Minister for Enterprise, Trade and Employment Micheál Martin, has urged Irish business to exploit opportunities in central and eastern Europe or watch as their competitors carve out a lucrative niche in some of the continent's most vibrant markets.

Accompanying Irish firms on a trade mission to Hungary, Mr Martin said it was up to entrepreneurs to exploit the strong links that Dublin has forged with the new and future members of the EU, where growth and foreign investment are surging.

"We have had a clear policy of developing strong bilateral ties with accession states," Mr Martin told The Irish Times, noting the success of Ireland's presidency of the EU last year, when 10 countries, eight of them former Soviet satellites, joined the bloc.

"We see the market, and we see central and eastern Europe as an opportunity, not a threat. These markets have taken time and will take time to develop, but you have to be in there to capitalise," said Mr Martin

More than 30 Irish companies already operate in Hungary alone - running everything from the inevitable pub and property outfits to a regional airport and €140 million wind farm - but Mr Martin said the region's potential is huge.

"We are competing against big players with a closer historical link to the region than ours - Germany being the prime example.

"But we are an island nation, and we have to be out there in the world, exporting our products and services. Generally, we punch above our weight. We can't hope for entire markets - but we definitely want a piece of the action."

Relatively low costs for land, property, tax and labour have attracted many major Western firms to Hungary, the Czech Republic, Slovakia, Poland, Slovenia, Latvia, Estonia and Lithuania since they joined the EU along with Malta and Cyprus last May.

Fears that a flood of talented youngsters and desperate workers would surge west have proved unfounded, and manufacturers in the east have not been crushed by an influx of high-quality imports from their richer neighbours.

Instead, according to a recent UN report, the economies of the eight new EU members from the old Soviet bloc are thriving and are set to easily outstrip the growth of more established markets in western Europe this year.

But their very success has caused friction with their supposed allies.

The rejection by France and the Netherlands of the EU constitution was inspired partly by fear that cheaper markets to the east would spirit away investors, and that further EU expansion into the Balkans - where land and labour are even cheaper - would only make things even worse.

A fault line was exposed running through Europe, and the new EU states found themselves fighting for more liberal markets and the free movement of labour and capital.

"Taxation is generally coming down in this region and this is a chance to broaden the debate around taxation in Europe," Mr Martin said. "We are on the liberal side, for the freeing up of markets.

"We are looking at a significantly altered political landscape in Europe, and the world is undergoing dramatic change.

"We are concerned with how the centre of Europe is responding to that."

He said Europe was "facing a challenge from Asia, from the Caribbean, from South America, from North America, and we have to adapt and change - no one owes Europe a living".

Mr Martin said Irish financial services and technology firms were finding particularly fertile ground in central and eastern Europe and representatives from 12 computer software and services companies joined him in Budapest.

There was also clear potential for project management and construction firms to increase their profile in the region, the minister said, and for companies across a vast range of sectors to "find their niche by bringing something different to the market".

"Companies have to lead the way," he said. "The drive has to come from within, and their commitment to research and development must be strong."

He also cast an eye further east for the next wave of opportunities.

Ireland opened embassies in Romania and Bulgaria this summer to help establish a strong commercial foothold there before they join the EU in 2007.

As the huge multinationals are drawn inexorably towards the low costs of these two Balkan nations, as well as to longer-term EU hopefuls like Croatia and Ukraine, major openings are likely to emerge among potential suppliers to those giants.

"There may be great opportunities - there are far more than mere scraps to be had," he said.