International Business

Project On

Foreign investment in Ireland for India Company

Submitted by

Name: Sawant Kiran Sanjay

Roll No: 09

MMS – II Academic

Year: 2013-14

Under the guidance of

Prof. Shamsundar Choughule

Changu Kana Thakur Institute of Management Studies and ResearchPlot – 1 & 4, Sector – 11, Khanda Colony,

New Panvel (w) – 410206

Ireland Economy: Overview

Ireland has an area of 84,421 square km and is the third biggest island in Europe. Situated in North Western Europe, Ireland is surrounded by a multitude of islands. Its most prominent neighbor is Great Britain. The population of Ireland is estimated to be around 6.2 Million.The Island has vast lands of vegetation, although agriculture does not contribute much to the exports. Although it remained a major source of employment as well as GDP, agriculture has been overtaken by the industry and service sectors. The latest trend seems to be towards a knowledge-based economy that focuses on services, trade and the high tech industry

The country has managed to rise beyond its agricultural dependencies and become a modern trade dependent economy. In fact, the shift has been so positive that the country could grow at a consistent rate of 6% during 1995-2007. However, the recession has had a negative effect on the growth rate, leading to a constriction in the economy. This is how the economy performed during 2007-2009: (Real growth rate)

2009: -7.5%

2008: -3%

2007: 6%

As the rate declined, the GDP also declined significantly. The following figures show how the GDP fared during 2007-2009:

2009: $177 billion

2009: $177 billion

2007: $197.2 billion

Ireland Economy: GDP Composition by Sector

From agriculture to being a service-dominated economy, Ireland’s economy has made the transition very effectively. It has been helped by FDIs and the real estate market. In terms of contribution to the national GDP, services contributed the maximum at 49%, industries came in second with 46%, while agriculture contributed 5%

Employment was generated the maximum by the service sector, which employed 67% of the labor force. The industries accounted for 27% and agriculture for 6% of the employment. The unemployment rate, however, remained at 12%

So external analysis involves factors outside of the agency’s control and common tools business analysts use are; PEST analysis (political, economic , social and technology factors), Driving forces, Key success factors, Industry Life Cycle and Industry forces. One of the most prominent and more important tool is the PEST analysis, which many of you will be already familiar with

Pest Analysis: Entertainment business in the Republic of Ireland

Political environment

The Republic of Ireland is considered a stable government, as the system is a parliamentary one.The head of state is elected for seven years and can only once be reelected.People have become used to a coalition of parties to form a government as there has not been a single -party government since 1989.The current government form is a coalition of three parties.

Economical environment:

The economy of Ireland has been through a transformation the last couple of years and has evolved from an agricultural focused economy to a recent knowledge economy.The mentioned knowledge economy is now mainly based on services and high-tech industries, constrained on trade, investment and industry.The economy growth averaged, according to research taken, a 10% from 1995-2000, and 7% from 2001-2004, an development which leads to the conclusion that industry, which accounts for 46% of the GDP (spitted in 80% of exports and 29% of labor force) now takes the place of the agricultural industry as the leading economic force.Furthermore there has been a significant rise in consumer spending habits, business investment and last but not least construction. Ireland is considered the largest exporter of services in the world.Though it is worth mentioning that the IRA is still present to some point as the Sinn Fein party has its place in the current government, which gives the fear of terrorism a new importance.Ireland joined the European Union in 1973,which is definitely favorable for business. It nevertheless has chosen to stay outside the Scheme Treaty and also rejected the Lisbon Treaty on 12.6.2008, facts that may cause relevant controversy within the E. U. and might affect under certain circumstances the future of the union and Irelands role in that. Therefore only British and Irish people can work legally in Ireland, as no worker exchange is possible. The limited pool of workers may also evolve to a negative factor concerning entertainment business.

Citizens of the UK can enter Ireland without further problems or a passport need thanks to the Common Travel Area. The most important part of Ireland's current economy policy since 1987 has been the Social Partnership, which is regarded as a neo- corporatist set of auxiliary 'pay pacts' between any kind of trade unions, employers and the current government.In January 1999 Ireland joined in launching the Euro currency system and leaving the Irish pound behind.Coming back to the GDP growth it is considered as being astonishingly robust even after 2001 as it continued with a rate of 6% in 2001 and 2002.The growth for 2004 is regarded over 4% and in 2005 even over 4,7% annually.

Irelands GDP is said to be the fifth highest according to the Human Development Index, which is calculated partially on the basis of GDP.The Gross National Income (GNI) per head averages at $ 41, 140, according to measurements of the World Bank. It is the seventh highest in the world, the sixth highest in Western Europe and even the third highest among any EU member state. Although there have been high levels of inflation particularly in Dublin, the capital city of Ireland, forcing people to cut spending habits as at the end of July 2008 the annual rate of inflation was running at 4,4% ,Ireland has still almost the best quality of life in the world according to an article in 'The Economist'. The falling house prices which previously were considered to highlight the extreme exposure of the Irish economy are beginning to stabilize and it is said that the Irish economy is' rebalancing itself '.In addition to that it might be important to mention that Ireland has the reputation of being one of the most expensive countries in Europe. Economically successive years have nevertheless led to increasing inequality in the Irish society and people seem to have limited money to spend.According to predictions made by the ESRI, the economy of Ireland may retract by 0,5% in 2008 but experts are positive about a growth in 2009. An index created by the Wall Street Journal and Hentage Foundation, the Index of Economic Freedom, ranked Ireland as the third most economically free economy in the world.To come to an end, the financial crisis of 2008 affects the Irish economy severely as any other economy, adding domestic economic problems to Ireland’s economic situation.

