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PAM Panel on External Trade
and Investments in the Mediterranean
TOWARDS A SUSTAINABLE ECONOMIC DEVELOPMENT
IN THE MEDITERRANEAN REGION
28 June 2012
aicep Portugal Global
Investment and Trade Promotion Agency
Investment promotion – attraction of FDI to Portugal;
Trade
promotion
–
support
to
internationalization
activities, specially of SME’s;
More than 7.000 companies, representing more than
90% of total portuguese exports, have a key account
manager at AICEP and are continuously supported in
Portugal and abroad, through offices in more than 40
countries.
www.portugalglobal.pt
The road behind
XXth century facts that hindered growth
• Political and economic isolation: reduced international
exposure for companies, reduced entrepreneurship;
• Protection of local production, with a negative impact on
international competitiviness;
• War effort in the 60’s and 70’s; social and economical cost
of decolonization;
• Currency devaluation as basis for competitiveness;
• 80’s and 90’s economy depending on low cost, low skills
products (textiles, clothing, shoes);
• Major increase in competition from EU enlargement
(countries with low cost, high skills, proximity to larger
markets) and China entering WTO;
• Low interest rates leading to investment in non-tradables
and reduction of savings rates.
Exports of goods and services
Ongoing structural changes – product diversification
Travel and Tourism
Machinery, Equipment
Other services
Transportation
Vehicles
Textiles
Minerals
Common Metal
Plastics, rubber
Food, beverages, tobacco
Pulp and paper
Other goods
Chemicals
Shoes
Stone, ceramics and glass
Wood and cork
Live animals, animal products
Vegetable products
Optics and precision
Relative % weight
in total exports
2011
1986
0%
5%
10%
15%
20%
25%
Exports of goods and services
Ongoing structural changes – market diversification
20
18
16
14
12
10
8
6
4
2
0
Relative % weight in total exports
Jan/Apr 2012
Exports of goods and services
Closing the trade deficit – Jan/Apr 2012
•
•
•
•
•
16,000
14,000
12,000
Record high exports;
Record low trade deficit;
Surplus with Third Countries;
160% coverage in Services;
96% coverage in total exports.
10,000
8,000
6,000
4,000
2,000
0
-2,000
EU
Third Countries
Exports
News from the battlefront – is growth sustainable?
Exports of goods
1990
2011
11.000 companies
20.035 companies
15.400 M €
60.660 M €
M€
Exports
> 50
#
Companies
106
•
The exporting base is growing
significantly;
•
Close to 60% of exports come
from large companies, more
immune to funding problems;
•
SME’s: resilient through crisis;
rapid recovery, to accelerate if
working capital funding is
available;
•
Even small companies diverting
focus to exports as a result of
internal market outlook;
•
Incentives schemes focused on
innovation and tradeables are
increasing results.
%
Exports
47%
25 to 50
140
12%
1 to 25
3.289
36%
<1M
16.500
5%
Current situation
Investment
Assessment:
• Investment decisions depend essentially on microeconomical issues and the necessary attractiveness factors
are present;
• Investors with access to international funding and that seek
external markets have in Portugal a low cost, high skills,
reliable infrastructure location;
• Existing foreign investors are maintaining investment
decisions even through crisis.
Shortfalls:
• Overall image effects of macro situation are delaying
investment decisions and creating difficulties that affect
perceived atractivenness by new investors.
Current situation
Exports/Imports – 96,2% in Jan/Apr
Assessment:
• The number of companies pursuing international businesses
is increasing;
• Young talent entering SME’s, with language and
management skills is creating a large number of rapidly
growing export companies, in high margin segments;
• A substantial part of total exports comes from large
companies, with access to international funding, enabling
export growth.
Shortfalls:
• Difficult access to funding for SME’s is not allowing working
capital to meet the demand needs – stabilization of finantial
markets will immediately result in added exports.
Structural Reforms
Labor market
Labour Market
0% increase in minimum wage (any
increase will only take place if the
economic and labour market evolution
justifies it and upon agreement with the
Troika partners)
Business environment
Competition
Business Environment
Competition
Making easier the usage of the “Single Balcony” and
improve the assistance capacity to the SME
More effective Competition
Law
An improvement in the professional
qualification regimen
“Zero Licensing” replaces
pre-approved permits by a
start of activity statement.
Easier access to the market, by auctioning new radio
wave frequencies for wireless broadband and reducing
the mobile termination fees
A reform of the firing regulations to allow
the introduction of new rules for laying off
with just cause
Adopting the “Simplex Exports” programme, including
measures to expedite the companies VAT exemption
for exports and simplify the indirect exports
procedures.
Adopting new measures to increase competition in the
fixed-line telecommunication market
New rules for working
hours, including the
adoption of “bank of hours”.
Wages adjustments according to the
company productivity
Reinforce the measures to improve the companies
access to financing tools and exporting markets
Court House: measures to expedite the resolution of
judicial process in the courts
Reduction of rents in sectors shielded from foreign
competition
Phased elimination of regulated electricity tariffs
Structural Transformation of the Portuguese economy
Open to foreign investment
and to the challenges of
international competition
Fully integrated in the
Single European
Market
Political consensus
on reform program
and stability culture
Competitive location for
physical and human capital
Structural Reforms
Agenda
Confidence, credibility and justice
Troika’s assessement of
the assistance program
First Evaluation
(August 2011)
Openness, competition and
competitiveness
Entrepreneurship, innovation and
labor market flexibility
Second Evaluation
(November 2011)
Third Evaluation
(February 2012)
Fourth Evaluation
(June 2012)
Limited State and economic
democracy
• Local authorities aplying the reforms as
recomended.
• Adjustment process faster than expected;
• Unemployment is a concern.
Structural Reforms
Privatization program as a flagship in the agenda
Energy retail
and production
Energy retail
and production
Air
infrastructure
Water
distribution
Insurance
Seguros
(1)
2011
Seguros
(2)
(3)
2012
Q1
Electricity
distribution
2013
Q2
Air transport
Q3
Railway
logistics
(1) Sale of “Caixa Geral de Depósitos” participation of 1%
(2) Concession
(3) Expected completion date by “Caixa Geral de Depósitos”
Q4
Mail
distribution
Television
broadcasting
THANK YOU
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