POLISH INVESTMENT AND TRADE AGENCY Business opportunities in

POLISH INVESTMENT AND TRADE AGENCY Business opportunities in Poland Iwona Chojnowska-Haponik Director Foreign Investment Department Hague, April, 2017

Value proposition Location & economic stabilit y Mature business environment • strategic location in Europe • part of s tran European transportation corridor • stable economic situation • rapidly growing internal market • variety of manufacturing sectors • dense network of suppliers subcontractors and • thriving business services sector • availability of clus ters, industrial and technology parks • well developed R&D i nfrastructure Attractive labor market Investment support ecosystem • young, well-educated workforce • ca 10% of universit y students in the EU • language proficiency • increasing labor productivity • strong work ethics • CIT exemptions in 14 Special Economic Zones • local tax reliefs • government grants • EU grants for R&D • Facilitators on central & local level

Strategic location and economic fundamentals Poland – key facts Area, population and economy 6 th largest country in the EU Currency Polish Zloty (1 USD ~3. 9 PLN, 1 EUR ~ 4. 3 PLN, 4 -year standard deviation: 8%) GDP growth 2009 2010 2011 2012 2013 2014 2015 2016 2. 8% 3. 6% 5. 0% 1. 6% 1. 4% 3. 3% 3. 9% 2. 8% Cumulative GDP growth 2010 / 2016 19. 4% vs the EU: 7. 4% GDP (PPP) GDP per capita USD 1, 045 billion (PPP, 2016) – IMF (25 th in the world) USD 27, 107 (PPP, 2016) – IMF Foreign trade in 2016 export EUR 183. 6 bn (+2. 3%) import EUR 178. 9 bn (+0. 9%) Largest EU funds beneficiary EUR 100 bn in years 2014 -2020 Low public debt (2015) 51. 1% of the GDP v. the EU average 85. 0% FDI stock as of the end of 2015 EUR 167. 1 bn Membership WTO (1995), OECD (1996), NATO (1999), EU (2004) Source: IMF, World Economic Outlook, March 2017

Stable economic situation • GDP growth in 2016: Poland 2. 8% vs. EU 1. 9% • Quarterly GDP growth (y-o-y) in Poland vs. EU (in %) 5, 0 4, 0 3, 3 3, 0 2, 0 1, 0 0, 0 1, 3 0, 2 2, 2 1, 7 0, 7 1, 0 1, 6 3, 1 1, 3 4, 3 3, 8 1, 3 1, 2 EU 3, 3 3, 1 2, 9 1, 8 1, 9 2, 0 Poland • Inflation (February 2017) Yearly basis (m/m-12) Monthly basis (m/m-1) EU 1. 9% 0. 3% Poland 1. 9% 0. 5% • Main drivers of economic growth - net exports - domestic demand - investments Source: Eurostat, tec 00115, namq_10_gdp, teicp 000, March 2017 3, 2 2, 8 2, 1 1, 8 3, 1 1, 9 2, 3 1, 9

European Commission Forecast – Winter 2017 GDP growth (%) 2016 2017 2018 EU 28 1. 9 1. 8 Eurozone 1. 7 1. 6 1. 8 Germany 1. 9 1. 6 1. 8 Poland 2. 8 3. 2 3. 1 Czech Republic 2. 4 2. 6 2. 7 Slovakia 3. 3 2. 9 3. 6 Hungary 1. 9 3. 5 3. 2 Bulgaria 3. 3 2. 9 2. 8 Romania 4. 9 4. 4 3. 7 Source: https: //ec. europa. eu/info/publications/economy-finance/european-economic-forecast-winter-2017_en, March 2017

Unemployment rate 01/2017: 8. 6% 1, 397, 000 Poland, Q 4 2016 Pomorskie 7. 3% Zachodnio-Pomorskie 11. 0% Warmińsko-Mazurskie 14. 2% Podlaskie 10. 4% Kujawsko-Pomorskie 12. 1% Lubuskie 8. 7% 10 Mazowieckie 7. 2% Wielkopolskie 5. 0% 0 Łódzkie 8. 6% Dolnośląskie 7. 3% Opolskie 9. 0% 11% > 8 – 11% < 8% 20 Śląskie 6. 7% Lubelskie 10. 4% Świętokrzyskie 10. 8% Małopolskie 6. 7% Podkarpackie 11. 6% Source: Central Statistical Office, Eurostat teilm 020, March 2017 Eurostat: Poland 5. 4% vs EU 8. 1% (as of January 2017) Year Unemployed with higher education 2006 2, 309, 410 140, 718 (6%) 2016 1, 335, 155 177, 559 (13%)