Social Environment:

The official languages of Ireland are Irish and English. In addition to that most public notes are only in English as is most of the public press, a fact favorable for future business plans in Ireland.Primary, Secondary and Tertiary level of education are offered freely in Ireland to all E. U. citizens.Ireland is said to make good and thoughtful use of the European founds in contrast to many other countries. Ireland could now be considered mainly progressive in relation to social issues. For example changes relating to the legal status of divorce and abortion in Ireland prove that steps are being taken to change policies regarding these matters.  It may also be important to mention considering further business plans, that Ireland became the first country in the world to ban smoking in workplaces.Furthermore Ireland is known for its traditional music scene and can also proudly present successful entertainment exports, especially in the late twentieth century, such as U2 and The Cranberries among many others.In addition to that Ireland's film industry can also be considered flourishing in the last couple of years.To sum up, Ireland seems to have a catholic, family oriented but also open structure of society

Technological Environment:

Ireland has 3 international airports, and Aer Lingus is the national airline.The route between London and Dublin is considered to be the busiest international air route in Europe.The significantly good infrastructure provides railway services (Dublin is the centre of the network) and the public transport network is steadily improving.The road network is managed by the National Roads Authority or even by local authorities according to the area.Furthermore the excellent infrastructure offers regular ferry services which operate between Great Britain and the Republic of Ireland. Technology is the final piece to this puzzle we have been trying to solve. Currently I would think technology is actually affecting areas of the property services industry such as management, sales and lettings, marketing and customer relations. As we become more and more fond of our devices and technologies, agencies must adapt to suit their market. This may involve having a digital strategy in marketing their services or a C.R.M system to manage their clients

Helped by trade and attractive policies, Ireland’s economy has made the intelligent transition from an agriculture based economy to a more trade based one. Although Ireland’s trade, especially the export sector, remains dominated by foreign multinationals, exports contribute significantly to the national income

The country analysis report on Ireland provides a wide array of analytical inputs to analyze the country's performance, and the objective is to help the reader to make business decisions and prepare for the future. The report on Ireland analyzes the political, economic, social, technological, legal and environmental (PESTLE) structure of Ireland. The report provides a holistic view of Ireland from historical, current and future perspective. Insightful analysis on critical current and future issues is presented through detailed SCPT (strengths, challenges, prospects and threats /risks) analysis for each of the PESTLE segments. In addition, the PESTLE segments are supplemented with relevant quantitative data to support trend analysis. The PESTLE country analysis report series provides an in-depth analysis of 50 major countries.

Features and Benefits

• Understanding gained from the country analysis report on Ireland can be used to plan business investments or market entry apart from a holistic view of the country.• Political section on Ireland provides inputs about the political system, key figures in the country, and governance indicators.• Economic section on Ireland outlines the economic story of the country to provide a balanced assessment on core macro-economic issues.• Social section on Ireland enables understanding of customer demographics through the income distribution, rural-urban segmentation and centers of affluence, healthcare and educational scenario in the country.• Technological section on Ireland provides strategic inputs on information communications and technology, technological laws and policies, technological gaps, patents data and relevant laws.• Legal section on Ireland provides information about the legal structure, corporate laws, business set-up procedures and the tax regime.• Environmental section provides information on environmental policies in Ireland and the performance in terms of important environmental indicators.

Highlights

PESTLE analysis of Ireland identifies issues that affect the country's performance through the prism of current strengths (strengths), current challenges (weaknesses), future prospects (opportunities) and future risks (threats).The political landscape discusses the evolution of the political scenario in Ireland in different periods. The economic, social, foreign and Defense policies are considered in the political landscape section. It also discusses the performance of the country as per World Bank Governance Indicators. The economic landscape describes the evolution of the economy of Ireland in different periods. It also examines the country's performance in terms of GDP growth, composition by sector (agriculture, industry and services), fiscal situation, international investment position, monetary situation, credit disbursement, banking sector and employment. The economic landscape also explains the financial system in the country, especially with regard to financial authorities/regulators.The social landscape covers the demographics, education and healthcare scenario in Ireland. The social welfare policies of the government along with the country's performance in terms of healthcare, income distribution and education are also provided.The technological landscape discusses the structure and policies in terms of Intellectual property, research & development, technology agreements/pacts; and policies related to the promotion of technology in Ireland.

The legal landscape examines the structure of the judicial system, legislation affecting businesses, tax regulations, labor laws, trade regulations and corporate governance in Ireland.The environmental landscape in Ireland discusses the environmental regulations and policies of the country. The performance of the country in terms of in terms of environment

Ireland Trade: Exports

Ireland’s trade has been the reason for the nation’s prosperity. Although the recession devalued the sterling and forced the government to implement various strategies, foreign companies, such as Apple, Microsoft, IBM, Oracle, Google, eBay, Pfizer, Cadbury-Schweppes, Dell and Intel, have kept the exports alive through their wide range of products

In 2009, the Irish export volume went down to $107.3 billion, from $119.8 billion in 2008. The main exported commodities were

Machinery and equipment Computers Chemicals Pharmaceuticals Live animals Animal products

Ireland’s exports partners include

US UK Belgium Germany France Spain

Ireland imports a huge amount of wood because its own timber industry has subsided due to deforestation and industrial set ups. The economic recession faced during the 2008 global financial crisis threw up challenges for Irish food and dairy products. The value of Irish exports, especially in the food and beverage segment, dropped significantly with the figures falling by 12% to stand at €7.12 billion, in comparison to the 2008 exports of €8.12 billion

The Irish economy: stability achieved, growth restored, focus now on job creationIreland continues to make steady and sustained progress towards recovery from the impact of the global economic and financial crisis.

After three successive years of decline in GDP, the Irish economy returned to growth in 2011 with a GDP increase of 1.4%. Growth of 0.9% was recorded for 2012 with positive growth is also forecast for 2013. Continued modest expansion is expected in the short-term, with the pace of growth gaining momentum thereafter.

In February 2013, Ireland successfully concluded the ninth quarterly review mission of the Programme of Financial Support with the ‘Troika’: EU Commission, the ECB and the IMF. The objectives of Ireland’s EU-IMF supported programmer are to address financial sector weaknesses and to put Ireland’s economy on the path of sustainable growth, sound public finances and job creation, while protecting the poor and most vulnerable.  The overall EU/IMF Programmer for Ireland has a total value of €85 billion, with the external partners providing up to €67.5 billion, including Ireland’s own resources of €17.5 billion and bilateral loans totaling €4.8 billion from the UK, Denmark and Sweden. By the end of March 2013,

Ireland had drawn down 84% of Programmer funding.

