Palestine: Wide-open prospects
Investment fundamentals
The west Bank and Gaza Strip enjoy investment opportunities in the area of infrastructure development, as well as abundant potential for investments in many areas and sectors in a free market economy in which the private sector plays a central role in accelerating the growth pace.
Several incentives are set to promote investments within Law no (1) of 1998 and its amendments on the promotion of investments, that aims at facilitating the business environment and contributing to the improvement of the investment climate. The law focuses on many economic sectors like agriculture, industry and tourism, and supports export activities and projects that employ local labor force and that serve local interests.
According to the Palestinian Investment Promotion Agency, a package of incentives was recently launched in 2017 to encourage investments in accredited industrial and free zones, in accordance with the national policies agenda for 2017-2022. These facilities include three types of projects: existing projects that did not benefit from grants program or that did benefit therefrom, projects within the scope of industrial zones, and the finance and lending programs. Another package of incentives was also launched to encourage investments in the use of alternative and renewable energy technologies.
There are several investment areas in the sectors of construction and real estate, food and beverage, IT & Communications, tourism, industry, agriculture, in stone and marble quarries, pharmaceuticals, textile and garment industry, renewable energy, health and education.
The occupation suffering
The Palestinian economy faces great difficulties resulting from the Israeli occupation and exactions, as well as from the sharp decrease of aid flows in the recent years. The growth rate that started to slowly recover from a state of stagnation in 2014 is expected to reach 3,5% in the medium term, according to the World Bank indicators.
There is a need to provide a favorable climate for sustainable growth that will be led by the private sector, alongside the commitment of the international community to continue providing financial support and remove the Israeli restrictions that are still hindering private investments.
Palestine’s ranking in the World Bank indicators for ease of doing business for 2017 among 190 countries
Source: World Bank Doing Business 2017
Official authorities continue to manage policies for achieving the required balance, as the report of the International Monetary Fund mission for 2017 indicates that the public finance had a performance beyond expectations in mobilizing revenues and curbing expenditures in the five first months of 2017. As a result, the recurrent expenditures deficit is expected to reach 6.1% of the GDP by the end of the year, thus showing a decrease by 1.7 percentage points compared to previous projections. There is also a need to take additional steps so as to make more progress in narrowing down the funding gap that accounts for 4% of the GDP, especially by improving collections, setting a more progressive fiscal system, raising spending efficiency and enhancing the cost recovery of public services.
