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DECEMBER 2009 | POLAND

The knowledge economy:

why Poland is punching

above its weight in

central Europe

produced in association with


DIRECTOR SUPPLEMENT | DECEMBER 2009 | www.director.co.uk

POLAND

THE KNOWLEDGE ECONOMY

IN ASSOCIATION WITH THE EMBASSY OF THE REPUBLIC OF POLAND

CONTENTS

FOREWORD

3 Barbara Tuge-Erecińska,

Ambassador of the Republic of

Poland to the Court of St James’s

explains why businesses should

choose to invest in the country

PROFILE

4 Poland was the only EU country

to report a positive GDP this year.

What lessons can we learn from

the country’s reform

PRIVATISATION

6 There are plenty of privatisation

opportunities on offer for

investors, as well as a new

Public/Private Partnership deal

REGIONAL DEVELOPMENT

8 We put the spotlight on Poznań,

Wrocław, and Łódź—three

enterprising, modern cities—and

the companies working in them

SECTOR WATCH

11 Poland has a diversified range of

industries, but it’s the aerospace,

biotechnology, IT and electronics

sectors that are really booming

FDI

12 Poland is not just a safe and

profitable place in which to

invest, it also receives billions of

euros of grants and incentives

TOURISM

14 A brief guide on where to stay

and what to do in Warsaw,

Kraków, Gdańsk and Poznań

Group Editor

Richard Cree

Deputy Editor

Amy Duff

Writer

Claire Coleman

Sub Editor

Caroline Proud

Art Director

John Poile

Client Sales Manager

Fiona O’Mahony

Production Manager

Lisa Robertson

Production Controller

Emma Bowen

Advertising Director

Jo Appleyard

Chief Operating Officer

Andrew Main Wilson

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necessarily reflect IoD policy.

The IoD accepts no

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2

Director.co.uk Poland


For the past 20 years, Poland has been undergoing a

comprehensive and often painful process of

transformation, from a centrally controlled economy

to a market economy. This process was fraught with

many obstacles and required considerable effort on

the part of the Polish people. However, we can now at last say

that this massive mobilisation has paid off.

The Polish economy, based on stable and transparent

economic, financial and political institutions, is going from

strength to strength, despite the credit crunch, as illustrated by

the latest economic indicators. In the middle of a full-blown

global crisis, a recent forecast by the European Commission

predicts that Poland will be the only EU member state with a

positive GDP in the current year.

With each passing year, the Polish economy is coming closer

to meeting the Lisbon criteria, placing knowledge at the

forefront of building economic prosperity. Poland is becoming

an increasingly significant player on Europe’s economic map,

thanks to a well-developed system of investor incentives; an

educated workforce fluent in foreign languages, and a €100bn

injection of structural funds.

Poland is the largest economy in central and eastern Europe,

with an almost 40 million-strong internal market, which is

quite resistant to outside tremors thanks to healthy consumer

spending. At the same time, Poland’s central location—which

includes unobstructed access to the whole of the EU market

and close links with the eastern markets—provides investors

with an opportunity to place their companies in a strategically

advantageous position ahead of the anticipated bounce of

the economy.

This supplement outlines answers to many questions that

our staff at the Embassy have been receiving concerning

business opportunities in Poland. I hope that the information

included inside will encourage you to think boldly, think

Poland, and to successfully invest and win business not only in

our country, but in other neighbouring markets as well.

I would also like to use this opportunity to wish all members

of the Institute of Directors a prosperous 2010.

OLIVER REUTTER/PA/POLONIA PALACE

Barbara Tuge-Erecińska

AMBASSADOR OF THE REPUBLIC OF POLAND TO

THE COURT OF ST JAMES’S

“POLAND IS BECOMING AN

INCREASINGLY SIGNIFICANT PLAYER

ON EUROPE’S ECONOMIC MAP”

December 2009 Director.co.uk 3


PROFILE

The heart

of Europe

A radical and sustained

programme of reform has

made Poland one of the

most successful EU

‘transition’ economies

In 1989, the idea that Poland could

compete against the likes of the UK

and France in business terms would

have been laughable. Under a

Communist regime, the economy,

such as it was, had been dominated by

heavy industry and by an antiquated

agricultural sector. Inflation was estimated

to have reached a staggering 900 per cent;

foreign debt was around the $37bn mark.

After the fall of Communism, Leszek

Balcerowicz, the then minister of finance,

POLAND IN BRIEF

Capital Warsaw

Joined NATO in 1999 and the European Union

in 2004, providing a major boost to the economy

Currency 1 złoty = 100 groszy

The government has announced its intention

to enact business-friendly reforms, reduce public

sector spending growth, lower taxes, and

accelerate privatisation

GDP (real growth rate) 2008 4.8 per cent

When to go May to October are the warmer

months. The ski season runs from December to

March—Zakopane and the nearby Tatra

Mountains have the best ski facilities

Getting there The majority of international

flights arrive at Fryderyk Chopin Airport.

