Almost 70% of Israeli startups have taken steps to relocate parts of their operation outside of Israel due to misgivings over the government's planned judicial overhaul. The figure comes from a survey by the Start-Up Nation Central non-profit, which was seeking to gauge the economic impact of the contentious reforms.
Israel's world-famous tech sector is one of the country's major growth drivers, accounting for 15% of economic output, up to 50% of exports and 25% of tax income.
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Israel's world-famous tech sector is one of the country's major growth drivers
(Photo: Boaz Oppenheim)
While typically reluctant to comment on Israeli politics, many tech CEOs have in recent weeks criticized the reforms to the judiciary that are being pushed through the Israel's parliament by the rightist coalition headed by Prime Minister Benjamin Netanyahu.
Earlier this year, some 80% of business leaders in the Israeli high-tech sector reported meeting cancellations by investors due to the government's attempts to legislate a judicial overhaul.
The survey published on Sunday canvassed employees of over 500 Israeli high-tech companies; 68% of the respondents said their companies "have begun taking active legal and financial steps, like withdrawing cash reserves, changing headquarter location outside Israel, relocation of employees and conducting layoffs."
"Concerning trends like registering a company abroad or launching new startups outside Israel will be hard to reverse," said Start-Up Nation Central CEO Avi Hasson.
Moreover, 22% of companies said they have diversified cash reserves outside Israel and 37% of investors say companies in their portfolios have withdrawn some of their cash reserves and moved them abroad.
The survey was released as lawmakers began debating a bill ahead of its final readings that would prevent the Supreme Court from striking down government decisions on the grounds of a "reasonableness standard."