Joint Committee on Foreign Affairs and Trade debate -
Wednesday, 27 May 2015

Trade between Ireland and ASEAN Countries (Resumed): Enterprise Ireland

Vice Chairman

Today, we will hear from Enterprise Ireland on trade links with ASEAN, the Association of Southeast Asian Nations. The purpose of this meeting is to provide a greater understanding of trading between the ASEAN countries and Ireland and the possibility of further inroads in developing trade with this market of more than 600 million people.

I remind members and those in the gallery to switch off, destroy or otherwise deal with their mobile phones, as they cause interruptions to the broadcasting system.

I remind members of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against any person or body outside the Houses or an official either by name or in such a way as to make him or her identifiable. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the joint committee. If they are directed by the Chairman to cease giving evidence on a particular matter and they continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice that, where possible, they should not criticise or make charges against any person or entity by name or in such a way as to make him or her identifiable.

Mr. Kevin Sherry

I thank the committee for its invitation today to brief members on ASEAN trade. Accompanying me today is Mr. Brendan Flood, head of international sales and partnering, Mr. Conor Fahy, and Mr. David Byrne, both also of that division. Our chief executive, Ms Julie Sinnamon, unfortunately is unavailable to attend as she is on a trade mission to South Africa. She asked me to convey her apologies to the committee.

Enterprise Ireland’s vision is that Irish enterprise will be a powerhouse of economic growth and job creation. Enterprise Ireland works with manufacturing and internationally traded services companies across the country. Our supports are tailored to reflect companies’ stages of development from early-stage entrepreneurs and start-ups to middle-sized companies, ensuring they can access the appropriate supports to help them to create and build their businesses and, most importantly, sustain jobs. In January, Enterprise Ireland reported that its client companies had created 19,705 new jobs in 2014. These companies continue to see year-on-year jobs growth. This employment growth demonstrates the real impact that the increase in exports has had on jobs in Ireland. Enterprise-Ireland-supported companies now directly provide employment for 180,072 people, comprising 156,202 full-time and 23,870 part-time workers.

Looking at the overall contribution to the economy, Enterprise Ireland clients support more than 300,000 jobs, directly and indirectly, which represents approximately 16% of the total workforce. In terms of scale and economic impact, those client companies spend in excess of €22.8 billion annually in the economy. In 2014, total exports from these companies exceeded €18.6 billion, more than at any time in the history of the State. This covered a wide range of sectors including food, construction, internationally traded services and life sciences, with a growth rate last year of 9.9%.

Priority markets continue to be the UK, the US and Europe. While those core markets account for the majority of our clients’ exports - 69% - high-growth markets such as Asia-Pacific and the Gulf countries, as well as South Africa, Russia and Brazil, will be an increasing source of future exports. It is Enterprise Ireland’s ambition that these markets will account for over €3 billion by 2016, a 50% increase on the export figures for 2013.

Enterprise Ireland clients saw exports to ASEAN markets grow by 17% last year, reaching €296 million. Singapore and Malaysia are the two most important markets in the region. Supporting this impressive export growth in 2014, Enterprise Ireland assisted clients secured more than 1,300 new customers and significant contracts. We also brought 907 international buyers into Ireland to encourage them to source from Irish companies.

Enterprise Ireland’s international office network is a vital resource for our clients. Our network of 33 international offices helps our clients win business. In August 2013, the Government approved our recruitment of 20 additional staff in high-growth markets. We have added nine additional staff to the Asia-Pacific region since 2013, including an additional two full-time staff members supporting ASEAN markets from our Singapore office. These overseas offices provide a range of services, from helping clients gain market knowledge to identifying how to win business and secure customers. Enterprise Ireland has eight offices in the Asia-Pacific region with 36 full-time staff, six of whom are in our office in Singapore.

Enterprise Ireland deploys what we call a hub-spoke and pathfinder network. We have central offices and also support pathfinders, which are effectively specialist trade consultants, and there are 14 of them based in ASEAN markets. Our dedicated high-growth markets team, based in Dublin and managed by my colleague Mr. David Byrne, which works in conjunction with our offices in the marketplace, helping local companies in Ireland to prepare for those markets. While over 90% of Enterprise Ireland’s activities are one-to-one company work, we have taken wider initiatives over the past year. More than 1,000 client companies took part in 18 Minister-led trade missions in 2014, with a further 67 international events in major target markets in North America, Europe, Asia, the Middle East, and Latin America. This week, in addition to a trade mission to South Africa led by the Minister for Foreign Affairs and Trade, there is a trade mission to the US, led by the Minister for Education and Skills, and an event in the aerospace area.

It did a specific joint trade mission with UK Trade & Investment and Invest NI at the beginning of 2014 to the ASEAN region, to Singapore. It was the first such mission of its type. It is very important to say that Enterprise Ireland also has very strong working relationships with other Departments and agencies. Without them we would not be able to do our job overseas. We are, in fact, co-located with embassies and consulates or with other agencies wherever possible. As I have mentioned, in the case of the Asia-Pacific region, we have eight offices, six of which are co-located with an embassy or consulate.

Finally, I would like to convey that Enterprise Ireland is wholly focused on supporting and servicing the needs of our clients. We have ambitious targets which are yielding results and delivering and sustaining jobs here in Ireland.

I thank the Chairman and would be delighted to take any questions.

Deputy Eric Byrne

It goes without saying that almost all politicians in the House have nothing but admiration for the work done by Enterprise Ireland and our embassies throughout the world.

