Portugal has made strong efforts to simplify administrative and licensing procedures for SMEs. The time to start a business and to transfer a property were both brought down to one day. However there is room for further improvements as procedures in Portugal remain more complex than the OECD median. The Enterprise Space, a one-stop service for entrepreneurs, was reinforced in 2017 with an online version, the Entrepreneur Office. The programmes Simplex+2016, +2017 and +2018 promote further simplification and ICT use in procedures and Abolish+ aims to eliminate obsolete legal texts. Corporate taxes have been cut and SMEs are provided with new tax benefits on land properties, reinvested profits or capital remuneration.
OECD SME and Entrepreneurship Outlook 2019
OECD SME and Entrepreneurship Outlook
Chapter 36. Portugal
Figure 36.1. Structure and performance of the SME sector in Portugal
Sources: Chart A, C, D: OECD Structural and Demographic Statistics Database 2018, http://dx.doi.org/10.1787/sdbs-data-en; Chart B: OECD Timely Indicators of Entrepreneurship Database 2018; for new enterprise creations and Financing SMEs and Entrepreneurs 2018: An OECD Scoreboard for bankruptcies; Chart E: OECD Structural and Demographic Statistics Database 2018, Employer Business Demography dataset.
SME business conditions and access to strategic resources
Institutional and regulatory framework
Market conditions
The structural reforms engaged in 2011 have created a favourable environment for foreign investment. Moreover, the government managed to reduce its budget deficit to its lowest level since 1974 (0.5%, 2018), the country exiting the EU’s Excessive Deficit Procedure in May 2017. The market for public procurement is small by OECD standards, and late payments affect SME participation, which, on the other hand, benefit from a well-structured e-public procurement system. The Code of Public Contracts was revised in 2017 to simplify and increase flexibility in public procurement procedures.
Infrastructure
European funds have sustained infrastructure investment in Portugal. The European Fund for Strategic Investment (EFSI) brought new funding to high-tech companies and specialised research centres. EFSI 2 to 2020 should put further emphasis on SMEs. The 2014-20 Roadmap of Research Infrastructures of Strategic Interest aims to increase SME participation in the H2020 framework programme and the creation of spin-offs through national and regional coordination. The 2019 State budget supports Digital Innovation Hubs (on manufacturing, healthcare, construction, energy, smart cities and agriculture) for their strategic role as testing and development centres and in attracting investment for SME digitisation. As part of the Interface Programme, the Fund for Innovation, Technology and Circular Economy finances cluster certification and technology transfer, through Technological Interface Centres and a network of Collaborative Labs.
Access to finance
Despite decreasing interest rate spread and rejection rates, SMEs face tightening lending conditions. SME lending has decreased over 2009-17, in line with a drop in total business credits and a sharp decline in short-term SME loans (-62% in 2010-2017). Venture capital partially recovered in 2017 (+33%) after the fall in 2016. The government has put high priority on securing SME access to finance. The share of guaranteed loans grew from EUR 5.7 to 6.1 billion over 2016-2017. The EUR 1.6 billion Capitalize Programme set new credit lines for SMEs, sponsored funds for public-private investment and added tax incentives for investors. Part of the financing serves to recapitalise the Mutual Counter-Guarantee Fund. The SME Leaders Programme also aims to strengthen trust between banks and SMEs. The 2016 StartUp Portugal strategy targets national and foreign capital for alternative funding and co-funding.
Access to skills
In Portugal, student proficiency in core disciplines and adult entrepreneurial abilities are in line with the OECD median. There is however a large gap in the number of adults who are highly educated or who access training. Since 2017 INCoDe.2030, an integrated long-term programme for digital competences, employability and digital inclusion, targets all-ages populations through promotion campaigns, self-diagnosis tools and digital resource platforms. It also plans a reform of the certification system and education and re-qualification programmes. In addition, the 2018 Qualifica Programme will create 300 centres to support a new lifelong learning strategy and cover 600.000 people by 2020.
Access to innovation assets
SMEs are proactive in adopting high-speed broadband and new digital technologies, but they remain weakly integrated into innovation networks. The EUR 4.5 billion Indústria 4.0 programme (2017-21) seeks to develop skills, new methods and digital applications in key strategic sectors, and to facilitate co-operation with multinationals. The Industry 4.0 Vouchers provide EUR 12 million for the digital transformation of 1 500 SMEs and COMPETE 2020 sets a competitive financing scheme for their digital transition. The Interface Programme (2016-20) earmarks EUR 1.4 billion to support inter alia SME linkages to the innovation cycle and SME integration in global value chains through its Suppliers’ Clubs.
The full country profile is available at https://doi.org/10.1787/34907e9c-en
References
CCA Ontier (2016), Find Out Which Tax Incentives Can SMEs Have in Portugal?, https://www.lexology.com/library/detail.aspx?g=82af80f3-67c5-4cf9-bac8-261001874188 (accessed on 22 June 2018).
EC (2017), Digital Transformation Monitor - Country: Portugal "Industria 4.0", European Commission, https://ec.europa.eu/growth/tools-databases/dem/monitor/sites/default/files/DTM_Ind%C3%BAstria%204.pdf.
European Commission (2018), 2017 Small Business Act FactSheet: Portugal, https://ec.europa.eu/growth/smes/business-friendly-environment/performance-review_en#sba-fact-sheets (accessed on 22 June 2018).
European Commission (2017), Investment Plan for Europe. Country Factsheet: Portugal, https://ec.europa.eu/commission/sites/beta-political/files/portugal-investment-plan-factsheet-17x17-june17_en.pdf (accessed on 22 June 2018).
FCT (2014), Portuguese Roadmap of Research Infrastructure 2014-2020, Portuguese national funding agency for science, research and technology, https://www.fct.pt/apoios/equipamento/roteiro/2013/docs/Portuguese_Roadmap_of_Research_Infrastructures.pdf.
INCoDe2030 (n.d.), National Digital Competences Initiative e.2030, https://www.incode2030.gov.pt/sites/default/files/incode2030_en.pdf.
OECD (2015), OECD Skills Strategy Diagnostic Report: Portugal, http://www.oecd.org/skills/nationalskillsstrategies/Diagnostic-report-Portugal.pdf.
Programa Interface (n.d.), Capacitar A Industria Portuguesa, http://www.programainterface.pt/pt.
StartUP Portugal (n.d.), Government Launches New Measures to Support Entrepreneurship, http://startupportugal.com/sp-plus/.
U.S. Department of Commerce (2017), Portugal - Market Challenges, https://www.export.gov/article?id=Portugal-Market-Challenges (accessed on 22 June 2018).