Why bother investing in Ireland?

ei.sdraob

from irisheconomy blog a question we should all be thinking about.

I have been disappointed but not surprised by the lack of comment on Edgar Morgenroth’s blog about the threat to introduce a low rate of corporation tax in Northern Ireland.

We are all well used to IDA shibboleths about the Republic of Ireland’s advantages other than the low Corporate Tax rate. We are told about the modern infrastructure, the well educated labour force (sic), EU membership and the fact that the Republic of Ireland is English- speaking. Northern Ireland has all of these as well as a dramatically lower cost base: we’ve even stopped killing each other in large numbers.

The UK already has generous R&D incentives and intellectual property incentives are already trumped by other European countries such as the Netherlands. The Republic’s only remaining advantages may be its sovereign ability to skate close to the wind of tax haven status: relaxed rules on transfer pricing, absence of controlled foreign company laws, limited rules on thin capitalisation and its skill at negotiating double tax treaties.

Is that all the Republic has? Surely, I’ve missed something!

So what do fans of Mr and Mrs Merkel make of this?

edit: look at the love in their eyes

Nody

Because of Bono of course (even though he don't pay tax in Ireland)!

Permabear

This post has been deleted.

ardmacha

If I were CEO of a major multinational corporation, I wouldn't consider investing in Ireland. Poorly prepared monolingual graduates, high wage demands, high energy and transportation costs, laughable rents, an extremely fragile banking system, and many other factors would put me off right away.

Companies that invest in Ireland are profitable, that's why they come here. This investment did diminish in the boom period, but will increase now. This is because of course rents will be much less and a people won't have to pay these high rents or ridiculous house prices they will not be making such high wage demands. Property price declines may be a problem for those who overpaid for such property, but it is good for everyone else.

Cookie_Monster

Those disadvantages are offset by the CT advantage though Permabear for most large profitable companies, you can always import people to speak the required languages too.

Obvious there is a cross over point where high costs versus low CT and extraordinarily generous R&D credits outweigh each other but for large multinationals it's less of an issue, especially if they are routing EU or world transactions through us to avail of the CT rates.

If the north reduce CT to similar levels it'll be an interest time to see what happens. (Some) Companies can fairly easily move just over the border to avail of the low CT and lower costs but may have to deal with possible disadvantages of operating through GBP then, which may not suit if they are a predominantly EUR based company.

ei.sdraob

ardmacha wrote: »

Companies that invest in Ireland are profitable, that's why they come here. This investment did diminish in the boom period, but will increase now. This is because of course rents will be much less and a people won't have to pay these high rents or ridiculous house prices they will not be making such high wage demands. Property price declines may be a problem for those who overpaid for such property, but it is good for everyone else.

Ever ask why they are "profitable"?

Taxation is a cost and drag on business, right now all the economy has to offer are high costs.

Euroland

There are multiple reasons for investing in Ireland whether it is the 12.5% corporate tax or undervalued residential property, etc

aftermn

We are all investors, maybe not the type reffered to here, but most have bank accounts etc.
How much are you being paid for your money? If you have ever wondered on this then you are an investor.
Investors require a return on investment. They can get a small return from deposit accounts, slightly larger from term accounts. These are relatively safe. If you expect them to get into more risky investments, they will require a better return for the risk involved.
Ireland has been shown to be a hotbed of corruption. An investor, who is not on the inside track, can expect to lose money here. Given our recent history, one should not bother investing in Ireland.
When our legal, political and corporate environments are close to the moral measure of honesty and fairness, a different appraoch may be warranted, until then, avoid Ireland.

gonedrinking

Permabear wrote: »

This post had been deleted.

where would you invest then?

ei.sdraob

phosphate wrote: »

You people have no skills.

Yet somehow i managed to make profit year on year during this recession and having to pay dozens of thousands in corporation tax

to fund our glorious state and politicians who never do wrong and don't need to be questioned or held to account.

danbohan

Euroland wrote: »

There are multiple reasons for investing in Ireland whether it is the 12.5% corporate tax or undervalued residential property, etc

undervalued residential property,?



do pray tell where this is , i have seen nothing yet that makes me think we have good value in property for a country depending on the kindness of strangers /germans

Lockstep

Phosphate, I've had to delete your posts for personal attacks. Any more of this crap and you're banned.

