A PIVOTAL TIME FOR PALESTINE
As Palestine continues its struggle for statehood, the country is working on a strategy to attract much needed investment into the country.
On May 16th, Pope Francis and Palestinian leader Mahmoud Abbas met after the Vatican made a more formal recognition of the areas controlled by the Palestinian Authority to which it has been referring to as Palestine since 2012. Ahead of the meeting, the Vatican entered an agreement with ‘the State of Palestine’ which is thought to mark the first time the Holy See has formally recognised Palestinian statehood in a legal document.
According to Palestinian officials, as many as 135 states now recognise Palestine as a state. Last October, Sweden became the first major European country to acknowledge Palestine as a state.
Hopes are high that the Vatican’s recognition of the State of Palestine will usher a new debate over Palestinian statehood in Europe and elsewhere, bringing Palestine closer to its goal of being recognised as a country in its own right.
Palestine has not had an easy history. The war in 1948 had hundreds of thousands of Palestinians expelled from their homeland; many of them have never able to return until today.
The challenges facing today’s Palestine are of multifaceted nature and include political as well as economic challenges.
Whilst Palestine’s government is democratically elected, internal political differences between the Fatah party and Hamas have hindered democratic processes in the country since Hamas took control over the Gaza strip in 2007. “Our country is quite democratic,” says Mohammed Zomlot, CEO of a luxury hotel chain in Palestine. “The issue is that since Hamas took over control of Gaza and is not interested in holding elections, the West Bank has been facing the dilemma of whether to hold elections without Gaza or not.” Dr. Faisal Awartani, CEO of a research and polling institute in Ramallah, thinks it won’t be long until the West Bank will decide to hold elections without Gaza as “we simply cannot go on any longer like this,” he says.
Political uncertainty and restrictions on access and movement caused by the Israeli occupation have hindered the Palestinian economy to take off. According to the World Bank, private investment in the Palestinian territories remains far from sufficient to fuel adequate rates of economic growth and to create enough jobs to allow unemployment to fall. Furthermore, the lack of a comprehensive peace agreement further hinders the development of economic stability. However, there are positive aspects in the investment climate, says the World Bank, such as a stable financial sector and low incidence of bribery; and firm performance indicates potentially competitive productivity levels.
These positive aspects imply that the Palestinian private sector could respond effectively once movement and access is allowed, says the World Bank.
Despite, or perhaps because of all of these challenges, Palestinians are an incredibly determined and resilient people. They refuse to succumb to the restrictions imposed on them by external forces and continue to find and implement ways to spur growth as well as to work towards increased international recognition of Palestinian statehood.
In an effort to promote investment into the country, the Palestinian government is currently embarking on a strategy aimed at changing perceptions about Palestine abroad.
Part of this means reaching out to the Palestinian diaspora and educating them about the opportunities the country has to offer. “If they [Palestinian expatriates] don’t make the first step and recognise the importance of investing in their own country, then who will?” says Haytham Wahidi, CEO of the Palestinian Investment Promotion Agency (PIPA). PIPA is currently in the process of establishing a diaspora database to reach out to Palestinians abroad and to create awareness about existing investment opportunities in the country.
Speaking at the groundbreaking event of the Al Rayhaan American School in Ramallah last month, a project which is set to significantly enhance Palestine’s educational offerings whilst setting an example for successful Public Private Partnerships in the country, Prime Minister Rami Hamdallah said:
“Our government as per the direction of the President, has made all the efforts to establish Palestine a place for serious investments. We have paved the way for all governmental sectors to provide the economical and administrative laws required to encourage both domestic and foreign investment, in order to be able to reap the benefits our country offers in terms of its resources and opportunities, which is essential to development of our country.
“In line with the above, we have updated the investor protection laws in order to settle any disputes, protect investors and their investments whilst at the same time providing a number of security measures for projects, especially for those located in the areas called ‘C’ and the lands which are on the frontline of the wall.
“These measures are aimed encouraging investment into Palestine despite the circumstances, especially in educational developments which signify our people’s willingness to live and develop every day while confronting the injustice posed by the Israeli occupation.”
Areas for investment
The bottom line is, Palestine is an untapped emerging market with enormous investment potential, says PIPA.
“Investment in Palestine is high risk but also high reward,” Wahidi says, pointing out that the government has created a package of incentives to attract investment into the country.
As a ‘virgin land’, Palestine offers investment opportunities in all economic sectors. Its development phase includes expanding its production chain to meet the needs of local as well as regional markets. In addition to being an untapped market, Palestine also sits at a strategic geographical location linking the continents of Asia, Africa and Europe and possesses a well-educated and skilled workforce.
A range of qualified Industrial Zones, administered by the Palestinian Industrial Estates & Free Zone Authority (PIEFZA) were established to “guarantee the success of investments by offering services, advanced infrastructure, and rewarding incentives within the designated areas.” Currently, existing industrial estates in Palestine are: Bethlehem Industrial State (BMIP), Jericho Agro-Industrial Park (JAIP), and the Gaza Industrial State (GIE). Further two industrial estates are currently under construction; the Jenin Industrial Free Zone (JIFZ) and the Industrial Zone in Tarqoumia.
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