Doing Business in Poland Discover Eastern Poland Arkadiusz
Doing Business in Poland – Discover Eastern Poland Arkadiusz TARNOWSKI, Ph. D. Polish Information & Foreign Investment Agency Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
What makes Poland a special place Competitiveness & FDI Perception & Taxes & Incentives Cooperation with China Eastern Poland – Macroregion Macrofuture Why Poland Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Poland - Key Facts Area: 312 700 sq km – 6 th in European Union Population: 38. 5 million – 6 th in European Union Currency: Polish Zloty (1 USD ~ 3. 7 PLN, 1 EUR ~ 4. 1 PLN) GDP growth: 3. 9% (2010), 4. 5% (2011), 2. 0% (2012), 1. 6% (2013), 3. 3% (2014), 3. 4% (2015, EC forecast) Political stability: Ruling party (Civic Platform) has been re-elected for a consecutive term Membership: EU, NATO, OECD, WTO, Schengen Zone Poland is knocking on G 20’s door Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Why is Poland a crisis-proof country? • Large internal market – 38 mn consumers • Healthy banking sector: – Poland passed all the stress tests – Low share of derivatives in portfolio of Polish banks • PLN is not pegged to the Euro • Low GDP-from-exports dependence: Poland only 45% (Czech Republic 73%, Slovakia 94%) • Low inflation rate – -1. 1% (April 2015) Source: Eurostat, National Bank of Poland, May 2015 Poland is characterised by: well-qualified and productive workforce, stable macroeconomic situation, relatively low level of public debt comparing to Western European countries, transparent tax and legal systems, favorable conditions both for manufacturing and services investments. Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Students and graduates Ø 22. 6 m people aged 44 and less (59%) Ø 460 higher education institutions Ø almost 2. 0 mn students (2012/2013) Ø more than 485 thous. graduates (2012/2013) Ø over 36 thous. foreign students Ø more than 90% of students speak foreign languages § 19 universities § 25 technical universities § 77 academies of economics Ø 200 different majors taught Ø population with higher education: 17% Ø growing number of science students Academic centers The most popular majors TRI-CITY OLSZTYN SZCZECIN BIALYSTOK BYDGOSZCZ/TORUN POZNAN WARSZAWA ZIELONA GORA LODZ LUBLIN WROCLAW OPOLE No. of students (thousands) KIELCE 201 > KRAKOW RZESZOW KATOWICE 151 – 200 101 – 150 51 – 100 Source: Central Statistical Office 50 < Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Languages in business centres Source: Hays 2013 Services conducted in the 400 centers are provided in 37 languages Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
FDI inflows to CEE countries (mln USD) PL CZ HU RO BG SK 29500 PL 24500 PL 19500 PL 14500 HU CZ 4500 PL BG RO 9500 PL RO CZ RO BG PL BG CZHU SK HU CZ SK SK RO BG CZ HU SK -500 2006 2007 2008 2009 CZ HU RO HU BG SK 2010 RO SK BG 2011 Source: UNCTAD World Investment Report 2012 Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Competitiveness & FDI Perception & Taxes & Incentives Cooperation with China Eastern Poland – Macroregion Macrofuture Why Poland Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
International recognition 13 th place as the most attractive FDI destination 1 st place in the CEE region – the most attractive country to establish operations 3 rd place worldwide as the best quality location for manufacturing projects 2 nd location in Eastern Europe and Russia offering the greatest revenue opportunities over next three years Poland classified as a mature outsourcing location 3 rd best location in the world after India and China, for outsourcing businesses in financial, accounting, advisory 6 th among top 10 destination countries in Europe in 2012 Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Effective incentives system Tax breaks • CIT exemption in Special Economic Zone • CIT relief for acquisition of new technology • Real estate tax exemption Cash support • Government grants • Cash grants available through EU Funds The EU budget: present and future financial perspective 2007 -2013 Total: Poland: 975 bn EUR 69 bn EUR (7% of total) 2014 -2020 Total: Poland: 960 bn EUR 72. 9 bn EUR (7. 6% of total) Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Tax rates Corporate Income Tax (CIT) 19% Personal Income Tax (PIT) 18%, 32% Value added tax (VAT) basic: 23% reduced: 8%, 5% export: 0% Social Security Tax paid by employer between: 19. 48% and 22. 67% Source: PAIi. IZ compilation Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Corporate income tax rates across Europe Entrepreneurs in Poland pay one of the lowest CIT in Europe Source: http: //www. worldwide-tax. com/ Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
