Poland The Attractive Place for Investment and Trade PAIiIZ 9 September 2006, China.
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Transcript of Poland The Attractive Place for Investment and Trade PAIiIZ 9 September 2006, China.
Poland
The Attractive Place for Investment and Trade
PAIiIZ
9 September 2006, China
POLAND – DESTINATION OF CHINESE INVESTMENTS
There has never been a better time...
(i) Investment Potential
• Poland is currently ranked 1st in terms of planned investments in Europe• Expected return on investment estimates are 4 times that of Germany• Economic indicators
(ii) Human Capital
• Poland’s most valuable asset – its 20 million young talented people• Poland ranks 3rd in terms of planned R&D investment after China and India
(iii) Strategic Location\ Services&Manufacturing Hub
• In the heart of continental Europe – 250m people within a 1000 km radius• Part of the Trans European Road Network
AGENDA:
Rank 4 - top 10 most attractive investment destinations
E&Y, „European Attractiveness Survey” 2005
Rank 4 - top 10 most attractive investment destinations
”Within Europe, Poland stands out among other countries in terms of labour costs and availability of industrial sites, but it also has the second best result in terms of prospects of improving labour productivity”
E&Y, „European Attractiveness Survey” 2005
Intended location of investment projects in Europe
E&Y, „European Attractiveness Survey” 2005
FDI Confidence Index, Poland ranks 5th globally
FDI Confidence Index, Poland ranks 5th globally
”In 2004 (...) nearly one in ten greenfield investments in the EU went to Poland”
„Europeans rank Poland their 4th most attractive R&D investment destinations globally”
AT Kearney 2006, FDI Confidence Index Report
POLAND – FDI leader in CEE region
24.6%
13%10.9% 10.4%
9.4% 8.8%
5.2%3.6%
2.4%
Ru
ssia
Po
lan
d
Ro
man
ia
Slo
ven
ia
Cze
chR
epu
blic
Hu
ng
ary
Bu
lgar
ia
Ukr
ain
e
Slo
vaki
a
Source: KPMG
Investment potential of Poland
Source: FDI Confidence Index Report, AT Kearney 2006
• GDP growth twice that of Western Europe
• Expected return on investment is estimated at 2 times that of Spain and 4 times that of Germany
3,2
5
-7,0
2,0
3,85,2
7,0 6,0 6,8
4,84,1 4,0
1,0 1,4
3,8
5,3
-8,0
-6,0
-4,0
-2,0
0,0
2,0
4,0
6,0
8,0
1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006
F
GDP growth in Poland in %
Source: EIU 2005
0
100
200
300
400
500
600
700
Poland
Czech Republic
Hungary
Slovakia
Nominal GDP USD bn at PPP in 1992-2003, forecast for 2004-2009
Polish GDP develops most dynamically among four newEU members
Poland has the highest unemployment rate among EU countries
16,0
17,0
18,0
19,0
20,0
21,0
Jun-0
2
Aug-0
2
Oct-
02
Dec-02
Feb-0
3
Apr-0
3
Jun-0
3
Aug-0
3
Oct-
03
Dec-03
Feb-0
4
Apr-0
4
Jun-0
4
Aug-0
4
Oct-
04
Dec-04
Feb-0
5
Apr-0
5
Source: Central Statistical Office, International Statistics Quarterly, 2005
02468
10
1214161820
• High level of unemployment means there are many employees available• The pressure on raising wages is also low
Unemployment rate in April 2006
16,0
17,0
18,0
19,0
20,0
21,0Unemployment rate in Poland, 2003-2006
Economic indicators
14wholesale sales (year-on-year, %)
11retail sales (year-on-year, %)
14.3industrial output (year-on-year, %)
1.3net inflation (year-on-year, %)
1.1CPI (year-on-year, %)
July 2006indicator
Source: August 2006, Reuters
Trade
Polish exports to China:
Value: 590,6 mln
Annual Growth: 6.3 %
Products: - metals (32,4%),
- chemicals (26,5%),
- equipment (17,3%),
- packing paper (2,8%),
- plastics and rubber goods (4,1%),
- food (2,1%) and non-metallic mineral products (1,4%).
