evolving industry.  The company offers digital software platforms, solutions and services for the property and casualty, life, pension and annuity, reinsurance, financial and compliance, workers’ compensation and financial markets.  With more than 35 years of experience delivering to over 450 organizations globally, Sapiens has a proven ability to satisfy customers’ core, data and digital requirements.  (Sapiens 28.01)

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9.3  Gilat Launches 5G-Ready Satellite Backhaul Solution

Gilat Satellite Networks announced the launch of a new powerful backhaul solution designed to deliver the high-performance required for next-generation services.  As the leaders in LTE satellite backhaul, Gilat is now further enhancing and optimizing its SkyEdge II-c multi-service platform for 5G capacity, service and network availability targets, to deliver new levels of satellite connectivity in multiple dimensions from cellular nodes and to the most demanding applications.  The enhanced SkyEdge II-c solution enables 2.5 Gbps throughput from a single forward carrier and 1 Gbps throughput from associated return channels, enabled by highly efficient DVB-S2X wideband transmission in the forward direction and Gilat’s innovative LDPC fast adaptive return access scheme.

The SkyEdge II-c solution supports the full suite of current modems and capabilities, including GTP acceleration, Mobile-Edge Computing (MEC) and carrier grade Layer-2 and Layer-3 with GTP acceleration.  In addition, the SkyEdge II-c satellite modem product family is now being extended with its newest addition, Capricorn-PLUS. This new modem is equipped with a powerful processing engine that supports new levels of users and services density with up to 100,000 PPS as well as higher throughputs and efficiencies with up to 100 Mbps throughput on the MF-TDMA return channel.  Moreover, the SkyEdge II-c scalable, cloud-based architecture offers a migration path to Software Defined Networking (SDN) and Network Functions Virtualization (NFV) with software upgrade, making it a future proof solution.

Petah Tikva’s Gilat Satellite Networks is a leading global provider of satellite-based broadband communications.  With 30 years of experience, they design and manufacture cutting-edge ground segment equipment, and provide comprehensive solutions and end-to-end services, powered by their innovative technology.  Delivering high value competitive solutions, our portfolio comprises of a cloud based VSAT network platform, high-speed modems, high performance on-the-move antennas and high efficiency, high power Solid State Amplifiers (SSPA) and Block Upconverters (BUC).  Gilat’s comprehensive solutions support multiple applications with a full portfolio of products to address key applications including broadband access, cellular backhaul, enterprise, in-flight connectivity, maritime, trains, defense and public safety, all while meeting the most stringent service level requirements.  (Gilat 24.01)

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9.4  Perception Point Integrates With Box to Enhance Security and Threat Detection

Perception Point announced its integration for cloud content management platform, Box.  Perception Point’s technology will be offered as an added service that can be deployed in only one click onto Box’s solution, providing additional threat detection for Box customers.  Collaboration platforms have become a target for highly sophisticated malware distribution, and once malicious content is on such a platform, it can easily infect any user who has access.  Perception Point’s agile cloud solution prevents malicious files and URLs from being uploaded, downloaded, or utilized to infect previously clean files shared, providing an added layer of protection on top of the advanced security controls built into Box’s platform.

Tel Aviv’s Perception Point is powered by several decades’ experience successfully developing and implementing innovative cybersecurity solutions for organizations worldwide.  With their proven R&D leadership formerly playing key roles within the elite Israeli Intelligence Corps, they are committed to building agile cybersecurity solutions for the digital-first enterprise.  Their mission is to protect all content exchanges across the enterprise, through any channel, with one extremely easy to deploy cloud solution.  (Perception Point 24.01)

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9.5  Telrad Networks LTE Selected by Evertek for Network Upgrade

Telrad Networks announced that Evertek, Inc., a Wireless Internet Service Provider (WISP) in Iowa, has selected the Telrad LTE solution to upgrade their wireless network. The new LTE upgrade will help better serve existing subscribers with higher throughput packages, as well as improve coverage to reach more customers in rural areas.

Evertek is using the Telrad high-power BreezeCOMPACT 3000 base station in the 2.5 GHz BRS spectrum.  Newly deployed sites are using the LTE solution while existing infrastructure is being upgraded.  A majority of Evertek subscribers are residential, the company also serves many businesses and supports public safety, with connectivity to police cars, and precision farming, with equipment-monitoring and automation.

Lod’s Telrad Networks is a global provider of innovative LTE telecom solutions, boasting over 300 4G deployments in 100 countries.  Telrad stands at the forefront of the technology evolution of next-generation TD-LTE solutions in the sub-6 GHz market.  Since 1951, the company has been a recognized pioneer in the telecom industry, facilitating the connectivity needs of millions of end-users through operators, ISPs and enterprises around the world.  (Telrad Networks 29.01)

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9.6  Ethernity Networks Releases Affordable, All-Programmable 100G ENET vRouter

Ethernity Networks introduced its ENET vRouter network appliance, enabling 100Gbps routing functionality in inexpensive commercial off-the-shelf (COTS) servers. It is ideal for communications service providers, internet service providers and enterprise data center administrators designing next-generation programmable networks.  The ENET vRouter combines Ethernity’s comprehensive embedded vRouter software with its ACE-NIC100 FPGA SmartNIC and cost-efficient COTS servers to deliver a carrier-grade switch/router appliance, thereby utilizing existing investment in data center hardware.  By simply plugging Ethernity’s solution into COTS servers, operators and network administrators can avoid heavy investment in purchasing rigid proprietary router equipment and gain an all-programmable switch/router platform.

Moreover, Ethernity’s FPGA-based data plane acceleration within the ENET vRouter appliance fully offloads networking and security functions from the server CPUs, which are better appropriated to the control plane.  This not only offers enhanced networking performance, but also optimizes CPU utilization by freeing the server CPUs to handle user applications.

The ENET vRouter network appliance is available in two convenient ordering options: Ethernity vRouter software and a pluggable ACE-NIC100 SmartNIC, for installation in third-party COTS servers, and a ready-to-use turnkey appliance that includes a server with the vRouter software and ACE-NIC100 SmartNIC installed.  The ENET vRouter is currently under evaluation by multiple potential Asian customers.

Lod’s Ethernity Networks provides innovative software-defined networking and security solutions on programmable hardware for accelerating telco/cloud networks.  Ported onto any FPGA, Ethernity’s software offers complete data layer processing with a rich set of networking features, robust security, and a wide range of virtual functions to optimize your network.  Their ACE-NIC smart network adapters, ENET SoCs, and turnkey network appliances offer best-in-class all-programmable platforms for the telecom, cloud service provider, and enterprise markets.  (Ethernity Networks 29.01)

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9.7  SuperCom Launches National Electronic Monitoring Project in Estonia

SuperCom secured a contract with the national government of Estonia to deploy its Pure Security Electronic Monitoring (EM) Suite with an emphasis on house arrest.  This project was formally awarded in November 2018 through a formal bid process and the contract execution has just been approved allowing for project launch.  This nationwide program with the country’s Ministry of Justice will cover all cases requiring house arrest within the country, with a simultaneous unit count starting at 200 and an option to grow up to 400.  SuperCom has already received the initial order and follow-on orders may continue over time.  The project will be billed at a per-unit daily rate and generate steady-state recurring revenues accordingly.  The total duration of the contract is up to 4.5 years for an estimated contract size of $1.35 million if the simultaneous unit count stays close to the starting count of 200, but this number may grow together with the simultaneous unit count.

SuperCom’s PureSecurity Suite is a best-of-breed electronic monitoring and tracking platform, which contains a comprehensive set of innovative features, including smart phone integration, secure communication, advanced security, anti-tamper mechanisms, fingerprint biometrics, voice communication, unique touch screens and extended battery life.

Since 1988, Herzliya’s SuperCom has been a global provider of traditional and digital identity solutions, providing advanced safety, identification and security solutions to governments and organizations, both private and public, throughout the world.  Through its proprietary e-government platforms and innovative solutions for traditional and biometrics enrollment, personalization, issuance and border control services, SuperCom has inspired governments and national agencies to design and issue secure Multi-ID documents and robust digital identity solutions to its citizens and visitors.  (SuperCom 30.01)

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9.8  QuantLR & PacketLight Secure Next-Generation Networks Against Cyber Attacks

QuantLR and PacketLight Networks will work together to form a more secure optical network by jointly developing an integrated QKD solution.  The announcement came following the recent signing of a Letter of Intent between the two companies, where they will cooperate and share information required for the development of the QKD solution as part of Layer 1 encryption of fiber optic link.  The intention is to demonstrate the solution at the site of one of PacketLight Networks’ customers.

QuantLR is an OurCrowd Labs/02 seed stage incubator portfolio company.  Based in Jerusalem, QuantLR aims to provide versatile low-cost quantum cryptographic solutions based on quantum key distribution (QKD) technology to protect communicated data.  This solution is proven to provide the ultimate security from any attack by contemporary or future, classical or quantum-based computers.  QuantLR’s solutions will be presented to the market as a component embedded within 5G communication hardware vendor products, and as stand-alone products. QuantLR is a spin out of Yissum, the technology transfer company of the Hebrew University.

Tel Aviv’s PacketLight Networks offers a suite of leading 1U metro and long haul CWDM/DWDM and OTN solutions, as well as Layer-1 optical encryption for transport of data, storage, voice and video applications over dark fiber and WDM networks.  PacketLight provides the entire optical layer transport solution within a highly integrated compact platform, designed for maximum flexibility, easy maintenance and operation, with real pay-as-you-grow architecture, while maintaining a high level of reliability and low cost.

Jerusalem’s OurCrowd Labs/02 seed stage incubator portfolio focuses on cutting-edge technology that will shape the future in innovative areas including AI, deep learning, autonomous transportation and smart cities.  OurCrowd Labs/02 is backed by OurCrowd, Motorola Solutions, Reliance Industries and Yissum, the technology transfer company of the Hebrew University.  The incubator is part of the world famous Israeli incubator program administered by the Israel Innovation Authority.  (OurCrowd 31.01)

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9.9  Banco del Bajio Selects Guardicore Centra Security Platform To Protect Data Center

Guardicore announced that Banco del Bajio (BanBajio), one of Mexico’s largest commercial banks, is deploying Guardicore’s Centra Security Platform to provide advanced data center security.  BanBajio is a financial institution that offers all products and services with integrated banking solutions for individuals and corporations.  Recognized for its services in the Small and Medium and Corporate Businesses sector, BanBajio is one of Mexico’s largest commercial banks with a business model focused on providing credit facilities to corporate clients and is one of the fastest growing local banks in Mexico.

