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Enterprise and Industry

SBA Fact Sheet 2012


PORTUGAL

In a nutshell: Portugal's SMEs have been severely hit by recession with no rebound in sight until the end of 2012 Hardest hit are micro-firms employing less than 10 persons and representing 94 % of all businesses Amid a challenging political and economic climate, Portugal's overall SBA profile has improved slightly over the last year Important policy initiatives have been taken in the Entrepreneurship and Second chance areas About the SBA Fact Sheets1: The Small Business Act for Europe (SBA) is the EUs flagship policy initiative to support small and mediumsized enterprises (SMEs). The aim of the annually updated Fact-Sheets is to improve understanding of recent trends and national policies affecting SMEs. Since 2011, each EU Member State has appointed a high-ranking government official as its national SME envoy. SME envoys spearhead the implementation of the SBA agenda in their countries.

1. SMEs in Portugal basic figures


Number of Enterprises EU27 Portugal Number Micro Small Medium-sized SMEs Large Total 671.213 35.919 5.335 712.467 782 713.249 Share 94,1% 5,0% 0,7% 99,9% 0,1% 100,0% Share 92,2% 6,5% 1,1% 99,8% 0,2% 100,0% Employment Portugal Number 1.193.094 681.677 508.684 2.383.455 660.376 3.043.831 Share 39,2% 22,4% 16,7% 78,3% 21,7% 100,0% EU27 Share 29,6% 20,6% 17,2% 67,4% 32,6% 100,0% Value added Portugal Billion 18 17 16 51 25 76 Share 23,2% 22,8% 21,5% 67,6% 32,4% 100,0% EU27 Share 21,2% 18,5% 18,4% 58,1% 41,9% 100,0%

Estimates for 2011, based on 2005-2009 figures from the Structural Business Statistics Database (Eurostat). The estimates have been produced by Cambridge Econometrics.The data cover the 'business economy' which includes industry, construction, trade, and services (NACE Rev. 2 Sections B to J, L, M and N). The data does not cover the enterprises in agriculture, forestry, fishing or the largely nonmarket services such as education and health. The advantage of using Eurostat data is that the statistics from different countries have been harmonised and are comparable across countries. The disadvantage is that for some countries these data may be different from data published by national authorities.

Portugals SME sector is characterised by the large share of micro-firms with less than 10 employees. At 94 %, it is two percentage points higher than the EU average. Their role as employers is even more striking: almost 40 % of the private sector workforce is employed in micro-firms. This is 10 percentage points more than the EU average. However, their productivity appears very low compared to their peers in other EU countries, as their share in valueadded in only slightly higher than the EU average. The SME sector in Portugal appears to be less services-oriented than it is in the EU as a whole. Also, the figures suggest that the services firms are much smaller and produce less than their EU peers.

Hence, although the share of services-oriented SMEs in the total number of SMEs is roughly the same as for the EU at large (43 % compared to 45 %), the services sector contributes much less to the overall economy than in the EU as a whole, in terms of employment (Portugal: 33 %, EU: 40 %) and value-added (Portugal: 35 %, EU: 42 %). Conversely, manufacturing, construction and trading all account for a higher share of employment and value-added in Portugal than in the EU as a whole. The available estimates for 2011 suggest a competitive disadvantage when it comes to research and knowledge-intensive firms2. Portugal has far fewer such firms both in manufacturing and services.

SBA Fact Sheet 2012 Portugal

SME trends in Portugal3


Number of enterprises (Index: 2005=100, estimations as from 2010 onwards)
110

100

90

80 2005 2006 2007 2008 2009 2010e 2011e 2012e

SMEs in Portugal

SMEs in the EU

Employment in enterprises (Index: 2005=100, estimations as from 2010 onwards)


110

100

High and medium-tech manufacturing firms, for instance, account for only 7 % (EU: 12 %) of all SMEs, 11 % of SME employment (EU: 21 %) and 18 % of added value (EU: 30 %). For knowledge-intensive services, including hightech ones, the difference is somewhat smaller but still significant. Only 26 % of Portugals SMEs are knowledge-intensive (EU: 28 %) with 22 % in overall SME employment (EU: 25 %) and a 23 % share in total SME value-added (EU: 31 %). The lack of competitiveness of Portugals SME sector as expressed in these figures may be one reason why the downturn in Portugals SME sector since the onset of the crisis in 2008 has been dramatic. The robust upward trend in the expansion of the SME sector came to an abrupt halt in 2008. Since then, the number of enterprises, as well as SME employment and value-added creation, has seen a massive decline completely wiping out the gains accumulated in the boom years of the beginning of the last decade.
Value added of SMEs

90 2005 2006 2007 2008 2009 2010e 2011e 2012e

Outer circle: Inner circle:

