Poland attracts foreign investors
According to the World Bank’s latest report, Doing Business 2017, Poland has once again advanced and now holds 24th place among 190 countries ranked in terms of how easy it is to do business there. And in EY’s European Attractiveness Survey 2016 Poland was recognised as the 5th most attractive FDI destination in Europe (1st in CEE). Poland’s main strengths are stable economic growth, a large consumer market, numerous tax incentives, and its location at the crossroads of major continental trade routes.
Stable economic growth
Poland remains one of the fastest-developing European countries (4th in the EU and 1st among the EU’s largest economies). It was the only country in the continent to resist the last global economic crisis and its public finances remain in much better shape than the EU average.
According to forecasts by the European Commission, Polish GDP will grow by 3.7% in 2017, as compared to an EU average of 1.9%. The main drivers of economic growth are investment, private consumption (among other reasons due to significant government transfers in the form of the Family 500+ child benefit) and exports (displaying a steadily growing surplus over imports).
The labour market is also in good shape. According to Eurostat, unemployment in 2017 should fall to 6.3%. And the inflation rate remains low.
According to the UNCTAD’s World Investment Report, Poland was one of the world’s top 20 recipients of foreign direct investment in 2014, with inflows of nearly USD 14 billion.
Poland’s membership in NATO and the EU is also important for the country’s economic situation, as a guarantee of stability and security and thus reliability as a business partner for foreign investors.
A big consumer market
With nearly 40 million people, Poland is one of the largest consumer markets in Europe. It ranks 6th in population in the EU and 1st in Central & Eastern Europe. Additionally, thanks to direct access to the EU market and its convenient location in the centre of Europe, at the crossroads of major trade and transit routes, goods can be exported from Poland to all European countries, reaching over 500 million consumers. Poland’s largest trading partners currently include Germany, Russia, the UK, France, Italy, Czechia, Spain and Ukraine.
Ease of doing business
According to the Doing Business report prepared every year by the World Bank, Poland is steadily advancing in terms of how easy it is to do business here. Since 2008 it has moved from 72nd place to its current 24th spot among 190 countries worldwide.
The conditions for doing business continue to improve in Poland, mainly thanks to numerous programmes implemented by the Polish government and parliament. An example is the “Business Constitution” designed to facilitate the functioning of enterprises, including by eliminating or greatly limiting legal barriers to doing business. Solutions are introduced to protect businesses against changes in interpretation of law, make inspections by public authorities less burdensome, lessen the obligations imposed on firms by employment law, simplify tax calculations and make it easier to enforce receivables. Work is underway on developing the “simplified stock company” as a new legal form with startups in mind, and achieving universal digitisation of the economy.
Qualified and competitive workforce
According to the OECD, more than 430 higher education institutions operate in Poland, with about 1.4 million students, including nearly 60,000 foreigners from over 150 countries.
Nearly 30% of Poles age 25–64 hold a university-level education (6% the equivalent of a bachelor’s degree, 21% a master’s and 1% a doctorate). In the PISA assessment 2015, Poland ranked 22nd in the level of student preparedness for further education and the demands of the labour market, among 72 countries in the global classification, with one of the highest positions in the EU.
Well-educated Polish economists, programmers, engineers and scientists are sought out by IT companies, R&D centres, and scientific and technical institutes. The number of graduates in the fields of study most desirable to firms investing in technologically advanced sectors of the economy is growing year by year.
High support from EU funds
In 2014–2020 Poland will receive a total of over EUR 120 billion from Brussels in the form of EU subsidies. These funds are earmarked mainly for two areas: cohesion policy (over EUR 82 billion) and agricultural policy (over EUR 32 billion). This is even more than in the prior budgetary perspective (2007–2013), when Poland had over EUR 100 billion at its disposal, including EUR 68 billion for the cohesion policy.
These funds cover the fields that contribute the most strongly to economic growth, greater employment, and modernisation of the economy. The money will be used for such purposes as scientific research, road construction, public transit, energy, entrepreneurship, digitisation, broadband infrastructure, and professional retraining of the unemployed.
These funds are also available to foreign investors operating in Poland.
Modern, well-developed infrastructure
A major strong suit of Poland is its continually expanding and improving infrastructure: roads, rail, airports, seaports, logistics, etc.