We had a meeting yesterday with the Minister for European affairs from Great Britain, Mr. David Lidington MP, and will probably hear today, in the Queen's speech, the outlining of the UK position on Europe. It may not be a directly relevant question but I will ask in any case. In his briefing to us, Mr. Lidington seemed to imply that Britain was being to some degree strangled by regulations and Commission and treaty obligations from Europe and that it needed to break free and get out of some of the treaties. Britain is fearful that it cannot compete with the evolution of world blocs and powers. The ASEAN countries have a market of 960 million where we have 500 million in Europe. Mr. Lidington seemed to argue that Britain needs greater freedom and flexibility to go into this market and expand. Does Mr. Sherry think there is any analysis that would back that up? Is Europe lagging behind because its regulations are so cumbersome they are strangling a country like Britain? Is the ASEAN market going to surpass the economic might and power of Europe? This may be a political question but if Mr. Sherry has any observations I would be delighted to hear them.

Vice Chairman

Thank you, Deputy Byrne. I am going to bank the question and we will take a number together. I call Senator Jim Walsh.

Senator Jim Walsh

I welcome the delegation. Our job is to probe to see, in measured terms, what the effect of its work is. I thank Mr. Sherry for his submission. It is light on targets, I think, so I would like to concentrate on that area.

Indigenous industry is something we have talked about for some considerable time. I note that Mr. Sherry says there are 300,000 jobs among client companies of Enterprise Ireland in this sector. Would Enterprise Ireland have all indigenous companies under its remit or only those with an export focus? Mr. Sherry mentioned that this figure represents approximately 16% of the total workforce. In recent years, economic commentators would have said that indigenous industry is where the growth in employment must come from. That seems a small percentage. Would Mr. Sherry have a comparison with ten years ago? What targets does Enterprise Ireland have for that sector in job numbers and percentage terms?

With regard to the ASEAN countries, Enterprise Ireland has eight offices and 36 staff, six of which are in Singapore. As Deputy Byrne said, it is a huge marketplace, and that seems a very small number of staff and offices. I know resources are an issue in everything we do, but ideally, to be really effective, what does Mr. Sherry think that figure needs to become?

What targets has Enterprise Ireland set for each of those ASEAN countries for growth in exports by indigenous companies here? Mr. Sherry has mentioned some sectors. Are there others in which we are not involved and which we should be trying to develop to enhance the export sector and contribute positively to job creation?

Deputy Maureen O'Sullivan

I have to leave in about 20 minutes but hopefully I will be able to hear the answers before then. I noted that Mr. Sherry mentioned that Enterprise Ireland clients support around 16% of the total workforce here in Ireland. Although we know employment is increasing, there are concerns that this increase is not happening at the sort of wages or salaries that allow people to live with dignity. We have had a lot of debate about zero-hour contracts etc. My first question, therefore, concerns that 16%.

My second question is about the overseas markets. Recently, I chaired the launch of a report Trócaire had commissioned, Where aid meets trade. We have had various debates about "aid for trade", discussion of which seems to be gathering momentum. If aid is going into a developing country, situations can arise where there has to be a corresponding pay-off for the donor country. There are serious concerns around human rights, due diligence and tax issues. I had questions with the Minister for Foreign Affairs and Trade last week, and he certainly seemed supportive that our trade missions would have to involve ethical engagement.

Irish companies going into other countries should be aware of the labour laws and social laws in those countries. Not one Irish company has been convicted of corruption, even though there have been cases, yet they could be charged in this country because of legislation we have. Such matters particularly concern women in the developing world. We know they are the worst off when it comes to working conditions. There are also serious concerns around Qatar and what is happening there. There are frightening statistics of the number of workers who may suffer injuries and fatalities before a ball is kicked in the World Cup and there are Irish companies working there. I know the Chairman was there recently and I was asking him whether he had addressed these issues. He said there was some open and frank discussion.

Are there any concerns about the ongoing discussions regarding the transatlantic trade and investment partnership?

Deputy Seán Crowe

I welcome the work Enterprise Ireland is doing to increase exports from Ireland and to create jobs and commercial investment. I note that Enterprise Ireland client companies created 19,705 new jobs in 2014, but the net new job figures were half of this, at 8,476. This is the highest net gain in the history of the agency. Enterprise Ireland's end-of-year statement notes that its supported companies now directly and indirectly account for 300,000 jobs in the Irish economy. As the previous speaker said, this is 16% of the total workforce. The total direct employment in Enterprise Ireland client companies, full and part-time, stood at 18,072 at the end of 2014.

To contextualise the new jobs created by Enterprise Ireland, there are currently 349,500 people on the live register. This brings us back to the question from earlier about the targets for the next five years.

What are the agency's specific targets in this area for the next five years? The highest increase in sales and exports in the past ten years was recorded in 2014.

The number of net new jobs created is small when we consider the big picture. It works out at just over 2%. We need ambitious targets where significant increases in sales and exports deliver significant new job increases.

An issue of concern, which was not mentioned by the previous speakers but which has been raised on numerous occasions, is the regional imbalance in job creation. Has the agency specific plans to tackle that? The Government's Action Plan for Jobs 2015 refers to funding of €100 million to support and encourage regional stakeholders. It would be good to know what the job creation target is to match that additional funding by Government for 2015. It would be helpful if Mr. Sherry could shed light on that for the committee.

