IDA Ireland is expecting to announce a significant number of new investments from multinational firms in the coming months and forecasts further wins on the back of Brexit.
The agency responsible for attracting foreign direct investment (FDI) to the Republic also said recent US tax changes have had little impact yet.
Speaking as the State body said it had achieved its job-creation target two years ahead of schedule, chief executive Martin Shanahan said it won't be until the end of 2018 and into 2019 before Ireland sees the impact of IDA Ireland's Brexit initiative.
“The Brexit initiative from our perspective is going reasonably well but it is not reflected in jobs on the ground yet,” he said.
Mr Shanahan said while the body expected a significant number of Brexit-related investments and jobs to be in the financial services sector, there should also be gains in the pharma and tech sectors. He added there were still companies deciding what to do and advancing their plans while others who had made the decision to relocate were undergoing licensing and regulatory processes.
The IDA head added that while Brexit itself was a reason for companies opting to relocate, it was one of many factors that companies were weighing up.
Downside risks
While warning of possible “significant downside risks” to FDI from both Brexit and US tax reform, he said the latter had yet to have much of an impact locally.
“Let’s be honest, this [reform] is an effort to make the US more competitive and that may mean there are some marginal calls which could mean a company decides to stay in the US rather than come to Europe or Ireland. But does it signify a significant change from an Irish perspective? I don’t believe so, for the reason that it isn’t all about tax,” said Mr Shanahan.
“Many of the decisions we saw in the latter part of last year were made in the full knowledge, more or less, of what was coming in the taxation Bill and it hasn’t dissuaded investors. I can tell you sitting here today that I expect the next couple of months to be strong in terms of investments . . . Those decisions have been made with full cognisance of what was coming down the road,” he added.
Publishing its annual report on Thursday, IDA Ireland said employment levels in foreign-owned companies here now totalled a record 210,443. This is up from 199,877 in 2016 and is ahead of a target of 209,000 jobs by 2019 set by the State body as part of an ambitious five-year growth strategy plan in 2015.
Last year, 19,851 jobs were created by international firms and 9,167 lost to give an overall net jobs gain of 10,684.
IDA said employment levels at companies it supports grew by 5.3 per cent in 2017, against the national average of 2.3 per cent.
The agency said it secured 237 investments last year with the number of investment decisions from new clients increasing to 111 from 99 in the previous year.
Complacency
While the State body has exceeded the total net increase in jobs targeted in its five-year strategy for three consecutive years, Mr Shanahan warned against complacency.
“Less than 10 years ago, across 2008 and 2009, Ireland lost over 35,000 FDI jobs. This is a salutary reminder that we can take nothing for granted in the foreign investment world – all jobs must be fought for and won against increasing international competition.”
He said the business environment for FDI remained “very competitive” with many other countries seeking to win the same investments as the Republic. While warning of international developments that could lead to fewer investments here, he also stressed the need to ensure Ireland did its best to remain attractive to investors.
Mr Shanahan noted several issues of concern for FDI investors, including ensuring a good supply of housing, skills levels, increasing industrial relations activity, income tax levels and infrastructure investment. He stressed, however, that despite significant reporting of worries over the housing situation it had not led to a “make or break” moment for any investor as yet.
The US continues to be the largest source of FDI investment into Ireland, although the situation is changing as IDA Ireland looks to attract investors from other markets.
Last year, 67 per cent of investment came from the US, compared with 72 per cent in 2016. Europe accounted for 24 per cent of investment, up from 20 per cent a year earlier. Growth markets moved from 8 per cent to 9 per cent over the year.
Mr Shanahan admitted there was still a reluctance from some investors to look beyond the capital in terms of investments.
“Convincing international investors to consider locations outside of Dublin continues to prove challenging with multinational companies increasingly looking to invest in bigger communities globally,” he said.
All geographic regions saw an increase in FDI-related jobs last year, with the biggest increase recorded in the southeast, where an additional 14,918 roles were created.
In addition, all industry sectors outside of the computers, electronics and optical equipment segment saw gains. Mr Shanahan attributed the 1.2 per cent decline in that segment to a decline in traditional computing and hardware that has led companies such as HP to close facilities here.
