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Economic and Trade Department, Tel +65-68349220 Fax +65-67372502

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(NYSE:EMC) has made more investments in Israel this year than any other the increase in the budget framework and the increase in the budget deficit,

    Highlights Dear Business friends of Israel,

    Israeli activities at Global Entrepolis The Israel Trade Newsletter is a bi-

     monthly publication of the Economic 10 Israeli start-ups under the Tnufa Program and Trade Department of the will be exhibiting under the Israel Pavilion at Embassy of Israel in Singapore. Global Entrepolis 2006, that will be held from 31 Oct 2 Nov 2006 at the Suntec Our office is the focal point of Convention Centre contact for Israeli companies For more information on the Israeli

    seeking trade and investment companies,

    opportunities in Singapore, Malaysia please click here.

     and Indonesia. We also assist To welcome our Tnufa delegates, the Singaporean companies who are Economic and Trade Department of the interested to do business with Embassy of Israel will be hosting a cocktail Israeli companies, in sourcing out reception. the right partners. For more details, please contact Ms. Joelle Loy We are happy to inform you that we at joelle.loy@israeltrade.gov.il or DID: +65-have several activities lined up 68349218

    during Global Entrepolis.

     Israeli designers at Eco Products

    International Fair 2006 1. 10 Israeli start-ups will be

     exhibiting under the Israel An Eco Products International Fair 2006 Pavilion at next week’s Global (www.epif06.com) will be held in Singapore Entrepolis exhibition in stndfrom 31 October to 2 November at the Singapore. For profiles of the Suntec International Convention Center, Halls companies, please visit 601 & 602. http://www.israeltrade.gov.il /NR/rdonlyres/BE774ECC-Eco Lifestyle & Design (Singapore) (or Ecolds,

    DD5C-4AFB-AEF1-in short) has been engaged by the event

    366D439507F8/0/ProfilesofIsmanager of EPIF06 to produce an Eco-Fashion

    Show which will feature a collective team of 4

    fashion designers from Australia, Israel and raeliTnufacompaniesatGES200

    Singapore. For Israel, Ecolds has selected 6.doc Neta Lidor who will showcase her collections Our office is organizing for the first time in Singapore. She will also meetings for the Israeli have ready-to-wear collections in Ecolds exhibitors, if you are keen to pavilion at EPIF06. There will also be other meet any of the companies, eco brands from Israel promoted at the Ecolds please contact Joelle Loy at pavilion. joelle.loy@israeltrade.gov.il or

    DID: 65-68349218 Anyone interested to participate in or visit the

     Ecolds pavilion at EPIF06, please contact Ms.

    Rina Raveh at 65.6462-2438 or 65.9637-2. To welcome our Israeli

    0795. delegates at Global Entrepolis,

     our office is organizing a

    cocktail reception. For more Business Opportunities

     details, please contact Ms.

    Latest! Joelle Loy at

     joelle.loy@israeltrade.gov.il or Archive DID: +65-68349218

     SIIRD 3. At the Eco Products

     International Fair that is held

    in conjunction with Global

    Entrepolis, for the first time, an Israeli fashion designer, Bi-national fund between Singapore and Israel

    for industrial research and development Neta Lidor, will be showcasing

    collaboration her collection in Singapore.

    For more details, please Coming Exhibitions/Conferences in

    contact: please contact Ms. Israel

    Rina Raveh at 65.6462-2438

     or 65.9637-0795.

    As always we will be happy to hear from you and be of assistance

    for any inquiry you may have. Telecom Israel 2006

     Communication & Information Technology

    Exhibition and Conference Warm Regards,

    November 6 8, 2006

     Anat Katz

     Commercial Attaché Israel Embassy, Singapore Prime Minister's Conference for Export & International Cooperation November 8 - 9, 2006 Alternative & Renewable Energy