Poland’s national carrier LOT flies to all major

European capitals

Sport Poland will co-host the UEFA European

Football Championship in 2012

EU Poland is the sixth largest country in the EU

Population 38 million

implemented a radical, hard-line

programme of economic reform. Initially,

the plan called for the removal of all price

controls and for limits on wage increases

and allowed layoffs and bankruptcies. At

the same time, it made the zloty a

convertible currency and stabilised its

exchange rate.

These changes led, slowly but surely, to a

new confidence and meant that Poland

could compete on the world economic

stage. After subsequent reforms to the

banking system and to monetary credit

policy, capital and labour markets were

created. In 1990, privatisation laws were

passed and, by encouraging companies to

depend less on the state and by promoting

competition, the culture of a free market

began to take shape.

Although, inevitably, problems still

exist—a CIA online report, while generally

bullish, points to “remaining deficiencies”

in the business environment and the need

for continued reform—20 years on, there’s

no doubt Balcerowicz’s plan is paying

dividends. In 2008, inflation in Poland was

around 4.2 per cent, while, year-on-year,

GDP had grown an estimated 4.8 per cent

to PLN 1,266bn (£279bn). Exports in 2008

totalled €114,566m (£106m), and

unemployment, although still above the EU

average, had dropped to 9.5 per cent.

Perhaps most importantly, the

percentage of GDP attributable to the

private sector has risen from 28 per cent in

1989 to around 75 per cent today, signalling

a true shift towards an enterprise economy.

The Public/Private Partnership scheme

(see page 7), designed to modernise the

country’s infrastructure and attract

domestic and foreign investors, will see

further expansion of the private sector and

further contraction of the state.

One of the spurs to liberalisation has, of

course, been Poland’s goal, achieved in May

2004 after 10 years of negotiation, of joining

the EU. The Copenhagen criteria, the rules

for EU membership, require “the existence

of a functioning market economy”.

If the goal of EU accession helped drive

the reform programme, achieving it has

helped it succeed. A recent Ministry of

Economy review noted that, five years after

joining the EU, the Polish economy is

growing at twice the rate of other European

economies, and that, at both a domestic and

international level, there has been

increased investment activity. The report

states that becoming an EU member state

has made Poland a far more attractive

prospect for foreign investors considering

setting up a base in the country.

The added stability of membership of

the EU has given new edge to an economy

that, in the heart of Europe, boasts a

domestic market of 38.1 million, good trade

routes, low labour costs, an educated, multilingual

workforce and real prospects for

economic growth.

4

Director.co.uk Poland


Moving on up: Poland’s Prime Minister Donald Tusk (above) is a champion of the free

market. Poland is the only EU member to sustain economic expansion in 2009, while

Warsaw is one of the fastest growing cities in Europe

EXCHANGE

TRADES UP

In just 18 years, the Warsaw

Stock Exchange has become the

leading bourse in central and

eastern Europe

GETTY/PA/PHOTOLIBRARY

Most significantly of all, though, joining

the EU has meant billions of euros in aid,

much of it available to foreign investors

through grants.

EU structural funds, together with low

prices on brownfield and greenfield sites

“EU STRUCTURAL FUNDS

AND OTHER INCENTIVES

MEAN POLAND IS

NOW A MAGNET FOR

FOREIGN INVESTORS”

and other incentives, mean Poland is now a

magnet for foreign investors. And the

Polish Information and Foreign Investment

Agency (PAIiIZ) is determined to make sure

they stay. Established in 2003, the agency

provides guidance on everything from

making the most of financial incentives to

finding business partners.

In the face of global recession, Poland is

not simply holding its own but out-doing a

number of economies that might

previously have been considered stronger.

It is the only one of the 27 members of the

EU to sustain economic expansion this year

and, according to Eurostat, GDP increased

by 1.4 per cent in the second quarter.

If anything, the credit crunch could

actually improve the labour market in

Poland as expats suffering harsher

economic times abroad return home.

Despite these positive signs, the country

is not resting on its laurels. In September

this year, the head of the central bank and

the economy minister announced plans to

strengthen the banking sector and boost

lending. It was a clear sign of a country that

is determined to continue to grow.

The Warsaw Stock Exchange (WSE) has

come a long way since April 16, 1991, when it

began trading in its present form. On that first

trading day, only five stocks were listed; now

there are 375, and the exchange in 2008 boasted

a share turnover value of $137.5bn

(PLN 331.3bn) and a market capitalisation of

$110.9bn (PLN 267.4bn).

