West Bank and Gaza

Bureau of Economic and Business Affairs
July 5, 2016

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Executive SummaryShare    

The Palestinian economy is small and relatively open, with several large holding companies dominating certain sectors. Palestinian businesses have a reputation for professionalism as well as the quality of their products. Large Palestinian enterprises are internationally connected, with partnerships extending to Asia, Europe, the Gulf, and the Americas. Due to the small size of the local market, access to foreign markets through trade is essential for private sector growth.

Since 2007, the West Bank’s investment climate has improved significantly – primarily due to security, economic and legal reforms; international donor support, and the easing of some Government of Israel (GOI) restrictions. Many of these reforms, however, were only applicable to business concerns in the roughly 40 percent of the West Bank under the civil control of the Palestinian Authority (PA). Restrictions on the movement and access of goods and people between the West Bank, Gaza, and external markets imposed by the GOI continue to have a deleterious effect on the private sector and limit economic growth.

Opportunities for meaningful foreign direct investment in Gaza are few, due to Hamas’s control and Israeli restrictions on the flow of imports and exports. Numerous consumer goods enter Gaza through Israel, but there are restrictions in place that limit the import of a number of dual-use items, including construction materials, which are only allowed to enter with advance coordination and approval from Israel. Likewise, only a few hundred truckloads of exports can exit each year.

Real Gross Domestic Product (GDP) increased by 2.9 percent in 2015: 1.8 percent in the West Bank and 6.5 percent in Gaza, where much of the growth was attributable to increased humanitarian and reconstruction assistance. This GDP growth followed a decline in 2014 that international organizations attributed mainly to that summer’s conflict in Gaza, ongoing political disputes with the GOI, uncertainty over the PA’s ability to pay salaries, and accumulation of high levels of private sector arrears. In 2015, donor countries provided the PA with USD 709 million to support its budget, about USD 510 million short of the amount needed to cover the PA’s recurrent deficit of USD 1.219 billion. The PA covered this financing gap by increasing bank debt and accumulating new private sector and pension fund arrears.

Future economic growth depends on a series of factors: easing Israeli movement and access restrictions, further expanding external trade and private sector growth, improved PA governance on commercial regulation, political stability, the GOI’s prompt release of customs and VAT revenues collected on behalf of the PA, and a general recovery of global and regional economic growth. Economic sectors that are not dependent on traditional infrastructure and freedom of movement, such as information and communications technologies (ICT), are able to grow somewhat independent of these factors and therefore have enjoyed greater success in the Palestinian economy during the past decade, although they are still impeded by factors such as GOI control of the electromagnetic spectrum.

According to the PA, the unemployment rate in 2015 was 17.3 percent in the West Bank and 41 percent in Gaza, or 25.9 percent overall. Among women, the overall unemployment rate was 39.2 percent and among youth aged 20-24 it was 36.5 percent (approximately 65 percent in Gaza). The workforce is expected to expand significantly in the coming years, as 50.5 percent of the population is currently below the age of 19. The labor force is relatively well educated, boasting a high literacy rate, with high technology penetration and familiarity with overseas markets. Wages are low relative to Israel but higher than neighboring Arab countries. In January 2013, the PA implemented the first Palestinian minimum wage, at NIS 1,450 (USD 389) per month. Palestinians remain dependent on the public sector, which employs 22.9 percent of the workforce. The PA depends primarily on the transfer of its customs and VAT revenue, which Israel collects on the PA’s behalf, to cover its operational expenses, including its wage bill.

Significant sectors highlighted by the Palestinian Investment Promotion Agency (PIPA) and in the National Export Strategy for 2014-2018 include the following:

  • Stone and marble
  • Tourism
  • Agriculture, including olive oil, fresh fruits, vegetables, and herbs
  • Food and beverage, including agro-processed meat
  • Textiles and garments
  • Manufacturing, including furniture and pharmaceuticals
  • Information and communication technology (ICT)

This report focuses on investment issues related to areas under the administrative jurisdiction of the PA, except where explicitly stated. Where applicable, this report addresses issues related to investment in the Gaza Strip, although Hamas’s implementation of PA legislation and regulations may differ significantly from the West Bank. In contrast to the West Bank, Gaza was controlled by Egypt rather than Jordan from 1948-1967, while Israel controlled both the West Bank and Gaza from 1967-1993. For issues where PA law is not applicable, Gazan courts typically refer back to Israeli and Egyptian laws; however, the de facto Hamas-led government in Gaza does not consistently apply PA, Egyptian, or Israeli laws. In 2014, Fatah (a major political party) and Hamas initiated a reconciliation process; however, at the time of writing the PA does not exercise operational control within Gaza.

Due to the changing circumstances, potential investors are encouraged to contact the PA Ministry of National Economy (www.mne.gov.ps), Palestinian Investment Promotion Agency (http://www.pipa.gov.ps), the Palestine Trade Center (www.paltrade.org), and the Palestinian-American Chamber of Commerce (www.pal-am.com); as well as the U.S. Consulate General in Jerusalem (http://jerusalem.usconsulate.gov) and the U.S. Commercial Service (http://export.gov/westbank) for the latest information.

Table 1



Index or Rank

Website Address

TI Corruption Perceptions index




World Bank’s Doing Business Report “Ease of Doing Business”


129 of 189


Global Innovation Index




U.S. FDI in partner country ($M USD, stock positions)



BEA/Host government

World Bank GNI per capita




Millennium Challenge Corporation Country Scorecard

The Millennium Challenge Corporation, a U.S. Government entity charged with delivering development grants to countries that have demonstrated a commitment to reform, has not produced a scorecard for the West Bank and Gaza.

1. Openness To, and Restrictions Upon, Foreign InvestmentShare    

Attitude toward Foreign Direct Investment

The PA continues to rank poorly in the World Bank’s Ease of Doing Business report, receiving a ranking of 129 out of 189 in 2016 (compared to 127 in 2015) due to a challenging business environment affecting domestic and foreign investors alike. The 2016 Doing Business Report scored the Palestinian economy particularly low in the categories of Resolving Insolvency (189 of 189), Staring a Business (170 of 189), and Dealing with Construction Permits (162 of 189), while the PA performed relatively better with respect to Paying Taxes (56 of 189) and Getting Electricity (75 of 189). However, there are no significant PA laws or practices discriminating against foreign investors. In 2007, the PA began implementing reforms aimed at stimulating growth through private sector investment as well as consolidating public finances. The current 2014-2016 National Development Plan (NDP), like its predecessor, focuses on four sectors: economic development and employment, governance and institution building, social protection, and infrastructure. Within the economic sector, the NDP actively seeks to encourage private sector and foreign investment, improve Palestinian infrastructure, increase the competitiveness of Palestinian companies, and encourage entrepreneurship in the West Bank and Gaza, among other goals. The NDP caveats that any economic progress is inextricably linked to resolution of the political conflict with Israel, as well as overcoming internal divisions between the West Bank and Gaza. The PA is currently preparing a National Policy Agenda (NPA) to replace the NDP and outline priorities beyond 2016.