Trade
Polish imports from China:
Value: 5 496,6 mln USD
Annual Growth: 35.2%
Products: - machines, precision instruments (52,8%)
- textiles (11,7%)
- various products, mainly furniture and toys (7,9%).
- footwear (4,5%).
Rating profile
• A robust export economy, declining government deficit and good medium-term growth prospects underpin Poland’s rating profile
• Clarity in the current political set-up, commitment to economic policies, lower levels of unemployment and further restructuring could potentially result in an upgrade in ratings from the two agencies which maintain positive outlooks
FC: Foreign Currency, LC: Local Currency
Strengths• Fundamental decline in core inflation and
entrenched reduction in inflationary expectations
• Consistently strong export performance based upon microeconomic restructuring
• Strong public debt indicators and proactive debt management policies
Challenges• Need to tighten fiscal policies• Need to restructure some heavy industrial
sectors• Need to reduce high level of
unemployment
Last Update:22 November 2005
FC: A2 / Stable LC: A2 / Stable
Strengths• Competitive and increasingly diversified
export sector• Good external liquidity position• Benign inflation outlook
Challenges• High fiscal deficit and debt burden• Structural reform challenges• Comparatively low GDP and high
unemployment levels
Last Update:17 Feb 2005
Strengths• Good medium-term growth prospects• Moderate current account deficits, mainly
non-debt financed• Flexible and transparent monetary and
exchange rate policy• Essentially sound, largely foreign-owned
banking system
Challenges• Large budget deficit and rising public debt-
to-GDP ratio trend• Political uncertainty poses risk to fiscal
consolidation and euro adoption timetable• High unemployment, large agricultural
sector
FC: BBB+ / Positive LC: A- / Positive FC: BBB+ / Positive LC: A / Stable
Last Update:31 March 2005
Last Update:29 March 2005
Recent Change – UPGRADE (22/11/05)The unification of the foreign and domestic currency ratings reflects the advanced economic and financial integration of the country with the EU, as evidenced in the recent accession to EU
Recent Change – OUTLOOK (31/03/05)Reflects expectations of a gradual improvement in fiscal trends from 2005 onward, Poland’s good economic prospects - with annual GDP growth forecast at 4-4.5% of GDP in 2005-08, and a comfortable external position
Recent Change – OUTLOOK (29/03/05)Fitch placed Poland’s Foreign Currency Issuer Default Rating (FCDIR) on a positive outlook signalling a belief that it is more likely than not to upgrade the rating within the next two years
0
2,000
4,000
6,000
8,000
10,000
2000 2001 2002 2003 2004 2005F 2006F
0%
2%
4%
6%
8%
10%
12%
GDP per capita, US$ (LHS)
Nominal GDP % change, LC (RHS) Inflation, CPI % change Dec/Dec (RHS)
Key indicators: improving in the lead-up to EMU accession
0%
1%
2%
3%
4%
5%
6%
7%
2000 2001 2002 2003 2004 2005F 2006F
0%
10%
20%
30%
40%
50%
60%
Gen. Gov. Deficit / GDP* (LHS) Gen. Gov. Debt / GDP* (RHS)
0%
1%
2%
3%
4%
5%
6%
7%
2000 2001 2002 2003 2004 2005F 2006F
0%
10%
20%
30%
40%
50%
60%
Current Account Deficit / GDP (LHS) External Debt / GDP (RHS)
0.0
10.0
20.0
30.0
40.0
50.0
2000 2001 2002 2003 2004 2005F 2006F
0%
5%
10%
15%
20%
25%
30%
Official Forex Reserves, US$bn (LHS) Debt Service Ratio** (RHS)
Increasing GDP per capita, low and stable inflation Declining govt. deficit, stable (but high) govt. debt
Improving external liquidity, declining debt service burden
Declining current account deficit, stable (but high) external debt
* Official definition of govt. finances; ** Debt Service Ratio defined as (Interest + Principal Repayment) / Current Account Receipts
Source: Moody’s country stats, 15 Nov ‘05
• Poland’s economy has exhibited considerable growth recently, albeit largely in the form of exchange-driven growth
• Continuing structural reform and fiscal consolidation will be key for sustaining the current positive trend