In September 2008, it was recognised by the

FTSE, alongside markets from countries such

as Taiwan and South Korea, as an “advanced

emerging” exchange. A clearly focused growth

strategy, aimed at strengthening the

attractiveness and competitiveness of the

Polish market, appears to be paying off.

By the end of September this year, the

WSE was, according to data published by the

Federation of European Securities Exchanges,

the leader in the central and eastern

European region, both by trading in stocks

and by capitalisation.

Little wonder that when, in September this

year, offers were invited for a 74 per cent stake

in the state-owned bourse (51 per cent to

professional investors, 23 per cent to

brokerages that trade on the exchange), many

big names came forward.

At the time of going to press, NYSE

Euronext, Nasdaq OMX, and Deutsche Börse

had all expressed interest in the takeover,

while Concorde Securities, Merrill Lynch,

Banco Espirito, Wood and Co, Goldman Sachs

and Bank Pekao were all said to have

submitted bids for part of a 23 per cent stake.

December 2009 Director.co.uk 5


New rules for new money

Changes to the law have enabled partnerships between private businesses and local

authorities in order to modernise infrastructure and improve public services

Poland’s accession to the EU in 2004 marked

a new phase for the country, confirming its

place in the market economy of Europe and

strengthening its attractions for investors.

Just after accession, in 2005, the government

passed the Public/Private Partnership Act to allow private

companies and local authorities to work together on

schemes to modernise the country and improve staterun

services.

Similar to the Private Finance Initiative in the UK, the

PPP Act seemed an ideal solution for the country, but the

development of PPP projects has so far stalled. As yet, no

successful PPP scheme has got off the ground.

Commentators blame a legal framework that placed

too many checks and balances on partners.

The good news is things are about to change. Early this

year, the government relaxed the rules.

“In February, a new law came into force that should

make PPPs a lot easier,” explains Michael Dembiński of

the British-Polish Chamber of Commerce. “The old law

was so restrictive that no PPP projects were actually

carried out under it.”

The PPP Act 2008 gives partners more leeway in

negotiating contracts and cuts red tape. Importantly, it

removes the requirement for complex risk assessments

and feasibility studies. As long as they stick to the

general law, parties are freer to proceed.

It’s widely hoped that the new legislation will result

in a successful pilot project and finally get the PPP

ball rolling.

“Our members are gagging to get involved with PPP

projects,” says Dembiński. “At a time when globally

things are slowing, firms such as construction

companies are turning to the public sector to help tide

them over.”

The will is there in the public sector, too. Wadim

Kurpias, a partner at international law firm CMS

Cameron McKenna, is convinced that PPPs are the only

viable way for the country to make the necessary changes

to its infrastructure.

“PPPs are very important, especially in light of the fact

that the local authorities have not got sufficient funds to

carry out new infrastructure projects and have often

reached maximum debt ratio,” he says. “There is no other

6

Director.co.uk Poland


PRIVATISATION

PA

Building for the future: the construction

sector in Poland has huge potential. Work is

already underway on Poland's new national

stadium in Warsaw (left) ready for the UEFA

Euro 2012 Football Championship, which will

also create opportunities for local hotels,

restaurants and the tourist industry in general

way to progress… PPP would bring

benefits, especially if we follow

international examples, such as those of

the UK and other countries that have

adopted this structure in their economy.”

Experts estimate that if the new

legislation succeeds in creating a workable

environment for PPPs, the market could

be worth as much as €50bn (£46bn) over

the next three or four years.

There can be little doubt that the government is fully

committed to the idea of private investment in Poland’s

public services. In May this year, the deputy minister of

economy Adam Szejnfeld went to Rome to sell Poland to

Italian businesses. With him were representatives from

Poland’s local authorities.

“WE ARE LAUNCHING A EUROPEAN

RACE FOR INVESTMENTS IN

POLAND THAT ARE DUE TO BE

IMPLEMENTED USING PPP”

“We are launching a European race for investments in

Poland that are due to be implemented using the PPP

formula,” he said. “Poland is one big construction site

now, and will remain so for years. Many of these

investments may be delivered using the PPP formula.”

The minister pointed out that the forthcoming

European Football Championship presents huge

opportunities for the private sector but was keen to

stress that PPP had a life beyond 2012. Realistic talk or

political spin

Dembiński still sees issues that need “ironing out”

before investors, and local authorities, can capitalise on

the possibilities offered by PPP. Nonetheless, he is

optimistic about the future for private and public sector

partnerships in Poland.

“There’s a lack of experience in managing projects like

this, and also a fear and lack of trust. But it’s getting

there, with investment banks and private equity firms,

lawyers, consultants and the construction industry all

poised to get involved with everything from water

treatment works and healthcare to social housing,

prisons and roads. All it’s going to take is that one

successful pilot project, and then I think the floodgates

will open,” he says.

