Spain: your partner in Europe

Spain: your partner in Europe Global Market Access from an International Economy Investment Framework Business Opportunities June 2015 0

INDEX 1. Spain: a highly internationalized economy 2. Global Market Access 3. Macroeconomic Situation and Structural Reforms 4. Business Climate Infrastructure and Technology Incentives and taxes Human capital: Productivity, Skilled Labour Force and Competitive Costs Quality of life: Expat setting up 5. Business Opportunities 6. ICEX / Invest in Spain 1

1. Spain: a highly internationalized economy 2

1. Spain: a highly internationalized economy Spain is the world s 13th-largest economy and the 5th-largest economy in the EU: GDP worth 1.4 trillion USD GDP comparison of major economic regions, USD billions EU27: 17,372 NAFTA: 19,883 Germany: 3,636 Asia: 13,435 France: 2,807 UK: 2,523 Japan: 4,899 USA: 16,768 Italy*: 2,072 Spain: 1,359 ASEAN-5: 2,012 NIEs: 3,807 Canada: 1,827 Mexico: 1,261 Australia: 1,506 China: 9,469 Russia: 2,097 BRICs: 15,413 Brazil: 2,246 India: 1,877 Source: IMF, 2015. Data Referred to 2013 3

1. Spain: a highly internationalized economy Spain is the 9th-largest exporter of commercial services worldwide (has gone up one position in the ranking), 4th in the EU, and the 18th-ranked exporter of merchandise trade (up from position 20 last year). Commercial Services Exports USD Millions Merchandise Trade Exports USD Millions 2013 2013/2012% 1 United States 662,041 5.63% 2 United Kingdom 292,728 5.04% 3 Germany 286,204 1.51% 4 France 236,269 7.83% 5 China 204,718 9.69% 6 India 150,926 7.50% 7 Netherlands 146,654 3.62% 8 Japan 145,356 11.89% 9 Spain 145,274 2.01% 10 Hong Kong 133,316 6.12% World 4,644,380 5.63% Source: World Trade Organization (WTO), 2015. 2013 2013/2012% 1 China 2,209,007 7.8% 2 United States 1,579,593 2.2% 3 Germany 1,452,711 3.4% 4 Japan 715,097-10.5% 5 Netherlands 671,863 2.7% 6 France 579,687 1.9% 7 Republic of Korea 559,632 2.1% 8 United Kingdom 541,594 14.6% 9 Hong Kong 535,548 8.7% 10 Russian Federation 523,294-1.1%. 18 Spain 316,534 7.2% World 18,816,000 2.2% Source: World Trade Organization (WTO), 2015. 4

1. Spain: a highly internationalized economy Spain, strong and sustainable external sector performance The weight of exports in GDP has increased from 21.9% (2009) to 32.6% (2014 Q2). Spanish exports of goods and services related to GDP in 2013 were higher than in the United Kingdom, Italy or France. 60 Exports of goods and services in % of GDP 50 Germany; 50,7 40 30 20 26,5 23,9 27,4 30,8 32,7 Spain; 34,1 UK; 31,4 Italy; 30,4 France; 27,2 Japan; 16,2 10 US; 13,5 0 2008 2009 2010 2011 2012 2013 Germany Spain France Italy UK US Japan Source: Eurostat, 2015. A competitive combination: technology, innovation, productivity and lower Unit Labour Costs have lead to a competitiveness-based expansion of exports. 5

1. Spain: a highly internationalized economy While the world export market share of Germany, Japan, Italy, or France has declined during the last decade due to competition from emerging countries, the Spanish share of world merchandise exports has remained stable. Spain increased its quota in international trade of goods in 2013, to 1.68% (1.60 in 2012) In 2013 Spain has kept its 3.1% share in the world trade of services Country share in world export of merchandise trade, 2006-2013 Source: World Trade Organization (WTO), 2015. 6

1. Spain: a highly internationalized economy Spanish and foreign companies established in Spain focus on EU markets, but they are increasing their exports and business towards Latin America, USA, Asia, Russia, Africa and the Middle East using Spain as a platform for Global Business. In 2013, our exports to non-eu countries maintained the upward trend of the last few years (+ 37.4% in 2013): Exports to Africa went up by 8.4% (particularly to Algeria by 11.4% and South Africa by 33.4%), To Latin America by 8.6% (especially to Argentina, +36.3% and to Brazil, 28.9%) To Asia by 10.3%, (of which 4.7% to China, 12.9% to Thailand and 10.7% to Taiwan) The EU is still our main business partner, but the slow growth in Europe has dented exports in 2014. During Jan-Oct 2014 exports have grown by 2.1% y-o-y as compared to 6.2% growth during Jan-Oct 2013. 7

1. Spain: a highly internationalized economy Tourism: Spain is the 2 nd country worldwide in revenues and the 1 st in Europe. Spain ranks 3 rd in tourist arrivals worldwide and 2 nd in Europe. GENERATED REVENUE (INTERNATIONAL TOURISM) Country 2013 (Bill USD) Source: WTO Tourism Highlights, 2014 2013/2012 (%) 1 USA 139.6 10.6% 2 Spain 60.4 7.4% 3 France 56.1 4.8% 4 China 51.7 3.3% 5 Macao 51.6 18.1% 6 Italy 43.9 6.6% 7 Thailand 42.1 24.4% 8 Germany 41.2 8.1% 9 United Kingdom 40.6 12.1% 10 Hong Kong 38.9 17.7% World 1,159 5.3% INTERNATIONAL TOURIST ARRIVALS Country 2013 (Mill. People) 2013/2012 (%) 1 France.... 2 USA 69.8 4.7% 3 Spain 60.7 5.6% 4 China 55.7-3.5% 5 Italy 47.7 2.9% 6 Turkey 37.8 5.9% 7 Germany 31.5 3.7% 8 United Kingdom 31.2 6.4% 9 Russia 28.4 10.2% 10 Thailand 26.5 18.8% TOTAL 1,087 5.0% Source: WTO Tourism Highlights, 2014 Spain received more than 65 million tourists in 2014 (Source: IET/ Tourspain) 8

Spain is the 11th-largest economy in terms of accumulated inward and outward FDI stock in the world. 1. Spain: a highly internationalized economy Inward FDI stock, USD Millions Inward FDI stock Economy 2013 Mill USD Share 1 United States 4,935,167 19.4% 2 United Kingdom 1,605,522 6.3% 3 Hong Kong, China 1,443,947 5.7% 4 France 1,081,497 4.2% 5 China 956,793 3.8% 6 Belgium 924,020 3.6% 7 Germany 851,512 3.3% 8 Singapore 837,652 3.3% 9 Switzerland 747,436 2.9% 10 Brazil 724,644 2.8% 11 Spain 715,994 2.8% 12 Netherlands 670,115 2.6% 13 Canada 644,977 2.5% 14 Australia 591,568 2.3% 15 Russian Federation 575,658 2.3% 16 British Virgin Islands 459,342 1.8% 17 Italy 403,747 1.6% 18 Mexico 389,083 1.5% 19 Sweden 378,107 1.5% 20 Ireland 377,696 1.5% World 25,464,173 100% Outward FDI stock, USD Millions Outward FDI stock Economy 2013 Mill USD Share 1 United States 6,349,512 24.1% 2 United Kingdom 1,884,819 7.2% 3 Germany 1,710,298 6.5% 4 France 1,637,143 6.2% 5 Hong Kong, China 1,352,353 5.1% 6 Switzerland 1,259,369 4.8% 7 Netherlands 1,071,819 4.1% 8 Belgium 1,009,000 3.8% 9 Japan 992,901 3.8% 10 Canada 732,417 2.8% 11 Spain 643,226 2.4% 12 China 613,585 2.3% 13 Italy 598,357 2.3% 14 British Virgin Islands 523,287 2.0% 15 Ireland 502,880 1.9% 16 Russian Federation 501,202 1.9% 17 Singapore 497,880 1.9% 18 Australia 471,804 1.8% 19 Sweden 435,964 1.7% 20 Brazil 293,277 1.1% World 26,312,635 100% Source: UNCTAD, WIR, 2014. Source: UNCTAD, WIR, 2014. 9

1. Spain: a highly internationalized economy Spain: Inward FDI by country Stock : EUR Millions COUNTRY STOCK 2012 % total 2012 US, UK, German, French and Italian Companies are the largest investors in Spain. Increasing interest from companies in Asia (especially from China, India, Korea and Japan) Latin America (especially from Mexico and Brazil) and from the Middle East Countries. 1 USA 57,308.5 15.9% 2 ITALY 48,605.8 13.4% 3 FRANCE 37,124.3 10.3% 4 UK 35,455.4 9.8% 5 GERMANY 28,973.0 8.0% 6 MEXICO 19,465.1 5.4% 7 LUXEMBOURG 19,241.3 5.3% 8 PORTUGAL 18,749.6 5.2% 9 NETHERLANDS 14,740.0 4.1% 10 SWITZERLAND 10,580.9 2.9% 11 BRAZIL 8,812.9 2.4% 12 UAE 5,445.3 1.5% 13 SWEDEN 4,999.4 1.4% 14 CANADA 3,778.5 1.0% 15 JAPAN 3,613.5 1.0% 16 BELGIUM 2,771.0 0.8% 17 COLOMBIA 2,765.6 0.8% 18 URUGUAY 2,456.7 0.7% 19 ISRAEL 1,260.5 0.3% 20 IRELAND 1,172.3 0.3% 21 AUSTRIA 1,004.4 0.3% 22 ARGENTINA 980.0 0.3% 23 DENMARK 921.9 0.3% OTHER 31,324.1 8.7% TOTAL 361,550 100.0% Source: Registro de Inversiones, 2014. Data Referred to 2012 10

1. Spain: a highly internationalized economy Spanish companies are among leading companies in the world: 3 out of every 5 flights worldwide are controlled using Spanish air navigation systems. Telefonica is one of the largest telecommunications companies in the world (in terms of market capitalization and number of customers). Santander Bank is the first bank in the Eurozone and one of the first in the world (stock market capitalization: more than 90 billion euros) and BBVA now operates in 40 countries. IBERDROLA is the 4th-largest utility company in the world (in terms of market capitalization). The Spanish infrastructure sector is a world leader in foreign markets. Thirteen Spanish companies totalled 80 billion dollars in revenue. The Al Shoula Group, a Spanish-Saudi consortium, is to run the high-speed train between La Mecca Medina. The Panama Canal expansion project has been awarded to a Spanish-led consortium. The Spanish company Abengoa has placed the largest solar power plant in the world in service in Arizona. 11

1. Spain: a highly internationalized economy Spain is the 9th-most open country to Foreign Investment according to OECD s FDI Restrictiveness Index CLOSE OPEN 12

1. Spain: a highly internationalized economy Over 13,050 foreign companies are currently located in Spain across all economic sectors 70 of the FORBES Top 100 companies have branches in Spain 13

2. Market Access 14

2. Market Access Domestic market of over 46 million consumers: Spain has a GDP per capita (PPP) above the EU-27 average. Spain grants free access to the world s largest market, the European Union: more than 500 million consumers Advantages of operating in the EU: Intra-European duty-free market. Free movement of goods and services, capital and persons. Single currency: EURO. Capacity for consumption of goods Country GDP per capita RK USD 1 United States 5 53,101 2 China 92 9,844 3 Japan 21 36,899 4 Germany 14 40,007 5 France 22 35,784 6 United Kingdom 20 37,307 7 Brazil 78 12,221 8 Russia 57 17,884 9 Italy 30 30,289 10 India 131 4,077 11 Canada 8 43,472 12 Australia 9 43,073 13 Spain 32 29,851 14 Mexico 65 15,563 15 Korea 26 33,189 Source: IMF 2014 15

2. Market Access The best European platform for doing business with Latin America: 17 Agreements to Avoid Double Taxation in Central and South America: Argentina, Bolivia, Brazil, Barbados, Chile, Colombia, Costa Rica, Cuba, Dominican Republic, ElSalvador, Ecuador, Mexico, Panama, Jamaica, Trinidad & Tobago, Uruguay, Venezuela. 20 Agreements for Protection and Promotion of Reciprocal Investments Bolivia, Colombia, Costa Rica, Cuba, Chile, Ecuador, El Salvador, Guatemala, Honduras, Jamaica, Mexico, Nicaragua, Panama, Paraguay, Peru, Dominican Republic, Trinidad & Tobago, Uruguay, Venezuela and Argentina. Excellent communications and infrastructure: Madrid concentrates around 35% of total air traffic between Europe & Latin America. Agreements for Protection and Promotion of Reciprocal Investments Agreements to Avoid Double Taxation 16

2. Market Access Why is Spain a perfect hub for doing business in Latin America? 1. Common historical, cultural and linguistic roots. Institutional network relationships. 2. Strong economic and business ties: Spanish companies have invested in strategic sectors in Latin America (banking, utilities, communications and transport, building industry, airport management, etc.) 3. Good communications: Spain is a major connecting hub for airlines traveling between America, Europe and Middle East. 4. Multinational companies are increasingly choosing Spain for their Latin American headquarters. 5. Spain has become the European HQ for Latin American multinational companies. 6. In the USA there are more than 50 million people working in Spanish. 17