Since June of 2010, the PA has not hosted any major investment conference, although it did so in previous years. The 2010 conference attracted over 1,000 potential investors and business representatives. Over 100 projects were presented at the conference. Further information on these and other projects is available at www.pic-palestine.ps.

Beginning in 1995, the PA took steps to facilitate and increase foreign trade by signing free trade agreements with the European Union, the European Free Trade Association (EFTA), Canada, and Turkey. The PA also is eligible for the benefits of the Free Trade Agreement signed between the United States and Israel. The PA has finalized other trade agreements with Russia, Jordan, Egypt, the Gulf States, Morocco, Tunisia, Mercosur, Vietnam, and Germany. On July 31, 2012 Israel and the Palestinian Authority reached an understanding on trade and taxation designed to facilitate the flow of goods between Israel and the PA, reduce smuggling, and increase tax revenues to be shared by both parties. Additionally, the PA is preparing to seek permanent observer status in the World Trade Organization (WTO); it participated in the 2005, 2009, 2011, 2013, and 2015 WTO Ministerial meetings as an ad hoc observer.

Other Investment Policy Reviews

Beginning in 2013, the Office of the Quartet (OQ), an international organization working to support the Palestinian people on economic development, rule of law and improved movement and access for goods and people, began work on the Initiative for the Palestinian Economy (IPE), a multi-year plan to engage the private sector to drive economic growth and job creation across the Palestinian territories. Based on rigorous analysis of the Palestinian investment climate, the IPE focuses on catalyzing private sector-led growth by leveraging new financing and investment into the Palestinian economy, continued and expanded Israeli easing measures, and increased institutional capacity within the PA. The IPE centers on eight sectors: (1) agriculture; (2) construction; (3) tourism; (4) information and communication technology (ICT); (5) light manufacturing; (6) building materials; (7) energy; and (8) water.

During the current impasse in political negotiations, OQ has continued to work on advancing economic development and application of the rule of law, giving priority to areas where accomplishments are most viable under current conditions. Looking ahead, OQ’s forward priorities focus on five strategic pillars that represent the fundamental impact areas that contribute to economic growth and capacity building: (i) movement and trade; (ii) investment promotion; (iii) reliable infrastructure; (iv) unlocking value of land and human capital; and (v) strengthening government. A summary overview of the Initiative for the Palestinian Economy is available at http://blair.3cdn.net/a0302ab9e588825b29_1bm6yhjay.pdf.

The Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO), and the United Nations Conference on Trade and Development (UNCTAD) do not provide investment policy reviews for the West Bank and Gaza.

Laws/Regulations on Foreign Direct Investment

Since 2006, there have been no general elections, and the Palestinian Legislative Council (PLC) has not met since April 2007. This means that any new laws or amendments must be issued by presidential decree. In the absence of a renewed political mandate or the endorsement of a legislative body, the PA has been reluctant to issue new laws that it does not view as immediately necessary. For amendments and changes to business regulations, the PA normally engages in a series of consultations involving ministry officials, the private sector, donors, and other stakeholders, resulting in lengthy delays for many key pieces of legislation. The United States Government (USG), through the U.S. Agency for International Development (USAID) and other agencies, is providing technical assistance to the PA to improve the investment climate and strengthen the trade regime through legislative reforms, improved regulations, and capacity building.

The legal framework for foreign investment in the West Bank and Gaza is based on the 1998 Law on the Encouragement of Investment in Palestine (Investment Law) No. 1, which was amended by Presidential Decree in 2011 and subsequently in 2014. All business entities must be registered with PIPA’s registry of investments either in the West Bank or in Gaza. There is minimal executive or other interference in the court system. According to existing PA company laws, three different types of companies may be incorporated:

  • General Partnership: The liability of each partner in a general partnership is unlimited. All partners are personally responsible for the liabilities of the partnership. The name of at least one of the partners must be included in the title of the General Partnership.
  • Limited Partnership: This includes two different types of partners: general and limited. A limited partnership must have at least one general partner who is personally responsible for the liabilities of the company. There is also at least one limited partner whose liability is limited to the amount of the capital.
  • Local Companies (Limited Liability Company (LLC) and Public Liability): Most investors prefer to use LLCs for the purposes of conducting commercial affairs.

Business Registration

Foreign companies may register businesses in the West Bank and Gaza according to the Jordanian Companies Law Number 12 of 1964. The Ministry of National Economy (MONE) and the PIPA provide information online about the business registration process at http://www.mne.gov.ps/compreg.aspx?lng=1&tabindex=100 and http://www.pipa.ps/page.aspx?id=BMfDyia1843545561aBMfDyi, but the PA does not offer a business registration website. The PA is working to simplify the process of starting a business, which currently requires an average of nine steps and 44 days to complete, according to the World Bank’s 2016 Doing Business Report. This includes two days to register the company, one day to pay registration fees, two days to register for taxes, one day to register with the Chamber of Commerce, and 36 days to obtain the business license from the Municipality. Foreign investors must obtain approval from the MONE and submit the application for registration through a local attorney. The procedures required to register this form of company are as follows:

  1. Search for company name and reserve proposed name.
  2. Submit company incorporation papers to MONE and sign document pledging to deposit initial capital within three months, if applicable (Jordanian Dinars (JD) 250,000 for a public shareholding company, JD 10,000 for a private shareholding company, or JD 10,000 for a nonprofit; other companies are exempt from this requirement). Obtain certificate of registration from the MONE.
  3. Register with the Companies Registry and pay registration fee.
  4. Register for income tax and value added tax.
  5. Register with the Chamber of Commerce.
  6. Obtain business license from the municipality.
  7. Obtain approval from fire department.

In addition to applicable fees, public and private companies must submit the following documents to the Companies Registry:

  • Articles of Association (3 copies)
  • Company Bylaws (3 copies)
  • Shareholders Identification (copies)
  • Verified company name
  • Registration application (3 copies)
  • Powers of attorney

Foreign companies may work with PIPA to obtain the investment registration certificate and investment confirmation certificate. In addition, foreign companies seeking to open branches in the West Bank or Gaza must submit registration documents certified by the Palestinian Liberation Organization (PLO) representative in their home country. According to PIPA, the majority of Palestinian companies are small- and medium-sized enterprises (SMEs), and the PA has sought to support SME development and financing. SMEs are categorized according to staff size: small enterprises employ up to nine people, while medium enterprises employ 10-19 people.

