Algarve businesses need to be proactive and optimistic

By PAULO SILVESTRE [email protected]

Algarve business leader Vítor Neto has backed the region’s entrepreneurs, saying he is confident that businesses will weather the current economic storm and go on to recover well.

In an exclusive interview with the Algarve Resident, the President of the Business Association of the Algarve (NERA) said that the Algarve is “developing positively” during the economic crisis.

“We feared that the situation would get worse this year but fortunately it has not. The Algarve’s economy has demonstrated it can withstand and recover,” said Vítor Neto.

He added that the Algarve had been affected by the recession, specifically the hotel and restaurant sectors and real estate and construction.

“In future, real estate and construction will develop at different speeds and it is natural that these two sectors will have a slow recovery.

“The Algarve has shown some signs of recovery this year and has all the conditions to overcome the crisis, but everything will depend largely on the country’s economic situation and the continuing visits by citizens of our major markets – the UK, Germany, Spain France and the Netherlands.”

According to official figures, the Algarve has lost almost 100 companies this year up to August, especially in the real estate, trade and construction sectors.

“The sectors that work with seasonality suffer more in times of crisis. We have seen, in recent years, a greater number of closures of establishments during the low season compared to previous years, particularly in the areas of accommodation, catering and leisure activities,” he said.

“In order to combat the crisis, companies in the Algarve need to review and refine their strategy and objectives, and streamline their costs and adapt their operating structures to the current situation in order to consolidate their financial positions. They need to believe in their businesses and work hard.”

Vítor Neto said that there are still a reasonable number of companies with foreign owners in the Algarve in various areas, from agriculture to tourism (accommodation, catering, bars, leisure and real estate among others).

“To my knowledge there is still interest from foreign residents to open businesses in the region, which is positive,” he said.

“The Algarve is a region with enormous economic potential that currently is experiencing a period of difficulties and uncertainty. This is caused by the economic and financial crisis and we need to upgrade the tourism development model in the region to compete with the international markets.

“The Algarve receives and is home to many foreigners. Many thousands live in the region and the relationship with the Portuguese companies is generally very good.”

According to NERA president, the region remains as the principal tourism destination of the country and the tourism sector is the “engine of the Algarve”.

“The Algarve has diverse scenic, historical, cultural and gastronomic resources, framed in a mild and pleasant climate with great light, which makes it a pleasant and friendly region that generates a high quality of life, good mood, harmony, well-being, pleasure and happiness,” he said.

Vítor Neto also feels the region’s agriculture and agro-industry sectors need to be “revived and modernised”. “We need to deepen the connection to the sea, restore fisheries and canneries and innovate in all related areas.”

The NERA president also thinks that the Portuguese government should support the activities of micro, small and medium enterprises to safeguard their economic situation and for them to be the main factors for development in the region, the major exporters and job creators.

“The funding support of SMEs through the existing mechanisms (SME-Invest), permanent financing mechanisms, and eventually a bank dedicated to this kind of supports, are essential for the economical development in the region,” he said.

“The government should not increase VAT rates, which cause sharp falls in consumption, and can aggravate recession, more business difficulties and unemployment.”

Vítor Neto believes the “TROIKA measures are likely to affect business in the Algarve due to loss of income of the Portuguese (50% cut of the 13th month, raising taxes, reduction of wages, among others)”.

“This will cause a fall in consumption of the Portuguese and affect domestic tourism,” he said.

“In relation to foreign tourists, this depends on the international measures taken by the TROIKA at a European level. If the international financial crisis worsens, a new financial crisis in Europe is likely to adversely affect our markets – UK, Germany, Spain, France, and Netherlands.”

Vítor Neto expects that the future will not be easy. Businesses and entrepreneurs should prepare for this scenario and plan ahead.“To win in the crisis we need to be proactive and optimistic permanently.”

NERA offers a business support office, which is able to advise entrepreneurs in various situations, such as legal, financial advice, information about community funding, training management, and support for contacts with official institutions in the area of​ the economy, among others.

For more information please call NERA on 289 415 151, or email [email protected]