Some of the ASEAN, Association of Southeast Asian Nations, countries have questionable human and workers' rights legislation in place. They are wide open to abuse. Some of us were at the meeting with Ban Ki-moon and he spoke about some of the difficulties in some of the countries. How does the agency ensure that Irish trade with these countries is focused on enhancing human rights protections? It is a very delicate area. Is it partially based on fair trade provisions? Are there any obligations on companies to export and invest responsibly? That was one of the questions we asked the representatives of IDA Ireland when they appeared before the committee recently.

We have a weakness in our language skills. Many of our young people do not speak a foreign language and that is the position for a variety of reasons. English is widely spoken in many ASEAN countries. Are there supports available to improve language skills? What is the agency's relationship with the Department of Education and Skills? Does it make recommendations, particularly with respect to the universities, on a regular basis? Concern was expressed that some of the courses provided in one of the universities related to language supports and supports in the area of cultural norms would be closed. Is Mr. Sherry aware of that? How does the agency feed into that system?

Senator Michael Mullins

I join in the welcome extended to our visitors. I compliment them on the work Enterprise Ireland is doing and on its level of job creation. We are all anxious that job creation would be spread throughout the regions and I say that as someone who comes from a town in the west that has suffered greatly from unemployment during the past decade. We wish the agency success and we would be anxious to see it expand, grow jobs throughout the regions and continue the good work it is doing with companies in finding new markets.

I have a few brief questions. Mr. Sherry indicated that in 2014, 1,000 companies partook in 18 ministerial led missions. What are the agency's plans for 2015 in terms of the level of ministerial missions and the number of companies that will be involved?

What are the greatest challenges companies face in doing business in the ASEAN region? Previous speakers referred to human rights and workers' rights. Given that in many instances the agency is colocated with the embassies and consulates, what is the level of engagement on and how high on its agenda is the area of human rights in terms of doing business with companies and encouraging business with organisations that might not have a good human rights track record?

Vice Chairman

Does Senator Daly wish to contribute?

Senator Mark Daly

No. Thank you.

Vice Chairman

I have a few questions. Mr. Sherry pointed to the growth potential in that region. Is it intended to increase the number of offices and operate something like what Ireland House has done in other jurisdictions? What has been the effect of closing the office in Malaysia? Has that featured in the agency's assessment of its impact in that area at present? How does Enterprise Ireland engage with the new embassies in Thailand and Indonesia, which are also huge growth areas? Has the agency assessed the potential for maximising the opportunities for Irish industry in that area?

The Irish Exporters Association said that there is scope for better leverage of resources of the local Irish chambers of commerce to grow Ireland's trading relationship in that region. Does the agency see itself linking directly with the chambers of commerce here and in the region with a view to maximising the advantage from Ireland's point of view?

The potential for the education sector in this area has come up in submissions made to this committee previously. I raise the issue of the potential for the education sector in this area and the extent to which Mr. Sherry sees the potential for the sale of our educational facilities abroad, thereby creating two opportunities, one in enhancing the reputation of our education sector and the other in establishing vital contacts and links with trade and business interests in the ASEAN region.

Other members referred to the growth potential and I also want to emphasise that. How does the agency propose to address the challenges of the diverse cultures, which was mentioned by previous speakers? I refer to languages, religious backgrounds and so on, all of which need to be assessed in the context of the degree to which we can benefit from accessing those markets.

Mr. Kevin Sherry

I will cover some of the issues and I will call on some of my colleagues to address the other issues. I will start by responding to the question raised by Deputy Eric Byrne on the ease of doing business and business regulations. First, I would say that Ireland ranks very highly on the table of ease of doing business. In terms of Ireland as a location from which to operate, it is a very attractive location. It is one of the compelling factors that the IDA would promote overseas in terms of multinational companies locating here and likewise it is one that Enterprise Ireland would promote because we have responsibility for foreign direct investment into the country in the food area.

In terms of doing business with companies in the Asia-Pacific region and the ASEAN region, it is quite a diverse region. If we compare two locations such as Singapore and Indonesia, they are very different. The ease of doing business in Singapore and the ease at which companies can operate there ranks very highly. However, in the likes of Indonesia it is a quite a different situation. The ease for companies to do business both within the country and for Irish exporters seeking to export to that country would be very different. In many cases when we talk to Irish companies about trading with other countries it is not so much a question of any barriers associated with regulations within Ireland, it is the accessibility of the countries they are trying to target to sell their goods or services. Within Ireland the ease with which companies can do business is important.

The importance of low regulation - I do not mean ineffective regulation but in terms of ease of doing business in the country - is very important because they are operating on the international stage and competing with global players. The fact that the Irish companies have been competing and winning and we have seen the results on the export side across multiple markets is evidence that at the moment Ireland is an effective location for doing business and we need that to continue.

In response to Senator Walsh, on the export side, Enterprise Ireland as an organisation produces and publishes a three-year plan where we set out our targets very clearly. There are employment and export targets. In our most recent plan, completed in 2013, we exceeded all of the targets. Our plan is to exceed our targets in the current 2014-16 business plan. We got off to a strong start in 2014 with exports increasing by 9.9% and employment substantially above the initial target set.

In exports to high growth markets, companies are starting from a lower base but as a result we have put more resources into those markets and have set a higher target, to increase from a little over €2 billion to €3 billion within that three-year period. It is an ambitious target but we believe we can achieve it. It is one of the reasons why we have put proportionately increased resources into those markets and why we had extensive discussions with Government about the need to deploy more resources in those markets because it does require more feet on the ground. We work company by company and going into those markets we focus on specific sectors, which we believe provide accessible opportunities to Irish companies and where we believe those companies have the capability and the resilience to go after them. It is noticeable that in the ASEAN and Asia-Pacific region a longer-term commitment is required to secure and win business than in many other markets. In respect of the culture of that market it is necessary to develop long-term relationships and that means companies putting feet on the ground in those markets. As a prelude to companies’ winning business in those markets they must commit and put boots on the ground. There are 171 Irish companies present in the ASEAN region. It is more like a marathon than a sprint winning business in those markets.

