Northern Ireland plans to woo investors away from the Republic's favourable tax regime by offering flexible grant packages and access to a pool of ready labour, the North's economy minister has warned. Sir Reg Empey, Minister for Enterprise, Trade and Investment, yesterday formally opened a new office in Dublin to promote investment opportunities in the North and said he was confident Northern Ireland could now compete on the "inward investment pitch" against the Republic.

The North's Industrial Development Board (IDB) has offices across the world, but this is the first time it will have a presence in Dublin and it represents a major departure for the Northern Ireland Assembly.

The significance of the North's trade minister, a senior member of the Ulster Unionist Party, formally declaring that Northern Ireland's IDB office was open for business in the South, was not lost on members of the Republic's business community who attended an IDB breakfast briefing in Dublin yesterday.

As one industry leader commented: "Six years ago this would have been politically impossible, today political persuasion has bowed to economic reality."

The IDB's new office, which is located in Lower Baggot Street, in the centre of Dublin, will have a permanent staff of three people. According to Sir Reg, it will help strengthen cross-Border business relationships and harness the interest expressed in Northern Ireland by companies in the South.

"We have had more success in the last 12 months from the Republic than we have had for a long time. Bank of Ireland for example has decided to locate one of its new customer contact centres in Newry.

"The fact is that a lot of American companies also have their European headquarters in the Republic and a lot of European investment decisions are now taken by European vice presidents," Sir Reg said. The office would be judged by its results, he added.

Sir Reg said: "We will measure its success by its output and its output will be the degree to which it can encourage investment into Northern Ireland."

He believes there is growing evidence that companies from the South had significantly changed their opinion of the North as a potential investment location.

Sir Reg said that in the last two years almost £60 million sterling (€96.7 million) had been invested in Northern Ireland which had in turn created more than 1,200 additional jobs, by companies based in the Republic.

"It makes economic sense for both parts of Ireland to maximise business opportunities for the benefit of all our people," he said.