WEBVTT - Ireland FDI Chief Michael Lohan Talks Trump's Global Impact

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<v Speaker 1>Political and business leaders around the world are waiting to

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<v Speaker 1>see what Donald Trump as president will mean for their

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<v Speaker 1>economies and businesses. Ireland, as a major hub for US

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<v Speaker 1>tech and pharmaceutical companies, could be particularly exposed to any

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<v Speaker 1>changes in trade or tax policy. Joining us to discuss

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<v Speaker 1>is Michael Lowan, the CEO of IDA Ireland, the government

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<v Speaker 1>agency that oversees foreign direct investment. He's in Davas this morning. Michael,

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<v Speaker 1>Good morning to you. When you're looking ahead to Donald

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<v Speaker 1>Trump's inauguration as president, how are you perceiving the risk

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<v Speaker 1>to Ireland and to Ireland's economy from potential policy changes.

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<v Speaker 2>Good morning, Stephen, and good morning from Davos.

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<v Speaker 3>Yes, so, I think if you take maybe a look

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<v Speaker 3>back at the last twenty four months, in particular from

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<v Speaker 3>an FDI perspective, we've seen a very changing and different landscape.

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<v Speaker 3>And in the FDI world, we've seen protectionism, we've seen

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<v Speaker 3>industrial policies that's been responding and that is leading to

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<v Speaker 3>a very different landscape of which FDI has been competing.

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<v Speaker 3>I think we're going to see a continuation of that,

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<v Speaker 3>you know, post inauguration later today. But as suppose from

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<v Speaker 3>an Ireland perspective, you know, this is something we've been

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<v Speaker 3>working with for the last twenty four months and we're

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<v Speaker 3>going to continue to do that. We're going to focus

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<v Speaker 3>on the areas where Ireland brings strengths in terms of

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<v Speaker 3>sensibility of our economy, in terms of the talent that

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<v Speaker 3>we have and the innovation, because that's very hard that

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<v Speaker 3>multinationals their international look to international market, and we believe

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<v Speaker 3>Ireland is that gateway for Europe and indeed for the

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<v Speaker 3>world for companies, whether it's from the US or indeed

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<v Speaker 3>from other parts of the world.

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<v Speaker 4>What policies are you most worried about, though, Is it

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<v Speaker 4>trade tariffs or is it tax changes potentially affecting the

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<v Speaker 4>tax base in Ireland.

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<v Speaker 3>Yes, so I think both of those elements will certainly

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<v Speaker 3>have an impact on international trade and by extension, on Ireland. Obviously,

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<v Speaker 3>if we think about tariffs in the first instance, tariff

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<v Speaker 3>I don't think will be to the benefit of of

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<v Speaker 3>of anyone in the world, whether it's whether they're in

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<v Speaker 3>the US or or in Europe, because I think there's

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<v Speaker 3>timely innovation. They'll actually drive inflation and have a cost impact.

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<v Speaker 3>So I think they'll be counterproductive in terms of taxation Obviously,

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<v Speaker 3>Ireland is aligned to the global bets process in terms

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<v Speaker 3>of minimum taxation, and we would would be very much

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<v Speaker 3>as supporting that, you know, all countries around the world

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<v Speaker 3>stay aligned to the Bev's process because we do believe

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<v Speaker 3>in certainty and clarity within in the tax regime is

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<v Speaker 3>very important as well for companies to plan and again

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<v Speaker 3>to make sure that they can enable their.

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<v Speaker 2>Global supply chains because.

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<v Speaker 3>As we've learned, you know, over the last number of years,

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<v Speaker 3>and particularly true to the challenges we've had, whether it's

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<v Speaker 3>throughe COVID or the war within within Ukraine, supply chains

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<v Speaker 3>are are so creatily important and we should try and

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<v Speaker 3>protect those in every facet of our industrial policy.

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<v Speaker 2>From a global perspective.

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<v Speaker 1>Which sectors do you see as being most vulnerable to

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<v Speaker 1>policy changes coming from the US?

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<v Speaker 3>Undoubtedly if we look at the from I speak maybe

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<v Speaker 3>from an Ireland active you're looking at the A suppose

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<v Speaker 3>two major sectors that we have have interaction with the

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<v Speaker 3>US in healthcare and in pharm and medical device.

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<v Speaker 2>And indeed in technology.

