2011 proved to be a record year for foreign direct investment (“FDI”) in Ireland. Over 148 investments were made during the year with an increase of 30% in the number of overseas companies investing in Ireland for the first time. 2012 has continued in a similar vein with over 5,000 jobs created by multinational companies in the first six months of the year.
A recent study of global investors undertaken by the Economist’s Intelligence Unit (EIU) on behalf of Matheson Ormsby Prentice has identified four cornerstones of competitiveness underpinning Ireland’s continuing attractiveness for FDI: ready access to EU markets; a sophisticated corporate tax infrastructure; a talented, English-speaking workforce; and a business-orientated legal and regulatory framework. Maintaining these four cornerstones will be key if Ireland is to remain one of the top global inward investments locations.
The EIU study involved a survey of over 300 global executives with responsibility for or familiarity with their companies’ decisions regarding current or prospective investments in Ireland as well as in-depth interviews with key FDI decision makers in Ireland and abroad.
As well as examining Ireland’s competitiveness, the EIU report also identified the challenges faced by Ireland in continuing to attract investment from multinational businesses. Principal among these are the need for Ireland to work with its partners in the EU to stabilise and grow economic activity in the world’s biggest market and to energise a subdued domestic economy caused in some part by fiscal policies necessary to reduce the national budgetary deficit.
Ireland’s new government, still less than two years in office, has shown itself to be willing and able to meet these challenges and provide the political and fiscal stability needed to steer the country towards economic recovery. The passing of a 2012 national budget tailored to meet Ireland’s commitments under its agreement with the EU and IMF, together with the introduction of further pro-innovation refinements to our tax code and an unshakeable commitment to Ireland’s 12.5% corporation tax rate, are unambiguous signals that Ireland remains fully committed to maintaining the level of competitiveness highlighted in the EIU report.
For 2012, the key factor for Ireland has been confidence. Confidence in Ireland and Ireland’s future is persuading new and existing international businesses that Ireland is the right location for them, with leading international companies announcing significant investments, in particular in the pharmaceutical, biotechnology and ICT sectors.
2012 has also seen evolutions in inward investment activity in Ireland, with a “cluster” of internet and technology companies forming in Dublin’s so-called “Silicon Docks” and the announcement of a 1.1 million square foot Euro-Chinese Trading Hub in Ireland’s midlands region showing the adaptive and pro-enterprise nature of the Irish economy.
Predictions for the future are positive. Ireland’s labour and construction costs continue to fall. Despite uncertainty in the international economic environment, productivity levels are increasing and Ireland’s GDP is now expected to grow by 2.2% in 2013. A recent agreement at EU level to provide emergency funding directly to banking institutions rather than adding that cost to Member States’ balance sheets will, it is expected, provide relief to Ireland’s national debt and allow the Irish government greater flexibility to reduce its budgetary deficit.
All these developments will pave the way for increased domestic consumption and economic growth in the coming years and augur well for consolidating Ireland’s place as one of the best places in the world to do business.