Industrial Promotion

The PA’s 2014 amendments to Promotion of Investment in Palestine Law No. 1 of 1998 shifted promotional incentives from a focus on those that benefit from industrial projects providing large capital investments to a focus on employment growth, development of human capital, increased exports, and local sourcing of machinery and raw materials. (See “Investment Incentives” below.)

Limits on Foreign Control and Right to Private Ownership and Establishment

Under the Jordanian Company Law of 1966, the foreign investor should own no more than 49 percent of a company, with a local partner holding at least 51 percent. However, foreign investors can readily obtain exceptions to this policy by working with PIPA and the MONE, which issues exceptions promptly. Foreign and domestic private entities may establish and own business enterprises in areas under PA civil control.

Privatization Program

There is no PA privatization program for industries within the Palestinian Territories.

Screening of FDI

Certain investment categories require pre-approval by the Council of Ministers (PA Cabinet). These include investments involving (1) weapons and ammunition, (2) aviation products and airport construction, (3) electrical power generation/distribution, (4) reprocessing of petroleum and its derivatives, (5) waste and solid waste reprocessing, (6) wired and wireless telecommunication, and (7) radio and television. Purchase of land by foreigners also requires approval by the Council of Ministers.

Competition Law

There is no competition law for the Palestinian territories at this time. The PA drafted a law in 2003 that was not enacted, and in 2012 the PA prepared a new draft law that has not yet been issued. Because of the geographic division between businesses in East Jerusalem, the West Bank and Gaza, many firms in disparate geographic locations within the Palestinian territories have little to no competition, causing variations in both pricing and firm productivity between regions and sometimes cities within a region.

2. Conversion and Transfer PoliciesShare    

Foreign Exchange

The PA does not have its own currency. According to the 1995 Interim Agreement, the Israeli Shekel (NIS/ILS) freely circulates in the Palestinian territories and serves as means of payment for all purposes including official transactions. The exchange of foreign currency for NIS and vice-versa by the Palestinian Monetary Authority (PMA) is carried out through the Bank of Israel Dealing Room, at market exchange rates.

Remittance Policies

The Investment Law guarantees investors the free transfer of all financial resources out of the Palestinian territories, including capital, profits, dividends, wages, salaries, and interest and principal payments on debts. Most remittances under USD 10,000 can be processed within a week. In addition to the Israeli Shekel (ILS), U.S. dollars (USD) and Jordanian dinars (JD) are widely used in business transactions. There are no other PA restrictions governing foreign currency accounts and currency transfer policies. Banks operating in the Palestinian territories, however, are subject to Israeli restrictions on correspondent relations with Israeli banks and the ability to transfer shekels into Israel, which occasionally limit services such as wire transfers and foreign exchange transactions.

3. Expropriation and CompensationShare    

The Investment Law, as amended in 2014, prohibits expropriation and nationalization of approved foreign investments, except in exceptional cases for a public purpose with due process of law, which shall be in return for fair compensation based on market prices and for losses suffered because of such expropriation. The PA must secure a court decision before proceeding with expropriation.

PA sources and independent lawyers say that any Palestinian citizen can file a petition or a lawsuit against the PA. In 2011, the PA established independent, specialized courts for labor, chambers, customs, and anti-corruption. These courts are composed of judges and representatives from the Ministries of National Economy and Finance. While general confidence in the judicial system is improving and businesses are increasingly using the courts and police to enforce contracts and seek redress, alternative means of arbitration are still used to resolve some disputes.

4. Dispute SettlementShare    

Legal System, Specialized Courts, Judicial Independence, Judgments of Foreign Courts

The Investment Law, as amended in 2014, provides for dispute resolution between the investor and official agencies either through binding arbitration or in Palestinian domestic courts. In 2010, the International Chamber of Commerce Palestine began work to establish the Jerusalem Arbitration Center (JAC) to provide a forum to resolve business disputes between Palestinian and Israeli companies; it officially launched in November 2013.

Commercial disputes can be resolved by way of conciliation, mediation, or domestic arbitration. Arbitration in the Palestinian territories is governed by Law No. 3 of 2000. International arbitration is accepted. The law sets out the basis for court recognition and enforcement of arbitral awards. Generally, every dispute may be referred to arbitration by agreement of the parties, unless prohibited by the law. Article 4 of the law states that certain disputes cannot be referred to arbitration, including those involving marital status, public order issues, and cases where no conciliation is permitted. In the event that parties do not agree on the formation of the arbitration tribunal, each party may choose one arbitrator and arbitrators shall then choose a presiding arbitrator, unless the parties agree to do otherwise.

Judgments made in other countries that need to be enforced in the West Bank/Gaza are honored, according to the prevailing law in the West Bank, mainly Jordanian Law No. 8 of 1952 as amended by the PA in 2005. Gazan courts refer back to Israeli and Egyptian laws, which were in force prior to 1993, for matters not covered by PA law; however, the de facto Hamas-led government in Gaza does not consistently apply PA, Egyptian, or Israeli laws. The law covers many issues in relation to the enforcement of foreign judgments.


The World Bank’s 2016 Doing Business Report did not cite any cases involving a judicial reorganization, judicial liquidation, or debt enforcement procedure (foreclosure) in the previous five years. According to that report, no priority is assigned to post-commencement creditors, and debtors may file for liquidation only. The PA MONE, with the assistance of international donors, is in the process of drafting a number of proposed laws related to bankruptcy, but no bankruptcy reform has been enacted.

Investment Disputes

The Investment Law, as amended in 2014, provides for dispute resolution between the investor and official agencies by binding independent arbitration or in Palestinian courts. It has been reported that some contracts contain clauses referring dispute resolutions to the London Court of Arbitration. The Jerusalem Arbitration Center (JAC) provides a forum to resolve business disputes between Palestinian and Israeli companies. Commercial disputes may be resolved by way of conciliation, mediation, or arbitration.

International Arbitration

International arbitration is permitted and governed by governed by Law No. 3 of 2000. The law sets out the basis for court recognition and enforcement of awards. Generally, every dispute may be referred to arbitration by the agreement of the parties, unless prohibited by the law. Article 4 of the law states that certain disputes cannot be referred to arbitration, including those involving marital status, public order issues, and cases where no conciliation is permitted. In the event that parties do not agree on the formation of the arbitration panel, each party may choose an arbitrator and arbitrators shall choose a casting arbitrator unless the parties agree to proceed otherwise. Arbitral awards made in other countries that need to be enforced in the West Bank/Gaza are honored, according to the prevailing law in the West Bank, mainly Jordanian Law Number 8 of 1952 as amended by the PA in 2005. The law covers many issues in relation to the enforcement of foreign judgments.

ICSID Convention and New York Convention

The PA signed the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention) in January 2015, and the Convention entered into force in April 2015. The PA is not a member of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID Convention).