To date Ireland has met or exceeded all the targets in the Programmer, including all quantitative fiscal targets. Over 190 commitments in the programmer have been fulfilled on time.

Ireland has restructured and recapitalized its banking system . Within this restructured system, the main domestic banks are now at the early stages of securing normal market funding. Ireland remains fully committed to meeting fiscal targets and reducing the deficit to below 3% of GDP in 2015.We have pursued a significant programmer of fiscal consolidation. Including the most recent Budget for 2013, measures designed to save/yield approximately €29  billion, or around 17% of estimated 2013 GDP, have been implemented. We have beaten all our deficit targets: the latest estimate for 2012 suggests a deficit of 8.2%, 0.4 percentage points ahead of target. Ireland is open for business .We have made significant competitiveness gains, which both help indigenous enterprise and underpin Ireland’s continuing success in attracting foreign direct investment (FDI).  Despite the major challenges on the fiscal side, targeted incentives have been introduced (particularly for research spending and intellectual property), while new changes to the visa regime make it even easier for entrepreneurs to invest or set up in Ireland.Support for overall activity is coming from the exporting sectors, with services exports becoming an increasingly important engine of growth. Our balance of payments is in a very healthy position, with surpluses in each of the last three years. Ireland supports its exporters, backs its entrepreneurs  and drives research and development .

There is also now a much greater focus on supporting economic growth that delivers jobs . New initiatives have been launched to boost job creation through an ambitious Action Plan for Jobs, and the government’s Pathways to Work is designed to enhance labor market activation

Exiting from the banking crisis and restoring the banking systemBanking CrisisThe government has acted decisively to stabilize the banking system following the banking crisis which played a central role in Ireland’s economic difficulties.

As of July 2012, the state has supported the banking system with over €64 billion gross. Ireland is working towards a sound, sustainable and innovative banking system capable of driving economic growth and job creation and supporting small and medium enterprises.

Key banking reforms leading to stabilizationIn March 2011, a comprehensive strategy was adopted to return to a fully functioning banking sector serving the needs of the Irish economy.Two universal pillar banks were created from the country’s two largest banks.  These compete with each other and with other banks operating in the Irish economy. The government has recapitalized, downsized and stabilized the domestic banking system.  It has overhauled senior management and boards of the domestic Irish banks to restore confidence and trust.

New governance and supervisory frameworks have been introduced at bank, regulator and state level.The recapitalization of the banks following comprehensive stress tests was achieved on schedule at the end of July 2011. 

These measures taken by government have contributed to stabilizing the banking system.  Deposits held in Irish banks have increased and support from the European Central Bank has been reduced significantly. 

In February 2013, the promissory notes arrangement around Irish Bank Resolution Corporation (IBRC - formerly Anglo Irish Bank) was brought to an end. Part of the arrangement for this involved the liquidation of IBRC - see more details here. The first months of 2013 also brought significant disposals

by the Irish government, notably involving Ireland and the Irish Life Insurance company.

Banks serving the real economyThe government is working to ensure that the restructured banking system serves the needs of each sector of the economy. There has been a strong focus on lending to small and medium-sized enterprises (SMEs), a key sector for job creation.

the two pillar banks have been set ambitious targets for their lending to SMEs: €3.5 billion each in 2012 and €4 billion each in 2013

an independent Credit Review Office was established in April 2010 to assist SMEs that have been refused credit by the pillar banks, leading to an additional supply of €9.6 million of credit for small businesses and safeguarding over 850 jobs

government has also introduced a Credit Guarantee Scheme and Micro-finance Scheme to boost the availability of credit to viable businesses

There are still many challenges ahead in restoring the state supported banks to full viability and private ownership, particularly at a time of great pressure on the European banking sector.  But Ireland is continuing to drive forward with determination.

In February 2013, the promissory notes arrangement around Irish Bank Resolution Corporation (IBRC - formerly Anglo Irish Bank) was brought to an end. Part of the arrangement for this involved the

liquidation of IBRC - see more details here. The first months of 2013 also brought significant disposals

by the Irish government, notably involving Ireland and the Irish Life assurance company.

Repairing our public financesTo restore sustainability to the public finances, which were affected by the global economic shock and the banking crisis, the government has implemented a significant programmer of fiscal consolidation. Despite this, Ireland returned to GDP growth of 1.4% in 2011, with modest growth forecast of 0.9% in 2012 and increasing growth expected in 2013.

The overriding priorities for fiscal policy are:

continue the process of restoring stability to public finances Ensure economic growth and job creation is supported. 

No matter what happens in the wider euro zone, Ireland needs to restore sustainability to its public finances.  If the euro zone crisis recedes, Ireland is amongst the best placed to grow quickly, as shown by the EU Commission’s growth forecasts.  If the euro zone crisis persists, it is equally important for the state to reduce its dependence on borrowing.

Ireland, through its significant reforms, has made enormous progress in regaining trust and confidence. This has instilled international confidence in Ireland: many feel that Ireland’s experience holds valuable lessons for the wider monetary union.  Ireland has positioned itself as something of a role model for recovery

Extent of Fiscal ConsolidationThere have been eight separate fiscal consolidation policy announcements – the most recent of which was Budget 2013 on 5 December 2012.  All told, Ireland has implemented expenditure reducing and revenue raising measures designed to save/yield close to €29 billion (or around 17% of estimated 2013 GDP).In 2011 the underlying government budget deficit was encouragingly well below target. The 2012 deficit is also on track to come within target. Budget 2013 has introduced measures to enable Ireland to meet its 7.5% deficit target for 2013, and the government remains committed to bringing the deficit below 3% by 2015.  The latest fiscal forecasts are in line with achieving these fiscal targets as discussed in the Irish Department of Finance's 'Report Card' on the Irish Economy from March 2013. Roughly 60%of the fiscal consolidation package over the period 2013-2015 relates to expenditure-reducing measures with the balance coming from revenue-raising measures.  This strikes a balance to make the overall policy as growth-friendly as possible. 

The government has sought to protect investments in productive capacity and has introduced an additional €2.25 billion (2012-2018) stimulus package which will leverage private and other investment.

