Nov 5, 2008 - 5:13:29 AM
 |
| US chip giant Intel is Ireland's largest industrial employer and Ireland's biggest foreign direct investment project. Since 1989, Intel has invested over $7 billion transforming the 360 acre former stud farm campus in Leixlip, Co. Kildare into a state of the art manufacturing centre of excellence. |
Senior economic advisor to Barack Obama and former US Under-Secretary of Commerce for Economic Affairs, Dr. Robert Shapiro said on Tuesday: "Ireland must wean itself from dependence on FDI," while addressing a seminar 'FDI: What's the Forecast?' hosted by UCD Business Schools. Shapiro along with Irish and international experts from Wyeth, Intel, CRH, Citibank and UCD explored the challenges facing Ireland in its fight to retain FDI (Foreign Direct Investment) and the solutions we must embrace to remain an attractive investment location for international firms.
|
|
Shapiro predicted that a highly skilled, English speaking workforce is the key to giving Ireland an advantage over all other states competing for FDI. He said, "Ireland is the greatest economic success story in the last fifteen years and it will continue to be an attractive site for FDI as long as it continues to provide the caliber of graduate that foreign investors have come to expect."
Commenting on what lies ahead for FDI into Ireland, Shapiro said, "Ireland must wean itself from dependence on FDI. A low corporate taxation rate is not the most important factor moving forward, it goes beyond that. The next stage is not FDI but a series of policies that actively promote spillovers from FDI corporations to Irish indigenous firms. The best way forward is for young Irish people to become entrepreneurs and force existing business to compete and become the best in the world. If you look at the Chinese model, FDI is a transitional strategy, not an end game strategy, that creates a lasting impact. The key to Ireland's next stage is to make the entire economy a modern economy and not one that depends on the success of foreign companies."
Shapiro said there is a “significant possibility” an Obama administration will change the current tax rules, under which US companies pay tax on overseas earnings only when profits are repatriated.
However, he told the conference“there will be no seismic change in flows of FDI to Ireland or anywhere else as a result of the changes.”
|
|
After 15 years of the Celtic Tiger, foreign-owned companies, mainly American, are responsible for 90% of Irish exports. The windfalls of the construction boom, went into commercial property overseas rather than providing a base for nurturing Irish exporting enterprises.
"The ability to develop ideas is the single most critical factor and source of wealth and growth for advanced economies today, replacing physical assets and this is what Ireland needs to focus on," Executive VP of Wyeth Biotech, Dr. Michael Kamarck said, increased costs are starting to eliminate the advantages of Ireland's 12.5% business-friendly rate, "Utility costs have increased 100% in the last couple of years. This, plus increased healthcare costs, erode the tax advantages of doing business here and will result in employment being cut. It will be important to make sacrifices to keep Ireland an attractive location for FDI."
On what Ireland could do to remain a competitive location for FDI, Kamarck said, "You can beat a zero tax rate. If you look at Puerto Rico, it has increased its volume based R&D tax rate to 50%. You can provide tax credits for investment in Ireland and continue to invest in education. We need talent that can increase efficiencies in processes."
Jim O'Hara, General Manager, Intel Irelandagreed saying, "Ireland must be more competitive - increases in energy and utility prices and wages will be offset by the numbers employed."
Aidan Brady, Country Officer, Citibank Ireland agrees that countries must reconsider their approach to FDI saying, "Globally, industry will have to rethink models. Consolidation will mean major job losses of about 15-20% across the board."
Shapiro forecasted that, "Our society will not tolerate on extended period of stagnant incomes – we are looking at the prospect of very ugly politics unless government can slow the rate of increases in energy and healthcare costs. If limits are not set, no society in the world will be able to meet the fiscal challenge of healthcare and pharmaceutical costs increase in the next 15 years. Government needs to be fair but brave in their policies."
Kamarck discussed his perspective on R&D in Ireland saying, "You are fighting an uphill battle to bring together research – there is an alphabet soup of agencies working on this in Ireland and to outsiders it may be viewed as unfocused. Ireland needs more focused R&D to put Irish universities in not only the top 100, but the top 25 in the world. We have got to form a world class university. To do this requires more direction and collaboration to generate worldwide academic centres of excellence. This will involve shocking uncomfortable change in choosing an aggressive strategy."
Considering the potential for Chinese investment in Ireland, Jim O'Hara, General Manager, Intel Ireland said, "A great opportunity for Ireland is to become a turn-key solution to enter Europe for Chinese firms. Ireland is very well versed in dealing with Europe. We could turn this into a massive opportunity. Ireland only needs a very small piece of the worldwide FDI pie to be very successful. We can offer expertise to China and many others to enter Europe, to establish their brands and gain financial, IP and legal support. We cannot get soft on climbing up the value chain and say manufacturing is not suited to the Irish economy. This would be a great mistake. It is much harder to compete at the high-value end of the value chain and the notion that developing nations will start at the bottom of this chain is nonsense. Irish institutions must be geared towards outputs in IP, with a focus on creating these, not just protecting them."
Paul Haran, Principal of the UCD College of Business and Law and former Secretary General of the Department of Enterprise, Trade and Employment, "Ireland must be the solution to other people's challenges, providing solutions that are superior to those provided by other economies. It has been a team effort; 'team Ireland' has made Ireland."
source: irish financial newsFort Lauderdale Real Estate Blog & Homes For Sale
Rory Vanucchi
RoryVanucchi@gmail.com
Posts
