The Government should continue to offer "aggressive" incentives to foreign firms, such as low rates of corporation tax, to attract high-quality jobs, the chief executive of Intel, Mr Craig Barrett, advised yesterday.
But at the official opening of Intel's $2 billion (€1.66 billion) wafer fabrication plant, Fab 24, Mr Barrett warned that more effort was required to ensure the Republic did not price itself out of the market.
In a clear reference to the current European Union debate about tax harmonisation, he said 35-40 per cent tax rates were not an inducement to expand or create jobs for any corporation.
"I always look at this [offering incentives\] as governments investing in the future by creating jobs and creating more payroll taxes. It is a very effective incentive," said Mr Barrett.
He cited corporation tax, education and political stability as the key reasons why Intel continued to invest in the Republic.
At the weekend, the Republic proposed the deletion of articles in the draft EU Constitution that would abolish national vetoes in some areas of tax policy.
And the Taoiseach, Mr Ahern, yesterday made reference to this in his own speech at the launch of the new Intel plant. He said the Government hoped to keep tax harmonisation off the EU agenda "for some time to come".
Mr Ahern said the importance of Intel's overall investment in Leixlip could not be overstated as it contributed €400 million per year to the Irish economy.
He said Intel's decision to increase its investment in the Republic proved that the company still had much to offer in terms of expertise, an educated workforce, a stable environment and low corporation tax.
Mr Barrett said that Intel's investment in Fab 24 would bring the most sophisticated manufacturing technology to the Republic. He said that he fully expected Intel to continue to upgrade its technology in two-year cycles.
Fab 24 uses the most sophisticated manufacturing technology available to cut the cost of manufacturing computer chips for Intel.
The Republic would benefit from this as long as it kept its tax policies intact and the cost of living did not rise too rapidly, Mr Barrett added.
Since first investing in the Republic in 1990, Intel has spent about $6 billion building three separate fabrication plants and a research centre in Shannon.
However, Mr Barrett warned that rising costs were now an issue.
"Cost is a significant issue," he said. "Labour costs and the other is the cost of building facilities and infrastructure in Ireland."
He said Irish labour and building costs were now as high as in the US and the Republic should be careful it doesn't price itself out of a competitive position.
"If you want an example of this type of non-business friendly environment just look at California, which has priced itself out of competition for manufacturing facilities. It got so bad there that they effectively threw out their governor. So it is possible for this thing to happen," he said.
