Speaker 1: Political and business leaders around the world are waiting to
Speaker 1: see what Donald Trump as president will mean for their
Speaker 1: economies and businesses. Ireland, as a major hub for US
Speaker 1: tech and pharmaceutical companies, could be particularly exposed to any
Speaker 1: changes in trade or tax policy. Joining us to discuss
Speaker 1: is Michael Lowan, the CEO of IDA Ireland, the government
Speaker 1: agency that oversees foreign direct investment. He's in Davas this morning. Michael,
Speaker 1: Good morning to you. When you're looking ahead to Donald
Speaker 1: Trump's inauguration as president, how are you perceiving the risk
Speaker 1: to Ireland and to Ireland's economy from potential policy changes.
Speaker 2: Good morning, Stephen, and good morning from Davos.
Speaker 3: Yes, so, I think if you take maybe a look
Speaker 3: back at the last twenty four months, in particular from
Speaker 3: an FDI perspective, we've seen a very changing and different landscape.
Speaker 3: And in the FDI world, we've seen protectionism, we've seen
Speaker 3: industrial policies that's been responding and that is leading to
Speaker 3: a very different landscape of which FDI has been competing.
Speaker 3: I think we're going to see a continuation of that,
Speaker 3: you know, post inauguration later today. But as suppose from
Speaker 3: an Ireland perspective, you know, this is something we've been
Speaker 3: working with for the last twenty four months and we're
Speaker 3: going to continue to do that. We're going to focus
Speaker 3: on the areas where Ireland brings strengths in terms of
Speaker 3: sensibility of our economy, in terms of the talent that
Speaker 3: we have and the innovation, because that's very hard that
Speaker 3: multinationals their international look to international market, and we believe
Speaker 3: Ireland is that gateway for Europe and indeed for the
Speaker 3: world for companies, whether it's from the US or indeed
Speaker 3: from other parts of the world.
Speaker 4: What policies are you most worried about, though, Is it
Speaker 4: trade tariffs or is it tax changes potentially affecting the
Speaker 4: tax base in Ireland.
Speaker 3: Yes, so I think both of those elements will certainly
Speaker 3: have an impact on international trade and by extension, on Ireland. Obviously,
Speaker 3: if we think about tariffs in the first instance, tariff
Speaker 3: I don't think will be to the benefit of of
Speaker 3: of anyone in the world, whether it's whether they're in
Speaker 3: the US or or in Europe, because I think there's
Speaker 3: timely innovation. They'll actually drive inflation and have a cost impact.
Speaker 3: So I think they'll be counterproductive in terms of taxation Obviously,
Speaker 3: Ireland is aligned to the global bets process in terms
Speaker 3: of minimum taxation, and we would would be very much
Speaker 3: as supporting that, you know, all countries around the world
Speaker 3: stay aligned to the Bev's process because we do believe
Speaker 3: in certainty and clarity within in the tax regime is
Speaker 3: very important as well for companies to plan and again
Speaker 3: to make sure that they can enable their.
Speaker 2: Global supply chains because.
Speaker 3: As we've learned, you know, over the last number of years,
Speaker 3: and particularly true to the challenges we've had, whether it's
Speaker 3: throughe COVID or the war within within Ukraine, supply chains
Speaker 3: are are so creatily important and we should try and
Speaker 3: protect those in every facet of our industrial policy.
Speaker 2: From a global perspective.
Speaker 1: Which sectors do you see as being most vulnerable to
Speaker 1: policy changes coming from the US?
Speaker 3: Undoubtedly if we look at the from I speak maybe
Speaker 3: from an Ireland active you're looking at the A suppose
Speaker 3: two major sectors that we have have interaction with the
Speaker 3: US in healthcare and in pharm and medical device.
Speaker 2: And indeed in technology.
