I noticed a few articles today lauding Ireland’s place as an attractor of Foreign Direct Investment but what I wonder about that is whether that FDI is just corporate profits being run into the IFSC and back out again to the Netherlands or Bermuda where it finally surfaces in jurisdictions with no corporation tax payable.
Our Corporation Tax earnings should be much higher and spiking every time true FDI comes into the country but I don’t see that anywhere so wonder whether Ireland is more of a kind of bonded warehouse for corporate cash flows rather than actually being a true attractor of investment which produces income for the state.
Admittedly back office jobs in units set up so that foreign corporations can take advantage of the ‘double Irish sandwich’ tax transactions are there- but they are minimal in relation to what we need and what is suggested by the official FDI figures.
I don’t think we should be dependent on our tax system and the international imbalances in national tax systems that corporations can manipulate in their favour. Sooner or later we may lose the ability to even attract corporate cash flows even on a warehousing jaunt and we’ll be left again with people on the dole as those jobs can disappear in weeks if the financial winds change.
I’m uneasy about the short term nature of many Irish jobs and wish we’d do a bit more deep breath analysis of what the country has in the way of its many advantages and look more for the creation of indigenous industry that can develop with the changing international business environment- for example the carbon credit market- why do we need foreign hedge funds to get in between Ireland and the profit available from that emerging market? If Coillte is a natural asset that underpins carbon credit markets why do we have to employ a foreign middleman and can we not balance our natural assets with the need to deliver national income ourselves?
The numbers don’t change because a foreign hedge fund is interested- why give their investors money that should be flowing into the national coffers and providing jobs off the back of emerging new trends that Ireland can take advantage of instead of these hedge funds removing the profit from the country?
We have the knowledge, the raw material, we just need to assess what we’ve got in a practical way and supply what the international markets want and we don’t need foreign middle men taking a cut.
Here is an example of a natural market for Ireland that is vastly underutilised. Salmon farming is huge and getting bigger. There is a problem in the salmon farming market around the world though where intensive farming breeds disease and attrition rates are up to 15% where salmon don’t have the room to grow naturally.
We’ve got the perfect conditions for high value ‘wild’ salmon off our shores and in our rivers. We can do salmon farming with much lower attrition rates if we aim for high quality and ‘free range’ style salmon farming. Irish food has a good reputation- and just look at this article that appeared on the BBC website the other day;
‘China has leapt into top spot in the Far East for Scottish salmon exports – just six months after it allowed seafood to be sent directly from Scotland for the first time.
Data from HM Revenue and Customs revealed 2,347 tonnes of salmon were exported to the world’s most populous nation in the first half of 2011.
The Far East total for the period was 3,036 tonnes, worth £16m.
China is now the fifth largest export destination for Scottish salmon. ‘
It appears the Chinese are mad for salmon. There are 300 million Chinese in their emerging ‘consumer’ class or middle class or whatever you want to call it. Ireland should be ready to supply that market with a high value export, clean and of top quality in order to beat the intensive farmers.
For all we know we could be sitting on the natural conditions for a ‘caviar’ style export into the emerging consumer market in China. That is Klondyke territory.
Captain Con O’Sullivan 20.10.2011