Duration of Dispute Resolution – Local Courts

In 2014 the IMF reported an average of 540 days to resolve a standardized commercial dispute through the courts, with 44 separate procedures required for a dispute resolution. Litigants suggested that the decisions at different levels of the courts were inconsistent, prompting more appeals and a larger overall caseload.

5. Performance Requirements and Investment IncentivesShare    


The PA is not a member of the World Trade Organization (WTO), but is actively preparing for eventual permanent observer status, and participated in the 2005, 2009, 2011, 2013, and 2015 WTO Ministerial meetings as an ad hoc observer.

Investment Incentives

In 2014, by presidential degree, PA President Abbas, in order to align the PA’s development priorities with the investment incentives provided by Palestinian law, enacted amendments to the Promotion of Investment in Palestine Law No. 1 of 1998, the investment and tax law. These amendments extended tax incentives to small and medium companies, exporters, and agriculture and tourist businesses; and shifted the focus towards incentives on human capital instead of fixed assets. The amendments add tourism and agricultural projects to qualifying industries, and removed real estate development projects from the industries promoted through the incentives. The amendments also gave additional authority to the PIPA to create incentive packages targeted to individual business needs (www.pipa.ps). PIPA expects the changes to create streamlined investment and incentive processes to circumvent some PA bureaucratic red tape to obtain investment project licenses. For example, if any step in the business registration process takes longer than 30 days, PIPA can intervene and issue a business license or registration on its own authority.

The 2014 amendment to Article 23 of the Promotion of Investment in Palestine Law No. 1 of 1998 granted the following incentives and exemptions for projects approved by PIPA:

  • Income tax of zero percent for producers of agricultural products whose income is directly generated from land cultivation or livestock.
  • Income tax of five percent for a period of five years commencing from the date of realizing profit but not exceeding four years, whichever is earlier.
  • Income tax of ten percent for a period of three years commencing from the end of the first phase. It will thereafter be calculated based on the applicable and in-effect percentages and segments.

Projects that may be targeted for taxation incentives and support services include the following:

  • Industrial sector projects;
  • Tourism sector projects;
  • New projects within any sector that employ at least 25 workers during the period of benefit;
  • Projects that increase their production exports ratio by more than 40 percent;
  • Projects within any sector which use approximately 70 percent locally-sourced machinery and raw materials;
  • Any existing project that adds 25 workers to the number of already existing workers;
  • Developmental expansions of projects (to be based on percentage of paid-in capital but not land value);
  • Projects in which the PIPA Board of Directors provides specific incentive packages that comply with special criteria, meet international environment conditions or alternative energy services, or are projects located within areas of developmental priorities.
  • Any project determined by PIPA’s Board of Directors to advance the public interest (subject to the nature of a project’s activity, geographical location, the extent to which the project contributes to increasing exports, creating job opportunities, advancing development, transferring knowledge, and supporting research and development for the purposes of enhancing the public benefit).

Excluded from the incentives are:

  • Commercial projects;
  • Insurance companies;
  • Banks;
  • Money changers;
  • Real estate projects;
  • Some electricity projects;
  • Telecommunication services;
  • Commercial services;
  • Crushers;
  • Quarries;
  • Any companies that obtained concessions contracts from the Council of Ministers and operate as monopolistic companies.

Research and Development

U.S. and other foreign firms are able to participate in partnerships with the PA for research and development programs. (Note: Because of the PA’s budgetary restrictions, much of the financing for such projects typically comes from donor countries or NGOs and not the PA itself.)

Performance Requirements

The current performance requirements for investment incentives have reduced the focus on a capital investment requirement and now focus on job growth and locally-sourced production.

While the PA does not require foreign nationals working in the West Bank to seek work permits, the GOI does require foreigners to obtain Israeli visas in order to enter the West Bank and Gaza via Israel. Israel generally grants foreign passport holders from countries that have diplomatic relations with Israel three-month tourist visas upon arrival, but longer-term business visas may only be obtained by businesses or organizations with an Israeli presence. Israel often requires foreign passport holders of Palestinian descent to apply for Palestinian ID cards. Israeli authorities may consider as Palestinian anyone who has a Palestinian identification number, was born in the West Bank or Gaza, or was born in the United States (or elsewhere) but has parents or grandparents who were born or lived in the West Bank or Gaza. Any such U.S. citizen may be required to use a Palestinian travel document and enter via the Allenby Bridge crossing on the Jordanian border instead of Ben Gurion Airport in Tel Aviv. If they decide not to obtain a PA travel document, such Americans may be barred from entering or exiting Israel, the West Bank or Gaza, face long delays, or be denied entry at the ports of entry. Palestinian-Americans holding Palestinian IDs and PA exit permits may depart via the Allenby Crossing between Jordan and the West Bank, provided they have valid Jordanian visas in their U.S. passports.

According to the GOI, foreign nationals working in the West Bank should either apply for work visas at Israeli embassies in their countries of origin or seek adjustment of status through the Israeli Coordinator of Government Activities in the Territories (COGAT) after their arrival in the West Bank. This process, however, is opaque, time consuming, and may not result in issuance of a work visa. As a result, many foreign passport holders depart and reenter the West Bank every three months to receive new three-month tourist visas upon re-entry. The GOI has placed a stamp reading “Judea & Samaria Only” on the visas of some U.S. citizens working in the West Bank, thereby prohibiting them from entering Israel or Jerusalem from the West Bank. The United States government continues to press the GOI to cease this policy.

Data Storage

There are no data storage requirements under PA law for IT companies. The PA does not follow a forced localization policy, and there are no requirements for foreign IT providers to turn over source code or provide access to surveillance.

6. Protection of Property RightsShare    

Real Property

The Acquisition Law in the West Bank, which regulates foreign acquisition and the rental or lease of immovable properties, classifies foreigners into three categories:

  • Foreigners who formerly possessed Palestinian or Jordanian passports shall have the right to own certain properties sufficient to erect buildings and/or for their agricultural projects.
  • Foreigners who hold other Arab passports have the right to own certain property that suffices for their living and business needs only.
  • Other foreigners, including Jerusalem ID holders, must receive permission from the PA Cabinet to own buildings or purchase land.

The permission process can be lengthy and includes clearances from the intelligence and preventive security agencies. It is critical that potential purchasers of land or buildings perform a title search to ensure that no outstanding violations or unpaid penalties exist on the properties. Under current law, outstanding violations and penalties are transferred to the new owners.

Title searches can only be obtained from the PA Land Authority (al-Taboh). Land registration is done through the Land Registries in Hebron, Ramallah, Qalqiliya, Tulkarem, Nablus, Bethlehem, Jericho, Jenin, and Gaza City. In order to purchase land in the West Bank or Gaza, an application that includes supporting documents, such as deeds to the property and powers of attorney, should be submitted to the land registry office having jurisdiction over the land.

