INSIDE THE WORLD OF BUSINESS
India offers whole ocean of opportunities for Irish firms
IRELAND DID €1 billion worth of trade with India in 2009 but over three times as much business with China in the same year. When you consider the cultural similarities between Ireland and India – not least the fact that Irish missionaries helped establish the Indian education system – that’s a puzzling anomaly.
The largest opportunity for Irish companies is in services, something not being reflected in the current trade statistics according to Ireland’s ambassador to India, Ken Thompson.
Our man in Delhi takes issue with recent comments from John Whelan, head of the Irish Exporters’ Association, who said Ireland’s exports to India have done very poorly given the huge efforts expanded on building trade links.
Speaking to a group of Irish business people in Mumbai as part of Ernst & Young’s Entrepreneur of the Year competition, Mr Thompson cited a range of areas – from architectural services to providing graphics for scientific journals – which Irish firms are successfully carrying out in India.
“Let’s not have this hang-up about back-office operations. There are Indian companies with back-office operations in the United States. And there are Indian companies with back-office operations in Ireland. So let’s start thinking out of these silos and start thinking about developing the relationship in a multiplicity of ways because that’s how business works,” he said.
India is still a country of contrasts. The middle classes are set to swell to about 400 million in the next decade but a similar number of citizens can’t afford to buy bottled water.
But the business opportunities will be significant as all boats start to rise. The pilot project to admit Indians who have British visas to Ireland will strengthen economic links. Hopefully, it marks just the first stage in a deepening of business relationships.
Age-old issue to fore
THE OUTLOOK for pension funds is unlikely to get any better under proposals outlined in a consultation document on reform of the funding standard for retirement savings, according to a conference this week.
The Mercer conference noted that the two main options under consideration would increase fund liabilities by 10 per cent and 50 per cent respectively, at a time when funds are already struggling with solvency issues.
The measures, which apply to more traditional final salary or defined benefit schemes in the private sector, have been circulated by an implementation group formed of public servants.
Michael Walsh, leader of Mercer’s retirement, risk and finance business, told the conference that apart from increased liabilities, schemes would have less time to get their house in order if they ran into trouble. As it stands, the regulator has had to extend recovery times simply to allow schemes survive.
If the most demanding option was implemented, defined benefit pension schemes would essentially face the same capital requirements as commercial insurance companies, Walsh noted. Very few employers could afford to fund pensions to this standard, he said, and therefore most of these schemes would probably wind up if this option were implemented.
Even a less drastic increase in the funding standard is likely to result in defined benefit pension schemes being modified and wound up at a much faster pace. Closure or significant restructuring may be on the cards for many, if not most, schemes.
Meanwhile, those with pension funds now deemed outsized by the Government were ensuring their savings were not exposed to new tax rules.
By a deadline on Tuesday, 1,200 people registered with revenue for personal pension thresholds in respect of funds in excess of €2.3 million.
It’s a not insignificant number but it is well shy of the 6,000 or so estimate of those who would be affected by the measure when it was first announced.
Of course, any move by the Government to proceed with a significantly more radical reduction of pension ceilings would see a considerable number of people in a similar position.
Rate talk raises eyebrows
IS TAOISEACH Enda Kenny addressing the wrong audience?
The Government made great play this week of giving up on efforts to secure the reduction in interest rates on our bailout loans to which we believe we are entitled in the face of continued intransigence from some of our European partners.
Together with Minister for Finance Michael Noonan, he made great play of the fact that the money gained would not come close to offsetting the likely cost being demanded.
The rhetoric was directed at a domestic audience to show strength in the face of adversity and fudge the scale of the Government U-turn on its confident pre-election pledges.
As it turns out, our European partners have a very different view of events. Even as they tackled the prospect of a Greek default, senior European sources expressed much surprise at the Government’s perception of hardening attitudes to our plight.
Pointedly, it was noted that Enda Kenny and his most senior ministers had been strangely inactive in engaging directly with key European constituencies to find a workable solution to the current impasse.
NEXT WEEK:
Bank of Ireland will hold its annual meeting next week, which will be enlivened by the resignation of several long-standing directors and questions from shareholders about the prospects for the banks debt for equity/cash exercise and subsequent rights issue.
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