Budget 2013 contains a mix of revenue raising policy actions designed to maximize future growth in employment including the 10 Point Tax Reform Plan to Help Small Business. Many of the measures are aimed at areas (property tax, capital tax increases) which are less damaging to economic growth than direct forms of taxation, as well as measures to encourage economic activity.  Income tax has largely been left unchanged given the focus on job creation.Looking forward – exiting the EU/IMF programmerMeeting deficit targets has helped Ireland to establish a reputation for sound policymaking and has enabled the state to recommence market financing.

In the referendum on the EU Stability Treaty held in Ireland on 31 May 2012 the people of Ireland voted by a significant majority to ratify what is known as the “fiscal compact”.

So far, Ireland has successfully returned to the financial markets: in the second half of 2012 it raised over €7 billion in short and longer term financing, including the issuance of new amortising bonds with maturities of up to 35 years.  The government remains fully committed to restoring order to the public finances, to building on the economic recovery and to successfully exiting the EU/IMF Programmer of Financial Support at the end of 2013.

The first months of 2013 have brought further progress, particularly with the recent issuance of a €5bn bond which received strong international demand - the first such issuance of 10 year bonds since 2010

Direct Investment in Ireland

Enterprise Ireland manages the Seventh EU Framework Programmer (FP7) for Ireland. In 2012 Irish SMEs ranked number 1 (per capita) in the EU for FP7 funding.

Ireland’s involvement in the European Space Agency has also proved very fruitful in terms of the value of contracts secured by Irish companies, and the resulting significant contributions and innovation from Ireland to enhance the European space research effort.

Ireland continues successfully to attract foreign direct investment (FDI) and exports are increasing.  In this balanced “twin engine” economy it is essential for growth that both FDI and exports continue to flourish.Ireland has a strong reputation, built over the last 40 years, as a leading location for FDI. IDA Ireland, the Irish government agency responsible for attracting FDI, supports multinational companies as they establish and develop operations in Ireland.Despite recent economic turbulence, Ireland is still attracting world-class investments. Ireland saw some erosion of cost competitiveness in the boom years to 2008, but since then we have made major competitiveness gains.  Ireland is one of just four euro area countries expected to show a decline in unit labor costs over the period 2009-2014, estimated at around 15%.  This is the result both of a small decline in wages and larger increases in productivity.  Commercial property is now at half of 2007 prices.

Over one thousand multinational companies have chosen Ireland as their strategic European base across sectors including digital media, games, social media, life sciences, international financial services and ICT

Why   Ireland   for FDI? Ireland is ranked as one of the most attractive business locations in the world due to the combined forces of a talented workforce, an outstanding track record in FDI, a competitive clear and transparent tax regime, access to EU markets and an international reputation for research, development, innovation and technology.

TalentThe IMD World Competitiveness Yearbook 2012  ranked Ireland first in the world for availability of skilled labor and for flexibility and adaptability of workforce.  Ireland has a young, well-educated labor force and scores very highly on labor productivity. Track Record93% of companies rate their investment in Ireland a success. Ireland is rated first in the euro zone for ease of doing business and first for inward investment by quality and value.

TaxIreland has a transparent and simple 12.5% corporate tax rate on trading income. We also have an extensive and expanding network of high quality tax treaties.  

TechnologyIreland continues to attract the best in scientific and technology investments. To date, €8 billion has been invested in science, technology and innovation in Ireland.

These attributes result in Ireland housing: 8 of the top 10 global ICT companies 9 of the top 10 global pharmaceutical companies 3 of the 5 top games companies 10 of the top ‘born on the Internet’ companies 50% of the world’s leading financial services firms 17 out of 25 global medical device companiesAnd the story continues. In recent months Ireland has welcomed further investments from major companies including Amazon, IBM, Ancestry.com, SAP, Northern Trust and Fidelity

What we are doing to support job creation and help the unemployed.

The government - through the Department of Finance, Department of Jobs, Enterprise and Innovation and the enterprise development agencies (IDA Ireland, Enterprise Ireland and Science Foundation Ireland) works to ensure that Ireland provides the best possible environment for businesses to establish themselves, create jobs, and continue to grow.The 10 Point Tax Reform Plan to help small business was announced in Budget 2013, aimed at helping improve the cash flow position, increasing access to funding, reducing the administrative cost of tax compliance, boosting demand for products in new markets and ultimately incentivizing job creation.

The Action Plan for Jobs, published in February 2012, is a key pillar of the government’s job creation strategy.  It sets out actions across government and the public sector to improve the operating environment for enterprise and to address sector-specific needs. 270 actions were successfully completed in 2012.The action plan is the first installment in an ambitious multi-year process which will help Ireland to achieve its national targets under the Europe 2020 process and to promote smart, sustainable and inclusive growth.  The government aims to have 100,000 more people in work by 2016 and two million people in work by 2020 (up from 1.8 million today).

The rate of job losses in Ireland has slowed dramatically though the unemployment rate remains high. Addressing the jobs challenge and getting people back to work is the government’s absolute priority. It is providing training and development opportunities to enhance skills and gain experience, better supports for the unemployed and engagement to help them on the pathway back to work.

The Irish Presidency is all about stability, jobs and growth. Our detailed policy programmer is being implemented at a steady pace under key headings. Our halfway point progress report published at the end of March illustrates our progress to date

FDI sectors

IDA Ireland has created info graphic to showcase some of the key industry sectors such as ICT,

pharmacy, life sciences, digital and social media, plus gaming, that are attracting global companies to set

up Irish bases.

Ireland now ranks first in the world for value of investment projects and second in the world for inward

investment per capita. That's according to IBM's 2011 Global Location Trends Report, as reflected in the

new IDA info graphic Key statistics from the IDA

There are now 1,004 overseas companies with Irish bases. These companies employ 146,000 people

between them and contribute to €110bn in total exports.

Where Ireland's FDI exports go:

EU - 49pc North America - 25pc Asia - 10pc Other European - 9pc Elsewhere - 7pc.

