As IDA prepares its next five-year plan, the organisation is pointing to new challenges ahead, including Brexit and the increasing competition for foreign direct investment.
Minister for Business, Enterprise and Innovation Heather Humphreys, TD – who this morning also announced a €40m boost to the Regional Enterprise Development Fund (REDF) in a bid to create more jobs across Ireland – joined IDA CEO Martin Shanahan at agency’s new office in Dublin earlier today.
Humphreys said that the record level of employment outlined during today’s announcement “represents a strong vote of confidence in our economy by international investors”, while demonstrating Ireland’s economic strengths.
As IDA Ireland prepares its next five-year plan, the organisation faces a fresh set of challenges. One such challenge, it said, is the increasing levels of competition for FDI from across Europe.
Shanahan said: “There are some countries doing extraordinarily well in Eastern Europe and improving their offerings. Many of them have actually modelled their interventions, supports, and indeed their agencies, around the Irish model. I think there is a very real threat coming from there.
“We also see increased competition from Mediterranean countries. If you look at some of the global rankings, Spain is doing really well. Every country in the world is alive to the potential of foreign direct investment.”
‘We are punching well above our weight at the moment’
– MARTIN SHANAHAN
However, Shanahan remained confident that IDA’s success will continue. “70 years ago, people had the amazing foresight to set up the Industrial Development Authority and to seek investment, and we have a lot of countries who are now trying to do that,” he said.
“To be very clear, and to give a rounded answer, we have very large countries like the US seeking investment and grants within Europe. Our nearest neighbour has been one of the most successful countries in trying to attract investment within Europe, and I expect it will continue, notwithstanding Brexit.”
On the matter, Shanahan concluded: “To put it all in perspective, Ireland has just under 1pc of Europe’s population, but we account for 5.4pc of foreign direct investment coming into Europe. We are punching well above our weight at the moment.”
So far, IDA Ireland has had close to 90 individual Brexit-related investments, with more than 5,500 associated jobs approved since the UK’s referendum to leave the EU in June 2016. As we move into the next stage of Brexit negotiations, Shanahan described the situation as “a wait and see”.
“We’re in the market for any mobile investment, wherever it comes from – including if that’s emanating from another European or non-EU country, as the UK will be. I think you will see that most companies have made their decisions and in many cases they have executed those decisions.
“Typically, these are ‘no regrets’ decisions, in that companies have made those decisions and have no plans to alter them, regardless of what happens with Brexit. I think a lot will depend on what happens in the negotiations with the EU in the UK trade deal.”
Shanahan said that the UK has set an “extraordinarily ambitious timeline” for successfully completing these negotiations. If the UK government doesn’t achieve a suitable trade deal or there isn’t an orderly transition, he added, “that would change things at that point, and you could see more investment”.
“In the short term, my instinct is that many companies will sit tight. They might do more analysis and watch negotiations, but we’re not likely to see a significant wave of investment until it’s clear what the UK trade deal looks like.”