Brian Lenihan
The resilience of our financial services sector in this challenging environment is evidence of the sustainability of the business being done here and the quality of the staff employed in the sector.
The international nature of the Centre means it is not directly impacted by the domestic economic downturn. But it has benefitted from our response to this crisis. The measures Fianna Fail has taken in government to restore order to the public finances; to regain competitiveness and to stabilise our banking system have directly benefitted the IFSC.
Our unit labour costs have fallen significantly. The European Commission is now forecasting that wage levels are coming into line with the rest of the euro area. This, together with the downward adjustment in other costs such as energy and rental charges has given our financial services a competitive advantage resulting in increased market share. Most recent data show a strong export performance by the financial services sector which represents one fifth of all services exports.
The recent Financial Services Ireland Report shows that as the IFSC approaches its 25th anniversary, it employs almost 33,000 people, constitutes 7.4 p.c. of GDP and last year contributed €2.1 billion to the Exchequer.
Significant opportunities have arisen for this sector as the international financial services industry restructures itself around the world after the global financial crisis. The Government has taken a number of steps to ensure Ireland is well positioned to take advantage of those opportunities. In particular, the 2010 Finance Act has been welcomed by IFSC companies as the most significant set of positive measures to have been introduced in a decade. It contained a number of legislative changes to strengthen the competitive position of the Irish funds industry to ensure we remain as one of the leading domiciles of choice for international investment funds.
The robust and efficient regulatory and tax environment we have created in this country has been crucial in attracting more than 850 fund promoters from over 50 countries to the IFSC. Ireland has unrivalled expertise in the administration of sophisticated investment products and is benefitting from the trend towards greater regulation and transparency.
The 2010 Act also contained measures to enable us to tap into the growing market of Islamic Finance, an industry that in 2007 was estimated to be worth over $700 billion and is estimated to be growing at 10 p.c. per annum. The tax treatment of conventional finance transactions now applies to Islamic financial products.
Over the past number of years Ireland has emerged as a leading location for the headquarters of insurance and reinsurance companies. Many of the leading names have substantial operations here, the most recent arrival being Zurich.
These companies are attracted by our membership of the EU, our low rate of corporation tax which is a cornerstone of our industrial policy, and by the quality of our work force in this area.
Another attraction for these companies is our stable regulatory environment which has evolved as a risk based regulatory model, which, while having an emphasis on risk mitigation, also seeks to apply an appropriate, proportionate and balanced level of regulation and supervision. Our low rate of corporation tax and general pro- business tax environment is also of crucial importance.
We have also significantly expanded our network of double taxation agreements which are critical pieces of fiscal infrastructure for developing bilateral trading and investment opportunities. We now have 60 Double Tax Treaties in place.
The most recent IFSC initiative undertaken by government, and announced by the Taoiseach is the provision of €6.8 million in seed capital over three years to develop the Green financial sector. There are considerable opportunities globally in green finance, carbon management and the growth of the green economy. This initiative will help to maintain the competitive advantage of the IFSC.
Green financial services have the potential to create at least 7,000 highly-skilled jobs over the next 5 years. Fianna Fail will ensure that Ireland has a pivotal role to play in what has been described as the most important market of the 21st century.
Fianna Fail in government supported the industry’s appointment of former Taoiseach, John Bruton to promote the IFSC in key global markets. We will continue to pro-actively market the IFSC and we will create a single body to act as an IFSC promotion board.
We will strengthen the current Clearing House Group to create a strong government/industry partnership body. We will continue to ensure that the right policies are in place to attract IFSC personnel with key skill sets to Ireland. We will ensure the competitiveness of the existing IFSC is preserved and supported by strong governance structures.
A Fianna Fail government established the IFSC a quarter of a century ago. Fianna Fail will continue in the years ahead to support this important sector which will play a central role in the future of our economy.