Tourism, together with associated real estate, is undoubtedly one of the main drivers of Portugal’s economy, currently representing 15% of its GDP.
But the success that Portugal has enjoyed over the past years is not solely down to good food, fine wines and a sunny climate.
It has to do with a coherent, consistent and holistic approach to rebranding Portugal’s image abroad, changing the perception of the country from being a quaint and traditional backwater on the periphery of Europe known only for tourism, to a modern, dynamic, high tech and startup centre, open to technology professionals, relocaters and cutting edge overseas digital companies. o
One of the key figures behind marketing Portugal as so much more than beaches and vinho verde is lawyer and consultant Adolfo Mesquita Nunes who was Portugal’s Secretary of State for Tourism for three years, between 2013 and 2015.
The lawyer and consultant addressed the American Club of Lisbon in November on the topic of ‘The Current State of Tourism’.
Tourism – the best job in government
Adolfo Mesquita Nunes says it the “best portfolio in the government” and selling Portugal was probably “the best job I ever had in my lifetime”.
When he joined the government, one of the first things he realised was that while Portugal is a wonderful destination, with great professionals, good infrastructure, quality hotels and superb experiences for tourists, the government was not communicating and effectively marketing Portugal overseas. “We were not known at the time”.
The former Secretary of State’s priority was to change the way Portugal was viewed and communicated abroad — both in terms of the tools used and the message spread.
In terms of tools, Portugal went fully digital. It was a successful effort and the government department was able to reach much more people, in a more segmented way, which included having conversations it had never had before with tourists.
This meant targeted media campaigns and bringing in social media influencers to reach more people on digital platforms than traditional TV advertising on channels like CNN, or posters along metro platforms.
“My idea at the time was that Portugal should not just market itself as a tourist destination. It needed to be more credible, consistent and coherent as a destination. No country is a good tourism destination if it is not a good place to live, work, and invest”, he said.
This resulted in the definition of a strategy from agriculture to wines, from universities to the startup scene packaged in a coherent message.
One of the first steps to changing perceptions was bringing Web Summit to Portugal in 2016. “It was consistent with the idea that our country was booming, that it was fighting its way out of the crisis, a country where technology could be developed, tested and made”.
Although Portugal has won a clutch of international awards, such as the World Travel Awards Best European Destination, the government realised that none of this could be consistent if Portugal did not have more to present.
The first message was that Portugal is a safe and friendly destination for expats, a county with reliable institutions, rule-of-law, regulatory quality, government effectiveness, political stability, with corruption under control, the 2nd safest European country and 4th safest globally, in the top 10 countries in Europe for FDI (Foreign Direct Investment), offering the best quality of life in Europe for ex-pats and 5th globally according to various rankings from Fortune to Forbes.
Portugal was also marketed as the ideal place to expand to the world because of both location and time zone, Portugal has easy and excellent connections, including air and sea.
Portugal is also one of the top countries in the world in ultra-fast broadband and internet take-up, communications technology, as well as top motorway infrastructure. And according to the English Proficiency Index 2021, Portugal is also in the top 10.
Visas and tax incentives
Portugal also offers a range of tax-friendly regimes and work visas aimed at different segments of the overseas professional and pensioner communities. These include the Tech Visa, Digital Nomads Visa, Golden Visa, StartUP Visa, SIFIDE tax regime for high tech investors, the International Investment Tax Regime, and Non-Habitual Resident tax status (NHR).
Other favourable tax regimes include Tax Incentive to Recovery (IFR), System of Tax Incentives for Company Research and Development (SIFIDE II), Incentive System for the Revitalisation and Modernisation of Companies (SIRME), and the Tax Regime for Investment Promotion (RFAI).
“The strategy was to create a tax, business and talent ecosystem”, he said. “We wanted to position Portugal as a country that is safe, reliable and one where you can invest”.
A safe haven in an uncertain world
Adolfo Mesquita Nunes says that Portugal, in the current times of crisis, has a set of characteristics that means it can be less pessimistic than other economies.
“If we look at the top 5 European economies, Germany is about to go into recession, and Italy and the UK are in recession. But Portugal’s GDP, FDI and energy mix are three main reasons for Portugal to be in a better position than some other economies in Europe”.
With an expected growth of 6.3% in GDP compared to the Euro Zone (2.8%), projections suggest that Portugal will grow in line with the Euro Zone in 2023-2024.
“We have now recovered from the pre-pandemic situation and low unemployment but in tourism we have plenty of jobs but no takers for these jobs”
One of the reasons why is that wages and incentives in the hotel and restaurant trade have traditionally been poor in Portugal which the government and sector has recognised.
The Covid-19 pandemic gave people in this sector time to rethink their lives and retrain, leaving a black hole of around 30-40,000 vacancies to fill. The Government has signed accords with a number of overseas countries making economic migration to fill these vacancies, easier.
Attracting tech and data companies
In 2021, Portugal had the highest number of FDI projects in the country’s history. We attracted 200 projects, (+30% on 2020) and the top country for FDI in Portugal is the United States (15%), with the EU responsible for 75%.
The main investment areas are in software, IT services, transportation, manufacturing and supplies in transportation, and logistics.
Portugal’s energy mix is not dependent on the Russian-Ukraine conflict or Russia, with the result that Portugal is more resilient to energy deficits than other European countries.
Portugal is also becoming more attractive for technology-based development. Portugal is now on course to create more unicorns to add to the current ones (Farfetch, Outsystems, Feedzai, Talkdesk, Remote, Swordhealth and Unbabel) with two more expected next year.
On the Portuguese startup scene companies are involved in AI, Cybersecurity, E-commerce, IoT, Mobility and Connectivity and all are related to the digital economy.
International companies are coming to Portugal to set up tech and data centres and engineering teams. According to Tech Behemoths, there are 130 digital tech companies in Portugal that cover 78 services and industries.
Companies like Revolut, Trip Advisor, Feedzai and Applied Blockchain have all chosen Portugal in recent months or years to establish themselves in Portugal.
“US companies we have been working with to set up in Portugal remark on the talent we have, an intelligible and stable labour legislation, the ease of hiring people in the engineering sector, a tax regime that is very attractive for FDI, a low-cost but skilled workforce, and an easy ‘tax and political climate’ to start a business than some other countries”.
Real Estate
Real estate and tourism each represent around 15% of Portugal’s GDP, while exporting companies represent around 40% of Portugal’s GDP.
“We are still very attractive for investment in these areas, with the residential tourism segment still very important” said Nunes, adding that Portugal’s city centres still have a high number of buildings that need renovating and refurbishing, and there is a huge problem with new-build supply ”.
Nunes points out that demand is 10 times the supply for new homes, providing a huge opportunity in Portugal for real estate development, particularly for developers working with new sustainability and innovation concepts. The stumbling blocks for developers, however, remain. These include the sheer cost of construction materials which have ballooned in price since 2019, continued supply chain problems, the cost of qualified labour, sluggish and cumbersome planning procedures, and multiple and high taxes and VAT.
Despite this, Nunes stresses that: “Portugal is a state that is eager to welcome overseas professionals, tourists and investors and has a stable political policy which is agreed on regardless of which political party is in power”.
“In conclusion, Portugal is so much more than the best tourist destination, and it is only the best tourist destination because somehow we managed to have coherent polices, from one government to the other, that were consistent in showing that Portugal is the best place to stay, live, work and fall in love!”.
Source: Essential Business