EU27 Portugal

SMEs in Portugal

SMEs in the EU
21% 31%

Value added of enterprises (Index: 2005=100, estimations as from 2010 onwards)


120
69% 79%

High-tech manufacturing and knowledge-intensive services Lowtech manufacturing and less knowledge-intensive services

110

100

90 2005 2006 2007 2008 2009 2010e 2011e 2012e

SMEs in Portugal

SMEs in the EU

SBA Fact Sheet 2012 Portugal

2. Portugals SBA profile


EU average +/- 0,5 standard deviations Portugal

1. Entrepreneurship 10. Internationalization


1,0 0,8 0,6 0,4

2. Second chance

9. Environment

0,2 0

3. Think small first

8. Skills and Innovation

4. Responsive administration

7. Single market 6. Access to finance

5. State aid & public procurement

Portugal's profile shows a mixed picture across the different policy areas. However, it shows a better overall performance than last year's. Hence, the negative trends described in section 1 are not associated with a deterioration of the policy environment, but are due to the deep recession the country is experiencing. SBA policy areas that stand out are Responsive administration, Think small first and Entrepreneurship where the country performs better than the EU average. While in most other areas Portugal is in line with the EU average, it also has some catching-up to do in State aid and public procurement and Access to Finance. In the areas of Responsive administration, Think small first, and Single market, the country has moved

from below the EU average range to just within it. Policy-wise, in 2011 and the first three months of 2012, Portugal took action in most SBA areas. Hence, there was some limited SBA progress in 2011 and first quarter of 2012. Important initiatives were launched in at least two areas (Second chance and Entrepreneurship), with the Programa Revitalizar (Revitalise Programme) and the Programa Estratgico para o Empreendorismo e a Inovao +E +I (Strategic Programme for Entrepreneurship and Innovation +E +I). The latter also relates to the Innovation and skills area. There is little in the way of a formal strategy for implementing the overall SBA agenda. However, the government elected in June 2011 included in its programme (approved by Parliament) the need to comply with and to implement the SBA principles. The SME Envoy has an active role in this process, as he is the Director of DGAE (Directorate-General for Economic Activities in the Ministry for Economy and Employment). This is the government department (national contact point for SBA) in charge of the SBA follow-up. There is potential for giving the SME Envoy an even more prominent role: during the inception phase his actions have been somewhat limited by the change in Government and the resulting administrative disruptions.

SBA Fact Sheet 2012 Portugal

Portugals SBA performance: Status quo and development over 2007-20124


(Compound annual growth rate 2007-2012) Low Performance, Progress 7 High Performance, Progress 15%

Progress over time

8 5 6 2 109 1

10% Legend: 1. Entrepreneurship 2. Second chance 5% 3. Think small first 4. Responsive administration 0% 5. State aid & public procurement 6. Access to finance -5% 7. Single market 8. Skills and innovation 9. Environment -10% 10. Internationalization

Low performance, Deterioration -2,5 -1,5 -0,5 0,5

High Performance, Deterioration 1,5 2,5

-15%

(Distance fromthe EUaverage, in standard deviations, EUavg.=0)

Performance

Note: Due to a lack of data, it is not possible to calculate the progress rate for Area 9 Environment. In the graph to the left, the progress rate was set to 0% by default, for all countries.

SBA Fact Sheet 2012 Portugal

I. Entrepreneurship
Dis tance from the EU-average (meas ured in s tandard deviations , EU-average=0)
Self employment rate (% of total employment); 2010; Portugal: 19; EU-avg: 14 Entrepreneurship rate (% of adults who have started a business or are taking the steps to start one); 2009; Portugal: 12; EU-avg: 12 Entrepreneurial intention (% of adults who intend to start a business within 3 yrs); 2011; Portugal: 12; EU-avg: 13 Opportunity-driven entrepreneurship (% of entrepreneurs); 2009; Portugal: 50; EU-avg: 55 Preference for self-employment (% of adults who would prefer to be selfemployed); 2009; Portugal: 51; EU-avg: 45 Feasibility of becoming self-employed (% of adults who think it is feasible to become self-employed); 2009; Portugal: 18; EU-avg: 28 Share of adults who agree that school education helped them develop an entrepreneurial attitude (%); 2009; Portugal: 63; EU-avg: 49 Share of adults who think that successful entrepreneurs receive a high status in the society (%); 2010; Portugal: 71; EU-avg: 69 M edia attention for entrepreneurship (%); 2010; Portugal: 53; EU-avg: 50

-2,0

-1,5

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

Note: Data bars pointing right show stronger than EU -average performance and data bars pointing left show w eaker performance.