It is encouraging that the report acknowledges the success Northern Ireland has had in recent years at attracting high value FDI, particularly in software & IT. However, clearly there is a need to build on this success and ensure an even greater focus on high value investments in the future.”The value added of FDI was measured using salaries, productivity, exports and R&D, whereas the Independent Review of Economic Policy (IREP) had focused solely on the average salaries of FDI jobs promoted.

Outlining how Northern Ireland can increase its competitiveness for inward investment, Arlene Foster continued: “Corporation Tax is identified as the most direct policy tool available to achieve a major increase in high value FDI, and this shows exactly why the Executive is pursuing, through our discussions with the UK Government, the possible devolution of Corporation Tax powers.“Alongside low taxes, the report also highlights the economic potential of measures to build and strengthen FDI clusters of similar companies. These include developing high-profile infrastructure projects and supporting sector-specific institutions that promote clusters.”

Ireland offers investors:

A thriving RD&I sector, with strong Government support for productive collaboration between industry and academia.

A strong legal framework for development, exploitation and protection of Intellectual Property rights. Strategic location with easy access to the EMEA region. Excellent IT skills and infrastructure. An advanced telecommunications infrastructure, with state-of-the-art optical networks and

international connectivity. Strategic clusters of leading global companies in Life Sciences, ICT, Engineering, Services, Digital

Media, and Consumer Brands. An established reputation as a hub for business process improvement across EMEA. Irish competitiveness has improved significantly: business costs including energy, private rents,

office rents, services, construction and labor have all become more competitive.Ireland’s position in the world rankings:

1st for flexibility and adaptability of workforce 1st for attitudes to globalization 1st for investment incentives 3rd for availability of skilled labor

Business Sectors

Ireland is one of Europe’s leading locations for Business Services Companies due to high quality IT, financial and HR skills. We continue to attract shared services operations togs well as more sophisticated and diverse regional headquarters’ operations from these companies Ireland is one of Europe’s leading locations for Business Services Companies due to high quality IT, financial and HR skills. We continue to attract shared services operations to serve European and global markets as well as more sophisticated and diverse regional headquarters’ operations from these companies

Ireland offers a low-risk, quick start-up, high-performance, knowledge economy to this sector

Consumer Products

The Irish experience for Consumer Products and Services covers every aspect of business and highlights the diversity of expertise available for EMEA and globally focused multinationals operating internationally from Ireland

Over 70 international consumer product companies have recognised Ireland as the ideal location for their activities

Clean Technology

Ireland has the ambition and potential to become a major hub for investment in the rapidly developing Clean Technology sector. Our strategic location is a natural advantage for the generation of many renewable energy sources and is backed by a high level of relevant skills and experience, a thriving RD&I environment and supportive government policies.

GE Energy & Airtricity developed the world’s first commercial application of offshore wind turbines over 3 MW in size off Ireland’s East coast

Entertainment & Media

Google and AOL’s decisions to locate overseas operations in Ireland are proof of the dynamic nature of the Entertainment and Media sector in Ireland. Innovative Government initiatives such as the Digital Hub in Dublin underscore the drive to create an international centre of excellence around digital media and technology in Ireland.

A worldwide reputation for creativity and communication is expressed in this thriving sector

Industrial Products & Services

Leading providers of industrial products and services have chosen Ireland as a location for sophisticated value added activities within their groups. Activities undertaken include high value manufacturing, supply chain management, research and development, international services and intellectual property management.

Companies in Ireland are supported by high quality engineering services, university level research and advanced logistics

Information & Communications Technologies

The ICT Sector in Ireland attracts global investment with 9 of the top 10 US ICT companies operating here. There are over 200 IDA supported ICT companies, directly employing approximately 36,000 people. They represent 22% of total exports, estimated at €35 billion. The ICT Sector continues to grow in Ireland as companies take advantage of the competitive environment, skill base and value propositions

Ireland has one of the highest concentrations of ICT activity and employment in the OECD

ICT - Cloud Computing

Ireland is showing the world the way in fostering and delivering cloud computing services. Supported by a comprehensive strategic approach from government and IDA Ireland, many world leaders in cloud computing have already positioned themselves to take full advantage of the benefits Ireland has to offer.

Ireland has the potential to become a world leader in the cloud computing industry

International Financial Services

More than 250 Global financial institutions have established operations in Ireland, with many located in Dublin’s International Financial Services Centre. The IFSC was created by the Irish Government in 1987 to drive the development of the sector. The IFSC now houses many of the world’s leading financial institutions along with a sophisticated support network including accountancy, legal actuarial, taxation, regulatory, telecommunications and other services providers

Ireland was chosen as the location for finance giant Citi’s recent investment in next generation eBanking

Life Sciences - Medical Technologies

Ireland boasts the leading cluster of Med Tech industries employing the highest per capita of Medical Technology personnel in Europe. Eight of the top twenty global companies have a manufacturing base here. Over 40 years experience has resulted in a dynamic, well serviced sector and a globally recognized centre of excellence.

Ireland is home to 20 of the world's top 30 Medical Technologies companies and a proven location for HV Manufacturing and R&D

Life Sciences – Pharmaceuticals

Through Foreign Direct Investment since the 1960’s Ireland has grown a globally significant Life Sciences Sector. Life Science Companies in the areas of Pharmaceutical, Biotechnology, Medical Devices and Diagnostics, employ 47,288 people between indigenous and multinational companies in a variety of activities.

