DISCOVER WHY PORTUGAL

IS OPEN FOR INVESTMENT

In collaboration with

architects’ dreams into reality. Meanwhile, Portuguese wines, olive oils and

preserved foods are winning ever greater international acclaim.

In services sectors such as life sciences and communications technology,

Portugal is also punching above its weight. In recent years, the country’s

medical researchers have made major breakthroughs in areas such as neurology,

oncology, degenerative diseases and pathology, and have developed two new

medicines for the treatment of Parkinson’s disease and epilepsy.

In the telecoms industry, some 150 mobile carriers from all over the

world use Portuguese technologies in their operations.

Meanwhile, the quality of Portugal’s workforce and infrastructure and

the country’s strategic location—just a 3-hour time difference from both São

Paulo and Moscow—have made it a leading location for Shared Services

Centers and Business Process Outsourcing. More than 450 companies,

including Altran, Cisco Systems, BNP Paribas, Europcar, Fujitsu, Xerox and

IBM have installed SSCs in Portugal.

“Not only is there already a very strong presence of SSCs in Portugal,

but they are also becoming more and more advanced,” Frasquilho says.

“Innovation in the sector is increasing, and of course the Web Summit will

empower this trend.”

Businesses investing in Portugal come not just from traditional partners

in Europe but from an increasingly diverse range of countries. AICEP itself

is now present in more than 60 countries, up from just over 50 in 2014,

after opening new offices in strategic global cities including Doha, Mumbai,

Riyadh, Seoul, Sydney and San Francisco.

While the US is still the country’s largest trade partner outside the

EU, in recent years Portugal has cemented a particularly close economic

relationship with China. AICEP has opened offices in Beijing, Shanghai

and former Portuguese colony Macau, while Chinese companies have made

major investments in Portugal, in the financial services industry and above

all in the electricity sector.

“We are very happy with the presence of China,” Frasquilho says. “We are

an open and multicultural country and we are ready to use all our experience

and know-how to help global businesses grow, wherever they come from.”

PORTUGAL: EUROPE’S TRENDY HOT SPOT HITS GLOBAL INVESTMENT MAPForeign investment, technology and innovation are transforming the Portuguese economy

software code, and Kinematix, which has developed TUNE, a sophisticated

wearable device for runners.

Providing increased support to start-ups and entrepreneurs is one of

the cornerstones of the government’s economic growth strategy. An official

four-year plan, Startup Portugal, is focusing on three key areas. Firstly, the

program is enhancing the country’s ecosystem for start-ups, by encouraging

business incubators, fab-labs and design factories as well as cutting red tape

and making it easier for companies to invest in the research, development

and production of new technologies. Foreign employees of science and

technology-based companies may also be eligible for special fast-track visas.

Secondly, Startup Portugal aims to improve the access of new companies

to financing, including public finance. Rather than having to rely on bank

loans, businesses will find it easier to use crowdfunding and peer-to-peer

lending to raise capital. At the same time, the government is strengthening

Portugal Ventures, the country’s official venture capital fund, designing

new tax incentives for entrepreneurs and creating vouchers for

incubation services.

Finally, the program is also internationalizing the

country’s start-up sector, both by promoting Portuguese

companies at overseas trade fairs and tech events and

also by attracting foreign start-ups, investors and

incubators to the country.

“Obviously, we like investors to come to Portugal

whatever their specialist sector, but of course it’s

preferable to have investments that can create more

value, wealth and employment,” Frasquilho says. “We are

very open to attracting investment in innovation and technology.”

Portugal’s official investment incentives are increasingly geared towards

high-value projects, projects which bring cutting-edge technologies and

processes to the country and which help internationalize the economy.

Significant funds are also available from the European Union’s Portugal

2020 program, which is designed to enhance the country’s competitiveness

and human capital. “In certain areas the value of our incentives can reach

25-30% of total investment, which is an extremely competitive level,”

Frasquilho says.

As well as strengthening incentives for high-value investors, successive

governments in recent years have pushed through broad-based reforms in

Poised confidently on the westernmost edge of Europe, Portugal

throughout its long history has been a pioneer of globalization,

opening up new trade routes to Asia, Africa and the Americas as far

back as the 15th and 16th centuries and bringing the Portuguese language

to every corner of the planet.

In the 21st century, this outward-looking and forward-thinking country

is now on the frontier of the global technology revolution. From the bustling

start-up scene in the capital city Lisbon, to family-owned businesses in cork

and agriculture, to giant multinationals in construction, aerospace and

automotive industries, investments across all sectors and technology have

put Portugal on the frontline of economic transformation.

“Portugal is now widely seen as a country that is at the forefront of

innovation and entrepreneurship,” says Miguel Frasquilho, President of

AICEP, the country’s trade and investment agency. “We have

built a very strong start-up community and ecosystem.

