US FDI investors view Ireland as a good place to do business

1 Nov 2011

The past year has seen Ireland benefit from major investments from tech giants Google, HP, Twitter, Apple and IBM to name but a few, and Ireland’s tax regime remains an increasingly important advantage over other potential FDI destinations in Europe, along with skills and infrastructure.

Ireland’s low Corporate Tax rate remains the key factor for attracting foreign direct investment from the US, new research from law firm Matheson Ormsby Prentice reveals. Matheson Ormsby Prentice represents 27 of the world’s 50 largest banks and more than 50pc of the Fortune 100 companies.

The latest instalment of the MOP FDI Index reveals that 40pc of the senior US business leaders surveyed perceive Ireland as a good place to do business, with the report also endorsing Irish Government initiatives and the way in which the FG/Labour administration is so far handling the economic crisis.

On Ireland’s corporate tax rate, the gap between positive perceptions of Ireland compared with its European counterparts has now widened to more than 30 percentage points.

Some 62pc of respondents in the September wave of research endorsed Ireland’s corporate tax rate as a key positive factor, compared to an average 30pc ranking for Western Europe. In April 2011, the equivalent figures were 58pc (Ireland) vs 39pc (Western Europe).

With the research carried out before the Eurozone leaders agreed on a deal to address the debt crisis, the survey results show the significant unease created by the financial instability in Europe, with 48pc saying the Euro debt crisis would deter them from setting up a business in Ireland.

More worryingly, positive perceptions towards Ireland’s relative economic and political stability fell by 41pc since the last round of the Index (in April 2011).

“Despite the political and economic turmoil of the last 12 months, it is clear that international investors still view Ireland as a good place to do business, and understand that Ireland is not just committed to keeping its promises to the companies who have invested here, but that it has the capacity and the will to do so,” Liam Quirke, managing partner of Matheson Ormsby Prentice explained.

“However, Ireland does not exist in a bubble, and the findings of the latest MOP FDI Index reinforce the importance of economic and political stability to investment decision makers in the global market.”

Reasons Ireland is winning over rest of Western Europe

While the survey findings show that Ireland’s corporate tax rate remains its key point of difference over other potential European FDI destinations, factors such as Ireland’s pool of skilled labour (34pc positive ranking vs 30pc for Western Europe), the quality of IT infrastructure (36pc vs 31pc) and the stable regulatory environment (58pc vs 34pc), all remain as strong positive attributes when Ireland is compared to its European neighbours.

However, in the context of global competitors for foreign direct investment, the research shows that Asia is proving increasingly competitive, and now ranks higher than Ireland in terms of perceptions on personal tax rates (a key factor for multinationals looking to relocate senior personnel abroad).

Positive perceptions towards Asia’s IT infrastructure also improved by eight points, from 47pc to 55pc (April vs September).

Quirke continued: “To be the best small country in the world in which to do business, we must benchmark ourselves globally, not just against our European neighbours.

“It also means that we must actually compete to make ourselves a more attractive destination. In defending our pro-enterprise tax policy, our Government has made an important first step towards maintaining Ireland’s competitiveness, with this clearly reflected in the findings of this survey.”

John Kennedy is a journalist who served as editor of Silicon Republic for 17 years