Amhran Nua

danbohan wrote: »

depending on the kindness of strangers /germans

Depending on the greed of same, you mean. A loan is not a gift.

AlekSmart

I`ve just spent a week`s work where I was in and around Dublin`s O Connell St for several hours each evening.

On three of those evenings I and others were forced to cross the road to avoid violent clashes between emaciated substance abusing yound people,women included.

On Thursday evening,for example at least three incidents kicked-off between Parnell St and North Earl St,one of which outside the old Royal Dublin Hotel site was particularly violent in nature.

The frequency of this type of behaviour,sadly is increasing rapidly,as is the viciousness.

The fact that their mobile phones,jewellery and packets of cigarettes were being scattered around the Street appeared to be the biggest concern of the beligerent young ladies as they tore into each other screaming abuse at all and sundry.

To be blunt,I have little concern about what these people do to themselves,I am aware however,that virtually all of my PAYE,PRSI and USC deductions are going to provide substantial cash payments and other inducements to "them."

That is part of democracy,and I accept that,BUT I do not accept that our Government can continue to peddle some mallarkey about "Knowledge Based Economies" and "Highly Educated Young Population" whilst tolerating,nay,encouraging such savage displays along the Capital`s main street.

What was of greater interest to me was the reactions of a number of groups who were forced to stop to facilitate the combatants desires.

I accompanied one group of French Students to the Gresham Hotel foyer where they were to meet their leader with the intention of heading down along the Boardwalk past the Custom House and then to see the U2 building...as it was now 19:30 I advised them that some caution was required and perhaps a daylight visit would be more appropriate....

I don`t know whether the group did in fact head off on their walk,but I was`nt encouraged to see multiple flashing Blue Lights from the Butt Bridge area sometime later...

All in all,just another ordinary week in Dublin`s O Connell St with the continuing onward march of thuggery and anti-social savagery as our most obvious trait.....

I really don`t know how any administration can continue with this pretence of "Normality" when the daily lives of ordinary folk throws up an ever increasing litany of a country on the verge of Social Collapse.

Currently and historically,those who are of a productive work orientated bent are merely told they are so lucky to have that job whilst being actively prevented from availing of any benefits themselves for which they have contributed.

It is the economy of Insanity and it`s continuing prevalence as Government Policy is only serving to send our brighest and best abroad from where many will never return.

willielovesall

Geographically, is ireland not a good place to invest for american multi-nationals?

Does Ireland not have strong role in terms of software development and pharmaceutical industry? (I know this isn't the whole economy but its a start)

I do concede that Irelands education structure leaves a lot to be desired but what are the best ways to amend this? Should we moving our younger students towards a self-learning style or maybe setting higher standards in terms of grading?

ei.sdraob

willielovesall wrote: »

Geographically, is ireland not a good place to invest for american multi-nationals?

Does Ireland not have strong role in terms of software development and pharmaceutical industry? (I know this isn't the whole economy but its a start)

I do concede that Irelands education structure leaves a lot to be desired but what are the best ways to amend this? Should we moving our younger students towards a self-learning style or maybe setting higher standards in terms of grading?

Was watching a documentary last night as to how they are developing a commercial space industry on the Isle of Man of all the places, needless to say there are less taxes there too and its quite well positioned...
While we are farting about smart economy and low taxes various British territories are doing it...


edit: linkie and linkie2

AlekSmart

ei.sdraob wrote: »

Was watching a documentary last night as to how they are developing a commercial space industry on the Isle of Man of all the places, needless to say there are less taxes there too and its quite well positioned...
While we are farting about smart economy and low taxes various British territories are doing it...


edit: linkie and linkie2

And,we have (or had) a direct link from the North Wall !!!

Nolanger

Permabear wrote: »

This post had been deleted.

It's actually called 'feminisation of the education system'.

willielovesall

ei.sdraob wrote: »

Was watching a documentary last night as to how they are developing a commercial space industry on the Isle of Man of all the places, needless to say there are less taxes there too and its quite well positioned...
While we are farting about smart economy and low taxes various British territories are doing it...


edit: linkie and linkie2

Was just reading about the Isle of mann. It is definitely a tax haven for anyone wanting to invest in.