Guardicore’s flagship product, the Centra Security Platform, is a comprehensive data center and cloud security solution that delivers the simplest and most intuitive way to apply micro-segmentation controls to reduce the attack surface and detect and control breaches within east-west traffic.  It provides deep visibility into application dependencies and flows and enforcement of network and individual process level policies to isolate and segment critical applications and infrastructure.

Tel Aviv’s Guardicore is an innovator in data center and cloud security focused on delivering more accurate and effective ways to protect critical applications from compromise through unmatched visibility, micro-segmentation and real-time threat detection and response.  Developed by the top cyber security experts in their field, Guardicore is changing the way organizations are fighting cyber attacks in their data centers.  (Guardicore 04.02)

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9.10  AudioCodes & Jabra Deliver Unified Communications and Contact Center Voice Solutions

AudioCodes and Denmark’s Jabra, part of the GN Group and a leading developer and manufacturer of communications and sound solutions, announced a partnership aimed at addressing Microsoft intelligent communications, including Microsoft Teams and Skype for Business, and contact centers environments.  The partnership is designed to assist enterprises in accelerating deployment and user adoption of IP-based unified communications and contact center solutions.

The partnership between Jabra and AudioCodes combines AudioCodes’ One Voice for Microsoft 365 comprehensive suite of devices, voice networking elements and management solutions with Jabra’s broad portfolio of professional headsets and speakers to create an unmatched offering of products and solutions for the enterprise voice market.  The two companies are aligned with regard to field and business operations to maximize business potential.  On the technological front, Jabra’s devices have been integrated with the AudioCodes One Voice Operations Center (OVOC), delivering a single pane of glass which enables IT managers to manage and monitor all end user voice devices simply and efficiently.

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 04.02)

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10.1  The Composite State of the Economy Index for December 2018 Increased by 0.2%

The Bank of Israel’s Composite State of the Economy Index for December 2018 increased by approximately 0.2%, attesting to continued expansion of the economy at the long-term growth rate.  The Index was positively impacted by the increase in consumer goods imports and by the increase in the job vacancy rate in December, as well as by increases in retail trade revenue and in services revenue in November.  In contrast, the declines in the import of manufacturing inputs in December and the decline in industrial production in November moderated the Index’s rate of growth this month.  The Index readings for previous months were revised downward, due in part to the downward revision in the job vacancy rate for October and November.

The Composite State of the Economy Index increased by 3.1% in 2018 relative to 2017, similar to the GDP growth rate.  The decline in the growth rate of the index compared to the rate the previous year (4.2%) reflects the economy’s difficulty in increasing the volume of production through an increase in the number of workers, since the unemployment rate is low and the economy needs to provide a larger share of the demand from outside sources.  The development of the components of the index is in line with this view.  The rate of increase in employee posts decline to 1.5% in 2018, similar to the growth rate of the primary working-age population (compared with 2% in 2017), while the import components increased more rapidly this year than in the previous year.  (BoI 27.01)

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10.2  Israeli Cybersecurity Companies Raised a Record $1 Billion in 117 Deals in 2018

Israeli cybersecurity companies and startups raised over $1 billion equity investment in 117 funding rounds in 2018, setting a new record and marking a 47% increase from 2017, according to a new report on Israel’s cyber sector by Start-Up Nation Central (SNC).  The total sum of $1.19 billion in investments constitutes nearly 20% of the overall cyber investments made worldwide in 2018, second only to the US, according to the report.

The year saw more early and late-stage investment deals, a trend that is evident across the general Israeli tech sector, with the median size of investment at $6 million, compared to $3.5 million in 2017.  Like the rest of early-stage Israeli tech, fewer cybersecurity startups are being established every year as the industry matures and companies stay private for longer periods before exiting.

There were just three investment deals of $50 million or more in 2018, which accounted for less than 15% of the total amount invested for the year, as opposed to three major deals that accounted for 40% of the total in 2017.  The investment rounds included Claroty, which raised $60 million, Exabeam, which raised $50 million, and KELA Group, which also raised $50 million.  Notable exits for 2018 included the acquisition of Dome9 Security by Check Point for a reported $179 million and that of SECDO by Palo Alto Networks for a reported $100 million.

There was also increased participation of non-Israeli investors in the cyber sphere in 2018. Foreign investors, a majority American, were dominant players in the industry, participating in 65% of the investment deals, SNC said.  By the end of 2018, according to the report, there were 450 active cybersecurity companies in Israel, 60 of them founded in the past year (compared to 75 in 2017 and 82 in 2016).

The data protection and privacy subsector was the fastest growing subsector in cybser-security, according to the report which indicated that “the growing demand for privacy, plus a vocal public debate and the need for GDPR compliance, are attracting entrepreneurs and investors to next-generation solutions including AI-based data governance solutions, and advanced cryptography.”

There were also significant initiatives and collaborations in the cybersecurity industry, including the establishment of a new $85 million fund by cybersecurity think tank and foundry Team8, backed by Walmart, Softbank, Scotiabank, Barclays, and Airbus, among others; and the partnership between the New York City Economic Development Corporation (NYCEDC), Tel Aviv startup network SOSA and Israeli VC Jerusalem Venture Partners to launch cybersecurity hubs in New York City.  (SNC 28.01)

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11.1  ISRAEL:  Israel Ratings Affirmed At ‘AA-/A-1+’; Outlook Stable


We expect Israel’s economic growth will remain resilient in the face of softer global growth.

Despite a widening budgetary deficit in 2019, we believe that the new government will ensure net public debt remains below 60% of GDP.

Heightened external security risks emanating from Syria and Iran will weigh on the country’s creditworthiness.

We are affirming our ‘AA-/A-1+’ratings on Israel.

The outlook is stable.

Rating Action

On 1 February 2019, S&P Global Ratings affirmed its ‘AA-/A-1+’ long- and short-term foreign and local currency sovereign credit ratings on Israel.  The outlook is stable.


The stable outlook on Israel balances external and security risks against Israel’s solid economic growth prospects.  The outlook also factors in our view that Israel’s net creditor position will remain about 35% of GDP over our forecast horizon, providing the economy with substantial buffers in the event of an external shock.

We could take a negative rating action if Israel’s economic, balance-of-payments, or fiscal performance weakened markedly beyond our forecast, or if security risks increased substantially.

A positive rating action could stem from strong fiscal consolidation efforts that result in a material reduction in net general government debt or interest payments, or a major and unexpected improvement in the Middle East’s security environment.


The ratings are supported by Israel’s prosperous and diverse economy, strong external balance sheet, and flexible monetary policy framework.  The ratings are constrained by Israel’s moderately high public debt burden and, in our view, significant security and geopolitical risks.

Institutional and Economic Profile: A wealthy economy and effective institutions support prudent macroeconomic policies

We project Israel’s diversified, competitive, and resilient economy will experience average growth of about 3% over the medium term.

We do not expect major policy shifts after the new government is formed following the early election in April 2019.

High exposure to external and domestic security risks weigh on the country’s creditworthiness.

Israel’s economy continues to thrive and benefit from diversification, with high-value-added manufacturing and services sectors, especially in the information technology industry.  The information and communication sector contributes over 8% of the gross value added, and scientific and technical activities about 3%.  This is underpinned by sizable expenditures on research and development, exceeding 4.5% of GDP on average–the highest among member countries of the Organization for Economic Co-operation and Development (OECD).

We expect Israel’s economy will expand by slightly over 3% on average through 2022.  Growth will stem from private consumption on the back of a strong labor market, continued corporate investment activity (not least in the hi-tech sector), and the robust performance of services exports.  We expect growth will benefit from an additional boost in 2020 as a result of the large Leviathan gas field and Intel projects coming online, and then will moderate to 3% over the long term, broadly in line with labor and productivity trends.  Even though we revised our growth forecast for 2019 to 3.2% from 3.5% owing to expected moderation of Israel’s key trading partners’ economic growth, we note that levels still remain elevated by OECD standards and that the projected growth comes on top of Israel’s already vigorous economic performance.  The economy has not faced recession in the last 15 years, and GDP in U.S. dollar terms has increased by over 55% since 2010, with the unemployment rate remaining at historical lows.

Israel’s domestic political situation remains highly fragmented, resulting in the break-up of the existing coalition in late 2018 and a subsequent snap election due in April 2019.  Although it is difficult to forecast the next government’s composition, public opinion polls suggest only a modest change is expected, if any.  Even if election outcomes trigger elevated tensions regarding the government’s formation, and result in challenging budget discussions in late 2019, we note that political fragmentation in the past has not undermined Israel’s commitment to prudent macroeconomic policies, which remains included in our base-case assumptions.  By international comparisons and based on policy outcomes, we view institutional and governance structures in Israel as generally effective.

That said, political polarization could constrain the government’s capacity to address longer-term structural issues in the economy and society.  These include excessive red tape, infrastructure gaps, weak labor market participation and poor skills of some social groups (mainly Haredi men and Arab-Israeli women), and housing-related matters.  We believe that domestic political volatility–exemplified by recent amendments to basic laws and proposals to reshape the Supreme Court’s powers–will likely stay elevated over the rating horizon.

In addition, Israel is exposed to persistent geopolitical risks.  The announced withdrawal of the U.S. forces from Syria, Israel’s neighbor on the northern border, and the Syrian regime’s consolidation of its position, could lead to elevated risk of open military tensions with Iran and Iranian-supported Hezbollah and other militant groups actively involved in Syria.  Russian support for the Syrian regime complicates the issue further, despite Russia and Israel maintaining broadly cordial relations.

Even though we expect the U.S. administration will stay committed to supporting Israel if regional security risks heighten, any significant armed conflict could adversely affect the ratings on Israel, since it would likely undermine business confidence and weaken economic growth potential, or could result in immediate budgetary pressures.

Flexibility and Performance Profile: Fiscal performance in 2019 will weaken, but risk to fiscal stability is contained

Past pro-cyclical fiscal decisions will likely widen fiscal deficits in 2019 to above 3% of GDP, but net public debt is likely to stay below 60% of GDP.

Israel’s substantial net external asset position remains a key credit strength.

Monetary policy effectiveness is high, with real estate price dynamics posing a key challenge.

