Forfás, the national advisory body on enterprise and science, today commented that while 2009 was an intensely challenging year for the enterprise sector and we have not yet fully turned the corner to recovery, there are tentative signs of international economic improvement which will help Ireland in its recovery. 

To move towards recovery and growth we must focus on our significant strengths and the solid enterprise foundations that have been built. We must also prioritise actions that will ensure that our enterprise environment provides businesses in Ireland with the very best opportunities to compete globally.

Jane Williams, Chief Executive, Forfás commented, “We will continue to face steep challenges in 2010.  Hard though the challenge will be, there will be opportunities for Ireland’s enterprises and for new investment.  We have worked through the most challenging phase of the current crisis. We now need to take important decisions towards recovery and growth, and implement them as soon as possible.”

The underlying factors which have helped Ireland to attract some of the world’s leading companies and to build successful Irish businesses remain strong. These companies provide a strong base upon which to build and innovate to develop the next era of Irish enterprise. Ireland has an attractive fiscal and regulatory environment in which to do business. We have a highly educated workforce and a significant pool of skilled graduates. There have been significant infrastructural advances over the past decade. However, there are opportunities which, if taken, could expedite our economic recovery including: 

• -stabilisation internationally, with most of our key trading partners emerging from recession;
• -improvements in energy, labour and cost competitiveness;
• -greater availability of skills;
• -the relatively resilient performance of our exporting sector in difficult international markets;
• -decisive actions taken in Budget 2010 towards fiscal stability; and
• -the acceptance of the Lisbon Treaty.

Jane Williams commented “Enterprises are the engine of every economy.  We rely on the successes of innovators, entrepreneurs, ambitious managers and employees for our economic success and prosperity. Government has responded decisively to the challenge of restoring fiscal stability and our international reputation; has committed resources to assist enterprises through this difficult period with the Department of Enterprise, Trade and Employment’s new measures to sustain jobs; and through the work of the enterprise development agencies.  Enterprise has responded to the environment in which they have to compete by restructuring and consolidating.”

“Our growth is in large part contingent on external factors over which we have no control, such as continued international recovery. However, there are also factors that are within our control. We must focus our efforts on these - to address barriers to competition and trade, enhance productivity and innovation and proactively seek out and exploit opportunities.  If we compare our current position to that of the ‘90s, we are stronger now in many areas of importance to enterprise success including an improved infrastructure and innovation and research performance.  We also have an acknowledged strength in manufacturing and internationally trading services sectors and in our education and skills. We are well prepared to take advantage of opportunities and the upturn in international trade and investment.  This is not to imply in any way that recovery and growing jobs will be easy. We may experience a period of jobless growth during 2010 as firms continue necessary restructuring, cost cutting and productivity gains to survive,” said Williams.

Diversifying Trade and Investment

Ireland’s export performance has been comparatively resilient during the recent global recession. A return to growth in our main trading partners, if accompanied by a sustained improvement in our own competitiveness, should present opportunities for further export growth in existing markets but more importantly to exploit the potential of emerging and high-growth markets. In addition, to date Ireland has not fully realised the potential of our membership of the euro zone and EU Single Market for diversifying trade from the UK and for attracting investment from high-growth new and emerging markets.

Forfás is currently working with the Department of Enterprise, Trade and Employment on a new Trade, Investment and Tourism strategy for Ireland, which will set out how best we can proactively develop relationships with new and emerging markets where there are significant opportunities for Ireland.

Growth Sectors and Entrepreneurship

There has been a forced acceleration in the restructuring of the Irish economy.  This has resulted in major job losses and a rise in unemployment.  Ireland needs to take a focused approach and concentrate on areas and sectors where we already have strengths such as life sciences, food, ICTs, medical technologies and international services and also on new growth areas where Ireland has relevant underpinning skills and research capabilities. As an example, the Forfás Report of the Higher Level Group on Green Enterprise launched in December 2009 provides a roadmap for harnessing the full potential of exports of environmental goods and services.