We are also seeing technology in more unexpected sectors

such as food, fashion, clothes and shoe-making, as well as in

the more obvious industries like aeronautics.

“Today, technology touches all sectors of activity and

segments of our lives. In Portugal we feel this impact

significantly.”

Portugal’s emergence as a global technology hub was

sealed last November when Lisbon hosted Web Summit

2016, one of the largest technology conferences in the

world. Some 55,000 entrepreneurs, tech professionals,

investors and other industry professionals descended on the

capital city to share their vision, discover start-ups, raise funds and make

deals. This year and next, they will be doing it all over again.

“The Web Summit exceeded all our expectations,” Frasquilho says. “It

was by far the biggest edition of the event. There was a Portugal before the

Web Summit, and there will be a Portugal after the Web Summit. And it is

already helping to change the dynamics of the economy.”

Pride of place at the Web Summit went to technology start-ups and

venture capitalists from Portugal itself; more than 10% of companies at

the event came from the host nation. High-flyers from Portugal at the Web

Summit included Unbabel, which uses artificial intelligence to translate

customer service, Codacy, which automates the process of reviewing

the labor market, education and justice systems and to the tax frameworks

for people and companies. “Ongoing reforms, combined with the quality of

our infrastructure workforce and the continued proficiency in English, have

made us much more competitive internationally,” Frasquilho says. “We have

come a long way and we will continue to work and improve.”

Industries innovate and adaptFar away from the pitching, cocktails and networking of the Web Summit

in Lisbon, Portugal’s more traditional industries are undergoing their own

technological revolution.

Nowhere is this more visible than in the country’s cork industry, long

the world’s largest producer and exporter. Cork companies are responding

to the competitive challenge of screwcap bottles and plastic stoppers by

finding innovative new applications for this most traditional and sustainable

of materials. Cork from the historic forests of the Alentejo region has become

an increasingly popular choice with architects, fashion designers and interior

decorators around the world for floor and wall coverings.

At the same time, the material is playing a key part in the US and European

space programs. A highly effective flame retardant and thermal insulator, it

is Portuguese cork that protects spacecraft from the high temperatures they

encounter when entering a planet’s atmosphere.

“Cork can be used everywhere,” Frasquilho says. “Our cork industry is

investing a lot in innovation and supporting numerous start-ups and cork

projects. It’s revolutionary.”

Two of the most dynamic industries in Portugal—aerospace and

automotive—make intensive use of local cork for insulation and interior

design. In these two industries, the quality of the country’s workforce and

its infrastructure have helped attract some of the world’s largest businesses,

ranging from airplane manufacturers Airbus and Embraer to car makers

Toyota, Peugeot Citroën, Volkswagen, and Mitsubishi.

Additionally, many car and bus manufacturers have built factories

in the country and Portugal is home to a thriving supply chain of

component producers, including businesses that produce dashboards,

batteries car doors, cockpit consoles, fuel tanks and wing components

for airplanes.

“In both the automotive and the aerospace sectors we have built strong

communities of suppliers and industrial clusters,” Frasquilho says.

“It is Portugal’s compelling combination of cutting-edge technology and

skilled labor that attracts the world’s largest aerospace and automotive brands

to the country,” Frasquilho says. Portuguese companies in these industries

do much more than supply basic parts and fittings; Airbus uses fiber optics

sensors made in Portugal in its aircraft, while NASA and the European Space

Agency both use Portuguese software to detect and correct flaws in their

mission-critical systems.

Back on earth, the Portuguese genius for design and innovation is helping

companies in sectors as varied as fashion, furniture, textiles and food emerge

as world-beaters. Technical textiles produced in Portugal helped power Usain

Bolt and Michael Phelps to new heights, while brands such as Burberry,

Kenzo and Dior have brought Portuguese quality to the catwalk. Buildings as

iconic and as daring as the Rockefeller Center in New York and the Sagrada

Família in Barcelona rely on Portuguese construction materials to turn their

The Web Summit has found a home in Portugal. As well as being a very good calling card, it will also be an excellent catalyst for growth.” Miguel Frasquilho President of AICEP

25th easiest country in the world for doing business (World Bank)

16th country in the world with better infrastructures (World Economic Forum)

22nd country in the world with highest availability of latest technologies (World Economic Forum)

78% of students learn 2 or more foreign languages

4.2% export growth in 2017(Ministry of Finance forecast)

5th most peaceful country in the world (Global Peace Index 2016)

8th place on the global quality of life index(Numbeo)

©APCOR

and it is currently performing very well due to a lot of investment in in-

novation. Corticeira Amorim, for example, invests in startups looking for

different uses for cork.

