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Israel
By Avi Krawitz
Israel’s diamond industry welcomed the Jewish New Year hoping that recent developments in the bourse and the global market will enable growth moving forward. “The Hong Kong Jewellery & Gem Fair in September signaled a slight improvement in the market, as it was better than previous exhibitions,” said Yoram Dvash, president of the Israel Diamond Exchange (IDE). “We hope this is the start of a new positive trend.” Similarly, Shmuel Schnitzer, president of the Israel Diamond Institute Group of Companies (IDI), reported an awakening in the rough market, accompanied by steady demand in the U.S., which he believes will lead to an improvement in the polished market. However, the industry’s leadership remained cautious in their outlook while giving their Rosh Hashanah messages and blessings. “We endured a difficult year and the preceding years were not easy either,” said Kobi Korn, president of the Israel Diamond Manufacturers Association (IsDMA). “The industry has seen its ups and downs and we have to exercise caution in the near term.”
Dvash stressed that the past few months have been particularly difficult in light of tightening bank credit to the local industry and pressure exerted by the banks to reach an agreement with the Tax Authority. The ongoing dispute raised the industry’s risk profile in the banking sector, he explained. The exchange consequently increased its efforts to solve the dispute surrounding the trade’s reporting standards and IDE leadership finally reached an agreement with the Tax Authority in the third quarter, Dvash announced. While representatives of the authority refused to meet with the IDE leadership for four years, Moshe Asher, head of the Tax Authority, is now leading efforts to enable “voluntary disclosure” of back taxes owed and related documents held by diamond businesses, Dvash reported. The exchange is still engaged in dialogue with the Tax Authority regarding how to go about valuing diamond inventory, according to Dvash. He stressed the agreement would help change the attitude of other government agencies toward the diamond industry, as well as that of the banking sector, which has steadily reduced its lending to the diamond trade given its “high risk” nature.
In light of the negotiations with the Tax Authority and the banks, the bourse has initiated reforms to streamline its own operations. The project has been divided into three parts, namely: looking into operations in the Maccabi and Shimshon buildings and the polished trading floor; secondly, assessing activity in the Yahalom building and the rough trading floor and thirdly, delving into special projects and management’s relationship with tenants. The reforms also include three rounds of job cuts, which have already been implemented and which Dvash said will save the bourse approximately $1.4 million a year. Other cost-cutting measures include implementing a new security system that will save the exchange $500,000 a year “without compromising the level of security,” Dvash said. IDE expects to save approximately another $250,000 in general expenses as a result of the reforms. The cost savings, along with a rise in income from rentals in the bourse, will be invested in advancing the trade, Dvash assured. “Our goal is to convert as many resources into projects that directly support the diamond business,” he said. “We already have advanced numerous projects in the first nine months of the year.”
A new center to hold rough and polished tenders and auctions will be established in the Maccabi building. The center, which will include seven viewing rooms and a central control room, is scheduled to open in the beginning of 2017. Dvash also noted plans to establish two new manufacturing facilities in the bourse area, adding to the existing facility set up last year. That will include a private company setting up a factory to provide laser services to manufacturers. Korn stressed the industry is working to bring young workers to these factories as the average age of factory workers in Israel is high. Meanwhile, on the polished selling side, IDE initiated projects to enable bourse members to sell their goods online through platforms such as eBay, James Allen and IDE’s own Get Diamonds portal.Article from the Rapaport Magazine - November 2016. To subscribe click here.
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