14 Special Economic Zones • Special Economic Zone (SEZ) is an especially dedicated area where investors receive special benefits • Major purpose of SEZ is to support local growth • There are 14 SEZ + many subzones • • Cumulative area = 20 000 hectares Permits to conduct activities in SEZ are issued by the authorities of each SEZ Minimum investment: EUR 100, 000 Possibility of including the land selected by an investor into SEZ • • Benefits from obtaining a permit to conduct activities in SEZ: • • • eligibility for income tax exemption – a form of regional aid plot of land prepared for an investment project, available at a competitive price free assistance in dealing with formalities relating to the investment project Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Regional state aid map – Maximum intensity in years 2014 -2020 35% 50% 35% 35% 35% 50% Warsaw 20% 35% 25% 50% 35% 25% 35% Warsaw: - until 31. 12. 2017 – 15% 35% 50% - as of 1. 01. 2018 – 10% Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Government grants – priority sectors Program of support of investments of considerable importance for Polish economy Priority sectors Production • • • automotive electronics aviation biotechnology „big investment” in other sectors Modern services • • ICT SSC BPO R&D activity (e. g. software development) Purpose of support • development of innovativeness and competitiveness of Polish economy Result of support • 53 programmes of total amount PLN 900 m (since 2004) • 19, 000 of new jobs Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Competitiveness & FDI Perception & Taxes & Incentives Cooperation with China Eastern Poland – Macroregion Macrofuture Why Poland Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Chinese FDI into Europe 2003 -2015 • Between 2003 and 2015 a total of 1247 Chinese FDI projects worth EUR 47. 2 bln were recorded in Europe, creating over 180 000 jobs (806 companies). • Top 5 companies: Huawei Technologies (85 projects); ZTE (37); Bank of China (27); Industrial and Commercial Bank of China (ICBC) (21); China National Chemical (17); • Major sectors: Communications (166); Electronic components (136); Industrial Machinery, Equipment & Tools (127); financial services (86); Automotive OEM (63); • Source states: Beijing Municipality (288); Guangdong (259); Jiangsu (123); Zhejiang (120); Shanghai Municipality (118); • Destination countries: Germany (413 projects worth EUR 2. 5 bln); UK (169 projects worth EUR 9. 2 bln); Russia (115 projects worth EUR 16. 8 bln); France (83 projects worth EUR 1. 0 bln); Netherlands (47 projects worth EUR 0. 5 bln); Poland (35 projects worth EUR 1. 2 bln); Source: f. Di Intelligence from The Financial Times Ltd Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Chinese FDI into Poland 2003 -2015 Jobs created Year Capital investment Number of projects Total Average Total (EUR m) Average (EUR m) 2015 1 156 7. 26 2014 4 1, 482 370 233. 93 58. 44 2013 4 939 234 127. 99 32. 02 2012 4 500 125 42. 52 10. 67 2011 9 1, 275 141 122. 47 13. 65 2010 4 958 239 253. 61 63. 42 2009 2 139 69 15. 13 7. 61 2008 3 753 251 198. 67 66. 22 2007 1 1, 000 85. 03 2006 1 1, 500 111. 54 2005 1 100 9. 54 2004 1 13 13 2. 80 Total 35 8 815 251 1 210. 58 34. 56 Source: f. Di Intelligence from The Financial Times Ltd Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Top 10 Chinese Companies in Poland: Jobs Created and Capital Investment A total of 25 companies from China invested in Poland between January 2003 and March 2015 Jobs created Company Name Nuctech Aviation Industry Corporation of China Dragon Power XCMG Construction Machinery Haier Group Admiral Overseas (AOC) Ei. W Industrial Development Sany BYD Electronics Shanxi Yuncheng Plate-Making Group Total 293 522 209 272 672 2, 500 100 511 590 30 Average per project Capital investment Total (EUR m) Average (EUR m) 97 54. 06 18. 02 174 77. 42 25. 81 69 14. 78 4. 90 90 51. 18 17. 06 336 68. 32 34. 12 1, 250 196. 57 98. 24 100 9. 54 511 48. 12 590 157. 47 Source: f. Di Intelligence from The Financial Times Ltd 30 5. 16 The top 10 companies account for 65% of job creation and 56% of capital investment Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Chinese FDI into Poland trends by sectors No of projects Sector Industrial Machinery, Equipment & Tools Automotive Components Automotive OEM Consumer Electronics Financial Services Non-Automotive Transport OEM Communications Business Machines & Equipment Business Services Aerospace Other sectors Total 10 4 3 3 3 2 2 2 1 1 4 35 Jobs Created Capital investment Total Average Total (EUR m) Average (EUR m) 1, 179 1, 022 1, 770 772 468 329 195 2, 500 25 136 419 8, 815 117 255 590 257 156 164 97 1, 250 25 136 104 251 138. 70 91. 90 472. 40 78. 40 21. 80 68. 00 53. 00 196. 60 0. 50 34. 60 54. 60 1, 210. 60 13. 90 23. 00 157. 50 26. 20 7. 30 34. 00 26. 50 98. 20 0. 50 34. 60 13. 60 34. 60 Source: f. Di Intelligence from The Financial Times Ltd Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Competitiveness & FDI Perception & Taxes & Incentives Coooperation with China Eastern Poland – Macroregion Macrofuture Why Poland Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
