Portugal: Business environment at a glance
September 22, 2006
Portugal: Business environment at a glance. Check it out:(EIU Viewswire Via Thomson Dialog NewsEdge) COUNTRY VIEW
FROM THE ECONOMIST INTELLIGENCE UNIT
Policy towards private enterprise and competition
2006-07: The state airline, TAP, an oil and gas company, Galp Energia, and Portucel (paper and pulp) will be privatised. Regulatory bodies will be enhanced, with benefits for competition in utility markets, especially telecoms and energy.
2008-10: Privatisations will continue in the energy sector. Diminished resistance to foreign takeovers and joint ventures with Spanish firms, especially in the banking, retail and energy sectors.
Policy towards foreign investment
2006-07: Continued efforts to boost foreign direct investment (FDI) through tax incentives, although efforts to make significant improvements to the overall tax framework will be hampered in the short term by budgetary constraints.
2008-10: Stiffer competition for FDI from central and eastern Europe. High-tech companies may benefit from tax incentives.
Foreign trade and exchange controls
2006-07: Moderate trade friction persists between the EU and the US. Despite reintroduction of EU quotas on certain textile imports from China in 2005, Portuguese textile firms continue to struggle against increased competition.
2008-10: Full opening to textile imports from China in 2008.
Taxes
2006-07: The income tax rate on high earners rose from 40% to 42% in January 2006. Taxes on tobacco, fuel and cars increased in January 2006, with further increases in 2007. The government will enact measures to counter tax evasion.
2008-10: Some tax cuts likely for low-income earners in the run-up to the general election in 2009.
Financing
2006-07: Renewed merger and acquisitions activity in the banking sector will lead to high concentration in the sector.
2008-10: Further consolidation in the financial sector. Medium-sized businesses will seek more funding on international capital markets. Spanish banks will attempt to increase their presence in the Portuguese market.
The labour market
2006-07: Relations with public-sector trade unions are under strain over reduced staffing, low pay rises and cuts in benefits.
2008-10: Additional investment in education and research to improve the quality of the labour force.
Infrastructure
2006-07: The airport at Oporto will be expanded, and construction will begin on a new airport for Lisbon in 2007.
2008-10: Further work on resolving infrastructure deficiencies, notably by expanding high-speed rail links with Spain. Integration of the pan-Iberian energy market will be accelerated, with the aim of reaching full integration during 2008.
Copyright 2006 Economist Intelligence Unit
Related Tags: sector, energy, foreign, competition, investment, market
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