Nine of the top ten global pharmaceutical companies are located in Ireland, with seven out of ten pharmaceutical blockbusters produced here

BANK NONPERFOMING LOANS TO TOTAL GROSS LOANS (%) IN IRELAND

The Bank nonperforming loans to total gross loans (%) in Ireland was last reported at 9.20 in 2011, according to a World Bank report published in 2012. Bank nonperforming loans to total gross loans are the value of nonperforming loans divided by the total value of the loan portfolio (including nonperforming loans before the deduction of specific loan-loss provisions). The loan amount recorded as nonperforming should be the gross value of the loan as recorded on the balance sheet, not just the amount that is overdue. This page includes a historical data chart, news and forecasts for Bank nonperforming loans to total gross loans (%) in Ireland

Ireland

The International Development Association (IDA) is the part of the World Bank that helps the world’s poorest countries. Established in 1960, IDA aims to reduce poverty by providing loans (called “credits”) and grants for programs that boost economic growth, reduce inequalities, and improve people’s living conditions

IDA complements the World Bank’s original lending arm—the International Bank for Reconstruction and Development (IBRD). IBRD was established to function as a self-sustaining business and provides loans and advice to middle-income and credit-worthy poor countries. IBRD and IDA share the same staff and headquarters and evaluate projects with the same rigorous standards

IDA is one of the largest sources of assistance for the world’s 82 poorest countries, 40 of which are in Africa. It is the single largest source of donor funds for basic social services in these countries. IDA-

financed operations deliver positive change for 2.5 billion people, the majority of whom survive on less than $2 a day

The International Bank for Reconstruction and Development (IBRD) aims to reduce poverty in middle-income countries and creditworthy poorer countries by promoting sustainable development through loans, guarantees, risk management products, and analytical and advisory services. Established in 1944 as the original institution of the World Bank Group, IBRD is structured like a cooperative that is owned and operated for the benefit of its 188 member countries

IBRD raises most of its funds on the world's financial markets and has become one of the most established borrowers since issuing its first bond in 1947. The income that IBRD has generated over the years has allowed it to fund development activities and to ensure its financial strength, which enables it to borrow at low cost and offer client’s good borrowing terms.

Key financial visualizations for the country, displaying fresh data straight from open datasets. Share, embed, or discuss them. The charts update every time the source data updates. To slice, dice, and visualize detailed financial data for the country, just access a source dataset. We encourage you to share your work with others. In fulfilling its responsibilities, the World Bank complies with all sanctions applicable to World Bank transactions.

Contributions to Financial Intermediary Funds by Ireland

As of 03/31/2012

2012

Amount in USD

$28,013,127.00

 

First RSI guarantee agreement in Ireland for innovative businesses

 

The European Investment Fund (EIF) and Allied Irish Banks (AIB) have today signed in Dublin the first guarantee agreement, to support lending to small and medium-sized enterprises (SMEs) under the Risk Sharing Instrument (RSI), a joint initiative of the European Investment Bank Group and the European Commission. Thanks to the agreement, AIB will now offer up to EUR 80 million of new loans to innovative companies over the next two years, enabling export and innovation led SMEs to gain easier access to debt finance. Additional loan capital from AIB will be made available under this agreement in the event that demand by the SME sector in Ireland exceeds the initial target amount to be allocated to innovation financing over the next twelve months.

AIB has taken the lead in being the first bank in Ireland to offer Risk Sharing Instrument backed loans to innovative businesses primarily operating in the knowledge and smart economy sectors. The RSI facility aims to encourage banks to provide loans of up to €7.5 million to SMEs and small mid-caps undertaking research, development or innovation, and seeking finance for investments and/or working capital. Banks are being selected by the EIF following a call for expression of interest for financial intermediaries across the euro zone.

Speaking at the signature ceremony in Ireland, EIF Chief Executive Richard Pelly said: “I am pleased to be signing our first agreement in Ireland under the new Risk Sharing Instrument (RSI) in support of innovative small and medium sized enterprises. Through the provision of a 50% guarantee, EIF will be helping AIB, a major SME bank, to channel much needed finance efficiently to technology oriented and innovation driven businesses.”

AIB's Chief Executive, David Duffy said: “I am delighted to be partnering with the EIF and EIB on this initiative which fits very well with our overall SME strategy. AIB is keen to partner with knowledge based businesses seeking capital to build sustainable competitive advantage and accelerate growth in international markets. By improving access to loan finance to accelerate export led businesses in Ireland, we believe it will serve to stimulate credit demand in this economic environment.”

European Commissioner for Research, Innovation and Science, Máire Geoghegan-Quinn, welcomed the signature "This agreement is an excellent example of how the Commission and the EIF will now work together with banks to support innovative companies in gaining better access to risk finance. Financing research and innovation and helping those SMEs who take risks to bring ideas to the market will encourage more competitiveness and growth in Ireland and across Europe."

The Risk-Sharing Instrument (RSI)

RSI is a pilot guarantee scheme which supports the financing of R&D and/or innovation driven SMEs and Small Mid-Caps. The RSI is a joint initiative of the EIF, the European Investment Bank (EIB) and the European Commission. It is supported by the European Union under the Seventh Framework

Programmer for Research and Technological Development (FP7) and uses EIF's risk-taking capacity. It is part of, and complements, the existing Risk Sharing Finance Facility (RSFF), managed by the EIB.

Under this facility, the European Investment Fund (EIF) is, in return for a fee, providing guarantees to banks and leasing companies that lend to SMEs and Small Mid-Caps. The guarantee covers, upon default, 50% of the outstanding amount of each loan. Some 10 or so banks are expected to be involved in the pilot phase, allowing the RSI to reach up to 1000 beneficiaries with a total loan volume of up to €1.0 billion.

The call is open to financial or credit institutions, established and operating in the EU and/or countries associated to FP7, including, Iceland, Liechtenstein, and Norway, Switzerland, Israel, Turkey, Croatia, the former Yugoslav Republic of Macedonia, Serbia, Albania, Montenegro, Bosnia & Herzegovina, the Faroe Islands and Moldova.

About the EIF

EIF's central mission is to support Europe's small and medium-sized businesses (SMEs) by helping them to access finance. EIF designs and develops venture capital and guarantees instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth, and employment. The EIF total net commitments to private equity funds amounted to over EUR 6bn at end 2011. With investments in over 370 funds, the EIF is a leading player in European venture due to the scale and the scope of its investments, especially in high-tech and early-stage segments. The EIF guarantees loan portfolio totalled over EUR 4.4bn in close to 220 operations at end 2011, positioning it as a major European SME guarantees actor and a leading micro-finance guarantor

Country Good for investment

Talent

Ireland is a small country that has re-invented itself over the last forty years through the combined force of sheer determination and growing, vibrant ambition. Its young, highly educated workforce has seized

the opportunity provided by Foreign Direct Investment and continues to transform Ireland into a dynamic, knowledge based economy for the 21st century

For Irish workers, management and Government agencies, securing new FDI is just the beginning of a long partnership in which they play a pro-active role. Irish management takes a forward-thinking approach to the MNC business, anticipating market developments and coming up with great ideas to make the most of new opportunities. That’s how so many Irish MNC teams have advanced up the value chain of their parent companies to take on higher value, knowledge intensive activities.

