NINE years on, the International Financial Services Centre (IFSC) at Dublin's docklands is a great success. Currently employing 3,200 people in more than 400 companies, IDA Ireland, the State agency responsible for marketing the centre overseas is confident that another 20 firms can be signed up by the end of the year, creating more employment for Irish graduates.
The 30 new companies announced this week join the growing number of banks, insurance firms, brokers and fund management companies opting to do business out of Dublin. The latest batch show the centre continues to attract blue chip firms, with groups such as the British Abbey National Building Society and Midland Bank, among the newcomers.
But those leading the drive to bring in new business to the IFSC are warning against complacency. Mr Brendan Logue, manager of IDA Ireland's financial services division, believes the centre is now at a "crucial stage" in its development and will require careful management if it is to realise its full potential.
Continued strong Government support for the IFSC is one of the key factors which could ensure that Ireland becomes a prestigious financial services centre on a pare with Switzerland and Singapore, he says.
At this stage in its development, Mr Logue says the Government must be prepared to bring the IFSC "centre stage" of its policy making. "If this is done, this industry has the potential to be bigger in terms of employment and tax revenues than the manufacturing sector," he says. But any sign of hesitancy could undermine the future of the whole project, he warns.
As it stands, the centre is a major contributor to annual tax revenues, bringing in close to £200 million a year, about 2 per cent of total corporation tax receipts. Last year revenues, which relate to the previous year's profits, fell because 1994 was a bad year for the financial sector. But this year, receipts should rise again. And the IDA argues that the centre could develop much further.
"The centre is still at an embryonic stage. We are doing now what Luxembourg - our main competitor - did in the 1960s," says Mr Logue. Issues affecting the centre, such as tax arrangements, legislation, property planning policy, and the negotiation of new tax treaties, he believes, should be at the top of the Government's agenda.
When the centre was launched in 1987, Mr Logue says financial institutions regarded the Dublin project as an "experiment". But now that most of the prestigious players in the industry have established operations here, he says the potential to encourage them to expand is enormous.
"Each company is a seed for something that could become a major project," he says. Once established in Ireland, Mr Logue says it is relatively easy for international companies to transfer other parts of its business to the centre.
In its bid to create more jobs at the centre, IDA Ireland is now turning its attention to 100 of the more than 400 companies approved so far, which it believes"could benefit from adding new areas to its' Irish business. "We will be mainly looking for them to move some of their services out of high cost centres, such as Germany and London, to Dublin," he says.
Building on its success in recent years in attracting international groups, such as express couriers UPS and white goods giant, Whirlpool, to establish European headquarters in Ireland, Mr Denis Molumby, manager of its international services division, says the same strategy can be applied to IFSC companies.
"Ireland is in a good position to capitalise on the greater integration of the European Union," he says. Offering a low cost base from which international corporations can centralise their European operations, Mr Molumby says the spin off in terms of job creation could be substantial.
He argues that IFSC companies should be looking to move many of their back office support services to the Dublin centre, where generous tax breaks and a highly skilled workforce are available.
"The complete range of administrative services, including specialist areas, such as legal services, qualify in the same way as financial services for a tax rate of to per cent in Dublin," Mr Molumby says.
Some IFSC companies, such as Chase Manhatten, have already incorporated European back office services within their Irish business, he says. Over the next couple of years, IDA Ireland's latest campaign could more than double the number of people employed in these areas in Ireland, he adds.
"One of the centre's greatest strengths is its relatively low cost. It has been estimated that companies can operate from Dublin at up to 30 per cent of the cost of a similar undertaking in Luxembourg," he says. The tax incentives, which offer approved companies a 10 per cent tax rate until the year 2005, are also important and will continue to be its greatest selling point, he adds.
Today just under half of the approved IFSC companies are based at the Dublin centre. The bigger projects, such as AIB, Ulster Bank, Morgan Grenfell and Chase Manhatten have taken up much of the available office space with other companies still waiting to move in as the development nears completion.
