COUNTRY FOCUS Adam Bernstein delves into the Polish economy and uncovers some interesting economic history. Part one: POLAND GETS A LICK OF POLISH Warsaw Castle Square The Recognised Standard / www.cicm.com / November <strong>2017</strong> / PAGE 24
COUNTRY FOCUS AUTHOR – ADAM BERNSTEIN THE roots of the Polish state go back more than 1,000 years to when an area akin to modern-day Poland, under the rule of Miesko I, converted to Christianity. Sitting at the crossroads of Europe, Poland soon rose in prominence yet fought many wars and uprisings to maintain its freedom. Partitioned at the end of the 18th century, the country became independent at the conclusion of World War One. But as history again demonstrated, its location and resources made it a target – this time for German occupation in 1939 – before it was subsumed into the post war Soviet sphere of influence. Some say that the fall of communism and the collapse of the USSR is partly down to one of its sons, the late Pope John Paul II, whose visit as pontiff in 1979 indirectly led to the creation of the trade union Solidarity and the subsequent break-up of the communist-bloc. A COUNTRY REBORN Poland is now politically stable having gained a new constitution in 1997, joined NATO in 1999 and the EU in 2004. An April <strong>2017</strong> Bloomberg Business publication says the country is becoming a regional power as it is now the EU’s eighth largest economy. In the World Bank’s ratings, Poland is classed as a high-income economy with a population of 38.5m that has a per capita income of around $13,370. Poland appears, according to a <strong>2017</strong> Ernst and Young report, Doing business in Poland, to be ‘making remarkable progress, moving from a centrally planned to a market economy. Trade liberalisation, economic restructuring, privatisation, capital inflows, and gradual adaptation of legal and administrative standards suitable for market practices have improved economic structures dramatically’. It’s notable that since 1992, the country has not seen a recession but instead, rapid growth interspersed with three short periods of slowdown. The World Bank has estimated that growth stood at 3.9 percent in 2015, 2.8 percent in 2016, and will be 3.1 percent in <strong>2017</strong>. Split into 16 regions, the country has strong relations with the UK as evidenced by the inflow of Polish nationals into the country since accession to the EU. Its consumer market is strong and filled with highly-qualified workers from the country’s 430 high education institutions (30 percent of Poles have a degree). The Polish Information and Foreign Investment Agency (PAIiIZ) believes that 90 percent of graduates can speak a language other than Polish. The country now has expertise in IT and other (modern) technologies. In a 2015 educational ranking, compiled by the The Organisation for Economic Co-operation and Development (OECD), Poland is said to rank as one of the highest among members of the European Union – 10th in science, third in reading and reading comprehension, and sixth in mathematics. OPPORTUNITIES At the start of September (<strong>2017</strong>), emergingeurope.com stated that the Polish Deputy Prime Minister and Minister of Economic Development and Finance have drawn up a new plan to attract inward investment. Effectively, from the start of 2018, the 14 existing special economic zones (which cover just 0.08 percent of Poland) will be replaced with one that will cover the whole of the country. The stated goal is to make every village, town, and city equally attractive to investors in an attempt to lower the general unemployment rate which in some localities is around 20 percent. The Government wants to ensure that going forward, tax incentives will depend on the number of quality jobs, number of jobs created in total, and the sustainability of the project that’s being subsidised. It’s estimated that within the first decade the new regulations will result in new investment projects worth over 117 billion pln złotys (£25 billion), 157,000 new jobs and four billion pln (£855 million) of corporate income tax. Of course, different sources suggest different openings for businesses. According to the US Government’s export.gov website, ‘investors represent a wide range of industry sectors including automotive, aerospace, information technology: hardware and software, food products, transportation, pharmaceuticals, paper production, appliances and financial services. Poland has also emerged as a favourable location for business processing centres, including call centres, shared services centres and research and development operations’. The UK Government sees the opportunities in a different light as the main UK exports are electromechanical devices, machinery and chemicals. It notes that Poland has maintained its position as a huge recipient of EU funding. Some 86 billion euros of Structural and Investment Funds between 2014 and 2020 is being combined with Poland’s own national investment of 18.8 billion euros to make a pot of 104.8 billion euros for investment in transport and energy, SME competitiveness, research and innovation, the low-carbon economy, environmental protection as well as social inclusion and labour market participation. In terms of market segments, there are many worth a closer look. In energy, the country is building new nuclear power plants that are destined to make up 17 percent of the country’s energy supply. There are openings here for R&D, consultancy and project management. The Recognised Standard / www.cicm.com / November <strong>2017</strong> / PAGE 25 continues on page 26 >
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