OPPORTUNITY

KNOCKS

An ambitious

programme of

privatisation means

there are opportunities

to snap up a bargain:

POWER

Up to 10 per cent of

PGE Polska Grupa

Energetyczna S.A., a

parent company of the

largest capital group in

the Polish energy sector.

CHEMICALS

50.12 per cent out of a

50.70 per cent treasuryowned

stake in Zakłady

Azotowe “Puławy”

S.A. (ZAP) nitrogen plant.

MINING

55.97 per cent of a 65.50

per cent stake in

Lubelski Węgiel

Bogdanka S.A., one of

the largest hard coal

mines in Poland.

METALLURGY

85 per cent of the

treasury’s 100 per cent

stake in Centrozłom

Wrocław S.A., a scrap

metal and waste

recycling company.

PETROLEUM

85 per cent of the

treasury’s 100 per cent

stake in Ośrodek

Badawczo -

Rozwojowy

Przemysłu

Rafineryjnego S.A.,

an R&D centre for the

petroleum industry.

DEFENCE

A 56.82 per cent stake in

Huta Stalowa Wola

S.A., which makes heavy

construction equipment.

PHARMACEUTICALS

41.65 per cent out of

49.00 per cent shares in

Cefarm Rzeszów

S.A., a pharmaceutical

supply company.

MACHINE AND METALS

85 per cent of Remag

S.A., a manufacturer of

mining machines

TRANSPORT

85 per cent of the shares

in Polska Żegluga

Bałtycka S.A.,a

provider of international

passenger and freight

ferry services.

December 2009 Director.co.uk 7


A tale of three cities

How new investment, new industries and new

government initiatives are transforming three of

Poland’s major cities

POZNAŃ

Poznań is Poland’s fifth largest city and fourth

biggest industrial centre

Its International Fair includes over 80 events

each year and attracts businesses and scientific

and research institutions from all over the world

Businesses with R&D and IT centres in Poznań

include GlaxoSmithKline, Microsoft, and Carlsberg

Poznań’s Old Town district is buzzing as

people head to its restaurants, pubs and clubs

Situated by the Warta River in central-west

Poland, Poznań has been an important

trade centre since the Middle Ages. Today,

it’s the country’s fourth largest industrial

centre with an unemployment rate (2.3 per

cent in May 2009) well below the national

average.

An international airport offers business

travellers direct, three-hour flights to more

than 20 European cities; modernisation of

the railway network is further improving

transport links.

Foreign investment has created new jobs

and new wealth. Poznań’s once state-owned

pharmaceuticals factory, at the heart of the

Polish drugs industry since the 1920s, is

now in the hands of GlaxoSmithKline,

making more than 200 products and

churning out 100 million packets of

medicines every year.

“The Poznań site employs more than 600

people, producing and packing medicines

that treat everything from AIDS to

migraines and are sold to more than 60

markets around the world,” says Justyna

Czarnoba, corporate communications

manager for GSK in Poland. What’s more,

the factory is ripe for expansion.

“In future years, the Poznań plant is set

to become an even more important part of

GSK as the company transfers production

of a medicine used in the treatment of

prostate cancer to the factory in an

investment valued at around $20m,” adds

Czarnoba.

Other big names in the pharmaceuticals

industry, such as Roche, Biofarm, Miralex

and Farmapol, also have interests in

Poznań. Drawing them all is Poznań’s

commitment to innovation and R&D. The

city’s renowned Adam Mickiewicz

University boasts a science and technology

Modern love: the Stary Browar centre in Poland’s fifth

largest city houses business, arts and shopping

8

Director.co.uk Poland


REGIONAL DEVELOPMENT

WROCŁAW

The capital of Lower Silesia is Poland’s

fourth largest city with a character all of its own

Wrocław is the major industrial, commercial

and educational centre for the region

Businesses working in Wrocław include HP,

Google, Credit Suisse, and Nokia Siemens Networks

On the Odra River its 12 islands, 130 bridges

and riverside parks make for an idyllic location

Old meets new: Poznań’s energetic old town (above); the open-air multimedia fountain (below) in the

historic area of Centennial Hall Conference and Exhibition Centre, Wrocław

park that supports businesses set up by

students, combining academic excellence

and innovation. The Centre for DNA

Research, a biotech business founded by

students, was “incubated” there. Named an

“academic enterprise leader” in 2008, it

demonstrates just the kind of “applied

science” the pharmaceuticals giants love.

Continuing investment in higher

education—witness the “new” University of

Life Sciences, a former academy for

agriculture that officially gained university

status last year—means Poznań’s knowledge

economy can only grow. More than 30,000

graduates enter the Poznań labour market

every year, perfectly equipped to take on

roles in biotechnology, nanotechnology,

bioengineering and genetics.