Several international routes totalling 5,000 km run through Poland (Berlin–Lviv, Berlin–Moscow, Białystok–Prague, Gdańsk–Cieszyn/Těšín, Gdańsk–Lviv). By 2020, 21 transhipment hubs will be built on the TEN-T (Trans-European Transport Networks). In 2014–2020 a total of over PLN 140 billion will be spent on expansion of the country’s road infrastructure, and a further 1,800 km of national roads and expressways will be built by 2023.
In 2016–2023 spending on expansion and upgrading of rail infrastructure is scheduled to reach PLN 31 billion (PLN 22 billion of that from EU funds) and in 2014–2020 a total of PLN 6.5 billion is to be invested in maritime transport. The cargo shipped through Polish ports continues to grow, and currently stands at over 80 million tonnes per year.
There are 15 airports operating in Poland, used by about 35 million passengers per year, a figure that is steadily rising. The Polish air transport sector is projected to grow through 2019 at an average annual rate of 3.7%.
There is no shortage of logistics space. Poland is Europe’s 8th-largest market for warehousing, and also the cheapest.
Special economic zones
Poland offers foreign businesses a range of investment incentives, including the opportunity to invest in special economic zones. There are currently 14 zones: Kamienna Góra, Katowice, Kostrzyn-Słubice, Kraków, Legnica, Łódź, Mielec, Pomerania, Słupsk, Starachowice, Suwałki, Tarnobrzeg, Wałbrzych and Warmia-Mazury. They also have their own subzones.
Investors in SEZs can enjoy state aid granted in the form of corporate income tax exemptions, and for costs of capital expenditures and job creation. To obtain such aid, it is necessary to conduct business operations for at least 5 years and to maintain the assets connected with the capital expenditures for that period; this period is reduced to 3 years for SMEs.
Entities investing in SEZs can also count on other preferences: the possibility of purchasing (or leasing) land fully prepared for development at competitive prices, free assistance in carrying out the formalities connected with planned ventures, covering the cost of training for interns, subsidies for creating new jobs, and exemption from real estate tax (in certain localities).
Data show that an additional PLN 215 is invested in Polish special economic zones every second. The greatest share in capital invested in SEZs is represented by the automotive industry (over 26%) as well as manufacturers of rubber products (mainly tires) and plastics (close to 11%). The leading investors in Polish SEZs include such companies as Electrolux, Ericsson, Fujitsu, General Motors, Gillette, IBM, IKEA, Indesit, LG, Michelin, Opel, Shell, Toyota, UBS and Volkswagen.
Cooperation between Poland and Belarus
Currently Poland is Belarus’s 3rd-largest trading partner (after Russia and Ukraine), the 3rd-largest exporter to Belarus, and the 9th-largest foreign investor there. For Belarus, Poland is its 6th-largest export market. In 2016 the total value of trade between the two countries reached about USD 2.5 billion, as compared to over USD 2.1 billion in 2015.
A record of some 500 businesses from the two countries took part in the 20th Polish-Belarusian Economic Forum in 2016. In the presence of deputy prime ministers of Poland and Belarus, four cooperation agreements were signed at the most recent forum, including a letter of intent concerning creation of the Polish-Belarusian IPO Centre. It is intended to serve as a centre for training and legal advice for Belarusian entrepreneurs and a platform facilitating access to sources of financing drawing from the Polish capital market. The document was signed by officials from the Warsaw Stock Exchange, the Polish-Belarusian Chamber of Commerce and Industry, and the Belarusian State University.
The forum also raised a number of other topics, including construction of the Dnieper–Vistula Canal, easing of visa traffic, launching of new border crossings, easier access to Polish seaports for Belarusian goods, and joint involvement in the Chinese concept for the New Silk Route. The possibility for Poland to purchase electricity generated at the nuclear power plant under construction in Astravyets, Belarus, was also discussed.
Dr Przemysław Szymczyk, adwokat, Wardyński & Partners, Warsaw
Alina Kalinovskaya, advocate, SBH Sysouev, Bondar, Khrapoutski & Partners, Minsk
Reprinted from the Belarusian business weekly Belarusians and the Market (Белорусы и рынок, 5 August 2017)