As a native of Monaghan, Heather Humphreys, Ireland’s Minister for Business, Enterprise and Innovation, knows first-hand how beneficial new investment is to areas outside of Dublin.
“It’s a huge priority for me that there is foreign direct investment right across the regions. I’m working closely with my colleagues across Government with the objective of creating the best possible environment for enterprise – for entrepreneurship, for innovation and for investment – right across the regions, for all businesses,” she says.
Continuing to drive the national competitive agenda is a significant part of that, particularly in light of the challenges posed by Brexit. Ensuring Ireland has a strong talent pipeline is important too. “We want to make sure that we have talents and skills so we are working to increase graduates in ICT, engineering, maths and language courses,” she says.
In November, Minister for Education Richard Bruton launched a plan setting out the Government’s intention to make Ireland a European leader in STEM (science, technology, engineering and maths) education by 2026.
“This is something that multinational companies are telling us they support,” says Humphreys. “It’s mutually beneficial both to our existing business community and to companies that are considering investing here, that they have a well-educated workforce that is skilled in the right areas for their particular businesses.”
Last year, IDA Ireland saw client company employment grow by 5.3 per cent – at a rate of more than twice the national average (2.3 per cent) – to 210,443. To maintain this performance, and to remain competitive, the Government will continue to invest in innovation. In this, Humphreys points to Innovation 2020, Ireland’s national strategy for research and development in science and technology.
“It sets out a ‘whole of Government’ approach to achieving our goal of becoming a global innovation leader, which will drive a strong, sustainable economy and of course a better society,” she says.
“Our commitment to driving the innovation capacity of our country is already yielding results because according to the latest global index, Ireland is now the 10th most innovative country in the world, up from 21st place just 10 years ago. I want to continue to build on that work.”
As part of that, the Minister recently launched Ireland’s first masters in artificial intelligence, created in response to a growing demand by industry for AI skills in Ireland. “We’re working to place Ireland at the forefront of the AI revolution by investing in the skills and technology that are so important,” she says.
Addressing the pinch points of Ireland’s infrastructure as the economy grows is vital, particularly as Ireland had some catching up to do after the recession.
National Development Plan
“The National Development Plan and National Planning Framework is a plan for the entire country. It’s all encompassing and it does not deal separately with urban and rural issues – it’s dealing with the country as a whole. The new capital plan will set out a 10-year vision for the development of public capital infrastructure grounded in the strategic investment priorities identified by each Minister.”
Together they “mark the first time ever that the Irish Government has prepared a joined-up, evidence-based planning and investment strategy to transform our country into the place we want it to be over the next 20 years. This is a real vision for Ireland for the next 20 years and it’s about achieving balanced economic growth and social progress on a regional basis and between urban and rural Ireland.”
Housing too is seeing progress, she believes.
“Government policy is focused on increasing the housing supply. It’s a priority of ours because we spent a long number of years when no houses were being built.”
Outside of Dublin, supply side issues are less prevalent. “It’s just one reason why the regions are an attractive place for foreign direct investment. I would say, coming from rural Ireland, that there’s a better quality of life – and there’s less pressure on houses.”
That plan is working. Thousands of new homes are being built every year and in 2017 alone over 17,500 new homes commenced construction – that's three times as many as in 2016
Budget 2018 included a number of measures to increase the supply of housing, such as removing the capital gains tax incentive to hold on to residential land and to increase penalties for land hoarding. The Government also has a dedicated plan, Rebuilding Ireland, that’s aimed at increasing the delivery of homes countrywide.
“That plan is working. Thousands of new homes are being built every year and in 2017 alone over 17,500 new homes commenced construction – that’s three times as many as in 2016.”
Budget 2018 also saw the introduction of a new fund which will provide affordable finance to builders throughout the country, called Home Building Finance Ireland.
