(with thanks to my friend, George Gulczynski who has recently returned from Poland and believes there is a compelling case for business and investment in this rapidly growing and stable economy)
Poland is one of the newest and most dynamic and exciting European Union (EU) states for foreign investment and business expansion. As a full EU, OECD, WTO and NATO member, Poland offers political stability and a rapidly expanding market in the heart of Europe.
It has a large internal consumer market, a diversified economy and export structure, ambitious and well-educated workforce and easy access to Eastern and Western Europe. Stability, greater market access, fewer trade and investment barriers, market liberalization and deregulation make Poland continually attractive as a Foreign Direct Investment (FDI) location.
Poland’s adoption of EU legislation has led to wide ranging reforms in economic regulation and reduced government intervention in the private sector. Reforms in areas such as financial markets, company and competition law, accounting, and intellectual property rights have improved the environment for private business and boosted economic growth.
Poland is classified by the World Bank as a “high-income economy.” With a population of over 38 million and GDP per capita of $19,752 (at purchasing-power parity) the country’s total GDP is equal to $468.6 billion, according to World Bank figures. That makes Poland the 7th-largest economy in the EU and the 20th-largest economy in the world. Poland provides direct access to the EU and markets to the east.
Poland was the only EU country to resist the global economic crisis, avoiding recession in 2009. Despite the difficult situation on world financial markets, the Polish economy enjoyed self-sustaining economic growth, with GDP at 3.8% in 2010 and 4% in 2011, which was the highest among all the EU countries. The European Commission’s forecasts indicate that Poland’s 2.5% GDP growth in 2012 would be the third best result (equal with Latvia) among the EU’s national economies.
In July 2012 inflation rate in Poland was at 4% and unemployment rate at 12.3%. The public sector debt amounts to 55.0% GDP while the EU 27 average equals 80.0% GDP. The Polish currency, zloty, is stable.
Poland’s financial and banking sectors have proved to be among the most stable in Europe, and have been largely unaffected by the credit crisis. Indeed, Poland was the only European Union member state to report economic growth during the darkest months of 2009 and is recognised as the sole “green island” within the EU that survived the storm without falling into recession. At the end of 2011, Moody’s, Standard & Poor’s and Fitch were unanimous in confirming Poland’s credit rating as a stable A-, unchanged since 2007.
In the 2010 Ernst & Young European Attractiveness Survey international concerns’ managers indicated Poland as the top potential investment destination for their FDI projects in Europe. Tourists, in turn, are enchanted by Polish hospitality and friendliness, Poland’s cultural heritage and the country’s natural landscape.
Poland’s 38-million strong consumer market is one of the biggest in Europe. It is a population that is homogeneous and essentially free of ethnic tension. The country’s favourable geographic location in the centre of Europe, where the main communication routes intersect, facilitates the export of goods to all European countries with over 500 million consumers as well as to countries to the east of Poland.
Since 1995, the EU has consistently accounted for approx. 70% of Poland’s exports and about two-thirds of its imports. While within the EU Poland’s major trading partner is Germany, other significant partners include Russia, China, France, UK, Italy, Hungary, Ukraine and Spain.
Poland’s economic growth is driven by a dynamic private sector, which includes a large number of agile small and medium enterprises (over 3 million registered entities). Major industry sectors include: Automotive industry, Aviation, Biotechnology, BPO/SSC, Domestic Appliances, Electronics, IT, Machinery and Steel Industry, Mining, R&D, Renewable Energy. Services include: outsourcing and off-shore call and business services.
Well-educated Polish economists, engineers, IT specialists and scientists and highly qualified workers are highly sought-after and appreciated employees who find employment in IT companies, R&D centres and scientific institutes. Poland has nearly 500 academic centres and universities with more than two million academic students, who also have an excellent knowledge of foreign languages, including English.