Overall, Portugal's performance has not changed substantially since last year. It still performs in line with the EU average, though it has been moving further up within that bracket of average performance. This slight improvement is mainly down to the introduction of a new indicator this year, i.e. the self-employment rate where Portugal scores well above its EU peers. Whereas 19 % of the persons employed in Portugal are doing so on their own account, the corresponding figure for the EU as a whole is only 14 %. This high rate may be partially explained by the fact that Portugal ranks the highest for the number of people who felt that school education helped them develop an entrepreneurial mindset almost two-thirds of respondents (63 %), versus less than half (49 %) for the EU as a whole. In the light of these results it is somewhat surprising that - according to the Eurobarometer results - the percentage of Portuguese people who consider selfemployment a feasible option is much lower than the EU average (Portugal: 18 %; EU: 28 %) On the policy front, in 2011 the Programa Estratgico para o Empreendorismo e a Inovao

+e +i (Strategic Programme for Entrepreneurship and Innovation +e +i) was launched in December 2011. Its main strategic objectives are to create a more entrepreneurial society, to expand the basis of innovative and export-orientated companies, and to ensure that Portugal is integrated into international networks of knowledge, entrepreneurship and innovation. In the field of entrepreneurship, the government is concerned to create a favourable environment for the emergence of excellence initiatives and projects. In connection with the +e +i Programme, the government set up the National Council for Entrepreneurship and Innovation. Secondly, it created the programme known as INOVA Jovens Criativos, Empreendedores para o sculo XXI (Creative, Entrepreneurial Youngsters for the 21st Century). This is a joint initiative taken by the Portuguese Youth Institute, IPJ, SMEs, the Innovation Support Institute (IAPMEI) and the Directorate-General for Curricula Development. It is expected to get significant numbers of basic and secondary school students applying their creativity to help improve conditions in their schools and local

SBA Fact Sheet 2012 Portugal

communities. Finally, the 9th Concurso PoliEmpreende (a call for tenders) is aimed at Polytechnic University students. It aims to change the attitudes of these students, encouraging them to

find ways of getting businesses to exploit the knowledge they have acquired.

II. Second chance


Dis tance from the EU-average (meas ured in s tandard deviations , EU-average=0)
Time to close a business (in years); 2012; Portugal: 2; EU-avg: 1,94 Cost to close a business (cost to recover debt as % of the debtor's estate); 2012; Portugal: 9; EU-avg: 10,64 Degree of support for a second chance (%); 2009; Portugal: 78; EUavg: 81

-2,0

-1,5

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

Note: Data bars pointing right show stronger than EU -average performance and data bars pointing left show w eaker performance.

Portugal remains well within the EU average range on this indicator. Most of the individual indicator results in this area have not changed as compared to last year. Portugal is doing slightly better than its EU peers as regards the costs for closing down a business, but this advantage is largely wiped out by the longer time it takes to wind down a business in Portugal and the lower popular support for giving failed entrepreneurs a second chance. As to policy measures, in February 2012 the government launched the Programa Revitalizar (Revitalise Programme). It aims at changing the legal framework to make it easier to recover businesses which are economically sound but may be close to insolvency. The revision of the law on insolvencies

and enterprise recovery (CIRE) is one of the 10 measures provided for in the first phase of the Revitalise Programme. The new Programme introduces a Special Process of Revitalisation, under which intervention by the courts will be reduced and decision time shortened because creditors will approve a company restructuring plan. Another important instrument is the Enterprises Recovery System involving an extrajudicial procedure (SIREVE). In addition, the legislation on insolvency administrators has been revised, and there are several other measures, of a judicial, fiscal and financial nature.

III. Think Small First


Distance from the EU-average (measured in standard deviations, EU-average=0)
Communi ca ti on a nd s i mpl i fi ca ti on of rul es a nd procedures (0=ma xi mum, 6=mi ni mum); 2008; Portuga l : 0; EU-a vg: 0,3 Burden of government regul a ti ons (1=burdens ome, 7=not burdens ome); 2011; Portuga l : 2,5; EU-a vg: 3,09 Li cens es a nd permi ts s ys tems (0=ma xi mum, 6=mi ni mum); 2008; Portuga l : 0; EU-a vg: 1,59

-2,0

-1,5

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

Note: Data bars pointing right show stronger than EU-average performance and data bars pointing left show weaker performance.