I was asked about the number of staff and offices. We cannot have substantial resources in every market, we do not have the resources for that. We need to be flexible. We need people to be able to move resources as clients demand. We have our own resources and we leverage off other resources. I mentioned pathfinders, which are trade consultants in different markets. These are people we have identified who have specific expertise in a particular sector, for example, telecommunications and we would link companies we operate and support in that sector with this individual and work across markets.

Deputy O’Sullivan asked about the workforce, I will ask my colleague Mr. Byrne to expand on my answer. In terms of salary levels in Enterprise Ireland client companies, in addition to exports an important factor for us is the spend within Ireland and the amount of money Irish companies spend on wages and on goods and services in Ireland. They need to be competitive and are constantly focused on that. For us as an organisation, we have increasingly focused on competitiveness and lean practices. We do substantial work with hundreds of companies in helping them improve their productivity and competitiveness. That is a very important factor in ensuring that companies have operations that are efficient but can and do pay wages appropriate to the country in which we operate. Ireland is not a low-cost economy and never will be. The type of business we assist companies in supporting is to try to develop companies that have strong intellectual property, are investing in research and development, have strong operations and have resources and capabilities in Ireland that are not based solely on cost but on other competitive factors.

The Deputy also asked about corruption and ethical issues. Enterprise Ireland focuses on business. We work very closely with our colleagues in the Department of Foreign Affairs and Trade. We are co-located with them in most locations. We work closely with our clients in identifying potential customers and assessing their bona fides and the way they operate. We also, as part of our supports for companies, have what we call a net international programme or excel at selling programme, one module of which is focused on developing capability within companies on cultural understanding of how to operate in business. Irish companies operating in international markets have their own reputation to protect. Companies operating perhaps in the Asia region and the Gulf region also do business in the US and Europe and they would be acutely aware that if they do not pursue appropriate business practices and adhere to proper procedures their reputation will be at risk in other locations. There is a fundamental, compelling business argument for those companies to ensure they operate effectively. In terms of TTIP, the US is a very important market for Irish companies and we do believe there are substantial opportunities assuming the successful completion of the negotiations.

From the point of view of women in the developing world, Enterprise Ireland has focused on women in business and many other countries are watching Ireland and what we do in this area. We have focused on this in the start-up area because there was a very low level of participation by females in start-up companies and we focused on increasing that over the past three years. The percentage of their involvement in high potential start-ups and early stage start-ups that we have supported has gone from single digits to 23%. We believe that by focusing on a particular area it is possible to achieve results. Our focus on female entrepreneurship has proved that.

I will ask my colleague, Mr. Byrne, to respond to Deputy Crowe’s question about regional balance in jobs.

Deputy Pat Breen took the Chair.

Mr. David Byrne

As my colleague Mr. Sherry mentioned earlier, we had an outstanding year in 2014 with new jobs created. We have 180,000 plus directly employed by Enterprise Ireland clients. In the break-down of full-time job allocation across the regions, Dublin mid-east is the dominant region by virtue of size and scale, but 25% of the full-time jobs in our client base are located in the south region, 12% in the west region, 12% in the mid-west and 18% in the border regions. We are conscious of our region development. In order to keep the focus on job creation in the regions we are engaged in regional strategy development with our parent department. We also engage in entrepreneurial support activities across all regions. We run eight to ten workshops across the regions annually to generate export awareness and export capabilities in companies. We are highly linked in to the local enterprise offices now, providing a seamless transition for companies as they go on a growth curve, regionally based, from the local enterprise office, LEO, straight through to Enterprise Ireland's full service offering support for growth and exports.

Mr. Kevin Sherry

I thank Mr. Byrne. Deputy Crowe raised the question of the importance of languages. In these markets languages are critically important. There are a number of elements to that, not least of which is leveraging the new diaspora - students that have come to Ireland for third level education and then return to their countries. These, along with the current international students studying here, are links for us to build on. We encourage Irish companies to build links with them as part of that languages link. I now ask my colleague Mr. Brendan Flood to expand on the languages issue.

Deputy Seán Crowe

Can Mr. Sherry tell us if there are any structures there? I understand some companies work through the local chamber, but is there any way of putting structure on those links, those people who were in Ireland. I am aware that trade delegations can invite people to dinners etc., but is there any way of making it more structured? Does Enterprise Ireland have plans to do this or is that outside its remit?

Mr. Kevin Sherry

Enterprise Ireland has responsibility for the international education area. A number of measures have been taken. We have an effective website that connects us in to that wider alumni, which is heavily visited. Some of those international students in Ireland operate as ambassadors on the website, sharing experiences of how they are doing. It is part of our promotional activity, promoting Ireland as a location for international education. There is a series of alumni with that group and also with the individual universities. Through our links and our activities in promoting international education, we do have strong links with colleges in Ireland and internationally, and we leverage those links.

