Business opportunities in Poland

Sławomir MajmanPresidentPolish Information and Foreign Investment Agency (PAIiIZ)

Rome, 6th April 2011

POLISH INFORMATION ANDFOREIGN INVESTMENT AGENCY

Poland - Key Facts

Area: 312 700 sq km – 6th in European Union

Population: 38,12 million – 6th in European Union

Currency: Polish Zloty (EUR 1 ~ 4.00 PLN)

GDP total: ca. EUR 494 billion (PPP, 2009)

GDP growth: 4.8% (2008), 1.7% (2009), 3.8% (2010)

Membership: EU, NATO, OECD, WTO, Schengen Zone

ES

-0,1% PT

1,4%

FR

1,6%

BE 2,1%

NL 1,8% DE

3,6%

EE 3,1%

LV -0,3%

LT 1,3%

IT

1,3%

TR

7,5%

HU 1,2%AT 2,0%

RO -1,3%

SK 4,0%

FI

3,1% SE

5,5%

UK

1,3%

GR

-4,5%

DK

2,1%

BG 0,2%

IR

-1,0%

CZ 2,4%

NO

0,4%

PLPL

+3,8%+3,8%

GDP changes in 2010

Źródło: Eurostat

The future seems to be bright - GDP forecasts for 2011 are very favorable

0,8 1,11,5 1,6 1,8 2

2,4

4,1

0

0,5

1

1,5

2

2,5

3

3,5

4

4,5

Spa

in

Italy

The

Net

herla

nds

Eur

o zo

ne

EU

27

UK

Ger

man

y

Pol

and

Per

cen

tag

e ch

ang

e y/

y

Source: European Commission, Interim Forecast, March 2011.

Competitive Advantages

Location & economic fundamentals

strategic location in continental Europe part of trans-European transportation corridor the only country of the EU with positive GDP growth in 2009 38 million consumers

Investment incentives 14 Special Economic Zones grants co financed from the EU (EUR 90 bn)

young, well-educated work force ca 11% of university students in the EU increasing labour productivity

1. Stricter banks’ credit policies before crisis compared to other countries

2. No dynamic growth of foreign debt as in other countries

3. Financial instruments far less sophisticated as in the other countries

4. Smaller influence of stock market on the economy than in the other countries

5. Falling natural resources’ prices

6. Huge internal market

Poland is much less affected by the crisisthan neighbouring countries

Leverages: Size of the market

Markets served:

• Internal market of 38 mn people

• Unlimited access to the EU market

• Strong relations with CIS and Balkan states

Stable economy:

• GDP growth in Poland 1.7% vs -4.2% in the EU in 2009

• Current GDP: 3.8% in 2010, 4% in 2011

• Main growth factors: domestic demand and foreign trade

1000 km radius

250 mn people

2000 km radius

550 mn people

Leverages: Human resources (I)

Source: EIU, Eurostat

Main academic centers

Szczecin

Tricity

Warsaw

Poznan

Wroclaw

Krakow

Lodz

• 20 M enterprising and multilingual young people

• about 2 M students, over 400 K graduates each year

• 87% of students can communicate in a foreign language

• 50% of the population is less than 35 years old, 35% under 25

(every 3rd has higher education in the 20 – 29 age group)• a nationwide network of 448 universities and technical universities

Students in CEE

0500

1000150020002500

Poland

Romani

a

Hungar

y

Czech

.Rep.

Bulgar

ia

Slove

nia

0%

10%

20%

30%

40%

50%

18-24 25-34 35-44 45-54

English German Russian

Foreign language capability by age groups

Source: CBOS Survey

Foreign language capability among students

0%

20%

40%

60%

80%

100%

English German Russian French Spanish

Learning of foreign languages is obligatory in the Polish education system

English is the most popular foreign language in Poland

Source: Randstad, October 2008

Children learn foreign languages from the age of 6

Language proficiency is one of the strongest points for Poland as a BPO center

Leverages: Human resources (II)

Leverages: Perception (I)

Source:UNCTAD, World Investment Prospects Survey 2009-2011

Poland’s main strengths against global competitors:

• Growth of the market

• Size of the local market

• Access to regional markets

• Cooperation with suppliers and business partners

• Investment incentives system

• Stable investment environment

Poland is 11th most attractive investment location in the world

Source: AT Kearney, 2010

Leverages: Perception (II)

• Poland – the biggest rise in comparison to the previous edition (2007); 2. place in Europe, 6. place in the world.

