Israeli investors are advancing plans to create a ‘tech valley’ on the island to host technology companies amid rising insecurity and concerns over a planned judicial overhaul.
Speculation has proliferated about plans by Israeli managers and investors to move overseas, companies they founded in Israel to protect them if a justice overhaul is enacted.
The right-wing government, headed by Prime Minister Benjamin Netanyahu, has paused the procedure following weeks of social unrest with thousands of Israeli citizens taking to the streets.
Israel is in the throes of a political crisis that has enveloped society, including the military, universities, and the country’s pioneer tech industry.
An Israeli investor living in Cyprus is leading a project to set up a tech hub community base in Cyprus which could accommodate companies looking for a haven or a base within the European Union.
Not wanting to reveal his identity, the investor confirmed that Israel’s tech industry is dissatisfied with the political landscape and is seriously considering relocating to an EU country; Cyprus is a strong candidate, along with Greece and Portugal.
“Currently, the Israeli high-tech community is in distress, looking for a way out of the insecurity in the country.
“Even if the government pulls the plug on their plans for a judicial overhaul, things will never be the same in Israel again,” said the investor.
He said plans for a technology hub to host Israeli firms in Cyprus have been in the pipeline for some years.
The investor revealed that cooperation between Israeli and local investors is laying the groundwork for a ‘tech valley,’ offering every facility from workspace, and labs, to schools and universities.
“We are also in talks with universities specialising in preparing the next generation of the industry’s workforce.
“Adding universities to the project is vital as we want to offer long-standing value to our valued customers.”
As the investor confirmed, universities like Technion and Massachusetts Institute of Technology (MIT) have been asked if they would be interested in establishing a research centre or local branch.
He believes that Cyprus offers unique opportunities to Israeli companies and their staff with only a 40-minute flight from home.
“They could work Monday to Friday here, catch a flight back home to Tel Aviv to spend time with the family over the weekend.
“Once a proper Cyprus base has been established, new employees and their family relocate in ‘one go’ with almost no difficulties, as the climate and life are very similar to Israel.”
Cyprus offers a competitive tax regime, while digital nomad legislation makes it easy for Israeli employees to obtain a residency visa and the opportunity to be naturalised after a few years.
For their view, the Financial Mirror contacted Invest Cyprus, the state investment promotion agency.
Its deputy Director-General Marios Tanousis confirmed the agency had received strong interest from Israeli tech firms.
“We are seeing an increasing number of high-tech companies, not only from Israel but around the globe, casting their vote of confidence in Cyprus’ efforts to establish itself as a regional high-tech hub,” said Tanousis.
“This is due to the country’s targeted incentives, low cost of living, and commitment to developing and fostering an innovative tech ecosystem.
“Following the success in attracting high-tech and fintech firms, the island is exhibiting its attractiveness to businesses across the board.”
Pioneers in cognitive sports training, Israeli technology company i-BrainTech has announced that it is expanding to Cyprus.
“These moves to add to a list of Israeli companies that have recently moved to Cyprus, and others that have been here for more than a decade.”
He reaffirmed that Invest Cyprus is responsible for attracting foreign investment and providing certainty to companies operating in the country.
“We, as the state agency to promote foreign investments, are doing our part to facilitate the move of any high-tech firm wanting to come to Cyprus.
“This is what we are doing with the cases involving Israeli companies,” said Tanousis.
According to the agency’s data, the number of foreign companies relocating to Cyprus in 2022 increased by more than 50% year-on-year.
The total effect of the relocation of these firms on the Cypriot economy is estimated at €3 bln.
Unrest amongst firms in Israel was triggered when Netanyahu’s governing coalition, arguably the most right-wing and religiously conservative in Israel’s history, set out to change the structure of the judiciary system.
Netanyahu has argued that the judiciary system has granted itself increased authority over the years.
The government also contends that the Supreme Court is not representative of the diversity of Israeli society.
With the planned changes, the Israeli parliament could override judicial decisions while also having the power to appoint judges, much like the USA.