"It's easy to get into talk populist talk on the issue of concentration, but it's not easy to deal with it," said Governor of the Bank of Israel Prof. Stanley Fischer at the 18th Caesarea Economic Policy Planning Forum (2010), being held in Nazareth. "We need to examine possible solutions that will be based on data and real research, not on shouting," he added.
Fischer said that it was clear that the level of concentration in Israel was high in international comparison, and that 20 conglomerates controlled about half of the market share of public companies. "This has negative consequences for competitiveness in the economy, and in extreme cases it can damage the financial system," he said.
Fischer added, however, that supervision of the banks kept the financial system stable.
Fischer did not miss the opportunity to comment on one of Israel's contemporary burning issues: government royalties from the natural gas discoveries. He said, "The amounts of gas discovered at Tamar and Leviathan are large relative to the size of the economy, which raises the question of royalties. It is important not to breach contracts, but it is also important to check what the contracts actually say, if they exist at all. It's not necessary to listen to every declaration by someone in the field as though it were fact."
Fischer welcomed the establishment of a committee to review the issue of royalties. "If the estimates materialize, we'll have to take measures to prevent what is called 'Dutch disease'; that is, that the discovery of the resources will result in reduced natural gas imports, which will cause a balance of payments surplus and an appreciation of the local currency," he said.
Published by Globes [online], Israel business news - www.globes-online.com - on June 16, 2010
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