Human resources availability Population of CEE countries (%) Population by age classes in Poland (%) 100% 90% 80% 70% 65+ 15% 50 -64 21% 60% 50% 40% 25 -49 37% 30% 20% Population by age classes CEE countries (m) 25 0% 15 -24 15 0 -14 5 - 0 -14 15% 25 -49 20 10 10% 15 -24 12% Poland is the 6 th largest country in the EU in terms of population Poland is the biggest country among CEE members of the EU 64% of population is younger than 49 years old 10. 4 m Poles are less than 25 years old Second lowest median age in CEE - 39. 6 years old Source: Eurostat demo_pjangroup, demo_pjanind, March 2017

Human capital 24 mn people aged 49 and less Academic centers Intern (64%) Almost 1. 41 m students TRI-CITY OLSZTYN SZCZECIN BIALYSTOK BYDGOSZCZ/TORUN (2015/2016) More than 395, 000 graduates (2015) Over 57, 000 foreign students from 156 countries (4% of all students) WARSZAWA POZNAN ZIELONA GORA LODZ LUBLIN WROCLAW More than 90% of students speak foreign languages Population with higher education: 25% in society, 37% of working population 201 > KIELCE OPOLE No. of students (thousands) 151 – 200 KRAKOW RZESZOW KATOWICE 101 – 150 51 – 100 50 < 438 higher education City ational recognition Students Graduates institutions 19 universities Warszawa 243 300 59 000 25 technical universities Krakow 160 800 44 900 72 academies of Wroclaw 120 000 30 800 Poznan 116 400 32 000 Katowice metro 97 800 28 200 Tricity 90 200 22 500 Lodz 76 400 19 800 Lublin 67 300 19 200 economics 728 different Growing number of science students majors taught Source: Central Statistical Office, BDL, Ministry of Science&Higher Education, March 2017

Foreign language capabilities Foreign language capability by age groups Learning of foreign languages is obligatory in the Polish education system Children learn foreign languages from the age of 6 Foreign language among students English is the most popular foreign language in Poland Language proficiency is one of the strongest points for Poland as a BSS hub Source: European Commission’s survey, October 2013, Hays, 2015

Achievements of Polish students ACN International Collegiate Programming Contest is an annual multi-tiered competitive programming competition among the universities of the world. The contest is sponsored by IBM. 2012 held in Poland, Team from University of Warsaw took 2 nd place beating 110 teams Microsoft Imagine Cup is a global competition focused on finding IT solutions to real world issues In 2012 students from Technical University in Gdansk and Adam Mickiewicz University in Poznan took the 2 nd and 3 rd place respectively. Since then Polish teams always among World Finalists Every third student doing internship in Microsoft HQs in Redmond (USA) comes from Poland 2011: Polish team from University of Silesia is a special winner of Samsung Application Contest 2005 – 1 st place ; 2011 - 3 rd place; 2012 - 1 st place ; 2013 – 10 th place ; 2015 – 4 th and 7 th place Results of past editions give Poland 4 th place in general classification of countries behind Russia, Belarus and Japan. Poland won 3 x 2 nd place and 1 x 3 rd place Source: www. microsoft. com

Road & rail infrastructure Source: Ministry of Transport, Construction and Maritime Economy, March 2017