    Conference

    November 8, 2006 More info at: http://oscar4b.com/BIRD/

    International Conference on

    From Invention and Development to

    Product

    From Research Institutes to the Water

    Industry

    November 28 - 30, 2006

    More info at: www.ziwr.co.il

    Plasto Ispack 2007 thThe 11 International Exhibition for Plastics,

    Rubber & Packaging

    January 15 18, 2007

    Daily News

     General News

    Business News

    Public Holidays in Israel 2006

    Israel Government Portal

    Israel Ministry of Finance

    Homepage of

    Embassy of Israel Singapore

    Visa and Consulate Affairs

    Contact: Ms. Valerie Wong

    Telephone: +65-68349264

    consul-sec@singapore.mfa.gov.il

    Economic News Updates from Israel

1. General & Economic News

    1.1 Foreign investment in Israeli start-ups US$2.1b since January

    1.2 Israel jumps to 15th place in WEF competitiveness rankings

    1.3 Israel’s risk rating unchanged

    1.4 Investment in telecom start-ups up 52% in second quarter

    2. Industry Developments

    2.1 Novel device for identifying explosives

    2.2 Bananas that defend themselves

    2.3 Infinity launches new fund

    2.4 LSI Logic to buy StoreAge for US$55m

    2.5 Cancer treatment company Althera Medical raises US$1.5 million

    2.6 Adi to supply 8,000 watches to Singapore Army

    2.7 Water company Blue I pilot successful

    2.8 Agilent opens R&D center in Israel

    3. Special Feature

    3.1 Update on Economic and Trade Department’s activities

    3.2 Special Feature: The Anatomy of a Hi-Techie

    4. Business Opportunities

    4.1 Recent Business Opportunities from Israel

1. Economic News

    1.1 Foreign investment in Israeli start-ups US$2.1b since January

    Foreign investment in Israeli start-ups has totaled US$2.1 billion since January 2006, according to a “Globes” survey. Top of the list is optical communications solutions developer,

    Passave Technologies, which forewent a Nasdaq IPO in favor of being sold to PMC Sierra Inc.

    (Nasdaq:PMCS) for US$300 million in shares.

The survey also found that 31 start-ups have been sold since the beginning of the year. Three

    start-ups were biomedical or medical devices companies: ColBar LifeScience Ltd., Alma Lasers Ltd. and Predix Pharmaceuticals Inc. The other companies developed technology of one kind or another.

    EMC Corp. (NYSE:EMC) has made more investments in Israel this year than any other foreign investor. Since January, it has acquired three Israeli start-ups: Kashya, nLayers, and Proactivity for an aggregate US$233 million.

    Software giant Microsoft Corp. (Nasdaq:MSFT) has acquired two Israeli start-ups since January: Gteko for US$120 million and Whale Communications for US$76 million.

    2006 has also been the year in which other US giants decided to buy an Israeli start-up. Xerox Corp. (NYSE:XRX) acquired XMPie Inc. for US$54 million. McAfee Inc. (NYSE:MFE) has also just acquired Onigma Ltd. for US$20 million.

Most of the acquisitions were in cash. Exceptions were the acquisition of Passave and

    SightLine (a cash and share-swap deal), the merger of Predix with Epix Pharmaceuticals Inc.

    (Nasdaq:EPIX), and four other acquisitions for sums of between US$2 million and US$52

    million.

Of the 31 start-ups mentioned, seven were sold for over US$100 million, and accounted for

    half the total foreign investment in Israeli start-ups so far this year. (Globes 17.10)

Back

1.2 Israel jumps to 15th place in WEF competitiveness rankings

    Israel is ranked 15th in the World Economic Forum’s (WEF) 2006 Global Competitiveness

    Index, up from 23rd place in 2005. The US fell from first to sixth place. Israel outranks Canada, Austria, France, Australia, Belgium and Ireland, which follow it in descending order.

The WEF ranks countries’ competitiveness according to a set of criteria, arranged into nine

    groups: macroeconomic policy, market efficiency, business sophistication, technological readiness, innovation, infrastructure, health and primary education, higher education and training, and institutions. The WEF believes that these factors affect an economy’s

    productivity, which in turn affects its ability to maintain sustained growth over many years. The rankings include figures for the criteria derived from surveys of business managers.

    The WEF says the jump in Israel’s ranking was primarily due to the reforms led by the Bachar committee, which instilled in Israel a considerable degree of competitiveness and professionalism, and laid the groundwork for a revolution in asset management. The report’s author, WEF chief economist Augusto Lopez-Claros says Israel is attracting a growing number

    of foreign investors, and that there were extremely impressive developments in Israel’s financial markets and that it now had developed along regional and international standards.

The WEF goes on to say that Israel benefits from innovation, supported by top-of-the-line

    higher education and scientific research institutions. Israel has become a global technology powerhouse, which has a huge impact on the rest of the economy, and is good news for the

    future. High-tech products comprise 70% of Israel’s industrial exports, the highest proportion in the world.

