The outlook for foreign direct investment into Ireland is buoyant, IDA Ireland said yesterday as it reported its first net jobs gain for three years.

The State investment agency also signalled that it is currently pursuing several big investments from multinationals, which could materialise over the next 12 to 18 months.

At the launch of its 2004 annual report, IDA Ireland reported that its client firms created 10,825 new jobs in 2004, significantly up from the 9,576 jobs created a year earlier in 2003.

More than half of these jobs attracted salaries in excess of €40,000 and most positions required a third level qualification, according to Sean Dorgan IDA chief executive, who added that the quality of the jobs created was far above the quality of the client jobs lost during the year.

On the downside, the report shows that IDA client firms recorded 10,628 job losses last year, giving the agency a net job gain for the year of 197 positions.

This compares to net losses of 3,630 jobs in 2003 and 4,112 jobs in 2002 as multinational firms cut back following the global economic and technology downturn in 2001/02.

Mr Dorgan singled out world class innovation and research projects attracted to the Republic in 2004 such as Lucent Bell Labs, IBM and Hewlett Packard as extremely significant.

He also mentioned significant manufacturing investment decisions by firms such as Intel and Guidant.

IDA Ireland attracted 37 greenfield projects and €5 billion worth of capital investment in 2004. Its client companies paid an estimated €2.7 billion in corporate tax and announced 33 expansion projects in 2004, the State agency said.

"Our business in 2005 continues to be buoyant and is on target," said Mr Dorgan. "The quality of the investments is being sustained and we have had considerable success in locating projects in towns throughout the country."

Mr Dorgan said the pipeline for new projects was good and there were a number of significant manufacturing investments that the IDA is currently competing for in sectors such as pharmaceuticals and medical devices.

The report highlights the need for continued investment in infrastructure, particularly in regional areas to attract investment and create new jobs. However, there is less of a concern about labour supply than at the height of the investment boom in the late 1990s.

Mr Dorgan said the Republic was "well fixed" in terms of the supply of labour, particularly given that it is able to attract people to move here from other European countries.

He said what needed to happen now in Ireland to grow investment was a deepening of the skills base with more people taking masters and doctorate degrees than before.

The amount of Exchequer funding to support IDA Ireland activities fell to €83.2 million in 2004 from €119.2 million in 2003.

But the IDA budget was supplemented by the return of €21.9 million in grants by firms that did not meet their targets for jobs growth and a €30.9 million profit made on the disposal of assets.