2. Market Access Spain is the world s 2nd-largest investor in Latin America among European countries. Spain: Top- Outward FDI Stock by country EUR Millions Latin America and the Caribbean: origin of FDI Others 36% Source: ECLAC, 2014. Latin America 14% USA 24% JapanSpain 4% 5% Netherlands 11% Canada 6% 2011 2012 % TOTAL 2012 1 UK 51,882 59,342 14% 2 BRAZIL 60,157 56,692 13% 3 USA 52,534 53,884 12% 4 NETHERLANDS 30,764 36,496 8% 5 MEXICO 26,966 29,202 7% 6 PORTUGAL 22,159 21,705 5% 7 FRANCE 15,199 15,789 4% 8 LUXEMBOURG 26,406 14,223 3% 9 SWITZERLAND 15,105 13,615 3% 10 ARGENTINA 15,183 12,976 3% 11 CHILE 12,192 12,405 3% 12 GERMANY 21,011 10,160 2% 13 VENEZUELA 4,960 9,181 2% 14 COLOMBIA 6,231 6,654 2% 15 HUNGARY 2,642 6,331 1% 16 PERU 4,228 5,716 1% 17 AUSTRALIA 5,317 5,462 1% 18 CHINA 4,496 5,172 1% 19 ITALY 4,807 5,054 1% 20 POLAND 3,848 4,792 1% TOTAL 447,291 438,359 100% Source: Spanish Ministry of Economy and Competitiveness, 2014. 18

2. Market Access Many Spanish companies have a strategic position in key sectors in Latin America (ICT, energy, finance, infrastructures, etc.) 19

2. Market Access Some multinational companies set up in Spain to manage their operations in Latin America or the EU. In addition, Spain has become the European Headquarters of Latin-American multinational companies doing business in Europe and MENA countries. LATIBEX: the single international market for Latin American securities regulated by the Spanish Stock Market. 20

2. Market Access Spain is a suitable platform within the European market for doing business with North- African, Mediterranean, and Middle East countries: 19 Agreements to Avoid Double Taxation: Albania, Algeria, Bosnia and Herzegovina Croatia, Cyprus, Egypt, France, Greece, Israel, Italy, Kuwait, Malta, Morocco, Montenegro, Saudi Arabia, Slovenia, Tunisia, Turkey, United Arab Emirates. 15 Agreements for Protection And Promotion of Reciprocal Investments: Albania, Algeria, BosniaHerzegovina, Croatia, Egypt, Jordan, Kuwait, Lebanon, Libya, Montenegro, Morocco, Slovenia, Syria, Tunisia, Turkey. Euro-Mediterranean Association Agreements with Egypt, Israel, Jordan, Lebanon, Morocco, Tunisia and Algeria for the gradual liberalization of trade in the Mediterranean area. Euro-Mediterranean Association Agreements Agreements for Protection and Promotion of Reciprocal Investments Agreements to Avoid Double Taxation 21

2. Market Access Key Role of the Spanish Canary Islands Special Zone (ZEC) as a commercial and logistic hub with Africa Geo-strategical location: On the Southernmost border of the European Union (EU) Strong historical and commercial ties with Africa and America Authorized by the European Commission in January 2000 Tax benefits for ZEC entities. Europe s most beneficial tax regime (4% corporate tax rate). Excellent communications and services infrastructure. Interesting tri-continental logistic platform to Africa, Latin America and Europe www.zec.org 22

2. Market Access Top ranking destination cities according to investment projects Global Location Trends. IBM Global Business Services 2012 Source: Global Location Trends. IBM Global Business Services. 2012. (Projects of less than 10 jobs were not included 23

3. Macroeconomic situation and structural reforms 24

3. Economic policy and structural reforms The Spanish economy is undergoing a significant adjustment and is in the process of correcting accumulated imbalances. 25

Spanish economic policy: reform calendar 3. Economic policy and structural reforms Financial System Reform Source: The Kingdom of Spain s Economic Policy Strategy and Funding Programme. Tesoro Público 26

3. Economic policy and structural reforms Reforms for Competitiveness Public Sector Reform Fiscal consolidation at all levels of Administration Financial System Reform Provisioning system redressed and restructuring process completed Competitive Labour Costs Labour market reform Measures to foster growth, competitiveness and entrepreneurship Rectification of imbalances and recovery from recession, with increased competitiveness and sustained growth Resident and Work Permits Law on visa and work permits and flexible application to foreign investors Transformation Results of the structural of Spain Growth reforms Model First Results 27

Public Sector Reform: Fiscal Consolidation at all levels of Administration Strengthening the structural fiscal framework: Constitutional Reform pioneered adoption of the Fiscal Compact. Budgetary Stability Law provides for further fiscal discipline and far reaching monitoring and enforcement tools. Independent Fiscal Authority. 3. Economic policy and structural reforms Measures to increase income and reduce expenditure at all levels, with the firm aim of achieving the deficit goal agreed with the EU (Pension System Reform, Reform of the Public Administrations). A Fiscal Reform to boost job creation and revitalize the economic growth. The Tax collection expected to increase 5.4% y-o-y, roughly in-line with the observed increase in 2014 despite cuts in tax rates (Corporate Income tax rate is reduced to an interim 28% in 2015 and the definitive 25% in 2016) Source: Ministerio de Hacienda y Administraciones Públicas 28

3. Economic policy and structural reforms Adjustment and recapitalization of the financial system In the Spanish Financial System, Entities could be divided into two groups. The core of the financial system is mainly composed of the largest and internationalized Spanish Banks with an outstanding performance during the financial crisis. The local saving banks Cajas de Ahorros - has shown structural vulnerabilities and the highest exposure to real estate. The Government has undertaken a restructuring process. In the last two years the provisioning system has been redressed and the restructuring process was completed at the end of 2013. Transparent and independent evaluation of the IMF and external risk evaluation of the whole asset portfolio. 70% of the Spanish financial sector is sound and does not require additional capital. The clean-up of under-capitalized banks has required an injection of 41.3 bn of public funds (less 4% of GDP). Segregation of the troubled assets of banks that need public support for their recapitalization (volume estimated at 50.781 mn.) and transfer to an asset management company (SAREB) with majority of private capital (55%). Increase in provisions and capital buffers on real-state exposure. The total number of entities in the financial sector, excluding credit cooperatives and foreign branches, has decreased from 50 in 2009 to 12 at the present time. Spain is the country with the second-best score from the tests by the European Single Supervisory System and the best score in terms of the asset quality assessment. 29

Labour Market Reform: Fostering Labour flexibility and productivity at company level. Firm-level salary bargaining prevails over national, regional or sector collective agreements. Collective dismissals without administrative authorization are allowed for firms posting falling profits for three or more consecutive quarters and elimination of procedural wages. Convergence and reduction of dismissal costs in line with EU(27) average. Fair dismissal: severance pay of 20 days per year, up to 12 months Unfair dismissal: severance pay of 33 days per year, up to 24 months. This means a reduction of 26.6% in the paying severance Simplification and clarification of the regime for individual and collective dismissals due to economic circumstances relate to sales, revenues trends. Creation of a new permanent contract directed at SMEs Incentives and tax relief for job creation: 500 exemption for employers contributions for common contingencies to the Social Security when the worker is hired under a full-time, open-ended contract. This exemption applies for two years. Recent trends in the labour market 3. Economic policy and structural reforms The labour market is adapting rapidly, spurred by recent legislative initiatives: more part time jobs & lower percentage of employees with temporary contracts, as well as decelerating nominal and real wages Sharp reduction in Unit Labour Costs as a continuation of decreasing wages in some sectors and sharp increase in labour productivity 30

Measures to foster growth, competitiveness and entrepreneurship Law of Guarantee of Market Unity: eliminates the fragmentation of the national market, and enables a convergent nationwide product/service regulation across all regions Reform of the public administration services which is still under way. Liberalization of the retail sector. No restriction on commercial opening hours in areas of commercial attractiveness; increase of the number of opening days. Deregulation of professional services. Plan on Fostering entrepreneurship and business environment: measures to support entrepreneurs, SMEs and self employed workers. Significant reduction of the red tape to start a business. The authorization of visa and residence permits will be made quicker and easier on grounds of economic interest National Commission of Markets and Competition: incorporates all sector regulatory bodies and the National Commission of Competition. Education reform on Improving the quality and results of Education and improves Vocational Training: Updating of qualifications, modernization of tools and gradual implementation of dual training. Law to De-index the Spanish Economy: Decoupling of the public administration service prices and fees from the CPI (consumer prices index). Strengthening of the Tourism Sector: A comprehensive National Tourism Plan (PNIT) for the period 2012-2016 has been approved. Reform of the Electricity Sector 3. Economic policy and structural reforms 31

3. Economic policy and structural reforms New specific framework for qualified immigration and investors It is based on an agile and specialized system for visa and authorization concessions. VISA AND AUTHORIZATION CONCESSIONS FOR Investors Entrepreneurs Highly qualified professionals Scientists and researchers Intra-corporate transferred employees GENERAL REQUIREMENTS Not being in an illegal situation in Spain Being 18 years old or older Not having criminal records Public or private health insurance in Spain Enough economic resources. THE PROCEDURES 10 days for visas and 20 days for authorizations A single authorization for living and working in Spain Valid for the whole of Spain The family will be able to apply at the same time Freedom to live in Spain: Granted residence and work permits authorization Source: http://extranjeros.empleo.gob.es/es/unidadgrandesempresas/folletos/index.html 32

3. Economic policy and structural reforms FIRST RESULTS In 2014Q4 the Spanish economy grew by 0.7% confirming its accelerating trend. As a result, in 2014 GDP grew by 1.4%, above the Government s estimate, and at the upper end of analysts projections Current Account Deficit: from roughly -10% in 2007 to a current account surplus in 2014. The current account has registered its second consecutive yearly surplus, +0.1 pp of GDP, supported by falling oil prices and accelerating real goods exports. The Aggregate Balance of the Capital Account and the Current Account in 2014 shows Spain s net lending capability vis-à vis the rest of the world of 5.600 M in contrast with the borrowing needs of 5,834 million euros recorded in 2012. Spanish goods exports grew by 2.5% year-on-year in 2014 to 240.03 billion euros, a new record for annual export figures. In real terms the growth was even greater - at 3.5%. This positive result in terms of exports exceeded the rate of growth posted by European exports (1.3%) and Eurozone exports (1.8%), as well as those of such countries as Italy (2%), France (-0.2%) and the United Kingdom (-11.1%). The ongoing geographic diversification of the Spanish exports pushes the increase of sales abroad: In 2014, our exports to non-eu countries grew for the fifth year in a row (0.2% year-on-year in 2014) despite the economic weakening in Latin America and some African countries. As a result, exports to non-eu countries have increased their share in Spanish exports from 27.5% of the total in 2005 to 36.6% in 2014. Foreign productive investment amounted to 17.63 billion euros in 2014, 9.8% more than in 2013 (16.05 billion), according to data from the Foreign Investment Register of the Ministry of Economy Affairs and Competitiveness. 33

3. Economic policy and structural reforms The falling Unit Labour Costs in Spain are helping to gain competitiveness and to lower export prices. Nominal unit labour costs have declined by 6.9% since the peak in 2009, as a result of wage moderation and especially of increases in productivity (+2.3% in 2013). According to Eurostat, in the first three quarters of 2014, Spanish Unit Labour Costs have declined by 1.2%, by 0.1% and by 0.4%, while they have rose by 0.7%, by 1.0% and by 1.1% in the euro area. The rising productivity is explained not only by labour shedding, but also because of gains in Total Factor Productivity. In this sense, the European Commission (source AMECO) shows that TFP increased in Spain in 2014 (+0.77%), a higher expansion than that of the EU-28 (0.40% in 2014), Germany (0.66 %), France (-0.21%) or Italy (-0.40%) Labour Force Survey: In the last 12 months, employment has increased by 433,900 persons. For every three new jobs created in the European Union, two of these are created in Spain. The Construction Sector has accelerated its adjustment: Real estate prices have fallen on average by approx 30 % in nominal terms since the peak in 2008. Significantly More Houses Sold Than Started Or Finished: gradual reduction of unsold stock. The gross value added generated by the construction sector is expanding since 2014Q2, for the first time since 2008 The differential of the 10-year bond compared with the German bond has gone from over 600 basis points in August 2012 to around 100 basis points. World Bank s Ease of Doing Business 2014, Spain ranks 33 rd (from 52 nd in 2013) of a total of 185 countries. 34 4

For more information about macroeconomic situation and economic policy, please log on to: www.tesoro.es and www.thespanisheconomy.com 35

4. Business climate o Infrastructure and Technology o Incentives and taxes o Human capital: Productivity, Skilled Labour Force and Competitive Costs o Quality of life: Expat setting up 36