Favorable demographics and consistent investment in education ensure a plentiful supply of highly qualified workers with excellent technical, language and customer services capabilities, as well as a reputation for flexibility and innovation.

Track Record

The 2008-2012 Business Environment ranking of the Economist Intelligence Unit placed Ireland 11th globally out of 82 countries, naming it as one of the most attractive business locations in the world. Furthermore, Forbes 2011 named Ireland as the best country in Europe in which to do business

Tax Regime

The key features of Ireland’s Tax Regime Corporate tax rate of 12.5% for active business. 25% Research & Development (R&D) Tax Credit An Intellectual Property (IP) regime which provides a tax write-off for broadly defined IP acquisitions.

Ireland’s Tax Regime also offers: an attractive holding company regime, including participation exemption for gains on disposals

of most shares; An effective zero tax rate for foreign dividends (12.5% tax rate on qualifying foreign dividends, with

flexible onshore pooling of foreign tax credits). An EU-approved stable tax regime, with access to extensive treaty network and EU Directives. Generous domestic law withholding tax exemptions

Ireland's Research and Development Tax CreditIreland has had an R&D Tax Credit scheme since 2004. Qualifying R&D expenditure will generate a 25% tax credit for offset against corporate taxes in addition to a tax deduction at 12.5%. Its purpose is to encourage both foreign and indigenous companies to undertake new and/or additional R&D activity in Ireland.

Holding Companies

Thanks to its attractive tax, regulatory and legal regime, combined with its open and accommodating business environment, Ireland’s status as a world-class location for international business is well established.

In recent years Ireland has increasingly emerged as a favored onshore location for MNCs establishing regional or global headquarters to manage the profits, functions, and shareholdings associated with their international businesses.

Ireland’s main tax advantages for holding companies are: Capital gains tax participation exemption on disposal of qualifying shareholdings; Effective exemption for foreign dividends via 12.5% tax rate for qualifying foreign dividends and a

flexible foreign tax credit system; Double tax relief available for tax suffered on foreign branch profits and pooling provisions for unused

credits; No withholding tax on dividends paid to treaty countries (or intermediate non-treaty subsidiaries); Access to double taxation agreements to minimize withholding tax on inbound royalties and interest, and

additional domestic provisions to minimize withholding tax on outbound payments.

Competitiveness

IDA Ireland is focused on securing investment in three key areas: High Value Manufacturing, Global Services and RD&I. These activities are thriving across all the business sectors and significantly improve Ireland’s competitiveness. Ireland has built up a concentration of knowledge and expertise: Life Sciences, ICT Services, Digital Media and Customer Brands.

Ireland is also developing the exciting, emerging areas of Clean Technology, Services Innovation and Convergence. In doing this, IDA Ireland demonstrates our readiness to embrace and capitalize on emerging technologies and innovations.

With lasting changes to the global economic, regulatory and business environment, the challenge now is to regroup, reassess and reposition Ireland and our Multi National Companies so that together, we are poised to take advantage of the recovery that will come.

Ireland is using its growing status as a knowledge-based economy to open new doors and avenues for investors. Ireland’s success as a centre for global investments has been facilitated by exceptional collaboration between Government agencies, industry, academia and regulatory authorities. Backed by a highly pragmatic Government policy, these stakeholders work together as a national team to win investment in Ireland:

As a key player in this national team, IDA Ireland works closely with our clients to ensure that they have the facilities, resources and connections they need for their business now and into the future.

IDA Ireland Business and Technology Parks offer a range of modern facilities suitable to every business activity and located across the country.

World-class research institutes and third level institutions work with industry partners on tightly-focused RD&I programmers, many in the Life Sciences and ICT sectors, where Ireland has in-depth expertise.

The Higher Education Authority is the Government funding agency for higher education, working to ensure the steady output of highly qualified graduates and researchers essential to the knowledge economy.

Team Ireland extends across local authorities, employer/industry organizations, utility/infrastructure providers and a range of other Government agencies, all of whom are highly motivated to secure investment from Multi National Companies and ensure the success of their Irish operations.

Trade Agreement with India

On intellectual property (IP) EU is asking India to go beyond the WTO TRIPS Agreement. EU is insisting on clauses that blindly enforce IP rights of multinational pharmaceutical and agrochemical companies, aimed at intimidating generic manufacturers by undermining the judicial system. “We can draw parallels to the Anti-Counterfeiting Trade Agreement. The EU-India FTA reaches the level of IP enforcement standards that ACTA was intended to reach”.

Over 30 Irish companies, ranging from software and IT to construction services to higher education, have their own offices in India, and a further 100 Irish companies are working with Enterprise Ireland in the early stages of selling to this market,

India and the EU have agreed June/July 2013 as an unofficial deadline. If no political breakthrough can be achieved by this date, the negotiations will be put on hold as India will be preparing for its general elections in 2014.Among the main issues outstanding are related to goods (tariffs on cars, car parts, wines and spirits), services (opening up of Indian sectors, currently strong focus on insurance), IPR protection in India, procurement and the sustainability chapter. A meeting between Minister Sharma and Commissioner De Gucht took place on 15 April where both sides took stock of the negotiations. 

India is an important trade partner for the EU and an emerging global economic power. The country combines a sizable and growing market of more than 1 billion people. The value of EU-India trade grew from €28.6 billion in 2003 to €79.9 billion in 2011. EU investment in India more than tripled between 2003 and 2010: going from €759 million in 2003 to €3 billion in 2010. Trade in commercial services tripled during the same time period, going from €5.2 billion in 2002 to €17.9 billion in 2010.

A planned free trade agreement between the European Union and India could lead to increased immigration of Indians to the EU. The free trade agreement would make it easier for Indian IT workers, engineers, and managers to live and work in the EU in return for greater access for European companies to India's enormous domestic market.