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<v Speaker 3>I think that both of those are the sectors which

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<v Speaker 3>are propelling the Irish economy in essence, So I think

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<v Speaker 3>there are two sectors. But again, as I mentioned there,

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<v Speaker 3>you know, if we think about the impact of potential

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<v Speaker 3>tariffs or changes, and those would have an impact on

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<v Speaker 3>the end user customer. So I think there has to

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<v Speaker 3>be a balance, and I would hope and maybe we're

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<v Speaker 3>already starting to see this with the administration. You're seeing

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<v Speaker 3>that balance come into maybe some of the conversation pre

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<v Speaker 3>election versus the administration as it takes office, and I

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<v Speaker 3>think we'll see balance come to the four.

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<v Speaker 2>In those areas.

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<v Speaker 4>Yeah, but there's no downside argument, is there. Let's say,

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<v Speaker 4>from a US perspective, to try to re show the

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<v Speaker 4>pharmaceutical industry, which present elect Donald Trump has spoken about

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<v Speaker 4>in the past, back in twenty twenty, in terms of

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<v Speaker 4>the amount of pharmaceuticals and medical items that are being

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<v Speaker 4>made in Ireland and then exported to America is something

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<v Speaker 4>like more than fifty billion euros. There's no downside in

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<v Speaker 4>terms of you know, making that argument. You could make

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<v Speaker 4>it about tariffs, but not about medical pharmaceutical equipment. If

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<v Speaker 4>that is reshored into the US.

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<v Speaker 3>Well, I think what you have to consider that in

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<v Speaker 3>that scenario is the capability that's built up within the

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<v Speaker 3>supply chain, whether it's in Ireland, or let's just say

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<v Speaker 3>it's a US versus US. That capability is serving the

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<v Speaker 3>global market as well as the US markets. Obviously, there's

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<v Speaker 3>economies of scale, there's supply chains lin link through those

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<v Speaker 3>facilities and those operations, so at one level, the supply

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<v Speaker 3>chains are so integrated. It is the first thing you

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<v Speaker 3>have to consider. The second point, obviously, is in terms

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<v Speaker 3>of skills, because we know across the world there is

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<v Speaker 3>a skills shortage and as companies look to expand and grow,

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<v Speaker 3>they need to make sure that they can get the

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<v Speaker 3>skills that's necessary to do that. And again, the diversity

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<v Speaker 3>of global supply chains allows that diversity of skills as well.

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<v Speaker 3>So I think all of those factors, you know, it's

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<v Speaker 3>what companies look at as the look to investment. You know,

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<v Speaker 3>in terms of market opportunity, the skills opportunity, the ecosystem

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<v Speaker 3>and the disability of the economy. All of those elements

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<v Speaker 3>are so quickly important and I believe they will continue

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<v Speaker 3>to be the case as companies look to grow and

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<v Speaker 3>make sure that they have international markets of scale.

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<v Speaker 1>What is IDA Ireland's plan if US firms do move

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<v Speaker 1>investment away from Ireland, where Are there other countries you're

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<v Speaker 1>looking at attracting FDI from what's the plan?

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<v Speaker 3>Yeah, so I think that's a very fair question. So

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<v Speaker 3>maybe maybe two ways. First of all, I don't believe

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<v Speaker 3>that there'll be an exodus of FDI from Ireland or

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<v Speaker 3>US companies from Ireland because for the very point they

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<v Speaker 3>are bringing real value that allowed those companies to create

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<v Speaker 3>new markets and to grow. So I can see that

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<v Speaker 3>continuing as we go into the future. Yes, we will

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<v Speaker 3>have to compete, and we've always had to compete for investments.

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<v Speaker 3>But as we look at last year, we announced two

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<v Speaker 3>hundred and thirty four investments by IDA across our portfolio,

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<v Speaker 3>and that's our international portfolio, and of that investment, sixty

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<v Speaker 3>four sixty five percent of that investment comes from the US.

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<v Speaker 3>Europe accounts for somewhere between twenty eight and thirty percent,

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<v Speaker 3>and then the rest of the world brings in between

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<v Speaker 3>eight and ten percent. So we've already built diversity within

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<v Speaker 3>our portfolio as well.

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<v Speaker 2>I think what's.

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<v Speaker 3>Creatively important, we've changed the type of project as well.

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<v Speaker 2>R and D in Ireland has really got embedded.

