Ireland’s FDI base remains resilient and is bouncing back

Job creation plans by multinational firms at pre-pandemic levels as continued resilience shown in existing foreign direct investment (FDI) base. Almost half of investments were in the regions.

Inward investment agency IDA Ireland says FDI for the first half of 2021 has returned almost to 2019’s record levels despite business uncertainty caused by the pandemic.

In the first six months of the year142 investments were won, with associated employment potential of over 12,530 jobs.

“FDI is well placed to remain a vital contributor to Ireland’s prosperity and future success”

62 were new name investments and 80 were investments by established companies.

68 investments – 48pc – went to regional locations.

FDI investment stays solid

“These are really encouraging results, showing investment in Ireland has remained remarkably solid despite immense challenges over the past 18 months. I’m particularly pleased to see that approximately half of new investments are going to locations outside of Dublin,” said Tánaiste and Minister for Enterprise, Trade and Employment, Leo Varadkar, TD.

“Foreign Direct Investment helped lift Ireland out of recession in the aftermath of the financial crisis and it will be crucial again as we recover from the pandemic. It is due to the strength of our multinational sector, which has been largely unaffected and even grown in some areas, that we are able to fund many of the financial supports we have put in place for businesses that are struggling.

“Despite these very positive results however, many challenges lie ahead. Among them trade protectionism, Brexit, the increasingly competitive global market for FDI and the need to keep pace with digitalisation, disruptive technology, new business models and the future of work. There will be opportunities too and Ireland must be at the forefront of new technologies and new ways of working to continue to win the best investment for our country.”

IDA Ireland reported a recovery in global FDI flows is underway after the sharp declines of 2020, however a return to pre-pandemic levels of global FDI are not expected until 2022.

The half-year performance builds on the record results achieved over 2015-19 and the buoyant growth secured last year despite Covid-19.

Global competition remains fierce

The IDA Ireland Annual Report 2020 shows that 246 new investments were won in 2020 with 20,123 new jobs created. Net job creation was close to 9,000. 95 investments were from new investors and 151 investments from established companies. 128 (52pc) of the 246 projects won were for regional locations. Employment growth of 3.6pc in IDA Ireland supported companies was achieved in 2020. Total employment in IDA Ireland client companies in Ireland stood at 257,394 at year end.

Ireland’s performance in winning FDI in 2020 was resilient not only compared to 2019 but also compared to the country’s main competitors for investment.

Ireland grew its market share of projects to Europe in 2020 and ranked 7th in a top 10 dominated by far larger countries, according to data from FDI Markets up from 9th place in 2019.

Separate EY research published in June showed Ireland as winning the largest number of FDI projects per capita in Europe last year.

The economic outlook in Ireland and in our main source markets for investment continues to be shaped by Covid-19. Updated forecasts from UNCTAD last month suggest global FDI flows will increase by 10-15pc in 2021 and only return to pre-pandemic levels in 20224.  The sectors that proved the most resilient during 2020, such as Technology and Life Sciences, are expected to drive the recovery in global FDI.

“These very strong results show that foreign direct investment continued to grow, demonstrating further endurance and strength even as the pandemic entered a second year,” said IDA Ireland CEO Martin Shanahan.

“142 investments won so far this year compares to 132 in the same period last year. The associated employment potential is over 12,530 compared to 9,600 in the first half of 2020. That’s a significant year-on-year increase to bring us back to the flows seen in 2015 – 2019.

“They demonstrate the continued resilience of companies in our core sectors of focus. Once again, we see in these figures that almost half of all investment made by FDI companies to date this year went to counties outside of Dublin. We will continue this focus on winning investments for regional locations across Ireland,” Shanahan said.

Shanahan said the timely provision of appropriate and cost-effective property and infrastructure solutions to meet the needs of MNCs remains essential to winning FDI.

Regional strategy

Over the last five years, IDA’s Regional Property Programme enabled the winning of capital-intensive projects of significant scale to regional locations.  These include Meissner in Castlebar, Abbot in Sligo, Aerie Pharma in Athlone and Eirgen/OPKO in Waterford who all occupy ABS’ constructed under our previous strategy, as well as companies like Triggerfish in Galway, Cadence in Cork, CSC in Wexford, Unum in Carlow, Axiom and Transact in Limerick.

IDA will deliver 19 Advanced Building Solutions (ABS) in 15 regional locations throughout Ireland over the lifetime of our new strategy.

It said that despite the challenges presented by Covid, good progress is being made on building delivery in Sligo, Dundalk, Carlow and Monaghan. Athlone and Limerick buildings to commence before year end.

IDA will also invest in major infrastructural projects across all regions, with significant investments in Cork, Limerick, Waterford, Galway and Dublin among others along with upgrading our Business and Technology Parks. As part of our long term strategic plans, it said it will maintain a focus on land banks and utility intensive strategic sites. An example is the two recently acquired landbanks in Co Louth. The land acquisitions, with a combined total of 149 acres situated in Killally, in Dundalk and Mell in Drogheda will position Louth and the wider North East region to compete for FDI investment.

“With the ongoing support of our parent Department, Government, key stakeholders, IDA client companies and our teams in Ireland and overseas and notwithstanding the challenges and uncertainties on the path ahead, FDI is well placed to remain a vital contributor to Ireland’s prosperity and future success. We must be mindful though of the scale of the economic shock in 2020, the ongoing impacts of Covid-19 and the high level of risk and uncertainty that remains despite improvements to the global outlook.”

Shanahan also said that “Ireland has adopted a stable, consistent, transparent and competitive approach to Corporation Tax over many years. It will be important that working within any new global tax framework, Ireland continues to offer stability and a competitive offering to investors.”

Main image at top: Aerial view of construction at Intel in Ireland in 2021, one of Ireland’s flagship FDI investments

By John Kennedy (john.kennedy3@boi.com)

Published: 12 July 2021