Exceptionally favorable macroeconomic conditions, one-off fiscal revenues, and exchange-rate appreciation have supported Israel’s public finances in recent years.  In 2015-2017, the government exceeded its deficit targets, setting public debt on a downward trend.  Despite a strong headline performance, however, the underlying fiscal stance has been pro-cyclical, with a number of tax and expenditure measures contributing to widening structural deficits.  With the business cycle now maturing, we expect general government deficits will increase somewhat in 2019 to 3.3% of GDP, resulting in a modest pick-up of gross public debt as a share of GDP.

In our view, Israel’s weaker headline performance does not pose risks to macroeconomic stability.  This is because government debt is now much lower than in the past, having declined by over 10% in the last 10 years to an estimated 61.1% of GDP in 2018.  At the same time, given elevated security risks, the Israeli government might require larger fiscal buffers relative to similarly rated peers. In this respect, one of the challenges facing the new government will be to re-establish the declining trajectory of public debt, while at the same time keeping cost containment measures growth-friendly.

Although downside risks remain, especially if nominal GDP growth is weaker then we anticipate, our base-line scenario assumes that headline fiscal deficits will decline to less than 3% of GDP from 2020.  We base this view on:

-Political consensus on containing public debt, resulting in, we assume, a reasonable degree of fiscal discipline, anchored by compliance with existing fiscal rules (i.e. the “numerator” rule) and a multiyear spending agreement with the defense ministry (the source of fiscal slippages in the past); and

-Expected proactive fiscal consolidation measures by the new government that would accommodate new spending proposals, including those related to the recently announced goal of enhancing public infrastructure (i.e. long-term national infrastructure strategy), without compromising fiscal stability.

Accordingly, we expect net general government debt (that is, gross debt net of liquid government assets, mainly in the form of deposits at the Bank of Israel [BOI; the central bank]) will stay below 60% of GDP through our forecast horizon.

Strong export performance and the ongoing development of Israel’s offshore natural gas fields, with significant export capacity, support the country’s strong external profile.  Although we expect Israel’s current account performance will weaken somewhat due to the strength of domestic demand and real effective exchange rate appreciation, which will weigh on the trade balance, we assume that resilient high-value-added services exports will keep the current account in surplus.  This will enhance Israel’s position as a net creditor versus the rest of the world, with liquid external assets exceeding gross external debt by over 50% of current account payments.  Israel’s net external asset position is in the 15 strongest from 133 sovereigns we rate globally.  These dynamics also contain the country’s gross external financing needs (payments to nonresidents), indicating low dependence on external financing.

We consider Israel’s monetary policy flexibility a credit strength.  With the output gap closing and unemployment rate at historical lows, headline inflation since mid-2018 has been at the lower end of the BOI’s 1%-3% target.  This prompted the central bank to hike its policy rate last November for the first time since 2011.  At the same time, the BOI’s policy stance remains accommodative, not least due to the need to counter the strength of the shekel to maintain the competitiveness of Israel’s exports.  In recent years, BOI has also intervened in foreign exchange markets, over and above its commitment to purchase foreign currency to offset the impact of domestic natural gas production on the balance of payments.  Therefore, we view the exchange rate regime as a managed float, which somewhat hampers monetary policy flexibility, in our view.

Despite some weakening of the shekel against the U.S. dollar in 2018 (driven in particular by higher rates in the U.S.), we expect Israel’s strong fundamentals, namely its current account surpluses, strong net foreign direct investment inflows, and high GDP growth rates will likely lead to renewed shekel appreciation over the long term.  The exchange rate will continue to pose pricing risk, adding to the need for continued innovation and reduction of regulatory pressures for local businesses to remain competitive in external markets.

One of the key challenges to monetary policy continues to be rising house prices.  Real house prices have increased by over 100% since the end of 2007.  The BOI’s past attempts to dampen the housing market by raising interest rates delivered limited results.  Thereafter, the BOI shifted focus to a series of macro-prudential measures targeted at the mortgage market.  More recently, the government has implemented comprehensive measures to cut speculative demand and increase the housing supply, including freeing up more land for development, changing the tendering criteria, allowing foreign presence in the construction market and accelerating processes for construction permissions.  Given capacity constraints, relatively low productivity in the construction industry, and continued growth in demand, addressing the supply shortage might take time, however.

Israeli banks’ exposure to the local real estate sector, mainly to residential mortgage loans, has increased in recent years.  We estimate the banking system’s current exposure to loans for construction, commercial real estate and mortgages at over 45% of total bank loans compared with 32% 10 years ago.  The housing market seems to have cooled off, with real housing price growth slowing in 2017-2018 to below an estimated 2%, from elevated levels of 6% in 2012-2016.  At the same time, the combination of supply constraints and economic and population growth will continue to drive moderate house price appreciation, in our view.  Even though the tightening of macro-prudential measures has reduced systemic risks to Israel’s banking industry, any abrupt correction in house prices could still weigh on the economy.  (S&P 01.02)

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11.2  ISRAEL:  Vertex Israel and TLV Partners the Most Active VC Funds in 2018

On 29 January, IVC Research Center, in cooperation with the Israeli law ‎firm APM & Co., released its 2018 Most Active Venture Capital Funds Annual Report, ‎which analyzes first investments in Israel since 2013.‎

Vertex Israel ($960m under management) and TLV Partners ($267m) ranked at the top of ‎the 2018 Most Active Funds list with 11 first investments each.  Vertex also ranked first in ‎‎2017, with 12 first investments. Both firms deployed capital from two active funds, Vertex ‎IV and TLV I from vintage year 2016 and Vertex V and TLV II from 2018.‎

Three VC funds ranked second with 9 first investments each: CE Ventures from Hong Kong, ‎active in Israel since 2015, Next Gear, an Israeli Micro-VC which focuses on early stage ‎smart mobility companies and MizMaa, another Hong Kong based fund.‎

Four funds shared third place with 8 first investments each: Israeli Pitango; RIO, a Brazilian ‎fund; TAU Ventures, Tel Aviv University’s Micro-VC fund; and Silicon Valley based ‎Micro-VC Upwest Labs.‎

Table: Most Active Venture Capital Funds in Israel – 2018

‎1.‎         Data are based on the IVC-Online database ( and information provided by participating VC funds

‎2.‎         Ranking includes Israeli and foreign VC funds

‎3.‎         Investments include Israeli high-tech companies only. Excluding investments by VC funds in companies from incubators or ‎accelerators owned by these funds.‎

‎4.‎         The total capital managed refers to the total capital managed by the management company

According to APM & Co. Chairman, Adv. Yonatan Altman: “Following the trend that has ‎intensified in recent years, it appears that 2019, similarly to 2018, will be characterized by ‎the continued shift of investments from tradable to non-tradable assets‏.‏‎  Along with the ‎development of the market, it is evident that investment areas, as well as groups of ‎managers, become more diverse and distinct.  Venture capital and private equity funds ‎continue to be formed both as specialized funds and as general funds.  There are plenty of ‎well-run funds for any investment stage.”  According to Altman, high-tech activities ‎penetrate all industries, including the traditional ones, and offer different opportunities to ‎all.‎

Altman points out that: “The financing funds are also undergoing an accelerated process of ‎development and diversification.  Innovative financing instruments, alongside old financing ‎funds, are currently being established, among other things, due to the need to increase the ‎non-bank financing component‏.‏‎  The worlds of real estate and infrastructure in Israel and ‎abroad are also producing activities that are growing, both in traditional and less traditional ‎areas‏ .‏‎ The point of convergence between financial resources and management is the ‎combustion engine of the funds industries in Israel and abroad.  Consequently, we believe ‎that 2019, which has already started by storm, will be a good year for the industry, investors, ‎and managers.”‎

According to IVC’s data, in 2018, venture capital funds slowed their first investment activity ‎‎(503 investments) compared to the 2017 record (553 investments).  Israeli funds first ‎investments decreased 17%, following an active 2017, which marked a five-year record.  ‎Foreign VC first investment activity has been decreasing since 2015, with a minor decline of ‎‎4% in 2018.  In keeping with the trend of the past few years, in 2018 foreign VC funds ‎maintained their share of about 60% of total first investments and Israeli funds captured ‎almost 40%.‎

Chart 1: First Investments in Israeli High-Tech 2013-2018

Israeli VC funds have ranked first for the past five years, with one exception in 2015, when ‎an early-stage Japanese VC, Samurai Incubate, came in first with 15 first investments—a ‎record for foreign VCs for the entire period.  The record number of first investments by ‎Israeli VCs decreased from 17 in 2013 to 11 in 2018.  The record number of foreign ‎investments has also declined in the past three years.‎

Marianna Shapira, Research Manager at IVC Research Center, says: “IVC has seen a number ‎of trends over 2018 which might continue into the beginning of 2019: the Israeli high-tech ‎market emerges as more attractive to foreign investors over the years, especially VC funds. ‎ Their numbers might grow, thereby driving first investments in Israeli startups, since quite a ‎few foreign VCs establish Israeli-dedicated funds.”  According to Shapira: “While the ‎majority of funds originate in the US and Asia, European VCs lag behind, as Israeli tech ‎companies are mostly USA market oriented.”‎

Shapira adds that: “The software sector is the clear favorite in capital investments, it is even ‎more evident among VC funds, as first investment shares in this sector grew from 29% in ‎‎2013 to 54% in 2018.  The cyber security technology vertical is leading globally, and Israeli ‎companies in this field will continue to attract due attention in raising capital through 2019.”‎

According to IVC data, while the number of active foreign VCs has increased to a record ‎level in 2018 (211 VC funds), their average first investment has decreased from 1.72 in 2014 ‎to 1.45 in 2018.  In comparison, the average first investment for Israeli VC funds in 2018 is ‎nearly 3.5, similar to their level of activity for the past 5 years.‎

Analogous to the capital raising analysis of 2018, early stage companies (seed and R&D) ‎attracted 17% less first investments compared to 2017, but still lead all first VC investments ‎with 58% share.  First investments in mid-stage companies (up to $10m annual revenues) ‎grew by additional 5%, capturing the largest share to date of 35% in 2018, following a 20% ‎upsurge in 2017.‎

In 2018, first investments in seed rounds decreased noticeably: 356 investments (lowest ‎since 2014) accounted for 33% of all investments (lowest since 2013).  According to IVC’s ‎analysis, the major decrease was among foreign VC funds, which made only 77 first ‎investments in seed rounds, a drop of 25% from historical ranges of 90 to 113 first ‎investments in the four previous years.  A rounds were preferred by all VC funds in 2018, ‎capturing a 38% share of total first investments.‎

IVC Research Center is the leading provider of data and analyses on Israel’s high-tech, venture capital and ‎private equity industries. Its information is used by all key decision-makers, strategic and financial ‎investors, government agencies and academic and research institutions in Israel.‎

APM & Co. is a renowned Israeli law firm with a robust legal practice. Established in 1956, the firm draws ‎on six decades of excellence, to offer an up-to-date innovative approach to the practice of law. The firm ‎provides a comprehensive range of legal services to an Israeli and international client base that spans ‎across all business sectors and stretches to Australia, India, China and Singapore.‎  (IVC 29.01)

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11.3  SYRIA:  Race for Reconstruction Heats Up as Syrian War Winds Down

Maysam Bizaer posted on 1 February in Al-Monitor that as the conflict in Syria winds down and reconstruction begins, Iran is racing alongside other friends and rivals for a role in the future Syrian economy.