Poznań is not just a biotech heartland. In

the heart of the city is Stary Browar, an

award-winning shopping, arts and business

centre built on the site of a former brewery.

Adjacent to an office block, the complex

houses around 200 stores and restaurants.

As the headquarters of Poland’s Bank

Zachodni (owned by Allied Irish Bank),

Wrocław became an important financial

centre after the fall of Communism. Today,

though, it’s probably just as well known for

its involvement with global ICT businesses.

In 2007, search-engine king Google chose

the city as the base for a

development/operations centre. Today, its

Wrocław office supports advertisers,

publishers and users not only in Poland but

also in other EMEA markets such as

Germany, France and Russia.

Google followed Norway’s Opera

Software, famous for the Opera family of

Web browers, to the city. IBM and Nokia

Siemens are also here. What attracts them

The answer is simple: the quality of the

workforce.

“We already had offices in Warsaw and

Kraków, and we considered various other

locations, but the key thing that sold

Wrocław to us was the access to talent,”

explains Peter Weng, head of Google’s

PHOTOLIBRARY/MACIEJ KULCZYNSKI

December 2009 Director.co.uk 9


REGIONAL DEVELOPMENT

Wrocław office. “There are three élite

universities in the city and a number of

languages are spoken at a very high level—

Polish, obviously, but also English, French,

German and Russian.”

Guenter Zwickl, the head of Nokia

Siemens Network Development Centre, the

largest telecoms R&D centre in Poland,

agrees. “After Eastern Europe opened we

needed a location with innovative people

on tap,” he explains. “We chose Poland

because it was the most promising location

and Wrocław because it seemed to have a

really rich seam of young, technicallyeducated

graduates. When it comes to IT,

the universities in Wrocław really are at the

top of their game. That’s why we’re now in

a position here to be able to develop

software and other tools that are deployed

globally throughout the business.”

Good and improving infrastructure and

transport links add to the city’s attractions

for business investors. There’s an

international airport, and rail and road

links are being upgraded as part of the

project to prepare the city for the 2012

European Football Championship.

There are short-term frustrations, admits

Zwickl: “Lots of work is currently under

way building a new highway and reworking

streets for larger traffic flow and

that can make getting around difficult.”

Peter Weng, meanwhile, is also concerned

that residential development isn’t keeping

pace with the city’s expansion. “The rental

market is a bit tight,” he says, “so finding a

place can be a bit of a challenge—the

quality is certainly there but at the moment

the quantity isn’t.”

Every problem, though, can be a

commercial or investment opportunity. “In

terms of real estate there are some great

opportunities out here,” Weng adds.

ŁÓDŹ

Łódź is Poland’s third largest city and an

important industrial centre

The city is campaigning to be the European

Capital of Culture in 2016

Businesses with R&D and IT centres in Łódź

include BSH, Fujitsu Services, Accenture, Infosys

Its central location means a number of firms

have located their logistics centres in Łódź

Łódź, a mill town in the 19th century, used

to have an image problem. Today, however,

it’s far from a grim industrial city. Much

like Manchester in the UK, it’s been

regenerated: EU funds and private finance

have been pumped into the city,

transforming obsolete textile factories into

hotels, museums and shopping malls.

Alongside the aesthetic revamp has been

a change in strategy. With the help of

consultants, McKinsey, the city authorities

have put together a plan to attract new

money, offering potential investors

information on everything from

commercial property and tax allowances to

recruitment and childcare. Their “one-stopshop”

approach has already attracted

investors that have, or are going to create

19,000 new work opportunities.

They believe business process outsourcing

(BPO) is one area in which Łódź can excel.

“Łódź has a lot to offer potential investors,”

says Aleksandra Suszczewicz of the Łódź

Investor Relations Unit. “We’re in a strategic

location in the very centre of Poland and

Europe, with ongoing development of

transport infrastructure. Plus there’s a large

pool of skillful manpower, in the form of

well-educated young people with knowledge

of languages, available at competitive

labour costs.”

Accenture, Citi Group, Atos Origin,

Infosys and Fujitsu Services are just some

of the companies that have finance and

accounting or IT bases in the city.

They join big-name manufacturers lured

to Łódź by the promise of the competitively

priced but highly-skilled workforce, and

easy access to European markets and

distribution networks. Proctor and Gamble

has opened a new plant in Łódź to make

skin care products; and in January this year

Centre court: the Manufaktura shopping centre

(above) was previously a 19th century factory;

Dell’s advanced computer systems plant (left)

10

Director.co.uk Poland


SESECTOR WATCH

A look at some of the industries that are fuelling

economic growth in Poland

The fab four

PHOTOLIBRARY/GETTY

Dell announced that it would transfer

production of computer systems for

customers in Europe, the Middle East and

Africa to Łódź by 2010.

