IDA boss: Ireland can 'buck the trend' and get more multinational jobs in every region

THE HEAD OF IDA Ireland has said he expects the state agency to fulfil its target of at least 30% more foreign direct investment (FDI) in every region in Ireland by 2019.

Speaking to Fora at IDA’s 2016 end-of-year review, chief executive Martin Shanahan said the organisation has seen “significant progress in relation to the regions, a real wide dispersion”, but acknowledged that it is “extremely challenging” to attract foreign companies to less populated areas.

“Investors are looking for talent and they are looking for places that are attractive to live in work in and that they can attract talent to. That poses a difficulty,” Shanahan said.

“The international trend for foreign direct investment is that it goes to larger urban areas, so we’re trying to buck the trend here.”

As part of its ongoing five-year strategy, IDA has promised to increase FDI in every region in the country by 30-40% by 2019 compared to the 2015 figures.

With job losses taken into account, the net job creation by FDI firms was 11,842.  Just over half went to areas outside of Dublin.

IDA Ireland CEO Martin Shanahan

“It is extremely challenging in the regions which have a lower population density and which do not have urban areas of critical mass,” Shanahan said, but added that Ireland’s access to the European labour market is a big selling point against large cities elsewhere.

He cited Newcastle West in County Limerick, Tullamore in County Offaly and Ballina in County Mayo – which all attracted FDI last year – as the types of towns that will help Ireland reverse the international trend.

According the IDA data, the region that saw the biggest boost was the mid-west, which experienced a jobs growth rate of 10% last year, with foreign firms adding just over 1,500 positions in the area.

The poorest performer was the midlands, which experienced a growth rate of just 1% in 2016 with just 58 net new jobs coming from foreign companies.

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Brexit

Shanahan also said he expects companies looking to relocate when the UK leaves the EU will “make decisions” on their new home by the second quarter of this financial year.

“It is not likely that companies will await the outcome of negotiations between the UK and the EU,” he said. “I think the political timeline and the commercial timeline are entirely incompatible.

“We have now moved to a situation where companies have narrowed it down based on their desk research and they are site visiting here and possibly elsewhere.”

He added that shareholders and clients of such firms demand that access to the European market is put beyond doubt.

A lot of interest has come from the financial services sector, Shanahan said, which has “felt most impacted because the timelines are longest in terms of ensuring that they are regulated in another jurisdiction”.

There has also been interest from the pharmaceutical and technology sectors, which Shanahan believes will increase this year.

However, he warned that the fallout from Brexit is not “all one-way traffic”.

“There are aspects of our existing portfolio will be impacted negatively by Brexit,” he said.

“We do have companies that service the UK market significantly out of Ireland. Obviously, in the event of hard Brexit of a situation, where access to the UK market is limited out of Europe, that would pose a difficulty for them.”

Trump

With political unrest on both sides of the Atlantic, Shanahan said “much of what is happening is outside our control, but what we can control is our own competitiveness”.

He said despite the incoming Trump administration’s seemingly protectionist policies, he expects US companies will continue to invest overseas “in order to access access (the European) market, in order to access the talent that is available and in order to access the innovation and the research and development that happens.

“There is no one country and there is no one continent that has a monopoly on these things.”

US president-elect Donald Trump

On the housing crisis, which has led to both property prices and rents soaring across the country, Shanahan said he didn’t believe it had cost the country any foreign investments to date.

Nor did he believe the Apple tax scandal had damaged ‘brand Ireland’, adding that it wasn’t something the companies IDA Ireland dealt with had raised as a concern.

“I do believe that if the commission’s decision is upheld, ie that they can retrospectively re-write national tax law, that is a problem. Not alone for Ireland, that’s a problem for Europe in terms of attracting foreign direct investment.”