Nearly eight years after the start of the Syrian conflict, forces loyal to President Bashar al-Assad — backed by Iran, Russia and Lebanon’s Hezbollah — have reclaimed control over most territories once held by the rebels.  As one of the main allies of Assad, who received Iranian aid in the form of military advisers, manpower and billions of dollars in credit lines to keep Syria’s economy afloat, the Islamic Republic is now trying to widen its role in the war-torn country as reconstruction estimated to cost up to $400 billion begins.

Speaking to Al-Monitor, David Butter, an associate fellow at Chatham House’s Middle East and North Africa program, said, “The main Iranian economic contribution has been through the provision of crude oil at an average of about 50,000-60,000 barrels per day since 2013 on a credit basis.  This would work out at about $6 – 7 billion.”

With the Syrian war nearing its final stages, Iranian officials both from the government and the military ranks have stressed the need to reap economic benefits from the costs they have shouldered.  In this vein, First Vice President Eshaq Jahangiri visited Damascus on 28 January at the head of a senior economic delegation.  During the two-day visit, Iran and Syria signed 11 agreements and memoranda of understanding that included a “strategic long-term economic cooperation agreement” spanning two decades.  The key agreements as reported by the Iranian media focus on industry, trade and agriculture, while the memoranda of understanding relate to education, investment, railways, housing and public services, among other sectors.

At the press conference held after the signing of the accords, Jahangiri noted that Iran and Syria have reached “very important agreements on banking cooperation.”  He added that Iran “will be by Syria’s side in the reconstruction phase as we have been by its side in fighting terrorism.”  Syrian Prime Minister Imad Khamis described the agreements as “unique” and added that Iranian companies wishing to invest in Syria will benefit from “legal and administrative facilities.”

But local and foreign experts alike are not very optimistic about the impact of the agreements.  “The actual Iranian economic role will be limited because of Iran’s financial constraints and the reluctance of the Syrian side to give Iranian investors too much control, as has been the case with the blockage of the mobile phone license and the deals signed with Russia for phosphate mining deals,” Butter told Al-Monitor, referring to a memorandum of understanding that Syria and Iran signed in January 2017.

“Although these kinds of agreements can facilitate trade and business between countries, without proper infrastructure such as transportation or banking ties, it is merely a symbolic act that cannot change the realities on the ground,” Iranian businessman Ali Shariati told Al-Monitor.  This view is shared by other experts. “In my view, this announcement was mainly political, intended to show that Gulf Arab investment [in Syria] will not be at the price of downgrading ties with Iran.  The Syrian regime will try to get better terms for aid and investment through playing off Gulf Arabs, Iran and Russia against each other,” Butter argued.

Although the details of the agreements signed in Damascus remain scant, repairs of several power plants across Syria, construction of a 540 MW electricity generation station in Latakia — worth over €400 million ($460 million) — and rehabilitation of the ports of Tartus and Latakia are among the projects that have been awarded to Iranian companies.  According to Khamis, the wide-ranging deals with Iranians also include dozens of projects in the oil and agriculture sectors and the opening of a permanent fair for Iranian goods in the Syrian capital.

Syria’s Economy

Nearly eight years of war in Syria have cost its economy billions of dollars.  According to IMF estimates, the country’s economy shrank over 75% between 2010 and 2015, falling from roughly $60 billion to an estimated $14 billion.  Syria’s imports have plummeted from over $18 billion in 2011, reaching an all-time low of $4 billion in 2016.

The conflict has affected Iran alongside other trade partners of Syria. Iran’s non-oil exports to the country reached an all-time high of over half a billion dollars in the Iranian calendar year ending 20 March 2011.  That figure slid for years before rising again since 2015.

While Iran’s non-oil exports to Syria might not be as significant compared to that of other countries such as Turkey, China and Russia, it should be noted that the total value of Iranian exports to Syria is likely much higher, given that weapons and other defense exports are not reflected in its export data.  It should also not be overlooked that Iran’s share of Syria’s total imports has increased from 2.9% in 2010 to over 5.43% in 2017.

Lack of secure roads and railways, proper banking ties or regular flights to and from Damascus and the high cost of transportation via shipping lines are just some of the main obstacles that many believe have hindered the expansion of economic ties between Iran and Syria.

“Despite all the costs we’ve paid in Syria over the past years, we still don’t have any significant share in Syria’s trade due to many barriers,” Shariati the businessman told Al-Monitor.  “We have a free trade agreement with Syria, but it is not implemented.  Getting a license from Syrians to export our goods is nearly impossible since we’ve to pay [a bribe] to every involved government body to secure permits.  That would raise the import tariffs to as high as 50% and literally makes the products too expensive,” he added.

Shariati believes that the Iranian private sector might need to alter its strategy.  “Instead of focusing on large-scale and infrastructure projects, which are harder to get and have a much greater risk, we should support the [Fast-Moving Consumer Goods] industries such as food, agriculture, cosmetic, soap or detergents among others,” Shariati said.

Although the full extent and feasibility of the deals Iran struck with Syria during Jahangiri’s recent visit to Damascus remain cloudy, it is clear that Syria is a much higher priority when it comes to security — at least for some of those in the Iranian ruling system.  “The legal presence of the Islamic Republic in Syria is upon request by Syrian officials.  Our presence is not for financial gains. Relations between the Islamic Republic and Syria have enjoyed the highest political and economic level over the past four decades,” Ahmad Dastmalchian, Iran’s former ambassador to Lebanon and Jordan, told Al-Monitor.  “In the midst of geo-strategic and geopolitical developments in the region, a new chapter in relations between the two countries will begin which could have profound effects in the region.  Now the conditions are ripe for Iran, Iraq, Syria and Lebanon’s Hezbollah — as the winners of the battle — to carry out their strategic partnerships.”

Maysam Bizaer is former editor in chief of the Iran Desk at for Press TV’s web division.  He has worked for various local media and has been a contributor for a number of foreign media outlets.  (Al-Monitor 01.02)

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11.4  KUWAIT: Staff Concluding Statement of the 2018 Article IV Mission

On 28 January 2019, the IMF released a Concluding Statement to their Article IV mission to Kuwait.

Higher oil prices in 2017–18 lifted growth and improved fiscal and external balances.  The uncertainty about their future though, as demonstrated by the recent drop, underscores the need to reduce Kuwait’s dependence on oil and save adequately for future generations.  Successfully tackling these challenges hinges on the emergence of a vibrant private sector that can create jobs for the large number of nationals joining the labor force over the next decade.  Ample financial assets, low debt, and a sound banking sector allow Kuwait to undertake the needed reforms from a position of strength and at a measured pace.

Against this backdrop, the authorities have taken welcome steps to contain government spending and boost private sector growth and job creation.  The key priority now is to build a national consensus around an equitable and well-sequenced package of measures to reform the high public wage bill, subsidies, and transfers; raise nonoil revenue and strengthen governance.  These steps would support fiscal consolidation while creating room and increasing the efficiency of spending on human and physical capital.  Promoting private sector-led growth and job creation for nationals requires lowering the high public-private wage premia, reducing the role of the public sector in the economy through privatization and public-private partnerships, and improving the business environment.

The IMF team highly values the candid discussions with the Kuwaiti authorities and expresses its gratitude for their hospitality and excellent cooperation.

Recent Macro-Financial Developments

1. Higher oil prices in 2017-18 lifted growth and the current account balance. Hydrocarbon output is estimated to have risen by 1.2% in 2018 following a contraction a year earlier. Buoyed by a confidence rebound and some fiscal loosening, non-oil growth has accelerated to 2.5%.  Thanks to higher oil prices, the current account balance moved back into surplus in 2017 (almost 6% of GDP), which further rose to an estimated 13.2% in 2018.  Inflation reached a multiyear low of 0.7% in 2018 due to weakness in housing rents, easing international food prices and a strengthening dinar.

2. While the overall fiscal balance has improved, the financing needs remain large. Higher oil revenues and investment income helped improve the FY17/18 overall balance to an estimated surplus of 8% of GDP. It is expected to reach almost 12% of GDP in FY18/19. However, fiscal financing needs – overall balance excluding investment income and compulsory transfers to the Future Generations Fund (FGF) – remained large at 12.5% of GDP in FY17/18.  Delays in the passage of a new debt law have rendered the government unable to issue debt since October 2017.  As a result, it has had to draw on the General Reserve Fund (GRF) assets for financing, including to pay for maturing debt.

3. Credit is recovering after a slow start in 2018. As the U.S. Federal Reserve raised its policy rate, the Central Bank of Kuwait (CBK) skillfully deployed various monetary policy instruments to maintain dinar’s attractiveness while helping support lending to the economy. For example, the CBK raised its repo rate several times, but kept the policy lending rate at 3%.  Private credit grew 3% year-on-year in November, supported by lending to households and the oil sector.  Government debt redemption in 2018 meant ample dinar liquidity, though some banks raised funding in international markets to boost foreign currency holdings.

4. The banking sector remains sound. Banks report high capitalization (CAR of 18%) and a rising return on assets (1.3% in September 2018). Asset quality has improved, with NPLs net of specific provisions falling to a historical low of 1.4% of gross loans.