Israel’s lowest ranking is for macroeconomic policy, where she is ranked 50th. Israel was

    ranked 29th in the institutions and basic requirements subindex. The report favorably notes Israel’s fiscal policy and tax cuts. Israel’s public spending/GDP ratio was 47.3% in 2005, above the OECD average of 41.8%, but the WEF favorably cites Israel’s efforts to cut this ratio to 34.4% by 2010. Tax reforms instituted in mid-2005 boosted Israel’s rating in the

    macroeconomic index to 17th place.

    The WEF attributed the plunge in the US’s ranking to sixth place, behind Switzerland, Finland, Sweden, Denmark and Singapore, to growing imbalances in some macroeconomic indicators,

    and the US’s huge fiscal deficit is jeopardizing the country’s competitiveness.

    The WEF ranking Switzerland as the world’s most competitive country, thanks to “a combination of a world class capacity for innovation and the presence of a highly sophisticated

    business culture.” Rapidly growing emerging markets, which are changing the global balance of economic power, got middling rankings: India is ranked 43rd, China 54th, Russia 62nd, and Brazil 66th. (Globes 27.09)

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1.3 Israel’s risk rating unchanged

    Israel’s risk premium on international markets is unchanged at 31 base points. No changes were made in the risk premium of other emerging markets, either, according to a Bank of

    Israel comparative study.

    The Bank of Israel said Moody’s, Standard & Poor’s and Fitch Ratings recently published reports on Israel’s fiscal condition after the cabinet approved the 2007 budget. The Bank of Israel said that announcements by the three rating companies accepted the increase in the budget framework and the increase in the budget deficit, to cover the cost of the second Lebanon war, even though these measures will slow the reduction in Israel’s debt/GDP ratio.

    The Bank of Israel says that the rating companies kept their ratings and outlooks for Israel unchanged, but stressed that the government must honor the new budget framework. (Globes 10.10)

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1.4 Investment in telecom start-ups up 52% in second quarter

    34 Israeli telecommunications start-ups raised an aggregate US$131 million during the second

    quarter of 2006, IVC Online reported today in its periodic venture capital in Israel survey. The survey demonstrates that Israel’s telecommunications equipment R&D and manufacturing is alive and well. The upcoming Telecom Israel 2006 exhibition and conference in November will undoubtedly benefit from this boom, presenting developments in the industry.

    Telecommunications companies raised US$217 million in the first half of 2006, 28% of total capital raised in this period.

IVC Online also states that telecommunications start-ups raised 32% of total capital raised in

    the second quarter, compared with 24% of the US$86 million raised in the first quarter, and

    35% of the US$136 million raised in the second quarter of 2005.

    A breakdown of telecommunications by subsector showed that the leading field is wireless, which attracted half of total investment. 24% was invested in optics, 12% was invested in

    telecommunications companies, 6% was invested in data communications and 8% in other

    fields. (IVC Online 05.10)

Back

2. Industry Developments

    2.1 Novel device for identifying explosives

    An Israeli company called TraceGuard Technologies has pioneered a detection device it claims can identify explosives with unparalleled sensitivity, which could simplify airport baggage checks. TraceGuard originally developed CompactSafe, a system geared at detecting traces of

    chemicals in electronic devices commonly used to conceal explosives, such as laptops, cameras or cellular phones. In response to last month's security alerts however, a new device in development known as CarrySafe will be able to detect liquids in carry-on bags, which will

    be vital if baggage restrictions remain in place.

    Unlike standard detectors, TraceGuard's technology can be placed alongside the X-ray

scanners, removing the need for time-consuming swab tests and individual bag checks.

    Dr Ehud Ganani, Chairman and Chief Executive Officer of TraceGuard, said that his firm was "committed to providing a unique solution to a complex and challenging security dilemma," confirming that the technology should be installed in a Tel Aviv checkpoint by December.

    Airport authorities around the world will be watching the success of this pilot program eagerly. (Ishitech Oct’06)

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    2.2 Bananas that defend themselves

    An Israeli biotech company has developed banana plants that are completely resistant to

    pathogenic nematodes, which are parasitic organisms that normally damage the plants and their fruit. Nematodes, commonly called roundworms, and are some of the most destructive pathogens damaging banana and plantain crops across the globe. Chemical nemacides have

    been banned in most of the world due to their dangerous toxic and carcinogenic nature. Israel's Rahan Meristem biotechnology company has now developed banana plants resistant to nematodes, a development that will save banana growers the world over millions

    of dollars in lost crops. The company currently employs 110 people, and aside from its main office in northern Israel, maintains agencies in Costa Rica, Brazil, Colombia, Serbia and Croatia. (Ishitech Oct’06)

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    2.3 Infinity launches new fund

    Israel Infinity Venture Capital announced that Infinity III Fund has begun activity. Israeli, British, and Chinese investors have pledged to invest in the fund, and Clal Industries and Investments Ltd. (TASE: CII) has already transferred money. Infinity managing partners Amir Gal-or and Avishai Silvershatz said today that the fund would make its first closing of US$25 million by the end of the year, and would raise US$100-150 million during 2007. They added

    that most of the Infinity III fund would be raised from Asian investors.

