“Ireland has ‘amber lights’ on infrastructure and we need to put the foot down”

IDA Chair Feargal O’Rourke, FCA, talks to Accountancy Ireland about the inward investment agency’s plans and priorities at a “critical juncture” in Ireland’s FDI journey

Feargal O’Rourke, FCA, assumed the role of Chair of IDA Ireland in January 2024 at a significant time for the inward investment agency, which celebrates its 75th anniversary this year – and, he says, a “critical juncture” in Ireland’s foreign direct investment (FDI) journey.

O’Rourke joined the board of IDA Ireland after stepping down as Managing Partner of PwC Ireland in October 2023 following a storied 37-year career with the firm. In his new role, working alongside IDA Ireland Chief Executive Michael Lohan, time is, he says, “of the essence.”

“The one thing I am always paranoid about is complacency, and I think you really do need to have a paranoia about that,” O’Rourke tells Accountancy Ireland. 

“Right now, I think Ireland has ‘amber lights’ on infrastructure and we need to put the foot down. We need to invest in more housing. We need to invest in the grid. We need to invest in offshore energy. 

“My biggest concern is speed. There are plans in place, but I constantly ask myself, ‘Are we moving fast enough? Can we move faster?’

“I think there is a broad consensus emerging that infrastructure is moving up our list of priorities. 

“I take the view that capital spend on infrastructure is an investment. It is not an outflow of money. Deferring a project is a cost. It is not a saving because we will have to do it at some point, and it may cost more then.”

New five-year strategy

The single biggest task for IDA Ireland as an organisation currently is finalising a new five-year strategy, which will run from 2025 to 2029, O’Rourke says. 

“We are doing this against the backdrop of significant geopolitical uncertainty. There is a more muted pace of growth in the global economy and more active industrial policy from some competitor nations,” he says.

“There is also the challenge of climate change and the opportunity of the green transition, companies globally grappling with the next step on their diverse digitalisation journeys and, of course, the revolution that is taking place in artificial intelligence.”

Ireland’s ability to continue competing in this fast-changing world will be dependent on having the right set of enabling conditions in place”, O’Rourke says. 

“As we face challenges in terms of our national competitiveness relating to energy costs and renewable energy provision, housing, infrastructure and utilities, countries around the world are vying to win the race for the next generation of FDI growth.

“The opportunity cost of not addressing these issues in a timely manner – particularly sustainable energy supply – risks being sizeable,” he warns.

Storied career in practice

A native of Athlone, O’Rourke studied commerce and accounting at University College Dublin and qualified as a Chartered Accountant with PwC in 1989. He is also an Associate of the Irish Tax Institute and current Chair of the Institute of International and European Affairs, the Irish-based international think tank.

“My father left school at 16, so he always placed a big emphasis on education and business,” O’Rourke says.

“He thought I should qualify as a Chartered Accountant and the ‘Chartered’ bit was very important to him, because he felt it had a cachet. That was back in the eighties, and I think the qualification still holds a distinction today.

“I remember sitting my final accounting exams thinking, ‘I wonder what this bit of paper will do for my life?’

“There is no doubt that having the Chartered Accountant qualification contributed so much to me living out my professional dreams in the years that followed. The status it brought with it is hugely important and I think the standing of the qualification is as strong today as it was when I qualified.”

O’Rourke joined PwC in Dublin in 1986 and remained with the firm for 37 years, holding the position of Managing Partner for the last eight.

“I joined what was then Price Waterhouse on 8 October 1986, with the intention of qualifying as a Chartered Accountant and then returning home to Athlone,” he recalls. “Thirty-seven years later – to the day – I retired from PwC having had a wonderfully fulfilling career that was beyond any expectations I had when I joined.”

His experience with the firm instilled in O’Rourke the importance of strategic planning for long term success – and it is a lesson he has brought with him to IDA Ireland.

“You can’t just think about an organisation as it exists today, and the current generation. You must ask yourself, ‘when I’m 20 and 30 years gone, will I have seeded the fields to ensure it continues to succeed long into the future?’”

With Central Statistics Office figures released earlier this year predicting Ireland’s population could grow to over seven million by 2057, O’Rourke’s vision for IDA Ireland is equally long term.

“In my role with IDA Ireland today, I am thinking ahead to 25 or 30 years from now and asking, ‘what will Ireland look like then?’

“We have got to play our part in advising the system today if we want to have the right industrial base in the years ahead, not just to continue to attract FDI but also to support indigenous businesses and wider society at a time of ongoing population growth.

“I feel a responsibility, as do many others in the system, to say, ‘okay, how does this organisation contribute to ensuring that we will have a successful society in which there are plenty of jobs for people? Do we have the infrastructure we need – both societal and industrial – whether that be in terms of housing, energy supply, water or transport?’ 

“These are as much societal issues as they are business issues and IDA Ireland will play its part. Building capacity is crucial. Ireland is facing infrastructural capacity issues, and they are a priority for IDA Ireland, particularly over the next five to six years.”

FDI and global tax developments

Having been appointed as a Tax Partner in 1996 and Head of PwC’s Tax Practice in 2011, O’Rourke spent a significant portion of his career working in Foreign Direct Investment (FDI). 

“I worked extensively – but not exclusively – with household names from the West Coast of the US. I was privileged to work with many of the companies that now rank among the largest FDI employers in the country,” he says.

“I still have the memo in which my then Partner Tadhg O’Donoghue said, ‘I’m going to ask you to focus on a particular area of tax – FDI.’ That one line in a memo almost 40 years ago completely determined my career and my life thereafter.”