4. Business climate o Infrastructure and Technology 37

4. Business climate: Infrastructure & Technology Airport Network 250 airlines have scheduled flights, operating out of the country s 47 airports, with Madrid and Barcelona the main hubs. Country Passengers on board Source: Eurostat: Last data available 2013 United Kingdom 210,784,792 Germany 181,879,734 Spain 158,072,126 France 138,872,882 Italy 116,332,421 Turkey 112,215,716 Netherlands 58,316,239 Switzerland 44,338,021 Norway 37,229,490 Greece 34,021,165 Sweden 31,654,684 Portugal 29,451,958 Denmark 27,575,531 Belgium 26,599,120 Austria 25,827,030 Ireland 24,644,846 Poland 23,298,404 Finland 16,606,783 38

4. Business climate: Infrastructure & Technology Railway Network Spain is the 3nd largest worldwide (1st in Europe) in High-Speed Network and the European leader with more than 2500km in service, traveling at an average commercial speed of 222 km/h, higher than that of Japan (218 km/h) and France (216 km/h). And a total railway network over 15,500 km. According to The Global Competitiveness Report (World Economic Forum), Spain has one of the best indexes of rail road infrastructure Quality in the world, and one of the best subway systems in major cities. Railway Network High-Speed Lines in the World (kilometres) 0 2000 4000 6000 8000 10000 12000 China Japan Spain France Germany Italy Turkey South Korea USA Taiwan Belgium Netherlands UK Switzerland Source: ADIF Source: International Union of Railways. Updated Sept 2014 39

Road Network 4. Business climate: Infrastructure & Technology Spain has the largest EU highway network with 14,701 km. According to The Global Competitiveness Report (World Economic Forum), Spain has one of the best indexes of Quality of roads in the world. Length of Motorways (kilometres 2012) Spain Germany United Kingdom Portugal Austria Croatia Poland Finland Slovenia Bulgaria Slovakia Norway Romania Lithuania Cyprus Estonia 0 5000 10000 15000 20000 Source: Eurostat 2014. Last data available. 40

Main Port Facilities 4. Business climate: Infrastructure Excellent maritime connections, with 46 state-own ports on both the Atlantic and the Mediterranean coasts, with 5 ports among the Top-20 container ports in Europe (Valencia, Algeciras, Barcelona, Las Palmas and Bilbao). According to The Global Competitiveness Report (World Economic Forum), Spain has one of the best indexes of Quality of port infrastructures in the world. Container traffic for European ports (in TEU) Source: European Sea Ports Organization. Ranking based on TEU (total number of actual twenty-foot equivalent units) of 2012 PORT COUNTRY 2013 1 Rotterdam NL 11,621,249 2 Hamburg DE 9,257,358 3 Antwerpen BE 8,578,269 4 Bremerhaven DE 5,830,711 5 Valencia ES 4,327,838 6 Algeciras ES 4,342,998 7 Le Havre FR 2,486,264 8 Zeebrugge BE 2,026,270 9 Genova IT 1,988,013 10 Barcelona ES 1,720,384 11 La Spezia IT 1,300,432 12 Gdansk PL 1,177,626 13 Marseille FR 1,099,271 14 Las Palmas ES 1,017,378 15 Sines PT 931,037 16 London UK 929,031 17 Göteborg SE 858,497 18 Leixoes PT 626,194 19 Bilbao ES 606,827 41

4. Business climate: Infrastructure & Technology More than 80 Technology Parks The main sectors of the companies located in the Parks 66 parks in the Association of Science and Technology Parks of Spain, hosting 6286 companies ICT Engineering/Consultancy Medicine/Health Industrial Agriculture/Biotechnology Energy/Environment Technology centres/r&d Training/Human Resources Aeronautics/Automotive Electronics Business Centres Others 28% 23% Pontevedra 1 Orense 1 Asturias 2 1 1 Salamanca 2 Cantabria León, Burgos and Valladolid Valladolid Biscay 1 Guadalajara Madri d 1 2 2 1 Álava 1 Guipúzcoa 2 1 La Rioja 1 Teruel 1 Huesca 1 1 Saragoss a 1 Lérida 1 Castellón 1 Gerona 7 6 Barcelona 1% 2% 3% 4% 4% 4% 5% 5% 6% 15% Badajoz 1 Córdoba Jaén 1 1 Seville 2 Huelva 2 1 Cádiz 1 2 Granada 1 1 Málaga 1 Almería Murcia 2 2 2 Valencia Alicante Palma de Mallorca 1 2 1 Tenerife Fuerteventura 1 Gran Canary 1 1 Parks at full performance Parks in development Source: Association of Science and Technology Parks of Spain 2013 42

Technology Adoption by Companies 4. Business climate: Infrastructure & Technology Whatever the size of the company, Spain leads the field in technologically enabled companies 100 Broadband penetration in Business (% of companies with broadband access) ICT Infrastructures in Spanish Businesses 90 80 100 Computer 70 60 Internet 80 60 40 Local Area Network 50 20 40 E-Mail 0 Wireless LAN 30 20 10 Other Technologies Broadband 0 Mobile Phones ES MT FR UK FN SE GE BG NL IT PT EU-27 Total 10 to 49 50 to 249 250 or more Source: Eurostat Community Survey on ICT usage in enterprises, 2011 (Data 2010) Source: ONTSI, based on INE 2011 43

Broadband: European Comparison 4. Business climate: Infrastructure & Technology 25.000.000 100% 22.500.000 90% 20.000.000 17.500.000 Broadband Lines and Penetration Rate in the EU27, lines/100 inhabitants 80% 70% Broadband Lines 15.000.000 12.500.000 10.000.000 37% 36% 60% 50% 40% Lines/100 inhabitants 7.500.000 5.000.000 24% 18% 29% 25% 17% 21% 11% 18% 20% 13% 16% 31% 17% 17% 21% 28% 31% 13% 20% 19% 28% 28% 28% 30% 20% 2.500.000 10% 0 MT CY LU EE LV SI SK LT IE EL HU FI CZ PT AT DK BE SE PL NL ES IT FR UK DE 0% Source: XIV Implementation Report, European Commission, 2010 44

4. Business climate o Incentives and taxes 45

4. Business climate: Incentives & taxes Main incentives for productive investment European Union Incentives Scheme for Large Companies in Spain Grants from Ministry of Finance and Public Administration Additional Increase in Incentives from 10 to 20% for SMEs There are other regional and local incentives available in all Autonomous Communities 46

Spain has got many Institutions that promote incentives in different calls along the year R&D: The Centre for Industrial Technological Development (CDTI) has got a wide range of grants and loans at competitive low interest rate for technological projects. The State Secretariat for Innovation in the Ministry of Economy and Competitiveness (MINECO) also offers support with grants and loans for technological projects developed by companies and public bodies INVEST IN SPAIN/ICEX has developed a programme for supporting foreign companies up to 200,000 for investments with a high degree of R&D in competitive tenders The National Innovation Company (ENISA) finances SMEs up to 1.5 million with participative loans at a very competitive interest rate and where no-guarantee is required. The Public organization RED.ES promotes the IT activities of technological companies and start-ups financing investments in infrastructures, equipments and so on. Investments: The Official Credit Institute (ICO) supports the creation/investment carried out by companies and entrepreneurs with loans/ leasing at a low rate The Ministry of Industry, Energy and Tourism (MINETUR) and The Ministry of Economy and Competitiveness (MINECO) support investments in equipment and infrastructures with grants and loans for large and SMEs companies The Institute for Energy Diversification and Saving (IDAE) participates directly in projects with loans at a low interest rate Human Resources: 4. Business climate: Incentives & taxes The Ministry of Industry, Energy and Tourism (MINETUR) and The Ministry of Economy and Competitiveness (MINECO) support investments in human resources, training and hiring personnel with grants and loans 47

Taxes: fiscal incentives for R&D 4. Business climate: Incentives & taxes 1. Favorable fiscal system for foreign investors and R+D activities: The 2nd most favorable fiscal incentives for R&D among OECD countries. 0,5 0,4 0,3 0,2 0,1 0,0-0,1 Large firms SMEs Note: Tax subsidies are calculated as 1 minus the B index. For example, in Spain, 1 unit of R&D expenditure by large firms results in 0.349 unit of tax relief. Source: Science, Technology and Industry, Outlook. OCDE, 2012. 2. In addition, the Spanish CIT law introduced a patent box type of incentive. Under this regime 60% of net income arising from the letting of the right to use certain qualifying intellectual property (IP) rights are tax-exempt. 48

4. Business climate: Incentives & taxes Incentives for hiring people Permanent Contract Incentives: Reduction in the employer's social security contribution Company Size Monthly Amount ( ) Term New contract (up to 31/08/2016) All Exemption for common contingences: 500 2 years National Youth Guarantee System All 300 6 months New contract Conversion of Training, Apprenticeships Contracts into Permanent Contracts Partial-Time contracts linked with training activities Employee<30 years Training Contracts Incentives: Reduction in the employer's social security contribution Company Size Annual Amount ( ) Term Less than 250 employees More than 250 employees 100% Throughout the term of the 75% contract Training activities All Depends on the type of the training: Maximum: 4,160 3 years All Less than 250 employees More than 250 employees 1,800 yearly for women 1,500 yearly for men 100% for common contigences 75% for common contigences 3 years 1 year + 1 year plus Hiring Incentives:Reduction in the employer's social security contribution Company Size Annual Amount ( ) Term Research staff All 40% for common contingences Throughout the term of the contract "First young job" contract 700 /yearly for women 500 All Employee<30 years /yearly for men 3 years Apprenticeship contracts for first jobs 100% for common contingences when the companies Throughout All hire beneficiaries of the National Youth Guarantee the term of the Employee<30 years System contract Companies with less than 50 workers hiring unemployed 16>Employee<30 Less than 50 Average of 1,200 Employee>45 years employees 3 years Companies with up to 9 workers hiring unemployed Source: Ministry of Employment and Social Security Source: ICEX-Invest in Spain and Ministry of Employment and Social Security Average of 1,400 Employee<30 yearsup to 9 employees 100% for common contigences 1 year 49

4. Business climate: Incentives & taxes Taxes: Moderate tax burden The comparative analysis shows that Spain is a country with relatively moderate ratio between Tax Revenues (Including Social Security Contributions ) and GDP (32.5% GDP) Countries UE. Tax Revenues (Including Social Security Contributions ) as a percentage of GDP 60,0 50,0 40,0 30,0 20,0 10,0 0,0 Source: Eurostat 2012 50

4. Business climate: Incentives & taxes Taxes: moderate tax burden 1. A favourable tax rate on corporate income (28% for tax year 2015, and to 25% in 2016). 2. Reduced corporate tax rate (15%) for companies established on or after January 1, 2013. The reduced rate will be applicable for the first two years that the company is generating profit. 3. An attractive allowance and deduction system in corporate tax (20.1% effective rate). 4. Participation Exemption system: dividends or profit participations from business activities carried on abroad through subsidiaries or branches and the gains obtained from the transfer of these securities are tax exempt in Spain if the Spanish company holds a participation of at least 5% in the non resident company. 5. Favourable tax incentive for foreign workers: fixed rate of 24% (up to maximum of 600,000 ). 6. Spain has tax treaties with 88 countries. Under these treaties, residents in foreign countries are taxed at a reduced rate, or are exempt from Spanish taxes on certain items of income they receive from sources within Spain. These reduced rates and exemptions vary among countries and specific items of income. Source: Paying taxes 2013 (PwC & World Bank) 51

Taxes: ETVEs 1. Foreign Securities Holding Companies (in Spanish, ETVE) is a Special Tax Regime applicable to Holding companies. a) No taxation on paid-in dividends. b) No taxation on paid-in capital gains. c) No taxation on paid-out dividends/gains. d) Stable and reliable regime. 4. Business climate: Incentives & taxes e) Wide tax treaty network (88 treaties to avoid double taxation). 2. The attractiveness of ETVEs goes beyond the pure Tax Holding Regime. The ETVE regime is an opportunity for international investors to channel their outbound investments (in Europe, LATAM and other countries) through Spanish HoldCos. Main Investors in Spanish ETVEs Source: Ministry of Economy and Competitiveness, 2015. Data Referred to stock 2012 20 Billions 15 10 5 0 52

4. Business climate o Human capital: Productivity, Skilled Labour Force and Competitive Costs. o Decreasing Unit Labour Costs. 53

Labour Costs 4. Business climate: Human Capital: productivity and skilled labour cost Labour costs in Spain are below the EU-28 average 45 40 43.0 41.2 39.8 Cost per hour Private Sector 2014 /hour 35 35.6 35.0 32.5 31.7 31.7 31.3 30 25 28.0 27.6 23.7 21.1 20.9 20 15 15.9 14.3 14.1 12.6 11.5 10 10.4 9.3 8.8 7.8 7.4 6.5 6.2 4.7 05 3.7 3,8 00 Source: Destatis 2015 (Federal Statistical Office Germany) 54

Labour Costs 4. Business climate: Human Capital: productivity and skilled labour cost Unit Labour Costs more competitive than main European economies 110 UNIT LABOUR COST EVOLUTION, 2010-2014 Index, 2010=100 105 100 95 Germany Spain France Italy United Kingdom 90 85 2010 2011 2012 2013 2014 Source: Eurostat. June 2015 55

