Getting Out the Message

Besides promotion, ICEP places a strong emphasis on facilitating information about Portugal´s business environment and tourism attractions

When listing Portugal´s assets and attractions for foreign investors, ICEP president Luis Neto likes to put the country´s people at the top. A stable economy, low operating costs, membership in the European Monetary Union, great incentives and high productivity are all major selling points for luring foreign direct investment to Portugal, but he also likes to remind people about the human element.

Mr. Neto is new to the job at ICEP, the government´s economic promotion agency, but with a long background in international banking he knows what is important to those companies looking around for the best place to put their money.

ICEP´s task is to lure foreign investment and tourism. It also operates in the opposite direction: developing Portuguese business abroad and seeking out export markets for Portuguese goods and services around the world.

"Portugal is producing world-class, high quality, sophisticated goods and services and we are trying to establish a Portuguese brand that represents that reality," he explains. "We recognize that for years there was a negative image of Portugal and that´s why we are promoting the Portuguese brand through so many different means."

"We believe e-commerce will be a big revolution and we need to prepare for it." "Portugal is such a very nice place to live and the Portuguese are very nice peopel to work with"

Many have already gotten the message. A list of companies which have invested in Portugal over the past five years reads like a Who´s Who of leading multinationals: Ford Motor Company, Siemens AG, General Motors, Texas Instruments, Samsung, Leica, Lear Corporation, etc.

According to analysts and members of the foreign business community, these companies liked Portugal because of its growing economy, value for money regarding operational costs, first-rate training programs for personnel, position in the European Union, good labor relations and its fabled quality of life, among other reasons.

The figures speak for themselves. In 1997 alone, Portugal lured around $8 million in foreign direct investment and in 1998, a record $11 billion. Two of the most recent big ticket investment projects include a plan by electronics manufacturer Epcos to boost its manufacturing presence in the eastern city of Evora with an additional $90 million outlay and the decision by Opel/General Motors to spend more than $100 million on a project in Azambuja.

Besides promotion, ICEP also places a strong emphasis on facilitating the investment process for potential foreign investors. ICEP, which is part of the Economy Ministry but operates independently, boasts 58 offices in 43 countries to provide potential investors with a wealth of information on the country and its benefits and attractions.

For those looking to invest, ICEP has full details on the business environment, legislation, statistics of interest to investors, support and follow-up on projects throughout the country.

The agency´s database also lists more than 5,000 Portuguese importers and 7,000 exporters; details of external markets covering contacts, competitors, consumer profiles, distributor channels, legal requirements and procedures.

ICEP representatives are a fixture at international trade fairs and it organizes fact-finding visits, seminars, the publication of articles in technical journals, contact lists, development meetings and assists in the preparation of promotional and information material.

The agency also helps investors with regional and sectorial advertising campaigns and provides logistical support and information and technical assistence for those businesses attempting to seal investment deals.

"A few years ago a company wanting to invest here had to go to the Finance Ministry, the Economy Ministry, and so on to get everything done. But now we operate ICEP as a one-stop shop for investors and facilitate all the information, assist in formalities and negotiate incentive packages," Mr. Neto says.

"There was a fall off in investment in Portugal in 1999 and in the first half of last year it was hard to attract investors because of European Union regulations concerning incentive packages," he explains. "But things improved in the second half and now, for example, we are preparing to sign a $500-million-dollar investment deal."

Over the last decade following the fall of communism, East European nations began attracting investors interested in their cheap labor costs. But the ICEP chief argues that investors need to look at many other factors and that is why his country still comes out ahead.

"For many years investment in Portugal was driven by our low labor costs," he recalls. "But cheap labor is not all that important anymore and we have so many other advantages such as a very qualified workforce, state-of-the-art infrastructure, modern communications systems and an excellent network of suppliers."

"We here at ICEP are now changing our emphasis on what kind of industries we want to see set up shop here. In the past we targeted industrial investments with which we were very successful. But now we believe Portugal is capable of attracting investments in the services sector, in new technology and things like call centers," Mr. Neto argues.

"And remember that Portugal is situated ideally to provide international services and we have a qualified workforce which speaks many languages."

Portugal has always been open to the outside world. Finding themselves stuck between a not always friendly Spain and the sea, the Portuguese opted to look beyond the Iberian Peninsula for riches and trade and for a while were the world´s most intrepid explorers.

These days, Portuguese businessmen realize their domestic economy is too small for real expansion so they seek out opportunities abroad or partnerships with foreign enterprises closer to home. Cross-border investment between Portugal and Spain is also on the rise.

Over the past few years, Spain has become Portugal´s main investment and trade partner by far and Mr. Neto sees that trend continuing.

"It is amazing to realize that economic ties between these two neighbors were almost non-existent in the past but I think that now we finally have the best relationship with Spain for the last 850 years," he explains. "Politically, ties are excellent and all of this is clearly of mutual benefit. Spain currently represents around 25 percent of our inflows and outflows of goods and I don´t see why this can´t rise to 40 percent."

"I believe there are some challenges ahead but I predict we´ll see close cooperation between Spanish and Portuguese companies through strategic alliances in the future because the two countries share some complementary advantages such as each one´s tight ties with former colonies."

Whether it´s Spain or Singapore where Portuguese companies wish to invest or promote themselves, ICEP is there to help. Between 1996 and 2000, the agency directly aided more than 100 Portuguese business projects overseas. In one year alone, Portuguese firms invested around $5 billion around the world in a variety of sectors.

ICEP is also active in trumpeting Portugal´s tourism attractions. Last year the country hosted 12 million tourists, or two million more than the number of Portuguese.

"This proves that Portugal has a lot to offer and the quality is very high," Mr. Neto says. "And for that reason, we´re focusing on boosting the quality and not the quantity of tourists. A rich culture, fascinating history, great cuisine and wines, wonderful sports and the finest leisure activities. We´ve got it all!"

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