What makes Eastern Poland different? One of the fastest developing regions of Poland Lithuania Baltic Sea Russia Warminsko. Mazurskie Podlaskie Belarus Territorial potential: • 212 cities • 6 cities over 100 thous. inhabitants • 38 border’s crossing points between the EU and Eastern Europe • 6 road’s and 5 railway’s international transportation corridors between the EU and Eastern Europe the lowest labour costs in Poland Warsaw Lubelskie Swietokrzyskie Podkarpackie Slovakia Ukraine is one of the most ecofriendly regions in the whole of Europe young and highly-skilled workers Positive outlook for road infrastructure development Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Young well-educated population is the major asset of Eastern Poland 17. 3% 18. 9% 63. 8% ✓ 31. 8% of population below 25 ✓ birth rate at the level of 2. 7% (one of the highest in Poland) ✓ 53 universities in Eastern Poland ✓ over 331, 000 students – more than 47, 000. students are studying the technical faculties ✓ 213, 000 students of the secondary vocational schools in Eastern Poland Population in production age Population in preproduction age Population in postproduction age Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Priority Sectors in Eastern Poland ✓ the food sector – dairy products produced in an ecological way (ca. 50% of all eco farms are located in Eastern Poland) ✓ furniture production – 4 th biggest producer in the world ✓ the metal and machinery sector – modern technology park actively supported since the entry to the EU in 2004 ✓ BPO – young people fit for the industry as they know languages ✓ the aviation industry – Polish aircraft industry is situated in 90% in Eastern Poland ✓ the yacht industry – tradition of production in the 1000 lake district ✓ business tourism – luxury hotels and spas for an affordable price Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Active projects serviced by PAIIIZ (as of the end of May 2015) PAIIIZ has in the project pipeline 169 potential investments • Value of investment: EUR 3. 0 bn • Number of new job places: 30 660 • Main sectors: ✓ Automotive (33) ✓ Business Process Outsourcing (32) ✓ R&D (19) ✓ Aviation (12) • Major countries-investors: ✓ USA (47) ✓ Germany (27) ✓ France (11) ✓ China (7) – 5 in BPO, 1 in biotechnology and 1 in pharmaceutical / 8 th major partner Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Competitiveness & FDI Perception & Taxes & Incentives Coooperation with China Eastern Poland – Macroregion Macrofuture Why Poland Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Poland Highlights • Poultry – The largest producer in the EU • Apples – the largest producer in Europe (third in the world) • Tobacco – second biggest producer in the EU • Champignon mushrooms – the largest producer in Europe • Furniture – Third largest exporter in the EU • Windows and doors – second largest producer in the EU (largest exporter of PVC and wooden windows in Europe) • LCD sets & Household appliances – largest producer in the EU • Aviation sector - Virtually every passenger aircraft in the world carries at least one part made in Poland • Yachts – European leader in the production of yachts up to 9. 5 m Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Why Poland? Strategic location – gateway to the EU Economic and political stability Availability of skilled human resources Effective incentive system including EU-Funding Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Landscape diversity Tatra Mountains Bialowieza Forest Baltic Sea Masurian Lake District Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
13 properties inscribed on the World Heritage List! Cracow’s Historic Center Castle of the Teutonic Order in Malbork Wieliczka Salt Mine Wooden Churches of Southern Little Poland Old City of Zamosc There are 13 UNESCO World heritage sites in Poland! Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
Thank you for your attention Eastern Poland Macroregion - Macrofuture Polish Information & Foreign Investment Agency ul. Bagatela 12 00 -585 Warszawa tel. +48 22 334 98 00 fax + 48 22 334 98 86 e-mail: invest@paiz. gov. pl www. paiz. gov. pl Project co-financed by the European Union under the European Regional Development Fund as part of the Development of Eastern Poland 2007 -2013 Operational Programme
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