4. Business climate: Human Capital: productivity and skilled labour cost Compensation of employees Spain has the lower employee compensation in comparison with main European economies EMPLOYEE COMPENSATION Millions (current prices) 1.600.000 1.400.000 1.200.000 1.000.000 800.000 Germany Spain France Italy 600.000 United Kingdom 400.000 200.000 0 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Eurostat. June 2015. Data: Millions (at current prices). Note: Compensation of employees is defined as the total remuneration, in cash or in kind, payable by an employer to an employee in return for work done by the latter. 56

Salaries and wages in Spain Average salaries by department for different sectors 4. Business climate: Human Capital: productivity and skilled labour cost 100 90 80 70 60 50 40 30 20 10 0 2013 Thousand Executive Director/National/Chief Division Director Manager/Head of Department Officer/Programmer/Technician Source: Infoempleo and Adecco Report 2013: Job offers and demands in Spain Note: Gross Salary 57

4. Business climate: Human Capital: productivity and skilled labour cost Labour Productivity Spanish Labour Productivity is better than EU-28 Labour Productivity 4,0 REAL LABOUR PRODUCTIVITY PER PERSON EMPLOYED % change on previous period 3,0 2,0 1,0 0,0 EU 28 Spain -1,0-2,0-3,0-4,0 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Source: Eurostat. June 2015. Data: % change on previous period 58

4. Business climate: Human Capital: productivity and skilled labour cost Social Security Costs Employer contribution rate: : From 18.9% to 23.2% in case of permanent contract during 2 years. Incentives for certain hiring and training contracts applied to reduce employer Social Security Contributions. Contribution to S. Security 400 300 200 100 Group 1 Employer S. Security Contribution for permanent contract during 2 years 176.76 18.9%-23.2% 350.08 <1,056.90 1,056.91 3,605.99 >3,606 Monthly Salary If the monthly salary is higher than the maximum contribution base, the Social Security rate applies to this maximum contribution base, where the effective rate is lower. Source: Ministry of Employment and Social Security 59

4. Business climate: Human Capital: productivity and skilled labour cost Employer s Social Security contributions before and after Royal Legislative Decree 3/2014 If a company hires a worker with a salary of 20,000, after RD 1/2015, the total employer contribution to Social Security is 4,764 per year. That means a reduction of 23% in comparison with the same employment contract before RD 1/2015 (6,180 ). Total Employers' Contribution to Social Security Total Employers' Contribution to Social Security with 500 Exemption Group 1 Group 1 Annual ( ) Monthly ( ) Annual ( ) Monthly ( ) Salary 20,000.00 1,666.67 Salary 20,000.00 1,166.67 General Contingencies 4,720.00 393.33 General Contingencies 3,304.00 275.33 Unemployment 1,100.00 91.67 Unemployment 1,100.00 91.67 Accidents 200.00 16.67 Accidents 200.00 16.67 Salary Guarantee Fund 40.00 3.33 Salary Guarantee Fund 40.00 3.33 Professional Training 120.00 10.00 Professional Training 120.00 10.00 Total Employer's Contribution to S.S. 6,180.00 515.00 Total Employer's Contribution to S.S. 4,764.00 397.00 Total Cost 26,180.00 2,181.67 Total Cost 24,764.00 2,063.67 % 23.61 % 19.24 Source: Ministry of Employment and Social Security Source: Ministry of Employment and Social Security 60

4. Business climate: Human Capital: productivity and skilled labour cost Business Schools 3 Spanish Business Schools are in Top-10 in the 2014 Financial Times ranking of European business schools European Business School ranking 2014 2014 Ranking 3 year average rank School name 1 2 London Business School UK 2 2 HEC Paris France 3 2 IE Business School Spain 4 4 Esade Business School Spain 5 5 Insead France/Singapore 6 7 University of St Gallen Switzerland 7 6 Iese Business School Spain 8 9 SDA Bocconi Italy 9 8 IMD Switzerland 10 11 University of Oxford: Saïd UK Country 11 10 Rotterdam School of Management, Erasmus University Netherlands 12 11 ESCP Europe France/UK/Germany/Spain/Italy 13 16 Imperial College Business School UK 14 14 EMLyon Business School France 15 16 Essec Business School France 16 15 Vlerick Business School Belgium 17 20 Edhec Business School France 18 26 Mannheim Business School Germany 19 18 City University: Cass UK 19 21 Warwick Business School UK Source: Financial Times 2014 61

Business Schools 4. Business climate: Human Capital: productivity and skilled labour cost Spanish Business Schools have three MBA programs among the top 20 in the world Global MBA ranking 2015 2015 Ranking School name Country 1 Harvard Business School USA 2 London Business School UK 3 University of Pennsylvania: Wharton USA 4 Stanford Graduate School of Business USA 4 Insead France/Singapore 6 Columbia Business School USA 7 Iese Business School Spain 8 MIT:Sloan USA 9 University of Chicago: Booth USA 10 University of California at Berkeley: Haas USA 11 Ceibs China 12 IE Business School Spain 13 University of Cambridge: Judge UK 14 Hong Kong UST Business School China 14 Northwesterm University: Kellog USA 16 HEC Paris France 17 Yale School of Management USA 18 New York University: Stern USA 19 Esade Business School Spain 20 IMD Switzerland Source: Financial Times 2015 62

Business Climate Human Capital: Highly skilled labor force Spain occupies a great position in Europe in number of persons with tertiary education, in comparison with the biggest European economies 60 Population with tertiary education, 2013 % 25-34 year olds 50 40 30 20 10 0 United Kingdom France Spain Germany Italy Source: OECD. April, 2015 Note: 2013, last data available 63

4. Business climate o Immigration 64

4. Business climate: Immigration International mobility- New legal framework It is based on an agile and specialized system for visa and authorization concessions. VISA AND AUTHORIZATION CONCESSIONS FOR Investors Entrepreneurs Highly qualified professionals Scientists and researchers Real Estate 500.000 Spanish Companies 1 mill. Bank Deposit 1 mill. Public Debt 2 mill. Intra-corporate transferred employees GENERAL REQUIREMENTS Not being in an illegal situation in Spain Being 18 years old or older Not having criminal records Public or private health insurance in Spain Enough economic resources. THE PROCEDURES 10 days for visas and 20 days for authorizations A single authorization for living and working in Spain Valid for the whole of Spain The family will be able to apply at the same time Benefits of the Schengen visa: freedom of movement within the member states Freedom to live in Spain: Granted residence and work permits authorization Source: http://prie.comercio.es/en/pages/programa-de-residencia-para-inversores-y-emprendedores-(prie).aspx 65

4. Business climate o Quality of life: Expat setting up 66 66

Foreign Schools 4. Business climate: Quality of life There are currently 180 international schools in Spain, including 116 English spoken Schools, 24 French Schools and 19 German Schools, among others 120 Foreign Schools 2014 100 100 80 60 40 20 24 19 16 5 5 4 2 1 1 1 1 1 0 Source: Ministry of Education, Culture and Sports, 2014 67

4. Business climate: Quality of life Spain is the 1st country in Europe in terms of quality of life for ex-pats and 3rd-ranked worldwide With large communities of many different nationalities, Spain is known for its highly cosmopolitan character. On average, 12.2% of the Spanish residents are foreignborn, a figure that rises to 16-17% in regions like Madrid or Catalonia One of the largest number of International Schools in Europe Outstanding & modern health system with very high standards Favourable fiscal regime for expatriates Law enforcement: Assurance & stability in business and social life Excellent climate, first-class gastronomy, wide range of cultural and leisure activities 68

4. Business climate: Quality of life Expat Experience. League table of selected OECD countries Country Overall Experience Overall quality of life Overall integration Overall setting up Spain 1 1 1 4 Switzerland 2 2 11 9 Germany 3 3 5 7 Australia 4 7 4 1 France 5 5 3 8 Canada 6 9 7 2 New Zealand 7 8 13 3 Belgium 8 6 9 10 United Kingdom 9 12 2 5 Netherlands 10 4 12 12 USA 11 11 8 6 Italy 12 10 6 11 Japan 13 13 10 13 Source: Own elaboration based on The Expat Explorer Survey 2012.(HSBC) 69

5. Business opportunities Automotive ICT (Information and Communication Technologies) Biotechnology, Pharmacy and Life Sciences Aerospace Logistics and Transport Environment and Water Treatment Chemical Industry Nanotechnology Agro-food Real Estate Tourism and leisure Natural resources Textile &Retail 70

5. Business opportunities: Automotive Investing in Automotive 71

5. Business opportunities: Automotive Why Spain for Automotive? SPAIN is a key Player in the European Car Industry. 2 nd manufacturer in the EU and 9 th worldwide. Productive and flexible manufacturing plants. High Future Investment committed by Main Car manufacturers. Powerful industrial supply chain and Auto Parts Industry. Availability of highly qualified human resources. High public and private investment in Professional Training. Leadership in European Industrial Innovation-Mobility Sector. Privileged Export Platform towards EU, Latin America, North Africa. Open Country for Foreign Investment. Public Support for Business Development. 72

5. Business opportunities: Automotive Key figures: Automotive Industry in Spain Spain is the 2 nd -largest car manufacturer in Europe and 9 th in the world. Spain is the 1 st manufacturer of Industrial Vehicles in Europe * Most of the world's biggest car manufacturers are present in Spain with 17 automobile production plants. Nine out of ten vehicles Made in Spain are exported to over 130 countries Spain Automotive Parts Industry ranks 6 th in the world in terms of turnover. * Including light commercial vehicles 73

5. Business opportunities: Automotive Key figures: Automotive Industry in Spain Vehicle manufacturing in Spain was up 11% in 2014 reaching 2.4 million units Automotive Industry turnover accounts for 10% of Spain s GDP. 300,000 people directly employed in the Industry. 2,000,000 jobs linked to the Sector. 2.1 Million vehicles exported to 130 Countries in 2014 Export value 30bn. Vehicle exports increased by 8.5% in 2014 to 2,039,893 units. Automotive Industry Main exporter with 18% of total Goods Exports. 3-4 Million vehicles transported every year through the territory. 34 Technology Centres devoted to Automotive Industry. R&D: One of the highest investment rates among all industries 63 Million Annual average Investment in Professional Training by Car Manufacturers. Lower Unit Labor costs than EU average in the Industry. Sources: ANFAC (Spanish Association of Vehicle Manufacturers) SERNAUTO (Automotive Parts Exporters Association ) Latest available figures 74

5. Business opportunities: Automotive Key figures: Foreign Direct Investment New Industrial Plans have been approved by the 9 Multinational brands established in the country. 13 new models assigned to Spanish plants between 2012-2015. 5 billion investment in progress to expand production in Spanish Plants, including new models and electric models Plan of the Spanish Industry to produce 1 Million extra vehicles 3 Million Plan. Sources: ICEX-Invest in Spain Real Instituto Elcano Ministry of Economy and Competitiveness (datainvex) 75

5. Business opportunities: Automotive Automotive Industry in Spain: AUTO-PARTS Spanish Auto-Parts Industry ranks 6 th in the world in terms of Turnover. Main global suppliers of the Automotive Industry established in Spain. 1000 companies belonging to 720 groups provide customized Service to Car Manufacturers 191,000 people directly employed in the Sector Turnover of 27.5 bn in 2013, 65% exported to 150 countries. EU, USA, Mexico, North Africa and BRICs top ranking destinations of Spanish Exports. 1,500 millions total industrial investment in 2013 785 million in R&D&i Source: SERNAUTO (Spanish Association of Automotive Parts and Accessories Manufacturers). Last available figures: 2013. 76

5. Business opportunities: Automotive Eco-Electromobility: Spanish Capabilities and Leadership Spain contributes to Eco-Electromobility as a major component designer and manufacturer and as provider of Infrastructures and Network Intelligence. Spanish Companies and Technology Centers have taken part in 2 out of 3 of the projects of the European Green Cars initiative. Spanish Companies and Technology Centers are leading the 3 European projects on new batteries: NECOBAUT, SOMABAT, GREEN LION. The Spanish Technology Platform Move to Future ww.move2future.es brings together 150 Key innovative Companies, Research and Technology Centers. Spanish Scientific, Technological and Industrial capabilities on future transport are well summarized in the document Intelligent Strategy for Future Transport (Green Vehicles Spain). 120 Eco-electromobility projects with Spanish Participation and 110 New Products/Services compiled for Green Car Initiatives. 77

5. Business opportunities: Automotive Eco-Electromobility: Spanish Capabilities and Leadership RENAULT, MERCEDES -BENZ, PEUGEOT- CITROËN, NISSAN are already manufacturing full electric powered and hybrid vehicles in Spain. i2e Full Electric Bus of IRIZAR already in the Market. AUTO-PARTS companies with plants in Spain are already providing specific components and systems for electric and hybrid vehicles. 78