    Infinity Venture Capital manages US$300 million through its Nitzanim and Infinity I funds, which are fully committed; Infinity II fund, which is due to make one more investment; and Infinity IMS and Infinity-CVCS fund, which operates in China.

    Infinity Venture Capital is raising the new fund now in order to maintain its momentum of the past 18 months, during which it made 11 exits amounting to US$130 million altogether. The exits include the sale of Native Networks, SightLine Technologies and Identify Software, and IPOs by Saifun Semiconductors Ltd. (Nasdaq:SFUN) and Shopping.com (later acquired by Ebay Inc. (Nasdaq:EBAY)). (IVC Online 09.10)

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    2.4 LSI Logic to buy StoreAge for US$55m

    Sources inform "Globes" that LSI Logic Corporation (NYSE:LSI) is in advanced negotiations to

    acquire Israeli start-up StoreAge Networking Technologies Ltd.. A deal is due to be signed in

    the coming weeks, and the companies have already agreed on a price tag of US$55 million. The companies have been collaborating since StoreAge was founded.

    When the deal is closed, StoreAge will become LSI Logic's R&D center in Israel. This is LSI

Logic's first acquisition in Israel.

    StoreAge was founded in 1999 and provides storage area network (SAN) solutions. The company has raised US$34 million since it was founded from The Challenge Fund-Etgar LP,

    Genesis Partners, Koonras Technologies Ltd., OphirTech Ltd. and Cisco Systems Inc. (Nasdaq:CSCO). The company recently raised US$4 million from Plenus Venture Lending

    Fund. Investors will double their investment when the deal is closed.

    StoreAge develops software solutions for storing data on enterprise information networks. The company develops split-path storage management solutions for SAN. The company's products

    provide tools for managing storage solutions in a uniform manner, protect them, and enable low-cost business continuity and disaster recovery.

    StorAge develops software and hardware that give enterprises maximum access to information. The company's products enable customers to reduce data storage costs while greatly improving storage capacity. (Globes 16.10)

    Back

    2.5 Cancer treatment company Althera Medical raises US$1.5 million

    Israeli start-up Althera Medical Ltd. announced that it closed a US$1.5 million first financing round. ProMed Capital Group of the US led the round, joined by private US and UK investors. ProMed partners Leonard Gordon and Dr. Jacob Dagan will join Althera’s board.

    Althera chairman and CEO Dr. Gideon Shichman, chief scientist Prof. Yona Keisari, and CTO Prof. Itzhak Kelson founded the company in 2005. IVC Online says the company has five employees.

Althera has developed an innovative cancer treatment based on diffusing alpha-emitting

    radiotherapy (DART) technology. DART uses alpha particles to destroy tumors. Although the medical world has known for years that alpha particles are effective, there has been no way to target them to cancerous cells. Althera has apparently solved the problem. The company’s

    treatment can be applied to lung, brain and neck, breast, pelvic, rectum and pancreatic cancers. (Globes 10.10)

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    2.6 Adi to supply 8,000 watches to Singapore Army

    Adi Quartz Watches-Yavne Group has received an order for 8,000 watches for Singapore Army

    officers. The watches will be embossed with the Singapore Army insignia, and will have light-

    emitting ampoules for poor light and underwater viewing capability. The watches will be water resistant up to 200 meters, have scratch resistant glass, made from stainless steel and with a double-seal crown.

The contract is worth an estimated NIS 350,000 (Globes 15.10)

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    2.7 Water company Blue I pilot successful

    Israeli start-up Blue I Technologies Ltd., which is developing water quality monitoring and control for systems for industrial and municipal use, has successfully completed an 18-month

pilot at the flagship Paris facility of Veolia Environnement (NYSE: VE; Euronext: VIE), the

    world’s largest water company. Founded less than five years ago, Blue I is run by CEO Tsur Ben-David, a former Israel Air Force pilot, who owns 40% of the company. The company has raised US$5 million to date from Kibbutz Ramat Rachel and European angel investors, and is now holding a second financing round.

