Invest Northern Ireland, which comes into force in April, is concentrating on attracting inward investment to the region. Francess McDonnell reports on a proposal that could transform Northern Ireland in investors' eyes.
Inward investor visits to Northern Ireland are at an all-time low. The combination of a global economic slowdown and a faltering US investor market, still troubled by September 11th, are having a devastating impact on the North's ability to persuade corporations even to consider site visits.
The main source of new inward investment in Northern Ireland has traditionally been from North America although in the past five years there has been a steady increase in the number of new investment projects coming from Europe and the Republic.
In an increasingly competitive environment, Northern Ireland has to fight its corner to stay on the investment radar.
It may be a cost-effective location both in terms of property and people but there is one hurdle for investors that Northern Ireland can no longer afford to disguise with generous incentives - the taxation issue.
During the past two years, the North won record new levels of inward investment. Latest Government statistics show that during 2000/2001 it secured 16 projects which promised to create more than 3,000 jobs and more than £48 million sterling (€78.4 million) in total investment. But a question mark hangs over a substantial number of these projects. Some are unlikely to come onstream in their original timeframe and any further deterioration in the global economy could see some of them postponed indefinitely.
According to business consultants, PricewaterhouseCoopers, the Northern Ireland economy is currently growing at half the rate required to provide jobs to match its expanding population.
PwC estimates that the North is only half way towards creating the 13,000 net new jobs per annum that are required to satisfy both a growing population and to provide jobs for those people who are currently unemployed.
This means that jobs created by new inward investors will be a vital component of the Northern Ireland economy in the future.
The challenge that now faces Invest Northern Ireland is how to best persuade inward investors to locate in the North. According to Mr Lochlainn Quinn, chairman of Allied Irish Banks, the first step is to persuade companies to visit the region. "Once people see Northern Ireland for themselves it changes their perceptions. The problem is senior executives are often too busy to go on trade visits so what Northern Ireland needs to do is use its natural assets, such as its golf courses, to initially sell the region."
He also believes that tax rates are an important consideration in any region. It is a belief shared by a discreet group of business people in Northern Ireland who have come together to set up a think tank that is known locally as the Millford Group.
These unidentified business people believe the North could improve its chances of competing against the Republic for new investment by offering potential investors more competitive tax rates.
Although the levels of corporation tax in Northern Ireland at 30 per cent are among the lowest in Europe, they do not come close to the Republic which will offer investors a uniform rate of 12.5 per cent from next year. The Millford Group believes that Northern Ireland should argue its case to create a special tax regime that would enable companies registered in the North to keep more of the profits they make in Northern Ireland.
The group is now putting together a proposal document that it claims will suggest new fiscal incentives that could put the North on an equal footing with the South for the first time as regards corporation tax rates.