5. Business opportunities: Automotive Success stories News/Investment Projects RENAULT November 2012 Renault approves the Industrial Plan 2012-2014 for the Manufacturing Plants of Palencia (Megane), Seville and Valladolid (Captur and Twizzy models). 100 new jobs will be created in Seville's Transmissions Plant. IVECO- (Fiat Group) Industrial Plan up to 2016 for the manufacturing centers of Madrid and Valladolid (Heavy Vehicles). Investment of 0.5 billion and creation of 1200 jobs throughout this period. FORD US-based automotive giant Ford will expand its manufacturing complex in Almussafes, Spain. The company will build a new 80,000 m2 plant at the site to produce its own automotive parts and increase the production of Ford Kuga by 10%. 1.1 billion investment has been committed through the period 2009-2013. MERCEDES In 2013, the company will Invest up to 200 Million to adapt Vitoria Plant Facilities for the new VITO VS20 and its Electric Version. The Industrial Plan secures jobs at the plant. Sources: fdi Markets Corporative Sources ANFAC (Spanish Association of Car & Truck manufacturers). 79

5. Business opportunities: Automotive PSA Peugeot-Citroën It is to create 1000 new jobs in 2013 in the Manufacturing Facilities of Vigo for the Production of Citroën C-Elysee, Electric Versions of Peugeot Partner and Citroën Berlingo and New C4 Picasso. NISSAN In 2014, announces 130 Million Investment in Barcelona s Plant to produce a new Sedan starting 2014, and investments of 10 Million in its components manufacturing plant of Cantabria. GM Includes Spanish Plant of Figueruelas in its Industrial Plan for Europe that will drive and investment of up to 4 Billion in 23 new OPEL models in Europe for the period 2013-2016. SEAT (VW Group) The group VOLKSWAGEN invested 665 Million in the SEAT Plant of Martorell in 2012, including 100 Million in R&D and 13 Million in Professional Training. Martorell is one of the Group s most productive and flexible plants, with 377.000 units in 2012 including the New Audi Q3. In 2013, the Plant will market the new SEAT Leon models. Sources: fdi Markets Corporative Sources ANFAC (Spanish Association of Car & Truck manufacturers). 80

5. Business opportunities: Automotive Automotive Industry in Spain: AUTO PARTS. New Investment Projects New Investment announcements by Auto-Parts Multinationals in 2013 FAURECIA The French multinational of Auto-Parts has chosen Valencia to set up its fifth R&D Centre in Spain. It will be located in the Technology Park of Paterna and is to employ 200 Technicians. MAHINDRA The Indian giant, leading manufacturer of Components in Asia, buys a 13.5% share of the Spanish company CIE Automotive for 96,24Million sealing a worldwide strategic alliance. SAMVADARDHANA MOTHERSON PEGUFORM It has announced plans to invest 5M as a part of its 30M expansion Plan to expand production capacity in its manufacturing facility in Ripollet (Spain) to increase production of sintered auto-parts at the site. The entire investment will create about 100 jobs. MAFLOW SPAIN AUTOMOTIVE The Auto Parts company owned by the Polish Industrial Corporation Boryszew invested 2Million in 2013 to expand production at its Plant of Guarnizo (Cantabria-Spain). MAFLOW is one of the larger manufacturers of Air Conditioning tubes worldwide. Guarnizo s Plant is its only manufacturing Centre in Spain with 100 employees. Source : SERNAUTO (Spanish Association of Auto-Parts Exporters) 81

5. Business opportunities: ICT Investing in ICT (Information & Communication Technologies) 82

5. Business opportunities: ICT Spain is a leader in advanced technologies: Spanish landing software is renowned and used worldwide Major events/complex, distributed international delivery Hi-Tech and Defence Industry Telecommunications, Utilities, Energy, Banking Mobile World Congress in Barcelona World s Mobile Capital Nearshoring value added location worldwide (BPO & IT) Spanish companies are present and recognized in major international markets: 83

5. Business opportunities: ICT Information and Communication Technologies Industry in Spain Spain is one of the most important ICT market by volume in Europe: 88,164 Million. There are near 30,000 ICT companies, including digital content, operating in Spain. The sector is currently 1 employing almost 400,000 workers. The gross added value at market prices represents the 4.7% of GDP in 2013. Spain ICT Sector Turnover 2013 Production Commerce 2.7% 16.1% 15.1% 88.16 Billion 35.5% Telecommunications Digital Content 30.6% Information Technologies Source [1] : ONTSI (Spanish Observatory for the Telecommunications and Information Society), 2014. Data 2013 (Last data available) 84

5. Business opportunities: ICT Leading ICT multinationals are already successfully located in Spain, taking advantage of Spain s benefits: Software Vendors Hardware Vendors Telecom equipment vendors Service Providers ICT Services and Consulting Companies 85

5. Business opportunities: ICT Success stories IBM was set up in Spain in 1926. Today, the Spanish subsidiaries have 7,200 employees. IBM Spain coordinates the activities of IBM in Portugal, Greece and Israel. Projects developed in Spain: Centre of excellence in Barcelona to develop solutions for financial entities and the health sector. INSA, an IBM branch, has set up two centres (Caceres and Salamanca) for software developments to be applied worldwide. MareNostrum, supercomputer installed in the Barcelona Supercomputing Centre in collaboration with the University of Catalonia. Technology Expert Council (TEC), which integrates IBM s best talents in Spain to enhance the leadership of the company and develop its technical knowledge. In the beginning, HP was set up in Spain as a manufacture centre. Nowadays, it has changed its strategy and has set up worldwide recognized support and R&D centres. 86

5. Business opportunities: ICT Success stories According to Walter Ji, CEO of Huawei for Spain and Portugal, Huawei has contributed to the transformation of Telefónica through its IT solutions and the evolution of their network infrastructure equipment, reaching an extensive footprint across the Group At the same time, Huawei has completely transformed the portfolio of devices for the customer in the countries where Telefónica is present, especially mobile devices, where 2 out of 3 units already sold by Huawei are smartphones In addition, the Huawei vertical cloud solutions for different industries have worked strategically in the process of transforming the B2B business of Telefónica. Telefónica, Mozilla and ZTE launched the world s first commercial Firefox OS with the ZTE Open available at Movistar stores from last July. The ZTE Open offers customers a smartphone experience at an incredible price point. Firefox OS devices will also be launched by Telefónica in other markets, including Colombia and Venezuela. 87

5. Business opportunities: Biotechnology, Pharmacy and Life Science Investing in Biotechnology, Pharmacy and Life Sciences 88

5. Business opportunities: Biotechnology, Pharmacy and Life Science Solid Basic Science: Good scientific output. Spain is 10th world scientific power and 5th by scientific production in the EU15. Integrated Healthcare System: Spain has an extensive network of university hospitals, both public and private, backed by leading-edge research centres. The system is ideal for translational medicine and discovering new drugs and advanced therapies. Emerging Biotech Industry: biotech companies are growing faster here than in other countries. Spain is providing strong support for the surge in biotechnology and its lateral application to other sectors. Excellent infrastructure for innovation: exponential growth of science and technology parks, research centres and institutes of technology. Spain s infrastructure also incorporates the latest technology for life science projects. Highly qualified workforce: in some areas of Spain the percentage of workers with post-graduate studies is higher than the European average. There is a surplus of talent for competitive and innovative projects. 89

5. Business opportunities: Biotechnology, Pharmacy and Life Science Biotechnology in Spain Solid macroeconomic impact Directly and indirectly, the sector accounted for 7.8% of Spain s GDP in 2012 (data close to traditional sectors as tourism and automotive) Consolidation of Spanish biotech sector Growing number of biocompanies and dynamic creation of highly qualified jobs More than 3000 companies involved in biotech activities and 625 strictly biotech 203,000 employees (+0.36%) and 9000 R+D activities dedicated (+2.14%). Breakdown of biocompanies by activity Of all strictly biotech companies 53% focus on healthcare and 32% on agro-food. 68% of industrial companies related to biotechnology focus on agro-food and 20% on healthcare Strong SPIN-OUTs culture Every year public institutions create between 10 and 14 new companies. Source: ASEBIO 2013 Report 90

Distribution of biotechnology companies and biotech users by region After Madrid and Catalonia, Andalusia is the autonomous region with the highest number of strictly biotech companies. Most biotech companies are located in Catalonia (21.76%), Andalusia (16.15%), Madrid (15.91%) and Basque Country (10.91%). Together they accounted for nearly the 50% of the national total in 2012. 5. Business opportunities: Biotechnology, Pharmacy and Life Science Source: ASEBIO 2013 Report 91

5. Business opportunities: Biotechnology, Pharmacy and Life Science Pharmaceutical Sector: overview There are about 425 pharma companies in Spain, including some with no production and/or marketing activity. Near to 60% are foreign companies. Leading pharmaceutical/biotech multinationals are already located in Spain many of which have successfully chosen our country for the establishment of Research Excellence Centres, Production or Distribution Centres. Distribution by region These companies are mainly located in Catalonia and the Madrid autonomous region, which both have long-standing pharma traditions. Important companies can also be found in other regions such as Navarre, Andalusia and Galicia. Source: FarmaIndustria Annual Report 2012 PMFARMA website 92

Pharmaceutical Sector: R&D spending and workforce The pharmaceutical industry is leader in R&D spending in Spain Pharmaceutical companies set aside near to 1000 M. for R&D. The sector accounts for 21% of all private R&D spending in Spain. Outsourcing R&D Apart from in-house R&D, the pharma industry leads the way in outsourcing this to other companies. Job creation in R&D The pharma industry has 4537 employees working full-time on R&D. This is 12% of all R&D employment in Spanish industry. 200000 total employment rate, direct and indirectly. Biomedical researchers 5. Business opportunities: Biotechnology, Pharmacy and Life Science The biomedical industry created 2153 jobs for graduate employees working exclusively on R&D. Source: FarmaIndustria Annual Report 2013 93

Healthcare Technology: overview The healthcare technology market This sector invoiced about 6800 M. It comprises more than 1050 companies. 5. Business opportunities: Biotechnology, Pharmacy and Life Science Job creation The healthcare technology sector employs more than 29,000 people. Exports are growing The value of exports exceeded 2082 M. This figure represents 0.89% of total exports in Spain. Important trade partners The target market is still the rest of the EU, which takes 60% of exports. Asia and South America are playing an increasingly important role as big importers of Spanish technology and products. Source: FENIN annual report 2013 94

Success stories Proof of concept for the global market 5. Business opportunities: Biotechnology, Pharmacy and Life Science Merck has concentrated its global growth-hormone production in Spain and has recently announced a 14M investment to increase by 50% the production capacity of its facility in Madrid. Novartis announced in 2013 a 60M investment to expands its facilities in Catalonia for the manufacturing of the entire production line of inhalers. The expansion will create 70 jobs. Lilly has in Madrid its research centre for medicinal chemistry, one of the biggest in the world investing 20M and is planning an increase in its production and R+D activities. Bayer has concentrated its global aspirin production in Asturias investing 6M. Celgene opened its first research centre outside the United States in Seville. The Celgene Institute of Translational Research Europe (CITRE) plans to focus on advanced therapies and regenerative medicine investing 60M. Genzyme has set up a sales office in Madrid and has a warehouse for domestic distribution. GSK has in Madrid its research centre for tropical diseases, Molecular Discovery Research and Drug Discovery activities. It plans to invest 20M in the next 4 years in their production center in Castilla y Leon. TEVA manufactures in Spain all the Omeprazol that exports to Europe. In the last 5 years it has invested 33M in its factory in Zaragoza. Source: press articles 95

5. Business opportunities: Aerospace Investing in Aerospace 96

5. Business opportunities: Aerospace Aerospace Industry in Spain The Spanish Aerospace Industry is 5th in Europe in terms of turnover ( 13.8 billion in year 2013) and employment (more than 54,000 employees). The Spanish space sub-sector is 5th at the European level, employs more than 3,400 people and had a turnover of 737 million in year 2013. Half of the commercial aircraft in the world uses Spanish technology. R&D: The investment in R&D activities reached 818.7 M in year 2013 (11% of the industry turnover) Government support: The Spanish authorities consider the Aerospace Industry one of the Strategic Industrial Sectors. Creation of several public R&D centres focused on the aerospace industry. 97

5. Business opportunities: Aerospace The Spanish Aerospace industry is the 5 th in Europe (and 8 th in the world) in terms of turnover ( 13.8 billion in year 2013) and employment (more than 54,000 employees). The Spanish Aeronautics industry is a world leader in several fields: composite aero structures, low pressure turbine engines, Air Traffic Management systems, Military Transport Aircraft, etc. The Spanish Space industry takes part in important contracts of high added value, in qualification of flight equipment and ground segment, and development of satellite systems. Moreover, Spain has satellite services operators. The Spanish Space sub-sector is 5 th at European level, employs more than 3,400 people and had a turnover of 737 million in year 2013. Half of the commercial aircraft in the world uses Spanish technology. R&D: invests 11% of turnover in R&D ( 818.7 M in year 2012) Highly qualified human resources: 47% of the aeronautics employees are University graduates or engineers and so are 65% of employees in the Spanish space industry. Government support: The Spanish authorities consider the aerospace sector to be strategic so it offers several grants and incentives lines. Creation of several public R&D centres focused on the aerospace industry. 98

5. Business opportunities: Aerospace Spain has significant Aeronautics Clusters: they provide new entering companies with infrastructures, research centers, technology parks offering interesting synergies. 99