It begs the question due to the size of the Isle of Mann

Do you think we should give more power to the local government(in terms of local tax control and funding) to better implement the necessary infrastructure to facilitate growth and employment?

Mr McBoatface

IMO the value of the Irish workforce is being under estimated by some people. It very easy to knock our education levels which I admit are not great but we still deliver the goods. I've worked for some major American multinationals (Intel & Wyeth) and while working with them the Irish workforce delivered on saving and efficiency that where on even on the radar in the the sister sites of these companies.

Just a personal example(one of many) but way back in 2002 just after I started working with Intel I with a mere National Trade Certificate (Toolmaking) came up with an ingenious solution to a problem that caused maybe 800K $ loses in annual production worldwide. I proposed the solution while on training in a US site, the problem had been looked at by several different Engineers with all sorts of wonderful degrees and masters yet they could not find a solution. When the new process which I was being trained for started in Ireland there where alot more similar fixes and saving introduced by Intel's Irish workforce.

In Wyeth (as it was called when I worked for them) the Irish work forced implemented several efficiencies not even consider in other sites, from manufacturing through to QC and QA. Savings and efficiency drives are a way of life in multinationals and the savings that where introduced by the Irish where adopted by other sister sites and the Irish sites where seen as leaders and not followers. I believe we are better than we give ourselves credit for, one senior Intel manger I meet commented to we that the Irish workforce always exceeded the expectations they had of us.

ei.sdraob

willielovesall wrote: »

Do you think we should give more power to the local government(in terms of local tax control and funding) to better implement the necessary infrastructure to facilitate growth and employment?

Yeh more power to local councils is needed including taxation ( i and many others would not mind paying taxes locally at least you can see where your money is going),
most of irish politics is fairly local anyways

along with more power also need more transparency, its hard to be corrupt when eveything is on record for all to see.

It be interesting if "special economic zones" are setup and compete against each other.

Amhran Nua

willielovesall wrote: »

Do you think we should give more power to the local government(in terms of local tax control and funding) to better implement the necessary infrastructure to facilitate growth and employment?

Jesus no. Have you seen the circus that local council meetings entail? And I shudder to think of giving the parish pump any more fuel. We need to focus on a unified decision making process aimed at the national level, not more balkanisation.

ei.sdraob

Amhran Nua wrote: »

Jesus no. Have you seen the circus that local council meetings entail? And I shudder to think of giving the parish pump any more fuel. We need to focus on a unified decision making process aimed at the national level, not more balkanisation.

Switzerland is an example of a country that manages quite fine in this area.

willielovesall

All the money does seen to be directed at Dublin in terms of investing with our tax.

I think investment in Dublin has created a magnet which attracts everything to Dublin(workforce, students, businesses) therefore stifling development in the rest of the country!

Amhran Nua

ei.sdraob wrote: »

Switzerland is an example of a country that manages quite fine in this area.

Switzerland has a robust direct democracy system. If you had something similar here (at the local level only), I'd be a lot more in favour of it. I really don't want the mini mandarins and egomaniacs you can see at council meetings having the power to raise local taxes unchecked, it would be the start of a wave of corruption undreamed of.

And in this country that's saying something.

ei.sdraob

Amhran Nua wrote: »

Switzerland has a robust direct democracy system. If you had something similar here (at the local level only), I'd be a lot more in favour of it. I really don't want the mini mandarins and egomaniacs you can see at council meetings having the power to raise local taxes unchecked, it would be the start of a wave of corruption undreamed of.

And in this country that's saying something.

Like I said in my post more power to local government accompanies with more transparency and accountability, it is hard to be corrupt when everything is on display.
Centralised government suffers from same problems as the decentralised one when it comes to corruption for the very same reasons (as Moriarty has shown this week), and worse you create larger beuracracies.
Ive no problems with more direct democracy,in fact I think in an information technology age this could be implemented more easily.

But anyways thats going offtopic

Amhran Nua

ei.sdraob wrote: »

Ive no problems with more direct democracy,in fact I think in an information technology age this could be implemented more easily.

Yes, but you only want it on the local level, where its enlightened self interest works well. Nationally it's not a good idea - some cantions in Switzerland only gave women the vote in the 90s. That's the 1990s. California is a great example of a complete train wreck caused by direct democracy.

