JUNE NEWSLETTER 2004 FDI in 15 May - 15 June

Polish Information and POLISH ECONOMY POLAND AND EU Foreign Investment Agency BUSINESS REGULATIONS The PKB growth New opportunities for entrepreneurs According to , the Ministry of Econo- Since May 1, 2004 Polish companies can still my and Polish economy will maintain its high indicate an origin of their products. They can Andrzej Zdebski (over 5% GDP) growth rate for the next few choose either the sign "made in Poland" or “made quarters, but continuation of this trend depends in the European Union". This is possible thanks President on the positive decisions in governmental policy. to the latest amendment to the act on the particular Jerzy Hausner said that high dynamism of industrial conditions of consumer selling, which has been production will be maintained after April and March introduced after Poland's accession to the Euro- pean Union. According to specialists we should when the growth amounted to 21,9% and 23,5% not underestimate none of these two signs. Each respectively. of them contains important commercial information. When one country is famous for a certain product High growth of export will be maintained it is vital to indicate it, otherwise it could be a very serious marketing error. The consumers very often PREFACE associate a given product with the region National Bank of Poland (NBP) estimates that of its origin. This is applicable to, for example, food, the trend of growing exports should be maintained which might be perceived as healthy if it originates from a certain country. This is exactly the source Dear Lady - Sir, till the end of the third quarter 2004. The trend of their dominance and we should treat it seriously. will be accompanied by favorable exchange rates When a product, however, competes on the effects, which will improve its competitiveness. international arena in the sector, in which the pro- We are happy to present the first edition According to NBP „Inflation Report” we can expect ducers of the product from a country does not feel of a monthly “Newsletter” of Polish Infor- a temporary decrease in the rate of export growth very strong, it is better to provide an information that it was made in the EU and as a result between 2004 and 2005. However, after that period, mation & Foreign Investment Agency. We do it can improve its credibility. hope that it will be an essential source the increase of potential production should widen Polish export offer and thus, stimulate external Excise duty of information on a current Polish economic demand. According to NBP's assumption, export situation, especially on an inflow of direct growth will be also one of the main stimulating There is an opportunity to use cars from factors affecting import growth in the first half the European Union countries in Poland, which foreign investment to Poland. are not liable to excise. Affirmative proof is however of 2004. needed that one has the right to use the car. In “The Newsletter” we encourage to invest Indeed, the act on the excise tax stipulates in our country and offer its „one-stop-shop” Business Index record level in May 2004 that the tax must be paid if the user of the car is not its owner. If this obligation is not fulfilled, services to foreign entrepreneurs who want the user of the car can be accused of breaking to commence their investment in Poland. Business Index presented by Polish Confederation the penal code. But there is a lack of precise instructions when such a tax should be paid. of Private Employers (PKPP) grew from 59 in April According to the Ministry of Finance the tax The „Newsletter” is to give reliable infor- to 64 points in May. Dynamic growth of the quarterly does not have to be paid if the caris to be used mation on an investment climate in Poland index grew by 8 points up to 66 points. “Business in Poland only temporarily based on the agree- index results from May 2004 do not leave any doubts ment between the user of the car and his and is mainly addressed to Economic that economic boom is going on. Quarterly relative living in the UE country. and Commercial Departments, Polish and yearly index exceeded record level of 60 New regulations on taxation of services diplomatic offices and to foreign journalists. points, which has not been registered so far.” wrote PKPP experts in their commentary. PKPP Business We are convinced that it will help New regulations concerning taxation of interna- Index is created on the basis of Polish economists' tional services are obligatory from May 1, 2004. in the field of active investment marketing predictions who evaluate the economic situation It results from the implementation of the norma- in Poland and will contribute to the growth for the current quarter, for the next six months lization to the Polish VAT. The regulation, which as well as a whole year. It Is being calculated on a determines the place of the services taxation. of an interest in our country and will The rules related to the place of taxation 100-points scale, where 50 represents export be chosen by investors as a very good are the reflection of several basic principles growth predictions within 3-3,5% of GDP yearly. of the EU's common VAT system, such as assurance location for their investment. of taxation of each transaction, avoiding double taxation, pursuance of the taxation to particular After 15 years of economic and political ICT market in Poland transactions in these countries, in which they are used due to their purchases. The taxation of the services reforms Poland has one of the strongest carried out by a Polish tax payer, either in Poland The value of ICT market in Poland amounted economies in Central Europe. Membership for the foreign parties or abroad, does not exclusively to USD 3.45 billion in year 2003 thus, rose by 11% depend on the place of realization of the service. in NATO, OECD and in EU will be its ad- in comparison to the year before announced Since May 1, 2004 an important issue is a description vantage in attracting foreign investors the annual Computerworld's TOP 200 magazine of the