Airport infrastructure Direct flights to major European cities Map of airports Warsaw Aberdeen, Amsterdam, Athens, Barcelona, Bari, Basil, Belgrade, Bergamo, Bergen, Berlin, Birmingham, Bristol, Brussels, Budapest, Bucharest, Kharkov, Chicago, Dnipropetrovsk, Doncaster, Doha, Dunai, Dublin, Dusseldorf, Eindhoven, Eilat, Erevan, Frankfurt, Geneva, Glasgow, Goteborg, Hamburg, Helsinki, Kiev, Chisinau, Kosice, Copenhagen, Liverpool, Lisbon, London, Ljubljana, Luxembourg, Lviv, Madrid, Malmo, Minsk, Milano, Munich, Moskva, Napoli, Nice, New York, Odessa, Oslo, Paris, Beijing, Petersburg, Porto, Prague, Reykjavik, Riga, Seoul, Sofia, Istanbul, Stockholm, Tallinn, Tbilisi, Tel Aviv, Toronto, Torino, Venezia, Vienna, Vilnius, Zagreb, Zurich Kraków Alicante, Amsterdam, Athens, Barcelona, Basil, Bergen, Berlin, Boulogne, Bristol, Brussels, Dortmund, Dublin, Dusseldorf, East Midlands, Edinburgh, Eindhoven, Eilat, Frankfurt, Hamburg, Helsinki, Copenhagen, Leeds, Liverpool, London, Lyon, Madrid, Manchester, Milano, Napoli, Newcastle, Oslo, Paris, Roma, Shannon, Stavanger, Stockholm, Tel Aviv, Trondheim, Venice, Vienna, Zurich Berlin, Brussels, Dortmund, Dublin, Frankfurt, Hamburg, Helsinki, Copenhagen, London, Manchester, Munich, Oslo, Paris, Rome, Prague, Edinburg, Birmingham, Bristol, Stockholm, Barcelona, Bergen, Goteborg, Cologne, Malmo, Reykjavik, Trondheim, Turku, Stavanger Birmingham, Milano, Roma, Stavanger, Paris, Dublin, Dusseldorf, Frankfurt, London, Oslo, Tel Aviv, Maastricht, Stockholm, Malmo, Cologne, Napoli, Liverpool, Barcelona, Dortmund, Belfast, Bristol, Bologna, Kiev, Glasgow, Edinburgh, Eindhoven Dublin, Dusseldorf, Frankfurt, Copenhagen, London, Munich, Oslo, Paris, Rome, Barcelona, Bologna, Cork, Stockholm, Liverpool, Glasgow, Dortmund, Venice, Tel Aviv, Lviv, Kiev, Lisbon, Reykjavik GDAŃSK SZCZECIN BYDGOSZCZ MODLIN POZNAŃ ŁÓDŹ WARSZAWA LUBLIN WROCŁAW KATOWICE KRAKÓW RZESZÓW Gdańsk Overseas flights Katowice European flights Number of passengers served by Polish airports: 34 mn (+12%) mn Wrocław 15 12, 8 10 5 5, 0 4, 0 3, 2 2, 9 2, 4 1, 7 0, 5 0, 4 0 Source: The Civil Aviation Office, airports’ webpages, March 2017 0, 3 0, 2 Poznań Dublin, Dusseldorf, Frankfurt, Copenhagen, London, Munich, Oslo, Edinburg, Barcelona, Milano, Stockholm Rzeszów Dublin, Frankfurt, London, Manchester, Oslo, Edinburg, Bristol Szczecin Oslo, London, Dublin, Bergen, Stavanger, Liverpool Lublin Barcelona, Burgas, Doncaster, Dublin, Eindhoven, Glasgow, Kiev, Liverpool, London, Munich, Oslo, Stockholm, Tel Aviv Bydgoszcz Dublin, London, Frankfurt, Birmingham, Glasgow, Dusseldorf, Rome Łódź Dublin, London, Munich, Amsterdam, East Midlands

FDI stock in Poland • The cumulative value of Foreign Direct Investments in Poland amounted to 167. 1 bn EUR as of the end of 2015 In 2015 EURthe(reinvested exceeded 12. 1 bn flow 60% of the of. FDI flow) gains constituted FDIinto Poland • 35 30 25 20 15 10 30, 3 Geographical sources of FDI as of the end of 2015 UE 94. 6% other countries 5. 4% Major FDI investors in Poland (FDI stock as of the end of 2015, in bn EUR) 27, 4 19, 3 17, 9 10, 2 9, 2 8, 5 5 0 Source: National Bank of Poland, November 2016 6, 3 5, 8 5, 1 4, 9 4, 2 3, 8 3, 2 1, 8 1, 5 1, 1 1, 0 0, 8 0, 7 0, 6 2, 9

FDI stock in Poland as of the end of 2015 FDI by manufacturing sectors (bn EUR) FDI preferred sectors (%) ICT Construction 5% 5% Professional, Other Scientific & 11% Technical Activities 6% Manufacturin g 29% 10, 3 Food & tobacco products; beverages and tobacco products Real estate activities 7% Wholesale and retail trade 14% Motor vehicles& other transport equipment Financial and insurance activities 23% 10, 2 Metal & machinery products 9, 7 Petroleum, chemicals, pharmaceutical products, rubber & plastic products 9, 7 Wood, paper; printing and reproduction of recorded media 5, 0 0 Source: NBP, November 2016 2 4 6 8 10

wavin. jpg Dutch investors - key characteristics Key facts Dutch cumulative direct investment in Poland totalled EUR 30. 3 bn as of the end of 2015 Poland the Netherlands is 1 st largest investor in share of Dutch investment in the stock of FDI in Poland represents 18% 2, 523 enterprises with Dutch shareholding (as of the end of 2015) operate on the Polish market of which 559 have invested over USD 1 m companies with Dutch shareholding employ directly over 120, 000 people 54% of all Dutch capital was invested in Mazovian region, 13% in Wielkopolskie and 7% in Silesia Dutch companies have invested 41% in manufacturing type of operations, 10% in trade and 8% in BSS Source: Central Statistical Office, National Bank of Poland, March 2017 Examples of Dutch investors

