Foreign investors pump EUR26bn into State

Figures detailing foreign direct investment in the Republic show that overseas interests pumped €26 billion into the State last year, but currency and equity changes hit the overall value of non-Irish-owned assets.

The Central Statistics Office (CSO) published the first of what will be an annual series of reports on foreign investment in Ireland yesterday. The figures show that total investment reached €25.9 billion in 2002. But growth in the total value of foreign investment in the Irish economy did not reflect this.

According to the CSO, the total value of foreign investment assets increased by less than €13 billion to €176 billion at the end of 2002 from €163.3 billion at the beginning of the year. Senior statistician, Mr John Fitzpatrick, blamed last year's volatile stock markets and changes in currency for the shortfall.

The level of investment in 2001 was €10.8 billion. During that year, just over €8 billion in US funds left the State. European and Japanese companies offset this with investments of €17.6 billion and €1.6 billion respectively.

The US funds that left the Republic in 2001 were mainly accounted for by loans from Irish subsidiaries of American interests to parents or other affiliates. Mr Fitzpatrick explained that companies based in Dublin's International Financial Services Centre (IFSC) were largely responsible for this.

The Netherlands appeared to be the biggest investor in the Irish economy last year, accounting for €10.7 billion of the €26 billion total, while the US contributed €7.9 billion. However, Mr Fitzpatrick told a press conference yesterday that the US was the biggest investor, but that a high proportion of the money was channelled through the Netherlands.

The CSO was unable to say how much money came this route, nor why US companies chose to invest here via the Netherlands. US investors also channel money ultimately destined for the Republic through other locations, including Bermuda and the Cayman Islands.

Outside the Netherlands, Germany was the biggest source of foreign investment in Europe in 2002, accounting for €3.4 billion. Belgium and Luxembourg were next with €3.2 billion and the UK came third with €2.5 billion. The Netherlands accounted for €60 billion of the €176 billion in assets held here, while the US accounted for €44 billion.

The figures show that the State is a profitable place in which to invest. Total profits generated by foreign investment were €31.7 billion last year, and reached €25 billion in 2001. The companies re-invested €16.5 billion in this country in 2002, and €10 billion the previous year. They repatriated €15.2 billion in the form of dividends last year.

On the other side of the coin, the value of Irish investments overseas dropped to €33 billion at the end of 2002 from €39 billion the previous year. The CSO also attributed this fall to conditions in the equity markets and to currency movements. More than €19.2 billion of total Irish overseas investment went to EU countries. Editorial comment, page 17