The overall situation regarding Think small first is better than in the EU as a whole. In absolute terms, SBA Fact Sheet 2012 Portugal

Portugal's performance on each of the individual indicators has remained the same as last year. 6

Portugal remains well ahead of its EU peers on two of the three indicators, which measure regulatory and administrative opacity (such as licenses and permit systems), communication and the simplification of rules and procedures. These results are based on the countrys self-reported answers from 2008. Portugal scores below the EU average only on the more general question of the burden of government regulation, as perceived by the entrepreneurs who responded to the survey. . Policy wise, no significant measures were taken in this area in 2011. However, there are plans for a

significant reform of industrial licensing in 2012 (Programa da Indstria Responsvel, Government Resolution 47/2012, published on 18 May 2012). This reform would significantly simplify the juridical framework for firms and it reduces (to less than 5 % of cases) the need for firms to have a previous licence in order to start up an industrial activity. This Government Resolution thus aims to review the current legislative framework for setting up new manufacturing firms. However, at the time of writing, this review has not yet been completed. The intended deadline for finalisation is the end of 2012.

IV. Responsive Administration


Dis tance from the EU-average (meas ured in s tandard deviations , EU-average=0)
Time to start a business (in calendar days); 2012; Portugal: 5; EU-avg: 14 Cost to start a business (% of income per capita); 2012; Portugal: 2,3; EU-avg: 4,98 Paid in minimum capital (% of income per capita); 2012; Portugal: 0; EU-avg: 16 Time required to transfer property (in calendar days); 2012; Portugal: 1; EU-avg: 36 Cost required to transfer property (% of property value); 2012; Portugal: 7,3; EU-avg: 4,69 Number of tax payments per year; 2012; Portugal: 8; EU-avg: 15 Time required to comply with major taxes (hours per year); 2012; Portugal: 275; EU-avg: 206 Cost to enforce contracts (% of claim); 2012; Portugal: 13; EU-avg: 20,6 Full online availability of the basic public services to businesses; 2010; Portugal: 100; EU-avg: 89

-2,0

-1,5

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

Note: Data bars pointing right show stronger than EU -average performance and data bars pointing left show w eaker performance.

Responsive administration is Portugal's best performing SBA area. Not only does this country currently rank above the EU average, but it also shows a firmly positive trend in the direction of a more business-friendly administration. Thus, in 2005-2012, the compound growth rate for this area has been firmly positive, pointing to a robust improvement of conditions. This is also reflected in the year-on-year improvement of all individual indicators in this area. There was no indicator where Portugal's performance deteriorated: in the worst of

cases it stagnated. Even in areas where Portugal is still trailing the EU average, e.g. on the lengthy timescale for tax compliance, Portugal has improved. The figure dropped from 298 to 275 days in 2011. While this is still way above the EU average of 206, days there seems to be momentum in the right direction. Portugal now outperforms the EU average in seven out of nine indicators. It has also retained its top position in Europe on two indicators: takes only one day to transfer property in Portugal, as against almost 34 days in the EU on average, 7

SBA Fact Sheet 2012 Portugal

and all eight basic public services are fully available online. The trend is thus encouraging, even though attention still needs to be given to some lessperforming areas such as the time requirements for tax compliance and the high costs of transferring capital. Policy wise, in 2011 a new licensing scheme (Licenciamento Zero: Zero Licensing) was approved for the premises of new shops, restaurants, cafes and pubs and a few other services. Large establishments (over 2000 square metres) and commercial complexes (malls, etc.) larger than 8 000 square metres remain outside this new scheme.

Zero Licensing replaces the old scheme (which implied a prior visit to obtain the licensing of new premises) by possible inspections after the premises open, and higher fines for breaching the rules. Travel agencies have been given easier access to activity by abolishing the requirement for a licence before starting a new travel agency, and replacing it with a prior notice giving evidence that the new agency meets all the requirements. Hence, new travel agencies may start their activities without any formal authorisation by the public administration.

V. State aid and public procurement


Dis tance from the EU-average (meas ured in s tandard deviations , EU-average=0)
SMEs' share in the total value of public contracts awarded (%); 2008; Portugal: 19; EU-avg: 38 State aid for SMEs (% of total aid earmarked for SMEs); 2010; Portugal: 1; EU-avg: 4 Average delay in payments from public authorities (in days); 2011; Portugal: 66; EU-avg: 25 e-Procurement availability (pre-award); 2010; Portugal: 84; EU-avg: 73 EU Regional Funds for entrepreneurship and SMEs in 2007-2013 (% of total allocation); 2011; Portugal: 7,2; EU-avg: 9,5 EU funds for business creation and development in 2007-2013 (% of EAFRD total allocation); 2011; Portugal: 0; EU-avg: 2,1

-2,0

-1,5

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

Note: Data bars pointing right show stronger than EU -average performance and data bars pointing left show w eaker performance.

