FDI in Portugal
FDI in Figures
After several years of steady growth, the flow of foreign direct investments (FDI) started to decline since 2007, and they contracted more due to the global recession in 2009. Despite a slight recovery in 2010, foreign investments have decreased since the beginning of 2011, following the deterioration of public accounts. Investors fear a scenario similar to that of Greece.
The FDI in Portugal is considered as a priority to the government. The country has recently embarked on the development of renewable energies, specifically solar energy (the country has the second largest solar power station in the world) and wave energy (obtained from wave movements), sectors that could provide new opportunities to foreign investors. Portugal offers a diversified economy and benefits from its membership to the European Union; however, the bureaucratic and legal burdens can be a hindrance to FDI.
|Foreign Direct Investment||2007||2008||2009|
|FDI Inward Flow (million USD)||3,055||4,665||2,871|
|FDI Stock (million USD)||115,314||99,970||111,272|
|Performance Index*, Ranking on 141 Economies||126||106||106|
|Potential Index**, Ranking on 141 Economies||50||51||-|
|Number of Greenfield Investments***||81||80||55|
|FDI Inwards (in % of GFCF****)||6.3||8.8||35.1|
|FDI Stock (in % of GDP)||51.7||41.0||48.9|
Note: * The UNCTAD Inward FDI Performance Index is Based on a Ratio of the Country's Share in Global FDI Inflows and its Share in Global GDP. ** The UNCTAD Inward FDI Potential Index is Based on 12 Economic and Structural Variables Such as GDP, Foreign Trade, FDI, Infrastructures, Energy Use, R&D, Education, Country Risk. *** Green Field Investments Are a Form of Foreign Direct Investment Where a Parent Company Starts a New Venture in a Foreign Country By Constructing New Operational Facilities From the Ground Up. **** Gross Fixed Capital Formation (GFCF) Measures the Value of Additions to Fixed Assets Purchased By Business, Government and Households Less Disposals of Fixed Assets Sold Off or Scrapped.
FDI Inflows By Countries and Industry
|Main Investing Countries||2009, in %|
|Main Invested Sectors||2009, in %|
|Trade (wholesale and retail)||35.9|
|Real estate and services to companies||25.3|
|Transport, storage and communications||3.3|
|Electricity, water and gas||1.3|
Source: Bank of Portugal
- Form of Company Preferred By Foreign Investors
- Public limited company, SA
- Form of Establishment Preferred By Foreign Investors
- Main Foreign Companies
The leading case of successful foreign investment in Portugal is that of «Autoeuropa», a Volkswagen project in the Setúbal peninsula with an initial investment of 2 billion euros. Because it was so large, the State moderated the negotiations on salaries etc. It is also a pole for other companies making components for the automobile industry.
The FNAC arrived on the Portuguese market in 1997. The first store opened in Lisbon. Since then, 15 stores have opened in the country's main cities. The FNAC, which make a profit of more than 250 million EUR in the country, had more than 243 million visitors, has sold more than 27 million books, 18.5 million CDs and 9.2 million DVDs in 2005.
- Sources of Statistics
Banco de Portugal
Why You Should Choose to Invest in Portugal
- Strong Points
Portugal's strong points are:
- The low labor costs;
- Its geographical situation. Portugal act as a bridge between 3 continents: Europe, Africa, America;
- its temperate climate;
- its socio-political stability and the non-existence of terrorism; and
- the stability of its currency.
You can consult the Ministry of the Economy website.
- Weak Points
- Portugal's weak points are its weak demography and a certain rigidity in the labor law.
- Government Measures to Motivate or Restrict FDI
Government policies have followed the priority established by the Prime Minister, to promote the country's appeal to foreign investors. In order to do this, simple taxation procedures have been put in place, effective warehousing and transport logistics have been set up (especially the Sines terminal in the South-West of the country), as well as improvements in telecommunication infrastructures, etc. An agency for investment and foreign trade has been established: the AICEP.
Other measures have been implemented, including making the labor law more lenient in order to increase the workforce flexibility, and setting up a special aid regime for large projects (over 25 million EUR).
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