The Warsaw Stock Exchange (WSE) is the largest national stock exchange in Central and Eastern Europe (CEE) and the fastest growing exchange in Europe. The WSE leads CEE in terms of market capitalization, trading value, number and type of traded instruments as well as number of IPOs and SPOs. Its growth is facilitated by well-developed infrastructure, as well as a sound regulatory environment fully compliant with EU standards. Medium-sized and small enterprises as well as large companies representing all sectors of the economy are present on the Warsaw bourse. At the beginning of January 2012, shares of more than 400 companies, including 36 foreign ones, were traded on the WSE Main List and attracted 320,000 individual investors.
The banking sector in Poland, although dominated by state-owned PKO BP, is in fact a huge market for foreign investment. PKO’s main competitor Pekao, as well as Millennium, BZ WBK, Citi Handlowy, ING, Kredyt Bank, Raiffeisen Bank Polska and BRE Bank are all in the hands of non-Polish firms. In fact, around 70% of the asset value of the industry in Poland is foreign-owned.
In the years 1995 – 2011 Poland’s GDP hovered at 4.8%. Foreign direct investments (FDI) were among the factors, which influenced the country’s good economic situation. FDI inflow to Poland increased by 46.7% y/y in 2011, amounting to USD 14.2B compared with USD 9.7B in the year prior. It is a result considerably higher than the global average of 17%.
World-class corporations often choose Poland as an investment destination in Europe. The number of new investment projects is constantly growing, especially in the automotive, R&D, electronic and chemical sectors.
In 2009 in Poland, there were 22,176 companies with foreign capital, 5.1% more than in 2008. Among 1,172 new entities with foreign capital the majority (984 companies) was greenfield. Among all the entities, 83.1% comprised small companies, i.e. those employing up to 49 people, while 1,131 big companies (employing over 250 people), accounted for 59.7% of share capital and 70.2% of employment. In terms of the business sector, 39.3% operated in manufacturing, and 24.3% were active in trade and repairs.
Poland is party to 89 Double Taxation Treaties throughout the world. Poland offers a wide range of investment incentives. Investors can locate their projects in 14 Special Economic Zones (SEZ), which offer attractive tax exemptions, employment incentives and well-prepared investment lots. Companies can also apply for assistance from the EU structural funds.
Offering a large domestic market coupled with political and economic stability and various government incentives for investors, Poland is placed by the United Nations Conference on Trade and Development among the top countries to attract FDI flows in the years 2011-2013 and the 6th most attractive investment location in the world.
The OECD annual report for 2011 places Poland closer to such countries as Germany, Austria and Sweden in respect of the health of public finance than those against which the Polish economy was previously measured.
Poland has proven highly attractive to international investors wishing to capitalize upon competitive employment costs, increasing industrial output and a highly qualified labor force. With 30% of the population aged between 20 and 29 undertaking university-level studies, according to the last OECD Program for International Student Assessment study, Poland is way above the average for OECD countries.
Stable growth has been the hallmark of the Polish economy, and that is expected to continue.
Australian Presence in Poland
There are approx. 130 Australian companies in Poland, mainly distributors, importers and investors; the fastest growing include Amcor, Mincom and Macquarie. Australian-based franchise enterprises are growing steadily in Poland as are student programs operating through educational agents. Australian wine (imported by more than 30 companies) is a significant competitor to other “new world” wines on the Polish market.
In 2011 Australian exports to Poland totaled AUD23 million, while Australian imports from Poland totaled AUD352 million.
Australian firms already in Poland include Goodman, Bovis Lend Lease, Opal Constructions, Bico Australia, Seafolly, Mamuska the Cheesecake Shop, Cartridge World, Eco One, Random House Australia, Text Publishing, Fremantle Press, Linc Energy, Squiz, Allen and Unwin, Lycon, Integeo, EDAQ, Dart Energy and Envirosax.
Australian companies have made promising inroads in less traditional (non-commodities) areas, such as telecommunications, computerization of government services, packaging, food handling and processing, beverages, health, architecture, building and construction, education, environmental technologies and mining equipment.
There is significant potential for growth in Australian trade and investment in these areas as the Polish economy further expands, incomes rise and demand diversifies.
With thanks to Jola Wolska, an Australian journalist working in Poland, for contributing the above article