NEW YORK, 27 SEPTEMBER 2002
STATEMENT BY HE
Mr. DURÃO BARROSO, PRIME MINISTER OF THE PORTUGUESE REPUBLIC, TO THE NEW YORK
STOCK EXCHANGE
Ten
Reasons to be in
Portugal
It
is with great pleasure that I find myself among you today. I am delighted to
take this opportunity to share some thoughts with you on why I believe
Portugal
and the Portuguese economy is the place to be.
It
was Neil Armstrong who said when landing on the Moon - “That’s one small
step for a man, one giant leap for mankind”.
Armstrong admired the leading role of the Portuguese navigators in the
Age of the Discoveries and I believe that if you take the small step of
investing in
Portugal
,
you too will be making giant leaps for your companies.
You
may remember that I was in
Washington
earlier this month, at the invitation of President Bush, for a bilateral
visit. Afterwards, I came to
New
York
to pay tribute and remember the tragedy of September 11th and to
highlight the close relationship
Portugal
has with the
United
States
.
We see clearly who our friends are in the international arena. I believe that,
particularly in moments of crisis, allies must show that they are just that:
allies.
I
made a point of coming to you, to the financial capital of the world. I came
to draw your attention to the business opportunities in
Portugal
that await companies and investors.
Portugal
is particularly well placed to attract the attention of the international
business community. Let me tell you why. Here are some key reasons to invest
in
Portugal
:
First,
we are a business-friendly environment
Portugal
is a stable democracy. Its government offers reliable and predictable policies
and a solid, institutional environment that business trusts. I have lived and
traveled extensively abroad and I can assure you that the business environment
in
Portugal
is above all open and very user-friendly. Its people and government understand
that an open economy to outside investors is the right way to growth and
prosperity, raising our standards of living to the European Union average and
beyond.
My
government is strongly committed to curbing public spending, decreasing
corporate income taxes and guaranteeing firm control of our public finances.
We believe that business is the source of economic growth and well being, and
we are enacting policies focused on increasing the efficiency of the
Portuguese economy. In some instances, we will deregulate; in others, we will
create independent authorities to supervise competition and business
practices.
As
I said, my government has made the economy’s efficiency and competitiveness
the cornerstone of its economic policy. Given our current situation, we
believe that foreign investment is a key factor for us to regain high growth
rates. We need foreign capital to modernize and to leap to the cutting edge in
certain areas.
To
that end, we have recently created the Portuguese Agency for Investment. This
Portuguese Agency for Investment will be the sole interface for large
investment promoters – in its essence, “one-stop shopping” for
investors, both domestic and foreign. It shall identify investment
opportunities in
Portugal
and handle all the required administrative procedures, including applications
for financial and tax incentives, licensing and installation processes, as
well as the negotiation of special contract regimes. This will save time and
money for investors.
The
Portuguese Agency for Investment is the only address foreign investors will
need to begin investing in
Portugal
.
Second,
we have innovative people
Portugal
is a country wide open to the world and to innovation.
For
Portugal
,
the world is its geography. And one of the features of the Portuguese people,
as history has shown, is its eagerness to innovate and experiment. Let me give
you two specific examples:
·
We
were pioneers of the most advanced freeway payment system in the world: an
integrated, and widely used system, called Via Verde that allows automobile
drivers to travel throughout
Portugal
without stopping at toll booths;
·
Another
example is the enormous success of cellular phones in
Portugal
.
Instrumental to that success was the pre-paid system, where customers buy
phone minutes before use. This innovation, first introduced in
Portugal
,
was extremely important for the deep penetration of cellular phones in
Portugal
.
Currently, cellular phone services are an important industry cluster in
Portugal
,
and many companies think of
Portugal
as the right market to develop and test innovations.
Our
most important asset, however, is the quality of our people
Portugal
has a flexible, productive and well-educated labor force. Currently around 6,5
per thousand people in the 20 to 29 year cohort have college degrees in
engineering and the sciences. Even though we are still working hard to improve
this figure, it is already well within the range of most industrialized
nations. Equally important, our labor force is increasingly able and willing
to use English as a working language.
According
to OECD data, real productivity growth in
Portugal
between 1995 and 2001 was well above that of countries like
Germany
,
UK
,
France
,
Spain
,
Netherlands
,
Denmark
and even the
United
States
.
To reinforce this positive path, we are currently conducting a major overhaul
of labor laws in
Portugal
to make our labor market even more flexible so that companies can better adapt
their strategies to the speed of change in the global markets.
Third,
we have good infrastructures in transportation and telecommunications
Portugal
has well-developed infrastructures for transport and communication. The
telecommunications infrastructure is modern and has capacity and coverage. The
transport system for goods and services is very good, especially along the
Lisbon-Porto and Lisbon-Madrid axes.
Lisbon
is also a major European port. Moreover, there are a growing number of
medium-sized cities in
Portugal
where companies will find very attractive location facilities for all types of
industries.
