POLSKA AGENCJA INFORMACJI I INWESTYCJI ZAGRANICZNYCH Poland Investment

POLSKA AGENCJA INFORMACJI I INWESTYCJI ZAGRANICZNYCH Poland Investment Opportunities May, 2014

Poland – basic facts Territory: 312 700 km 2 – 6 th place in the EU Population: 38. 1 m. – 6 th place in the EU Currency: PLN (1 EUR ~ 4. 17 PLN) GDP in 2013: $ 814 bn (PPP) Membership: EU, NATO, OECD, WTO, Schengen Zone

Competitive advantages Location & economic fundamentals • strategic location in continental Europe, between Germany and Russia one of the most robust economy in Europe part of trans-European transportation corridor stable economic growth and low inflation rapidly growing internal market • • 1000 km radius 250 m people Attractive labor market • • • young, well-educated workforce (1. 7 m students) 460 universities & high education schools language proficiency increasing labour productivity crisis resilient country Appealing investment incentives • • tax exemptions in 14 Special Economic Zones (+) local tax reliefs government grants EU grants 2000 km radius 550 m people

Poland – leverages Image Location Foreign direct investment Public aid

Poland – leverages Image Location Foreign direct investment Public aid

Poland – highlights • LCD sets & Household appliances – largest producer in the EU • Apples – the largest producer in Europe (second in the world) • Champignon mushrooms – the largest producer in Europe • Windows and doors – second largest producer in the EU (largest exporter of PVC and wooden windows in Europe) • Tobacco – second biggest producer in the EU • Furniture – Third largest exporter in the EU • Poultry – Third largest exporter 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

Investment attractiveness of the CEE region, AHK 2014 Poland ranked as the most appealing country in the CEE. Scale: 1 - 6 (very attractive) Source: Ankieta Koniunkturalna 2014 , AHK

Poland a leader of growth in Europe • 1 st place in the CEE region – the most competitive country in the region. • 1 st place in terms of number of the investment projects in the CEE. • 3 rd place in the whole Europe in terms of created jobs due to FDI (13 111 jobs – only the UK and Russia were better). • 3 rd place in Europe in terms of created jobs per 1 project. Source: E&Y Attractiveness Survey, June 2013

World Investment Report Main advantages of Poland: ü Stable economic situation ü Market growth ü Size of internal market ü Access to regional markets ü Cooperation with suppliers and business ü System of investment incentives Poland is among the 15 most attractive investment locations in the world Source: UNCTAD, World Investment Prospects Survey 2009 -2011, World Investment Report 2013.

Doing Business 2014 45 th place The best result in the history 3 rd place in credit availability Poland among 15 countries catching up the fastest Source: Doing Business Report 2014 10 place improvement

Corruption Perceptions Index 2013 Transparency International: Poland has the lowest corruption among CEE countries Index value (higher score = less corruption). Numbers in brackets indicate position in ranking of 176 countries. Source: Corruption Perceptions Index 2013 Transparency International

Poland – leverages Image Location Foreign direct investment Public aid

FDI flow to Poland 1994 - 2013 23. 7 25 20 10 5 15. 0 Thousands 15 20. 7 19. 9 13. 0 12. 7 10. 3 9. 3 3. 7 4. 5 4. 9 6. 4 7. 3 14. 3 5. 7 6. 1 4. 6 -4. 0 1. 9 1990 -’ 95: internal market shopping centers privatization Market seeking Source: PAIi. IZ, NBP 2013. 1995 -2000: labour force low costs >2000: quality/cost ratio assembly lines KPO, R&D Strategic capabilities 2 013 2 012 2 011 Next stage: top quality creativity outsourcing centers (BPO), transport infrastructure Resource seeking 2 010 2 009 2 008 2 007 2 006 2 005 2 004 2 003 2 002 2 001 2 000 1 999 1 998 1 997 1 996 1 995 -5 1 994 0

FDI stock in Poland, end of 2012 30 26. 9 26. 3 Total stock: EUR 178 bn 25 21. 9 18. 2 EUR bn 20 15 10. 0 10 9. 7 8. 4 8. 1 7. 5 6. 1 5 1 Source: National Bank of Poland, 2013. . 3 5 6 ria m Au st te d U ni U 4 Ki ng do at e ni te d St ed e Sw Lu x 2 s n n Sp ai Ita ly em bo ur g an ce Fr la nd s he r N et G er m an y 0 7 8 9 10

Projects successfully completed by PAIi. IZ in 2012 & 2013 2012 2013 Number 53 53 Value (mln EUR) 1 236, 3 902, 5 Employment 9 998 18 963

Poland – leverages Image Location Foreign direct investment Public aid

Students and graduates – achievements 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. 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. 2011: Polish team from University of Silesia is a special winner of Samsung Application Contest. Every third student doing internship in Microsoft HQs in Redmond (USA) comes from Poland. The winners of the International Olympiad in Informatics (IOI) belong to the best young computer scientists in the world. In 2008 Polish team took 1 st place ex-aequo with Chinese one. The third place individually was won by Pole, too. Source: www. microsoft. com, www. us. edu. pl

Human resources Main university centres Students in given EU countries Tricity Szczecin Warsaw Poznan Lodz Wroclaw Cracow • 20 million of talented young people, who speak foreign languages • 1. 7 mln students, over 400 000 graduates every year • 87% of students speak foreign languages • 50% of population is younger than 35 yrs. (in the group between 20 and 29 y. o. 1/3 studies) • there are 460 higher education institutions in Poland Źródło: EIU, Eurostat.

Human resources Foreign language capability by age groups Language proficiency is one of the strongest points for Poland as a BPO center Children learn foreign languages from the age of 6 Source: CBOS Survey Foreign language capability among students English is the most popular foreign language in Poland Learning of foreign languages is obligatory in the Polish education system Source: Randstad.

Poland – leverages Image Location Foreign direct investment Public aid

State aid (I) I. CIT exemption in Special Economic Zone only available in Special Economic Zone (SEZ) II. Government grants through individual negotiations individually approved and granted by the Ministry of the Economy III. Real estate tax exemption subject 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 Funds subject to negotiation with different managing institutions depending on the investment project key parameters All above presented instruments can be combined together however the total amount of state aid cannot exceed the maximum aid intensity

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 § § SEZ will operate at least until 2026 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

Tax rates Corporate Income Tax (CIT) rate: 19% Personal Income Tax (PIT) rate: 18% and 32% Value added tax (VAT): • basic rate: 23% • reduced rates: 8%, 5% • export rate: 0% Social Security Tax paid by employer: between 19. 48% and 22. 67% Employer’s social security contribution (as a % of employee’s gross wage) 100 22, 71 Poland 100 17, 5 Hungary 35, 2 34 27 19, 48 -22, 67 100 11 Czech Republic Source: OECD, Czech. Invest, HITA, Sario 100 Employer’s social security contribution Total cost for employer Gross wage 13, 4 Slovakia Employee’s social security contribution Average gross wage comparison does not reflect total labour cost – social security contributions make a significant difference

Why Poland? Strategic location – gateway to the EU Economic and political stability Availability of skilled human resources Effective incentive system including EU-Funding

Thank you for your attention 00 -585 Warszawa, ul. Bagatela 12 tel. (+48 22) 334 98 00, fax (+48 22) 334 99 99 e-mail: post@paiz. gov. pl