Ireland’s international business is soaring, Kieran Donoghue, head of financial services with IDA Ireland tells Angela Madden.
Ireland’s international business is flourishing, according to IDA Ireland’s head of international financial services, Kieran Donoghue. He is at pains to point out that while Ireland has been in the spotlight in recent years for the wrong reasons, “there are two distinct economies in operation in Ireland at the same time – the domestic and the international.”
It is clear to see that both economies have been simultaneously going in completely different directions. Ireland has, of late, been given credit for its handling of the domestic, economic crisis and its progress has been further endorsed with the news that ratings agency Fitch has raised its ranking of Ireland’s creditworthiness to a level last seen in late 2010. The agency removed the risk of a further downgrade, moving Ireland’s rating to a ‘stable’ outlook, saying the Government was making progress towards an economic recovery.
The State was moved off negative outlook, reflecting Ireland’s continued progress on fixing its public finances and the improved options on its ability to fund itself. This is the first positive move by a ratings agency since the EU-IMF bailout. The last time Fitch ranked Ireland at a BBB+ rating on a stable outlook was in December 2010, and so, this is indeed good news for Ireland.
“Over the last few years, Ireland’s international business has never been better,” Donoghue says. “Exports, FDI and funds, which have surpassed €2 trillion assets under administration for the first time, are, in fact at all time highs.”
These facts are reflected in research such as the 2011 IBM Global Location Trends Report which highlights that Ireland is ranked 1st in the world for inward investment by quality and value, and 2nd globally for the number of inward investment jobs per capita.
“In 2012 a FDI Report from Foreign Direct Intelligence stated that Ireland’s performance far outweighed the average for Europe in 2011. The only real impact the domestic has on the international economy is to make Ireland a more affordable place to do business,” Donoghue explains.
It is not surprising so that FDI is at an all time high. Irish competitiveness has improved significantly from the peak in 2008. Costs including energy, rent, services, construction and labour have all become more competitive. Prime office rents are down 52%, unit labour costs down 12% and business services are down 7%.
But, as we know costs aren’t everything and the real opportunities afforded by Ireland and the funds industry are as a result of its talent.
“We have excellent intellectual capital in Ireland,” Donoghue explains. “The IMD World Competitiveness Yearbook 2012 ranks Ireland 1st in the world for availability of skilled labour, flexibility and adaptability of workforce and attitudes towards globalisation.” And, it would appear that this availability of talent is recognised globally. According to the EIU, Benchmarking Global City Competitiveness Report 2012, Dublin ranks as the best city in the world for human capital. Despite reports on the demographic pensions crisis in Europe, Ireland is also bucking that trend with the average age of the population being 35; the lowest in the EU.
On a global scale, hiring activity is least likely to be affected by talent shortages in Ireland, according to new rankings by Manpower’s 2012 talent shortage survey show. “This is really important when it comes to large multinationals choosing jurisdictions in which to base their business and, without a doubt, is a key one in their decision to locate here. This is equally relevant when it comes to the funds industry and attracting new administrators or managers and a core reason Ireland is continuing to win business in this area.”
And, Ireland is continuing to win business in terms of funds administration which is creating new jobs as evidenced by the recent announcement from Butterfield Fulcrum that it intends to almost double its workforce to 100.
“Ireland’s international financial services sector is an integral part of Ireland’s FDI portfolio and announcements like these will further enhance Ireland’s profile within the hedge fund industry globally. Ireland is a key strategic location for the hedge fund industry and further growth in this sector is expected,” Donoghue adds. Indeed, Ireland is the number one hedge fund centre in the world responsible for administering more than 40% of the globes assets.
“As the Government’s inward investment agency, it is vital for us to support international business and work to ensure continued growth and job retention and creation,” Donoghue says, citing the growing partnership with the Irish Funds Industry Association (IFIA) as proof of the pudding.
Over the past 18 months IDA Ireland has been playing an ever more significant role in the funds industry as it seeks to build a global presence. The IDA/IFIA partnership has seen 10 new IFIA representative offices launch across the globe in the US, in Atlanta, Boston and Chicago; throughout Asia in Shanghai, Singapore and Tokyo; in Europe in Frankfurt and London as well as in Sydney, Australia and San Paulo, Brazil.
The Irish funds industry now has representative offices and people on the ground in a growing number of locations, and there may well be more to follow.
Attractive business environment
Ireland offers one of the most attractive locations in the world in which to do business, with the lowest headline rate of corporation tax in the EU. A study carried out by the Heritage Foundation has found that Ireland has the freest economy in the whole of the eurozone and out of 141 economies, Ireland ranks in the top 10 in the Global Innovation Index 2012.
“But, there are other less tangible reasons why multinationals and fund administrators continue to chose Ireland. People say they like doing business with the Irish and, it does no harm that we are the only native English-speaking country in the eurozone, particularly when looking at key regions of the USA and Asia. It all helps and it all counts,” Donoghue concludes.
*This article was originally published in Funds Review Ireland 2013.