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| Export Performance and Competitiveness of the Irish Economy Central Bank of Ireland Quarterly Bulletin 3 2005 - - - It is foreign-owned firms that are driving Irish exports and most of them don't have or need a marketing function in Ireland. The IBEC four-point plan is only of relevance to a small number of Irish-owned firms |
IBEC, the Irish employers' group, on Monday launched a major report on trade with Asia with the Minister for Enterprise, Trade and Employment Micheál Martin. The report highlights that bureaucracy, customs delays and a lack of intellectual property protection are seen by business as significant obstacles to boosting trade with the region. The report “Opening Doors to Asia” called for a range of measures from government and the EU Commission to enable Irish companies to benefit from the enormous trade opportunities that exist.
Martin said he was delighted to launch the IBEC report, which advances the objectives of the Government’s Asia Strategy and will contribute to Irish companies achieving success in the expanding Asian markets.
It is important to note that the majority of firms involved are foreign owned ones. At an international level, for example Irish tech firms are small. One of the biggest IONA posted 2006 revenue of $77.8 million.
In the Celtic Tiger period, the successful Irish companies at an international level, have been CRH, the biggest materials supplier in the US, Europe's largest low-fares airline Ryanair and Denis O'Brien's Digicel, which operates in 22 markets and has more than 3,000 employees.
As a result of a survey of Irish-based companies, carried out by IBEC as part of the report a four point plan states:
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Improved information on Asian markets should be available
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new direct flights to the region are required
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technical regulations should be harmonised, and
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a strategic plan from government to tackle non-tariff barriers must be developed.
Speaking at the launch of the report IBEC Director of Trade Affairs Pat Ivory said: “There is substantial potential to increase Ireland’s level of trade with Asia. In addition to increasing sales of computer, pharmaceutical, food and drinks products, Ireland should also be targeting growth in new emerging sectors such as medical devices and financial services. If Ireland does not move to exploit these opportunities, the business will simply go elsewhere. The Asian economies are set for enormous growth over the coming years and IBEC will be working closely with business to enable them to benefit from this.
“Irish exports of goods and services to Asia are now valued at around €8.5 billion per annum but there is scope for increasing this above the €10 billion mark over the next two years. Over recent years the trade in services, including financial and computer services, have been over €2 billion. New opportunities are constantly emerging in these areas and Irish companies need to be able to take advantage of these,” said Ivory.
GDP growth of between 7% and 10% is particularly impressive in China, India, Vietnam, Hong Kong and Singapore. A further welcome development is signs of an economic recovery in Japan, which continues to be Ireland’s major trading partner in Asia, with GDP growth of 2.7% in 2006 and the IMF forecasting growth of over 2% for 2007.
Welcoming the IBEC study Gerry Murphy, Director, International Sales and Partnering at Enterprise Ireland said: “Ireland’s economic future will more and more depend on how we fare in the emerging growth markets of Asia. This report will make a valuable contribution to understanding where the opportunities are and the barriers and challenges that Irish companies face in Asian markets generally.”
Asia, with 3.7 billion inhabitants or more than half the world’s population and a combined gross domestic product (GDP) of over €7,900 billion, offers enormous potential for trade in Irish goods and services. Real GDP growth rates in Asia are also very high from an international perspective and generally well above European levels.
Irish exports of services to Asia have increased to over €2 billion in the last couple of years, Japan accounts for around 25% of Irish services export to Asia, with China (including Hong Kong) accounting for 9%. This growth in services exports is particularly important given the lower current level of exports of goods (€6.5 billion) to Asia when compared to earlier in the decade. Japan still accounts for around 35% of Irish goods exported to Asia, with strong growth in exports to China (including Hong Kong) increasing its share to around 22%.
Finfacts Comment: A Central Bank of Ireland report noted in 2005 that Irish Export growth has slowed since 2000, partly as a result of weaker international demand conditions and the slowdown in the global ICT sector but also partly due to the weaker competitiveness position of the Irish economy. The latter reflects the rising cost base in the domestic economy, a steady increase in consumer prices relative to our main trading partners and the stronger value of the euro in recent years.
Foreign-owned companies were responsible for 92% of Irish exports in 2006. Basically, success or failure in Asia depends on multinationals with operations in Ireland and Irish policymakers have little opportunity to influence the trend.
The IBEC report for example notes that exports to Malaysia are mainly in the machinery and transport equipment sector, which have fallen substantially in the most recent period from 2003 – 2005. Exports in the Chemical and related products sector have increased between periods from €8 million in 2000 – 2002 to over €25 million in the period 2003 – 2005.
A change in the supply chain from Intel, Ireland's biggest industrial employer, could for example have resulted in a change in the trend in exports of machinery. Similarly in relation to chemical exports. The changes in both sectors may well have just reflected changes in two global companies.