O’Rourke saw the evolution of Ireland’s FDI landscape firsthand over that span of time.
“Tax became central to Ireland’s FDI proposition, delivering a major competitive advantage for us back in the eighties and nineties. It has really played a central role in how Ireland has positioned itself to attract FDI,” he says.

As Head of PwC’s Tax Practice, O’Rourke also collaborated extensively with companies, officials, governmental bodies and the Organisation for Economic Cooperation and Development on the Base erosion and profit shifting (BEPS) initiative introduced in 2013 to curb tax avoidance among multinationals operating across different jurisdictions.

“Successive Irish Governments over the past 15 years have really got it right on our FDI-related tax policy and we are now seeing the benefits of this in terms of our corporate tax take,” he says. 

“That contribution to the State coffers is being used to build hospitals and schools, but other countries in the post-BEPS era are moving fast on their own FDI-friendly tax strategies, and I think we need to move quickly as well and make sure we continue to be agile and responsive, looking around the world and asking, ‘what lessons can we learn here from what others are doing?’”

“A world-class organisation”

Just over 10 months into his role with IDA Ireland, O’Rourke’s pride in the organisation is palpable.

“In sporting terms, IDA Ireland is like Limerick in hurling or Manchester City in football,” O’Rourke says.

“We have a fantastic record of success, but once the season is over, we must do it all again. We can survive a year where we are not top of the pile, but we can’t afford to enter a period where we are living off past glories.

“You wouldn’t say to the Limerick hurling team, ‘you need to ease off the training for a few years and let everyone else catch up,’ nor would you say to Manchester City, ‘you shouldn’t buy any good players for now.’

“I don’t think IDA Ireland as an organisation should ever say, ‘we are doing really well, we could pull back a bit’. Life doesn’t work like that. Michael Lohan, our Chief Executive, often says, ‘when you turn off the tap, there is no guarantee that, when you turn it back on again, water will come out.’”

As it stands, O’Rourke sees IDA Ireland as a “world-class organisation.”

“This is not just my own view,” he says. “Over the course of my 37 years in professional services, I was repeatedly told this by clients who had experience of being ‘courted’ by a variety of inward investment agencies from around the world.

“Today, our IDA Ireland clients tell me time and again, ‘we feel welcome in Ireland; we feel supported’.”

These IDA Ireland client companies employ 300,583 people directly, accounting for 11 percent of total employment in Ireland currently. They spend a combined €35.8 billion annually on payroll and Irish-sourced goods and services, and €15.5 billion in capital expenditure.

In total, 248 investments were approved by IDA Ireland in 2023 and a further 131 in the first six months of this year, with the potential to create some 27,000 jobs.

“While I expect the pipeline of projects to continue to be strong as we move through 2024, the challenges we face to stay at the forefront of attractive locations to invest in are significant,” O’Rourke says.

“If we stand back, there is no doubt that FDI flows have slowed a bit compared to, say, four or five years ago. 

“This is, in part, because we have probably already seen the high watermark in globalisation. In retrospect, I think that occurred somewhere towards the end of the last decade. 

“The good news for Ireland is that we are continuing to win FDI projects of substance and the 300,000 FDI direct employment figure is a new plateau for us. 

“For many years, the benchmark for direct employment was 200,000. Now, our focus is on keeping that figure above 300,000 as we look to build on the next FDI cycle.”

Emerging opportunities

As IDA Ireland looks to future FDI growth, its focus will be centred on emerging opportunities in the ongoing green and digital transitions reshaping the global economy, O’Rourke says.

“We recognise the need to help the Irish operations of global firms transform to thrive in a world that is changing fast. 

“We actively partner with client companies on investments in talent development, digitalisation, research and development, innovation and sustainability, including decarbonisation,” he says.

“When I was Managing Partner at PwC and we were at our most profitable and successful, we decided we needed to invest heavily in digitisation. 

“It wasn’t just an investment in technology, it was an investment in our culture. Even though there were no clouds on the horizon, we could see that, if we stayed still, we might have another few great years – but, really, we needed to invest in the technology to continue growing beyond that.

“Our focus now at IDA Ireland is on helping our clients to invest in the areas they need to focus on to do the same – to prepare to continue succeeding in the future. This means supporting them on investment in digitalisation and sustainability.”

Collectively, IDA Ireland client companies spend over €7 billion on in-house research, development and innovation (RD&I) annually. 

IDA Ireland approved 25 sustainability projects last year, focused on carbon abatement and building Ireland’s green economy. 

New RD&I projects won by the semi-state agency in 2023 came with associated client spend commitments of €1.4 billion. 

“With the requisite enabling conditions in place at a national level, aligned to emerging FDI attractiveness factors – such as AI skills and renewable, reliable and affordable energy – I think we will be well-placed to capture new investment opportunities,” O’Rourke says.

A particular focus is Ireland’s future capacity to generate renewable energy – specifically, offshore energy.

“We have been very vocal about the importance and potential of offshore energy. If Ireland gets its offshore energy strategy right – both fixed and floating – we could be in a surplus energy position in 10 years’ time,” he says.

“That could transform our capacity to attract energy-intensive multinationals from various industries, because we would potentially be in a situation where have no constraints in relation to our ability to supply green energy.”

O’Rourke is, he says, a born optimist. “When it comes to our strategy at IDA Ireland over the next five years, I do genuinely and fully believe that our best years are ahead of us.”