The Republic will lose many of its lower-end technology investments to low-cost locations overseas by 2005 because of its relatively high cost base, a strategy document warned yesterday.
The paper, prepared by industry pressure group ICT Ireland which is part of the employers' group IBEC, proposes tax breaks, new legislation and a roll-out of telecoms infrastructure to make the State more attractive for investment.
At the paper's launch in Dublin, senior figures in the high-tech industry said the sector in the Republic was facing the most challenging period in its history.
Mr Kevin Dillon, chairman, ICT Ireland and managing director of Microsoft's European operations centre, said significant restructuring was required for Ireland to remain an attractive location for information and communication technologies (ICT) development.
The paper says the sector's future is linked to the State's ability to move up the "value chain" and attract high-value production and design activities.
The Government should establish centre-of-excellence status in technologies such as e-learning, wireless and thematic software.
Inward investment should be part of a coherent regional strategy with existing "technology clusters", according to the paper. Although the ICT industry produces annual exports worth €23 billion (£18 billion), many competitor countries have a better record of start-up technology companies, according to ICT Ireland.
"Ireland must therefore nurture its indigenous sector, encourage a culture of entrepreneurship, and develop an appropriate structure," says the paper.
The strategy document identifies research & development, education, infrastructure, taxation, entrepreneurship, market relationships and ICT Sector Profile as critical areas for the sector. An action plan proposes:
Expanding ICT-related research within third-level institutions and establishing a national research institute for ICT.
Increasing second-level student numbers taking science and mathematics by 25 per cent in five years.
High-speed Internet (broadband) access should be provided to all business parks and towns of 3,000 people and over by the end of 2004.
The VAT rate for e-commerce should be brought into line with competitor countries.
Increasing the number of high potential ICT start-ups by 15-20 per cent on an annual basis over the period 2002 to 2005.
Developing a statistical profile highlighting the critical importance of the sector to the Irish economy.