The issue of land registration in the West Bank is complicated by overlapping, and sometimes conflicting, laws and customs derived from the Ottoman, British Mandate, and Jordanian periods of rule. In addition, there is no comprehensive registry of land ownership for the West Bank, and efforts to complete one are expected to take decades at the current pace. The majority of the land has not been registered; even where land is registered, titles are often more than a generation old, with unresolved rights to numerous inheritors, which affects the mortgage market. The Palestinian Land Authority has been working with support from the Government of Finland and the World Bank on land titling and registration. Israeli administrative control over 60 percent of the West Bank designated as “Area C” adds an additional layer of bureaucracy and restrictions with respect to sale and use of privately held lands in those areas.

Intellectual Property Rights

The West Bank and Gaza do not have modern intellectual property rights (IPR) regimes in place, and IPR legislation originates from a combination of Ottoman era, British Mandate, and pre-1967 Jordanian laws. The PA was indirectly committed to the General Agreement on Tariffs and Trade and the agreement of Trade Related Aspects of Intellectual Property Rights (GATT-TRIPS) when it signed the 1995 Interim Agreement on West Bank/Gaza according to Annex III (Protocol Concerning Civil Affairs), Appendix 1, Article 23.

Currently, intellectual property is governed by the Civil Claims Law of 1933 and the Palestinian Trademark and Patent Laws of 1938 in Gaza, and the Commercial Law No. 19 of 1953 and the Patent Law No. 22 of 1953 in the West Bank. Registration is very similar and, despite different authorizing legislation, there are few substantive differences between IPR laws in the West Bank and Gaza.

To register a trademark, four copies of the proposed trademark must be attached to the application, one of them in color, along with a copy of the company’s Certificate of Registration. A foreign company is entitled to register its trademark in the Palestinian territories by giving power of attorney in this regard either to a trademark agent or to a lawyer. Trademarks can be registered unless they fall within the recognized prohibition, such as being similar or identical to an already registered trademark, are likely to lead to deception of the public, or are contrary to public morality. Trademark protection is available for registered trademarks for a period of seven years, which may be extended for additional periods of 14 years. The proprietor of a trademark in the West Bank/Gaza owns the sole right to the use of the trademark in association with the goods with which the trademark is registered. The trademark is open for opposition after being published in the Gazette for a period of three months. The holder of a trademark retains the right to bring civil action against any perpetrator in addition to criminal proceedings.

Trade names are registered by the PA according to specific procedures and conditions that are laid out in the Jordanian Trade Names Registration Law No. 30 of 1953, which is still applicable in the West Bank, and Law No. 1 of 1929 in Gaza.

The Patents and Design Law No. 22 of 1953 is applicable in the West Bank and the Patents Design Law No. 64 of 1947 is applicable in Gaza. A foreign company is entitled to have a patent or design registered by giving power of attorney in this regard to a patent agent or to a lawyer, with the requisite documents. Patent protection is provided for a period of 16 years from the date of filing the patent application.

Copyright in the West Bank and Gaza is governed by the Copyright Laws of 1911 and 1924. The protection lasts for a period of 50 years after the death of the author of the work. The law also deals with infringements, compulsory licenses, and many other procedural issues as well.

The law prescribes imprisonment for a maximum period of one year or a fine not exceeding 100 Jordanian dinars for infringement of a registered mark.

There is minimal enforcement of IPR laws for music and movies in the West Bank/Gaza, while the PA has enforced some of these laws to protect the Palestinian pharmaceutical industry. The PA has drafted a modern law that will encompass IPR, including copyright, patents and designs, trademarks, and merchandise branding, but the law has not yet been adopted in the absence of a functioning legislature. The PA is keen to obtain membership in the different organizations and agreements concerned with intellectual property, such as the World Trade Organization (WTO) and the World Intellectual Property Organization; it has held observer status in the latter since 2005.

Resources for Rights Holders

Contact at American Consulate General in Jerusalem:

NAME: Mary E. Vargas
TITLE: Economic Officer
TELEPHONE NUMBER: +972-2-622-6969
EMAIL ADDRESS: VargasME@state.gov

Country/Economy resources:

NAME: The Palestinian American Chamber of Commerce
ADDRESS: PCS Bldg. 1st Floor, Al Ma'ahed St. Al Masyoun, Ramallah
TELEPHONE NUMBER: +972-2-297-4117
EMAIL ADDRESS: info@amcham.ps
WEBSITE: http://www.pal-am.com

7. Transparency of the Regulatory SystemShare    

The PA has worked to erect a sound legislative framework for business and other economic activity in the areas under its jurisdiction since its creation in 1994; however, implementation and monitoring of implementation needs to be strengthened, according to many observers. The PA MONE, with the assistance of international donors, is in the process of drafting a number of proposed laws related to business and commercial regulation, including licensing, intellectual property rights, business registration regulation of competition, secured lending, bankruptcy, and trademark and copyright. The MONE regularly holds stakeholder meetings for draft commercial legislation to gather input from the private sector, and publishes drafts of the proposed law. Because the Palestinian Legislative Council has not met since 2007, each law must be adopted as a presidential decree, an effort that often delays reform efforts. The proposed laws will likely need to be approved by the PLC, should it reconvene in the future. The PA Ministry of Justice, in cooperation with Birzeit University, publishes online the Official Gazette of all PA legislation since 1994 at http://muqtafi.birzeit.edu/en/index.aspx.

The PA budget is publicly available, including on the Ministry of Finance website. A regulatory body governs the insurance sector, and the PA has adopted a telecom law that calls for establishment of an independent regulator. However, establishment of the telecom regulator has stalled due to disagreement over its proposed members and authorities.

8. Efficient Capital Markets and Portfolio InvestmentShare    

In 2004, the PA enacted the Capital Markets Authority Law and the Securities Commission Law, and created the Capital Market Authority to regulate the stock exchange, insurance, leasing, and mortgage industries. In 2010, a banking law was adopted to bring the Palestinian Monetary Authority’s (PMA) regulatory capabilities in line with the Basel Accords, a set of recommendations for regulations in the banking industry. The 2010 law provides a legal framework for the establishment of deposit insurance, management of the Real Time Gross Settlement (RTGS) system, and treatment of weak banks in areas such as merger, liquidation, and guardianship. It also gives the PMA regulatory authority over the microfinance sector. In 2013, the PA passed a commercial leasing law and in 2015 the MONE finalized a registry for moveable assets, intended to facilitate secured transactions, especially for small and medium-sized businesses. The PA is also working to finalize both a Companies Law and a Secured Transactions law, both of which are currently under review by interagency panels. Implementation of these laws would help improve the investment climate and the ease of doing business. The World Bank 2016 Doing Business report assigned the West Bank and Gaza a particularly low score for protecting minority investors, resolving insolvency, and obtaining credit. Founders of new SMEs complain that loan terms from Palestinian creditors are often too short in that they fail to allow the borrower enough time to establish a sustainable business. The new Moveable Assets Registry, coupled with the Commercial Leasing Law, is expected to improve the ranking.

