By: Abraham Kasbo
People flock to the Emerald Isle for its lush landscapes, deep history, and rich heritage. As one of the world’s leading tourist destinations, Ireland is a fierce competitor in the global tourism arena. No small task considering the neighborhood. While tourism is essential to Ireland’s economy and its four million citizens, the island nation is also recognized as a player in attracting foreign direct investment. From Microsoft and Facebook, to Hubspot, Log Me In, and Lilly, companies have been flocking to Ireland for the past 20 years or so to take advantage of low corporate tax rates, an educated workforce, and relatively stable economy.
So when Frank Keane, Partner and Head of International Business at MKO Partners and Co-Founder of Ireland, Gateway to Europe invited me to attend a program in New York City on foreign direct investment in Ireland, I was intrigued. I must admit in my current role, I am focused on the growth of our marketing and public relations firm here in the US and took his invitation as a welcomed opportunity to learn more about how Ireland markets itself for direct investment. It was my understanding that the trend of enterprise businesses flocking to Ireland seemed to be tapering off, but then again, that would be more of a reason for Mr. Keane’s diligent work in marketing his country to attract foreign investment. “If you’re not out there, someone else will get the business. The same principle applies to Ireland. We have a compelling story and we need to be in front of people explaining how business can benefit from our unique geo-political and business friendly environment,” said Mr. Keane.
The mid-April lively program featured CEOs from the US who made the move to Ireland along with Ireland-based service providers who help foreign businesses get started in Ireland. Panelists consisted of Ireland-based companies offering HR, payroll and tax services, to industry leaders in business process outsourcing such as SouthWestern,and they talked about the ins-and-outs of doing business with and in Ireland. CEOs of American-based companies made their case for the opportunities and the challenges of getting started in Ireland, and touched on a wide range of topics: from getting office space quickly to hiring the right talent, to partnering with telecom and technology providers. But marketing aside, the fundamental question remains: why would American businesses invest in Ireland when there’s uncertainty in Europe? I attended “The City National Economic and Investment Forum 2013” in New York several weeks ago where Austan Goolsbee, former Chairman of the President’s Council of Economic Advisers, questioned the fundamental setup of the Eurozone. The strength of the Euro, which may dissuade or slow investment continues to be a hot topic with investors. The rocky road in Europe is lined with other pitfalls such as Europe’s complicated politics and with Greece, Spain and Italy’s woes…so why would Ireland tie its fortunes to Europe? Isn’t the message off here a bit?
The reality is that enterprise businesses are not in business for shot-term gains. They are in it for the long run. And while opportunities for foreign direct investment are abundant around the globe, European economies are more mature and offer more stability for businesses in the medium and long term. High flying growth is easy in emerging markets and when you start from a low threshold or zero, isn’t it?
Here’s why the message and the title of the venture of Mr. Keane and his colleagues is spot on. There’s plenty of data and indicators that make the case for investment in both the US and Europe, here are two that I found interesting: The transatlantic economy between the US and Europe is still the largest, garnering 40.8% while Developing Asia comes in second with 28%, according to the International Monetary Fund’s latest round of data. The US and Europe “account for nearly 60% of total inward stock of foreign direct investment and almost 75% of the outward stock of foreign direct investment,” according to AmChams, The Case for Investing in Europe.
So, even in times of uncertainty, the long-term bet for stability certainly seems to continue to be on the United States and Europe. As for Ireland, there are plenty of reasons for international firms to consider direct investment, including one of the lowest corporate tax rates in the world at 12.5% for active businesses. In 2011, Forbes named Ireland as the best country in Europe in which to do business. 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. “Ireland is the only English speaking member of the Euro with an excellent, well-educated workforce. Also, business costs including energy, private rents, office rents, services, construction and labor have all become more competitive here in Ireland,” said Frank Keane. These are not simply key marketing messages; these are realities of the business eco-system on the ground in Ireland; the nature and essence of the product, if you will.
As developing economies around the world mature, and more mature economies prosper, the competition for foreign direct investment will undoubtedly heat up even more. Until then, Mr. Keane and his colleagues recognize that marketing Ireland is a business imperative. From a pure marketing perspective, a proactive marketing plan seems to be well in the works focusing on American foreign direct investment in Ireland; from symposiums in key American cities, the web, to networking events and media. Everything else remaining constant, including due diligence, geo-political events and the ups and downs of the global economy, it appears that American firms with long-term aspirations would be hard-pressed to have access to a more rational foundation for doing business in Europe outside of Ireland.