The growth of US investment into Ireland over the past decade has been little short of startling but action needs to be taken in a number of important areas if that level of success is to be maintained, according to American Chamber of Commerce Ireland (AmCham) CEO Paul Sweetman.
“Looking back to 2013, there were 577 American companies in Ireland, employing 118,000 people directly,” he notes. “There are now 970 companies, employing over 210,000 people directly. Those numbers are impressive but Ireland has also become of strategic decision making importance for these companies. We need to double down on that.”
That strategic importance is reflected in the longevity of US investment in Ireland, says Sweetman: “One third of US FDI has been here for more than 20 years and two-thirds of new US investments come from companies already based in Ireland.”
That will not necessarily always be the case, however, and there is no room for complacency.
“US multinationals are constantly innovating. They are developing new products and services at a rapid pace. That needs to be matched by innovation in our own industrial policy if we are to attract more FDI. What got us here won’t get us to where we want to go.”
Since taking on the role of AmCham chief executive earlier this year, Sweetman has been consulting with member firms on the areas of key importance to them.
“Six areas emerged – talent and skills; infrastructure; research, development and innovation; doing business in Ireland; Ireland’s place as a global leader; and the new competitive landscape,” he says. “There are opportunities and challenges in each area when it comes to growing investment.”
The most immediate challenge is talent, as Sweetman explains: “The quality of life for people living and working and building careers in Ireland is very important. Top of the list is housing and in our most recent survey 49 per cent of members said it is their top challenge. It impacts directly on talent pipeline.
“Other areas of importance are access to childcare, a good healthcare system, access to school places. These are things people look at when considering where they are going to live and work.”
Regarding infrastructure, the top issues for AmCham members are energy and transport.
“The energy issue is threefold – supply, cost, and connections,” says Sweetman. “Transport is about the movement of people and goods. People need to get to and from work. Potential capacity constraints in our airports are concerning. As an island nation we need to have the capacity for companies based here to do business globally.”
The competitive landscape for foreign direct investment (FDI) is changing.
“Other countries have been looking enviously at Ireland’s success in attracting US FDI for many years,” Sweetman points out. “They have looked at Ireland’s advantages and have been building up their own offerings to be able to match them. There are more jurisdictions competing for FDI now as well. There are more people on the dance floor.
“There is not as much time as there used to be to make pitches and secure investments. We need to double down on our advantages and articulate them clearly to the world.”
On research and development, Sweetman says the increase in the R&D Tax Credit from 25 per cent to 3o per cent of eligible expenditure was a strong positive for the State but there is a need to look beyond these shores.
“Ireland needs to use its position in Europe to call out the research, development and innovation agenda. Europe needs to match China and the US in investment. Ireland can be a strong voice in Europe in that. That will be noticed by potential investors.”
He believes Ireland can be a global leader in diversity and in sustainable energy: “Ireland has the potential to be a world leader in offshore wind – we must grasp that opportunity now. Diversity is very important for US companies. They are very keen to make sure they play their part in the broad diversity agenda. Again, Ireland should make sure it broadcasts as broadly as possible its position as a global leader in this area.”
The business climate is another area of concern for AmCham members. “There is a perception of a heavy regulatory burden,” says Sweetman. “There is also a danger of fragmentation of regulation. Ireland must step up to address this issue, not just here at home but in Europe as well. The stability of doing business here has long been a strength for Ireland. Amid global instability, Ireland needs to present itself as a beacon of stability.”
He views digitalisation and AI as part of the broader infrastructure agenda: “Ireland should be seen as a pre-eminent location of promoting digitalisation in organisations and helping them use digital technologies as a key tool for delivering products and services. If Ireland can be seen as a country that supports companies on their digital journeys that will be very positive for investment.”
The same goes for AI. “It’s not just about the companies who are responsible for the development of AI, but for all companies to adopt it in their day to day business,” says Sweetman. “Also, there is an opportunity to get the companies involved in the development of AI to work with schools and the education system to help them to use AI safely and securely.”
The planning system has also come up in conversations with members, he adds.
“We need an efficient system with a clear process. The Planning and Development Bill before the Oireachtas is the third biggest bill in the history of the State. It is a start but there is a lot more to be done. If the issues aren’t addressed, it could be an impediment to FDI. There needs to be ongoing reform. Continuing dialogue is needed in what’s working and what’s not.”
While these issues do require attention, Sweetman is keen to point out that Ireland is still in a very positive place when it comes to US FDI.
“Sixty-nine per cent of AmCham members increased employee numbers in the last 12 months and 60 per cent of them plan to do so in the next 12 months, according to our most recent survey,” he concludes.