Mr. Brendan Flood

I will separate the education from the language side. In 2013 Enterprise Ireland established a dedicated client skills unit to collaborate with the Department and with Government agencies about specific skills gaps faced by Irish companies in the short and long term. The domestic supply of foreign language skills is something that should be acted upon, not just in relation to Europe but also in the markets we are talking about. Foreign language capability and cultural awareness, as suggested by the committee, are essential for enterprises to compete in an increasingly global market. Having language capabilities is a major boost to companies in achieving their export goals. It also offers them opportunities to diversify away from English speaking markets. While we do prefer the skill-set of language capability to be brought in to the companies, it can be met in the short-term - for the Asian markets - in different ways including recruitment, up-skilling employees, use of professional translators and interpreters and hiring native speaking channel partners or agents. There is no doubt the development of business, technical and professional language capabilities within companies will enable them to pursue opportunities that may arise in any of those markets.

Mr. Kevin Sherry

Senator Mullins asked about the greatest challenges facing companies in the ASEAN region and about Enterprise Ireland's plans for trade missions in 2015. I will ask Mr. Conor Fahy to expand on that. There are a series of challenges. We have spoken about cultural challenges, it is different doing business in the region and we understand that. One important element that Enterprise Ireland brings to that party is that it has the experience of doing business in these regions. It also connects companies with other companies doing business in the region so they can learn while connected to those networks. Culturally it is quite different. Timescale was mentioned - companies doing business in Asia require patience. From initial contact to placing an order tends to be a longer life-cycle than in other markets such as Europe and the US, so companies have to be resilient and patient in that large market.

Companies also require an understanding of the way business is done. The importance of relationships was mentioned earlier. In these markets companies need to develop the relationship first and the business comes after. In some other markets a higher priority is not placed on the relationship element. Companies are also required to put boots on the ground which is important. Enterprise Ireland encourages people to put sales people on the ground and helps companies with this by access to the Enterprise Ireland offices and to incubation centres.

Mr. David Byrne has highlighted that most of the Enterprise Ireland staff overseas are local hires and that is important to us. Typically one person in each office is someone who is placed from Ireland. The rest of the teams are local hires. It is important therefore for Irish companies, when going in to the market place that they do have local capability. It needs to be a mix of people from the company in Ireland and also locally recruited people who understand the market. There are substantial opportunities in those markets where growth rates are high. The Enterprise Ireland message to companies is to look at the success of the companies that have committed to the markets and the business is there to be won. Irish companies can compete, and win, against the best in the world. Enterprise Ireland is very confident about that - it is one of the things we are proud of when working overseas - the expertise and capabilities and Irish companies bring. Another important factor, innate in Irish companies, is their ability to build relationships and their ability to get on with people. The committee asked about plans for trade missions. There are plans for 22 trade missions in 2015. I now ask my colleague Mr. Conor Fahy to expand on that.

Mr. Conor Fahy

I thank Mr. Sherry. Trade missions are an integral part of the overseas promotional programme. The outcome for companies is to foster business relationships and prospective customers. In last year's trade mission programme, companies announced over €200 million in contracts signed. There is an ambitious programme again for 2015. Last week I returned from a trade mission to central Europe with Minister of State at the Department of Jobs, Enterprise and Innovation, Deputy Gerald Nash. We had 42 companies announcing €30 million in contracts in the course of a two city trade mission to Warsaw and Prague.

Our programme for the year ahead will focus significantly, as Mr. Sherry has said, on high growth markets. If one contrasts 2010 with the year ahead, one will see that we have increased the level of focus on high growth markets by over 40% in relation to our activity in those regions. As the leading sponsor of ID 2015, Enterprise Ireland supports Irish companies in celebrating world class design skills through a range of programmes and events which have been incorporated into our trade missions across the world. Such skills will be a feature of the programmes that Ministers will participate in and will be a key message in the speeches delivered to the audiences who will participate on our programmes internationally.

Mr. Kevin Sherry

Deputy Durkan asked about our office network in the Asia Pacific region and our office in Malaysia. We regularly review the location of our overseas offices and the way that we operate. It is important for us that when we operate in an overseas market we are able to respond to the specific needs of clients. Most of the companies that we work with target the ASEAN region as a region as opposed to targeting individual countries. They are also focused on specific sectors, such as financial services, telecommunications, and international education. The food area is the responsibility of our colleagues in Bord Bia.

The majority of Enterprise Ireland's client's business in Malaysia is in international education. We used to have a one-person office in Kuala Lumpur in Malaysia and we also had one person in Singapore. We decided to consolidate our resources in Singapore with an office of six people, so we expanded our resources there. In Malaysia, there is one person working full-time in the international education area. In the other cases, we have aligned our staff in those offices to have specific sector expertise. With the exception of the manager of the office, all of the staff are locally recruited and have specific domain expertise.

The Deputy asked about Indonesia and Thailand. One member of our team in the Singapore office is an Indonesian national and she, in fact, spends some of her time in Indonesia and provides advice and expertise to clients on the market in Indonesia. The level of business and client demand for Indonesia and Thailand at the moment does not justify Enterprise Ireland having a full-time office in either of those countries. We work very closely with the embassies and the Department of Foreign Affairs and Trade, but co-located with them in Singapore. We work very closely with the teams there. It is something that we keep under constant review. In the last couple of years, we have opened new offices and have realigned some of our resources and changed the way that we operate. We have expanded our pathfinder trade consultant network substantially. In recent times we have opened new offices in Austin in Texas, Perth, and Abu Dhabi. That is a constantly changing environment and we have to operate like that in order to respond to the changing needs of our clients. In the case of the Asia Pacific and ASEAN regions we have deployed more resources there proportionally than the exports currently justify and that is in recognition of the fact that we need to deploy more resources in order to assist companies to build for the future.