Cork can be used in fashion, agri-foods and several other areas that you

would not have thought of or imagined before. Did you know that you can

use cork to help make yogurt? And that you can even apply it in a more

sustainable refrigerator? Cork really can be used everywhere, it is such a

versatile product!

Which sectors are making the most progress and being globally competitive? Portuguese exports have been performing very

well for the last six ot seven years and 2016 was re-

cord-breaking. Sectors that are doing well include

machinery, automotive, aeronautics, cork, agri-food

and fashion.

We probably became more competitive due to

the crises we experienced. It made the domestic market shrink, so compa-

nies had go out and get into the global market place to survive. That’s why

our exports have grown from less than 30% of GDP in 2010 to more than

40% at the current time. However, if we compare Portugal to our peers in

Europe of the same size such as Austria, Belgium, the Netherlands, Czech

Republic, Slovakia, Denmark, or Ireland, you will see that their exports to

GDP ratio is more than 50%, while we are still at 40%. We have come a long

way, but we still have to improve.

The recovery of the Portuguese economy is ongoing and GDP is now growing at a moderate pace. What are the remaining challenges that you believe the government needs to address?Growth is still not as strong as we would like it to be, but I believe the

conditions are there for the GDP growth rate to accelerate.

Many reforms have taken place in recent years: in the justice system, labor

market, rental market, tax policies, de-bureaucratizing public administration,

education, health, etc. But we still need to implement new measures to improve

our competitiveness. One of the areas where I think we are less competitive is

regarding taxes: tax incentives, corporate and personal income tax. We should

reform our tax system, especially when it comes to direct taxes.

We still have severe constraints in the financial area though. Our 2016

budget deficit will be around 2% and should foster a good economic

How would you describe Portugal in terms of innovation?Portugal is now seen as a country at the forefront of innovation and

entrepreneurship. Technology and innovation are present in all segments of

our lives and throughout all economic sectors. We have very good examples

of innovative and diverse companies, from the most traditional, to the most

advanced as well as several startups. These companies range from fashion

and luxury to finance, music, golf, and even apps for androids, etc.

We have an excellent startup ecosystem and it has been growing

organically. The Web Summit in Lisbon was a

great opportunity to promote ourselves even more

internationally. We have several Portuguese startups

that got their financing in London, New York and

San Francisco and today are seen as success stories.

The technologically advanced automotive and aero-

nautics sectors have also been extremely innovative in

Portugal and these clusters are contributing to our de-

velopment and internationalization. In Portugal, we

support a lot of innovative projects with global potential, those that favor exports

and job creation, especially in R&D and internships. Innovation needs to create

more value, wealth, and jobs. This is the ideal scenario.

How much is Portugal investing in R&D?Many companies in Portugal are strengthening their position through

R&D and innovation. Very well-known corporations are expanding their

investments in R&D and building strong partnerships with universities.

Bosch, for example, is working together with the University of Minho.

Industrial companies in northern and central Portugal are conducting

research programs with the University of Aveiro. This also applies to

universities in Lisbon and Porto. So R&D is definitely on the agenda of most

Portuguese companies nowadays.

What is your assessment of the Portuguese work force?Our work force is highly qualified, which was not the case 20 or even

10 years ago. They are extremely competent and Portuguese engineers,

businessmen, managers, etc. are constantly hired by international

companies because they are very competitive.

How is innovation boosting the cork industry, one of the traditional leading sectors of the Portuguese economy? Our cork industry was in decline, but we have managed to turn it around,

Miguel FrasquilhoPresident of AICEP

INVEST IN PORTUGALRIGHT CHOICERIGHT TIME

on attracting foreign investment. We identified three

geographical areas where we believe we have better

chances of attracting the attention of investors.

They are North America (Canada and the US);

Western Europe (Benelux, France, Germany, Spain,

Switzerland and the UK) and Asia (China, Korea and

Japan).

We have been getting a lot of interest from

Chinese investors who also bought stakes in

privatized Portuguese companies. Some examples

are China Three Gorges and their stake within our

electric company EDP, the State Grid Corporation of

China in REN, our electrical network. They are also

investing in the banking and finance sector; Fosun

International, for example, bought the insurance

company, Caixa Seguros and is also present in

Millennium BCP.

China is the country where we currently have

the most branches with offices in Beijing, Shanghai

and Macau – (we cover Hong Kong from Macau.) As

soon as Portugal opens a consulate in Guangzhou,

we will also have an AICEP representation there. It

is a sign of the times we are living in, where no one

ignores China.

We are happy to welcome these Chinese investors

as traditionally most of our investors came from

Europe, but the truth is that now we invite investors

from all over the world. We are a very open economy.

It is not AICEP’s role to export or invest, but it is our role to support and

work with companies that want to export and those that want to invest here.

