Back in the game: Portugal doubles pre-pandemic peak for export-focused investment

7:46 am Friday, January 07th, 2022

By Sergio Goncalves

LISBON (Reuters) – Portugal last year more than doubled its pre-pandemic record for investment in export-focused projects, showing it remains an attractive destination for foreign companies, the head of the state agency that promotes investment and exports said.

AICEP, which offers tax breaks and other incentives for exports and investment, attracted 2.68 billion euros ($3.05 billion) of such investment “with high added value and innovation”, after 287 million euros in 2020.

Its chief, Luis Castro Henriques, told Reuters investors have so far shown “no signs of concern” about political stability in Portugal before a snap general election on Jan. 30, which was called after parliament rejected the minority Socialist government’s budget bill for this year.

Last year’s investments smashed the previous record of 1.17 billion euros in 2019, before the coronavirus pandemic.

With executives’ travel curtailed by the pandemic, AICEP began heavily using online contacts and attracted 97 investments in 2021, “almost all of them industrial projects”, with foreign companies accounting for about 80% of all funding.

“These numbers show that Portugal is highly competitive as we are capturing these investments in an open global competition,” Castro Henriques said, pointing out that money was coming regularly from new sources such as South Korea and the United States, complementing European investment.

Projects included a metalworking factory to be built by South Korean wind tower manufacturer CS Wind, a production line of components for electric car engines by U.S. company BorgWarner, and others in the aerospace, automotive, or pulp and paper industries.

AICEP provides incentives, tax breaks and loans from European Union cohesion funds to companies only in export-oriented businesses.

Projects supported under AICEP’s latest five-year incentives plan are expected to add 4.4 billion euros worth of exports, or more than 2% of GDP, and thousands of jobs.

($1 = 0.8842 euros)

(Reporting by Sergio Goncalves, editing by Andrey Khalip and Timothy Heritage)