5. Real estate is starting to recover and equity markets have outperformed regional peers. The monthly sales of investment and residential properties have rebounded since mid-2018. Kuwaiti stocks have outperformed other Gulf Cooperation Council (GCC) markets and market capitalization has grown, especially following the March 2018 announcement of Kuwait’s inclusion in the FTSE Russell Emerging Market Index.

Macro-financial Outlook and Risks

6. Medium-term macro-financial prospects are broadly favorable, having slightly improved compared to a year ago.

-Growth is expected to strengthen. The mission has assumed an average oil price of $57 per barrel in 2019–20, increasing to $60 per barrel over the medium term.  As capital project implementation accelerates, non-oil growth is projected to increase to about 3.5% in 2020.  The recent OPEC decision to cut production is expected to hold oil output to 2% growth in 2019, which could rebound to 2.5% in 2020 given the spare capacity. Inflation is expected to rise in 2019 – 20 to about 2.5% as the deflationary factors in 2018 unwind.

-The underlying fiscal position is projected to gradually improve over the medium term. The mission’s baseline scenario assumes the introduction of excises on tobacco and sugary drinks in FY2020/21 and a value-added tax (VAT) in FY2021/22, small increases in fees for government services, and stricter enforcement of eligibility rules for transfers.  As a result, the underlying fiscal position (non-oil fiscal balance excluding investment income) is projected to improve by 13.5%age points of non-oil GDP by FY2024/25.  However, the overall fiscal balance will deteriorate by almost 8.5%age points of GDP over the same period, mainly reflecting the projected decline in oil revenues in 2019.

-Gross financing needs will remain large. The authorities’ principal measure of fiscal balance – overall balance excluding compulsory transfers to the FGF and investment income – will average 13.5% of GDP deficit over the medium term.  This will give rise to gross financing needs of $127 billion over the next 6 years.  The mission’s baseline assumes that parliament will approve the new debt law, allowing borrowing to resume in FY19/20.  If the approval is delayed, the government will have to solely rely on the GRF for financing.  Continued fiscal consolidation will be needed to reduce financing needs over the medium term.

Credit is expected to accelerate. As growth recovers, and capital projects come on stream, credit growth should pick up, supported by ample banking sector liquidity and the recent easing of lending limits on personal loans.

7. A sustained drop in oil prices and delays in reforms are the main sources of risk. Oil prices could decline if trade tensions were to heighten and global growth were to weaken. A sustained drop in oil prices would generate unfavorable macro-financial dynamics, with twin deficits, large financing needs, and tightening credit conditions with asset quality deterioration.  Delays in fiscal and structural reforms could slow growth and increase fiscal deficits at a time when the global environment is becoming more challenging and financial conditions have tightened.  Should investors’ appetite for exposure to Kuwait wane under these conditions, the government and banks could face higher funding costs and rollover risks.  Should these risks materialize, Kuwait could draw on its large financial assets to meet its fiscal financing needs while mitigating the impact on the financial sector and the real economy.  Heightened security tensions and a challenging geopolitical environment in the region are an additional source of risk that could dampen confidence, investment and growth.

Policy Discussions

A. Bolstering Long-term Fiscal and Macroeconomic Sustainability

8. The mission supports the authorities’ efforts to strengthen the fiscal accounts. The mission considers that the fiscal adjustment should be primarily expenditure-based, supported by non-oil revenue mobilization. Government spending as a share of GDP in Kuwait rose fastest in the GCC during a period of high oil prices and is currently the highest in the region.

-Reducing government spending while cutting inefficiencies. The authorities took initial steps to cut current spending by rationalizing some employment benefits and reducing energy and water subsidies.  Facing opposition for further such reforms, the government has identified a menu of streamlining measures that could be implemented with greater social acceptance.  These include: (i) closing loopholes in administration of various transfers, (ii) improving procurement, (iii) limiting grants to priority sectors, and (iv) rationalizing capital expenditure.

-Increasing non-oil revenue. The mission encourages the government to redouble its efforts to secure parliamentary support for the GCC-wide excise taxes on tobacco and sugary drinks and value-added tax (VAT), which Saudi Arabia, the UAE, and Bahrain have already implemented.  With the low 5% proposed rate, the VAT would have a moderate and temporary adverse impact on growth and inflation, but would yield stable revenue, help upgrade tax administration and contribute to more informed policy-making.  Given its complexity and scope, the mission encourages the government to continue the preparatory work to build administration capacity.  Facing a delay in VAT introduction, the government has explored alternative means to boost non-oil revenue: (i) repricing government services, (ii) enforcing penalties on businesses for not meeting Kuwaitization quotas, and (iii) strengthening revenue collection, including for public utilities.

9. Kuwait needs deeper reforms to secure adequate savings for future generations. Even if implemented fully and on time, the measures under consideration would not close the intergenerational equity gap. The government’s non-oil balance would fall well short of levels needed to ensure equally high living standards for future generations – a gap of 13.5% of non-oil GDP by 2024.  Additional fiscal consolidation will therefore be needed to close this gap, which would also reduce financing needs and preserve liquid buffers.

10. The mission sees scope for building consensus around a more ambitious fiscal package. Such a package would support gradual fiscal consolidation, build on contributions from key stakeholders, introduce targeted compensatory measures to protect the vulnerable and boost growth-enhancing infrastructure spending. Crucially, to gain broad support, the package would include reforms to foster a vibrant private sector that creates jobs for Kuwaitis who are no longer absorbed into the public sector, reduce inefficiencies and improve the quality of public services, and strengthen government transparency and accountability.  A vigorous communications campaign will be key.

11. To that end, the mission proposes a path that would close the intergenerational savings’ gap over the next decade. It would entail additional measures to tackle current spending rigidities and increase non-oil revenue while boosting capital outlays. Most of the adjustment would come from spending, which would decline to about 75% on non-oil GDP by 2024 – a level broadly consistent with that experienced in 2000-10.

-Curtailing the public wage bill. The authorities concur that reforming the large public wage bill (18% of GDP) will have to be an essential component of fiscal adjustment and are considering reform options.  Comprehensive reform that centralizes compensation policy, harmonizes the public wage grid structure, better aligns public sector wages with those in the private sector and fosters merit-based compensation would generate sizeable savings over time.  Reducing the high public-private wage premia and limiting public employment growth would incentivize nationals to seek opportunities in the private sector, thereby enhancing its productivity and competitiveness.  In this regard, the early retirement bill recently approved by parliament could further increase the relative attractiveness of civil service employment while imposing a cost on the budget.

-Gradually phasing out fuel, electricity and water subsidies and transfers. Despite earlier reforms, at 5.3% of GDP, the fuel and utility subsidy bill remains large.  Not only are these subsidies costly, they also encourage excessive consumption and inefficient investment and, being untargeted, disproportionately benefit the wealthiest.  Raising public awareness about their budgetary costs, distortions, and distributional impact would help build consensus for reforms.  The mission also sees scope for rationalizing transfers, by consolidating various programs, improving targeting, and better enforcing eligibility criteria.

-Broadening the coverage of the profit tax and introducing an excise on luxury goods. Applying the profit tax to all companies operating in Kuwait would raise non-oil revenue while leveling the playing field.  An excise tax on luxury goods would contribute to a more socially-balanced adjustment mix.  A personal income tax on high-income individuals could be an alternative.

-Rebalancing spending toward capital with improved implementation. Increasing the level and efficiency of capital outlays is essential for closing infrastructure gaps with GCC peers and raising the long-term growth potential.  This should be complemented by public investment management reforms to improve project planning, selection and implementation.  The mission encourages the government to undertake a public investment management assessment that would provide a comprehensive diagnostic of Kuwait’s public investment management system.

12. The authorities agree on the need to further strengthen fiscal governance. Addressing shortcomings in public procurement, spending efficiency, and fiscal transparency would help cut waste, strengthen accountability and reduce Kuwait’s vulnerabilities to corruption. To this end, the mission welcomes the newly released anti-corruption strategy and efforts to strengthen the operational independence and capacity of the Anti-Corruption Agency (ACA).  The mission encourages prompt implementation of the new procurement law (passed in 2016), which aims to put in place a modern procurement system that would reduce opportunities for corruption and deliver value for money by promoting competition, equal treatment of bids, and introducing life-cycle-costing and other non-price criteria.  Given the potential for large efficiency gains, the government could consider a focused Public Expenditure Review of education and healthcare spending.  The mission welcomes the planned adoption of the GFSM2014 methodology and encourages improving the timeliness of intra-year budgetary execution data to enable more effective monitoring.  Further steps should focus on expanding coverage to off-budget entities, debt, and contingent liabilities; increasing transparency to the public over the management of oil revenues and conducting a Fiscal Transparency Evaluation to develop a comprehensive roadmap.

13. A robust medium-term fiscal framework would bolster fiscal policy credibility and ensure durable gains from fiscal adjustment. The introduction in 2017 of the 3-year expenditure ceilings stretched the planning horizon beyond annual budgets and helped contain spending. The mission urges the government to reintroduce such ceilings, anchoring them to a long-term fiscal policy objective (e.g., based on intergenerational equity considerations).  Setting a time-consistent path for an intermediary target, such as non-oil primary balance, would help delink spending from oil revenues.  To further improve the fiscal framework, the mission recommends strengthening top-down budgeting and expenditure control mechanisms.  Medium-term budget planning should also consider fiscal risks, including those stemming from public pensions, state-owned enterprises and public-private partnerships.  In this regard, it is important to develop a contingent liabilities framework.

14. The mission supports the government’s steps to strengthen the institutional and legal framework for debt management and capital market development. The approval of the new debt law would allow the government to resume domestic borrowing, helping absorb structural excess liquidity. Gradually increasing the tenor of bonds would help build a long-term yield curve in dinars, while issuing sovereign Sukuk would widen the investor base.  The mission welcomes the establishment of an asset-liability management committee, between the Ministry of Finance, the Central Bank, Kuwait Investment Authority and the Kuwait Petroleum Corporation.  Along with improved coordination, this will help in forming a more systematic view of asset-liability management, weighing costs and benefits of borrowing and investment, including the implications on GRF liquid buffers, central bank reserves, domestic liquidity, and debt market development.  In this regard, publishing a regular issuance calendar and, in due time, moving to a market-based auctions to allow for price discovery would help deepen government debt markets.  This in turn would facilitate corporate bond market development and help diversify private sector financing.

