PORTUGAL and Slovakia are among the smaller member countries of the European Union, located at opposite ends of its territory. Even though the mutual presence of either country is not particularly visible in their respective economies, there are some links and similarities between them. Both countries use the euro, the automotive industry is an important segment in both of their economies, and both are hungry for more foreign investment. There are also ways in which Portugal could be an inspiration to Slovakia, as in its use of renewable sources of energy or its services sector.
Concerning mutual trade, Slovakia is well-positioned as a destination for Portuguese exports, although over the past five years the trade balance has always been in Slovakia’s favour, Joao Luís Niza Pinheiro, Portugal’s ambassador to Slovakia, told The Slovak Spectator.
In 2011, Slovakia’s exports to Portugal amounted to €141.7 million while Slovakia imported goods and services worth €103.9 million, according to data from the Slovak Statistics Office. The trade deficit was thus €37.9 million in Slovakia’s favour.
Niza Pinheiro specified that the main exports from Portugal to Slovakia are machines, which accounted for some 32 percent of exported goods in 2011. Vehicles followed, with around 20 percent. Exports of textiles accounted for about 13 percent and rubber and plastics for about 11 percent. In 2011 Slovak exports to Portugal consisted of around 40 percent machinery, almost 25 percent vehicles, some 9 percent metals and 6 percent textiles.
Paper and cardboard, metals, plastic moulds and footwear are the also significant items in Portugal’s exports to Slovakia.
“These figures show that Portuguese-Slovak trade already has a pattern, that it has developed, and that it has even more potential to develop,” said Niza Pinheiro.
The number of Portuguese firms trading with Slovakia is increasing. Niza Pinheiro specified that the number had increased from some 190 in 2006 to almost 270 in 2010.
“It is increasing all the time, which is telling us that there is a potential for [Portuguese] exports,” said Niza Pinheiro, adding that the stress is on the automobile sector, and a whole set of supplier firms to it, which is important in both countries. Both Slovakia and Portugal have Volkswagen as well as PSA Peugeot Citroën car factories, and Portugal also has plants owned by Toyota, Isuzu and Mitsubishi.
Other goods exported from Portugal to Slovakia, connected with the cluster of the automobile sector, include electrical appliances, optical-fibre cables, moulds and tyre parts.
With regards to the trade in services, which is more modest but does exist, Niza Pinheiro pointed to renewable sources of power and electronic services as the main sectors in which Portuguese companies could do very well.
“When you think about e-government or electronic procurement, these are solutions that have already successfully moved Portugal into the international arena,” Niza Pinheiro said. “I see a potential for the two countries to work closer together in these areas.”
Investment opportunities
Slovak direct investment in Portugal has been very limited. As for Portuguese investment in Slovakia, for now there are only two companies with Portuguese capital in this country: a branch of one of the main banks in Portugal, Banif Mais, and Martifer Slovakia. The bank is, among other things, active in financing car purchases, while Martifer Slovakia focuses on the renewable energy and photovoltaics sector and uses Slovakia as a base to operate in some neighbouring countries. There are more Portuguese companies active in Slovakia with bases in Vienna or Prague, according to Niza Pinheiro.
With regards to prospects for direct investment, Niza Pinheiro pointed out that, currently both countries are looking to attract inward foreign investment from other areas of the world, rather than investing bilaterally, adding that Portugal would, no doubt, welcome investment from Slovakia.
Ľubomíra Gabrielová, head of the marketing department at the Slovak Investment and Trade Development Agency (SARIO), agrees that the volume of direct Portuguese investments in Slovakia is relatively small.
“Portugal’s current economic situation is being impacted by the global economic crisis,” Gabrielová told The Slovak Spectator, adding that the situation with industry in particular, in which production has declined steeply, is problematic.
With regards to pro-investment activities in Portugal, Gabrielová specified that the possibilities of SARIO are limited in this respect as Slovakia does not have a trade mission in Portugal via which SARIO would be able to map out investment signals as well as realise investment events. The most recent significant activity with Portugal took place in 2008-2009, when SARIO actively contributed to organising two investment seminars there.
Slovakia has registered total aggregate direct investment from Portugal of €3.6 million since 1993, according to preliminary data from the National Bank of Slovakia.
With regards to prospects for direct investment, Niza Pinheiro pointed out that, currently both countries are looking to attract inward foreign investment from other areas of the world, rather than investing bilaterally, adding that Portugal would, no doubt, welcome investment from Slovakia.
“We have a common limitation, regarding each other, as we are focusing more on foreign direct investment from abroad, namely from the emerging economies” said Niza Pinheiro. “We are looking for the same. We are not, for the moment, really picking investors concerning each other.”
Niza Pinheiro specified with respect to Slovakia he sees potential in the automotive sector.
The Luso-Brazilian Business Association was launched more than two years ago, with the goal of promoting the interests of its members with respect to commercial links between businesses in Brazil, Portugal and other Portuguese-speaking countries in Slovakia.
“That entity helps to attract Portuguese firms to Slovakia, gives support to them and provides them with information on local market conditions,” said Niza Pinheiro.
