Multinationals Predict $7.5BN Investment In Irish Operations And 20,000 Jobs Boost

Key Findings:

• Foreign investors estimate they will create 20,000 new jobs in Ireland over the next three years. Financial services (50%) and Technology (25%) will account for the majority of the jobs 
• 97% of existing foreign investors plan on maintaining investment levels in Ireland over the next 3 years. Just 3% plan a reduction  
• 46% of foreign investors cited Ireland's access to other EU markets as the country's most attractive attribute, 30% stated legal and fiscal stability, 29% cited the corporate tax rate (other tax factors are also important)
• 44% of those already investing in Ireland cited the country's corporate tax rate as the original factor that attracted them here

Foreign investors and multinationals predict they will invest an estimated USD$7.5BN in their Irish operations over the next three years, creating 20,000 new jobs. This is according to a new report, 'Investing in Ireland – A survey of foreign direct investors', published today by the Economist Intelligence Unit (EIU) and commissioned by Matheson Ormsby Prentice.

Liam Quirke, Managing Partner at Matheson Ormsby Prentice (MOP) said, "The job creation estimates clearly show that foreign investors have a very positive attitude to Ireland. This survey is about understanding the needs of international business when making investment decisions, and how Ireland can better compete for such investments. It is important that policy-makers think about Ireland as an actual business, with actual customers, and make the needs of these customers a priority."

In compiling the report, the Economist Intelligence Unit (EIU) surveyed 315 senior executives in international companies and financial institutions across the US, EMEA and Asia Pacific. 49% were from the financial services industry, 15% from IT/online, and the remainder from sectors including pharmaceuticals. In-depth interviews were also carried out with senior executives from some of the largest FDI operations in Ireland.

The report examines the main factors that bring foreign investment to Ireland and the main challenges in attracting it.  It identifies that there are four key cornerstones to Ireland's FDI offering – access to the EU internal market; the overall taxation infrastructure; the ability to supply a skilled pool of labour; and a stable legal and fiscal framework.

The Access Cornerstone – Ireland must be the premier gateway jurisdiction to the EU market

• The prime motivation for global investors to invest outside of their home market is to access new markets – 58% said this was their most important consideration
• 46% cited access to the EU market as a key competitive advantage for Ireland
• 51% said the size of Ireland's domestic market was a disadvantage

Liam Quirke said: "It is important to understand the relevance of Ireland to global investors. Our key advantage is not offering a market for goods, it is acting as a gateway to a bigger market. With increasing investment likely to come into Europe from China, India, Brazil and the Middle East over the coming years, we need to position ourselves to ensure we can act as the gateway to Europe for those investors, just as we already do for the US."

The Taxation Cornerstone  - Corporation Tax just one ingredient of a competitive tax infrastructure

• 46% of respondents cited a competitive corporate tax rate as an important factor when considering investment decisions. 44% of those with investments already in Ireland cited the corporate tax rate as the original factor that attracted them here
• 29% of respondents consider the corporate tax rate as one of Ireland's key attractions
• 16% cited double taxation treaties as a key advantage
• 40% rated Ireland's R&D tax credits system as more competitive than other locations
• The importance of the corporate tax rate varies depending on industry – 65% of pharmaceutical firms rated it as an important attribute. 35% of US firms cited it as important.
• Personal taxation is perceived as the weakest element of Ireland's tax offering

Liam Quirke said: "The headline corporate tax rate is clearly important. However, to compete successfully for mobile international investment requires a much more holistic approach in terms of our overall tax offering."

The Talent Cornerstone – Giving FDI investors the access to the right pool of skilled labour

• 28% of respondents mention Ireland's skilled workforce as a key competitive advantage
• 23% mentioned Ireland's base of skilled labour from across the EU (due to open labour markets)
• Ireland's workforce is seen as being 'reliable and able to handle complexity'
• Personal taxation is perceived as the weakest element of Ireland's tax offering – how will this impact on attracting and retaining senior international executives

Liam Quirke said:"Ireland must ensure that FDI investors have access to the right pool of skilled labour. This means attracting the best and brightest people to Ireland, whatever their country of origin."

The Legal, Fiscal and Regulatory Cornerstone – Make Ireland the best small country in which to do business

• 30% of respondents said that Ireland's legal and fiscal stability was a key competitive advantage (33% Financial Services, 26% Non Financial Services)
• 50% said political stability was 'very significant' when it came to FDI decisions
• Fiscal certainty was deemed important by 87% of respondents
• Report shows that Government must consider the unintended consequences of regulation of the financial services industry

Liam Quirke said: "It is especially important that policy-makers clearly understand that where trade-offs are necessary, the attractiveness of Ireland as a location for cross-border activity should be a priority consideration. This will require a differentiated approach between the regulation of domestic and international business activities, nowhere more so than in the regulation of financial services."

Other notable findings of the EIU report were:

• 51% of those surveyed said that Government's top priority for the next three years should be stabilising Ireland's financial system. 37% said attracting inward investment should be a priority
• 53% believe that Ireland's economic policy is increasingly determined by international institutions
• When asked if they had more faith in the current Government than the previous one, almost one third (31%) said they had, while 54% said they were 'neutral'

The full report can be downloaded by clicking here.

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