15. The peg to an undisclosed basket remains appropriate. It has provided an effective nominal anchor. The authorities are fully committed to the peg as demonstrated by CBK’s use of various monetary policy instruments to maintain the dinar’s attractiveness.  Staff’s external sector assessment suggests a moderate current account gap, most of which would be closed by increasing fiscal savings as recommended over the medium term.  The mission notes that, as the economy diversifies over the longer term, the benefits of greater exchange rate flexibility may increase.

16. Enhancing the coverage, quality and timeliness of statistics is essential for informed policy making. To this end, the mission encourages increasing support to the Central Statistical Bureau, including for building technical capacity, and strengthening data provision arrangements.

B. Safeguarding Financial Stability

17. Prudent regulation and supervision by the CBK have helped keep the banking sector resilient. Banks are under Basel III regulations for capital, liquidity, and leverage, and transitioned to IFRS9 in January 2019 with little impact thanks to precautionary loan-loss provisioning. The current FSAP found banks to be resilient to various stress test scenarios, including protracted credit, liquidity and market shocks.  The main vulnerabilities stem from high concentration of loans to single borrowers, large depositors, common exposures (particularly in the real estate sector), and interconnectedness of the financial system.  The mission welcomes the CBK’s continuous calibration of macro-prudential tools to carefully balance financial stability and credit growth, and its plans to upgrade stress-testing techniques and early warning indicators.  As banks enhance their assessment of credit risk to wider segments of the economy, a gradual relaxation of interest rate ceilings would allow them to better price these risks and expand lending to new market segments.

18. The already strong supervisory regime could be further improved in certain areas. The CBK updates its supervisory framework on an ongoing basis to incorporate international best practices, and the supervisory approach is appropriate. Further refinements could include better integrating on- and off-site supervision, enhancing the consolidated supervision framework, and strengthening cross-border supervision.  To reduce the risk of inconsistent interpretation of Sharia compliance, the authorities have proposed draft amendments to the CBK law establishing a centralized Sharia Board at the CBK.  They are strengthening the AML/CFT framework, including through improved coordination between the Financial Intelligence Unit (FIU), ACA and CBK.

19. The CBK is developing options to strengthen its systemic risk oversight and crisis management frameworks. In line with FSAP recommendations, it has prepared a draft law assigning the CBK an explicit financial stability mandate and creating a Financial Stability Committee to establish a formal coordination mechanism between the CBK, Capital Markets Authority, Ministry of Finance and Ministry of Commerce and Industry. Reforms should also focus on enhancing the existing corrective action framework, establishing a special resolution regime for banks, mandating bank recovery planning, and reforming the current blanket guarantee of deposits.  Progress in these areas would promote market discipline, allow for orderly resolution in case of bank failure, and help safeguard fiscal resources.

20. The comfortable liquidity environment offers an opportunity to enhance the liquidity management framework. To better anticipate system-wide pressures, the CBK is currently reviewing its forecasting framework with a view to improving its accuracy and extending the forecast period beyond the short run. Information-sharing arrangements between the CBK and the relevant agencies would be essential in that regard. Gradually reducing the current ample liquidity in the system will be needed to incentivize banks to manage their balance sheets effectively and provide an impetus for an interbank market to develop, contributing to a more efficient allocation of liquidity.  This would reduce the reliance of banks on the CBK as the first port of call in the event of non-emergency liquidity needs, a role normally assigned to money or bond markets.

C. Boosting Private Sector-led Growth and Economic Diversification

21. A vibrant private sector is the only sustainable solution to creating enough jobs for the large number of Kuwaiti youth entering the labor market. With the budgetary environment constrained, structural reforms that create incentives for entrepreneurship, foster productivity and competitiveness, and encourage private initiative will be paramount to private sector development.

22. An enabling business environment is a pre-condition for a dynamic private sector. The mission is encouraged by the recent streamlining of registration and licensing, including digitalizing administrative procedures, and relaxing restrictions on foreign direct investment. Eliminating excessive regulations, easing the burden and cost of trading across borders, enhancing market competition, and further reducing restrictions on foreign ownership will be key to Kuwait’s efforts to attract domestic and foreign investment. Improving access to land would remove a key constraint to private businesses.

23. Encouraging the private sector to play a bigger role in the economy would improve efficiency, competitiveness and diversification. While progress was made in building stronger legal and institutional frameworks in recent years, privatizations and PPPs have yet to gather momentum, though several projects are in the pipeline. Given their significant potential in raising productivity and enhancing private sector development, the authorities should accelerate the execution of the planned privatizations and PPPs.  It will be important to ensure transparent and competitive implementation and to limit hidden costs and contingent liabilities for the government.

24. Education and labor market reforms would boost Kuwaitis’ employment in the private sector. Comprehensive education reform, including enhanced vocational training, would help produce a better-skilled and more productive workforce. The authorities should revamp public wage subsidies for nationals working in the private sector to make the subsidies time-bound and targeted toward younger Kuwaitis.

25. The mission encourages increased focus on SMEs given their job creation potential. The mission welcomes the revised definition of SMEs. With the recent changes in its mandate, the National Fund for SME Development, in addition to lending, will be able to provide equity finance, train entrepreneurs, and encourage better integration of SMEs into supply chains.

26. Steadfast implementation of these reforms would yield large growth dividends. The mission estimates that rebalancing government spending towards growth-enhancing investment, strengthening governance, and increasing the role of the private sector in the economy could raise Kuwait’s non-oil growth potential to 5%, from 4% currently. (IMF 28.01)

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11.5  UAE:  IMF Executive Board Concludes 2018 Article IV Consultation

On November 26, 2018, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation with the United Arab Emirates.

The economy is starting to recover from the 2015–16 slowdown caused by a decline in oil prices.  Growth momentum is expected to strengthen in the next few years with increased investment and private sector credit, improved prospects in trading partners, and a boost to tourism from Expo 2020.  Non-oil growth is projected to rise to 3.9% in 2019 and 4.2% in 2020.  The oil sector’s prospects have also improved with higher oil prices and output.  Overall real GDP growth is projected at around 3.7% for 2019–20.  Inflation is expected to remain low, notwithstanding the introduction of the value-added tax (VAT) earlier in 2018.  Although nonperforming loans rose during the slowdown, banks remain liquid and well capitalized.

Fiscal easing is underway to facilitate the recovery. In tandem with stepped-up structural reforms to boost medium-term prospects, the authorities announced plans for a fiscal stimulus over the next three years, augmenting the planned increase in investment ahead of Expo 2020.  As private sector activity picks up and stimulus measures are phased out, fiscal consolidation is expected to resume, to ensure sufficient saving of oil wealth for future generations.  The overall fiscal balance is projected to turn to a surplus next year on higher oil prices and remain positive over the medium term.

The external position has also improved.  The current account surplus nearly doubled last year to 6.9% of GDP as imports remained flat and is expected to rise further to nearly 8% of GDP by 2019 owing to higher oil revenues.  Over the medium term, however, the current account surplus is projected settle at a lower level as oil prices soften.  Downside external risks have increased in recent months, driven by tightening global financial conditions, heightened volatility in emerging markets, geopolitical tensions, and rising protectionism.

Executive Board Assessment

Executive Directors noted of the challenges the UAE economy has been facing, particularly a prolonged decline in oil prices, and commended the authorities for their strong policy response, including the introduction of the value-added tax, stepped up structural reforms and the upgrading of the prudential framework.  While noting the improved economic prospects, Directors stressed that the external downside risks to the outlook have risen and encouraged the authorities to continue their efforts to bolster economic growth and safeguard macro-financial stability.  In this context, Directors stressed the importance of increasing supervisory vigilance and strengthening management of contingent liabilities from borrowing by government-related enterprises, government guarantees, and public-private partnerships.

Directors agreed that the main fiscal policy priority is to support economic growth in the short term and resume fiscal consolidation once the recovery takes hold, to ensure sufficient savings of exhaustible oil revenue for future generations and debt sustainability.  Directors welcomed the authorities’ efforts to strengthen their fiscal policy frameworks and coordination, noting the importance of continuing progress in this area to realize the authorities’ socio-economic Vision 2021 agenda, avoid policy pro-cyclicality and improve risk management.

Directors agreed that creating a vibrant, diversified, and knowledge-based economy will require continued reforms to boost the role of the private sector and promote talent and inclusiveness.  They welcomed the recently announced reforms, including the liberalization of foreign investment, and encouraged the authorities to swiftly implement them, while broadening and deepening policy initiatives to improve productivity and competitiveness.

Directors commended the authorities on their implementation of the Enhanced General Data Dissemination Systems and other steps to improve economic statistics.  They emphasized the need for further progress, including improving labor, fiscal, national accounts, and international investment position statistics, to facilitate decision-making and enhance transparency.  (IMF 01.02)

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11.6  UAE:  UAE Furniture Market is Expected to Reach Around AED 11 Billion in Revenues by 2022

Ken Research announced that the development of key projects like Caesars Palace, Fairmont and others will lead to the development of the UAE’s tourism industry, which in turn will support the demand originating from the Hotel Industry.  The UAE will experience an increase in expat population owing to the stability in oil prices in near future.  The increase in expat population will further lead to an increase in furniture retailers in the region.

Growth of Real Estate Sector:  In UAE alone 55,000 homes and 40,000 new hotel rooms were constructed in 2017-18.  It has been observed that 70% of the timber and wood products are used for construction purposes while the remaining 30% is used in real estate, interiors, furniture and other industry applications.  The demand for furniture is likely to go up in the near future as Dubai will add 40,000 new hotel rooms and service apartments to meet the growing demand of tourists following the “Expo 2020” in Dubai.

Increasing Competition among Manufacturers and Retailers:  The furniture market in UAE region is highly competitive owing to the rising demand of furniture and furnishing products.  This rise in demand has led to the growing domestic demand and emergence of multiple players catering to the same target audience in the space.  Manufacturers and retailers operating in the region compete on almost same grounds of quality of the product and the material used to manufacture the product.

Competition from Different Format Stores: Organized furniture retailers in UAE have faced substantial competition not only from the unorganized sector but also from different types of stores within the organized market.  The organized furniture market comprises of company showrooms (exclusive or franchise), SIS format stores and destination stores.  Exclusive showrooms and franchise outlets of specific brands have witnessed a higher footfall owing to high brand awareness and customer satisfaction, whereas on the other hand destination stores possess furniture products of different products under one roof.

