Business costs blamed for foreign investment fall

The high cost of doing business in Ireland has caused the level of foreign direct investment to drop by nearly 50%, it was claimed tonight.

The amount invested by foreign companies fell from €22.1bn in 2003 to €11.6bn last year.

Fine Gael said the figures, which were contained in the Organisation for Economic Co-operation and Development (OECD)’s foreign direct investment report (FDI), showed the country was losing out to low-cost countries like India and China.

“We are now identified as a high-cost economy and it is clear that investment from both outside and inside the country is responding by going abroad. Inaction by this Government is adding to the problem,” said Enterprise spokesman Phil Hogan TD.

He said the fall in FDI was a worrying portent of things to come.

“The Government must act now or watch Ireland’s competitiveness be eroded even further.”

Although FDI in France and Germany fell drastically last year, it reached record levels in China. The country took in €45.2bn last year, which was up from €38.7bn in 2003.

The high level of FDI has been a key factor in the growth of the economy over the last decade.

There are now more than 1,000 companies who have chosen Ireland as their European headquarters. They employ 130,000 people directly and account for 80% of exports.

However, IDA Ireland said the OECD report related to fund flows between countries and mergers and acquisitions, not just job-related investment.

“They are not figures that we use to measure our success. Our business is still good and we had more projects last year than in 2003,” said spokesman Enda Connolly.

He said the IDA had 70 investment commitments in the pipeline last year worth a total of €5bn.