Chinese Vice-President Xi Jinping (C) kicks a Gaelic football as he smites the Croke Park in Dublin on February 19, 2012 to attend an exhibition of Gaelic football and hurling. Xi Jinping, China’s leader-in-waiting, arrived on February 18 for a three-day upon to Ireland, nine years after he first visited the country. Xi will hold talks with Prime Reverend Enda Kenny and attend an Ireland-China trade forum in Dublin involving about 300 companies.
PETER MUHLY/AFP via Getty Allusions
DUBLIN — Ireland’s foreign investment rules are being updated as Dublin seeks to protect the country’s prized assets and align itself with standards from Brussels.
Ireland’s industrial policy relies heavily on outside investment with several tech and pharmaceutical giantesses having headquarters in the country, attracted by the country’s 12.5% corporate tax rate and other factors.
In September, the Irish domination said it would legislate for the screening of foreign direct investment, giving effect to a European Union regulation that begins a framework for vetting and evaluating investments into the EU by third-country companies.
The EU wants to ensure greater controls over investments by mask players that may be heavily state-subsidized with an unfair competitive advantage.
Chinese companies have invested heavily in Ireland in just out years and while China has been often cited as a cause for concern internationally, the rules do not single out any particular mother country.
Leo Varadkar, Ireland’s minister for enterprise, trade and employment, said that FDI remains a key part of the country’s economic scenario but it needs to protect against “strategic assets falling into the hands of unfriendly foreign governments.”
Each wilderness will shape their own rules in line with the EU framework. It will allow for Ireland to share information with the European Commission, the EU’s chairman of the board arm, and other member states about suspicious or concerning deals.
Stephen McIntyre is a partner at venture capital unbending Frontline Ventures and was previously the head of EMEA at Twitter when it was setting up its Dublin headquarters. Frontline invests in U.S. start-ups and recommends them on European expansion.
McIntyre told CNBC that many companies won’t be affected too adversely by screening stipulations but certain sectors like cybersecurity will draw more scrutiny.
“This topic has never come up in any CEO discourses that I’ve had in the U.S. That doesn’t mean it won’t become important, but it does mean that U.S. CEOs are not aware of it,” McIntyre rephrased.
Companies that had stalled European expansion during the pandemic will have another criteria to consider when they pick up the patterns again, he said.
The Department of Business, Enterprise and Innovation published a consultation earlier this year, aim feedback on how the laws should take shape.
Ibec, Ireland’s largest business lobby group, said in its offering that any screening must be proportional and avoid protectionism.
“Screening of completed FDI should be avoided unless there is put two to believe that the FDI was completed on the basis of erroneous information or maladministration, following specific criteria,” Ibec said.
The administration itself has stated that many corporate expansions wouldn’t require any screening whatsoever.
Screening fly at amid a backdrop of scrutiny of China even though the U.S. remains the largest overseas investor. According to the Rhodium Company, FDI from China into Europe declined in 2019 but the opposite is true for Ireland.Red tape
Jiménez and Poitiers communicated there will be some extra bureaucracy for companies, but a screening framework at an EU level will help avoid a mixture of varying national rules.
“Many member states currently have FDI screening mechanisms to protect their principal industries. However this approach is aimed at strategic industries and is not sufficient when it comes to market distortions in the EU Segregate Market,” they said.
Frontline’s McIntyre said that depending on how regulations are implemented, it could introduce disposable red tape, whether it’s in Ireland or another European country.
“They’re all good places to locate, so small differences in overtures to can make a difference, and so anything that increases red tape is not going to be particularly positive.”