JUNE NEWSLETTER 2004 FDI in Poland 15 May - 15 June Polish Information and POLAND AND EU Foreign Investment Agency POLISH ECONOMY The PKB growth BUSINESS REGULATIONS New opportunities for entrepreneurs According to Jerzy Hausner, 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.