State aid and public procurement represents the other end of the scale of Portugals SBA performance. Portugal is trailing its EU peers by a wide margin. On almost all counts, Portugal failed to catch up with the EU average. In fact, Portugal's performance is among the lowest of all EU-27 countries in all but one area the share of services related to e-procurement, where Portugal's 84 % is well ahead of the EUs 73 % average. A case in point are the 66 days (on average) it takes the public authorities to pay SMEs. Even though this has come down from 84 days last year, it is still well above the 25 days EU average and also outside the acceptable norms as defined in the EUs late

payment directive which was adopted by all Member States in 2011. The other indicators in this section suggest either relatively little attention being paid to SMEs in public support programmes or insufficient dynamism by SMEs in terms of accessing public support. The share of SMEs in state aid and the share of SMEs in public contracts are well below the EU average. So is the share of SME-dedicated assistance programmes in using EU regional or structural EU funds for promotion purposes. In none of those areas was there any significant improvement, either in absolute or in relative terms. On the policy front, the Portuguese Government has adopted a competitive approach in several

SBA Fact Sheet 2012 Portugal

categories of goods and services covered by framework agreements, under the National Public Procurement System which is mandatory for all central administration and public institutes (+1800 entities). Between 2009 and 2011, the system manager ANCP (National Agency for Public Procurement) drew up over 20 public tenders, which were duly publicised in the Official Journal of the European Union (OJEU). Their purpose was to celebrate and renew 16 active framework

agreements, covering EUR 1 000 million, amounting to 80 % of across-the-board public spending. A government resolution of January 2012 established 25 measures, one of which envisages the development of a B2B platform to expand the public procurement chain currently covered by eprocurement. Through this e-procurement solution, SMEs are able to better access public markets, and can do so either individually or in association, to achieve economies of scale.

VI. Access to finance


Dis tance from the EU-average (meas ured in s tandard deviations , EU-average=0)
Rejected loan applications and unacceptable loan offers (% of loan applications by SM Es); 2011; Portugal: 22; EU-avg: 15 Access to public financial support including guarantees (% of respondents that indicated a deterioration); 2011; Portugal: 23; EU-avg: 22 Willingness of banks to provide a loan (% of respondentd that indicated a deterioration); 2011; Portugal: 36; EU-avg: 27 Relative difference in interest rate levels between loans up to EUR 1 million and loans over EUR 1 million; 2011; Portugal: 23; EU-avg: 19 Total duration to get paid (no. of days); 2011; Portugal: 98; EU-avg: 53 Lost payments (% of total turnover); 2011; Portugal: 3,2; EU-avg: 2,91 Venture capital investments - early stage (% of GDP); 2009; Portugal: 0,018; EUavg: 0,02 Strength of legal rights; 2012; Portugal: 3; EU-avg: 7 Depth of credit information index; 2012; Portugal: 4; EU-avg: 4

-2,0

-1,5

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

Note: Data bars pointing right show stronger than EU -average performance and data bars pointing left show w eaker performance.

The available data show that, on the whole, getting access to finance is much more difficult for Portuguese firms than for most of their peers in other EU countries. What is more, the situation has clearly deteriorated in a number of key areas. Most problematic seems to be the situation as regards financing through loans by banks or other private financial institutions. While last year only 19 % of SMEs found their loan applications rejected, or met with unacceptable loan offers, the figure rose to 22 % in 2011. What is worse is that this happened in the face of a drastically improved credit climate in

the EU overall. This trend is also confirmed by other indicators such as the willingness of banks to provide a loan: 36% of entrepreneurs reported a deterioration in 2011 compared to only 18% in the previous year. The situation seems to have massively deteriorated in Portugal while for the EU overall it improved (the EU average dropped from 30 % in 2010 to 27 % in 2011). The problem of access to private loans is compounded by increasingly difficult access to public financial support. This, in 2011, 23 % of the country's SMEs reported a deterioration of access to such support

SBA Fact Sheet 2012 Portugal

(including guarantee funds) while in the previous year it had been only 19 %. Although Portugal is still not falling behind the EU average of 22%, this worsening of conditions ran counter to the general EU trend, as the EU average figure remained stable. A more converging development can be seen in the relative difference in interest rate levels between loans of up to 1 million Euros and those above that threshold. In both cases, the mark-up to be paid for small loans of less than 1 million Euros (as compared to loans above that threshold) shrank in 2011. The convergence in credit conditions for smaller and bigger loans was similar for both Portugal and the EU as a whole. In both cases, the differential dropped by 8 % (Portugal: from 31 % to 23 %; EU: from 27 % to 19 %), but left a wider gap for Portugal than the EU. In terms of payment times, the average waiting time for SMEs in Portugal (98 days) is still much greater than the EU average (53 days) and hence constitutes another cash-flow problem for SMEs in Portugal. A number of policy measures have been taken lately to improve the situation in this policy area in Portugal. The PME Crescimento (SME Growth) initiative was launched to provide loans to SMEs. This initiative intends primarily to finance new investments in fixed or intangible assets, but it can also be used to boost a firm's working capital.