Ireland is one of the most entrepreneurial countries in the world and never has this spirit been more needed.  We must continue to work with our enterprises and entrepreneurs to understand their changing requirements and ensure that the business environment that Ireland provides is one in which they can thrive.

Innovation

Greater innovation will be key to sustainable growth over the coming years.  Innovation has no boundaries - it can come from customers, suppliers, competitors and employees as well as the research institutes and it can apply to all aspects of a business – products, services, processes and workplace structures.  Irish enterprises are facing very testing times and need to be open to all types and sources of innovation.

“Building on our current strengths and with prioritisation and focus on areas such as strategic international partnering will enable us to build the type of sustainable and competitive economy that will deliver growth in jobs and shared prosperity, there are however areas of our enterprise environment that we need to address to ensure that our enterprises and entrepreneurs can compete successfully for opportunities,” continued Williams.

Enterprise Environment - Actions

Forfás will continue to provide evidence based analysis to identify opportunities and issues and provide robust advice to the Department of Enterprise, Trade and Employment.  Forfás in 2010 will focus on a range of issues of greatest importance to enterprise and which will include:

Access to Credit and Finance

Lack of credit availability remains a critical issue for enterprise throughout the economy, hampering exporters and domestic activity. Recent restrained lending patterns are unacceptable given the significant State support for the banking system. We need to get credit flowing again to new enterprises with potential and existing viable enterprises.  Another critical action will be the provision of a wider range of trade finance products for exporters.

Skills and Emerging Sectors

Steps have already been taken by Government to help maintain employment and to address the reskilling needs of the recently unemployed, including an additional €20 million to fund an open call for proposals targeting the low skilled and those recently unemployed in declining sectors, particularly the fall-off in construction related activity where those jobs will not return. The emergence and growth of other sectors will be needed to replace jobs for those unemployed and these new and growing sectors may have very different skills requirements. Investment must be focused on ensuring that skills being developed match the needs of current and future enterprise and employment activation measures aimed at the unemployed should support skills development for sectors with job growth potential. The accelerated pace of change across all sectors and activities means that at the same time, those in employment also need to ensure that their skills are continuously developed and enhanced. Management skills development, in particular in SMEs, will be essential to driving the internationalisation and productivity of our enterprises and growing employment.

Competitiveness

There have been cyclical improvements in our cost competitiveness over the last year, with costs of energy, labour and property reducing.  More broadly based structural change is needed to restore our competitiveness in international markets.  This is critical to protect our attractiveness as a location from which to do business and is fundamental to stemming the rise in unemployment. 

Recent productivity growth has also been strong, although in part due to reductions in numbers employed. We need to boost productivity in all areas of the economy, private and public including through ensuring open competitive markets and eliminating restrictive practice that hamper competition and that are detrimental to consumer interests. This applies to pay (in line with our international offering of skills, enterprise base and infrastructure) and other costs in legal and other professional services, local authority charges, utilities and waste and insurance costs which remain markedly above those in competitor locations.  Restoring cost competitiveness is a critical step in the protection of our attractiveness as a location from which to do business.

Investing in Broadband Telecoms

As highlighted in the recent Forfás broadband benchmarking report, we continue to lag behind other comparable countries by at least 3 to 5 years in the roll-out of the infrastructure capable of providing access to high speed next generation broadband (NGN). High speed access is essential to underpinning entrepreneurship, innovation and regional competitiveness. Although we have made significant progress in improving levels of broadband coverage and take-up in the last two years, for the development of the Smart Economy we need advanced broadband services, comparable to those available in competitor countries as a matter of urgency. Forfás will continue to work with relevant stakeholders in 2010 on the regulatory and investment actions needed to ensure Ireland can catch-up.  

Research and Development

Ensuring a return from the significant investment in research is a continued priority. While innovation can stem from many sources, Ireland has invested heavily in developing  R&D led innovation through its Strategy for Science, Technology and Innovation. Ensuring that the right supports exist to support commercialisation and translation of this research into economic value remains a key priority. It is also timely to reassess the areas of priority investment, which Forfás will to progress with other stakeholders in 2010 to ensure investments are oriented to the areas of greatest relevance to Ireland’s future well-being.