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<v Speaker 3>Last year was a record year for R and D

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<v Speaker 3>investment within our portfolio just under two billion that was

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<v Speaker 3>invested in supported through IDA to our client companies. So

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<v Speaker 3>we built, if you want to call it, that longevity

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<v Speaker 3>of our FDI base, the quality and depth of what

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<v Speaker 3>the activities we're in our FDI base. So we're actually,

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<v Speaker 3>while there is a period of change ahead, we are

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<v Speaker 3>actually entering this from a very very strong position from

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<v Speaker 3>an FDI perspective, and indeed from the Irish economy's perspective

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<v Speaker 3>as well.

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<v Speaker 1>There are you know, Ireland is a long tradition of

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<v Speaker 1>having you know, foreign companies operating in the country, and

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<v Speaker 1>you've outlined that. But I do wonder how do you

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<v Speaker 1>make the case for attracting new investment now given the

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<v Speaker 1>issues particularly around housing highlighted in your own clients survey

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<v Speaker 1>as being a major issue for any company that wants

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<v Speaker 1>to set up in Ireland. How do you convince the

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<v Speaker 1>company to set up if there's nowhere for their workers

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<v Speaker 1>to live.

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<v Speaker 3>Yeah, so I think again that's a fair question, and

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<v Speaker 3>maybe as a respond in two ways. First of all,

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<v Speaker 3>the numbers I mentioned that we reported in December of

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<v Speaker 3>last year at seventy of those investments, of those two

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<v Speaker 3>undred and thirty four investments or first time or new

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<v Speaker 3>name investments in New Porland. So we continue to invest

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<v Speaker 3>or attract new investment into Ireland. And you're correct, yes

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<v Speaker 3>they're carrying capacity constraints, but we also have a response

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<v Speaker 3>in that carrying capacity. So we see our Housing for

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<v Speaker 3>All strategy which is really started to deliver on our

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<v Speaker 3>housing front, our infrastructure, and again these are the same

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<v Speaker 3>challenges that you see in every growing economy. Remember, the

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<v Speaker 3>Irish economy has grown significantly. Our population base has grown

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<v Speaker 3>ten percent over the last decade and that actually has

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<v Speaker 3>put strain on our investment or our infrastructure investment. But

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<v Speaker 3>we are responding. I think what's really helpful as well

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<v Speaker 3>is that this week actually the.

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<v Speaker 2>New Irish government has been formed on Wednesday.

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<v Speaker 3>In our doll and in the draft program for government,

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<v Speaker 3>at its very core is a number of varias, a

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<v Speaker 3>commitment in terms of our infrastructure and housing, our commitment

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<v Speaker 3>to that Ireland is going to have a revolutionary change

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<v Speaker 3>in terms of a sustainable energy and indeed a commitment

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<v Speaker 3>in terms of digital and AI. So I think therefore

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<v Speaker 3>the growth opportunities are and d for Ireland as part

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<v Speaker 3>of that global environment.

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<v Speaker 4>Okay, interesting in terms of the UK you're near neighbor.

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<v Speaker 4>Have you seen interest from companies who are leaving the

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<v Speaker 4>UK or interested in investing directly in Ireland as a

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<v Speaker 4>result of the tax changes in the UK the new

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<v Speaker 4>tax regime in Britain for businesses.

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<v Speaker 3>At this juncture, the UK continues to be a very

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<v Speaker 3>vibrant market for for for for Ireland and from an

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<v Speaker 3>FDI perspective, it's also, of course is a competitor for FDI,

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<v Speaker 3>and I think the UK has always been so, so

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<v Speaker 3>we we we see that that that interaction continuing over

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<v Speaker 3>this year. I think as we go forward, I do

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<v Speaker 3>believe there's more opportunity for for for Ireland within the

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<v Speaker 3>UK market and we're continuously working towards that.

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<v Speaker 2>So so we do see some flows.

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<v Speaker 3>Coming towards US, and generally not just tax related, but

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<v Speaker 3>very much on the basis of of skills and talent

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<v Speaker 3>and growth that they're the primary reasons that companies look

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<v Speaker 3>to invest.

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<v Speaker 1>In and has that Has that increased since the budget

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<v Speaker 1>here at the end of October, Have you seen an

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<v Speaker 1>increase in inquiries?

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<v Speaker 3>I would I wouldn't say there's a marked increase. I

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<v Speaker 3>think it's it's active. I think the marketplace is active,

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<v Speaker 3>but I wouldn't be marketing as as a market increase