Already in the first two months of operation it granted 640 m of credit in a total of 5 600 operations. Furthermore, the pay-back period for SMEs' credit lines was extended by one year. In just five months, these extensions granted 384 m of liquidity for companies in a total of 8 300 operations Also, the reorientation of National Strategic Reference Framework (QREN) funds aims to provide easier access to credit for national enterprises that are being restructured. The 1 500 million framework loan from the European Investment Bank (EIB) was allocated to QREN initiatives and is being used to support productive investments. The Regime Fiscal de Apoio ao Investimento (Tax system to support investment) provides tax benefits to support investment in tangible and intangible assets whenever those investments lead to the net creation of jobs. The government has decided to review the legislation on venture and risk capital. Its aim is to develop the private business sector and streamline the public resources being used for this purpose. The main practical decision was to concentrate the risk and venture capital activities of different ministries in a single agency or entity.

VII. Single market


Dis tance from the EU-average (meas ured in s tandard deviations , EU-average=0)
SMEs with intra-EU imports (%); 2009; Portugal: 13; EU-avg: 17 SMEs with intra-EU exports (%); 2009; Portugal: 4; EU-avg: 7 Single market directives not transposed or notified (%); 2011; Portugal: 1,3; EU-avg: 1,17 Number of directives overdue by 2+ yrs.; 2011; Portugal: 0; EU-avg: 0,15 Average transposition delay for overdue directives (in months); 2011; Portugal: 6,2; EU-avg: 5,47

-2,0

-1,5

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

Note: Data bars pointing right show stronger than EU -average performance and data bars pointing left show w eaker performance.

Portugals overall performance in this area has moved up from just below the EU average to just

within that threshold. This change is, however, rather small. The data is, in effect, largely

SBA Fact Sheet 2012 Portugal

10

unchanged from last year, since Portugal was unable to substantially improve its performance on any of the individual indicators, either vis--vis the EU or in absolute terms. The indicators measuring government action to implement single market regulation thus show a failure to transpose many Single Market Directives into national law, delays in transposition and an above-average number of directives overdue by more than two years. The indicators measuring SMEs trading record within the internal market also show Portugal trailing behind

other EU countries, although there are some absolute improvements as the share of SMEs importing from the single market crept up slightly from 11 % in last year's fact sheet to 13 % this year. Still, Portugal's performance remains below the EU average and the country is therefore still failing to fully exploit the opportunities of the single market. Despite these problems, no significant measures were taken in this area in 2011.

VIII. Skills and innovation


Dis tance from the EU-average (meas ured in s tandard deviations , EU-average=0)
SMEs introducing product or process innovations (% of SMEs); 2008; Portugal: 48; EU-avg: 34 SMEs introducing marketing or organizational innovations (% of SMEs); 2008; Portugal: 44; EU-avg: 39 SMEs innovating in-house (% of SMEs); 2006; Portugal: 34; EU-avg: 30 Innovative SMEs collaborating with others (% of SMEs); 2008; Portugal: 13; EU-avg: 11 Sales of new-to-market and new-to-firm innovations (% of turnover); 2008; Portugal: 16; EU-avg: 13 SMEs participating in EU funded research (number per 100.000 SMEs); 2011; Portugal: 8; EU-avg: 23 SMEs selling online (% of SMEs); 2011; Portugal: 15; EU-avg: 13 SMEs purchasing online (% of SMEs); 2011; Portugal: 14; EU-avg: 28 Enteprises providing training to their employees (% of all enterprises); 2005; Portugal: 44; EU-avg: 58 Employees' participation rate in education and training (% of total no of employees in microfirms) ; 2010; Portugal: 4; EU-avg: 11

-2,0

-1,5

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

Note: Data bars pointing right show stronger than EU-average performance and data bars pointing left show weaker performance.

The overall score in this area is largely unchanged from last year and still in line with the EU average. There is a striking difference between indicators on innovation and skills. The innovation indicators include core indicators that directly track a firms innovative record, such as SMEs introducing new products and processes, SMEs introducing marketing or organisational innovations, SMEs innovating in-house and the average share of newto-market and new-to-firm products in relation to turnover. All but one of these indicators for Portugal

are in line with the EU average or above it. The most striking example is the Share of SMEs introducing products or processes, where Portugal outperforms the EU average by 14 %. While these indicator results look positive, one should interpret them with caution. After all, the figures in section 1 have clearly shown that Portugal lacks hi- and mid-tech manufacturing SMEs and knowledge-intensive SMEs, so the findings have to be placed in this context. Regarding online sales and purchases, Portugal is firmly in line with the EU average and

