By Business & Finance 
Louise Phelan, vice president Global Operations at PayPal has been appointed president of the American Chamber of Commerce Ireland, which represents the interests of 700 US companies in Ireland employing over 115,000 people.
Investment in Ireland by US multinational companies remains strong. Last year US companies made 118 investments accounting for 72% of all IDA announcements. In the past five years US companies in Ireland have increased their investment by 25% to over $200 billion, and employment has increased by 15% to 115,000.
Speaking at the launch of her presidency, Phelan said that the credibility of Ireland’s response to changes in its economic fortunes has been instrumental in protecting continued investment in Ireland. “The recent successful and over-subscribed bond auction by the National Treasury Management Auction reflected the clear confidence of international investors in Ireland,” she said. “The Moody’s upgrading of Ireland’s Government debt is also very significant as we have seen even this morning with the fall in the cost of Irish borrowings.
“However we remain under scrutiny and, with one of the highest levels of public debt in the world, fiscal policy will need to remain prudent. Investors’ confidence in Ireland was gained by our strict adherence to the bailout programme, and now that we have regained control of our own fiscal strategy we must maintain this certainty, through demonstrating sound economic management credentials.”
Building momentum
Helping Ireland to build on this strong investment record is a key goal for the Chamber in the coming year.
“IDA Ireland has done fantastic work in winning new investment for Ireland and the Government’s commitment to promoting a pro-business environment has paid dividends. The American Chamber of Commerce Ireland is committed to playing its part in promoting Ireland as an investment location. Our annual report on the strength of the Irish – US economic relationship is a key vehicle to promote Ireland to US companies considering investing here. Our member companies also support IDA Ireland, meeting prospective investors and outlining their own positive experiences of investing in and running EMEA operations from here.”
Phelan called for a renewed focus on competitiveness to sustain the positive momentum which is becoming evident in the economy. “Critical to attracting new investment is ensuring we have a strong ‘business case’ for investors. Our successful exit from the bailout is a marvellous achievement and over the past three years Ireland has rebuilt its competitive advantage. With employment growing, now is the time to capitalise on those gains.”
Phelan also welcomes the signs of growth returning to the domestic economy but warned that inflationary pressures should be resisted in every area. “We watched as Ireland tumbled down the international competitiveness league tables,” she noted. “In 1997, Ireland ranked 10th in the IMD Competitiveness Report. By 2011 we had tumbled to 24th. This happened because we allowed price and wage inflation to create a vicious cycle which drove up costs right across the economy.
“We must not repeat those mistakes and we must hold onto the hard won gains of the past few years. Last year we climbed to 17th in the IMD Competitiveness Report and we must continue to see competitive improvements in the years ahead.”
Lessons could be drawn from the export led growth of the late 1980s and early 1990s as we seek to consolidate the gains of recent years, she added. “Ireland is a trading nation and the formula that helped this country emerge from the recession of the 1980s is basically the same one which will work for us again today and it is based on our people, our competitiveness and our open and transparent tax regime.”
Cost competitiveness
On the overall competitiveness agenda, Phelan called for even greater vigilance on costs in every area of the economy. “All costs, be they imposed by the state or the private sector have to be monitored closely. Everything possible must be done to control or even reduce them where possible. We do not exist in isolation. Our international competitors are continuing to seek new ways to gain advantage over us – we cannot afford to stand still.”
She pointed to renewed price pressures in the Dublin property market as an issue requiring urgent attention. “Even before the recovery began there was a debate around the need for a greater supply of high quality office accommodation for modern technology-driven businesses establishing here. If this shortage is compounded by significant price rises we will be sending the wrong message to potential investors so the decision by IDA Ireland to invest in developing suitable properties for regional investment is an appropriate and correct one.”
She said that energy costs were a significant cost on business with Ireland now the fifth most expensive location in the Eurozone for electricity for industrial users. “With energy costs lower in the United States and continuing to fall, the disparity in energy prices has the potential to damage our attractiveness to investors. We need to ensure the capacity to deliver a secure and sustainable energy supply at a competitive cost to enable growth in the employment base, particularly in manufacturing,” she said.
Talent
“The skills and flexibility of our workforce are key pillars of our success in attracting FDI,” Phelan continued. “Investment in education and training must be maintained in order to ensure that we have the people with the right skills for the next generation of companies, which we will need to attract to sustain our economy into the future.
“Today we differentiate countries on whether they are ‘developed’ or ‘developing’ but the Global Competitiveness Index is clear that in the future countries will be differentiated on whether they are ‘innovation rich’ or ‘innovation poor’. We must identify the policies which will deliver an innovation-led economy. Chief among these must be a transformative education system which supports innovative and entrepreneurial thinking among our young people,” she said.
Phelan welcomed the education and training priorities outlined in the Public Sector Reform Plan 2014 – 2016. “That all schools will have high speed broadband installed by the end of 2014 is important as this is a basic requirement of an innovation-led economy. We also welcome reforms in the Junior Cycle which will move students away from rote learning and encourage more creative thinking and life skills. The government has also expressed its commitment to improved teacher training and accountability which will support the achievement of the necessary education reforms identified.”
According to Phelan: “We need to develop and retain talent in Ireland and also attract talent from abroad to fill the skills gaps that can emerge from time to time.”
Phelan also said that the flexibility which has long been a characteristic of Irish workers must not be compromised in any way. “Modern companies need to be nimble and adaptable in order to respond to rapidly changing market conditions and that’s part of the reason US firms choose Ireland as a favoured investment location. Key facets of the 1990s recovery were industrial peace and a climate where the industrial relations climate facilitated flexibility and direct engagement. They are even more important in today’s world and we should not lose sight of that.”
Corporate tax
Phelan said: “The wide ranging discussions taking place at OECD level on international taxation is important in ensuring that global taxation systems are appropriate to modern business. The Irish Government must be at the table, protecting Ireland’s interests in any such discussions.
“Ireland has a transparent taxation system which provides certainty to investors. This is extremely important and it is why the Government must continue to reiterate its commitment to our 12.5% corporate tax rate. I congratulate the Government on its achievement in defending the regime in recent years and in helping to make Ireland the best country in the world to do business in the process, as was recently attested by Forbes magazine.”
Phelan concluded by saying that there was a real opportunity for the 700 US companies located in Ireland to work collaboratively to help further embed investment in the Irish economy.
“Through the American Chamber we already facilitate collaboration in our CEO fora and our Member to Member ‘Best Practice’ events. I believe that there is an opportunity to leverage these connections so that we support each other to build businesses that are strongly positioned to win new investment that will benefit our own employees and Ireland Inc. I look forward to the year ahead, to working with the American Chamber member companies and Government stakeholders to retain and grow investment in Ireland.”
