Focusing on Irish investment immigration and listening to the Irish story: The Shannon River, like a brilliant jade belt, still flows gently through the mid-west of Ireland into the Atlantic Ocean, just as it did 55 years ago. However, the Shannon Development Company, which once led the world-renowned Shannon Free Trade Zone through thick and thin and explored numerous business innovations, was relegated to history as 2014 approached, becoming a term of the past.
For local resident Niall Maloney, this is not a sad ending to the story. His ancestors have lived here for generations, and his grandfather, father, and numerous relatives have worked for the Shannon Airport Development Zone. Now, as the operations and service manager of Shannon Airport, he is full of expectations for Shannon's new future.
After a major government-led restructuring, most of the assets of the Shannon Development Company will be incorporated into the newly established Shannon Group, centered around the Shannon Airport Authority. The mission of the Shannon Group is to develop the region into an international aviation service center, establish a world-class industrial cluster, and help create the growth and employment needed in Ireland, driving development in the mid-west region.
Kevin Thompstone, former CEO of Shannon Development Company and president of the Shannon Chamber of Commerce, although lamenting the disappearance of the Shannon Development Company, is excited that the focus in Shannon has returned to growth—just as the story began in 1960.
The First Rebirth
Today, the location of Shannon Town and the Shannon Free Trade Zone was once just a small village on the north bank of the Shannon River estuary. One day in 1930, the arrival of an American pilot completely changed the fate of this remote little village.
According to Maloney, before the advent of jet aircraft, long-haul flights, such as those between the United States and Europe, required ground refueling to continue. At that time, the Irish government invited this famous pilot to choose a location in western Ireland to build an airport. He determined that Shannon, located in a sheltered bay, was a good place to build an airport, as it was situated on the main axis between North America and the European continent.
After Shannon Airport was completed in 1942, aircraft traveling between North America and Europe could refuel here, and Shannon's aviation service industry developed rapidly, becoming an important aviation hub and operational base for airlines. In 1947, Shannon Airport innovatively implemented duty-free sales at a small counter selling tobacco and alcohol, giving birth to the world's first airport duty-free shop that year.
However, the good times did not last long. With advancements in aircraft manufacturing technology and increased range capabilities, transatlantic flights no longer needed to stop at Shannon Airport for refueling. The once-glorious Shannon Airport became a thing of the past, and the local economy, which relied on the airport, fell into difficulties.
Should this neglected airport be closed or transformed? In 1959, the Irish government decided to establish the Shannon Development Company to attract foreign investment to save the airport and the surrounding area. In 1960, the Shannon Development Company established the world's first free trade zone focused on export processing near Shannon Airport, attracting foreign investment, especially from American companies, with its duty-free advantages and low-cost benefits.
To this day, the United States remains Ireland's largest foreign investor. American companies invested in this European island nation of less than 5 million people last year, equivalent to the total investment in all developing regions in Asia, including China. Beyond the allure of tax incentives and other investment policies, Emmet Oliver, Director of Public Communications at the Industrial Development Authority (IDA), believes that the historical ties and blood connections between Ireland and the United States are among the most important roots.
This cannot be separated from the "Great Famine" that occurred in Ireland in the mid-19th century, during which 2 million Irish people were displaced, with more than half going to the United States, while the rest spread to Europe, Australia, and other places. Today, there are 80 million people of Irish descent worldwide, with 41 million in the United States, far exceeding the population of Ireland itself. The natural connection between Ireland and the United States, along with Ireland's position as a Eurozone country backed by the large EU market, makes many American companies willing to prioritize investment here. Statistics show that 94% of foreign investment in the Shannon Free Trade Zone comes from Europe and the United States, with American investment accounting for 57%.
As the world's first duty-free industrial zone, the Shannon Free Trade Zone successfully attracted a large number of foreign-funded enterprises, transforming a remote little airport that had lost its refueling service due to technological development into a prosperous industrial area. The Shannon Free Trade Development Zone has also become a model for various countries to emulate. Today, over 100 countries operate more than 3,000 various free trade zones, most of which still reflect the influence of Shannon.
When Xi Jinping visited Ireland in early 2013, he specifically visited Shannon, praising the Shannon Free Trade Zone as one of the earliest and most successful economic development zones in the world, which not only made significant contributions to Ireland's economic development but also provided valuable lessons for the development of open economies in many countries. China's establishment of special economic zones in Shenzhen, the Pudong New Area in Shanghai, and the Tianjin Binhai New Area has drawn on many experiences from the Shannon Development Zone.
Investment Attraction Secrets
To attract foreign enterprise investment, the Shannon Free Trade Zone has introduced incentive systems including: low corporate tax rates; allowing goods from non-EU countries to defer tax payments until leaving for another non-EU country; companies can import goods from non-EU countries for processing and re-export to non-EU countries tax-free; exemption from taxes on goods imported from EU countries; zero value-added tax within the free trade zone; and providing funding, research and development tax credits, and exemptions from capital gains tax on equity sales for qualified companies intending to establish entities within the free trade zone and those already operating in the free trade zone.
If it can be said that the Shannon Free Trade Zone primarily relied on duty-free and low-tax policies to attract a large amount of foreign investment, with the Irish government unifying the corporate tax rate to 12.5%, Shannon's tax advantages are no longer what they used to be. However, it has still managed to maintain long-term attractiveness for foreign investment over the years. What is the secret?
