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Standing strong

EY Attractiveness Survey Portugal 2019

Standing strong: with perceptions of Europe declining, Portugal emerges as a beacon for foreign investors

Investor appetite for Europe hit a seven-year low in 2019. While Europe prevailed as the world’s most attractive region to establish operations in, investment plans slowed down, and investor optimism came to an abrupt halt with the outbreak of geopolitical concerns regarding Brexit, slowing Eurozone growth and rising trade tensions.

However, 2018 proved to be a year of renewed prospects in Portugal:

  • This year, EY European Investment Monitor reveals an inflection in the pace of foreign direct investment (FDI) inflows – Portugal secured 74 FDI projects, corresponding to at least 6,100 new jobs created.
  • Business leaders’ assessment of Portugal’s attractiveness is changing, with clear signs of stabilization. But while the unusual optimism of the last two years is readjusting, Portugal’s attractiveness remains strong and short-term investment plans in the country are among the highest in Europe.
  • High perception ratings on key structural factors such as quality of life, social stability, Infrastructure and local labor keep fueling Portugal’s appeal to investors globally, underpinning the country’s resilience to external pressures.

Considering these results, this year’s Attractiveness Survey:

  • Sheds a light on technological change, talent imbalances, how these forces work together to influence investment decisions and what steps have been taken to tackle these issues.
  • At a time when the labor market does not seem to be adapting fast enough to the pace of technological change, this report provides an overview of policy reforms, investments and new partnerships.
  • We would like to thank all who shared their assessments and insights in this survey. Portugal is back on track, strengthening its foothold in the European FDI panorama and emerging as a mature choice for global investors. We hope this study helps to show how and why.

About Portugal

Portugal regained economic growth and successfully restored investor confidence.

More
than

2.1%

Gross domestic product (GDP) growth was attained in 2018

The Bank of Portugal (BoP) expects the economy to continue expanding at a steady pace in 2019.

60%

The value of inward stock of FDI as a percentage of GDP was 60% in 2018

This is among the highest rates in Europe.

The return of growth, an improving structural balance, and the consolidation of the banking sector led to an improvement in the market sentiment, substantiated in the declining cost of debt and the upgrade of the Portuguese sovereign debt rating back to investment status.

EY Portugal - Best Countries for Business 2019 Forbes - 25th

Best Countries for Business 2019
Forbes
161 countries

EY Portugal - Global Competitiveness Index 4.0 2018 - 34th

Global Competitiveness Index 4.0 2018
World Economic Forum
140 countries

FDI in Portugal

Following an unusually high number of investment projects in 2017, FDI activity is stabilizing.

74
FDI projects were secured in 2018 (from 95 FDI projects in 2017).
 
6100
FDI jobs were created in 2018.
Top investors:

#1 France

19 projects

#2 Spain

10 projects

#3 Germany

7 projects

Key sectors:

#1 Digital

15 projects

#2 Transportation manufacturing and supply

14 projects

#3 Agri-food

12 projects

Portugal emerging as a beacon for foreign investors

Even as the unusual optimism of the last two years fades, attractiveness remains strong and short-term investment plans are among the highest in Europe.

Top five attractiveness factors:
(Percentage of respondents who find it attractive)

EY - Top five attractiveness factors

Top three areas of focus to keep Portugal competitive:

1
Support high-tech industries and innovation

2
Develop education and skills

3
Reduce taxation

EY - Portugal emerging as a beacon for foreign investors

Talent and technology, the reality that matters

5 in 10 jobs

that are hard to fill are found in high-skill occupations.
The most acute shortages occur in tech-related occupations.

Top 3 areas of focus to become a leader in innovation:

1
Improve education and training in new technologies

2
Invest in digital infrastructure

3
Increase tax incentives for innovative companies

As it stands today, a positive outlook for the future of businesses is underscored by the need to carefully manage the workforce shift at the intersection of talent and technology.

How can EY Help ?

Services for investors and multipliers

With offices in Lisbon and Porto, EY offers a broad scope of EY’s services across its service lines: Assurance, Tax, Advisory and Transaction Advisory Services.
Our teams work closely with the financial system, private equities, venture capitalists and privately owned businesses. Alongside private and public clients, we provide support to the development of economic and commercial promotional strategies in Portugal and overseas.
An in-depth knowledge of the local market enables us to offer a set of services that covers all stages of the investment process.

Identification of acquisition opportunities
  • Support on the decision-making process concerning new investments either related to new geographies, products or markets
  • Identification of potential targets, based on the investor’s requirements Preliminary contact (respecting non-disclosure agreements) leading to in-depth negotiations with selected targets
Acquisition and integration support
  • Support in the development of growth and business diversification strategies, through both the identification and negotiation of acquisition opportunities and / or in finding additional funding (assisted funding or new investors), and the analysis of business restructuring strategies
  • Assessment of existing compensation policies and design of compensation packages matching compliance with local regulations and the investor’s own policies
  • Financial, tax, commercial, environmental and regulatory due diligence
  • Asset valuation and business model validation
  • Assessment of tax implications
  • Technical support to acquisition negotiations
  • Operations assessment and identification of performance improvement opportunities
Assessment of greenfield opportunities
  • Initial business model preparation reflecting investment, financial and operational costs based on local conditions
  • Site selection based on location requirements for investment and business expansion
  • Intermediation with local stakeholders, and identification of funding opportunities, including tax and EU-funded financial incentives
  • Preparation and assistance to on-site visits, and formal contacts with national and local stakeholders
  • Identification and selection of local suppliers, based on sourcing requirements

Services for the public sector

EY Portugal, building on EY global’s legacy, has been developing a significant rapport with governments, investment promotion agencies, regions, municipalities, and public companies in the completion of market screening and economic impact assessments. Efforts have also been undertaken to improve attractiveness, reinforce competitiveness, attract, support and accompany FDI leads.

Assessments of attractiveness
  • Identification of existing attractiveness factors, and areas of intervention to increase FDI and promote exports
  • Creation of investment attractiveness dashboards to measure results
Assessment of investment intentions
  • Validation of business models
  • Investor due diligence
  • Assessment of regional impacts
  • Assessment of the economic and commercial viability of investments – Investment sustainability
Assessment of greenfield opportunities
  • Macroeconomic analyses
  • Evaluation and impact analysis of programs, public and sectorial policy
  • Strategic plans for public goods and services
  • Technical assistance and support to public management
Investment promotion
  • Identification and validation of targets for FDI promotion
  • Compilation of the Doing Business report series with regional sector specific investment brochures
  • Initial setup and definition of procedures for the update of data sets typically required by investors
  • Preparation of regional business model templates for specific sectors
  • Setting up and facilitation of roadshows, and one-to-one meetings with potential investors, government authorities and business partners
Reinforcement of regions and cities’ attractiveness
  • Analysis of regional and local development factors and creation of touristic value
  • Assessment of attractiveness, refunctionalization and impact of equipment and heritage
  • Conceptualization of local and regional development strategies
  • Conceptualization of governance models and partnerships

 

Contacte-nos

EY - Florbela Lima

Florbela Lima
Ernst & Young, S.A.
Partner, Strategy leader
+351 217 949 341

 

EY - Telma Franco

Telma Franco
Ernst & Young, S.A.
Associate Director and Press Relations, BMC
+351 217 912 292