Foreign investors will watch closely how we vote on treaty
FOREIGN direct investment (FDI) is vitally important to Ireland and inward investment makes a crucial contribution to the long-term development of the Irish economy. Building on a strong performance in 2011, the first four months of 2012 have seen the trend of winning major investments continue apace.
Ireland's international reputation rebuild, under way since 2011, is re-enforced by the confidence shown in the country by some of the world's leading multinational corporations, with investments from the likes of Eli Lilly, PayPal, Mylan, Mastercard, Microsoft, Cisco and Apple, who are bringing fresh employment and capital investment into the Irish economy.
Last week alone Galway benefited from expansions announced by Cisco and SAP.
There are now more than 1,000 IDA client companies in Ireland and they are responsible for the direct, and indirect, employment of 250,000 people.
The IDA, with its global contacts and networks, is in a unique position to comment on Ireland's position in relation to FDI, particularly in a European context.
While many of the investments hail from our traditional partner, the US, what is not widely known is that there are also almost 300 European companies based here. Among European projects announced in recent times have been Sogeti (a division of Cap Gemini), SAP, Arvato (part of Bertelsmann), Valeo and Allianz.
There are a variety of reasons those companies are here, but all recognise Ireland's strengths -- a strong talent pool, low corporation tax, a track record in attracting leading companies and a technological capacity.
But another reason is because Ireland is an enthusiastic member of the European Union and the eurozone. That means that currency risk, so ever present in other locations, is not something most European companies operating out of Ireland have to worry about.
Secondly there is considerable stability in terms of the political system here. While governing parties may come and go, all administrations see investment by foreign multinationals in Ireland as highly strategic, and nobody wants to jeopardise those investment flows.
As a result the vote on the forthcoming stability treaty does have direct relevance for the future outlook for FDI.
While some suggest even discussing this question amounts to a type of scaremongering, it is worth pointing out that foreign multinationals I meet on a regular basis do play close attention to Ireland's evolving relationship with Europe. On a trip to the US last week with Jobs Minister Richard Bruton, once again the issue surfaced in discussions with executives.
FDI clients do see our eurozone commitment as vitally important
They also want to know that Ireland's own economic and debt position will remain secure in the years ahead. Part of that security is knowing that Ireland has the ability to access outside funding from Europe's new rescue fund -- the European Stability Mechanism (ESM).
As a result any step that appears to threaten these current positions would be viewed negatively by outside investors.
Of course, investors put projects into non-EU locations (like Switzerland) and non-eurozone locations like the UK, but Ireland is often a location they view as a springboard into a wider European market. Ireland also gets a disproportionate share of FDI and last year an IBM study showed that Ireland gets among the highest levels of FDI, relative to its size, in the world.
Nowadays the margins between winning and losing large-scale FDI projects are very fine and competition for key projects grows all the time.
A whole host of factors go into that final decision. Is there a suitable property solution available? Are there enough skilled workers available? Is the tax structure attractive? But Ireland's relationship with the outside world also matter.
As a result a vote on what appears to be a strictly economic issue can have wider implications. In that context a positive vote later this month will ensure the continuing ability of Ireland to win greenfield investments and guarantee that the nation benefits from expansions and transformations by the existing multinational base.
Barry O'Leary is chief executive of IDA Ireland