Digital district planned for Liberties

The Government is in discussions with Guinness Brewery to acquire a large portion of its 64-acre premises in the Thomas Street area of Dublin for a new digital media district.

The Irish Times has learned that the Government has approved £200 million (€254 million) in initial funding for a newly established Digital Media Development Board to get the project up and running. This includes the administration and distribution of funds for Media Lab Europe, which has been pledged £28 million in State support.

The newly launched Media Lab, located in the Guinness Hopstore, will serve as the anchor tenant for the region. The chief architects of the digital media district envisage a project along the lines of the International Financial Services Centre (IFSC), attracting global Internet companies specialising in the creation and distribution of digital content. It is understood that at least three overseas investors have expressed an interest in taking up a further 400,000 square feet in the area.

The district is also likely to become the hub for Global Crossing's second high-speed fibre-optic cable line linking the Republic directly with the US and Europe. This would increase the area's attractiveness for Internet-based companies reliant on substantial bandwidth for the delivery of their products.

The board, which is chaired by former senior civil servant, Mr Paddy Teahon, includes a number of senior civil servants, businessman and former Fianna Fail fund raiser, Mr Paul Kavanagh, U2 manager, Mr Paul McGuinness, and chief executive of Enterprise Ireland, Mr Dan Flinter.

Details of an incentive plan are still unclear, and the board has yet to decide on how the property will be allocated. One option is for the Government - along the lines of a public-private partnership (PPP) scheme - to buy as much land possible from Guinness and sell it on to appropriate investors. Dublin Corporation is supporting the project, and has already indicated there will be tax incentives for developers to locate in the Thomas Street and James's Street areas of the city.

The board has had one meeting to date, and advertising begins this weekend to commission executive services to manage the project, which will be closely monitored by the Taoiseach's office.

Based loosely on the strategy that transformed Dublin's Temple Bar area, early reports indicate the idea is generating a lot of interest among potential overseas investors and indigenous Internet companies. US company, John Drew, which owns the World Trade Centres in Boston and Washington, is understood to be very interested in making a major similar investment here, which will house pure Internet content companies. Senior executives from the company have visited Dublin four times in the last year, and it is thought they may be considering a site located at Guinness's premises on Dublin's quays.

Sources close to the project have also indicated the Office of the Revenue Commissioners is lobbying for a new EU Directive to introduce a VAT rate for electronic transactions that will apply in the jurisdiction where the enduser resides.

This would be significant if Ireland was to gain a lead in establishing an e-commerce hub, because it would mean foreign investors could locate anywhere without risking potential revenues.

Already Germany has come very close at EU level to imposing its own 15 per cent VAT rate for all of Europe. This would have a negative effect on e-commerce in countries with higher VAT rates, including the Republic. At the moment the Government is leasing the top floor of the Guinness Hopstore for Media Lab Europe, and it is in the process of acquiring the Hopstore and an adjacent brewing house for the Media Lab campus before the end of the year.