Ireland’s low corporate tax rate of 12.5 per cent remains the single most powerful influencing factor when it comes to attracting foreign direct investment (FDI), according to a new survey of Irish chief executives.
The Pulse survey of 220 chief executives of Irish-based firms by PricewaterhouseCoopers (PwC) also found just 3 per cent believe the outlook for Irish business in 2009 is "favourable".
This compares to a reading of 74 per cent in a similar survey in 2007. Chief executives of multinational companies were slightly more optimistic than their counterparts in indigenous firms.
The main complaint among the CEOs - 70 per cent of which worked for multinationals – was the cost of doing business in Ireland with 84 per cent of respondents identifying this as their main worry.
The areas of most concern were wages, telecoms and transport charges.
Some 81 per cent were unhappy with labour costs, up 4 percentage points from 2008.
As a result around three-quarters of chief executives said they expect to cut costs or hold them at 2008 levels this year.
To combat rising costs 86 per cent of chief executives plan to complete business reviews in response to the economic downturn with 75 per cent intending to restructure their organisation. Six out of ten CEOs said they plan to cut jobs this year.
Just under a third (28 per cent) of chief executives said they would sell assets this year.
The two areas hardest hit by the credit crisis are investment plans and access to capital markets, the survey noted.
While 88 per cent of chief executives believes Ireland’s corporate tax regime makes it attractive, just a third (32 per cent) said they are considering additional investment here.
To improve the State’s attractiveness to foreign direct investment half the survey respondents said the Government should introduce more favourable intellectual property tax rules.
