Central elite’s response to the regions is pathetic

Last week, Goodbody’s hosted an event for investors and companies seeking equity capital. We attracted world-class investors from the US and UK, who spoke with great admiration about Ireland as a source of innovation and entrepreneurship.

What widened my eyes was their view that Ireland produces businesspeople who thrive with limited resources.

Because of our small population and the absence of huge wealth, Irish men and women who set out to develop and grow companies have a hunger and ambition that are often absent elsewhere in the world.

Moreover, our small island-nation status means ambitious business leaders must travel extensively to compete, which, in itself, helps forge hardened business models capable of tackling the toughest markets.

It was also noted at the event that the eco-systems in Irish business, including the IT community, centred around giant companies such as Facebook, Google, Twitter, Microsoft, and Apple, are setting the seeds for the next generation of entrepreneurs.

The skills and abilities honed working for these world-class companies create individuals who will, some day, build their own companies with external capital and who will be new champions for Ireland.

All of this is in parallel with major developments that could improve large, multinational investing in Ireland.

Under so-called BEPS (base erosion profit-sharing) rules being worked by the OECD, it is becoming harder to secure low tax rates in countries like Ireland, unless it is crystal clear that the core skills and assets of that business reside in the country.

Important companies have moved their senior executive teams and decision-makers to Ireland as part of this process.

That could unleash another wave of investment and expansion by companies that have seen, first-hand, the benefits, from a cultural, business, and tax perspective, of centralising activities in the Republic.

Such a prospect again foregrounds the debate about where these businesses should reside.

You might have noted headline announcements in recent weeks, by companies committing to large job projects in Ireland, but these have a distinct bias towards the greater Dublin area.

I am surprised that more announcements are not being won in Cork, Limerick, and Galway, where residential and commercial costs are significantly lower than in the capital.

You can listen to the usual excuses — transport links, preferences for big cities, and so on — but the regions outside of Dublin have important competitive advantages around costs, leisure pursuits, and third-level support, which warrant a greater number of wins for mobile international investment.

Regarding the formation of a government, there is much noise about interests outside of Dublin, but this seems overly focused on road repairs and the number of Garda stations or post offices being closed.

Should the debate not be more advanced and demand answers as to why the cities outside Dublin are not announcing major industrial services and manufacturing projects with hundreds of jobs attached?

The more Dublin secures rolling waves of investment, relative to the rest of the country, the more unbalanced the economy risks becoming.

Many years ago, the IFSC and Shannon Free Zone won investment because they had specific corporate tax advantages that drove investors to those sites.

Today, a US multinational setting up in Midleton, Ennis, or Mullingar gets the same 12.5% rate as those in the centre of the capital.

We are not doing enough to generate a new pipeline of major investments outside the Pale, and shoulder-shrugging is a pathetic response to the challenge.

Joe Gill is director of corporate broking with Goodbody Stockbrokers. His views are personal.


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