THERE IS much effort and a great deal of hope involved in the US investment conference planned for Belfast in May. First Minister Dr Ian Paisley regards it as an event of such significance that it warrants his remaining in office until its conclusion.
And US President George W. Bush has promised to send senior personnel to the conference, which the Taoiseach describes as a once-off opportunity for Northern Ireland to attract global investors from whom it has not benefited over the last 40 years. Unfortunately, given the state of financial markets in the US and elsewhere, the timing is less than propitious. In addition, the best that can be said about the recent British budget is that it did not weaken the case for investing in Northern Ireland, but it did nothing to boost it. The tax rate for small companies is rising from 20 to 21 per cent and a further increase to 22 per cent will come through next year. This will have a negative effect on job-creation in the North which relies heavily on the sector. It is estimated that 90 per cent of the 57,000 VAT-registered small businesses in the North employ fewer than 10 people.
The investment conference, on the other hand, will be out to attract some big fish. The US government and many individuals in American business played significant roles in encouraging Northern Ireland on the road to peace. Hopefully, they can now be persuaded that there would be mutual benefit in assisting the development of its economy. New York mayor Michael Bloomberg, who will be attending, believes that the North's future has never been brighter and has said that "with peace and stability come economic opportunities".
Foreign direct investment (FDI) into the North reached almost $1 billion last year. That is a long way from the $27 billion achieved by the Republic. However, if the environment is right, Northern Ireland may be able to emulate the performance experienced across the Border, but it would help greatly if the North's corporate tax level was lower. Total global FDI last year amounted to $947 billion, so the potential is enormous.
Criticisms have been made of the huge emphasis placed on attracting FDI. It is argued that concentration on it leaves little time or effort for developing local enterprises. But foreign investment indisputably generates wealth. In 2006, FDI companies in the Republic spent €5.7 billion on payroll costs and the same again on Irish services. They spent €3.4 billion on Irish materials and paid €2.8 billion in corporation tax. The Northern Ireland Executive is correct to target the US first. Even now, after much inward investment from a variety of countries, US firms in Ireland provide 70 per cent of the employment in foreign-owned businesses.
The focus of attention at the investment conference will be on finance minister Peter Robinson. He has to convince potential investors that Northern Ireland has a climate which will encourage business growth and that he will put in place programmes for entrepreneurship and innovation which will support high-added-value companies which are in the forefront of technological progress.