Porto exemplifies Portugal’s recovery in the wake of the severe financial crisis that swept the country in the first half of the 2010s. The city achieved record levels of foreign direct investment (FDI) in 2022, according to data from greenfield investment monitor fDi Markets. Mayor Rui Moreira, who has led the city government since 2013, talks to fDi about the main drivers behind the city’s transformation into a major investment hub in southwestern Europe.
We have one objective: reach carbon neutrality by 2030. We want investors that don't inflict a heavy environmental footprint on the city.
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Q: What is your vision for Porto as an investment destination?
A: When I was elected in 2013, there was a perception among the locals that Porto was Europe’s best-kept secret, which didn’t make sense for a city. To change that, we focused on two main goals: making the city liveable, as well as making it entertaining. That’s all we wanted. Older people like my mother would be more interested in the city’s liveability, while my kids want it to be entertaining. The same applies to anyone else, including businesses, and small and big investors.
However, it may all sound a bit too ethereal; we had to keep our feet on the ground so we set out to make the city tax competitive to achieve our overall vision, which means making it the most competitive city in Portugal when it comes to property tax, corporation tax and personal tax. As a local authority, we have control over the land tax, and we can reduce corporation and income tax rates. But before that, we have to pay down our debt and keep good accounts.
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Q: What are the other pillars of your strategy?
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A: The second thing we thought was that we needed to develop a cultural offering: culture is the main factor in the success of European cities these days. We thought we needed a city that is lively, where people really want to go, be it as a tourist, or as a foreign resident. Culture is the thing that enables a city to meld rich and poor, foreigners and locals. We needed that heavy investment in culture.
Another element was creating new jobs. Obviously, we couldn’t depend solely on local companies, especially as in 2013 it was not very easy. We had come out of a crisis, there was a very depressive mood. But we wanted to create quality jobs. We were a little bit anxious that we would go back to the model of the 1960s, when Portugal attracted foreign companies because of cheap labour.
The problem was that we had a very educated population and very good technical higher education, but many engineers would leave the country — the state would pay for their education and then lose them as they went abroad to work for foreign companies. How could we convince these companies to come and hire the same engineers locally? Why do companies pick a city for their operations?
They want a safe environment and Porto is extremely safe. They want a clean environment too, so we had to invest a lot to make the city cleaner. They want a city with good health services, so we facilitated the private sector to join the health sector to further improve it. And they want international schools, so we started interacting with educational institutions to offer international curricula locally.
Q: How does your FDI strategy fit the city’s overall commitment to sustainability?
A: We have one objective: reach carbon neutrality by 2030. We want investors that don't inflict a heavy environmental footprint on the city. With that in mind, we have to look at everything we do, in every small decision, and make sure that the investment we bring in is compatible with this grand desire.
This article first appeared in the April/May 2023 print edition of fDi Intelligence.