High Marketing/Promotion Costs:  Furniture as a product holds high importance in the mindset of the people of the UAE region.  Hence, in order to represent the high value generated by particular furniture product, companies often incur high costs for marketing and promotion.  Display of advertisements on television, newspapers, online portals and display of actual products in retail mall promotions has increased the cost of marketing.  In the future, it is believed that the companies will continue to dedicate their marketing expenditure towards above the line advertising modes.

UAE Furniture market is expected to register positive CAGR of around 5.6% during the period 2018-2022.  The rise in number of online market players catering to the demand for wooden products and accessories are expected to have positive impact on the overall revenue of UAE furniture market.

Analysts at Ken Research, in their latest publication “UAE Home Furniture and Furnishing Market Outlook to 2022,” believe that rise in demand of residential furniture with the change of existing furniture and adopting new designs & modern furniture will aid the furniture market.  (Ken Research 28.01)

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11.7  EGYPT:  Fiscal Deficit Falls to 9.8% of GDP in FY18 from 12.5% in FY16

Egypt’s economy maintained a strong growth rate in 2018 on the back of increased gas production, with the ongoing fiscal reforms helping to reduce the budget deficit to 9.8% of GDP in the fiscal year 2017/18 from 12.5% of GDP in FY 2015/16, according to the Oxford Business Group’s (OBG) latest report.

The OBG cited the International Monetary Fund (IMF) report issued last November which forecasted that the GDP growth would expand by 5.3% in 2018, increasing from 4.2% in 2017, and the highest rate of annual growth since 2008.

Furthermore, the OBG report indicated that this growth was supported by figures released by the Central Bank of Egypt (CBE), which put year-over-year (y-o-y) GDP growth at 5.3% in the first half of the year.  Adding that the expansion was driven by strong performances in the extractive industries (9%), manufacturing (4.2%), wholesale retail and trade (4.2%), and real estate (4.1%).

LNG Imports Halt to Strengthen Foreign Currency Reserves

In regard to the foreign currency reserves, the report indicated that they totaled $42.5 billion at the end of December 2018, marking a 15% increase on the $37 billion at the end of 2017, according to the CBE data issued on 8 January.  “This increase in reserves could be further bolstered by an expected drop in Egypt’s import bill in the future, with the government halting inward shipments of liquefied natural gas (LNG) in September 2018 after meeting gas self-sufficiency,” the report said.

Moreover, according to the OBG, it was estimated that the country will save around $3 billion per year as a result of the LNG imports halt, however, imports could be resumed in the coming years following investment aimed at increasing downstream capacity, which could allow for the processing and re-export of gas sourced from other countries.  Domestic gas production is expected to total around 60 billion cubic meters in 2018, up from 49 billion cubic meters in 2017, with the figure forecast to rise to 72 billion cubic meters 2019.

Consequently, the OBG believes that the increase in natural gas production will not only increase the gas available for domestic consumption, but could also provide additional opportunities for export, with limited shipments of around 2m cubic meters sent to Jordan in 2018.

Fiscal Position Improves on Back of Reforms

The report cited the IMF announcement in late October 2018 about the release of a further $2 billion tranche of Egypt’s $12 billion loan deal, taking to-date disbursements to $10 billion.  The IMF three-year agreement, brokered in November 2016, saw the government committed to a series of fiscal reforms – including tax increases, spending and energy subsidy cuts – designed to improve the budget balance and stimulate economic activity in return for the loan.

According to the OBG, the economic reform program helped reduce the fiscal deficit from 12.5% of GDP in FY 2015/16, which ends June 30, to 9.8% in the most recent fiscal year, according to government officials, with ongoing measures expected to lower this figure to 8.4% by the end of FY 2018/19.  Meanwhile, the IMF credited the fiscal measures with reducing government debt from 103% of GDP in FY 2016/17 to 93% in 2017/18, while the fund expects the economy to gain further momentum in 2019 with GDP growth of 5.5%.  As a result of such progress, the government announced in December 2018 that it expects to receive its fifth tranche of the loan this January.

The economic reform program received further support from the World Bank in early December 2018 with the signing of a $1 billion loan aimed at promoting growth in the small business segment, building on earlier WB-funded reform programs supporting Egypt’s regulatory and economic environment.

Inflation Declines as Rates Remain Stable

According to the report, inflation continued its downward trend across 2018, supported by the CBE’s monetary policy, as headline inflation began the year at 17.1%, with the CBE’s decision to lower its benchmark interest rate from 18.75% to 16.75% over the course of February and March 2018, coinciding with a drop to year-low inflation levels of 11.4% in May 2018. While the figure rebounded to 17.7% in October, it fell again to 12% in December 2018.

The report indicated that controlling inflation has been a key challenge of Egypt’s in recent years following the government’s decision to float the pound in November 2016 – a decision that saw the currency loses almost 50% of its value against the dollar before stabilizing.  This led inflation to jump sharply to three decade-high levels of 33% in July 2017, placing pressure on consumers.  (DNE 31.01)

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11.8  MOROCCO:  Morocco Looks South

Intissar Fakir wrote in Diwan on 23 January that Rabat has heightened its support for Sahel countries, hoping to make gains on a number of levels.

In recent months, Morocco has heightened its support for the Group of Five Sahel (G5 Sahel) regional group.  By doing so, the kingdom aims to compete with Algeria for influence in the Sahel and the rest of Africa.  It also seeks to benefit from any potential Western or Arab military or economic support to the region – including pledges of financial support from Morocco’s closest Arab allies, Saudi Arabia and the United Arab Emirates.  Additionally, Morocco wants to be instrumental in the European focus on the Sahel’s security and stability given the implications for migration.

But there are potential strategic gains as well.  For Morocco, one of the biggest challenges to its efforts to rejoin Africa politically is the lack of trust between Rabat and many African states.  For decades, Morocco has had ties with post-colonial African states that were not as close, for example, as Algeria’s.  Until recently African support for Western Sahara’s independence was also a source of tension between Morocco and much of the continent – particularly at the institutional level where the dominant African powers remain wary of Morocco.

To counter this, Morocco has sought to improve its bilateral relationships with African countries, particularly in West Africa and the Sahel, a region where it has long maintained soft power ties.  Engaging with the G5 Sahel is a way of demonstrating to Africa that Morocco is aligning itself with the continent’s key security priorities – in Algeria’s backyard, no less – and with the African Union (AU) vision of promoting regional peace and cooperation.  The G5 Sahel presents a further opportunity in that the group has excluded Algeria from formal membership, unlike previous regional security initiatives that Algeria led or promoted from within the AU.

For Morocco, the most likely positive consequence of its engagement with the G5 Sahel is improved relations with Mauritania, a country with which Rabat has long had uneven relations.  Engagement could also pay dividends with regard to relationships across the Sahel and possibly enable Morocco’s future foray into the Economic Community of West African States (ECOWAS), a regional group of fifteen states that the kingdom has lobbied heavily to join.

Overall, Morocco’s support for the G5 Sahel is a relatively low-risk approach to augmenting its broader goals in Africa.  It also allows the kingdom to become a strategic security actor, as the United States and the European Union cannot afford direct military intervention, and Morocco’s cooperation on counterterrorism and countering violent extremism is valuable in this regard.  It gives Morocco an additional means of gaining leverage in the Western Sahara issue with Washington and Brussels, from whom Morocco has faced diplomatic and legal challenges to its de facto control over the area.

Morocco’s two main contributions to the G5 Sahel group are military and religious training.  On the security front, in September 2017 then-foreign minister Nasser Bourita announced that Morocco would assist the G5 Sahel to manage border security and promised to help counter radical Islamic teachings in the broader area.  Moroccan delegates attended the International High Level Conference on the Sahel in Brussels in February 2018, during which Bourita highlighted a number of areas of collaboration, including border control, food security, social development, military training and religious training for imams.  In June 2018, Morocco pledged support for a G5 Sahel joint force whose operations focus on counterterrorism and combating transnational crime.

Morocco has long trained many of the G5 Sahel countries’ personnel and military commanders – among them current Mauritanian President Mohammed Ould Abdel Aziz.  The commander of the G5 Sahel joint force, General Hanena Ould Sidi, another Mauritanian, trained at the Royal Military Academy in Meknes.  In November 2018, local newspapers reported that more than 1,300 foreign officers – a majority of them sub-Saharan Africans – were receiving military and technical training in Morocco.

Morocco’s religious influence extends into the Sahel due to the region’s historical ties with the sultans of Morocco.  Rabat has recently been formalizing this cooperation within the framework of its support for the G5 Sahel. It has held study programs for religious leaders from the Sahel and West Africa as part of what it terms “religious diplomacy.”  This ensures that Morocco will remain at the forefront of counterterrorism and security efforts in the Sahel and perhaps eventually all of Africa and beyond.  The Mohammed VI Institute for the Training of Imams in Rabat has trained hundreds of imams from the Sahel and West Africa.

Cooperation Beyond Security

Cooperation between Morocco and the G5 Sahel has also developed beyond security-related issues.  Moroccan universities and educational institutions have been a major destination for students from West Africa and the Sahel, and this is bound to expand.  Morocco also wants to play an important role in the energy field.  During the G5 Sahel group’s December 2018 meeting, Prime Minister Sa‘deddine al-Othmani announced Moroccan plans to support the Priority Investment Program.  Rabat intends to provide access to its electricity and water management expertise through the country’s top two state-owned renewable energy agencies – the Moroccan Agency for Sustainable Energy and the Moroccan Agency for Energy Efficiency – in order to bring electricity to the underpowered Sahel.

Over the past few years the bulk of Morocco’s diplomatic and economic outreach has targeted West Africa and the Sahel due to their proximity and their historical and cultural ties with the kingdom.  Morocco-Chad relations have grown since 2013, when Rabat first established a diplomatic presence in N’Djamena, and an important aspect of this is bilateral security cooperation.  The two countries have also increased cooperation in other domains, more recently on water scarcity, sanitation and management.

Morocco’s cooperation with Niger dates back further.  Niger has supported Morocco’s proposal to join ECOWAS and in 2017 the two countries signed sixteen bilateral cooperation agreements.  Morocco and Niger also inked a partnership agreement on a host of socioeconomic issues in July 2018, singling out youth employment and climate change.