There are two tracks for us. The first is to help companies sustain and build exports in markets where they currently have a footprint, such as in more developed markets, and the other aspect is to build and develop exports in those more developing high growth markets, which is why we set a higher target for those markets.

I have mentioned the importance of Malaysia to the education sector abroad. I have also mentioned the new diaspora. We have two agendas in terms of the international education area. The first is that it is obviously a very important business. There are over 32,000 international students studying full-time in Ireland, so it is a very important part of the third level sector in Ireland. The people who come to Ireland to be educated are, effectively, the ambassadors of the future for Ireland in the countries they come from and are important commercial links for us. That is why it is so important, as Deputy Crowe has asked, that we build and continue to build links with those individuals in the marketplace.

We work closely with the Irish Exporters Association. We are part of and have part funded their Asia Trade Forum. We have close links with the chambers of commerce in those international markets, the strongest of which is the chamber of commerce in Singapore. Does Mr. Byrne wish to explain that?

Mr. David Byrne

We are also members of various other chambers internationally, as well as members of most of the established chambers here in Ireland. We participate in the Dublin and Ireland chambers. We also participate in the Irish China Association, the Irish Russia Association, and central European associations, so we are aware of the opportunity to leverage the networks, contacts, and expertise that are available to our clients through engagement with chambers here and abroad. On most trade events and missions we aim to leverage power and establish contacts in the market, either through the Global Irish Network and other sources or through local chambers, and we try to bring in that expertise and make it available to our client companies.

Chairman

I apologise for not being here at the beginning - I had a media event to attend.

How does Enterprise Ireland deal with Irish companies that have a good product, which is doing well in Ireland and which they believe will work well overseas, but who go against the advice of Enterprise Ireland and go abroad and fail? Have there been many companies that did not listen to the advice of Enterprise Ireland, that went out on their own without the knowledge that was needed in that country, and maybe did not look at a local partner and have failed abroad? Are there many such companies that feel let down by what they thought would be the golden egg for them?

Mr. Kevin Sherry

I have mentioned resilience. There are companies that try and do not succeed. Sometimes it is because of the actions they have taken and sometimes it is because the market has changed. While it is painful, one of the best forms of learning for those companies is failure. What Enterprise Ireland tries to do with those companies is to help them to be successful next time around. They are a very important part of our network in terms of connecting with other companies that want to go abroad because it is as important to learn from failure as it is to learn from success. Other companies that want to go out into the marketplace can learn a lot from the advice from those companies about what they tried and what did or did not work. For the companies that we work with, one of the key things is that they are prepared when they go out into the marketplace. That is why we have a high growth markets team here in Dublin so they can get direct market advice from people here in Ireland about what they can expect in the marketplace. We have Japanese, Chinese and Russian nationals in that team in Ireland who have been working with us for many years and who can talk directly about their experience, not just of operating in the market but also the culture within the market.

Mr. Brendan Flood

Obviously we have learned from the experiences as well. We have what we call a first flight programme which leans on the experiences of those who have gone and succeeded as well as those who have gone and failed. It is a programme on which we like to bring people who are considering exporting for the first time. We have one relating to the Asia-Pac area.

Deputy Eric Byrne

I am interested in education. The question has been asked before and I have seen it in operation when we were engaging in a twining arrangement with China. There would be an argument that the colleges are very competitive; that Trinity College, UCD, the Institute of Technology Tallaght or DIT have their individual stands; and that they do not co-operate. I am very conscious of the 32,000 students who are being attracted to Ireland, particularly at the higher levels of education. Is there a single Irish authority? The Saudis would send their children here under the King Abdullah scholarships and the Iranians would send their students to UCD under their state-funded educational schemes. This presumably is replicated across the board. I know there are many Libyan students here among others. There are batches of students from different countries but I find it hard to get my head around who in Ireland is the single authority if there is one or if one is needed to deal with these students on the world scene.

There was a relatively recent trade mission to India. We all know that India has a terribly difficult problem with energy. A third of the country could nearly go out overnight because of problems with energy supply. I am very conscious that the ESB does fantastic work in the international field. How is our relationship with India going?

This committee broke the ice only 15 months ago in establishing relations with Iran. How proactive is Enterprise Ireland in the Iranian market given the consensus view that the nuclear talks will reach a conclusion possibly in June and that we are very conscious that in 15 months, Ireland has engaged in about four visits? The Ceann Comhairle has visited Iran. The speaker of the Iranian parliament might visit here next month. There has been phenomenal contact in a very short period of time. When we visit Iran, we are very conscious that the Korean trade missions are there. The witnesses mentioned South Africa. When I was out there recently, nearly every government ministry was involved. I think there was a delegation of about 42. The world is looking at Iran. How do we look at a market like that where one can anticipate changes occurring?

Chairman

I will bring in Deputy Crowe.

Deputy Seán Crowe

The issue of embassy expansion is raised here on a regular basis. The witnesses say that they see the Asian countries as a region. A request was made that we open more embassies in that area. How important is that in respect of trade? People say it is key but if one was talking in terms of recommendations relating to countries where we do not have embassies, which countries would the witnesses recommend opening embassies in? Is there a direct link between opening an embassy and trade?

Mr. Kevin Sherry

In respect of Deputy Byrne's question about education, I will ask Mr. David Byrne to expand on that. Enterprise Ireland is heavily involved in international education. We have responsibility for promoting it overseas. It is true to say that in some areas, the colleges and institutes of technology compete. However, by and large, they collaborate and work very well together. As I mentioned in my introductory remarks, the Minister for Education and Skills is in the US this week on an education trade mission. NAFSA is the main international education trade fair.