If we merged local authorities even across county lines, introduced a strong element of direct democracy there, and went with a national party list system, we'd probably have an optimal political system.

Euroland

danbohan wrote: »

undervalued residential property?

Yes, undervalued, if you compare it to other countries.

ei.sdraob

Euroland wrote: »

Yes, undervalued, if you compare it to other countries.

I think you need to travel a bit more

Euroland

ei.sdraob wrote: »

I think you need to travel a bit more

1) O, yes, I do.



2) Apparently someone just needs to get access to residential property prices and household income levels across the world. Once you have it, you would realize that our residential property now is undervalued.

ei.sdraob

please do entertain us by starting own separate thread

maninasia

Euroland wrote: »

1) O, yes, I do.



2) Apparently someone just needs to get access to residential property prices and household income levels across the world. Once you have it, you would realize that our residential property now is undervalued.

What about average levels of personal debt, Ireland's doing pretty well in that department, coming among first in the world. Still think houses are 'undervalued'?

Count Dooku

Euroland wrote: »

1) O, yes, I do.



2) Apparently someone just needs to get access to residential property prices and household income levels across the world. Once you have it, you would realize that our residential property now is undervalued.

you missed in your equation demand, which depends from number of new jobs created and supply(in our case oversupply)
sorry for off-topic

murphaph

Euroland wrote: »

Apparently someone just needs to get access to residential property prices and household income levels across the world. Once you have it, you would realize that our residential property now is undervalued.

...or more likely that our income levels are overvalued

gigino

danbohan wrote: »

undervalued residential property,?



do pray tell where this is , i have seen nothing yet that makes me think we have good value in property for a country depending on the kindness of strangers /germans

Leitrim for example. Look up daft.ie and you will find newly finished 2-bedroom apartments for 40 grand. Which, to put this amount of money in context in Ireland, is 7 grand less than average public sector wage. ( statistics for the private sector are harder to quantify / can be more complicated or open to question.)

Yes, definitely is undervalued residential property compared to wages

rumour

Permabear wrote: »

This post had been deleted.

I would think about my family and decide they can't even get a decent education there. That believe it or not is a major major issue.
If this aspect is not good the CEO will look elsewhere.

Euroland

murphaph wrote: »

...or more likely that our income levels are overvalued

1) Usually affordability of residential property is measured as the ratio of average property price to the average gross household income, and could be done on national, regional, or individual (property) basis. From one country to another this ratio usually varies between 2 and 40 years. Although pessimists usually say that 3 years is the only reasonable level one property should cost, in practice, in most of the countries this ratio for many decades remains between 4 to 20 years. So going back to Ireland, now (after collapse in residential property prices) you can find a lot of individual properties, which would be on a level of 1 to 3 average annual gross household incomes, and the average for the country now declined to 3.5 years, which in my view indicates that relatively to other countries in the world, our residential properties, after 50-60% decline in price, became undervalued.

2) According to CSO, average annual gross household income in Ireland in 2009 was 56,522 Euro

maninasia

Count Dooku mentioned 'over supply'. Something has no value unless there is a market for it. Large areas of the country have ghost estates that have essentially no long-term value. Just like the 40k apartment you mention in Leitrim. Maybe that is one of a complex, are the others going to be unoccupied and vandalised, will they put refugees in the other apartments? Whose going to pay for maintenance and upkeep of the whole complex? Can you get a job in Leitrim? How about property tax? Yes there are people who can pay 40k for this apartment but how many want to actually buy one?


Then using public sector wages...how solid is the public sector these days, as solid as the budget that pays for it right.

There is no single property market, just houses in varying states and size and varying locations. Useless to look at statistics that amalgamate everything into an average! Ireland had by any account the world's biggest property bubble. To put it into context, the bust, mainly caused by property speculation, will cost 190 billion Euro, equivalent to the cost for compensation and reconstruction for Japan's earthquake and tsunami!

Finally stop ignoring the problems of personal debt and access to credit. Although personally I think limiting credit is a good thing as it is the fuel to any speculative bubble.

maninasia

rumour wrote: »

I would think about my family and decide they can't even get a decent education there. That believe it or not is a major major issue.
If this aspect is not good the CEO will look elsewhere.