Burkina Faso has also been one of Morocco’s closest African partners.  The two countries have signed dozens of bilateral agreements and Morocco is an active investor in the Burkinabe banking and telecom sectors.  Ouagadougou has also supported Morocco’s bid to join ECOWAS.  Mali is likewise an important trading partner, with longstanding religious and cultural ties.  There too, Morocco has been expanding bilateral cooperation.  To that effect, Morocco signed six agreements with Mali – including a military cooperation agreement – in March 2018.

The main exception to positive relations with the Sahel countries is Mauritania.  Historically, ties have fluctuated between close cooperation and periods of tension.  Disagreements over the Western Sahara and the presence of Mauritanian regime critics in Morocco have long hampered Moroccan-Mauritanian ties.  The relationship deteriorated in recent years under Mohammed Ould Abdelaziz, but Morocco has recently made efforts to improve the situation and recent meetings between officials have included proposals to work together to secure border zones.

In June 2018, Morocco dispatched Hamid Chabar as ambassador to Nouakchott after a two-year vacancy.  Other gestures of goodwill have been economic and political. Morocco recently denied entry to a political opponent of the Mauritanian regime, a significant step given that Mauritanian opposition figures have historically found refuge in Morocco.  Rabat is a key investor in the Mauritanian mining industry and a delegation from the General Confederation of Moroccan Companies, Morocco’s main private sector representative, visited Mauritania last December to reinforce financial ties and prepare for further cooperation in sectors such as renewable energy, health, telecommunications and fishing.

However, as with all of Morocco’s foreign policy considerations, the Western Sahara issue is never too far away.  Mauritania, an important actor on the Western Sahara and a former party to the conflict, was also present in the revived negotiations under United Nations auspices in December 2018.  The initial meeting in Geneva coincided with a G5 Sahel meeting in Nouakchott.

Better relations with Mauritania in the context of collaboration with the G5 Sahel would be one less obstacle to Rabat’s quest for regional influence and support over the Western Sahara.  Still, three of the G5 Sahel countries – Chad, Mali and Mauritania – continue to recognize the independence of the Sahrawi Arab Democratic Republic.  Algeria, which over the years opted for a less active foreign policy in its neighborhood, has predictably been critical of Morocco’s efforts.

Morocco’s efforts to engage in regional security in the Sahel could pay dividends in terms of regional influence, but that is likely to be tenuous.  Members of the G5 Sahel are still devising a strategic vision for regional stability.  Morocco cannot expect much in terms of immediate tangible gains from its involvement in the Sahel, as the G5 Sahel force itself is facing significant challenges in collecting pledged aid.  What is important, however, is that heightened Moroccan engagement with the G5 Sahel has created excellent optics for a country that still provokes doubts among African states.  (Diwan 23.01)

11.9  MOROCCO:  Morocco Ranks 75th on World Index of ‎Economic Freedom, Up From 86th

The Heritage Foundation’s World Index of Economic Freedom for 2019 scored ‎Morocco’s level of economic freedom at 62.9, classifying the country as “moderately ‎free.”  With a one point increase between 2018 and 2019, Morocco moved up 11 places ‎in the worldwide ranking. ‎  The research demonstrates Morocco’s progress in economic freedom, while also ‎highlighting remaining challenges. ‎

Morocco has shown growth in the fields of fiscal health, property rights, and judicial effectiveness.  The research attributes Morocco’s successes to “low labor costs and ‎proximity to Europe” which have allowed Morocco “to build a diversified and market-‎oriented economy.” ‎ The study demonstrates a six point increase in fiscal health over the one year period as ‎well as a three point increase in property rights and judicial effectiveness.  In areas of ‎financial and investment freedom, the values did not change.‎

2019 Index of Economic Freedom for Morocco

The research found Morocco to decline in the areas of government integrity, labor ‎freedom, and trade freedom. The low scores in labor freedom and government integrity ‎fell below regional and global averages and were attributed to inflexible labor laws and ‎unequally implemented rule of law.‎  With regards to government integrity, Morocco’s points decreased between 2018 to ‎‎2019 from 41.2 to 39.1.  This ranking leaves Morocco in the ‘repressed’ category for ‎government integrity.  For labor freedom, Morocco was given a score of 33.1 compared ‎to its score of 36.0 in 2018.  The regional average for labor freedom is 59.4.‎

Morocco’s overall level of economic freedom has slowly been increasing since 2014.‎

Index of Economic Freedom

Overall, the Heritage Foundation ranked Hong Kong to have the most economic ‎freedom, followed by Singapore and New Zealand. France ranked at 71st, in the same ‎category as Morocco.  The most repressed countries were North Korea, Venezuela, and ‎Cuba.   The data used to calculate the 2019 index values was collected over the second half of ‎‎2017 and the first half of 2018.  The information was accurate as of 30 June 2018.‎  (MWN 30.01)

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11.10  TURKEY:  Turkey’s Metal and Building Industries in Coma

Mustafa Sonmez reported in 25 January in Al-Monitor that declining production in key industrial sectors is seen as an omen that the worst of Turkey’s economic crisis might still be to come.

Production in Turkey’s crisis-hit industrial sector — the backbone of the economy — is in general decline, with some major sub-branches hit even harder, auguring deeper economic turmoil and mass layoffs down the road.  Figures by the Turkish Statistical Institute and the Istanbul Industry Chamber point to sharp declines in the automotive, white appliances and electronics industries amid a fast-shrinking domestic demand and climbing prices under the impact of last year’s currency shock.

The turmoil in the construction sector, which was the first to plunge into crisis, has spilled over to suppliers in sub-sectors such as ceramics, cement, iron and steel, where sharp declines are similarly observed.  While the lira’s depreciation has given some impetus to exports, its impact on industrial production has been limited.

Various sectors are trying to stay afloat with tax reductions introduced by the government, but once such incentives come to an end after the 31 March local elections, these sectors are expected to face even harder times and possibly mass layoffs.

Recession became palpable in the Turkish economy in the second half of 2018.  Soon, it devolved into a crisis, with the economic growth rate falling to 1.6% in the third quarter.  The available data from the industrial sector is now the harbinger of sharp contraction in the fourth quarter.

Official figures on the gross domestic product (GDP) in the fourth quarter are scheduled to be released on 11 March, but a growing number of pundits forecast a contraction of about 5%.  This would put the annual growth rate at some 2%, well below even the 3.8% the government projected as part of revised targets in September after the turbulence began.  For Turkey, a growth rate of 2% means a steep slowdown, given that the country’s GDP grew 7.4% in 2017.  Obviously, the economy will remain in crisis through 2019, with some forecasts suggesting a contraction of up to 4%.

The crisis is widely expected to flare up in April in the wake of the municipal elections.  Scrambling to rein in popular anger ahead of the polls, Ankara has mobilized treasury funds and other public means to cushion the impact of the crisis and keep the dirt under the rug until April.

The crisis had hit the construction sector first, and now it has become palpable in the industry sector as well.  Contraction in the industrial sector, which contributes 20-21% of the country’s GDP, has an immediate impact on trade and service sectors such as transport. Industrial output shrank nearly 6% year-on-year in the fourth quarter.  This steep decline is the basis on which pundits predict a GDP contraction of some 5% in the fourth quarter.

A closer look at industrial output data shows that the decline in the manufacturing industry last year was worse than the overall decline, standing at more than 7%. Industries supplying materials to the construction sector, which had shrunk nearly 6% as early as in the third quarter, stand out as the worst hit.  They include the ceramics, cement, glass and brick manufacturing industries, where production fell by more than 21%. In two other sectors linked to construction — woodworking and the base metal industry, which comprises the iron and steel sector — production shrank by 16% and more than 12% respectively.

Similarly, the automotive sector — another major sub-branch of the manufacturing industry — took blows from the sharp increase in foreign-exchange prices, which made imported inputs more expensive and pushed up producer and consumer prices.  Amid the shrinking domestic demand, production in the sector decreased by more than 18%.  The decline stood at 13% in the metal industry, which comprises white appliances, and 12% in the computer manufacturing industry.

Others hit by the increased cost of imported inputs include the paper, plastics and rubber, and machinery and electric devices sectors, where productions shrank respectively by 12%, 11.5% and 11%.  In the leather, chemicals, food and clothing industries, the annual drops in production ranged from 2.5% to 8%.  Oil refining, the pharmaceutical industry and furniture manufacturing stood out as sectors where the output did not shrink and even grew to some extent.

Another data set reflecting the industrial downturn is the Purchasing Managers’ Index (PMI) drawn up by the Istanbul Industry Chamber and IHS Markit, a London-based financial information company.  The PMI is a composite index tracking the performance of the manufacturing industry, based on five individual indexes, including new orders, output, employment, suppliers’ delivery times and stock of items purchased.  An index reading below 50 indicates an overall decline in the sector. In December, the PMI dropped to 44.2 from 44.7 in November, confirming that the industry has plunged into crisis.  The contraction in the economy could be observed also in sales data.  Retail sales indices and turnover indices point to a steady downtick in sales, similar to the trend in production.

In sum, all those indicators signal that the Turkish economy shrank by an estimated 5-6% in the last quarter of 2018.  In the industrial sector, sub-branches linked to construction have suffered major declines in production, along with the automotive and white appliances sectors that cater to domestic demand.

As a result, the government is widely expected to fall short of its annual growth target of 3.8% for 2018, with the rate likely to reach only about 2%.  The economy is expected to continue shrinking through 2019, with contraction rate estimates ranging from 2% to 4%.

Since September, Ankara has in fact slowed the industrial decline through a number of tax cuts.  With the elections in mind, tax incentives on the sales of cars, domestic appliances and furniture have been extended until 31 March.  In addition, many companies have slashed prices — a measure that helped to keep car sales unscathed but could not stop a 17% drop in white appliances sales.  The sharp increase in foreign-exchange prices and the ensuing rise in interest rates on bank loans also bore on this outcome.

The steep declines in industrial output are expected to result in mass layoffs, especially after March.  The number of employees was already down by 170,000 in the construction sector and 40,000 in the industrial sector in October, just several months after the turbulence began in the summer.  The downtick in employment is estimated to have continued in the ensuing months, and with further job losses looming in 2019, the turmoil in the industrial and construction sectors — the two driving forces of the economy — is bound to aggravate the social cost of the crisis, which could hardly go without political consequences.

Mustafa Sonmez is a Turkish economist and writer. He has worked as an economic commentator and editor for more than 30 years and authored some 30 books on the Turkish economy, media and the Kurdish question.  (Al-Monitor 25.01)

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