Mr. David Byrne

Under Ireland's international education strategy 2010-2015, Enterprise Ireland manages the Education in Ireland brand. The brand was established in 2011 as an overarching brand for all of the colleges and institutes of technology. They travel on our education-related missions and various trade missions under that brand. They work collaboratively. There is a difference in terms of contribution to the brand by way of marketing, marketing collateral and support. It is fair to say that the colleges are more adept at undertaking that marketing. They are better resourced generally than the institutes of technology and that is reflected in the level of traction they achieve.

That said, there are institutes of technology that secure significant business in terms of overseas students from not only the Asia-Pac region but ASEAN countries in particular. Enterprise Ireland has the responsibility under that strategy and the Education in Ireland brand for the development of the international offering, the international strategic partnership arrangements and the promotion and collaboration for the development of sales and marketing capabilities for the education offering.

We have a comprehensive offer. There is a single unified website - educationinireland.com - which is a stand-alone facility that provides access and support for current students, future student enrolments, agents and other service providers to the education services in and from Ireland. We work across a number of fairs, particularly in the Asian and ASEAN region across the Star Education Fairs. We recently returned from a Star Education Fair in Malaysia and will participate for the first time in the Star Education in Fair in Indonesia later this year. If we compare the 2013 results to those of 2010, we can see that there has been a 36% growth in revenue from overseas students from the Asia-Pacific region.

Deputy Eric Byrne

Given the success rate in attracting students, which I did not know about and for which I congratulate the witnesses, how does Enterprise Ireland balance the accommodation needs of students with the intake? How does it blend that? If one is attracting students, one must be conscious of accommodation needs. How are they balanced?

Mr. David Byrne

That falls to the individual colleges. Deputy Byrne may be aware of the significant amount of accommodation for students that has been developed across the country by the colleges and in terms of PPP operations. There have been some very innovative developments in that space by both the public and private sectors. Athlone Institute of Technology has managed to find significant separate accommodation in the immediate Athlone area for its student base from the Gulf region. Another example is UCD's expansion of its on-site accommodation in Belfield. Those facilities enhance the wider education ecosystem and strengthen the offer for Ireland. The Education in Ireland brand provides not only immediate education needs but it looks to provide guidance on living in Ireland, quality of life in Ireland and other wider benefits to a student than simply the core education element. It is important that people who come here not only have some cultural awareness but enjoy the experience as well as achieve a top-class education.

Deputy Eric Byrne

The National College of Art and Design in Thomas Street working with the Digital Hub has a massive ongoing student accommodation building scheme.

Chairman

I think Deputy Byrne had another question on Iran.

Mr. Kevin Sherry

I will deal with India first. India is one of the markets that are seeing substantial growth in the number of international students coming to Ireland following a substantial effort. A number of our most recent trade missions in India have focused on international students. It is one of the more difficult countries in which to do business both in terms of ease of doing business and Irish companies identifying areas of opportunity where they can not only compete but win business and win profitable business because the cost base in some sectors in India is obviously a challenge. Companies looking to do business in India are very much focused on intellectual property-intensive businesses where they have something that cannot be easily found in the marketplace in India.

That also extends to design skills in terms of construction services and telecommunications. India, in terms of the scale of its population and growth, is a market to which we are committed for the long term, as is, as I am sure members are aware, the IDA and the Department of Foreign Affairs and Trade. It is a market into which we continue to encourage companies. The Minister for Jobs, Enterprise and Innovation, Deputy Bruton, visited India recently.

On Iran, we have been looking at the market there and have some previous experience in that regard, which my colleague, Conor Fahy, will expand on.

Mr. Conor Fahy

We have been engaged over the past six months or so in research on Iran as a market. As mentioned, many countries have been looking at the re-opening of the Iranian market. In January, my colleague, Mr. John McNamara, who is our regional director in the region and my colleague from Dubai held a series of meetings in Iran as part of a preliminary assessment phase. In this regard, we are looking at how we can match the opportunity with companies who have the capability to develop a market and customers in Iran. This will be undertaken in conjunction with our clients who are experienced in this area. The key aspect of any company selling into an emerging market like Iran is whether its offer is compelling, whether it has the capability to service it and whether it has the commitment to develop the necessary relationships to see the business contracts through. We are actively monitoring Iran as a prospective market for us in terms of our activities across the Middle East.

Mr. Kevin Sherry

Deputy Seán Crowe asked a question about embassy expansion. As I mentioned earlier, we work very closely with the Department of Foreign Affairs and Trade, particularly the trade promotion division in Dublin, and with each of the embassies and ambassadors overseas. We discuss with them in some detail our assessment of the market opportunities and they, in turn, give us their view in that regard. We have been involved with them on the trade, tourism and investment strategy and had lengthy discussions with them during the development of that strategy and the most recent review of it, including on what are the most appropriate markets, what is the market assessment of the opportunity in those markets and in what sectors, and timing in that regard. As we have had discussions with them on their thinking in terms of opportunities, they would be fully aware of our plans.

In practical terms, we work hand-in-glove with companies. During trade missions we work hand-in-glove with people at a senior level, as we do with our colleagues in IDA Ireland or Tourism Ireland. In the case of the ASEAN and Asia Pacific regions, as government access is vital we work with companies on a daily basis in leveraging contacts at a senior level.

