Millions of Euros in Investments Coming Into Portugal, Portas Announces Published on 04 Jul, 2012 by Sandy Barreiros / Google+
Amidst the gloomy Portuguese economy underlined by the debt crisis, the government continues to give the people good news. The latest of such good fortunes is the ratification of eight contracts with foreign companies that are slated to produce their products and services in the country, most of said commodities of which will be exported.
The news was announced by Paulo Portas, the Minister of Foreign Affairs, just a few days ago. Portas announced that the influx of new foreign investments will bring in €157 million into the Portuguese economy that, in turn, will result to more jobs and less trade imbalance.
The national government will also grant tax incentives amounting to 10% of the investment – or €15.7 million. Such a tax incentive will, hopefully, encourage more foreign investors to pour their funds into the beleaguered Portuguese country.
Portas’ announcement was made at a press conference in his capacity as a minister in charge of the in charge of the Agency for Investment and External Commerce of Portugal (AICEP) and in conjunction with the Ministry of Economy.
According to Portas, the eight foreign investment contracts fulfilled the criteria for approval of two bodies, namely, the AICEP and the Institute for Support to Small and Medium Enterprises and Innovation (IAPMEI). Seven of the contracts were concluded with the AICEP while one was made with the IAPMEI.
These investments are now circulating, so to speak, in the Portuguese economy and, thus, are significantly contributing to its recovery from the European debt crisis. At present, there are 352 jobs directly created from the influx of these foreign investments while also indirectly sustaining 4,108 jobs in related industries.
The foreign investments are in the automotive, aerospace, pharmaceutical and construction industries. These sectors are three of the most important industries in the Portuguese economy, which explains the good news where the government is concerned.
This is good news, indeed, for the Portuguese people considering the high unemployment rate in the country today. As of June 2012, Portugal’s unemployment rate had reached an alarming 14.9% - the highest in the decade and, without timely, effective and long-term public and private sector intervention soon, and the most troubling sign of the debt crisis.
Jobs generation is, of course, a critical component of economic growth. Portas pointed out that economic growth is Portugal’s “essential ambition” while jobs creation is “very important from the social point of view”.
With jobs in place, the Portuguese people are less likely to slide into civil unrest with riots in cities and towns. Such scenarios have happened even to the best European countries including the United Kingdom and Greece.
Then again, in a testament to the Portuguese people’s resilience and forbearance in the face of difficulty, the government has already instituted three rounds of austerity measures without the Portuguese raising too much of a fuss. These austerity measures were made under its own direction as well as part of the provisions for the financial bailout of the European Commission, the European Central Bank and the International Monetary Fund. The latest financial bailout amounted to €78 billion, with Portugal becoming the third country after Greece and Ireland to receive it from the troika.
The foreign companies with investments in Portugal will manufacture their brands, products and evens services in Portugal. In most cases, these commodities will be exported to other countries, thus, helping in restoring the balance of trades.
This is not the first time that substantial foreign investments have entered the beleaguered Portuguese economy. The €157 million influx is actually the “third wave” in foreign investment contracts announced in 2012 by the national government. These investments will be used “regularly and with intensity” to promote more investments, more jobs and better trade balance.
Furthermore, the influx of foreign investments will have beneficial effects on other aspects of the economy including taxation. These effects can come in two basic forms – first, direct use from owner occupancy and, second, various forms of rental income. These two tax aspects are predicted to provide for excellent returns in the tax arena for the country.
Indeed, Portugal is not yet out of the economic storm that continues to batter many European countries but with the government’s focused thrusts and the people’s cooperation, the sun may yet shine in the near future.
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