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