26th June 2024
Portugal’s three-year window to define strategies and accelerate projects in areas that will define the next 20 years


Portugal has a window of just three years to define an economic strategy that will lay the foundations for the country’s economic development and prosperity for the next 20 years according to Portugal’s Minister for the Economy, Pedro Reis.


Addressing business leaders at a lunch organised by the American Chamber of Commerce in Portugal (AmCham) last week in Lisbon, the minister and former head of Portugal’s overseas investment bureau AICEP highlighted the vital role of Portugal’s development bank in financing innovative, technologically led projects.


Pedro Reis emphasised the need to focus on building strategic clusters, and attracting overseas investment in sectors such as renewable energies and mobility.


The minister also underscored the importance of the economic and trading relationship between the United States and Portugal, defining it using adjectives such as “absolutely critical, strong, strategic, profound and special”.


“I think it is important and comforting in a world that is demanding, challenging and volatile on many fronts to see this strong and aligned relationship between the US, Europe and Portugal,” he said.


Giving a succinct overview of the Ministry of Economy’s agenda for the near future, Reis explained that over the past two months since the centre-right Democratic Alliance (AD) government had won the elections in March, the ministry had been preparing its blueprint for the future.


Acceleration, expansion and consolidation


The minister emphasised that he was “very attentive and committed” to getting all of the institutions that fall under the wing of the Ministry of the Economy to be “fully operational and articulated with each other”.


“Our role as a ministry, from my point of view, is to mobilise forces, find solutions and instruments to help companies gain scale in our economy, to encourage them to accelerate innovation, foster internationalisation, and ensure financial returns on contextual costs; in short, helping companies to accelerate, consolidate and expand”, outlined Reis.


Reis highlighted the importance of AICEP, praising its previous management, and said policy and suggestions over strategy for the overseas investment bureau was not “political at all”, but rather involved giving AICEP a different agenda and cycle, as well as concentrating operations at Portugal’s development bank, Banco de Fomento, and revitalising IAPMEI.


IAPMEI is a government office that provides incentives to SMEs to innovate and internationalise, helping startups set up in Portugal, and supports companies in technological research and development.


Pedro Reis considers that Portugal has strong ideas and propositions for attracting overseas investment in key strategic areas such as energy, mobility and electric vehicle “clusters”, as well as believing that cybersecurity, shared services centres and defence are sectors that have potential.


Plans for Portugal’s Development Bank


One institution that has been on the hard end of recurring complaints and concerns from companies and entrepreneurs is the Banco de Fomento, over its activities, what will happen at the development bank, and what the Ministry of the Economy’s plans for it are?


The bank was created in 2020 by the previous PS Socialist government under the recommendation of the European Council to assist and supervise the selection and financing of company projects that would modernise and innovate Portugal’s economy; companies organised into sectorial hubs and clusters in key strategic areas such as green energy, the circular economy, mobility, digitisation and digitalisation, and new innovative technologies such as AI and Big Data.


It would also allocate EU funds (loans and grants) applied for by these groups of companies, startups and scaleups for different projects in the areas defined, through tenders within given timelines for their application and development.


In other words, Portugal’s Banco de Fomento is a financial institution that provides EU and government funding, loans and grants to support companies to develop and deliver innovative high-tech solutions, and finance national and international projects that promote sustainability and economic development.


The minister said that the Banco de Fomento was a “crucial instrument for government economic policy, particularly in a country like Portugal which still had “weaknesses and flaws”.


It was urgent and vital that the bank dialled up its commercial activities, and that everything done should be aimed at creating more bank product and at an accelerated pace through lines of finance for these companies, filling gaps that had arisen from failures in the private lending market.


This meant riskier lending operations, providing longer maturities, and more investments in structural sectors of the economy.


“The Banco de Fomento is crucial as an active development bank for the moment that Europe and Portugal is currently going through”, he said.


And added: “We are not a large market and we do not have that level of investment attraction to be able to afford the luxury of wasting an institution like the Banco do Fomento. I am really positive about and pro the private sector — without intending to use the term liberal — and want to defend the idea of having a development bank”.




Another policy was keeping up the intensity in sectors such as tourism by focusing on markets that would enable greater growth in value and reducing seasonality. The USA, China, Canada, South Korea and Turkey were all priority markets.


“The sector is strategically important for the Portuguese economy, which is why we want a sector with value added that is capable of retaining talent, with a strong investment in a green agenda and internationalisation.”


This meant focusing on a commercial offer that provided differentiated products for demanding segments such as cultural tourism, architectural tourism, gastronomy and wine tourism, among others.


And things are looking up in the sector which has recovered well after the Covid-19 pandemic with figures for 2024 set to exceed those of 2019 in all regions of Portugal. Bookings in the Algarve were already 6% up on 2023 numbers, while the country’s statistics institute estimates that in March there were 5.7 million tourist overnight stays, and an increase in revenues of 17.4%.


Portugal RRP and Compete 2020/2030


It was also about maintaining an articulated policy with the Innovation Agency (Agencia de Inovação) and promoting a profound interaction, that is agile and efficient between IAPMEI, the AdC (Authority for Competition) and other intermediary organisations.


“When we arrived, we focused on hearing cases, understanding the institutions, and tracing out and aligning objectives, particularly in terms of managing them.


The ministry would also be working closely with the Ministry of Territorial Cohesion and Development regarding accelerating the Recovery and Resilience Programme (RRP) and Portugal 2020 and 2030. “Portugal cannot afford the luxury of failing to execute these rapidly.”


Compete 2030 is an EU funded programme with a total budget of €3.9Bn aimed at supporting digitisation, research and innovation, and generating more growth and competitiveness for SMEs in Portugal.


The programme also aims to support companies in de-carbonisation projects and renewable energy production and use, as well as supporting the adaptation of workers and enterprises to modernise and change by increasing their competencies and skills.


“It’s all about enhancing resources, creating more agility and cooperation between the different institutions and organisations, evaluating applications for EU funds for projects, and pooling the specialisations that all these institutions have.


“There are no silver bowls in life, so we need to have clear tender documents (from the applicants)” he said, inferring that the government was not going to dish out money for projects that were not well thought out and did not stand a chance of making a return that would benefit the Portuguese economy.


Focusing on strategic projects


Another area in which the Ministry of the Economy is focused is enabling Portugal to be able to attract strategic overseas projects and position itself as far as possible to net the investment and create the synergies to do so.


Pedro Reis, as a former President of AICEP, knows that creating a pipeline of strategic investments takes time to set up.


Regarding this, the government plans to develop some investments that were already in the pipeline and to accelerate them. Without referring to any one specific project, he said that Portugal, as was the case with Spain, was doing well in this respect.


“We have strong proposals to attract investments in areas like energy, mobility, the electric vehicles cluster, and green hydrogen,” he said.


Pedro Reis had recently visited China and was impressed at how they created sector clusters from A-Z. “We have to take decisions on lithium extraction, refining it, producing lithium batteries, and producing car components” (for electric vehicles), all of which would require a “reengineering of products and processes”.


“I’ve been visiting a lot of countries recently, and the ‘tectonic plates’ are moving, and we have to make choices in new critical sectors. There is a window open to position ourselves overseas so that when things become clearer over the next two to three years we’ll be well placed for the next 20 years”, concluded Pedro Reis, adding that it was time to strike while the iron was hot at this propitious moment to attract investment and build on the preparations made by previous governments, rather than “try and reinvent the wheel”.


Article published in Essential Business and written by Chris Graeme