Thanks to the Disengagement Plan and to other steps taken by the government, the Israeli economy is presently at a new starting point.

I am happy to be here at the opening of Israel’s 2005 Hi-Tech Conference.

Last year I stood here and presented the Disengagement Plan to you. I explained the logic behind it and the benefits it will bring to the State of Israel. Since then, the withdrawal from Gaza was approved by the government and the Knesset and we are presently preparing for its implementation. The plan will be implemented and carried out in accordance with the dates determined by the government and the Knesset.

Recently, various people have made assessments regarding the reality which will be created in our region following the disengagement. It is important to understand, the withdrawal from Gaza has already improved, and will continue to improve Israel’s position in any reality which will be created in our region. It is the right thing for us to do and we will continue to implement it in spite of opposition, false incitement, blockage of traffic arteries, and dire threats.

We will do so because withdrawal from Gaza is good for Israel. Today, on the eve of the implementation of the Disengagement Plan, we can already see its benefits – also in the economic field. Thanks to the Disengagement Plan and to other steps taken by the government, the Israeli economy is presently at a new starting point. From a negative growth rate in 2002, we achieved a growth of 4.3% in 2004 – a rate higher than that of most industrial countries. Our prognosis, and that of the Bank of Israel, is that growth will continue at these rates, or even higher, in the next few years.

This change is very evident in the field of hi-tech industries, which suffered the worst blow during the recession years. The change is already discernible in the export data: export of hi-tech products increased during the first third of 2005 at a rate of 5.9%, compared with the same period last year. One of the most encouraging signs is the 60% increase, in 2004, in venture capital fund investments in Israeli hi-tech industries.

The government, for its part, is doing its utmost to assist our knowledge-based industries. The Research and Development Law was amended to enable the participation of Israeli companies in the global research and development market. We cancelled the tax on foreign investment in venture capital funds. We amended the Law for the Encouragement of Capital Investment to ensure attractive and easy terms for investment in hi-tech companies. I say without hesitation: this law makes Israel one of the most attractive countries for investment in the field of technology. And today, if we take into consideration other developments in the Israeli economy – stability, decreased inflation and interest rates, and processes of reform and privatization – the picture we get is indeed a positive one.

We can look back with satisfaction on the great achievements of the government, primarily the determined stand against the Palestinian terrorist assault, which attempted to make our lives here hell, and the recovery of the economy from the serious crisis it faced, while renewing growth.

However, in the competitive world of the 21st century, there is no time to rest on the laurels of yesterday’s achievement. We are, at this time, examining programs to ensure unlimited implementation of hundreds of initiatives and opening new start-up companies every year.

This constitutes the engine of the technological industry. At the same time, we are examining the country’s ability to support the formation of an infrastructure which allows for the development of additional strategic technological industries in Israel, such as homeland security, bio-technology or water and environmental technology. There is no doubt that we, of course, have entered the nano-technology sphere, and I have many expectations from this field.

We should not be satisfied with the impressive accomplishments already achieved by the Israeli hi-tech industries, but should continue to advance. For a country which belongs to the club of developed countries, there in no future without constant development of technology and human capital. The young generation which grew up here already has envisioned new initiatives, and I believe that they represent a great hope.

I wish you a fruitful and successful conference. And again, I wish to thank you. We are confident in your abilities, your talents and in your business daring.