South East Mediterranean- Logistics- Trade and Industry
 Chapter 3 South East Mediterranean
3. Logistics, Trade and Industry
 South East Mediterranean- Logistics- Trade and Industry

The availability of competitive skilled labor force, experienced in various manufacturing sectors, renders the East Mediterranean suitable for the development labor-intensive industries such as food processing, textiles, shoes, metallurgy, plastics, agricultural equipment, electronics assembly, jewelry, and building products. The region may also serve as a gateway for on-route manufacturing for trans-national companies conducting trade between Europe and the Far East.

3.1 Establishment of the Industrial Estates at Karni

The Palestine Development & Investment Company (PADICO) is developing an industrial estate (the Gaza Industrial Estate or GIE) at the Karni crossing, the main commercial transfer point with Israel. The Estate, which is being constructed on 50 hectares, is designed to provide full infrastructure and support services. It is located 3 km from Gaza City near the major Israeli port of Ashdod and a approximately 1 hour from the Ben Gurion International Airport.

A World Bank report estimates that anticipated economic benefits deriving from the project could include:

  • the creation of direct and indirect employment for over 50,000 people;
  • annual sales of products manufactured in the estate of approximately $790 million;
  • annual exports of approximately $400 million;
  • approximately $80 million net foreign currency earned.

a. On-site Infrastructure

Industrial units and office space are available in one-story and multi-story facilities. The standard industrial unit at the Estate is 2300m2 enclosed space, which can be divided into two or four sub-units to serve smaller operations. Companies can also lease plots of open land with full infrastructure services for building dedicated facilities. Utilities include: three-phase electricity, water distribution and wastewater disposal and telecommunication services. On-site services include personnel recruitment, customs brokerage, garbage collection, medical care and financial services, and special security arrangements. There are separate access points for pedestrian and vehicle traffic.

In order to facilitate cargo transport over the crossing, Israel has agreed to authorize the Israel Airports Authority, a civilian body, to administer the crossing point. Within this framework, Israel has undertaken the construction of a new cargo terminal at the Karni crossing. The new facility will include eight palate x-ray machines and cargo will be transfered from one side to the other via conveyer belt. Israeli and PA authorities will each be responsible for security on their respective sides. It is estimated that this facility will be operational by the spring of 1998.

Transfer of management of the crossing terminal to civilian authorities is designed to encourage economic activity between Israel and the PA and to facilitate access to international ports of entry for the GIE and Gaza. Along with the transfer of management, new crossing procedures will be instituted, designed to ensure that Palestinian goods will get to port and market intact and as quickly as possible. These new arrangements will lower current transport and handling costs for goods originating from and destined to the Palestinian Authority.

According to the planned arrangement, trucks transporting goods to the crossing will not have to wait for their partners on the other side before unloading goods. A fleet of Palestinian trucks will service the transfer of goods to and from the Israeli side of the crossing to ports of entry. These trucks will travel only in Israel. The new system will enable goods to be transferred without accompanying personnel. Hence, cargo will be able to pass through even if passenger traffic is limited.

b. Off-site Infrastructure

Off-site infrastructure will be supplied by both the PA and Israel. Planning is based on the following assumptions:

  • the estate will rely partially on PA systems;
  • only light-medium water users will be allowed to occupy the estate;
  • only limited numbers of industrial waste producers will be allowed;
  • mandatory tenant pre-treatment of effluent will be required in some cases;
  • the maximum capacity will be 17,600 workers;
  • all facilities will be located outside the proposed 47.2 hectare site area.

c. Required Financing and Primary Economic Benefits

The overall Gaza Industrial Project (including off-site infrastructure) was estimated by a World Bank Mission to cost $50 million. On-site incubator/computer training facilities, training and business support and a three-year security equipment and management contract is estimated to cost an additional $12 million. Technical assistance and program support required for concluding the necessary bilateral arrangements and legal frameworks and for aiding program development, project implementation, investment promotion, and Gaza Industrial Estate (GIE) management comes to $10 million. Hence, total financing required comes to $72 million. Additional investment in buildings and equipment will be made by the tenants, estimated at $108 million.

d. Israels Participation in the GIE

As part of its contribution to the PA as a member of Forum of Donor Countries, Israel has earmarked $14.5 million dollars for projects related to the Gaza Industrial Estate. $7 million is designated for erecting security infrastructure at the cargo terminal adjacent to the Estate. An additional $7.5 million will be channeled to additional infrastructure projects. $60,000 has already been allocated for a water pipeline to serve the GIE.

GIE industries will receive special status and benefits regarding transfer of personnel and goods at the Karni crossing point facility.

3.2 Oz Shalom Industrial Park

Kibbutz Nahal Oz is planning the development of a 900 thousand sq. m. logistic and industrial park on the Israeli side of the Karni crossing. The proposed site is designed to complement rather than directly compete with the GIE.

The Park will comprise five primary logistic elements:

  • Storage facilities will constitute the anchor of this facility that will special in transshipment of goods to and from the Palestinian Authority;
  • Industrial and auxiliary service facilities that offer high-level management, communications, office, business, financial and security services. It is estimated that these services will not constitute the key area of activity at the Park;
  • Road services, including a service station and commercial center at the Kibbutz Saad junction;
  • A factory outlet shopping center, including stores and food services;
  • Development of lodging services at neighboring kibbutzim.

Development of the project will be phased, reflecting development of cargo traffic through the crossing point:


thousand sq. m. developed (gross)







Provision of storage facilities and logistic services will constitute the primary activity of the Park. Facilities will include: warehouses; open storage lots; distribution warehouses at which repackaging and transshipment services will be coordinated; cold storage, safe storage for valuables; quarantine compounds, dangerous materials storage facilities.