SBA Fact Sheet 2012 Portugal

11

even above it for sales. The situation on innovation contrasts with the situation on skills. Both indicators (measuring training by SMEs) give below-average results. In Portugal, 44 % of all enterprises train their employees, as against the EU average of 58 % and the EU's top scorer is the UK, with 90 %. This clearly shows that Portugal has some catching up to do. Recently, the Portuguese Government has consolidated the situation by taking a string of further policy measures. First, the National Budget for 2011 renewed the SIFIDE Sistema de Incentivos Fiscais I&D Empresarial (System of Incentives for Business Research and Development) giving it the title SIFIDE II and laying down new rules for accessing this system in 2011-2015. SIFIDE is a tax credit system designed to stimulate R&D in business by allowing firms to deduct a number of items from their IRC (the tax on business

revenues). These items include the equity of research and development entities, the costs of filing for patents and the fees for maintaining them, the costs of R&D audits, investment in purchasing R&D equipment, and the salaries of researchers and auxiliary R&D personnel. The Taxa Zero para a Inovao (Zero Rate for Innovation) initiative was launched through a Decree Law with measures to reduce business companies contextual costs. This will be done by exempting business firms with innovative potential from fees and other charges for two years. To benefit from this initiative, SMEs need to fulfil the following criteria over the previous three financial years: i) having carried out R&D investments; ii) having maintained or increased the number of workers on their staff; and iii) having raised their business turnover by at least 5 per cent on average.

IX. Environment
Dis tance from the EU-average (meas ured in s tandard deviations , EU-average=0)
Innovations with environmental benefits ; 2008; Portugal: 0,07; EUavg: 0,04 SMEs that have taken resource-efficiency measures (%) ; 2012; Portugal: 99; EU-avg: 93 SMEs that have benefitted from public support measures for their resource-efficiency actions (%); 2012; Portugal: 4; EU-avg: 9 SMEs that offer green products or services (%); 2012; Portugal: 21; EUavg: 26 SMEs with a turnover share of more than 50% generated by green products or services (%); 2012; Portugal: 17; EU-avg: 22 SMEs that have benefitted from public support measures for their production of green products (%); 2012; Portugal: 4; EU-avg: 8

-2,0

-1,5

-1,0

-0,5

0,0

0,5

1,0

1,5

2,0

Note: Data bars pointing right show stronger than EU -average performance and data bars pointing left show w eaker performance.

Overall, Portugal performs in line with the EU average. The majority of individual indicators showed, however, sub-average values for Portugal, suggesting that more action in this area might be required. In particular, the indicators measuring the number of SMEs that base at least part of their business on green goods and services show Portugal consistently underperforming vis--vis the EU average. On all three indicators measuring the SBA Fact Sheet 2012 Portugal

importance of green business, Portuguese SMEs trail their counterparts in the rest of the EU. As regards resource-efficiency the picture is less clear. Almost all SMEs (99 %) have already invested in resource efficiency, and this is clearly more than the EU average. Relatively few, however, have been receiving public support for those investments In 2011, no significant measures were taken in this area. 12

X. Internationalisation

Portugal's overall performance matches the EU average. There has been almost no change since last year. Confirming the results of the single market section, Portuguese SMEs tend to trade less with partners outside Portugal, in this case with partners outside the EU. On both the export and import side, the longer time delays for importing or shipping goods overseas may, at least partially, be responsible for holding SMEs back from trading. On the positive side, Portugal's relatively advantageous position regarding the smaller number of documents needed for exports and imports was unchanged from last year. Likewise, the costs of exporting and importing are also lower in Portugal. In fact the average cost for importing was reduced from $ 999 in 2010 to $ 899 in 2011. Overall, though, no major progress was recorded in 2011 in this area and selected additional policy measures might be needed to stimulate further internationalisation.

Portugals policy action in this area in 2011 included setting up a Strategic Council for the Internationalisation of the Portuguese Economy. Its purpose is to assess public policies and private initiatives relating to the internationalisation of the Portuguese economy or to promoting and securing foreign investment and development cooperation. The 'Internacionalizar em Parceria' (Partnerships for Internationalisation) Programme is the result of a partnership between AICEP Capital Global, a financial organisation (Caixa Capital, which is part of the public Caixa geral de Depsitos group) and a private partner. It aims to support the internationalisation of Portuguese SMEs. EXPORT-INVESTE is an instrument for providing support to exporting companies. It involves launching a new credit line and credit insurances Export Invest totalling EUR 275 million to promote the export of products with longer production cycles.