"A highly educated, flexible workforce combined with an excellent business-friendly environment has made Shannon a continuously attractive investment location, and the strength of the existing industrial base continues to attract new companies to invest in the region," said Conor Agnew, IDA Manager for the mid-west region.
It is worth mentioning that the Shannon Development Company has successfully adjusted its park development strategy based on the Irish government's strategic planning and changing circumstances at different times, promoting the transformation of the park's industrial structure, which has led to sustained achievements for the Shannon Development Zone.
In the 1970s and 1980s, the company focused on promoting technology-based industries at the government's request. With the establishment of the University of Limerick and Limerick Institute of Technology, the area gradually explored a good tradition of combining research and industry, providing high-quality professional labor for enterprises in the development zone. In 1984, the Shannon Development Company established the Shannon National Technology Park in Limerick City, promoting the local industry from labor-intensive to technology-intensive.
After the 1990s, with the development of high-tech industries, the Shannon Development Company gradually shifted towards developing service and knowledge-based industries under government guidance, establishing two technology parks in Kerry and Tipperary, as well as the Ennis Information Age Park and the Bole Technology Center.
However, as foreign companies shifted production to lower-cost Eastern European and Asian countries, and other countries increased their investment in technology and innovation, developing knowledge-based economies, the prospects for the Shannon Development Zone also faced significant challenges.
In this context, since January 1, 2006, the Irish government has entrusted the responsibility of attracting foreign investment in the Shannon Development Zone to the Industrial Development Authority (IDA), while the support for local enterprises is managed by Enterprise Ireland. The operational management of the Shannon Development Zone itself is still specifically handled by the Shannon Development Company.
Although major international companies such as Intel, General Electric, Emerson, EMC, and Johnson & Johnson remain deeply rooted in Shannon's new and old business parks, they cannot prevent the overall economic scale of the Shannon Free Trade Zone from declining due to a lack of new investment.
Currently, the Shannon Free Trade Zone has over 100 companies, employing more than 7,000 people, with an annual output value exceeding 600 million euros and annual sales of 3 billion euros, of which 90% is exported.
In recent years, an important initiative of the Shannon Development Company has been to leverage the local cultural heritage and natural scenery to vigorously develop the tourism industry. The Shannon Heritage Company, under its umbrella, offers popular tourism projects such as medieval banquets at Bunratty Castle and a folk park. Although these tourism products have enriched the economic diversity of the Shannon region, bringing in 15 million euros in annual direct economic returns, they also highlight the awkward position of the Shannon Development Company in promoting investment, as it finds it difficult to achieve significant results.
Shannon's "New Birth"
In May 2012, the government decided to restructure the state-owned operating agency of the Shannon Development Zone, aiming to create a world-class aviation industry cluster. In December of that year, Shannon Airport was separated from the Dublin Airport Authority (DAA) and began independent operations. In the first half of 2013, the Shannon Development Company underwent restructuring, retaining its main property assets and renaming itself Shannon Commercial Enterprises Limited, merging into the Shannon Group as a subsidiary while divesting other operational management businesses to local authorities.
Shannon Airport hopes to regain its former glory and become an important regional airport connecting Europe and America. Although the airport's passenger throughput in 2012 was only 1.4 million, it is expected to increase to 2.5 million within five years. With the Irish government abolishing the vehicle and vessel tax in April 2014, it is anticipated that more passengers traveling from the UK to the United States will choose to go through Shannon Airport. For a family of four, for example, if flying directly from the UK to the US, they would pay £248 in aviation tax, but if flying via Shannon, they would only need to pay £52 in tax.
However, to become a promising world-class aviation hub, the Shannon Group must also invest in large airport projects, which is conservatively estimated to require at least 100 million euros in investment.
Joining the ambitious development plan of the Shannon Group is the Shannon Foynes Port Company (SFPC). The Irish government hopes to leverage the advantages of the local aviation and shipping industries to create a good port connecting the westernmost point of Europe and the easternmost point of the United States.
Pat Keating, CEO of SFPC, told the 21st Century Business Herald that the port's waters are 30 meters deep, suitable for large vessels to dock, and there are very few ports in Europe that meet this condition. According to long-term plans, they hope to develop the port into a regional transshipment center for the shipping industry, attracting large Asian vessels to dock here and then distribute to other smaller ports in Europe. With the opening of Arctic shipping routes, large vessels from Asia to Europe will no longer need to detour through the Mediterranean but can shorten their shipping time by using this port.
The deep-water port project has just passed initial feasibility approval and is expected to require 400 million euros for construction. Pat Keating welcomes Chinese investors to cooperate.
As part of the entire international aviation service center plan, the Shannon Group will also actively seek new business in areas such as composite materials, assembly completion, route networks, cargo, leasing, pilot and technical training.
Currently, the Shannon Group is just waiting for legislation to be completed to officially launch. In Kevin Thompstone's view, Shannon still has a very solid industrial foundation and is the area in Ireland, outside of the capital Dublin, with the highest concentration of North American company investments.
"The future of Shannon depends on the types of new industries and the level of business activities that are established," he said. "Shannon will have a great story; what we need to do is continuously remind the international investment community that Shannon is open and ready to provide tangible returns for investments in various industries."