Broadband is another area of focus for the Minister. “A robust, resilient, high-speed broadband infrastructure across the country will certainly add to the attractiveness of regional areas for foreign direct investment. This Government does recognise, absolutely, the importance of high-speed broadband connectivity for every business and community across the country. Delivering improved connectivity through the National Broadband Plan remains a Government priority.”
Parts of counties such as Cavan, Roscommon, Kerry, Donegal, Mayo and Clare now receive 1gbps broadband speeds and the Government is determined to build on that progress, she says.
“I have to say I’m confident the roll-out of fibre to rural homes and premises will continue over the coming year and will enhance the attractiveness of these locations for multinational investment.”
People on the ground can also help boost their town’s attractiveness to FDI. “I think there are a number of things that communities can do in terms of working together to create a pro-business environment. It’s important that people work collaboratively, that they work with local authorities, with State agencies, and with business people, to come forward with proposals on how their area can be seen as an area that is attractive for FDI.”
These proposals can be submitted for funding to her department’s Regional Development Fund.
“Just before Christmas I announced a €30 million fund and I’ll be announcing a further €30 million towards the end of March or early April. I would encourage areas that have been either unsuccessful or who did not put in applications to look at this fund and to look at where you can improve on your application or how you can work collaboratively with other counties, or universities, or in whatever way, because there are many strengths in many regions – it’s about building on those strengths.”
Progress on personal tax code
While Ireland’s low corporation tax rate is attractive to FDI, concerns have been raised about the personal tax code. Progress is being made here too, she says, including a reduction – albeit modest – in the top rate of income tax from 41 per cent to 40 per cent in 2015.
“The last four budgets have also seen changes in the marginal tax rate – being the total of USC, PRSI, and income tax – for those earning less than €70,044. This is now 48.75 per cent, down from 52 per cent in 2014. This has been achieved by reducing USC rates for the lower income bands, thereby using our limited fiscal space to target lower earners, and that was the purpose behind that.”
He said very clearly 'The reason we are coming to Ireland is because you have a talented workforce, and because you are a stable and growing economy and we want to be part of that
This year’s budget also saw increases to the entry point to the top marginal rate of income tax from €33,800 to €34,550.
“Finance Minister Donohoe has signalled that this entry point could further be increased over the coming years to ensure that those earning the average wage no longer have to pay the top marginal rate of tax and I think that’s important. He has also indicated that the next few years should see additional sustainable cuts in overall tax rates as the fiscal space improves and as the economy continues to grow.”
Such changes won’t just be of interest to workers here, but to Irish workers overseas, many of whom left during the recession. Humphreys recently met with Andrew Anagnost, president and chief executive of US software company Autodesk, which announced the creation of 200 new jobs in Dublin.
“He said very clearly ‘The reason we are coming to Ireland is because you have a talented workforce, and because you are a stable and growing economy and we want to be part of that’,” Humphreys says.
“And with him comes an Irish emigrant who 20 years ago went to work with that company. Now he’s returning to Ireland to be their head of operations here. And that’s what we want to see, more of our highly skilled workforce returning.”
For FDI investors, Brexit should provide an additional impetus to move here. “We’re looking at companies that have their European headquarters in the UK who are now looking to relocate and we are saying that Ireland is a very attractive place to come to. We have a well-skilled, English-speaking workforce and a population of which 40 per cent is under the age of 29. We have a good regulatory structure and a strong economy, as well as a very good cultural offering and a good quality of life.”
Many companies have already made that decision, particularly in the financial services sector. Leading companies such as Bank of America, Barclays, Citigroup, JP Morgan, S&P Global, Willis Towers Watson, Bank of China and Beazley Re, among many more, all made investment announcements in Ireland last year. Much of this was the culmination of work done by IDA Ireland officials.
“IDA Ireland competes in an extremely competitive global environment and they do wonderful work. In many ways we are the envy of other countries because they really do an excellent job,” says Humphreys. “Certainly there are opportunities there and Ireland continues to be open for business.”
For more, visit idaireland.com