A RETURN to export-led growth is the answer to the challenges facing Ireland, the Joint Oireachtas Committee on European Affairs heard yesterday.

“More indigenous enterprises than ever . . . are regularly exporting to international markets,” Frank Ryan, chief executive of Enterprise Ireland, told the committee. “In 2008 Irish exporters grew their exports even in a downturn.”

Many thousands of small and medium enterprises (SMEs) around the country are still managing to export goods and services because they are “well advanced on a transition to a new Irish economy based on skills and innovation”, Mr Ryan said.

The core issue for SMEs is access to capital, he said. As the administrator of the EU-approved Enterprise Stabilisation Fund announced in the Budget, Enterprise Ireland will ensure that this €100 million facility is aimed at “viable but vulnerable exporting companies”.

IDA executive director Denis Molumby pointed out that the foreign direct investment (FDI) sector accounts for 60 per cent of Ireland’s exports. “The Single European Market has been, and continues to be, a crucial factor for attracting FDI,” he said.

The IDA believes that foreign investment will continue to flow into Ireland this year despite difficulties presented by declining competitiveness.

“It is hugely important that we recover that competitiveness, but we believe that there is some basis to be guardedly optimistic,” Mr Molumby said.

In response to questioning from committee members that some of the ESB’s competitors are offering cheaper electricity rates, executive director of the company’s customer supply services Bríd Horan conceded that 150,000 ESB customers have switched to competing providers in order to avail of discounted prices.

However, she explained that price disparity in the market is because the ESB is obliged by regulation to provide fixed-tariff rates to customers. In order to do so, the company enters into agreements to buy wholesale electricity at auctions.

The ESB is locked into rates agreed during the middle of 2008 when energy prices were at record highs. “Other competitors . . . did not buy at that time, and can buy at present fuel prices,” she explained. “We look forward to the time when our tariffs will not be regulated and we will be able to compete freely.”