• 50% companies postpone investment projects due to the crisis.

top 15 differences16

11

5 5 42 2 1 0 0 0 -1 -3 -6 -9

-15

-10

-5

0

5

10

15

20

Pol

and

Mex

ico

Ger

man

y

Can

ada

Aus

tral

ia

Bra

zil

Oth

erP

ersi

an

US

A

Chi

na

Vie

tnam

Fra

nce

Indi

a

UE

A

UK

Hon

gK

ong

Country2010 rank

2007 rank

Difference

China 1 1 0

USA 2 3 1

India 3 2 -1

Brazil 4 6 2

Germany 5 10 5

Poland 6 22 16

Australia 7 11 4

Mexico 8 19 11

Canada 9 14 5

UK 10 4 -6

UEA 11 8 -3

Vietnam 12 12 0

France 13 13 0

Hong Kong 14 5 -9

Other Persian Gulf countries 15 17 2

Leverages: Perception (III)

Major strengths of Poland:

- Controlled inflation/CPI

- Competitive CIT levels

- Significant internal demand

3,5

3

2

6

3,7

4,2

0 2 4 6 8

Australia

USA

Germany

Chile

Poland

Mexico

Source: Harvard Business Review Polska.

Poland is in a group of the most attractive countries for investments –having the most favorable economic and polical environment

Forecasted GDP changes in 2011 (%)

I. CIT exemption in Special Economic Zoneonly available in Special Economic Zone (SEZ)

II. Government grants through individual negotiationsindividually approved and granted by the Ministry of the Economy based on the Council of Ministers’ Resolution

III. Real estate tax exemptionsubject to negotiation with the local authorities only in case if the investor is the owner of the building(provided by the Commune Council)

IV. Cash grants available through EU Fundssubject to negotiation with different managing institutions depending on the investment project key parameters

Leverages: State aid

All above presented instruments can be combined together however the total amount of state aid cannot exceed the maximum aid intensity

Leverages: EU funds

EU support for 2007-2013

Structural instruments

(EUR 67,3 bln)

Rural Development Programme

(EUR 13,2 bln)

European Fisheries Fund(EUR 0,6 bln)

Investment in food processing, wholesale,

training for farmers and foresters

Investment in fish processing and marketing

6 national operational programmes

and 16 regional – ESF, ERDF, CF

FDI Flow to Poland – a long term view

Source: NBP.

1.6 2

.8 3.6 4.3 5

.7 6.8

10

.3

6.4

4.4

4.1

10

.2

8.3

15

.7 17

.2

10

.1

10

.0

7.5

1.4

0

2

4

6

8

10

12

14

16

18

201

99

4

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

I 20

11

EU

R b

illi

on

s

Long term upward trend.In 2008 and 2009 FDI flow at the same level.

2010: estimates (will be changed).

EU accession

Source: PAIiIZ, 2011

PAIiIZ projects in 2010

• Number of completed projects: 58

• Estimated value: EUR 973,2 mn

• New jobs: 10 711

• Key sectors:• BPO• machinery• electronics

• Main source countries:• USA• Sweden• France

In April 2011 PAIiIZ cooperates with 154 investors willing to invest EUR 6.4 bn and to employ 38 000 people

AutomotiveAutomotiveWhite goodsWhite goodsElectronicsElectronicsAviationAviationBPOBPOR&DR&D

Services and Manufacturing Hub in Poland

Why Poland? Recap

Availability of skilled human resources

Economic and political stability

Effective incentives system including EU-Funds

Strategic location – gateway to the EU

00-585 Warszawa, ul. Bagatela 12

tel. (+48 22) 334 98 00, fax (+48 22) 334 99 99

e-mail: post@paiz.gov.pl

Thank you for your attention