service. This will determine the taxation place report. According to IDC Poland, analyst company, and will apply to the services purchased by Polish and will make Poland a reliable and a good tax payers from the foreign parties as well. the current year will be another good one for economic partner to foreign companies. the Polish ICT sector. Until the end of year 2004 Work in Poland for foreigners We will try to prove all these facts each the value of Polish ICT market will reach almost month in our “Newsletters”. USD 4 billion. The biggest ICT company, operating Employment for some foreigners in Poland is still in Poland is still HP Poland, which produced limited. According to the accession treaty an easy flow of employees is allowed, however in the transitory On this occasion, I would also like to invite revenues of over PLN 1.78 billion. Other top spots period some countries may limit it. Poland has de- you to our new economic web site about are occupied by ABC Data, Action, IBM Poland, cided to treat the employees from other EU countries Tech Data Poland, Prokom Software, Incom Group, on the same basis as they treat ours. Due to this, Poland which will be accessible since AB, Microsoft and ComputerLand. the act on the promotion of employment and job the beginning of July. market institutions for foreigners has some restric- tions due to the protection of the Polish market. DIRECT FOREIGN NEW INVESTMENT IN JUNE 2004 Privatisation of Polish companies Car interior from Jelcz On June, 15 Parliamentary Commission of Treasury INVESTMENT has adopted a project of the resolution about Portuguese company Simoldes Plasticos decided the privatisation of some companies important to build a car interior plant. A total amount of investment from the point of view of strategic Polish interests. should reach PLN 50 million. The new factory will According to the project the government is obliged be situated in Jelcz-Laskowice and will be able to present its privatisation assumptions with regard Sebastian Mikosz to employ about 200 people. Such huge Groups as Fiat, to PKO BP, PGNiG, BG¯, PZU and KGHM. Mem- bers of the Parliament also want to be informed Executive Vice President Volkswagen and Toyota will be the clients of the Simoldes Plasticos factory. about the sale of shares in PZU, BG¯ and KGHM PAIIZ belonging to the Treasury. The Parliament is expec- A few companies interested in Daewoo-FSO ted to debate over these assignments and express Growing interest in investing in Poland its opinion. No privatisation process should be started Foreign investors are interested in Daewoo-FSO until any decision will be taken. Since the beginning of this year there has been growing investment said Jacek Piechota, Deputy Ministry Flat-rate tax interest in investing in Poland. This trend of Economy and Labor. According to him, there are has been caused by the global economic boom. a few investors interested in investing their money Almost 193 thousand entrepreneurs have decided and production subcontracting. There is a big chance for the flat-rate tax. This new opportunity is one According to UNCTAD, the level of international to rescue Daewoo-FSO car plant from liquidation of the most important novelty for them. As a result, flows of foreign direct investment (FDI) amounted he added. In Jacek Piechota's opinion the most to USD 653 billion in 2003 and was USD 2 billion higher some of them will pay less, but lose their chance to pay important issue is the fact that FSO factory has gained income tax together with their spouse. than in 2002. Forecasts for this year are even more two-year permission for production and sale of Lanos optimistic. Economic Intelligence Unit estimates that and Matiz cars. MG Rover Group has resigned from the global amount of FDI will reach USD 755 billion, this investment in April 2004. INVESTMENTS CALENDAR which means 30 percent growth in comparison to the Although, Treasury Ministry does not formally hold last year. majority of stocks in Daewoo-FSO, it controls 87% The most important investment events of votes on general shareholders meetings. Majority Those worldwide trends find their reflection in our country. The inflow of direct investment to Poland of Daewoo-FSO's plant stocks belong to Korean Investment Seminaras in Japan in 2003 was USD 350 million higher than in 2002 Daewoo, but these stocks have no legal power Tokio, Nagoya, Osaka, 21 - 24 June 2004 (according to PAIIZ calculations) and the future looks and influence. Three investment seminars will be held as parties very promising. Over the last months Whirlpool, of an Investment Mission to Japan in there towns. Gillette, Sanden and Daicel have commenced their Philips from £ódŸ The seminars are dedicated to Polish economy investment in Poland. These four investments, and the climate for foreign investment in Poland which amount USD 310 million, guarantee 2500 Philips starts to build its new financial and accounting after our accession to European Union. new jobs. center in £ódŸ soon. The president of the concern built- in a corner stone on June 17, 2004. This event is a result Conference "Promotion of Poland. Barriers PAIIZ is currently working on some 100 possible of Philips' decision to move its financial and accounting chances - challenges", Wroc³aw 24 June 2004 investment projects. If all of them are concluded, center from Ireland. Employment will reach 500 people. The conference is being organized in cooperation 30 thousand new jobs will be created and the level If everything goes right, the concern plans to finish with Polish Information & Foreign Investment Agency of FDI will increase by USD 3 billion. construction works by late autumn 2005. and Wroc³aw local authorities. Among invited guests are President of Poland, the Minister of Foreign Affairs Being happy to learn about every new investment Pharmaceutical market attracts foreign investors and other Ministers, representatives of Polish Econo- located in Poland, we put most of our effort into drawing mic Chamber, representatives of the Institute of Polish investors' attention to companies