Services and Manufacturing Hubs in Poland AUTOMOTIVE HOUSEHOLD APPLIANCES ELECTRONICS

Services and Manufacturing Hubs in Poland AEROSPACE BUSINESS SERVICES SECTOR R&D

Corporate income tax rates across Europe Bulgaria Ireland 10, 0% 12, 5% Latvia 15, 0% Lithuania 15, 0% Romania Slovenia Ukraine 16, 0% 17, 0% 18, 0% Poland 19, 0% Czech Rep. 19, 0% Hungary 19, 0% UK Estonia Finland Sweden Slovakia the Netherlands Spain Germany France Belgium Source: KPMG, 2017 20, 0% 22, 0% 25, 0% 29, 7% 33, 3% 33, 99%

Regional state aid in EU – forms of incentives Cash support • Government grants • Cash grants - EU Funds for R&D projects Tax breaks • CIT exemption – SEZ/relief for R&D • Real estate tax exemption The EU budget: current multiannual financial framework 2007 – 2013 2014 – 2020 Total: EUR 975 bn Poland: EUR 69 bn (7%) Total: EUR 960 bn Poland: EUR 82. 5 bn (8%)

Government grants – priority sectors Program of support of investments of considerable importance for Polish economy Priority sectors Manufacturing - automotive electronics and household appliances aviation biotechnology food processing „big investment” in other sectors Business 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 • 77 programmes supporting investments worth 13. 6 bn PLN and creating 27. 8 thousand new job places

Key facts about EU funds for R&D&I Operational Programs cofinanced by structural funds (82. 5 bn EUR + national contribution) • The main financial instrument supporting R&D&I is the Operational Programme Smart Growth (PO IR): the programme is nationwide and focuses on supporting key R&D&I projects enhancing cooperation between businesses and academic centers • Innovations are also supported through other regional programmes: • Regional Operational Programmes: each voivodship has defined its own list of smart specializations (KIS) and will implementation of innovative support projects in line with regional KIS 6 Operational Programs (55. 3%) 16 Regional Operational Programs (37. 9%) • Eastern Poland Operational Programme: funds will be distributed to innovative projects completed in the macroregion of Eastern Poland by cooperating companies Source: NCBR, Ministry of Economy, Ministry of Infrastructure and Development, January 2016

Regional Leader in Business Friendliness 74 55 2017 41 39 45 36 33 27 32 24 „Every region has a leading champion in the scope of improvements made since 2005 — whether Poland for OECD high-income economies, China for East Asia and the Pacific or Colombia for Latin America and the Caribbean. ” Source: Doing Business 2017, 2016, 2015, 2014, 2013, 2012, World Bank 25 24

Poland – a safe bet Would you choose the country as a location for investment once more? YES NO Poland Estonia Czech Rep. Romania Serbia Lithuania Slovakia Bulgaria CEE Slovenia B&H Croatia Hungary Macedonia Latvia Source: Economic trends in CEE in 2016, AHK, n=1508 95% 5% 93% 7% 92% 8% 91% 9% 90% 10% 88% 12% 85% 15% 84% 16% 83% 81% 80% 80% 75% 72% 17% 19% 20% 20% 25% 28%

Why Poland – Summary Availability of skilled human resources Strategic location and strong economic fundamentals Mature business environment Effective incentives system

How can we help you? Investment process Considering of investment Direct marketing Long list of countries Agency’s offer Pro-active approach: identifying the needs of the companies • investment seminars, work-shops, study tours • co-operation with Polish Embassies/Trade Offices Professional services: dedicated Project Manager’s assistance • macroeconomic and sectoral data • business case building, site visits • real estate offers: the best possible location Short list One-stop-shop: implementation assistance • financing options from Polish Development Fund, investment incentives: grants, Special Economic Zone • database of suppliers and subcontractors Investment decision Antibureaucratic concierge: after-care services • spokesman foreign investors, business climate improvement

Active projects serviced by PAIi. H As of March 2017, PAIi. IZ is assisting 191 potential FDI projects: • Total value of investment: EUR 5. 1 bn • Total number of new workplaces: 55, 100 Main sectors: BSS=SSC+IT+BPO (69) automotive (32) food processing (15) R&D (12) White goods (9) Major countries – investors: USA (62) Germany (22) Japan (17) Poland (8) UK (7)

Welcome to Poland! 00 -585 Warszawa, ul. Bagatela 12 tel. (+48) 22 334 98 75 e-mail: invest@paiz. gov. pl www. paiz. gov. pl