South Africa has reasons to invest more in Portugal.jpg

South Africa has reasons to invest more in Portugal

PORTUGAL WAS a good bet for bilateral South African investment for its political, economic and social stability, and excellent relations with Angola and Mozambique, said Basílio Horta recently. But the economist and diplomat warned that investment worked both ways and Portugal wasn’t for sale on the cheap.

Addressing the Portuguese-South African Chamber of Commerce, the seasoned diplomat asked what could be done to better reinforce Portuguese-South African relations? This was the very question South African President, Thebo Mbeki, put to Prime Minister, José Sócrates, on a recent official visit, reports The Resident’s Chris Graeme.

In truth, the current panorama of economic relations between South Africa and Portugal is not one of the best. “We could say that it is a rather modest relationship, which is inexplicable because, if there is a strategy for Portuguese economic development and investment outside of Portugal then its privileged relationship with Africa (Angola and Mozambique), Brazil and India should allow for greater economic bilateral economic ties with South Africa,” Horta said.

The trade balance between the two countries is traditionally weighted against Portugal, with only 180 million euros in 2005. The imports that came from South Africa were principally coal, iron, food products, and machinery, while exports were cork, wood, paper, ceramics, a few food products, and even fewer chemical products.

In terms of investment, the panorama is even more modest, with generally small-time investments from Portuguese businessmen resident in South Africa. The direct investment from South Africa to Portugal in 2005 was only six million euros. “But, with time, we have great potential to build a very different kind of relationship. The first mission together is to fix specific objectives to launch into the South African market. This can be done from three perspectives: bilateral commerce (imports and exports), from the perspective of investments by Portuguese companies in South Africa, and South African investments in Portugal,” he explained.

What were the factors that determined the interests between the two countries? The most important was the large Portuguese community in South Africa. “We have to get to know this community, forge ties with them, and talk numbers, products and incentives,” he urged.

The second factor was diplomacy. Portugal didn’t have frontier problems or wars, so economic diplomacy was fundamental. Another factor was information gathering with the Portuguese external trade agency, Instituto das Empresas para os Mercados Externos (ICEP), and its 50 staff able to provide South African and Portuguese investors with information and research on external and internal market needs.

“We have to know the market sectors which are important, the opportunities that exist within them, create networks and carry out promotion and research. This country doesn’t have elastic resources, we have to be selective and choose, carefully, how, what and where to invest, or we will end up with a hand full of nothing,” he warned.

Basílio Horta went on to stress the importance of labour and management qualifications, particularly in small and medium sized companies, which needed to go international and had the desire to do so.

“I think Portugal is a magnificent country because we have political stability and we have a government with four years ahead of it. We cannot afford to miss the boat this time, or we risk our people becoming even poorer,” he warned.

“Portugal also has economic stability.” By this, Horta meant that the country was in the European Union with no exchange problems, respected market rules and was average among the OECD countries in terms of wealth and financial stability. “We respect private property, we respect the rights of the investors, which is fundamental, but we must respect them even more,” he said.

According to the economist, there was, generally speaking, social stability, and there were less hours lost to strikes in Portugal when compared to other OECD countries. Using AutoEuropa as an example, Basílio Horta trumpeted the fact that the car company had decided to produce its new luxury VW model in Portugal, because the Portuguese factory worker was productive, competitive and didn’t lose man-hours to strikes. The qualifications, productivity and organisation of our workforce, whether at AutoEuropa, Siemens, Vodafone or Alcatel, were among the best in the world.

The infrastructure was excellent in Portugal: modern roads, air and railway networks, and newly planned rail links that would bring a Spanish market of 40 million ever closer.

Finally, Portugal had security: compared with other countries, there was security in the streets, and, of course, it had a good climate, and the golf! “These are positive aspects for investors,” he stressed. “In terms of software, we have the best there is for small and medium sized companies. In terms of information technology and systems, they’re using the best.”