The Palestine Exchange (PEX) was established in 1995 to promote investment in the West Bank and Gaza Launched as a private shareholding company, it was transformed into a public shareholding company in February 2010. The PEX was fully automated upon establishment – the first fully automated stock exchange in the Arab world, and the only Arab exchange that is publicly traded and fully owned by the private sector. The PEX operates under the supervision of the Palestinian Capital Market Authority. There are 49 listed companies on the PEX, which as of 2016 had a market capitalization of about $3.339 billion across five main economic sectors: banking and financial services, insurance, investments, industry, and services.

Money and Banking System, Hostile Takeovers

The Palestinian banking sector continues to perform well under the supervision of the PMA. The World Bank’s reports to the Ad Hoc Liaison Committee (AHLC) have consistently noted that the PMA is effectively supervising the banking sector. The PMA continues to enhance its institutional capacity and is steadily building many of the capabilities of a central bank. It provides rigorous supervision and regulation of the banking sector, consistent with international practice. An Anti-Money Laundering law that was prepared in line with international standards with technical assistance from the International Monetary Fund (IMF) and USAID came into force in October 2007. In December 2015 the PA President signed the Anti-Money Laundering and Terrorism Financing Decree Law Number 20. Among its many improvements over the 2007 decree was to make terrorist financing a criminal offense and to define terrorists, terrorist acts, terrorist organizations, foreign terrorist fighters, and terrorist financing. It also makes terrorism and terrorist acts predicate money laundering offenses.

Credit is limited by uncertain political and economic conditions and by the limited availability of real estate collateral due to non-registration of most West Bank land. Despite these challenges, the sector’s strong loan-to-deposit ratio continues to improve, moving from 56 percent in January 2015 to 59 percent in January 2016. The PMA has achieved this in part by encouraging banks to participate in loan guarantee programs sponsored by the United States and international financial institutions, by supporting a national strategy on microfinance, and by putting in restrictions on foreign placements. The MONE’s draft Secured Transactions Law would allow use of moveable assets, such as equipment, as collateral for loans. Non-performing loans are around three percent of total loans, due to credit bureau assessments of borrowers’ credit worthiness and a heavy collateral system.

Palestinian banks have remained stable despite the global economic crisis, but have suffered from deteriorated relations with Israeli correspondent banks since the Hamas takeover of Gaza in 2007, at which time Israeli banks cut ties with Gaza branches and gradually restricted cash services provided to West Bank branches. All Palestinian banks were required to move their headquarters to Ramallah in 2008. Israeli restrictions on the movement of cash between West Bank and Gaza branches of Palestinian banks have caused intermittent liquidity crises in Gaza and the West Bank for all major currencies: U.S. dollars, Jordanian dinars, but mainly Israeli shekels (ILS).

The PMA regulates and supervises 15 banks with 260 branches and offices in the West Bank and Gaza, several of which are foreign banks, mostly Jordanian; the top three banks have assets of more than USD 5.8 billion combined. No Palestinian currency exists and, as a result, the PA places no restrictions on foreign currency accounts. The PMA is responsible for bank regulation in both the West Bank and Gaza. Palestinian banks are some of the most liquid in the region, with net assets of USD 12.4 billion, total deposits of USD 9.7 billion and gross credit of USD 5.8 billion as of the end of January 2016.

9. Competition from State-Owned EnterprisesShare    

Although there are no state-owned enterprises (SOEs), some observers have noted that the Palestine Investment Fund (PIF), an investment fund that essentially acts as a sovereign wealth fund for the PA, enjoys a competitive advantage in some sectors, including housing and telecom, due to its close ties with the PA. The import of petroleum products falls solely under the mandate of the Ministry of Finance’s General Petroleum Corporation, which then re-sells the products to private distributors at fixed prices.

OECD Guidelines on Corporate Governance of SOEs

Not applicable.

Sovereign Wealth Funds

The PIF acts as a sovereign wealth fund, owned by the Palestinian people. According to PIF’s 2014 annual report, its assets that year reached USD 795 million; earnings before taxes were USD 44 million, and net income was USD 36.7 million. PIF’s investments in 2014 were concentrated in infrastructure, energy, telecommunications, real estate and hospitality, micro/small/medium enterprises, large caps, and capital market investments. The overwhelming majority of PIF investments are domestic, but excess liquidity is invested in international and regional fixed income and equity markets. In 2014 the fund established the Palestine for Development Foundation, a separate not-for-profit foundation managing PIF’s corporate social responsibility initiatives, which are primarily focused on support to Palestinians in the West Bank, Gaza, Jerusalem, and abroad. Since 2003, PIF has transferred over USD 728 million to the PA in annual dividends, but the PIF leadership does not report to the PA per PIF bylaws. International auditing firms conduct both internal and external annual audits of the PIF.

10. Responsible Business ConductShare    

Most large or multinational businesses in the West Bank include corporate social responsibility (CSR) in their business plans, mainly focusing on philanthropy related to education, health, and youth. Some medium sized enterprises, particularly in healthcare and the food industry, started CSR initiatives to create goodwill for their products. CSR engagement remains relatively low because most companies are small, family-run businesses – over 68 percent of Palestinian companies employ one or two people – and many of these do not have the budgetary resources for CSR.

11. Political ViolenceShare    

The security environment remains complex in the West Bank, and Gaza. The security situation can change day to day, depending on the political situation, recent events, and geographic area. Potential investors should consult the State Department’s latest travel warnings available at https://travel.state.gov.

Violent clashes between Israeli security forces, Israeli settlers, and Palestinian residents of the West Bank have resulted in numerous deaths and injuries. Demonstrations and violent incidents can occur without warning, and vehicles are sometimes damaged by rocks, Molotov cocktails, and gunfire on West Bank roads. During periods of unrest, the Israeli government may restrict access to and within the West Bank, and some areas may be placed under curfew. In June 2007, Hamas, a designated Foreign Terrorist Organization (FTO), violently seized control of the Gaza Strip, effectively removing the PA from government facilities. Following the Hamas takeover, the GOI implemented a closure policy that restricted imports to limited humanitarian and commercial shipments and cut off most exports. The economic situation and investment outlook in Gaza have continuously deteriorated since that time, especially following Israeli combat operations there in December 2008-January 2009 (Operation Cast Lead), November 2012 (Operation Pillar of Defense) and July-August 2014 (Operation Protective Edge). Even before the substantial physical damage sustained by the private sector during the military operations, the World Bank estimated as many as 90 percent of private sector businesses had closed. The GOI has from time to time eased its closure policy by lifting some restrictions on goods imported into and exported out of Gaza, but the measures have been largely symbolic and the situation remains unstable. The GOI allows limited exports to overseas markets, Israel and some sales to the West Bank. According to the 2014 World Bank Investment Climate report, political instability and the restrictions on movement and access to resource and markets remain the key obstacles to investment.