Dell has hailed its new 37,000sqm plant,

opened in 2008, as its most advanced in

the world.

Rafal Branowski, communications

manager, explains why it had to be in

Poland and it had to be in Łódź: “The

facility in Łódź locates Dell production

closer to increasing numbers of

consumers and businesses in central and

eastern Europe and significantly improves

delivery times.

Łódź is at a major crossroads (on the

Berlin to Moscow and Kraków to Gdańsk

routes) with excellent logistics, critical for

efficient deliveries. And Poland has a high

student population. Employees are

well-educated, flexible and have a great

work ethic.”

The endorsements for this former textile

industry town do not end here. As if to

confirm its place in Poland’s new

knowledge economy, Microsoft has chosen

Łódź as the site for one of its “innovation

centres” or MICs, which foster links

between government, academia and

business. Says Daniel Grabski from

Microsoft’s Polish subsidiary: “Microsoft

selected Łódź primarily because it is one of

the most computerised cities in Poland

with a strong academic and scientific

community. Łódź is home to 21 academic

institutions and 30 R&D centres. Moreover,

there are 1,200 ICT companies in town.”

1. AEROSPACE

California might boast Silicon Valley but

south-east Poland has Aviation Valley, an area

renowned for its aerospace industry and pilot

training centres. The multiple attractions of an

international airport, an investor friendly

environment, low production costs and a

University of Technology with a strong

aerospace engineering faculty mean that 90

per cent of the Polish aerospace industry is

here. So, too, are international companies

such as Siemens and King & Fowler,

which, part of the Aerogistics group,

provides surface engineering for Boeing, BAe

Systems and Saab.

2. BIOTECHNOLOGY

In a couple of years or so, biotech will be big

business in Poland. That, essentially, was the

conclusion of a report earlier this year by

market intelligence experts, PMR.

Although Poland’s biggest biotech

company, Bioton, performed poorly in 2008,

it’s widely accepted that the country is ideally

placed for biotech R&D: there’s a wealth of

educated young people to draw on; EU funds

are making it easier to raise the capital for

research; and legislators, particularly in the

area of genetics, are proving sympathetic

to scientists.

Innovative projects suggest Polish life

sciences are developing fast. The Polish

companies Celther and Biocontract, for

example, are, respectively, working on stem

cell therapy and vaccines against skin and

kidney cancer. And, with the likes of GSK and

Roche already established in the country,

PMR forecasts that, by 2011, the Polish biotech

industry will be showing almost 30 per cent

year-on-year growth.

3. IT

The fact that rivals Google and Microsoft have

multiple bases in Poland is indicative of the

strength of the IT industry in the country. At the

end of 2005, the Polish software market was

valued at $1.1bn (£700m), while computer

services were estimated at $1.6bn (£1bn).

The growth of the market goes hand in hand,

of course, with the growth of the business sector

generally. Applications to help businesses with

such things as customer relationship

management and e-commerce account for the

biggest slice of the software market. With an army

of tech-savvy graduates on hand, it’s little wonder

that international companies are moving in.

4. ELECTRONICS

When, last August, Toshiba announced that it

was to cease production of LCD TVs at its plant

in Plymouth, effectively ending TV production in

the UK, few in the electronics industry failed to

guess the reason why: the move was part of the

company’s plan to centralise European TV

production in Poland and thereby cut costs.

A leading manufacturer of the liquid crystal

modules used in televisions, Poland is fast

becoming the European hub for TV production.

But it’s not just televisions that are made here;

Electrolux recently opened a fourth factory in

the country, and companies such as Bosch and

Samsung also have a presence.

December 2009 Director.co.uk 11


Five keys to foreign capital

Easy access to European cities, burgeoning

demand for consumer goods, an educated

workforce, economic growth, billions of euros in

EU aid... Here, Director looks at the factors that

make Poland an obvious place to do business

STRATEGIC LOCATION

Slap bang in the heart of Europe, Poland has geography

on its side—something it exploits through good and

improving transport systems, which include one of the

highest densities of rail track in the world.

Train and plane routes allow swift transit of goods and

people, to and from a number of the continent’s major

cities. With increased investment in the country’s

infrastructure, for instance through the developing

Public/Private Partnership scheme, transport can only

get better. New rail links are being planned; current ones

are being adapted for container freight.

More importantly, investment is being poured into the

road network, which, historically, has been

underdeveloped. By 2013, there will be 2,085km of

motorways and 5,466km of expressways.

With a number of sea ports, a major national and

international airport in Warsaw, offering direct flights to

55 countries worldwide, and other international airports

at Kraków, Gdańsk, Katowice, Poznań, Wrocław, Szczecin

and Łódź, Poland is the gateway not just to Europe but,

increasingly, to the rest of the world as well.

