Not bad and getting better

The World Investment Report 2010 was announced in Poland on 22 July 2010 at the Polish Information and Foreign Investment Agency.

World Investment Report 2010: Investing in a Low-Carbon Economy was published by the United Nations Conference on Trade and Development (UNCTAD).

“For a crisis, Poland is doing very well,” said Prof. Zbigniew Zimny, a UNCTAD representative in Poland who was a consultant on the report. “While the amount of foreign direct investment has fallen since 2007, we must remember that 2007 was a record-setting year. If we treat this as a correction, we can see a steady growth trend despite the 22% decline in 2009. And projects worth a total of EUR 5 billion were begun within the past five months.”

Bouncing back

In the latter part of 2009, investments grew in most regions of the world. While these were mainly international acquisitions of enterprises, not new investments, Poland still represents an exception. Steadily over many years, more than 90% of investments in Poland have been new “greenfield” projects, while countries like the Czech Republic, Hungary and Latvia have relied more on the sale of enterprises.

The report also points to the growing profile of developing countries and countries in transformation, which account for nearly half of global investment flows on both the export and import sides. This share is expected to grow at the expense of more developed countries.

Why such success?

According to Robert Seges, head of the Services Division at the Polish Information and Foreign Investment Agency, “Poland was protected from deeper consequences of the crisis by the low share of mergers in the investment flows into Poland, and the fairly high level of reinvested profits, which are a measure of interest on the part of earlier investors. In addition, in Poland there is strong growth of sectors that are less susceptible to cyclical fluctuations—high-tech services, aviation, and renewable energy. But it will take about 4 or 5 years to return to the record-high level of FDI in 2007.”

Paradoxically, the crisis made it more profitable to invest in Poland. “We must remember that just before the crisis, the situation was not favourable for investors,” Seges said. “The unemployment rate was falling, which made it harder to find staff educated to modern standards. On top of that there was double-digit growth in labour costs and a rising Polish zloty. It was only with the crisis that Poland reached the top of the country rankings of investment attractiveness.”

According to a report by A.T. Kearney, Poland now ranks 6th in the world in terms of attractiveness for investors – up from 22nd place in 2007. “We can expect an increase in investments over the course of the next 5 years,” Seges said, “but growth will depend on the quality and education of staff, rather than investment costs.”