Posted on Wednesday 23 March 2011 byUlster Business
The pipeline for foreign direct investment has increased in the last six months, but Budget cuts may limit the number of new projects Invest NI is able to support in future, according to the economic development agency's chief executive.
Alastair Hamilton told Ulster Business the recent run of investment announcements made by Invest NI were both a function of projects backed before changes to EU state aid rules for supporting business were made at the end of last year and increased demand.
"I am on the record about a year and a half ago as saying that our pipeline for foreign direct investment had depressed because of the economic climate. But US companies have for the last six or nine months raised their heads and are starting to see global opportunities and therefore my foreign direct investment pipeline is up 60%," he said.
Hamilton noted that Invest NI had a target to create 6,500 jobs across the last three year Programme for Government but has actually achieved 7,900, with 3,000 coming in the last six to nine months.
However, he said a reduction in the agency's budget combined with the commitments made during this time will create challenges for the future.
"For the next couple of years because the FDI pipeline has been up and we've supported more projects in the last six to nine months, those create commitments for us in the incoming period. Historically, the bulk of a financial commitment is in the second year of a project. If you close so many projects in one year, you create a challenge two years out if people follow those plans, in terms of your ability to fund them. In an environment where budgets have then reduced that reduces the amount of headroom we have to support additional projects," said the Invest NI chief.
He added, "I think it would be very dangerous for us to go back to existing clients, unprompted and try to encourage them to take a different profile of funding. There are clients who may not be able to deliver against the original five year plan they gave, so there's an open door for us to go back to discuss with those companies. But I think the bigger opportunity for us is to get some sort of flexibility so that instead of working on a 12 month annual budget every year we have some flexibility to be able to move commitments from one year out to the next. It remains to be seen if that can be delivered."