140,000 COMPANIES REPRESENTED

Portugal 2019 | ECONOMY | VIP INTERVIEW

TBY talks to António Saravia, President of the Confederation of Portuguese Industries (CIP), on doing business in Portugal, the country's industrial profile, and priorities of the organization in the coming year.

How do you define CIP's role in the context of business in Portugal?
The global economy is going through a series of rapid changes, demanding that organizations adapt to new challenges in the business context. CIP interprets these challenges and finds the best solutions, thus acting as a lighthouse that guides companies. CIP must focus on finding the answers to these new challenges. We represent 140,000 Portuguese companies and are the largest employers' confederation among 70 associations. The diversity of the companies that we represent provides us with a deep knowledge on the day-to-day activities and needs of our companies, replicating best practices that have worked for other companies in need.

What are Portugal's current competitive factors and what needs to be done to improve them?

We have an excellent communication network, great highways, and young people who are highly qualified. However, we still need to improve the qualification of our human resources, because it is through knowledge that differentiation among countries will prevail. Incorporating knowledge to create innovation will allow us to differentiate ourselves in the highly competitive game of the global economy. In addition, more structural reforms are needed. The wealth of the country does not support the dimension of the state we currently have. Portugal must improve the qualification of its human resources and free the state from activities that consume a great deal of the wealth generated in order to transfer the surplus to the economy. We must stimulate the improvement of competitiveness factors by reforming tax and reducing bureaucracy so it is less asphyxiating. If the state manages these points, then companies will be able to perform their roles far better.

The profile of European commerce is changing. How do you see Portugal performing in the EU moving forward?

Portugal is a small but open economy. It has had throughout its history a differentiation: its relationship with both Africa and the Americas. We have a virtuous triangle: Europe, Africa, and the Americas. Through our history, our culture, and the relationship with countries that speak Portuguese as an official language, Portugal can help the EU face the challenge of globalization. Our privileged relationships can bring greater synergies to Europe and simultaneously allow Africa and the Americas to see Portugal as the gateway to Europe. However, Europe also has challenges, its biggest being dissolution. It is not just Brexit, but also Catalonia and the autonomous movements in Spain. We also have to consider how Brexit reflects on the reality of the UK. These are challenges that are beginning to undermine European cohesion. If we start thinking about the future, we will have not one Europe but 27 states with distinct realities. Portugal through its historical relationship with the world has a great power of knowledge and this rich history can be utilized by Europe.

What is the importance of strategy in terms of Portugal's efforts to change its industrial profile theme?

Our Strategic Council on Industry released a publication called “Industrial Politics in Portugal in the Twenty First Century" about how Portugal can position itself in terms of industrial policies. The country cannot be based on services alone. For example, we have reduced the unemployment rate through tourism activities; however, the country cannot live on tourism alone. The sector is extremely volatile, and Portugal could lose its revenue from tourism. That is why we cannot rely on a service economy alone; we must also have an industrial base. The weight of industry in the economy must increase, and this can be reached with a well-defined strategy. Portugal must bet on sectors such as aeronautics or the maritime sector. The country must also look to traditional industries such as footwear and textiles, where we have excellent examples. Portugal must define its strategy and business model to diversify and improve. The country must know what it wants and what it can do; we have excellent examples in the metallurgical and metal-mechanics industry, where we are increasing sales and exports. There are great successes in the aeronautics industry, where Embraer and other companies have come to Portugal. Then, there is the automotive industry, where we are attracting companies through clusters that provide components to the sector. Portugal must define industries and within these definitions aggregate, develop strategies, promote reforms, and fiscally encourage possible ways to invest. We must attract productive investment and bring more national and foreign investments that will bet on internal production, substituting imports for internal manufacturing and developing more industry than what we currently have. The weight of industry in Portugal's GDP has fallen in the last 20 years, and we must bring back industry. This is what we represent with our work: the concept of re-industrialization to return industry to the center of the Portuguese economy.

What are the priorities for CIP in the coming year?

As a social partner, we will continue to demand that the government look at our internal politics and our role in Europe and the world. We want the government to promote reforms that must be undertaken. We need fiscal stability and our fiscal policy must be more predictable. We cannot change the fiscal framework every year; there must be an attractive fiscal policy toward investment. It must allow predictability for investors and ensure that taxes will not change in next five or eight years. The reform of the state must allow the economy to set itself free and entice stimulus so that it can benefit. We need a more efficient legal system with less bureaucracy in order to benefit economic agents. These are our key areas of focus, and we must focus on them until they are achieved.