    The success of the pilot is a major achievement for Blue I, since its competitors in the pilot to supply water quality control systems were companies worth hundreds of millions or billions of

    dollars.

Veolia controls 40% of the French water market, and operates 10,000 facilities. Ben-David

    said that, following the pilot, the company conservatively expected orders for hundreds of systems for water facilities. Each system costs ?4,000-5,000. Blue I also expects to supply

    technical support and maintenance.

    Although Veolia first has to complete several weeks or even months of internal bureaucratic procedures following the completion of the pilot before Blue I can open negotiations with it,

    the facility’s manager has already ordered two Blue I systems for immediate delivery. Ben-

    David said, “This is a vote of confidence.” (Globes 09.10)

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    2.8 Agilent opens R&D center in Israel

    Another technology giant is opening a development center in Israel. Agilent Technologies Inc. (NYSE: A) Electronic Measurements Group president Patrick J. Byrne made a 24-hour visit to

    Israel. The centerpiece of the visit was to dedicate the company’s new R&D center at the

    company’s offices in Petah Tikva

    Agilent has joined the long list of high-tech giants with R&D centers in Israel. Agilent’s center is important because electronic measuring equipment is barely known in Israel. Also, in contrast to other international companies, Agilent has not acquired a local start-up as the

    foundation for its R&D center, but has set it up from scratch.

    In an exclusive interview, Byrne told “Globes”, “We’re starting with an R&D center, which will focus on customers. Later, we’ll probably support research carried out by Israeli research institutes (such as the Technion - Israel Institute of Technology). We realized that if we want organic growth, we must begin with a small project. We’re therefore starting with a small team, fewer than ten people whom we’ll hire in the coming months. We’ll then move forward step by step.”

    Bryne said Agilent opened an Israeli R&D center because of developments in the communications industry and because of Israel’s centrality in the wireless equipment industry.

    “The wireless communications industry is undergoing convergence to IP. Technology such as WiMAX is based on this convergence, which is the future of mobility. There are many semiconductor companies in Israel working on solutions that will be the future of the mobile

    world. I see the convergence of market forces in Israel as something that enables us to be in the forefront of the semiconductor industry, solutions that will later go to equipment companies.” (Globes 08.10)

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3. Special Feature

    3.1 Update on Economic and Trade Department’s activities

    Israel Start-ups @ Global Entrepolis

    31 Oct 2 Nov 2006

    Booth number: C 6-12, D 5-13

    Venue: Hall 401 404, Suntec Convention & Exhibition Center

    www.globalentrepolis.com

    10 Israeli start-up companies under the Tnufa Program will be showcasing their innovative ideas and prototypes at the coming Global Entrepolis Enterprise Exchange exhibition.

For profiles of the companies, please visit

    http://www.israeltrade.gov.il/NR/rdonlyres/BE774ECC-DD5C-4AFB-AEF1-

    366D439507F8/0/ProfilesofIsraeliTnufacompaniesatGES2006.doc

    Our office is organizing meetings for the Israeli exhibitors, if you are keen to meet any of the companies, please contact Ms. Joelle Loy at joelle.loy@israeltrade.gov.il or

    DID: 65-68349218

In short, the 10 Israeli exhibitors are:

    1. AsMedic: Development and initial marketing dissemination of a new

    system delivery that aims to deploy changing dosage at any delivery of

    Asthma attacks prevention medications.

    2. Cellergy: Developed and manufactures low cost EDLC

    supercapacitors (electrochemical double layer capacitors), utilizing its

    own proprietary process. www.cellergy.co.il

    3. Flamingo Electronics: Technological breakthrough with their invention,

    JeTrix, an inkjet printing technology that allows page printing at a

    fraction of a second.

    4. MEP Technologies: Development of a software client for the camera-

    phone, agnostic to operating system & hardware, running on virtually

    every camera-phone. Combined with the MEP server, users can

    seamlessly upload images and video clips to their favorite

    service (Blogging, sharing, social networks, printing service) or receive

    the assets directly to their email box. A clientless service is also

    available.

    5. Movie Key: Developed a solution to down load any video content like

    movies or songs, from a kiosk or vending machine to a Disk On Key and

    play it back on your TV set in your hotel room.

    6. Parallel Communications: OfficeOne, is a software suite that bundles

    a full range of intra-enterprise communication applications. It brings real

    time voice, text, video and multimedia desktop communication functions

     providing employees with an unprecedented set of tools for

    communicating within the organization. www.parallel-

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