Ireland continues to outperform its competitors in attracting Foreign Direct Investment (FDI) and has the potential to attract further inward investment according to a report launched by Grant Thornton today entitled Foreign Direct Investment in Ireland: Sustaining the Success.
The report examines the factors which have contributed to Ireland’s success in attracting FDI, and highlights the key measures that must be progressed to sustain high levels of inward investment.
The report, prepared with support from Amárach Research, was welcomed by the Minister for Jobs, Enterprise & Innovation, Richard Bruton TD at an event this morning, and outlines the key success factors senior executives and key decision makers in Ireland and North America believe underpin Ireland’s attractiveness as a place to do business. The report also indicates that global FDI inflows are estimated to reach US$1.8 trillion in 2015, with Ireland well-positioned to take advantage of this opportunity.
The factors identified as positively contributing to Ireland’s reputation as a place to do business include:
• The quality of the workforce with particular reference to its flexibility, adaptability and level of education;
• A strong work ethic;
• The pro-business environment maintained by successive governments, and the support given by government departments and agencies; and
• Ireland’s continued economic recovery and the resilience displayed by the Irish government and people in relation to same.
In addition, Ireland’s political stability, the perceived ease of doing business, access to the EU market and access to skilled labour were identified as key considerations when assessing investment opportunities in the economy.
For Ireland to continue its successful attraction of FDI, the report outlines the measures that must continue to be progressed including:Skill shortages – challenges still exist in accessing talent within the ICT, science and engineering sectors. Over the past number of years significant investments have been made to develop these areas. On-going success of these measures needs to be monitored to future proof the competitive advantage offered by Ireland’s people and talent.
• The costs of doing business – the overall cost competitiveness of Ireland has improved, however Ireland continues to be an expensive place to do business when compared to some other EU destinations. As costs of doing business are purely location related, it is vital to ensure that Irelands cost competitiveness improves. Policy makers should aim to improve the cost areas that are directly under their controls.
• Intellectual Property – Ireland has a strong intellectual property regime and the country’s substantial R&D support-offering greatly contributes to Ireland’s FDI attractiveness. It is important that any significant changes to the Irish IP regime, such as the introduction of branding restrictions, are thoroughly reviewed from a national and a wider international perspective to determine any potential negative impact on the attractiveness of Ireland as a location for FDI.
• Poor infrastructure in specific areas – transport, communications and property infrastructures continue to provide challenges to FDI investors. In particular, challenges exist in growing attractiveness of regional Irish locations as destinations for FDI. These areas are now being addressed to ensure Ireland’s continued competitiveness in the global landscape.
Minister for Jobs, Enterprise & Innovation, Richard Bruton TD, said: “Expanding our base of FDI jobs is a key part of the Action Plan for Jobs. As we seek to increase employment in this sector, it is crucially important that we continually look over the next horizon at the future challenges which will make the difference between success and failure for Ireland in this area. That is why my Department will shortly publish our policy statement on FDI, and following on from that IDA Ireland will over the coming months develop a new strategy which will map out the future direction of FDI policy. In this way we will ensure that we build on the successes of recent years, react to changing circumstances, and continue to grow jobs in foreign companies in Ireland in the coming years”.
Myrtha Hurtado Rivas, Head of Global Trademarks, Novartis Pharma said: “In the past decade many developing countries have significantly strengthened their IP regimes and now offer real competition to Ireland. In the pharmaceutical sector innovation is at the core of everything. IP protects that innovation and hence the investment made by companies.
There is a trend towards increased regulation of IP rights of pharmaceutical brand owners, aimed at increasing access to generic medicines, patient safety and reducing health budgets. Novartis strongly supports these aims. Nevertheless, it is essential to find the right balance between attaining these objectives and the IP rights at stake. Brands and ornamental features are part of the trade dress and the brand identity of pharmaceutical products built up during a long period of time and with considerable investment.”
Danny McCoy, CEO of Ibec said: “Strong IP rights are a vital element to foster additional FDI into Ireland. Ibec has recently set out four pillars for a medium term FDI strategy for Ireland, that include having a best ìn class R&D tax credit scheme, continued commitment to the 12.5% corporate tax rate brand, a more competitive personal tax environment and an enhanced IP regime.”
Brendan Foster, Grant Thornton Partner for Business Consulting and Advisory said: “It is interesting to note from the survey that tax incentives for investors scored lower than other investment decision factors. Our 12.5% corporate tax rate continues to be a fundamental pillar in Ireland’s FDI offering, but the predictability of the rate is as important as the rate itself. By publishing this report we hope to make a positive addition to the policy debate by highlighting to Government where, in the opinion of international investors, more work should be done such as tackling persistent skills shortages, infrastructure deficits and ensuring the protection of intellectual property.”
The Foreign Direct Investment in Ireland: Sustaining the Success report can be found at www.grantthornton.ie/FDI2014