SBA Fact Sheet 2012 Portugal

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3. Good practice
To show what the government does to promote SMEs, we include an example of good practice.
The government launched third (2011-2012) edition of the programme Promoo do Empreendedorismo Imigrante (Promotion of Immigrant Entrepreneurship), also known as PEI 0.3. This programme is aimed at promoting entrepreneurial attitudes in immigrant communities, particularly those living in more vulnerable areas. The purpose is to create 30 new businesses and to develop people's personal, social and managerial competencies, enabling them to start up a new business. The programme is aimed at young people, between 18 and 35 years, who have completed their secondary education but who are unemployed and looking for their first job. The programme is financed by the MICROINVEST credit line, and provides up to 15 000 Euros of financing for each project.

About the SBA Fact Sheets


The Small Business Act (SBA) Fact Sheets are produced by DG ENTR as part of the SME Performance Review (SPR), which is its main vehicle providing an economic analysis of SME issues. They combine the latest available statistical and policy information for the 27 EU Member States and another 10 non-Member States which also contribute to the EUs Competitiveness and Innovation Framework Programme (CIP). The Fact Sheets produced annually help to organise the available information to facilitate SME policy assessments and monitor SBA implementation. They document the status quo and progress. They are not an assessment of Member State policies but should be regarded as an additional source of information designed to improve evidence-based policy making. For example, the Fact Sheets cite only those policy measures deemed relevant by local SME policy experts. They do not, and cannot, reflect all measures taken by the government over the reference period. More policy information can be found on a database accessible from the SPR website. Please also see the end notes overleaf.

For more information


SME Performance Review: http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performance-review/index_en.htm Small Business Act: http://ec.europa.eu/enterprise/policies/sme/small-business-act/index_en.htm The European Small Business Portal: http://ec.europa.eu/small-business/index_en.htm Entr-SPR@ec.europa.eu

SBA Fact Sheet 2012 Portugal

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The SBA Fact Sheets 2012 benefited substantially from input by the European Commissions Joint Research Centre (JRC) in Ispra, Italy. The JRC made major improvements to the methodological approach, statistical work on the dataset and the visual presentation of the data. The indicators measuring the number and contribution to employment and value added of the hightechnology SMEs in the manufacturing industries and knowledge intensive SMEs in the service sectors were calculated following the Eurostat definition on High-technology and knowledge based services aggregations based on NACE Rev. 2.. For more information please see: http://epp.eurostat.ec.europa.eu/cache/ITY_SDDS/Annexes/htec_esms_an3.pdf
3 2

The three graphs below describe the trend over time for the variables. They consist of index values for the years since 2003, with the base year 2003 set at a value of 100. As from 2008, the graphs show estimates of the development over time, based on 2003-2007 figures from the Structural Business Statistics Database (Eurostat). The estimates were produced by Cambridge Econometrics. The data cover the business economy, which includes industry, construction, trade, and services (NACE Rev. 1.1 Sections C to I, K). The data do not cover enterprises in agriculture, forestry, fishing or largely non-market services, such as education and health. A detailed methodology can be consulted at: http://ec.europa.eu/enterprise/policies/sme/facts-figures-analysis/performance-review/index_en.htm.

The policy measures presented in this SBA Fact Sheet may only a selection of the measures taken by the Government in 2011 and the first three months of 2012. The selection was made by the SME policy country expert contracted by Ecorys (DG ENTRs lead contractor for the 2012 Fact Sheets). The experts were asked to select only those measures which, in their view, were the most important, i.e. were expected to have the greatest impact in the specific SBA area. The complete range of measures that the experts compiled when producing this years Fact Sheets will be published in the form of a policy database on the DG ENTR website alongside the Fact Sheets. The quadrant chart combines two sets of information; First, it shows the status quo performance based on data for the latest available years. This information is plotted along the X-axis measured in standard deviations of the simple, non-weighted arithmetical average for EU-27. The vertical corridor marked by the dotted lines defines the EU average. Second, it reveals progress over time, i.e. the average annual growth rates for 2005-2011. The growth rates are those of the individual indicators which make up the SBA area averages. Hence, the location of a particular SBA area average in any of the four quadrants, not only provides status quo information about where the country is located in this SBA area relative to the rest of the EU at a given point in time, but also shows the progress made in 2005-2011.
6

The start-up indicators are based on World Bank data. For methodological details, please consult the Doing Business

2012 report at http://www.doingbusiness.org/. It should be noted that these findings differ from the corresponding figures obtained directly from Member States (through a self-reporting exercise) according to which, in 2011, it took one day and cost 300-360 to start up a business in Portugal. For more details please see: http://ec.europa.eu/enterprise/policies/sme/business-environment/start-up-procedures/index_en.htm.

SBA Fact Sheet 2012 Portugal

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