IDA sees ‘very difficult’ road ahead for foreign investment

Physical investor visits fall to zero – with ‘virtual’ tours yielding one deal this year

IRELAND faces exceptional difficulty in winning new foreign investment in coming months – simply because potential investors, particularly from the US, cannot set foot here.

IDA Ireland chief executive Martin Shanahan said the pipeline for new foreign direct investment (FDI) typically stretches out six months in advance. This means Ireland’s cupboard for the final quarter of this year and the first of 2021 looks depleted, if not bare.

He spoke to the Irish Independent after the agency published mid-year results that reported a 6pc decline in projects won so far this year – 132 with the potential to generate 9,600 jobs – versus the first six months of 2019.

But Mr Shanahan said the dropoff in projects won versus 2019 would become much more pronounced as the year wears on. While those 132 projects were evenly spread between the first and second quarters, the recruitment and persuasion work – including in-person site inspections – was mostly done in 2019.

“I already know what it looks like now for more or less the next six months. That’s why I’m saying quarter four of 2020 and quarter one of 2021 are going to be very difficult,” he said.

“The work on all of these involves an average six-month time lag,” he said of investments announced this year. “These are coming through from 2019 right up to March. We were operational in Ireland – and I was abroad in the US – right up to the middle of March. So you’re not seeing that fall-off yet.”

However, Mr Shanahan remains hopeful Ireland still can punch above its weight wooing the smaller pool of multi-nationals eyeing Europe for expansion.

Two international organisations – the UN Conference on Trade and Development and the Organisation for Economic

Co-operation and Development – estimate FDI could fall globally by 35pc to 45pc between now and the end of 2021.

Mr Shanahan is hopeful Ireland will fare better than that even as it focuses on defending the 245,000 jobs already existing in the IDA’s nearly 1,550 multi-national here.

Since March, the IDA has not hosted a physical visit of investors, when normally these are daily events for the agency.

Instead, like most firms, it’s engaging investors on video conferences and taking them on ‘virtual’ tours of offices, industrial buildings and development sites.

Over the past three months, IDA representatives have taken overseas investors on 36 ‘virtual’ tours. This is about a third of the usual level. Yet Mr Shanahan confirmed one has already clinched an as yet unannounced FDI commitment.

And the virtual approach has one other effect – it’s much easier to show Dublin-focused clients sites elsewhere. More than three out of four have been sites far from the capital.

“We can showcase more places in a shorter period of time than if you were asking people to physically visit,” said Mr Shanahan.

He is confident US firms, particularly once their executives are cleared to resume overseas flights, will expand operations here, regardless of any restrictions emanating from Donald Trump’s administration. He doesn’t see Irish-based US firms shifting operations back to the US to any significant degree.

“If US companies are going to grow, internationalising is part of that,” he said.

“There are compelling reasons for biopharma and medtech companies to continue to invest in Europe and Ireland in particular. We will be competitive for the next wave. I do not see any one country or continent having a monopoly.”

‘There are compelling reasons for biopharma & medtech to invest in Europe and Ireland in particular’