Portugal, officially known as the Portuguese Republic is the westernmost developed country of Europe. It joined the European Union in the year 1986 and since then it has never looked back and has become one of the best financial hubs in the entire Europe.
Portugal offers a good business environment and a favorable climate for foreign capital both in the short term as well as in the long term. Its strategic location is extremely ideal for those who wish to serve the European market or want to extend their business across the world.
Just as its strategic location, Portugal also has the best infrastructure in the entire Europe that provides connections to almost all the major cities through air, sea, land, road or railway. It has the most sophisticated telephone and communications systems.
Facts:
It ranks 19th in terms of having the highest quality of life and is 13th most peaceful country in the world with no political turmoil in the recent past. Some of the other key facts about Portugal that really make it one of the best destinations for investment as follows:
•   Portugal has one of the lowest operational costs in the entire Western Europe.
•   It has one of the Europe’s most enthusiastic and youngest workforces with first class training facilities.
•   It has the best as well as flexible incentive packages for investors coupled with good support services before and after investing in Portugal.
Trends:
The Portuguese economy is showing an upward trend of growth than the other countries within the Euro Zone. The Portuguese economy is expected to grow at a rate of 0.8 percent which is quite impressive amidst the repercussions of the global economic downturn and is expected to grow at a rate of 1.4% in the coming year based on the signs of global recovery. This recovery would be mostly demand driven as there is a favorable outlook for both internal as well as external demand.
Market Size:
Portugal is mostly a service based economy. The market of Portugal is in fact larger than it may actually appear. The market for construction, engineering and architectural services is all set to expand in Portugal. Significant changes have been made in the manufacturing sector and also in sectors such as electronics, new technologies and pharmaceuticals.
Growth figures and FDI figures:
The Gross Domestic Product (GDP) of Portugal is worth $240.9 billion. Foreign Direct Investment (FDI) has been welcomed in Portugal since the early 1990s. It reached its peak in 1993-94 followed by a decline in the mid-90s. However, there was an accumulated upturn in the last decade and gross FDI in Portugal stood at €31.9 million in the year 2008.
Key investment areas in Portugal:
Ever since Portugal joined the European Union, it has increasingly become a service-based economy. Some of the key sectors worth investing in Portugal include the Automotive sector, Information and Communication Technology sector, Renewable energy and Biotechnology. Of these, the renewable energy has the higher prospects as Portugal plans to achieve a target of achieving 60% of its electricity generation through renewable sources of energy. The other sector that needs mention here is the Plastic Mould industry. There are already 500 Portuguese companies operating in this sector who produce as much as 90% of their total output.
FDI/Investment policy:
Portugal has an investor friendly economic environment and is an innovative country. Portugal has one of the investor friendly investment policies in Europe. There is no discrimination between domestic and foreign investors with respects to establishing business in almost all the economic sectors that are open to private investment. On an average it takes only 46 minutes to set up a business in Portugal. From this, you can make out how business friendly Portugal is. Not only the government encourages foreign investment in the country but has also set up several agencies that provide full fledged support to the investors. For this, the Portuguese government has also established an online support for investors who wish to invest in Portugal.
Special incentives offered by Portugal government to foreign investors:
There are loads of incentives which the Portuguese government provides to foreign investors. However, these incentives are based on the certain factors such as the contribution of the investment for development purpose, the size of the investment, job creation. The Portuguese government provides a reduction of the corporate tax by as much as 15% for resident companies in areas that are eligible for benefits whereas for companies that create permanent jobs can get a deduction of 50% on their social security payments. The Portuguese government also provides certain incentives for companies investing in R&D sector. These include 20% tax credit on assets purchased.
Resources:
The Portugal government has set up an agency to boost the foreign investment in the country. This agency is known as the Portuguese Agency for Foreign Investment and Commerce. The main objective of the agency is to attract FDI in Portugal as well as serve as an intermediary for investors who are investing in projects worth more than 25 million Euros. It also assists the small investors by directing them to assistances agencies such as IAPMEI or the Institute for the Support of Small and Medium enterprises.
The upward growth trend, an investment encouraging government and friendly foreign investment policies, all these really make Portugal one of the preferred destinations for investors who wish to expand their business across the world.