Fourth,
we are a modern country
Portugal
is modernizing quickly and surely. Income per capita in
Portugal
(adjusted for purchasing power parity), hovers today around 75% of the
European Union average. Agriculture represents only 4% of our national
production, industry is responsible for 29%, and services have a contribution
of 67%.
Regarding
capital markets in particular, capitalization has increased significantly with
the presence of the newly privatized companies, which are today amongst the
most traded stocks and represent, altogether, almost 68% of market
capitalization of the main index of the Lisbon Stock Exchange (PSI – 20).
Nevertheless, we must still strengthen our capital markets.
Portugal
’s
membership of Euronext group along with the
Paris
,
Brussels
and
Amsterdam
stock exchanges is helping a small capital market such as ours to have a
greater exposure to new opportunities and to enlarge its potential turnover.
Politically,
Portugal
has a new, young and reformist government. My government is committed to
structural reforms. We want to make our economy less dependent of the state,
more flexible, so that capital and labor can adjust to changing market
conditions. We are part of a new generation that believes that
Portugal
will be among the most developed countries in
Europe
.
I know not of a single reason that would prevent us from achieving this goal.
Fifth,
monetary and economic stability has been provided by membership of the
European Union
Portugal
is well anchored within the European Union. We are founding members of the
Euro currency, and participate in the decision-making of the European Union on
all matters. The European Union has brought to
Portugal
an economic and monetary stability that is well regarded by major investors.
Portugal
is strongly committed to the conditions that
Europe
has enshrined in the Growth and Stability Pact and in the Treaty. My
government will deliver the necessary government budget results both in the
short as well as in the medium terms.
By
investing in
Portugal
,
you are also investing in the heart of
Europe
,
because you will have a very similar regulatory and institutional environment.
Portugal
is an economy with a free flow of capital. Therefore, capital investments and
outflows of capital are decided freely by investors. And you know that our
membership of the European Union and the Euro currency will guarantee that all
governments will keep it that way.
In
this and other senses,
Portugal
is a gateway to
Europe
.
And my country can be your southern gateway to
Europe
.
Sixth,
we provide low operating costs
Portugal
has the lowest operating costs in
Western
Europe
.
In 2000, Healey & Baker concluded a survey of more than 500 European
companies, which ranked
Lisbon
as the best location in
Europe
in terms of cost and availability of staff. The US Department of Labor put
manufacturing costs in
Portugal
at 55% less than in
Spain
,
70% less than in the
US
and 80% less than in
Germany
.
A comparative survey recently led by Price Waterhouse Coopers concerning the
operating costs for a car component plant in various locations around Europe
put Lisbon 40% below its closest rival, Barcelona, and less than one third
that of Dusseldorf.
Seventh,
we are a country that is attractive to business expatriates
On
a personal note, I would like to tell you that all business expatriates I know
(and I know many) very much enjoy working and living in
Portugal
,
and actually many choose to settle there for life. This is not surprising in
view of our privileged climate and the beauty and variety of our country, as
well as its safety. It is certainly a country where your executives will be
more than willing to travel to and to live in.
By
the way, we are also a premier golf destination in
Europe
and I suspect that many business investments and deals are closed on our golf
courses. For some of you, this reason – good golf - may be the most
important reason of all.
Eighth,
the Portuguese Diaspora is a Portuguese asset
Let
me remind you that there is a substantial Portuguese Diaspora around the
world, but especially in the
US
.
You will be able to capitalize on this in various ways. First, many of these
Portuguese abroad are very successful businessmen in their own right. Their
knowledge and skills are much appreciated and welcome in
Portugal
.
Second, you will find right here in the
US
many people with strong links to
Portugal
.
People you can talk to and who will be able to help you set up operations in
Portugal, reducing your perceived risk, through better independent knowledge
of Portuguese ways, language and culture.
Ninth,
we have a new generation of builders and leaders in
Portugal
Portuguese
business leaders and builders are self-confident and assertive, and you will
find many competent local business talents to help you develop and manage your
business projects. Young Portuguese entrepreneurs are confident and reliable.
They have a can-do attitude and you will find that some of them have come out
of your most prestigious business schools.
Tenth,
we are a Government committed to reducing the corporate tax rate
across-the-board during this political cycle
I
would like to end this presentation with one more piece of good news.
Portugal
is today amongst the countries with the lowest corporate income tax in the
European Union – 30 percent. Because we know this is a critical aspect for
investors facing the choice of several possible locations, we are making
available an incentives package that includes significant tax credits, loans
for fixed asset investments, cash grants for training expenses and social
security exemptions for first time employees and others.
But
we will go even further. The Government has promised to reduce the corporate
tax rate during this political cycle. The Portuguese people already know that
we are delivering on all major policies that we have included in our program
for the first year. So, you too can believe that our commitment to help
business create wealth for
Portugal
is core to our economic and fiscal strategy.
Ladies
and gentlemen,
I
know the time is right for you and your business to invest in
Portugal
.
I sure hope you do not miss out on making this important business step.
There
is a popular song by Paul Simon, whose lyrics say that there are fifty ways to
leave your lover. I am in a more positive mood. That is why I believe I gave
you ten good reasons to find a new love:
Portugal
.