COUNTRY PROFILES
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PortugalCapital Currency Population EU status GDP Employment Government type Religions Languages Exports Imports |
COUNTRY PROFILE
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Portugal |
Print articlePortugal is perhaps best known on continental Europe for its service and tourism industry. But this is a country with an array of natural resources, and an increasingly diversified and service-based economy. A skilled and educated workforce, good telecommunications infrastructure, a strong transport system that is undergoing extensive upgrades, free movement of goods within the EU, and comparatively low labour costs are all points in Portugal’s favour.
A number of legal and financial reforms have been brought in to smooth the path of investors. The World Bank’s report Doing Business in 2005: Removing Obstacles to Growth ranked Portugal in the top 10 “reformer” countries that were implementing pro-business changes in the investment climate.
 Oporto city at the river bank |
Sector overview
Portugal supports the development of industry clusters, where a full range of services form around a core industry sector. Clusters have been formed around the automotive sector, which has seen a strong input of FDI, much of it from within Europe; the telecommunications, ICT and chemical sectors, amongst others. Portugal is also keen to promote development in its forestry industry, in agriculture, and in tourism. Substantial investment incentives are available under the PIN scheme for projects above a certain size, or that have R&D as the main object of their business.
Setting up a business
Reports from the OECD show that establishing a company in Portugal is relatively complex compared with the OECD average, with 11 separate procedures required to register a company, and the whole process taking up to 53 days. However, Portugal’s foreign investment agency, the API, has powers to intervene directly on behalf of foreign investors who are finding that projects are being held up by unnecessary bureaucracy. It may be easier for US companies to enter the market through a Portuguese partner, at least initially.
Tax and employment reform
Portugal has introduced a number of measures to improve its competitiveness within Europe over the last few years. Corporate tax rates were reduced to 25% in 2004 and will be reduced to 20% in 2006. A Competition Authority was set up in 2003, and according to the OECD, was found to have “the necessary powers to ensure a dynamic, open market, implement free market policies, stimulate a just and open competitive environment and reduce the regulatory burden on enterprises”.
In recent years, Portugal’s competitiveness has been further boosted by the liberalisation of labour laws in 2002, creating a codified set of labour laws for the first time, and creating more flexibility in the employment market. These efforts paid off at the end of last year, when it gained two places in the World Economic Forum’s competitiveness rankings in 2004. Portugal is now ranked 20 in the world, ahead of Spain, France and Belgium.
FDI
Despite these positive developments, FDI flows fell dramatically in 2004, down by 85%, from €5.8 billion to €895 million, according to reports from UNCTAD. By July 2005, though, FDI flows for the year were already at just under €1.8 billion, suggesting a recovery is underway, although full figures for the year are not yet available.
Facts in brief
 Ancient wine cellar |
Portugal’s location is South-western Europe, bordering the North Atlantic Ocean, west of Spain. Azores and Madeira Islands occupy strategic locations along western sea approaches to Strait of Gibraltar
Its climate is maritime temperate: cool and rainy in north, warmer and drier in south
Natural resources include fish, forests (cork), iron ore, copper, zinc, tin, tungsten, silver, gold, uranium, marble, clay, gypsum, salt, arable land, hydropower
Agricultural products are grain, potatoes, tomatoes, olives, grapes; sheep, cattle, goats, swine, poultry, dairy products; fish
Industries include textiles and footwear; wood pulp, paper, and cork; metals and metalworking; oil refining; chemicals; fish canning; rubber and plastic products; ceramics; electronics and communications equipment; rail transportation equipment; aerospace equipment; ship construction and refurbishment; wine; tourism
Diplomatic representation in the US — Chief of mission: Ambassador Pedro Manuel Dos Reis Alves Catarino
Diplomatic representation from the US — Chief of mission: Ambassador Alfred J Hoffman Jr
Contact Information
Rua D estefania 155
5 Esq
1000-154 Lisbon
Portugal
Tel: +35 121 357 2561
E-mail: amchamportugal@mail.telepac.pt
Website: www.select.pt/clientes/cca
Useful websites
| www.american-embassy.pt | US Embassy in Lisbon |
| www.investinportugal.pt | Government investment agency |
| www.ine.pt | National Institute of Statistics |
| www.dgep.pt | Economic research and forecasting |
| www.min-nestrangeiros.pt | Ministry of Foreign Affairs |
| www.visitportugal.pt | Tourism and travel |