''The Wall Street Journal'' and the Heritage Foundation published its "2004 Index of Economic Freedom" .Israel was ranked 29th out of 155 countries in 2004. Over the years efforts within the country have aimed at privatization and the doing away with monopolies. The current Finance Minister Mr. Benjamin Netanyahu recently announced that these two issues would receive his attention and pointed squarely at the Israel Water Company and the Israel Electric Company as cases in point.
However, a closer look at the banking monopoly would probably result in the downgrading of Israel's position on the Freedom Index.
The Israel High-Tech & Investment Report, which we publish for nearly twenty years has always aimed at providing a platform for Israel's high-tech companies. Some of these are public companies listed on the Tel-Aviv Stock Exchange (TASE). We encouraged our readers that if they liked the companies, they should invest in their shares. To our surprise we received a large number of letters saying that it is impossible to place orders of shares listed on the TASE. We investigated the difficulty and found that indeed this was the case. An Israeli can turn to his bank and buy shares on any Exchange, Bangkok, Hong Kong and not just on the New York Stock Exchange or Nasdaq. However an American can not invest on the Israeli Exchange using his own broker. One broker suggested to a potential client that an Israeli bank in the US perhaps could carry out the purchase. The investor, in turn, was advised by Bank Leumi in New York that he must open an account with them. The head of Foreign Securities for Bank Hapoalim Ms. Hanna Prizant confirmed this.The investor decided it was too much trouble.
For the past three years at the annual meeting of the Foreign Press Association at the Tel-Aviv Stock Exchange I turned to Prof. Yair E. Orgler, Chairman of the Board of Directors of the TASE and asked him to deal with the issue. After three years of raising the issue we realized that the 11 members of the Exchange are banking institutions and that they have no incentive to change the status quo.
So if we want the international investment community to invest in our companies and make the local Exchange a truly international market, access to it must be made as easy as it is for Israeli
Much is said about free competition. If we want the international investment community to invest in our companies and as a result make the local Exchange a truly international market, it must have free and convenient access.
Israeli banks are blocking foreign investors from buying shares registered on the Tel-Aviv Stock Exchange.The Israel High-Tech & Investment Report's investigation reveals that the Israeli banks are forcing foreign investors to invest exclusively through their branches and insist that the investors open accounts with them. The management of the Tel-Aviv Stock Exchange has been made aware of the problem but have refused to act. Israelis, on the other hand, are not faced with any limitations when investing globally.