Was the Web Summit a huge success for Portugal?The Web Summit surpassed all our expectations! It was the largest event that

we have ever hosted in Portugal and we think it is here to stay. The attendees

were very happy with the event. The venues were great with lots of space

and very good services,

The Web Summit has been growing each year; from 400 attendees seven

years ago to over 40,000 in Dublin in 2015 and around 55,000 in Lisbon

in 2016. The startups present in Dublin in 2014 and 2015 raised more than

US$ 1 billion each year. We expect an even higher number for Lisbon 2016.

We are hopeful that the participation of the Portuguese companies will also

increase.

There is the Portugal before the Web Summit and the Portugal after

the summit. The impact has been impressive! AICEP is happy that it is

contributing to the fact that Portugal can now be seen as a tech hub.

environment, making us more competitive and

interesting to investors.

However, we are doing well in comparison to

other countries when it comes to infrastructure and

a qualified work force. The quality of our infrastruc-

ture such as roads, railroads, etc., is excellent. And

the level of proficiency in English here is exceptional

compared to other European countries. This is im-

portant since English is the international language

in business. And this is not only in Lisbon, but

throughout the whole country.

Can you describe AICEP’s role in bringing in foreign direct investment (FDI) and where it is present?AICEP has two inter-related goals, one is to promote

and support exports, and the other is to attract in-

vestors to Portugal.

We believed that we needed to expand our over-

seas network to increase exports and we are now

present in more than 60 countries, compared to a

little more than 50 in 2014. The last three offices

we opened were Bangkok, Buenos Aires and Sydney.

We are present in all the CPLP (Community of

Portuguese Speaking Countries) countries, except

for Equatorial Guinea which is covered by our del-

egation in São Tomé and Príncipe. Being present

throughout the CPLP is very important not only because of our historical

and cultural ties, but also for economic reasons. It is a market of more than

250 million consumers and we want to maximize the potential of Portuguese

as a business language.

We also opened our second US office in San Francisco in September

2015, the exact same week when it was announced that the Web Summit

would be coming to Portugal.

We have also opened branches in Seoul, Riyadh, Doha, Zurich, and a

second office in Mumbai (we were already present in New Delhi). We work

very closely with the ambassadors and consuls general in each country.

Two recently opened branches are Havana and Tehran since the

international community is once again trying to reach out to those markets.

This expansion was not in our original plan, but we need to adapt to current

economic trends. Our expansion plan needs to be dynamic and flexible

because things change from one moment to the next.

As far as bringing in more FDI is concerned, we needed to have a more

strategic presence abroad which is why we opened all these new offices.

We strengthened our teams with “FDI scouts” who are specialists focused

AICEP has two inter-related goals,

one is to promote and support exports, and the other is to attract investors to Portugal.”

40%percentage of exports that

contributed to the GDP in 2016

60 +AICEP global

offices

55,000attendees at

the Lisbon Web Summit 2016

COMPETITIVE, EFFICIENT AND ADVANTAGEOUSPortugal punches above its weight across all sectors and is open to investment

Investment (GFCF), Portugal 2010-2015, %

Exports, Portugal, Euro Zone2010-2015, %

35th country

in the world for availability

of scientists and engineers

3rd in services offered

fully online 4th in

reuse of user data in online

forms Digital Economy and Society Index 2016

22nd country

in the world with highest availability of latest

technologies 29th with the

highest firm-level technology absorption

and 21 in the world in the number of fixed-broadband subscriptions per

inhabitant

5th most peaceful country

in the world Global Peace Index 2016

Best European

country to visit USA Today 2014

3rd in the Fundacity’s Acceleration

Ranking in 2014

measures number of startups accelerated

Portugal has a

strategic position to access

key worldwide markets

it is the nearest European country to the US and Canada

6th country

in motorway network density

1ST

in Trading Across Borders

Rank 2017 19th in the

Enforcing Contracts Rank 2017

LISBON 2nd

Best City to Invest

Financial Times 2014

12th most

competitive country

within the EU-28, better classification

than the Netherlands, France, Spain and Italy

The World Bank

15th

(out of 141) Travel & Tourism Competitiveness

Report 2015

Great infrastructure

The quality of its roads (9th), port

infrastructure (29th), railroad infrastructure

(28th) and air transport (28th)

All mainland seaports

are connected to the rail network

to the Spanish border

10

5

0

-5

-10

-15

-20

12

10

8

6

4

2

02010

2010

2011

2011

2012

2012

2013

2013

2014

2014

2015

PortugalEuro Zone

2015

4.5

9.57.0 7.0

3.44.3 6.1

4.56.5

2.12.7

6.5

11.3

2.3

-0.9

-12.5

-5.1

portugalglobal.ptaicep@portugalglobal.pt Created by: www.elitereports.net