An agreement on the encouragement and protection of investments between Israel and Japan was signed in Tokyo in early February, after a long and intensive process. By signing this agreement Japan joins a long list of 35 countries who already signed investment agreements with Israel. However, this is the most advanced and liberal agreement signed by Israel so far; the agreement offers a new model, aiming to encourage Japanese investment in Israel and not only to protect Israeli investments, as was the case in previous agreements.
What are the goals of a bilateral investment agreement of this kind?
First, it promises investors from both countries a just and fair attitude, which includes protection against non-commercial risks. The main commitment determines non-discrimination of foreign investors or local investors facing a third country (apart from certain exceptions specified in the appendices to the agreement).
Secondly, on a symbolic level, it shows the mutual desire of the two countries to encourage foreign investments. In the Israeli context, the mere signing of the investment agreement conveys a clear message that Israel is a relevant destination for businesses and investments. It is estimated that the agreement will highly encourage the activities of Japanese companies in Israel.
This is a continuation of a series of agreements and activities to promote bilateral economic relations between Japan and Israel, since the mutual visits of the heads of the two countries in the years 2014-2015. According to estimates, in 2015 the flow of investment from Israel to Japan doubled in scale. But it seems that the true potential is just starting to be realized, since in 2015 Japan was the source of $129 million in foreign investments, second only to the United States in this regard. In light of this agreement, the Foreign Investment Authority (Invest in Israel) will be holding an investment conference both in Tokyo and in Osaka this week.
This agreement marks another milestone in Israel’s plan to strengthen its economic ties with many countries around the world, as well as its sheer commitment to promoting investments through bilateral agreements based on liberal standards and mutual trust.