Speaker 3: I think that both of those are the sectors which
Speaker 3: are propelling the Irish economy in essence, So I think
Speaker 3: there are two sectors. But again, as I mentioned there,
Speaker 3: you know, if we think about the impact of potential
Speaker 3: tariffs or changes, and those would have an impact on
Speaker 3: the end user customer. So I think there has to
Speaker 3: be a balance, and I would hope and maybe we're
Speaker 3: already starting to see this with the administration. You're seeing
Speaker 3: that balance come into maybe some of the conversation pre
Speaker 3: election versus the administration as it takes office, and I
Speaker 3: think we'll see balance come to the four.
Speaker 2: In those areas.
Speaker 4: Yeah, but there's no downside argument, is there. Let's say,
Speaker 4: from a US perspective, to try to re show the
Speaker 4: pharmaceutical industry, which present elect Donald Trump has spoken about
Speaker 4: in the past, back in twenty twenty, in terms of
Speaker 4: the amount of pharmaceuticals and medical items that are being
Speaker 4: made in Ireland and then exported to America is something
Speaker 4: like more than fifty billion euros. There's no downside in
Speaker 4: terms of you know, making that argument. You could make
Speaker 4: it about tariffs, but not about medical pharmaceutical equipment. If
Speaker 4: that is reshored into the US.
Speaker 3: Well, I think what you have to consider that in
Speaker 3: that scenario is the capability that's built up within the
Speaker 3: supply chain, whether it's in Ireland, or let's just say
Speaker 3: it's a US versus US. That capability is serving the
Speaker 3: global market as well as the US markets. Obviously, there's
Speaker 3: economies of scale, there's supply chains lin link through those
Speaker 3: facilities and those operations, so at one level, the supply
Speaker 3: chains are so integrated. It is the first thing you
Speaker 3: have to consider. The second point, obviously, is in terms
Speaker 3: of skills, because we know across the world there is
Speaker 3: a skills shortage and as companies look to expand and grow,
Speaker 3: they need to make sure that they can get the
Speaker 3: skills that's necessary to do that. And again, the diversity
Speaker 3: of global supply chains allows that diversity of skills as well.
Speaker 3: So I think all of those factors, you know, it's
Speaker 3: what companies look at as the look to investment. You know,
Speaker 3: in terms of market opportunity, the skills opportunity, the ecosystem
Speaker 3: and the disability of the economy. All of those elements
Speaker 3: are so quickly important and I believe they will continue
Speaker 3: to be the case as companies look to grow and
Speaker 3: make sure that they have international markets of scale.
Speaker 1: What is IDA Ireland's plan if US firms do move
Speaker 1: investment away from Ireland, where Are there other countries you're
Speaker 1: looking at attracting FDI from what's the plan?
Speaker 3: Yeah, so I think that's a very fair question. So
Speaker 3: maybe maybe two ways. First of all, I don't believe
Speaker 3: that there'll be an exodus of FDI from Ireland or
Speaker 3: US companies from Ireland because for the very point they
Speaker 3: are bringing real value that allowed those companies to create
Speaker 3: new markets and to grow. So I can see that
Speaker 3: continuing as we go into the future. Yes, we will
Speaker 3: have to compete, and we've always had to compete for investments.
Speaker 3: But as we look at last year, we announced two
Speaker 3: hundred and thirty four investments by IDA across our portfolio,
Speaker 3: and that's our international portfolio, and of that investment, sixty
Speaker 3: four sixty five percent of that investment comes from the US.
Speaker 3: Europe accounts for somewhere between twenty eight and thirty percent,
Speaker 3: and then the rest of the world brings in between
Speaker 3: eight and ten percent. So we've already built diversity within
Speaker 3: our portfolio as well.
Speaker 2: I think what's.
Speaker 3: Creatively important, we've changed the type of project as well.
Speaker 2: R and D in Ireland has really got embedded.