5. Business opportunities: Aerospace Success stories BOEING has developed important R&D Centres in Spain: First Boeing R&D centre outside the USA Main areas: safety, ATM and environmental technologies April 2008: first flight of an aeroplane powered by hydrogen fuel cells Ocaña (Madrid) According to Boeing: The reason for choosing Spain was the country s outstanding role in the EU and as a reference point with the Latin American countries. It also shows the relevant position the Spanish Aerospace industry has acquired in the last few years and the country s capabilities in environmental and ATM technologies Source: www.boeing.es 100

5. Business opportunities: Aerospace Success stories The Consortium EADS-AIRBUS has a very significant presence in Spain A380 Double-deck, wide-body, fourengine jet airliner. It is the world s largest passenger airliner. It began commercial service in October 2007 with Singapore Airlines. Spain has a participation share of 8%. Civil aircraft A350XWB Last Airbus civil aircraft model: from 250 to 350-seater. Over 70% airframe is made from advanced materials: composite structures, titanium and advanced aluminum alloys. The two first test flights have already been developed. Spain has a 11% share of the program. HMC (Harbin Hafei Airbus Composite Manufacturing Center is a joint venture between Airbus (20%) and its Chinese partners (mainly Harbin Aircraft Industry Group, 50%). HMC manufactures elevators that are being delivered to Spanish company Aernnova (the first ship set was delivered last September 2013). Aernnova will later on deliver those elevators to the Airbus plant in Getafe (Madrid, Spain). 101

5. Business opportunities: Aerospace Success stories The Consortium EADS-AIRBUS has a very significant presence in Spain Military aircraft A330 MRTT Multi Role Tanker Transport Refueling aircraft, entirely developed by Spanish industry, including a refueling pole with electric controls. Eurofighter Typhoon Multi Role Fighter 14% share of participation by the Spanish industry. Major components developed in Spain: -Right wing -Leading edge slats. A400M Military transport aircraft Spain has a 15% of participation share, including: -Final Assembly Line -Simulation and training Center - Services Logistics Hub All of them located in Seville (Spain) The first A400M aircraft have already been delivered to customer (France) in September 2013. Eurocopter Military helicopter Plant located in Albacete (Spain): -Final Assembly Line -Delivery Center For models: NH-90, TIGER and EC-35 102

5. Business opportunities: Logistics and Transport Investing in Logistics and Transport 103

Logistics and Transport Industries in Spain 5. Business opportunities: Logistics and Transport Spanish Logistics Sector ranks among the top-20 in the world according to the latest Logistics Performance Index of the World Bank (11th among EU countries) Turnover 98.0 Billion Logistics Road, Railway, Sea and Air Freight Growth rate of 7% in the last 3 years Almost 4% of the Spanish GDP Employment > 861,000 workers 4.2 % of active workers in Spain 90.8% occupancy rate Road & Rail Freight Sea Freight Air Freight Companies > 200,000 Structure: High market concentration 90% SMEs 10 large enterprises manage 27% of the business Turnover 2012 44,2% 8,7% 1,8% 45,3% Warehousing and other activities related to transport Source: National Institute of Statistics, 2014 Logistics Performance Index (The World Bank) 104

5. Business opportunities: Logistics and Transport Larger extension of kilometers of highway in EU-27 > 14,000 km. 5.9 % Spain vs. 1.2% EU average, 1.4% USA or 0.6% Japan. 46 Seaports of which Valencia, Bahia de Algeciras and Barcelona are placed among the top ten in Europe. The Trans-European Transport Network development encloses the Spanish Corridors in the Atlantic and the Mediterranean Sea to promote Logistics. The Mediterranean Corridor plan connects the Mediterranean Spanish Seaports to a rail corridor that links North Africa to Central Europe through Spain. 105

5. Business opportunities: Logistics and Transport Success stories DHL Spain is the key input platform across the DHL network to Latin American markets. Invest in Spain. TNT International Operations Centre Madrid - Barajas (Spain) became hub for South America in 2002. Today, shipments to and from fifteen South American countries are handled from the Barajas Hub and to its whole network. Total Terminal International Algeciras (TTIA) part of the South Korean Hanjin Shipping group builds its first container terminal semi-automatic of the Mediterranean and Southern Europe. 106

5. Business opportunities: Logistics and Transport Success stories Hutchison Port Holdings, a subsidiary of Hong Kong conglomerate Hutchison Whampoa, operates the new semi-automatic container terminal of the Prat quay at the Port of Barcelona, which represents an initial investment of 300 million Euros and aims to be the largest terminal in Southern Europe. Mexico's Pemex will install its European operations base at the port of A Coruña which implies a direct investment of $70 million. The Danish APM Terminals Algeciras will devote 42 million investment to meet their new triple-e ships in the port of Bahia de Algeciras. Toyota Motor Europe (TME) sets up a new logistics centre in Illescas for the delivery of the brand s spare parts and accessories in Spain. The German Vossloh Rail Vehicles operates one of its engineering centres, a reflection of its commitment to innovation, in Valencia, Spain. One of the main actors of E-commerce in Europe, Vente Privée, opens its third logistics platform in Spain after Germany and Italy. 107

5. Business opportunities: Environment and Water Investing in Environment and Water 108

5. Business opportunities: Environment and Water Environmental Industry in Spain The Spanish environmental sector accounts 3,6% GDP Sales: 40.355 million 7.780 companies employing 530.947 people directly (estimates put employment at 1 million in 2020) 26,4% work in Waste treatment and management. 11% work in Water treatment. Success stories Spain ranks fifth in the world and third in Europe for ISO 14001 Environmental Management certificates with more than 16,500 awarded. In 2011, the EU granted 85.8 million to 29 Spanish projects on nature preservation, climate change, environmental policy, clean technologies and environmental information and communication. Areas that require urgent attention and offer opportunities to foreign investors include WasteManagement, Air Quality and Water Treatment: Waste generation: 463 kg/inhabitant in 2012 Emissions: 6,2 tonnes of CO2 equivalent/inhabitant in 2011 Water consumption: 112 litres/inhabitant/day in 2014 Sources: Estudio del sector económico del medio ambiente en España 2011 - MAGRAMA EUROSTAT 109

Environmental Industry in Spain: key players 5. Business opportunities: Environment and Water Public entities Private companies EUROPEAN ENVIROMENTAL AGENCY www.eea.europa.es SPANISH MINISTRY OF ENVIRONMENT AND AGRICULTURE www.magrama.es Provides sound & independent information 32 member countries Makes proposals and develops the implementation of government policy 17 REGIONAL AUTHORITIES Definition and implementation of environmental policy. Regional environmental authorities often called Consejerías MUNICIPAL AUTHORITIES Subsidies, Fines refuse collection, street cleaning etc. Local environmental authorities, often called Concejalías 110

5. Business opportunities: Environment and Water The Water sector in Spain (1/2) Maximum reservoir capacity (2014) 55,977 hm3 Reserves (October 2014) 35,643 hm3 (63.7%) Domestic consumption (2014) 112 liters/inhabitant/day Uses Urban Supply Irrigation 4.485 hm3 15.832 hm3 Water Origin Urban Supply Surface (Dams, rivers ) 67% Underwater sources 29% Others (Desalination, depuration) 4% Irrigation Surface (Dams, rivers ) 76,9% Underwater sources 21,5% Others (Desalination, depuration) 1,6% Treatment 3.375 hm³/year of treated waste water by 2.533 WWTP 400-500 hm³/year reused by regeneration systems >700 towns with >2000 inhabitants with no waste water treatment plant Sources: MAGRAMA, INE, AEAS-AGA 111

5. Business opportunities: Environment and Water The Water sector in Spain (2/2) 24,000 companies involved in the water sector 212,300 jobs Water sector annual turnover: approx. 32,000 million euros Strengths Sectorial targets match general interest. Great quality and innovation in Spanish water industry. Sector generates employment and wealth. Large number of products, solutions, high technological level. International experience and reputation. Strong sectorial network. Business Opportunities Sources: PTEA Growing demand of water supply & water treatment. Rising social concern about water use and efficiency. Demand if integral solutions (EPC + O&M). Growing investments & financing in developing and emerging countries. International projection of Spanish water companies. Excellent public-private cooperation in I+D+i. 112

5. Business opportunities: Environment and Water Desalination Spain is the 1st producer of desalinated seawater in Europe and America Spanish companies are leaders in Reverse Osmosis Technologies. Interesting cluster: More than 700 desalination plants in Spain according to the Ministry of Agriculture, Food and Environment. International Expertise in constructing desalination plants (Befesa, Cadagua, Acciona ) R&D. Research centers actively involved in desalination: 113

5. Business opportunities: Environment and Water Waste Management sector in Spain (1/3) The Spanish Government is currently processing the Residues Framework Plan (PEMAR) for the period 2015-2020. By 2016, Spain must achieve a reduction of 47% to 35% in biodegradable urban waste dumps. This means that additional 5.3 million tons of must be treated. By 2020 the fraction of recycled/reutilized residues must increase from 30% to 50%. Waste treatment expenditure still low, 35 euro/tn (European average 100 euro/tn) Waste Generation: Economical sectors Constructio n 22% Industry 12% Mining 19% Agriculture & related 5% Domestic 18% Services 24% Other 8% Composition of Urban Waste Organic matter 42% Paper, cardboard 15% Metals 3% Glass 8% Wood 2% Textile 5% Food waste 7% Plastics 9% Bricks 1%

5. Business opportunities: Environment and Water Waste Management sector in Spain (2/2) Room for improvement, great business opportunities As much as 60% of waste is still dumped, 45% of which is not treated. Dumping w/o treatment 33% Destination of Urban Wastes Incineration 11% Compostage, anaerobic digestion 14% Dumping w/treatment 27% Recycling 15% Sources: MAGRAMA, Eurostat 115

Waste Management sector in Spain (3/3) 5. Business opportunities: Environment and Water Room for improvement, great business opportunities PEMAR: Separation in origin must improve from current 18%. Waste Collection Papel & cardboard 5% Glass 3% Mixed waste 82% Separated 18% Other 3% Packages 3% Biodegradable 4% Sources: MAGRAMA, Eurostat 116

5. Business opportunities: Chemical Industry Investing in Chemical Industry 117

Strategic Sector of the Spanish Economy. 4.5% annual growth of Chemical products demand forecasted worldwide Main Figures of the Spanish Industry-2014 : 3,000 Companies with a turnover of 56,4billion 12,4% of Spanish Gross Industrial Product. 540,000 direct and induced high qualified jobs. High Domestic Consumption of Chemicals (1,200 /capita). 2 nd largest exporter of Spanish Economy with more than 32 billion. Spain is Gateway to EU market and EMEA & Emerging Markets. Leader Sector in Innovation: 25% of Industrial Investment in R&D&I. Competitive Talent: 118,600 added value per-employee. Sustained Growth : 54.5% growth through last 10 years. Source: FEIQUE:(Spanish Federation of Chemical Industries) Business opportunities: Chemical industry 60.000 50.000 40.000 30.000 20.000 10.000 35.771 Evolution of Turnover in the Chemicals Sector 200-2013 (millions ) 49.743 52.585 47.714 53.153 55.657 55.117 55.282 56.400 0 2000 2007 2008 2009 2010 2011 2012 2013 2014 Source: INE. Industrial Company Survey, Production and Price Index, and Own elaboration 118

Business opportunities: Chemical industry Spanish Industry : Sectoral Specialization (Turnover 2013 (%)) Gases 2,1% Inorganic 2,6% Other Consumables 6,4% Perfumery and Cosmetics 6,1% Detergents and Cleaning Products 6,1% Organic 14,8% Paints and Dyes 6,7% Agrochemicals 1,9% Fertilizers 3,6% Plastic and Rubber RM 20,5% Fibers 0,9% Colorants 1,4% Pharmaceutical RM 5,5% Pharmaceutical Specialities 21,3% Source FEIQUE: Spanish Federation of Chemical Industries www.feique.org National Statistical Office -INE 119

Business opportunities: Chemical industry Investment Locations: Productive sites and Clusters providing industrial infrastructures. and Logistics Mediterranean Region: Largest Chemical Cluster in Southern Europe and Mediterranean Area: ChemMed in Tarragona. Key Clusters in Huelva and Algeciras. Chemical strategic sites in Valencia and Murcia. North Chemical Sites: Cantabria, Asturias, Pays Basque. Non Coastal Chemical Regions: Madrid,Aragón,Castilla-León,Castilla La Mancha. 120

Business opportunities: Chemical industry Infrastructures - Energy Supply and Investment Support. Guaranteed Energy Supply and Investment in Infrastructures. Diversified energy mix with high contribution of renewables. Secure National Electricity System- 102,281 MW installed power. Largest gas infrastructures and storage capacity in Europe. High Public Investment committed to boost freight transport and intermodal infrastructures and logistics hubs. Agreement of the Spanish Chemical Industry with the Ministry of Public works to develop direct connections between rail network and Production Plants. Vast Structure of financial programmes for Reindustrialization and Innovation activities. 121