LARGE DOMESTIC MARKET

Home to more than 38 million people, Poland has the

sixth largest population in the EU. Perhaps just as

importantly, many of its people are young—50 per cent

are under the age of 35—and keen to benefit from the

current economic boom. Poland’s young people are

likely to have very different expectations from their

parents—and very different spending habits. The average

disposable income of Polish households has increased

significantly over the past few decades. In 2004, the year

of Poland’s accession to the EU, the Warsaw Business

Journal published figures that suggested a year-on-year

growth in the retail sector of more than 50 per cent.

The pickings are not just, however, in the consumer

market. The business-to-business potential is there, too.

Poland has seen a huge rise not only in the number of

domestic start-ups in recent years but also in the

number of “new” entrants and big names from abroad.

The opportunities for contractors, sub-contractors and

other suppliers are clear.

12

Director.co.uk Poland


FDI

EDUCATED WORKFORCE

Poland has almost 500 academic institutions, and it’s

estimated that 50 per cent of 19 to 24 year-olds are at

one of them. Therefore, there’s a steady supply of

young graduates.

The Poles are polyglots, with more than half of Polish

students speaking fluent English and the vast majority

having a basic understanding of the language. The

second most commonly studied language is German,

followed by Russian, French and Spanish. In other words,

Poles speak the languages of Europe—and beyond.

With a strong focus on science and technology in

further education, sectors such as IT and biotech are well

catered for. No wonder so many international R&D

centres are based in the country.

New sensation:

domestic

investment in

enterprise and

infrastructure

means Poland is not

just a great place to

invest, it also looks

the part; the Polish

MEP Jerzy Buzek

(below) became the

European

Parliament

President in July. He

said: “This is a

measure of how

Europe can change”

STRONG ECONOMY

Poland seems relatively unscathed by the ravages of

global recession. It’s certainly seen no return to the bad

old days of the 1980s, when the economy was on the

brink of collapse. Inflation is well and truly under

control and, since 2003, the country has seen stable

growth in GDP. In fact, Poland is the only EU member

state to have sustained economic expansion this year.

While this, of course, reflects the benefits of EU

membership—Poland was allocated one fifth of the

budget for the development of EU regions between 2007

and 2013 (see below)—it’s also due to domestic

investment in enterprise and infrastructure.

The European Football Championship, to be organised

by Poland and Ukraine in 2012, is also stimulating the

growth of the construction, service and tourism

industries, and contributing to falling unemployment.

EU FUNDING

Poland is the recipient of one of the EU’s biggest ever

financial aid packages: €67bn to increase economic

competitiveness. The money was allocated for 2007 to

2013 but may be spent until 2015.

While much of the package is designed to improve the

country’s infrastructure (roads, railways, air and sea

ports), and to improve water quality, flood defences and

to build waste disposal sites—a wide range of projects

can also be considered for a grant.

EU funds are available for work that supports R&D

and the development of the country’s exports, as well as

projects that invest in “human capital”, or in some of the

more deprived areas of Poland.

Money is disbursed under four national operational

programmes (OPs) and 16 regional operational

programmes. Some of the largest grants are available

from the national programme OPIE (OP Innovative

Economy), designed to promote the development of the

modern services sector. Under measure 4.5 of OPIE,

support for investments of high importance to the

economy, foreign investors were entitled to a total of

around PLN 2.1bn (£460m) in 2009.

PHOTOLIBRARY/PA

THE INVESTOR’S CHARTER

What’s up for grabs when you enter the market

■ Direct grants from the government to support strategic investment in one of six

sectors—the automotive industry, aviation or aerospace, biotechnology, R&D, business

process outsourcing (BPO) and electronics.

■ Direct grants, subsidised by EU funds, for projects such as the development of

infrastructure, the protection of the environment and human resources development.

■ Special Economic Zone incentives, which can include exemption from taxes,

competitively priced sites and free assistance in dealing with paperwork/investment

formalities etc.

■ Industrial and Technology Parks offering consultancy services and helping turn R&D

and ideas into technological innovation.

■ Brownfield and greenfield sites at very competitive prices.

■ Gmina (local authority) tax incentives to encourage investment in particular areas and

regenerate local economies. (These vary by region.)

■ Anyone thinking of entering the market should remember that the Polish Information

and Foreign Investment Agency (PAIiIZ) is on hand to offer guidance and to help

investors make best use of the aid and incentives available.

www.paiz.gov.pl/

December 2009 Director.co.uk 13


Welcome sights: clockwise from below, the ultra modern

Intercontinental; the stunning Royal Palace; the chic

Mamaison Hotel Le Régina; and the grandeur of Polonia

Palace—all in Warsaw

Where to stay,

what to see

New and refurbished hotels, modern bars and

restaurants, and old town atmosphere make Poland’s

principal cities perfect for a luxury weekend break

The strength of the euro has

encouraged travellers to broaden

their horizons when it comes to

booking weekends away, and it’s

not hard to see the appeal of Poland, with

its striking architecture, fascinating history

and mix of grande dame and modern

boutique hotels.