repre-senting sectors Polish pharmaceutical market, which is worth EUR 2,5 Brand, local politicians, businessmen and leaders which are, from our point of view, strategic: automotive, billion, attracts foreign investors. One of them is Dutch of prominent promotion offices. Talks will focus on a promotion of Wroc³aw which is of a great impor- shared service centers, medical (especially Nycomed, which opened its 19-th trade office in Poland. tance for its economic development, a growth of fo- biotechnology and pharmaceutical) and defense. The Dutch Group is not planning further investment for Development of these sectors is particularly important reign investment and a development of tourism. the time being, but also does not exclude such possibi- because they largely contribute to the growth of added lity in future. Everything will depend on improvement value, employment and development of new Debate "Poland strategic location for investment technologies. The main regional advantages of investment climate in Poland over the next few or economic outskirts of Europe? for potential investors from these sectors are: a big years. Warsaw 29 June 2004 number of university graduates, numerous An originator of the debate is Business Consulting sub-suppliers and the large domestic market. Since June, a printed version of “The list of major Services. A purpose of the debate is to define foreign investors in Poland 2003” is available which the initiatives which in the nearest future should Over the last several months, many big corporations, w e had already a pleasure to present on our press be adopted in the fields crucial for foreign investors as well as small and medium size companies have conference in April, 2004. in order to increase the level of foreign investment invested in Poland. This came as a consequence in Poland. Participants of the debate will also discuss of liberalization of the Polish economy and its harmo- our chances and threats in attracting foreign nization with those of the European Union countries; investment in the context of our EU accession and our amendments to the economic law, and low costs BUSINESS ENVIRONMENT perspectives of a quick economic growth. In the event of manufacturing and labour. will take part experts, businessmen, representatives of science, local governments interested in investing Poland's accession to the European Union is bound Lower taxes for entrepreneurs in Poland. to speed up the inflow of investment from EU countries. Other strategic business partners for Poland The drafts of new acts issued by the Ministry Conference „A role of media and economic are countries such as USA, China, Russia and Japan. of Economy and Labour assume preferential taxes promotion of Poland and its regions”. Interest of the latter is encouraged by positive and simplification of investment process for those Warsaw, 30 June 2004 experience of Japanese firms which were successful companies, which start new investments. It will cause Hosts of the conference are the Ministry of Finance on the Polish market. The Accuromm Center company an increase in the capital outlays this year. The Ministry and Polish Information & Foreign Investment Agency. is a good example it is the third Japanese company wants the companies both domestic and foreign, Talks will be held on promotion of foreign investment, which has decided to build its factory in Poland, as well as big and small, which commence new a current investment situation, a strategy of attrac- in Jelcz-Laskowice. investment to pay lower in come tax. ting foreign investment in the years 2004-2007 The entrepreneurs support this idea, because and a creation of Poland and Polish regions image We are aware of the fact that some investment it is a solution, which will satisfy everyone. It is said in the world by Polish media. Honourable guests barriers still existing in Poland should be eliminated. that paying lower income tax will cause an increase of the conference will be Bogus³aw Zaleski under- The barriers were identified by our Agency and des- in the inflow of foreign investment. It is difficult secretary of state in the Ministry of Finance cribed in the report „Poland a paradise for investors? to estimate what consequences it will bring about and Krzysztof Krystowski the undersecretary of state Investment barriers in Poland and proposals of re- in the Ministry of Economy and Labour who in his moving them”. Some legislative decisions of the Polish for the budget, but surely over the longer period of time the budget will benefit from this move. The Ministry main speech will talk about the instruments of suppor- government made over the last months helped ting foreign investment in Poland. to implement many facilitations. A significant step is constantly working on facilitation of investment processes. Amendments in this field have been The panellist of the event are: Andrzej Zdebski, towards improving the investment climate was the president of PAIIZ, Jan Cieñski, a correspondent already mentioned in the report concerning invest- lowering the corporate income tax from 27% to 19%. of the Financial Times, representatives Polish regions ment barriers, which had been accepted by the former and Artur Nejmark, the director of the Wroc³aw There is a very good climate for foreign investment government. , in his expose, said that Investor Servicing Centre. in Poland, which is proven by opinions of foreign simplifying the investment process is one of the priority investors. What we are particularly proud of is that for the new Cabinet. In June, the draft of the new many of them have announced that their best factories construction law and the act concerning urban Polish Information and Foreign Investment Agency worldwide are those in Poland, both in terms planning schemes, which cause the greatest PL 00-585 Warsaw, 12 Bagatela Street, of productivity, profitability, and qualifications amounts of problems for foreign investors, are said phone. (+48 22) 334 98 00, fax 334 99 99, and involvement of employees. to be ready. e-mail: [email protected], www.paiz.gov.pl