12. CorruptionShare    

The Anti-Graft Law (AGL) of 2005 criminalizes corruption, and the State Audit and Administrative Control Law and the Civil Service Law both aim to prevent favoritism, conflict of interest, or exploitation of position for personal gain. The AGL was amended in 2010 to establish a specialized anti-graft court and the Palestinian Anti-Corruption Commission, which was tasked with collecting, investigating, and prosecuting allegations of public corruption. The Anti-Corruption Commission, appointed in 2010, has indicted several high-profile PA officials; these cases are now pending before the courts. However, the PLC, which is responsible for oversight of the PA’s executive branch, has not met since April 2007. In May 2011, the World Bank reported that the PA had made significant progress in establishing a strong governance environment in many critical areas, but highlighted continuing areas of concern, including management of state land assets, transparency in licensing and business rights, and public access to government information. Palestinian civil society and media are active advocates of anti-corruption measures, and there are international and Palestinian non-governmental organizations that work to raise public awareness and promote anti-corruption initiatives. The most active of these is the AMAN Coalition for Integrity and Accountability, which is the Palestinian chapter of Transparency International. According to the World Bank 2014 Investment Climate Assessment report, Palestinian firms do not consider corruption to be one of the most serious problems they face. Seven percent of the firms surveyed reported having experienced a request from a government official for a bribe. Please see the AMAN website (http://www.aman-palestine.org/eng/index.htm) for further information.

During the past decade the perception of corruption involving political figures and institutions, once widespread, has significantly declined. Private sector businesses agree that the PA has been successful in reducing institutional corruption and local perceptions of line ministries and PA agencies are generally favorable in this regard. PA officials, businesses and representatives of service sectors note, however, that the largely discretionary authority given to Israeli military, police, and civilian officials in administering economic policy in the West Bank – touching on imports, checkpoint crossings, labor permits, and building licenses, among other things – create regular opportunities for low-level corruption on a range of daily decisions.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

In April 2014 the PA acceded to the UN Anticorruption Convention. The PA is not a party to the OECD Convention on Combatting Bribery.

Resources to Report Corruption

Contact at American Consulate General in Jerusalem:

NAME: Mary E. Vargas
TITLE: Economic Officer
TELEPHONE NUMBER: +972-2-622-6969
EMAIL ADDRESS: VargasME@state.gov

Contact at government agency or agencies are responsible for combating corruption:

NAME: Dr. Ahmed Barak
TITLE: Acting Attorney General
ADDRESS: Al-Balua, opp. Foreign Ministry, Al-Bireh
TELEPHONE NUMBER: +972-2-242-8538
EMAIL ADDRESS: ag.office@pgp.ps

The Coalition for Accountability and Integrity - AMAN
TELEPHONE NUMBER: +972-2-298-9506
EMAIL ADDRESS: info@aman-palestine.org
WEBSITE: http://www.aman-palestine.org

13. Bilateral Investment AgreementsShare    

Bilateral Taxation Treaties

The Palestine Liberation Organization (PLO), on behalf of the PA, has signed international trade agreements, which refer implicitly or explicitly to WTO rules. These include:

  1. Paris Protocol Agreement with Israel (1994) – free trade in products between Israel and Palestinian markets
  2. Technical and Economic Cooperation Accord with Egypt (1994)
  3. Trade Agreement between the PA and Jordan (1995)
  4. Duty Free Arrangements with the United States (1996)
  5. The EuroMed Interim Association Agreement on Trade and Co-operation (1997)
  6. Interim Agreement between European Free Trade Area (EFTA) states and the PLO (1997)
  7. Joint Canadian-Palestinian Framework for Economic Cooperation and Trade (1999)
  8. Agreement on Commercial Cooperation with Russia – extends MFN status
  9. Greater Arab Free Trade Area, to which PA is a party (2001)
  10. Free Trade Agreement with Turkey (2004)
  11. Trade Agreement with the EU – duty free access for Palestinian agricultural and fishery goods (2011)
  12. Free Trade Agreement with Mercosur (2011)
  13. Unilateral acts by other Arab trade partners extending preferential treatment to trade with the Palestinians

Since 1996, duty-free treatment has been available for all goods exported from the West Bank and Gaza to the United States, provided they meet qualifying criteria as spelled out in the U.S. - Israel Free Trade Area (FTA) Implementation Act of 1985, as amended. The duty-free benefits accorded under the FTA exceed those benefits which would be provided under the Generalized System of Preferences (GSP). It is worth noting that the benefits for imports provided in all of the trade agreements listed above are subject to application by the GOI, since all goods destined for the West Bank or Gaza must enter through Israeli-controlled crossings or ports. The GOI generally applies duties and tariffs consistent with its trade agreements, not with the PA’s trade agreements.

The West Bank and Gaza do not have a bilateral taxation treaty with the United States.

14. OPIC and Other Investment Insurance ProgramsShare    

The Overseas Private Investment Corporation (OPIC) provides a variety of services to qualified investors with either U.S. partners and/or subsidiaries in emerging economies and developing nations. During the early stages of investment planning, U.S. investors may contact OPIC for insurance against political violence, inconvertibility of currency, and expropriation in the form of an insurance registration letter. OPIC has initiated a number of programs in the West Bank and Gaza to support private sector development, including a successful loan guarantee facility. Building on previous programs that disbursed over $117 million in loans from July 2007 to September 2015, OPIC launched a new Loan Guarantee Facility in April 2016 enabling pre-approved lenders to provide up to $143 million in loans to eligible SMEs. The new facility expands the parameters of its predecessor programs to broaden the range of guaranty products and technical assistance.

The World Bank, via a USD 26 million fund administered by its Multilateral Investment Guarantee Agency (MIGA), provides loan guarantees in the form of insurance against political risk for private investments in the West Bank and Gaza. Under the terms of the Fund, investors who are nationals of companies incorporated in a MIGA member country, or who are Palestinian residents of the West Bank or Gaza, are eligible to obtain guarantees for up to 15 years. The Fund currently has the capacity to issue guarantees for up to USD 5 million per project. This trust fund, administered by MIGA on behalf of the government of Japan and the PA, aims to encourage investment in the West Bank and Gaza by providing political risk insurance to both local and foreign investors. The fund is designed to facilitate small and medium-size investments, with a special emphasis on projects with high employment-generating capacity. The fund is currently backing the development of Mejdool date palm and herb farms, a dairy factory, a plastic manufacturing plant, and the expansion of a company that produces and distributes beverages.