Lovers of city breaks are spoilt for choice

in Poland. If the metropolis is your thing,

head for cities such as Warsaw, which now

attracts an international crowd of urbanites,

drawn by bars that rival the best in Paris

and Milan. Wrocław is another magnificent

medieval centre worth checking out.

The relatively unspoilt countryside offers

itself up to those who prefer to cycle, walk

or horseride. The south of Poland is famous

for its tree-clad mountains, while sailors

and kayakers make for the Great Masurian

Lakes. The long, sandy beaches of the Baltic

coast are popular for seaside breaks.

Here’s our pick of where to stay and what

to see and do.

WARSAW

You’re spoiled for choice with international

chains like Hilton, Sheraton and

Intercontinental, but for something a bit

more homegrown, check into the elegant

Polonia Palace (www.poloniapalace.com), a

Warsaw institution since 1913, which,

following a two-year revamp reopened in

2005. Old school in terms of service and

grandeur in the bar and restaurant; all mod

cons in the bedrooms. The Mamaison Hotel

Le Régina (www.leregina.com) an elegant

14

Director.co.uk Poland


TOURISM

boutique hotel with 61 air-conditioned

rooms is close to the Royal Castle, The

National Opera House, the Old Town

Square and the Umschlagplatz.

Culture vultures on tripadvisor.com rate

The Warsaw Rising Museum (www.1944.pl)

as one of the city’s best attractions, but if

gastronomy’s your passion, head for

Mielżyński (www.mielzynski.pl), a wine bar

and restaurant adjoining a wine importers

warehouse, or to Dom Polski

(www.restauracjadompolski.pl) for a taste

of tradition.

KRAKÓW

One of the prettiest places in Poland,

Kraków is frequently called the cultural

capital of the country. Make your base the

Pałac Bonerowksi (www.palac bonerowski.pl)

(above), a five-star medieval tenement house

situated on the main market square that

boasts just eight double rooms and six

suites, some featuring original 16th century

frescoes. You’re perfectly placed to wander

round the atmospheric Old Town and

check out Pijarska Street (below), as well as

the galleries, cafés and bars of Kazimierz.

If you want traditional food, seek out Pod

Baranem for stuffed cabbage leaves and

beetroot soup, or Aperitif

(www.aperitif.com.pl) and Ancora (www.ancorarestaurant.com)

are modern and popular.

GDAŃSK

The port town of Gdańsk (above) makes a

good base for exploring the coastline. City

slickers will like the newly opened

Radisson Blu (www.radissonblu.com), but if

you want to be away from the hustle and

bustle of downtown Gdańsk, book into the

Dwór Oliwski (www.dwor-oliwski.pl), a 17th

century manor on the outskirts. It’s set in

wooded gardens with a small picturesque

lake—head for a hike around the grounds,

or simply relax in the sumptuous spa.

Tawerna (www.tawerna.pl) is widely

regarded as serving up some of the best

seafood in town, while hipsters make for

Cafe Ferber (www.ferber.pl), where the

people-watching from the terrace is rated

second to none.

POZNAŃ

Poznań is increasingly rated as a business

destination Monday to Friday and this is

good news for the tourist—swanky places

like the Sheraton (www.starwoodhotels.com)

cut their rates at weekends, making them

perfect for an inexpensive luxury break.

And, there’s more to the city than the

business parks. Church lovers will be in

their element—there are lots to discover in

the cobbled streets—and then there’s the

old market square, often considered among

the most beautiful in Europe.

Try the national drink in one of the local

bars. If vodka’s not for you, Dom Vikingów

(www.domvikingow.pl) has something for

everyone, from the subterranean whisky bar,

to the sophisticated restaurant.

POLISH HOSPITALITY

According to the Polish National Tourist

Organisation you will be overwhelmed by the

exceptional hospitality offered by the Polish people,

who are famous for their warm and generous spirit.

When you visit the country, you’d be wise to expect

some good-hearted social rituals. On public

transport, for example, prepare for some old-fashioned

courtesy—young people will give up their seats to

elderly passengers, while men make way for the ladies.

Even if you protest, you will be encouraged to indulge

in a glass of vodka or two—in Poland a polite “no

thanks” will not do you any favours as your host might

assume his hospitality is being put to the test. And

if you’re invited to dinner, make sure you’ve got a

hearty appetite—expect a feast of plentiful Polish

dishes and specialties and of course, a bottle of

homemade flavoured liquor.

For more information visit: www.poland.travel

REX

December 2009 Director.co.uk 15

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