A leading private Palestinian company is planning to pump hundreds of millions of dollars into the West Bank and eastern Jerusalem, beginning in the coming months.
Projects range from an electricity power-generation plant in the West Bank city of Qalqilya to a multi-purpose hall next to the Israeli Justice Ministry in ?Salah A-Din Street in the center of Arab-dominated east Jerusalem.
PADICO is planning on unveiling these projects during an investment conference the Palestinian Authority plans to hold on November 8 or 22 in the West Bank city Nablus with the participation of 450 Palestinian and Arab businesspeople, 100 of whom are Palestinian businesspeople living in Arab and Western countries.
The new push in the investments of PADICO, whose capital is around $500 million, came as heads of the company felt the West Bank was more secure compared to the years of violence that began in September 2000.
Reviewing the economic position of the P.A., the World Bank said in its March 2007 World Bank Investment Climate Assessment that, ?since the advent of the caretaker government in June 2007, the international community has channeled substantial financial and technical assistance to the P.A. to reverse the impacts of the recent aid sanctions on Palestinian institutions. This, in addition to a revival of discussions towards a peace agreement by the end of 2008, led to a new momentum in Israel and the Palestinian territories.?
However, the bank added, ?These positive developments remain challenged by the isolation of almost half of the Palestinian population within the Gaza Strip and by the continued violence arising from the Israeli-Palestinian conflict, and within the Palestinian territories. Combined with the tightening Israeli restrictions on movement and access and continued settlement expansion, the result is a Palestinian economy that is unable to sustain itself and its population under the current circumstances.?
But the PADICO management is upbeat.
?Despite the split between the West Bank and the Gaza Strip, there is relative stability in the West Bank on the security issue,? says Samir Huleileh, the new executive president of PADICO.
?There is a state of better internal security compared with the past as a result of measures taken by the Palestinian Authority, particularly in Nablus and Jenin; there is no corruption and investors don?t need to pay anybody in order for their projects to move.?
PADICO, which is considered one of the leading privately owned concerns in the Palestinian territories, owns or has a large stake in 31 companies in the West Bank and Gaza Strip.
Well-known Palestinian businessman Monib Al-Ma?sri is the CEO of the company, which began operating immediately after the establishment of the Palestinian Authority in 1994.
In a meeting with Palestinian journalists in Jerusalem, Huleileh disclosed that the company had in the recent past had to invest some of its money in Arab and regional stock markets to compensate for losses incurred as a result of the violence between Israelis and Palestinians.
?From 2000 onwards was a difficult period and led to a decline in average income and a decline in the performance of businesses, especially companies dependent on the movement of goods, such as industrial firms, or tourist companies such as the Jasir Hotel in Bethlehem, which is classified as a 5-star hotel,? Huleileh said.
?The hotel was opened just days before the second intifada; it cost more than $35 million and is located on the sensitive side of the Israeli military checkpoint,? he added. ?We were forced to bear the costs of a company throughout the period of 2000-2007, so the volume of loans on the hotel has reached $20m.?
This was just an example of how the company used to drain its energies to enable its companies to stay alive in a difficult period, he said.
?Without a strong parent company to support these businesses they would not have been able to survive... this is exactly what PADICO did these last seven years... It is true we bore losses but we still think these companies will bring benefits in the long run,? Huleileh added.
Palestinian officials estimate investments worth hundreds of millions of dollars were transferred from the West Bank and Gaza to Jordan and other Arab countries following the eruption of violence in 2000.
Following the 1993 Oslo Accords it was expected that the Palestinian economy would enter a period of sustained and rapid growth, according to the World Bank.
A World Bank statement said that, ?While performance was not as strong as hoped, growth was steady and by 1999 real GDP had grown to around $4.9 billion. However, since 2000, when Israel instituted a strict closure regime in response to the second intifada, the Palestinian economy has been on a downward trend. GDP fell by over a quarter to an estimated $3.54 billion at the height of the fighting in 2002 and then recovered slightly in 2004 and 2005.
?But with the continued settlement growth, closures and the cut off in direct aid after the election of the Hamas government, GDP fell again in 2006,? it added.
The World Bank Investment Climate Assessmentfound that fewer than a quarter of private-sector firms made any investments in 2005/2006 and the equipment in manufacturing enterprises was on average more than 12 years old.
?The lack of investment in public infrastructure and private enterprises is eroding the very limited remaining Palestinian productive base, leading to increased aid-dependency and pointing to bleak future prospects unless the trend is reversed,? the World Bank said.
According to Hulleileh the investments planned for the West Bank include:
? An electric power-generation project in Qalqilya, estimated at a cost of $300 million. It will take two to three years to be completed, and will provide the northern West Bank with all its electricity needs until 2020. The tender will be launched soon
? A cement mill at a cost of not less than $150m. The project will be implemented by PADICO, WATAN Company and the Palestinian Investment Fund (PIF).
? A $100m. iron-smelting project.
? Refining sewage water for agricultural uses on the eastern side of Nablus ($50m.) and water from Wadi Elnar, which combines all the sewage of Jerusalem, Bethlehem and Beit Sahour at Alnabi Musa near Jericho. The water will be used to green 10,000 acres of desert land.
As for Jerusalem, Huleileh said PADICO would implement five major projects:
? Turning the former Alhambra Cinema in ?Salah A-Din Street next to the Israeli Justice Ministry into Alhambra Castle at a cost of $1.7m. The Alhambra will serve as a multi-purpose hall including restaurants and meeting places hosting a variety of activities. It will open at the end of November or early December.
? A housing project in Sharafat near Beit Safafa, that will include 162 apartments, in addition to a commercial building in partnership with PRICO Company. The firm has obtained the necessary licenses from the Israeli authorities and building will begin at the end of the year and will be completed in two years.
? A shopping mall in the Sheikh Jarrah neighborhood, already licensed by Israel. The project will be launched before the end of 2008 at an estimated cost of $16-17m.
Huleileh refused to give details of the other two projects, saying only that they would be located in Jerusalem?s Old City and were related to the tourism sector.
While much is made in the media of the tough times faced by the Palestinian economy, much of the evidence from the West Bank points to good times ahead, with domestic and foreign investments the order of the day, bringing with them the good news for locals that the employment market is on the way up.
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