Covid-19: IDA boss warns of diminished multinational investment

Agency’s annual report shows multinationals employed record numbers in 2020

IDA chief executive Martin Shanahan warns the State will be fishing for investment in a smaller pool. Photograph: Chris Bellew /Fennell

IDA chief executive Martin Shanahan warns the State will be fishing for investment in a smaller pool. Photograph: Chris Bellew /Fennell

 

The head of the State agency responsible for securing foreign direct investment (FDI) has warned that global investment flows are likely to be significantly curtailed in 2021 because of the ongoing impact of the pandemic and having to fight for “a much smaller pool” of activity.

Martin Shanahan, the chief executive of IDA Ireland, was speaking as the agency launched its results for 2020, which showed that multinationals created an additional 20,000 jobs here last year despite the disruption to business caused by Covid restrictions.

Nonetheless, Mr Shanahan warned there had been a lower of investment activity here since March last and the full impact of this was still to play out.

While the agency has developed a number of virtual workarounds, he said prospective investors still needed to be able to visit the country.

Investment “is a contact sport and we need to be able to get investors in here and they need to be able to travel out of their own countries.”

“It would be wrong to presume that we’ve seen all of the [Covid] impact at this point, we will see more impact in 2021, which will be challenging,” Mr Shanahan said.

“The international evidence suggests that global flows of FDI are going to be significantly curtailed, so Ireland is fighting for investments in a much smaller pool,” he said.

The agency’s annual results for 2020 show the IDA secured 246 investments last year, only marginally down on the 250 secured in 2019, and that 20,123 new jobs were created.

This represented a net jobs gain of almost 9,000 and brought the numbers directly employed by multinationals here to an all-time high of 257,394. Some 128 (52 per cent ) of the new investments were in regional locations.

IDA Ireland also announced a new 2021-2024 strategy, targeting 800 investments and 50,000 new jobs. It will focus on growing the regional enterprise base, driving productivity and building a sustainable enterprise base while increasing the spill-over effects from FDI to SMEs, the agency said.

‘Remarkable’

“In the context of the Covid-19 global pandemic, FDI’s performance is remarkable,” Mr Shanahan said.

“It is encouraging that Ireland has been able to secure such a significant number (246) of investments and grow employment in 2020, a year of unprecedented disruption to global business and adverse impact on global economies,” he added.

The agency’s annual report said job losses in the multinational sector were up on previous years at 4.5 per cent while noting that some sectors proved more resilient than others.

“ Sectors such as life sciences and technology were much less affected and, in a number of cases, increased operations in response to demand for Covid-related products, mitigating job losses in other sectors,” Mr Shanahan said.

He said the bulk of the investments (67 per cent) came from North America, a larger contribution than in previous years.

“This was driven in part by our focus on existing companies and the strong existing base of US corporates and their investments in expansion, R&D and training activity in Ireland,” Mr Shanahan said.

The agency’s report shows IDA-backed multinationals here generated €15.1 billion in direct wages, up 11 per cent on the previous year.

Tánaiste and Minister for Enterprise, Trade and Employment Leo Varadkar said: “Despite a year of unprecedented challenges to our economy, these results show that foreign direct investment has been remarkably resilient.”

“FDI was central to Ireland’s recovery during the last recession and it will be crucial again as we rebuild after the pandemic,” he added.