Business opportunities: Chemical industry According to FDI Markets Spain Ranks 2nd destination for Research & Development projects and 5th destination for New Chemical projects (all business activities) of Multinationals in Europe (period 2004-2014). Destination Countries Country Ranking New Chemical Projects* in number of Projects Research & Development Manufacturing Headquarters Design, Development & Testing Logistics, Distribution & Retail Others UK 61 188 26 30 39 87 431 Spain 33 178 15 11 16 39 292 France 28 245 10 17 15 78 393 Germany 23 286 22 22 20 187 560 Ireland 21 67 9 3 25 14 139 Belgium 15 113 6 16 13 34 197 Russia 14 234 4 8 16 88 364 Hungary 13 111 1-17 22 164 Sweden 9 39 7 2 7 15 79 Poland 8 193 1 6 16 61 286 Austria 8 41 3 3 8 14 77 Total World 4,320 Total Source FDI Markets Data Base. *Sectors included: Chemicals (105), Pharma (87), Plastics (81) and Rubber (19). 122

292 New Projects have been developed by 163 worldwide Multinationals with a Capital Expenditure of 11,433.4 millions USD. (period 2004-2014) New Chemical Projects by Parent Company, investing in Spain in four selected sectors* (millions USD) Parent company Projects Capex Avg Capex Jobs Created Avg Jobs Companies Bayer 11 144.3 13.1 325 29 4 BASF 10 365.3 36.5 448 44 4 Ube Industries 10 498.4 49.8 623 62 3 Dow Chemical 9 722.6 80.3 403 44 2 Novartis 8 665.3 83.2 1,135 141 1 DuPont 7 380.8 54.4 367 52 2 Boehringer Ingelheim 6 118.9 19.8 233 38 2 Sanofi-Aventis 6 163.9 27.3 525 87 2 Messer Group 5 110.3 22.1 139 27 1 General Electric (GE) 5 1,806.3 361.3 1,175 235 3 Michelin 5 180.8 36.2 386 77 1 Solvay 4 113.8 28.4 106 26 2 Merck & Co 4 550.4 137.6 986 246 3 Israel Chemicals (ICL) 4 395.0 98.8 826 206 2 Henkel 4 13.3 3.3 74 18 2 Les Laboratoires Servier 4 30.9 7.7 81 20 2 Hexcel 4 190.5 47.6 165 41 2 Renolit 4 89.1 22.3 72 18 2 AkzoNobel 4 73.6 18.4 160 40 2 GreenChem 3 79.5 26.5 123 41 1 Companies 21 to 163 175 4,740.6 27.1 8,650 49 149 Total 292 11,433.4 39.2 17,002 58 191 Source: fdi Intelligence. * Sectors included: Chemicals (105), Pharma (87), Plastics (81) and Rubber (19). Business opportunities: Chemical industry 123

Business opportunities: Chemical industry 124

5. Business opportunities: Nanotechnology Investing in Nanotechnology 125

5. Business opportunities: Nanotechnology Nanotechnology Initiatives and Companies in Spain NanoSpain: Spanish Nanotechnology Network (www.nanospain.org) brings together 310 research groups, 50 companies and a research task force of around 2,500 researchers and technicians. Network coordinators: Phantoms Foundation (www.phantomsnet.net) and CSIC (www.csic.es). Phantoms Foundation (www.phantomsnet.net) focuses its activities on nanoscience & nanotechnology and is a key actor in structuring and fostering European excellence and enhancing collaborations in this field. 100 innovative companies providing a general overview of the sector in Spain catalogue: http://www.phantomsnet.net/resources/nanodoc.php?project=1 Spanish N&N Thematic Networks: RENAC (Construction), SUSCHEM (Sustanaible Chemistry); NANOMED (Spanish Nanomedicine Platform); GENESIS (STP Nanotechnology and Smart Systems Integretion); MATERPLAT (STP Advanced Materials and Nanomaterials); and FOTONICA 21 ( STP Photonics). Source: NanoSpain Phantoms Foundation 126

5. Business opportunities: Nanotechnology Research Groups in Nanospain Network ( Regional Distribution July 2012) 334 groups Source: Phantoms Foundation www.phantomsnet.net 127

5. Business opportunities: Nanotechnology Nanotechnology Initiatives/ Infrastructures Emerging N&N in Spain Source: Phantoms Foundation www.phantomsnet.net 128

5. Business opportunities: Nanotechnology Nanomaterials and Graphene In the fields of graphene research Spain occupied the 8 th position in the ranking of countries in published papers 2004-2011. (source Thomson Reuters Global Report Material Science) Spain is actively participating in the EU Graphene Flagship. 300 Spanish researchers are currently working on graphene (source: CSIC - Institute of Materials Science of Madrid) CSIC National Research Council stands 3 rd among world wide Institutions in Graphene research (Thomson Reuters Global Report) Spanish emerging companies among European leaders in graphene production and exports. Graphenea (www.graphenea.com), Granph Nanotech (www.granphnanotech.com) or Avanzare (www.avanzare.es) are developing innovative processes and advanced products to supply companies as Nokia, Philips, Canon, Nissan or Sigma Aldrich. CDTI (Center for Industrial Technological Development) and the Spanish petrochemical multinational REPSOL have co-invested in the company Graphenea to develop high quality graphene for international markets. Research laboratories in Spain are developing advanced products for electronic applications used by multinational companies like TOSHIBA. Sources: CDTI (Centre for Industrial Technological Development CSIC (Spanish National Research Council ) 129

5. Business opportunities: Agro-food Investing in Agro-food 130

5. Business opportunities: Agro-food Spanish agri-food sector accounts for 90,169 million (2013 data) which represents 17% of industrial GDP The agrifood sector s foreign trade in 2014* had a positive balance: Food exports value rose to 37,189 million: Fruit and vegetables 14,333 million Meat 5,109 million Fish and seafood 2,933 million Drinks 3,606 million Food imports value amounted to 28,363 million. Mainly, Spain sold abroad its citrus, its sweet fruits, its vegetables, its wines and its oils, but also its fish products, processed meats and many other agrifood products. Basic data on the food industry Sector Net sales (million ) People employed Meat industry 19,499 101,306 Fish processing 4,107 22,622 Fruit and vegetable processing 7,155 39,056 Manufacture of fats and oils 8,427 14,716 Dairy industry 8,322 31,874 Milling products 3,323 7,896 Animal feed products 8,984 15,673 Bread, cakes and biscuits 6,630 96,075 Sugar, chocolate and cocoa 4,788 25,000 Other products 4,827 28,486 Production of alcoholic beverages 9,586 41,548 Mineral water and soft drinks 4,519 15,508 Total 90,169 439,760 Source: Mercasa 2014. FIAB 2014 (2013 Data) Main market for Spanish exports of agrifood products has always been Europe, but since Spain joined the European Union (EU) that relationship has intensified significantly. * Estimated data. DataComex 131

5. Business opportunities: Agro-food Spain is the world's leading producer and exporter of olive oil and table olives, with the largest acreage devoted to olive groves and the greatest number of olive trees. Olive oil World olive oil production (Thousands Tons) 2012/13 2013/14* World 2,718 3,098 EU 1,739 2.308 Spain 613 1,768 Source: Mercasa 2014 *Estimate Spanish Wine and Grape Must Production 53.5 million hectolitres (2013*) Exports 18.5 million hectolitres (total value: 2,628 million) *Estimate Source: MAGRAMA. MERCASA 2014 Spain ranks 1st in the world in wine production and has the largest surface area of wine grape vineyards in the world. Wine Main clients for Spanish wines are Germany, France and UK, followed by Portugal, Russia, United States and Italy. Spanish wines exports have increased by 6.5% in value. 132

5. Business opportunities: Agro-food Subsector Production (th Tn) Meat industry In 2013 there was an overall improvement of the livestock and meat produced in prices. Exports in 2014 were valued at 5,109 million Bovine 582 Ovine 119 Goat 9 Porcine 3,440 Poultry 1,370 Rabbit 63 Others 6 Total 5,588 Fuente: MERCASA 2014 The Spanish catches reached the 813,200 tons with an estimated value of 1,785 million Euros. The aquaculture production reached 266,700 tones with a value of 436 million. Fish processing Exports in 2014 were valued at 2,933 million Fuente: MERCASA 2014 133

5. Business opportunities: Agro-food Fruit & Vegetables Spain is the second largest fruit and vegetable producer in Europe. The value of Spanish fruit and vegetables amounted to 15,389 th in 2013. Production in Spain reaches 30 million Tn and exports in 2014* were valued at 14,333 million The main crop is the tomato * Estimated data. DataComex The value generated by this sector in 2013 amounted 2,765 million. 75% corresponds to cow's milk 14% corresponds to sheep s milk 12% corresponds to goat s milk Exports in 2014* were valued at 1,400 million Dairy products * Estimated data. DataComex Fuente: MERCASA 2014 134

5. Business opportunities: Agro-food Success stories Shuanghui Group, acquired through the US company Smithfield, the Spanish company Campofrio. Chinese multinational company has paid 7,100 million for Smithfield. Campofrio, which owns brands such as Navidul, Oscar Mayer and Revilla, is one of the largest food companies in Spain. It has 29 production plants in six European countries and more than 8,000 workers. The Spanish Ministry of Agriculture, Food and Environment has signed a cooperation agreement with China's Wahaha, to boost the marketing of Spanish food products in major cities of China. 135

5. Business opportunities: Real Estate Investing in Real Estate 136

5. Business opportunities: Real Estate Professional Real Estate Investment in Spain reaches 3,800 Millions in 2013, what it is an increase of 112% between 2012 and 2013. INVESTMENT VOLUMEN BY TYPE OF ASSET 2012 2013 2% 3% 20% 15% 39% 3% 43% 18% 36% 22% Oficina Retail Logistica Hotel Otros Retail Otros Oficina Hotel Logística Source: BNP Paribas Real Estate, Research Spain. 137

5. Business opportunities: Real Estate Nominal Housing Prices Adjustment by type of residence (Year-on-year growth rates) 10 5 0-5 -10-15 -20 2008 2009 2010 2011 2012 2013 General New dwelling Second-hand dwelling 9000 Source: National Statistics Institute (INE) Residential Prices 8000 7000 6000 /sqm 5000 4000 3000 2000 1000 0 2009 2010 2011 2012 2013 Madrid Prime Residential Prices Spain Residential Average Prices Source: Ministry of Public Works and Aguirre Newman, 2014. 138

5. Business opportunities: Real Estate National average may not be noteworthy as housing market requires regional analysis. Nominal price adjustment of residential real estate has been very heterogeneous between regions. Higher discounts have taken place in the Mediterranean Coast, in some of the Canary Islands and in Madrid s outskirts. Nominal Housing Price Adjustment Since Peak in Each Province (%) Source: Ministry of Public Works, 2014. 139

5. Business opportunities: Real Estate STILL DEMAND FOR HOLIDAY HOMES? INCREASING FOREIGN INVESTMENT After dropping 35% in 2009, the acquisition by residents and non residents rose by 13% each between 2012 and 2013. FOREIGNERS HOME ACQUISTIONS 80.000 12,0% 60.000 10,0% 8,0% 40.000 6,0% 20.000 4,0% 2,0% - 2009 2010 2011 2012 2013 0,0% Foreign Residents Foreign Non Residents % f oreign / total sales Source: Ministry of Public Works, 2014. 140

5. Business opportunities: Tourism Investing in Tourism 141

5. Business opportunities: Tourism Spain, a Major Player in Tourism Tourism accounts for 10.9% of GDP in Spain Generates 11.9% of total employment (about 2 million jobs) Covers 174% of the Spanish trade deficit (Bank of Spain, 2014) Receive more than 65 million tourists (2014) (IET/Tourspain 2014) Travel & Tourism Competitiveness Index top 10 Country 2015 2013 Spain 1 4 France 2 7 Germany 3 2 United States 4 6 U.K 5 5 Switzerland 6 1 Australia 7 - Italy 8 - Japan 9 - Canada 10 8 Source: The Travel & Tourism Competitiveness Report 2015, World Economic Forum (WEF) 142

5. Business opportunities: Tourism 40.3% of our tourists have visited Spain ten or more times in their lifetimes 82% are repeat visitors 2 nd country in the world in terms of UNESCO World Heritage Sites (42 sites). 2 nd country in Europe in natural areas (14 national parks, 126 nature reserves) and natural spaces declared UNESCO Biosphere Reserves (42, behind only the United States with 47). 2 nd country, behind USA, in receiving foreign golf tourists, with 431 courses and 884,848 tourists in 2011. 648 Spain Blue Flags Eco-Label Record (2013): Beaches Spain (551), Greece (393), Turky(383), France (365) and Portugal (280). More than 120 spa resorts in mid or high mountain locations. More than 300 days of sunshine a year and more than 2,000 km of Green Tracks. 143

5. Business opportunities: Tourism Business opportunities Continued expansion and diversification Increasing number of destinations have opened up to and invested in tourism SMART TOURISM CRUISES MICE VACATION CLUBS SHOPPING TOURISM CULTURAL TOURISM HEALTH & WELLNESS TOURISM THEMED & LEISURE PARCS SPORTS TOURISM GASTRONOMIC TOURISM URBAN TOURISM RELIGIOUST OURISM NATURE TOURISM LEISURE TOURISM SUN TOURISM INTERIOR TOURISM 144

