Uh oh, they’re sorry they’re here…

Well, half of them. Them being large multinational companies.

This can’t be a very good news in time of economic downturn. Almost half of multinational companies surveyed by IDA (they surveyed 97/538 companies, which works out about 18% of client portfolios) that are currently based in Ireland have indicated that given a second chance to relocate their companies, Ireland would not have been their choice. The two main cited reasons – high business costs and poor infrastructure. It appears not only the residents here are tired of rip-off Ireland, foreign investors are also unhappy with fatigued accountings.

With the widening of European markets, there are more options than ever for any company that’s currently looking into tapping into the continent. Of the companies that said they would have chose a different location, almost 2/3 of them would choose Eastern Europe. Not only that, some 16% would even go to UK. This must be sending some major alarm bells to the government!

But of course Ireland does have its own saving graces, since the other half surveyed are happy where they are right now and would not have choose an alternative location. Top of the list of graces is the favourable corporation tax rates, which even McCain evoked time and time again during his (now lost) presidential bid debates and speeches. The other main advantages are skilful set of labour, high technological knowledge (although we still sorely need better telecoms and broadband infrastructures) and favourable regulations for multinationals relocating here.

However, in times of global competitions, the balancing act is tricky at best (e.g. maintaining high living standard but battling rapid increases in wages which reduces profits and thus taxation) for the government. Not only that, the international economic climate also influences decision making by large international firms which are trying to remain competitive. For one, a large number of the multinationals currently based in Ireland are American-owned, and if tax breaks offered by President-elect Obama be deemed more favourable, the companies may begin to downsize their operations here and return to US for their expansions.

I guess we won’t know right now how the events will unfold. Only time will tell. In the mean time, the government has to stop sitting on the laurels of Celtic Tiger, and start to think of Plan B (and C and D) to keep the economy of the country growing. One thing that I can think of right now is, stop spending frivolously on all sorts of overbudgeted and overran (time wise) projects!

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