15. LaborShare    

With its growing youth population, the West Bank and Gaza have an abundant labor supply with a high level of education and skills. According to the Palestinian Central Bureau of Statistics (PCBS), the total population of the West Bank and Gaza in December 2015 was about 4.75 million, including 2.9 million in the West Bank and 1.85 million in the Gaza Strip.

PCBS estimated there were 1.299 million people in the labor force as of the end of 2015, effectively 46.1 percent of the West Bank population and 45.2 percent of the Gaza population. Since 2001, when the GOI began restricting the number of labor permits available to Palestinians, areas adjacent to the Green Line between Israel and the West Bank, such as Jenin, Tulkarem, and Qalqiliya have seen their unemployment rates increase substantially above the West Bank average.

The most recent PCBS labor statistics estimate 2015 unemployment was 17.3 percent in the West Bank and 41 percent in Gaza. Unemployment disproportionately affects youth: when broken down, the highest unemployment rate in 2015 was 36.5 percent among youth ages 20-24 years. According to PCBS, at the end of 2014, the service sector was the biggest employer in the local market with 36.1 percent in the West Bank and 58.4 percent in Gaza Strip. The public sector employed 22.9 percent of the workforce in 2014 (16 percent in the West Bank and 41.5 percent in Gaza Strip). The average daily wage during the first quarter of 2015 in the West Bank was 94.1 ILS (USD 24.50) compared with 66.19 (USD 16.30) NIS in the Gaza Strip. The Palestinian minimum wage in 2014 was NIS 1,450 (USD 381.57) per month. The average daily wage for persons employed in Israel and Israeli settlements was NIS 187.5 (USD 48.50).

According to the most recent Labor Force Survey, labor distribution by sector is as follows:

  • 36.1 percent - Services and Other Branches
  • 20.2 percent - Commerce, Hotels, Restaurants
  • 15.3 percent - Construction
  • 12.6 percent - Mining, Quarrying, Manufacturing
  • 10.4 percent - Agriculture, Forestry, Fishing, Hunting
  • 5.4 percent - Transportation, Storage, Communication

The International Labor Organization reported in 2015 that increasing uncertainty and restrictions on labor institutions and practices in the West Bank and Gaza could lead to negative prospects for private economic activity. PA law does not expressly forbid forced or compulsory labor, and there have been reports of forced labor and child labor in the West Bank and Gaza, particularly in agricultural work and the informal economy. Despite widespread informality in the economy, most large Palestinian employers rely on standard, long-term employment contracts with minimal use of temporary workers. Israeli law applies to settlements in the West Bank, but authorities did not enforce it uniformly. Investors may encounter increasing reputational risks related to labor conditions in these settlements.

PA law provides for the rights of workers to form and join independent unions and conduct legal strikes. The law requires conducting collective bargaining without any pressure or influence but does not explicitly provide for the right to collective bargaining. Anti-union discrimination and employer interference in union functions are illegal, but the law does not specifically prohibit termination due to union activity. Labor unions were not independent of authorities and political parties in 2015.

The requirements for legal strikes are cumbersome, and strikers had little protection from retribution. The PA Ministry of Labor can impose arbitration; workers or their trade unions faced disciplinary action if they rejected the result. If the ministry cannot resolve a dispute, it can be referred first to a committee chaired by a delegate from the ministry and composed of an equal number of members designated by the workers and the employer, and finally to a specialized labor court. Teachers, who comprise the most significant portion of the public sector work force, participated in a large-scale strike with demonstrations in early 2016 protesting partial pay.

In early 2016, the PA President ratified a new Social Security Law, but the law had not been formally adopted or implemented at the time of this report. The draft law is expected to cover issues related to retirement benefits, maternity leave and disability payments, as well as compel employers to contribute to a Social Security Fund for employees.

16. Foreign Trade Zones/Free Ports/Trade FacilitationShare    

There are no foreign trade zones or free ports in the West Bank or Gaza.

17. Foreign Direct Investment and Foreign Portfolio Investment StatisticsShare    

According to the PCBS, the stock of foreign investment in the Palestinian territories at the end of 2014 amounted USD 2.746 billion. This includes foreign direct investment, portfolio investments, and other investments.

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy


Host Country Statistical source

USG or international statistical source

USG or International Source of Data: BEA; IMF; Eurostat; UNCTAD, Other

Economic Data






Host Country Gross Domestic Product (GDP) ($M USD)





Host source: PCBS, “Major National Accounts”

International source: World Bank, Worldwide Development Indicators

Foreign Direct Investment

Host Country Statistical source

USG or international statistical source

USG or international Source of data: BEA; IMF; Eurostat; UNCTAD, Other

U.S. FDI in partner country ($M USD, stock positions)





BEA data unavailable

Host country’s FDI in the United States ($M USD, stock positions)





BEA data unavailable

Total inbound stock of FDI as % host GDP





Host Source: PCBS Foreign Investment Survey of Palestinian Enterprises (stocks) at the end of 2014 available at http://www.pcbs.gov.ps/Portals/_Rainbow/Documents/e-FIS-annual-2014.htm

International Source: IMF Coordinated Direct Investment Survey

Table 3: Sources and Destination of FDI

The largest foreign company in the West Bank/Gaza is the Palestine Development and Investment Company (PADICO), which has invested over USD 250 million in the economy. Key PADICO investors include diaspora Palestinians from Jordan, the United Kingdom, and the Gulf. PADICO has made significant investments in telecommunications, housing, and the establishment of the Palestinian Securities Exchange. The Arab Palestinian Investment Company (APIC), headquartered in Ramallah, is a large foreign investment group with authorized capital of over USD 100 million. There are four private equity funds operating in the West Bank/Gaza, largely comprised of foreign investors: Riyada, Siraj, Sharakat, and Sadara. Other significant foreign investments include Qatari mobile operator QTel’s projected USD 600 million investment in Wataniya Mobile over a 10-year period, and Qatari Diar’s projected USD 1 billion investment in Rawabi, a mixed use/affordable housing real estate development. The largest U.S. investment is Coca Cola’s 15 percent stake in the local bottler, Palestine National Beverage Company (PNBC), a company valued at USD 70 million. PNBC is currently investing USD 20 million in a bottling facility in Gaza, in addition to its three West Bank-based plants.

Direct Investment from/in Counterpart Economy Data

From Top Five Sources/To Top Five Destinations (US Dollars, Millions)

Inward Direct Investment

Outward Direct Investment

Total Inward



Total Outward






Data unavailable










United States








"0" reflects amounts rounded to +/- USD 500,000.

Table 4: Sources of Portfolio Investment

The Palestinian Economy is not included in the Coordinated Portfolio Investment Survey (CPIS) site; therefore, data is not available for Table 4.

18. Contact for More InformationShare    

NAME: Mary E. Vargas
TITLE: Economic Officer
TELEPHONE NUMBER: +972-2-622-6969
EMAIL ADDRESS: VargasME@state.gov