IRISH AMBASSADOR H.E. KENNETH THOMPSON
“Ireland is open to M&As with Indian firms”
Irish Ambassador H.E. Kenneth Thompson speaks to BFM’s Mona Mehta on how Ireland can be the ‘bridge-head to Europe’ for Indian companies looking to access European markets, and stresses on the need for Ireland to enhance its export performance by improving competitiveness and increasing productive capacities
Issue Date - 01/01/2012
Inward investments have been critically important for the economic development of Ireland and India is key to the Irish strategy for the next 10 year horizon. With this aim, his excellency H.E Kenneth Thompson was appointed as the Irish ambassador to India in 2008. Kenneth Thompson was born and went to school in Belfast and then Trinity College, Dublin and St John’s College Cambridge. He has served on diplomatic postings in London, Cairo, Vienna, Madrid, Washington Buenos Aires and Brussels as well as several stints in Dublin. The Irish economy was in a slowdown phase for a number of years. However, during the financial crisis, the property bust put Ireland under the burden of massive sovereign debt. In an interaction with mona mehta, Kenneth Thompson elaborates on the actual scenario of the Irish economy, the steps taken by the Irish government to combat the scenario and also the potential for growth in terms of bilateral trade between India and Ireland.
How is the economic scenario taking off in Ireland and what does the economy of Ireland have in store for Indian business houses?
Ireland has seen tough times because of the global downturn. Since the economic downturn in 2008, Ireland’s GDP has been growing at a rate of 1%. Prior to that, Ireland’s GDP used to grow by 6-7%. The GDP degrowth of the Irish economy has improved -7.25% in 2009 to -0.25% in Q1 2010. The unemployment rate had decreased from 13.8% to 13.7% between August and September 2010. As per the National Recovery Plan by the government, the GDP is expected to grow at a rate of 3% between 2012 and 2014. For the purpose, Ireland needs to spearhead its export performance by improving its competitiveness, and increase productive capacities by maintaining investments in key infrastructure projects and education.
The global economy has been a cause of concern for a few years now. The financial crisis that started in the US in 2007 is having ripple effects all over the world. Ireland’s financial troubles are similar to that of the US. However, the government has been swift to tackle to issue head-on, and taken numerous corrective measures. The National Asset Management Agency (NAMA) was a mammoth step in this direction. It looks at buying toxic funds and assets from 5 major Irish lenders, including the Anglo Irish Bank, thus preventing a financial meltdown. Additionally, in an attempt to cut down public spending, the government has imposed a 20% wage cut for those working in public sector, 10% cut in state’s child benefits and also included minimum wage earners in tax brackets. Similar measures have also resonated in the private sector, thus aiding the overall financial stability in the country. The Irish economy has been on a steady growth path post the bailout. Despite severe recession, Ireland continued attracting FDI, the key reason being ‘improved competitiveness’. Business costs including energy, private rents, office rents, services, construction and labour have all become more competitive. The government aims to restore financial stability and ensure fiscal sustainability in the economy in the coming years.
As for the Indian business houses having office and factories in Ireland, and looking at expanding them for enhancing production capacities, one of the main advantages is the availability of cheap labour cost in Ireland.
How is Ireland different in terms of the business scope for companies?
Ireland is the only English speaking country in the Euro Zone, and has multi-lingual capabilities. For instance, Google services over 60 languages from its center in Dublin. Ireland additionally follows a standard, EU approved Corporate Tax rate of 12.5%. There is ease of operations for businesses at Ireland, the legal system is based on the common law and Ireland is also very well connected with mainland Europe and the US.
So far, in Ireland, 75% FDI comes from the US, 20% comes from Europe and the rest comes from Asia. Indian investments into Ireland will be much higher in the coming couple of years and investments are expected especially from the IT sector.
Considering the fact that conditions in Europe have deteriorated further as compared to 2009, do you think it’s the right time for Indian companies to foray into the European market?
An ambitious FDI strategy increases focus on job creation from the services sector in emerging markets. Industrial Development Agency (IDA) Ireland, established in India in 1969, is responsible for securing investments from new and existing clients from other countries into Ireland. The key focus sectors of IDA Ireland include Information & Communications Technology (ICT), Life Sciences (pharmaceutical, biopharmaceutical and medical technologies), financial services, engineering, professional services, digital media, consumer brands and international services.
Indian companies such as GTL, TCS, SFO Technologies and HCL Technologies have presence in Ireland. Besides, Wockhardt, Reliance Life Science and Ranbaxy in the pharma sector in India and Crompton Greaves in the lighting sector also have presence in Ireland. On the other hand, there is a huge list of Irish companies present in India to include. CRH entered in India in 2008 and PM Group has made a JV with a Bangalore-based firm of architects for project management. Other companies like Icon Laboratories Plc, Kerry, Total Produce, Relate Software, Macro Beverages, Clearstream, Merrion IT, Animost (animation services), Delhi Duty free an Aer Riant JV at IGI Terminal 3, HKR Architects, Kingspan and Daon biometric (the UID company), Information Maosaic and Zenith Technologies have entered the country. Cork Institute of Technology has a bilateral collaboration program with Pune University. There is a huge scope for mergers and acquisitions (M&As).
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