5. Business opportunities: Natural Resources Investing in Natural Resources 145

Spain has one of Europe s most diversified mining sectors, which produces mostly industrial minerals and stone. Spain encompasses almost 90% of the Iberian Peninsula which is considered to be the most mineralized zone in the European Union as it includes the volcanic massive sulfide ( VMS) deposits of the Iberian Pyrite Belt ( IPB ). Leading EU producer of natural sodium sulphate, slate and celestite (strontium minerals); of the latter, Spain is the second largest producer in the world and the only one in Europe. Spain is the world's fifth-largest producer of sand and gravel (industrial), also fifth- largest produces of magnesite ( 3 rd in Europe), sixth largest producer of gypsum ( 3 rd largest exporter), and also world s sixth-largest producer of fluorspar. Source: Geological and Mining Institute of Spain ( IGME), 2012 5. Business opportunities: Natural Resources Mining and Mineral processing industry contributed 0.8 % of Spain s GDP ( Banco de España 2012). Direct Employment: 35,000 people in Spain. well developed infrastructure. Skilled work and Government support: Transparent legislative framework and positive fiscal environment for the extraction of natural resources. Long mining tradition and past success in exploration and mine development. 146

5. Business opportunities: Natural Resources SPAIN: STRUCTURE OF THE MINERAL INDUSTRY 2012 Commodity ALUMINA ALUMINUM CEMENT Major operating companies and major equity owners Aluminio/Alúmina Española S,A, (AESA) (Alcoa Inc,, 100%) Alcoa Inespal S,A, (AISA) (Alcoa Inc,, 100%) Cementos Portland Valderribas Location of main facilities Annual capacity (Th. tons unless otherwise specified) Alumina plant at San Ciprian, Lugo 1,450 Electrolytic plant at San Ciprian, Lugo 250 Electrolytic plant at Aviles 93 Electrolytic plant at La Coruña 87 7 plants in Spain 15,000 Lafarge SA (Lafarge España ) 3 cement factories (Montcada i Reixac, Sagunto and Villaluenga de la Sagra), 1 cement grinding station (La Parrilla) and eight distribution points cement also has about 40 concrete manufacturing plants, between plants fixed and mobile; 2 central exclusive production of mortars and 6 aggregate holdings spread across the Autonomous Communities of Asturias, Catalonia, Madrid, Valencia and Castile-La Mancha. COAL: ANTHRACITE Antracitas Gaiztarro SA Mines near Oviedo 2,000 Antracitas del Bierzo SA Mines near Leon 1,000 BITUMINOUS Hulleras del Norte SA (HUNOSA) Various mines, Asturias 3,300 46,000 Hulleras Vasco Leonesa SA Santa Lucia Mine, Leon 2,000 Minas de Figaredo SA Mines near Oviedo 1,000 ENCASUR Emma Mines, Ciudad Real 60 Source: Geological and Mining Institute of Spain ( IGME) 147

5. Business opportunities: Natural Resources SPAIN: STRUCTURE OF THE MINERAL INDUSTRY 2012 Commodity COPPER: METAL, CONTENT Major operating companies and major equity owners Location of main facilities Annual capacity (Th. tons unless otherwise specified) Iberian Minerals Corp Minas de Aguas Teñidas at Huelva ( MATSA) 2,200 Atlantic Copper S,A, (Freeport McMoRan Copper & Gold Inc,, 100%) Refinery at Huelva 270 Idem Electrolytic refinery at Huelva 105 Industrias Reunidas de Cobre Smelter at Asua-Bilbao 30 Elmet SL Smelter and electrolytic refinery at Berango, Vizcaya 60 First Quantum Minerals Ltd, 100% - Inmet Mining Corp, Cobre Las Cruces - Open pit mines in Seville Andalucia 210 Idem Cathode electrowinning at Las Cruces in Seville 72 Lundin Mining Corp,, 100% Aguablanca Mine, Extremadura 7 DUNITE Pasek España S,A, Mines and plant at Landoy, A Coruña 1,500 FLUORSPAR Minerales y Productos Derivados SA (MINERSA) Plant at Torre, Asturias 150 Underground mines at Emilio, Jaimina, and 420 Moscona, Asturias GOLD Orvana Minerals Corp, ( Kinbauri Gold Corp.) El Valle- Boinas Carles mines, Asturias 3,750 (kg) MAGNESITE Magnesitas Navarras SA Mine at Eugui, plant at Zubiri 600 Magnesitas de Rubián SA Underground and Mine at Lugo, 70 Source: Geological and Mining Institute of Spain ( IGME) 148

5. Business opportunities: Natural Resources SPAIN: STRUCTURE OF THE MINERAL INDUSTRY 2012 Commodity Major operating companies and major equity owners Location of main facilities Annual capacity (Th. tons unless otherwise specified) NICKEL, METAL, CONTENT Lundin Mining Corp,, 100% Aguablanca Mine at Badajoz near Seville 8 POTASH, ORE Iberpotash S,A, (ICL Fertilizers Europe) - ICL Israel Mines and plants at Suria near Barcelona 1,100 SEPIOLITE Grupo Tolsa S,A, Mine at Madrid and Toledo and plant at Madrid 1,000 Sepiolsa ( MINERSA ) Mine and plant at near Madrid 200 MYTA (SA de Minería y Tecnología de Arcillas, del grupo SAMCA Mine and plant in Zaragoza and Segovia 100 SODIUM SULFATE Crimidesa SA Mine and plant at Cerezo de Rio, Burgos 600 Minera de Santa Marta SA ( SANCA ) Burgos ( underground) and Toledo (open pit) 400 STEEL Sociedad Anónima Sulquiza ( MINERSA) Madrid 100 Aceralia Corporación Siderúrgica (Arbed SA 35%) Compañia Española de Laminacion S,L, (Celsa), 100% Corporación Gerdau Sidenor S,A, (Sidenor) (Gerdau Group, 50%, and Santander Group, 50%) Plants at Aviles, Gijon, Sagunto, and Sestao 8,000 Plant at Barcelona 2,600 Plant at Basauri 2,500 STRONTIUM Solvay Minerales SA Mines and plant at Escuzar, Granada 85 TUNGSTEN Almonty Industries Los Santos, Salamanca 125 Asturiana de Zinc SA (Azsa) (Xstrata plc, ZINC, METAL, CONTENT Electrolytic zinc plant at Asturias 500 100%) Source: Geological and Mining Institute of Spain ( IGME) 149

5. Business opportunities: Natural Resources Success stories Canada s First Quantum Minerals Ltd interested in Cobre Las Cruces copper mines. This mine is the largest open pit operation and process plant located in Southern Spain.).The plant is designed to produce approximately 72,000 tones of copper cathode per year, shipped as final product. In September 2009, Orvana Minerals Corp of Canada( OMC ) acquired El Valle Boinas/Carles ( EVBC) cooper and gold mine in northern Spain, through its acquisition of Kinbauri Gold Corp. The EVBC was previously mined from 1997 to 2006 by Rio Narcea Gold Mines. They produced nearly 1,000,000 ounces of gold and over 20,000 tones of copper prior to the closure of the mine. Production guidance for EVBC for 2013 is, 63,000 ounces of gold, 6,000,000 pounds of copper and 200,000 ounces of silver. ICL (Israel Chemicals Ltd) announced the first stage of an efficiency plan for Iberpotash, which includes increasing potash granulating capacity to meet increased demand for granulated potash, as well as construction of a plant at Suria to produce 1.5 Mt of vacuum salt for the food and chemical industries. Execution of this plan was expected to be completed in early 2014 at a cost of about 160 million euros. The second project, which had not yet been approved, would expand Suria s potash production capacity to produce 1.1 Mt of potash, of which 630,000 t would be granulated potash and 50,000 t would be technical potash. 150

5. Business opportunities: Textile & Clothing Investing in Textile & Clothing 151

Textile and Clothing sector in figures in Spain 5. Business opportunities: Textile & Clothing Spain is one of the five biggest producers in T&C industry in the EU and accounting for about three quarters of EU production of textile and clothing. There are more than 8,500 companies, which are a major employment generator and provided jobs for 129,000 people in 2014, with an estimated turnover of 9.3bn. Source : Fact Sheets MINETUR 2013 152

Spain Exports of Textile and Clothing sector 5. Business opportunities: Textile & Clothing Rest of Europe 6% Africa 4% Rest of the world 0% Oceania 0% Spain Imports of Textile and Clothing sector Asia 12% America 10% European Union 68% Rest of the world 0% Oceania 0% Resto Europa 8% Africa 2% Asia 15% America 9% European Union 66% Source : Directorate General for Customs / Icex 153

5. Business opportunities: Textile & Clothing Spanish companies in T&C sector The main Spanish companies and brands national in the sector are: 154

Foreign companies in T&C sector 5. Business opportunities: Textile & Clothing Foreign companies and brands with presence in Spain are: 155

5. Business opportunities: Textile & Clothing Success stories Hennes & Mauritz was set up in Spain in 2000. H & M, open the first store in Barcelona, Glories 6th of April, followed by two additional store openings in Zaragoza in the shopping centers of Grancasa, April 7, and Augusta, April 13. The fourth opening was in May month in Barcelona la Maquinista. In fall 2000 was open H&M in the center of Madrid and in Spring 2001 in Valencia. H & M expands its commitment to the 'e-commerce' the presence Store 'online' in Spain in autumn 2014. «Estamos entusiasmados con la llegada de H&M 'online' a España este otoño, algo que nuestros clientes estaban esperando ansiosos, ya que es el complemento perfecto para nuestras 150 tiendas de España y la oportunidad de ofrecer a nuestros clientes la mejor experiencia de compra las 24 horas del día», ha asegurado Doris Klein, directora general de H&M para España y Portugal. Source: ABC.es 156

ICEX / Invest in Spain your partner in Spain 6. ICEX-Invest in Spain Paseo Castellana, 278 28046 Madrid SPAIN T (+34) 91 503 58 00 E-mail: investinspain@icex.es www.investinspain.org 157

Who is INVEST IN SPAIN is the Directorate responsible for attracting direct foreign investment in ICEX-Spain Trade & Investment. Our president is the Secretary of State for Trade (Ministry of Economy and Competitiveness). Objectives & activities To promote, attract and maintain foreign direct investment in Spain Attracting new projects of foreign investment by focusing on countries, sectors and businesses that involve greater growth potential for Spain Promoting a business climate and facilitating doing business in Spain Transmitting an image of Spain as an internationalized country associated with highly competitive human and technological resources To be the benchmark for foreign investors and the meeting point between companies and institutions on State, Regional and Local levels engaged in promoting and attracting investments 158

1. Information and Advice Personalized advisory service. Customized reports Information on European, National, Regional and Local grants and subsidies applicable to investment projects Information on administrative procedures and advice on all stages of the investment process Specialized consultancy on legal, technical and market areas through partnership institutions Specialist publications: sector guides, tax, immigration and legal briefs. 2. Support and Management Assistance with the establishment of foreign companies in Spain: Finding the best location for each project throughout Spain Organization and co-ordination agenda: meetings and visits to companies and institutions across Spain, as well as with the corresponding regional and local governments Identification of the strategic & technology partners for each project 159

3. Business Development Working in conjunction with regional and local agencies to provide clients with the best possible service and location Help in seeking incentives, public and private finance for the establishment, development and expansion of companies setting up in Spain Introductions to other companies: to help with reinvestment projects, suppliers, specialist consultancy Partnership & management of joint investments by foreign companies and Spanish investors 4. Business climate Presents the collective needs and interests of foreign-owned companies to the Spanish Administration Opinion surveys: individual interviews, focus-groups, analysis of the business climate. Foreign chambers of commerce, associations, etc Legislative and administrative proposals Periodical publications on topics of interest to investors 160

6. Invest in Spain: Investor services Services of special interest: Immigration Department Provides advice on the most appropriate way (quickest and least bureaucratic) to obtain the permits for highly qualified employees, technical staff, scientists, families,... Advice on how to open a branch, create or acquire a company... Assessment for transactions that involve immigration issues for foreigners without residence in Spain Act as the institutional contact for companies vis-à-vis all Spanish bodies with powers, such as the Spanish Embassy and Consulates, Ministry of Employment, Home Office and Regional Immigration Offices 161

6. Invest in Spain: Investor services Services of special interest: Investment Program in R&D Activities Since 2007 ICEX-Invest in Spain has managed European Regional Development Funds (ERDF) with the objective of attracting research and development activities from foreign-owned capital companies to Spain For the period 2014-2020 ICEX-Invest in Spain will manage 14 million budget for projects allocated in Extremadura, Andalucia, Castilla la Mancha, Canarias, Murcia, C. Valenciana or Galicia Investment in facilities, equipment, human resources and technology could be supported up to 200,000 per company in competitive tenders. Since 2007 Invest in Spain has supported 127 projects in high valueadded sectors such as Biotechnology, IT, Renewable energies and Environment 162

ICEX / Invest in Spain your partner in Spain 6. ICEX-Invest in Spain Paseo de la Castellana 278 28046 Madrid SPAIN T (+34) 91 503 58 00 E-mail: investinspain@icex.es www.investinspain.org 163