Mr. Conor Fahy

Enterprise Ireland is also a member of the export trade council and is represented at a series of dialogues that take place throughout the year with our colleagues across Departments, including the Department of Foreign Affairs and Trade, where many of the common issues on which we need to work together are articulated and acted on.

Chairman

I have been to some of the ASEAN countries. As the witnesses will be aware we have opened a number of embassies in new ASEAN countries in recent times, including Bangkok and Jakarta. Obviously, Indonesia, which has a population of 240 million, is a huge and diverse market. Such is the size of that market there it stretches a distance similar to that between New York and California. There is also huge potential in Thailand.

Current focus is on the Chinese market. Prime Minister Li Keqiang recently visited Ireland and there have been a huge amount of trade missions into China in recent times, with almost every member of the Cabinet having visited there at this stage. I would like to discuss the Ireland House concept, which operates in New York, Tokyo and so on. Enterprise Ireland has an office in only one of the five ASEAN countries. Would it be possible in the context of the resources currently available to Enterprise Ireland for it to link up more frequently with the embassies in the other countries? It must be difficult for one office to engage with all of the countries. I acknowledge the resource issue mentioned by Mr. Sherry but everybody has a resource issue, including the Department of Foreign Affairs and Trade. We would like to see further embassies in other countries. Could additional resources be allocated to address that issue in the context of the ASEAN countries? Vietnam is an emerging economy. We have had a great deal of success in this region, including in China in terms of our infant milk formula and the Kerry Group research and development in Singapore, which we visited last year. We now have an embassy in Indonesia. While this embassy was originally an aid embassy it has now also become a trade embassy. Is Enterprise Ireland giving serious consideration to development of the Ireland House concept in this region? I know that it works closely with the embassies but has consideration been given to the provision of additional resources to promote Ireland in this region, particularly in the food and IT sector?

Mr. Kevin Sherry

The Vietnamese and Indonesian markets are kept under constant review in terms of where resources are deployed. As mentioned by Mr. Fahy, we recently did a market study visit in Vietnam and we are planning one for Thailand later in the year. This is done in conjunction with the ambassador. In the case of Indonesia, the vast majority of our exports to Indonesia are in the food area, which is the responsibility of our colleagues in Bord Bia. Enterprise Ireland does not have responsibility for the overseas trade promotion of food. While we are currently encouraging companies to look at Indonesia as a market this does not justify our putting a person there full time. I mentioned earlier that one of the team in our office in Singapore is an Indonesian national who spends time in the marketplace, which is very important. We purposely sought to recruit somebody with that expertise. As in the case of many other markets, we will continue to try to encourage and develop companies' interest in the Indonesian and Vietnamese markets. One of the things we need to do is to bring companies with us. We have to encourage their commitment without over-extending them. Many Irish companies are on a journey within the Asia Pacific region. Many are at the stage of looking at putting feet on the ground in the region. Once they get established in the region they than seek to expand beyond one location.

As I said earlier, when responding to Deputy Byrne's question in regard to ease of doing business, Indonesia is a market that is up there in terms of difficulty in doing business. It is a market in reality where there are issues associated with the ease of doing business. As corruption is a factor in Indonesia companies must be much more prepared and much more resilient when going into that particular market. It is not as easy a market in which to do business as is Singapore. That said, there are opportunities and we are exploring them. In the context of resource allocation, as in the case of other locations where we co-locate with the embassies, it is an obvious choice.

Chairman

What are Mr. Sherry's views on the Asia Pacific Irish Business Forum that takes place there every year? Are there benefits in that? Has it real potential to grow business from Ireland to those regions?

Mr. Kevin Sherry

There are. Enterprise Ireland was one of the sponsors of the Asia Pacific Irish Business Forum right from the outset, and in terms of even the Asian games that take place in the region with which there is a strong business angle associated. There is a review underway of its focus. We would strongly encourage the leveraging of those strong connections. As the committee will be well aware, the GAA plays an important role in those connections in the region. It is very much part of our agenda.

Chairman

If there is nothing else, we will conclude the debate. As I said, I am sorry I was not here for the beginning of it. The representatives are to be congratulated on the work they do in Enterprise Ireland, particularly overseas and given the resources. In the end it will always be about resources and prioritising areas, but I suppose that is the reason we are preparing this report. We see significant potential in ASEAN countries which is reflected in the fact that we opened new embassies in these areas. We would like to see more growth in the business being done from those areas, both inward and outward investment. Obviously, it is important in both ways.

We are aware Enterprise Ireland is competing with powerful agencies in those countries. For example, there is KOTRA in Korea and JETRO in Japan. These organisations have significant resources and considerable manpower, as well as the foreign embassies of these countries. Where our embassies have only three or four personnel, they have maybe 40 or 50 in embassies. That is a real challenge for us. At the same, it is important to have a presence. I would encourage Enterprise Ireland to have a greater presence, if at all possible. It is something, I presume, Enterprise Ireland will be looking at in future.

I thank all of Enterprise Ireland's representatives for coming here this morning. We had an interesting debate. They enlightened us on Enterprise Ireland activities abroad. It is good for us, as a committee, to talk to representatives of Enterprise Ireland from time to time about its activities and to see the important role it plays in our economic recovery. Trade is part of our economic recovery and has played a major role there. We look forward to having Enterprise Ireland's input into our report when we complete it later on this year.

Mr. Kevin Sherry

I thank the Chairman and the committee.

The joint committee went into private session at 11.35 a.m. and adjourned at 11.55 a.m until 10 a.m. on Wednesday, 10 June 2015.