Speaker 3: Last year was a record year for R and D
Speaker 3: investment within our portfolio just under two billion that was
Speaker 3: invested in supported through IDA to our client companies. So
Speaker 3: we built, if you want to call it, that longevity
Speaker 3: of our FDI base, the quality and depth of what
Speaker 3: the activities we're in our FDI base. So we're actually,
Speaker 3: while there is a period of change ahead, we are
Speaker 3: actually entering this from a very very strong position from
Speaker 3: an FDI perspective, and indeed from the Irish economy's perspective
Speaker 3: as well.
Speaker 1: There are you know, Ireland is a long tradition of
Speaker 1: having you know, foreign companies operating in the country, and
Speaker 1: you've outlined that. But I do wonder how do you
Speaker 1: make the case for attracting new investment now given the
Speaker 1: issues particularly around housing highlighted in your own clients survey
Speaker 1: as being a major issue for any company that wants
Speaker 1: to set up in Ireland. How do you convince the
Speaker 1: company to set up if there's nowhere for their workers
Speaker 1: to live.
Speaker 3: Yeah, so I think again that's a fair question, and
Speaker 3: maybe as a respond in two ways. First of all,
Speaker 3: the numbers I mentioned that we reported in December of
Speaker 3: last year at seventy of those investments, of those two
Speaker 3: undred and thirty four investments or first time or new
Speaker 3: name investments in New Porland. So we continue to invest
Speaker 3: or attract new investment into Ireland. And you're correct, yes
Speaker 3: they're carrying capacity constraints, but we also have a response
Speaker 3: in that carrying capacity. So we see our Housing for
Speaker 3: All strategy which is really started to deliver on our
Speaker 3: housing front, our infrastructure, and again these are the same
Speaker 3: challenges that you see in every growing economy. Remember, the
Speaker 3: Irish economy has grown significantly. Our population base has grown
Speaker 3: ten percent over the last decade and that actually has
Speaker 3: put strain on our investment or our infrastructure investment. But
Speaker 3: we are responding. I think what's really helpful as well
Speaker 3: is that this week actually the.
Speaker 2: New Irish government has been formed on Wednesday.
Speaker 3: In our doll and in the draft program for government,
Speaker 3: at its very core is a number of varias, a
Speaker 3: commitment in terms of our infrastructure and housing, our commitment
Speaker 3: to that Ireland is going to have a revolutionary change
Speaker 3: in terms of a sustainable energy and indeed a commitment
Speaker 3: in terms of digital and AI. So I think therefore
Speaker 3: the growth opportunities are and d for Ireland as part
Speaker 3: of that global environment.
Speaker 4: Okay, interesting in terms of the UK you're near neighbor.
Speaker 4: Have you seen interest from companies who are leaving the
Speaker 4: UK or interested in investing directly in Ireland as a
Speaker 4: result of the tax changes in the UK the new
Speaker 4: tax regime in Britain for businesses.
Speaker 3: At this juncture, the UK continues to be a very
Speaker 3: vibrant market for for for for Ireland and from an
Speaker 3: FDI perspective, it's also, of course is a competitor for FDI,
Speaker 3: and I think the UK has always been so, so
Speaker 3: we we we see that that that interaction continuing over
Speaker 3: this year. I think as we go forward, I do
Speaker 3: believe there's more opportunity for for for Ireland within the
Speaker 3: UK market and we're continuously working towards that.
Speaker 2: So so we do see some flows.
Speaker 3: Coming towards US, and generally not just tax related, but
Speaker 3: very much on the basis of of skills and talent
Speaker 3: and growth that they're the primary reasons that companies look
Speaker 3: to invest.
Speaker 1: In and has that Has that increased since the budget
Speaker 1: here at the end of October, Have you seen an
Speaker 1: increase in inquiries?
Speaker 3: I would I wouldn't say there's a marked increase. I
Speaker 3: think it's it's active. I think the marketplace is active,
Speaker 3: but I wouldn't be marketing as as a market increase