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20 september 2018

Yoram Dvash Hits The Ground Running As Second Term Begins

04 january 2018

yoram_dvash_xx_2.jpgHaving completed his first term in office as President of the Israel Diamond Exchange (IDE), Yoram Dvash sat down with Rough & Polished to discuss his achievements during his first period in office, and plans for the second term following his unopposed reelection in October. One of the changes that was agreed at the IDE's last General Assembly was for the term of IDE president to last three years rather than two to give the man at the helm time to plan and execute changes, meaning Dvash’s second term will end in 2020.

One of the first things you notice when you sit down to interview Yoram Dvash is that he is a man in hurry. Having just come from one meeting, and on the way to another as soon as our meeting is over, it is clear that he is a president with a big agenda.

He has an ongoing and continuously growing list of changes and improvements that he wants to make after identifying the lack of faith in the work of the exchange as problematic. That was clear from the list of achievements from his first term in office, of which more later.

He is open to new ideas, indeed welcomes them, if they can bring more benefits to his bourse members and push the IDE further along the road to success and transparency. Interviewing him several days after a celebratory event in Tel Aviv to mark the exchange's 80th year of operations, Dvash is still beaming as he recounts the Israeli ministers, senior officials and members of parliament who attended the event and publicly praised the work of the exchange.

"It was wonderful to hear the words of congratulation coming from senior people who recognize the nature of the changes that have taken place at the IDE," he said. "This is a big turnaround from just a few years ago when the mood at the bourse was rather low. The Israel Tax Authority now sees us in a completely different way. We have returned to being seen as a highly regarded industry. The Banking Supervisor at the Bank of Israel speaks in high terms about the bourse and the changes we have made. All of these comments confirm the necessity of the changes we made and the importance of working with transparency."

Asking him about the changes at the exchange that he brought about during his first term, Dvash is quickly into his stride, mentioning the tenders center where three firms a month are exhibiting goods. Then he shows me an area next to the boardroom that is being refurbished in order to make it a center for 150 bourse members who have signed up to take part in selling goods via the giant Chinese site Alibaba. The IDE has signed a deal with the online giant in which it will invest in promoting the deal with the IDE.

Dvash also mentions the arbitration panel that he has brought into being another forward-thinking move showing the IDE is actively promoting transparency. A retired district judge will settle arbitration claims with a value of $400,000 or more, rather than a long-standing bourse member. Some smaller claims will also be decided by the retired judge. There will be an arbitration panel of four judges. The change is aimed at raising the professional level of arbitration proceedings. As Dvash says, “This is an unprecedented decision that will increase the status of our Arbitration Institution in Israel and in the diamond world. It will contribute to greater transparency and objectivity and will strengthen the independence of the Arbitration Institution. I have no doubt that the civil courts will now attribute even greater authority to decisions of this institution."

The IDE also launched of a code of ethics which a leading Israeli expert on the issue, Professor Asa Kasher, helped create. The code puts Israel at the forefront in matters relating to correct and transparent administration. Dvash said: "I am proud to be the first bourse president in the world to launch a code of ethics. It combines very well the IDE's path – a path of transparency and clearly written rules."

Above all, the biggest achievement in the first term was signing an agreement with the country’s tax authorities that exempts traders from paying taxes if they incur a loss. Israeli diamond companies will be taxed on profit rather than revenue. The previous tax agreement which had been in force for several decades meant that Israeli diamantaires were paying tax on turnover even when making losses. The new tax law allows companies to deduct expenses from income before arriving at the final profit figure.

The deal was signed following 10 months of intensive talks with the Israel Tax Authority and, crucially, are in line with international financial guidelines. The significance is that Israel’s diamond sector thus becomes more attractive to lenders – all the more important given the challenges faced by the diamond industry across the world.

Looking forward, Dvash mentions the bourse’s plan for the building of two new towers that would create 400,000 sq meters of space which has been approved by the Ramat Gan municipality. They will raise around $1.3 billion to $1.5 billion for use by the exchange in paying pensions and other uses.

Another feature of his first term in office of which he is proud and which he believes will continue is the large number of young people who entered the diamond business. "Many young people have joined our trade because they see that it is a dynamic business and want to make their careers here."

In his first term, Dvash oversaw the opening of a modern manufacturing plant near the IDE complex that was officially opened in 2015, and then pushed for the establishment of another manufacturing center for Israeli diamantaires for the production of diamonds of 10 carats and larger. Bringing manufacturing back to Israel is something that Dvash not only believes in, but is passionate about achieving. For years, it was not considered possible due to the dominance of the Indian cutting and polishing center based on low wage levels.

But the new centers enable Israeli firms to send their diamonds for cutting, literally a stone's throw away. Being able to monitor their diamonds' production close by – particularly for larger stones where the labor cost element is less important – is an important advantage. "The money being saved by sending diamonds overseas for cutting and polishing is not as significant anymore," Dvash explains. "Even lower-cost polishing countries face rising expenses as they develop and workers demand better salaries and conditions. Furthermore, there is the issue of time. Sending goods abroad and getting them back can take a few business days, and then there is the cost of shipping and insurance. All of these factors created a new equation into which the new plants fitted very well."

By far the biggest development in this respect is the news that the 813-carat Constellation diamond is being laser cut in Israel in the first stage of its processing. The Constellation was brought to Israel for processing at the advanced Synova laser cutting facility located in the Israel Diamond Exchange (IDE). Synova Laser MicroJet (LMJ) technology will enable maximum precision and minimum waste in diamond cutting, reducing damage to expensive rough stones and providing higher yields. “This is really evidence of the top-quality cutting and polishing facilities that we have here. It is an exceptional stone requiring extremely precise work and the fact that its owners have sent it here testifies to the high level of trust in the work that is carried out in Israel.”

Looking forward to his second term, Dvash says: "In general terms, together with my excellent directors who were elected in October, I want to consolidate the achievements of the first term. In addition, we have the new Alibaba center which will be up and running shortly. We are also in talks with the Ministry of Economy about relaxing regulations for the diamond trade and financial assistance.”

By our Israel correspondent Abraham Dayan