Under the free trade agreement, a skilled Indian worker would be allowed to work in any EU country under contract. In return, India would reduce tariffs on European products and lift some restrictions on bidding on certain public projects. The EU also wants India to make the issuance of Indian visas to EU citizens, business professionals, and politicians easier. This would include multiple entry visas with minimum one year duration.

A recent study found that the free trade agreement would result in Europe's economy growing by 4.5 billion euros a year.

International Trade and the Irish Economy

Introduction

Ireland is a small open economy with an entire population of less than four million people. At the same time, we enjoy a standard of living that is beyond that of many similar sized nations and that of some very larger ones.

One of the main reasons for this is that we have always looked beyond our own national boundaries and recognized the need for engaging in international trade. A combination of the following factors has meant that international trade has always been a necessity:

A small indigenous population A lack of essential raw materials A growing desire for a varied supply of goods and services Climate Social and historical connections abroad The drive for growth

 

The benefits of free international trade to Ireland

Larger markets: Irish firms have free access to a market of over 350 million people who are high-income earners in the EU. This compares favourably to the 3.5 million people in Ireland. This larger market allows firms to expand and benefit from economies of scale.

Imports: Firms are allowed to import raw materials, components and capital equipment without meeting barriers to trade such as tariffs and quotas.

Reduces risk: A business selling to a wide range of foreign markets is less dependent and may be better able to survive an economic downturn. Unfortunately, Irish small to medium enterprises are too dependent on the UK market. The multinationals have taken full advantage of the bigger market.

Economic growth: The fuel behind the Celtic Tiger has been the dramatic growth in Irish exports.

International cooperation: International trade encourages communication, understanding and cooperation, which reduce the chance of hostility. The World Trade Organization was established in 1995 with the aim of reducing or eliminating global barriers to trade. America's recent decision to put a 30 percent tariff on steel imports is against WTO agreements. This action threatens free trade.

Specialization: Free trade means that Ireland does not have to try to be self-sufficient. Instead, we can specialize and produce a surplus, which can be traded on the international market. Ireland has a competitive advantage as a food producer.

Choice and variety: A wider range of goods and services are available for consumption as a result of free trade and this gives rise to a higher standard of living.

Standards: There is a pressure on domestic firms to meet the standards of international competition and this should translate into value for the customer. Ryanair is enjoying international success offering a competitively priced service. 

The Nature of International Trade

At the moment, exports from this country are about 60% of our total national income. This amounts to approximately €152 million per day and is growing. Exports of nearly all goods (visible trade) and services (invisible trade) are growing. The benefits and opportunities of the Single European Market, the emergence of new markets in Eastern Europe and beyond, the global movement towards free trade and the removal of trade barriers, the influence of new technologies, and the impact of huge transnational companies are all beginning to take effect.

As a nation, we enjoy a healthy surplus on both the Balance of Trade and the Balance of Payments. This in turn is helping to fuel the 'Celtic Tiger' with all the subsequent benefits of nearly full employment, record levels of growth, reduced taxation, and a higher standard of living than ever before experienced.

This positive state of affairs did not arise by accident. Much planning, a great deal of hard work, and not a little luck has brought us to the point we are at now. To maintain this position we must, as a small trading nation, be aware of the challenges that lie ahead. 

Challenges to Irish firms in the international market place

In order to be a success in the global market Irish firms must overcome the following barriers:

Legal restrictions: Thanks to the harmonization of EU law, Ireland doesn't face this barrier within the EU but when trading with the USA or Japan, Irish firms must ensure all laws are obeyed.

Quality: Due to the level of competition allowed by the movement towards free trade, Irish companies must produce at the highest standards. Many firms apply for the international ISO9000 quality awards to reassure customers of high standards.

Languages: Irish firms tend to rely on their trading partners to speak English but language skills should be encouraged in order to facilitate trade. Great care is needed in the translation of all business correspondence, packaging and manuals.

Location: Ireland incurs higher transport costs than many of its European competitors and as a result must control costs to remain competitive.

Making foreign payments: Even with the advent of the Euro it is still proving difficult to make foreign payments. A small shoe retailer was complaining he could not write a euro cheque from the business account to pay for Italian imports. He still had to use an international bank draft. At least the euro has eliminated exchange risks but as Sterling remains outside the euro, Irish traders are still exposed to exchange risks when dealing with firms in the UK. A weak Euro benefits Irish exporters to the UK but Irish importers would be advised to find suppliers within the Euro zone.

Customs and Cultures: Irish firms must ensure that they carry out business in agreement with the customs and culture of their trading partners. 

Trade in goods:                                                             

Year Imports from India Exports to India Total Trade

2008 265.00 161.00 426.00

2009 281.00 158.00 439.00

2010 301.00 162.00 463.00

2011 372.00 217.00 589.00

2012 235.00 365.00 600.00

Major items of Indian exports to Ireland include textiles, garments and clothing accessories,

pharmaceuticals, light engineering goods and chemicals. Major items of Irish exports to India include

telecommunications equipment, computer accessories, precision equipment and pharmaceuticals.

BILATERAL INVESTMENTS:

Irish investment in India: Irish companies have invested in India in the field of manufacturing

of building materials, property, food processing, medical research, media and IT sector. Notable

among them are Cement Roadside Holdings, Quinn Property Group, Total Produce, ICON

Independent News & Media Investment Limited and various IT Companies.  Indian investment in Ireland: Among the notable Indian companies who have investments in

Ireland are Wockhardt Ltd Ranbaxy Ireland Ltd, Reliance Gene Medix, Crompton Greaves, Deepak Fasteners Limited, Hindustan Zinc, Tata Consultancy Services (TCS) and Hindustan Computers Ltd (HCL).

The trade part of the negotiations will lead to progressive and mutual liberalization, through the development of an ambitious, comprehensive and balanced FTA that complies fully with the rules of the World Trade Organization

The agreement under negotiation is broad-based, covering technical barriers to trade competition customs sanitary and phytosanitary regulations non-agricultural market access intellectual property rights government procurement investment service