CEOs of large organisations will send their kids to top private schools on the company largesse, either in their host country or home country. That is not really a concern for them and their kids would probably take the curriculum of their home country, not the leaving certificate.

rumour

I agree Twhat you say is the most probable outcome. But it is a major issue, most CEO's on a personal level consider this first.
I agree about the leaving certificate. The few people I know are all slightly dubious about the leaving certificate so anecdotally I agree, alternative options in Ireland are extremely limited. Dublin has only one or two schools doing the international bac.
That leaves boarding school, and while it may offer a solution its a parental decision. Assuming that all CEO's are satisfied with this is a big assumption.

danbohan

Amhran Nua wrote: »

Depending on the greed of same, you mean. A loan is not a gift.

beggars cant be choosers !

ei.sdraob

gigino wrote: »

Leitrim for example. Look up daft.ie and you will find newly finished 2-bedroom apartments for 40 grand. Which, to put this amount of money in context in Ireland, is 7 grand less than average public sector wage.

How many public servants work in Leitrim? last I check decentralisation failed and many wanted stay in Dublin.

More importantly how much is a house on a floodplain worth? more a liability than an asset, I thought that lesson would be freesh in memory of people after floods.

danbohan

gigino wrote: »

Leitrim for example. Look up daft.ie and you will find newly finished 2-bedroom apartments for 40 grand. Which, to put this amount of money in context in Ireland, is 7 grand less than average public sector wage. ( statistics for the private sector are harder to quantify / can be more complicated or open to question.)

Yes, definitely is undervalued residential property compared to wages

yes it seems good value but ,it is in an unfinished estate , nobody can get mortgage on them probably , they cannot be rented so in effect they are valueless . apartments in carriicj on shannon that sold at 325k + are now selling for 90k , cheap ? , rent is 250-300 per month and falling if you can rent them annual rent x14 = 47k , still a ways to go

murphaph

danbohan wrote: »

yes it seems good value but ,it is in an unfinished estate , nobody can get mortgage on them probably , they cannot be rented so in effect they are valueless . apartments in carriicj on shannon that sold at 325k + are now selling for 90k , cheap ? , rent is 250-300 per month and falling if you can rent them annual rent x14 = 47k , still a ways to go

This is a better measure of property value than comparing it to household income, but owing to certain govt interference, the true value of Ireland's housing stock has not yet been reached. As you say, still a ways to go.

ei.sdraob

To point at an appartment in Leitrim in a ghost estate and come to conclusion that property in Ireland is "undervalued" is a failure of logic and strawman at worse

the last Daft report tells a different story > http://www.daft.ie/report/ronan-lyons-2010q4

Euroland

ei.sdraob wrote: »

To point at an appartment in Leitrim in a ghost estate and come to conclusion that property in Ireland is "undervalued" is a failure of logic and strawman at worse

the last Daft report tells a different story > http://www.daft.ie/report/ronan-lyons-2010q4

The opposite, this report (the numbers in it) actually suggest that Irish residential property has been undervalued already for some time.

Euroland

maninasia wrote: »

How about property tax?

What property tax?

ei.sdraob

Euroland wrote: »

The opposite, this report (the numbers in it) actually suggest that Irish residential property has been undervalued already for some time.

undervalued by what measure

Euroland

maninasia wrote: »

Ireland had by any account the world's biggest property bubble.

How about Australia and Norway then? The property prices over there almost twice above ours. How about Singapore or Hong Kong?

Euroland

ei.sdraob wrote: »

undervalued by what measure

On average at least by 10-20%, maybe more. On the individual basis it could be even more, and then you have to go to the details.

Euroland

danbohan wrote: »

yes it seems good value but ,it is in an unfinished estate , nobody can get mortgage on them probably , they cannot be rented so in effect they are valueless . apartments in carriicj on shannon that sold at 325k + are now selling for 90k , cheap ? , rent is 250-300 per month and falling if you can rent them annual rent x14 = 47k , still a ways to go

I’m not talking about that particular estate, I’m talking about overall picture, our residential properties are undervalued relatively to many other countries in the world.

As regards to the rent, relatively to many other countries in the world, our residential rents are very low (as a proportion of average household income).