Positive outlook: upgrade if policy and trends can be maintained
• Poland’s robust performance positions it well for accession into the EMU (over 2008-10)• However, the recently-formed coalition government is believed to have resulted in uncertainties regarding the
country’s fiscal policies and performance, and the impact of the 2006 budget remains to be seen
“Debt maturity structure is favourable, debt servicing requirements are not onerous. Foreign currency reserves are high. The current account deficit is small.” - 22nd Nov 2005
“In the medium-term, Poland’s ratings could be upgraded if the government emerging from the 2005 election engineers a fiscal reform program which results in a sustainable reduction of the deficit and debt levels beyond S&P’s current projections, and which improves prospects for an earlier EMU accession” – 31st Mar 05“If fiscal trends can be maintained in the medium-term, supported by credible economic and fiscal policy, the rating on Poland could be upgraded within the coming year” – 27th Oct 05
“If, as Fitch expects in its central scenario, Poland sets out credible fiscal reforms after the elections, then it would be likely to upgrade the ratings ” – 29th Mar 05
“However, nearly four months on from parliamentary elections and despite the publication of a draft budget for 2006 and a new Euro Convergence Plan, the outlook for public finances remains uncertain” – 20th Jan 06
Clarity in fiscal policies and improved fiscal performance
• Clarity in the current government’s commitment fiscal and structural reforms would be the key determinant for a rating upgrade
• Along with clarity in fiscal policies, improvement in fiscal performance will be key for a rating upgrade, in particular, in the areas of:
- rural pensions
- health & education
- social welfare transfers
• Conclusion of restructuring of select heavy industrial sectors and faster privatisation would have a positive impact on ratings
Human capital
(i) Demographic structure
• Young society• Approx. 38 million people
(ii) Talent pool
• 427 higher education institutes• 2 million students• Availability of engineers• Flexibility, Hard-working
Human capital - demography
• 50% under 34 years, 35% is under 25 years of age
• 13m young, well-educated people will enter job market in next few years
Poland – Young Society
Polish society is relatively young considering the European average.
56% of Poles are below their 40s
High poll of labour force is guaranteed in following 10 years
0
500
1 000
1 500
2 000
2 500
3 000
3 500
0-4 5-9 10-14 15-19 20-24 25-29 30-34 35-39 40-44 45-49 50-54 55-59 60-64 65-69
age sections
ths
of
pe
rso
ns
OurFuture
Our Employees
Talent pool - Main Academic Centres
Gdańsk
Warszawa
Kraków
Poznań
Wrocław
Katowice
Łódź
Szczecin
Białystok
Olsztyn
Lublin
Rzeszów
ToruńBydgoszcz
Kielce
Education in Poland:
Students - 2 mn
Graduates - 384 thous
Higher education schools - 427
International Schools in Poland
Preschool
Primary school
Lower secondary (Gymnasium)Higher secondary school
*There are no international schools, however some of national schools are able to run classes in various languages if there are such requests
DOLNOŚLĄSKIE
MAŁOPOLSKIE
MAZOWIECKIE
ŚWIĘTOKRZYSKIE*
WIELKOPOLSKIE
ZACHODNIOPOMORSKIE
ŁÓDZKIE
WARMIŃSKO – MAZURSKIE*
POMORSKIE PRESCHOOL PRIMARY
SCHOOLLOWER SCHOOL
HIGHER SECONDARY SCHOOL
Dolnoslaskie ENG-1
DE-1
ENG-1 ENG-1
Lodzkie ENG-1 ENG-1
Malopolskie ENG-2 ENG-2 ENG-2 ENG-2
Mazowieckie ENG-7
DE-1
JAP-1
FR-1
ENG-10
DE-1
JAP-1
FR-3
ENG-7
DE-1
JAP-1
ENG-7
DE-1
JAP-1
FR-1
Pomorskie ENG-2 ENG-3 ENG-3
DE-1
ES-1
FR-1
Swietokrzyskie ENG-1
DE-1
ENG-1
DE-1
Wielkopolskie ENG-3 ENG-3 ENG-3 ENG-1
Zachodnio-
pomorskie
ENG-1 ENG-1 ENG-1
ENG-English ,DE-German ,FR-French ,JP-Japanese ,ES-Spanish
The number of International Schools in regions
Academy of International
Studies
Adam Mickiewicz UniversityOriental Institute
JagiellonianUniversityFaculty of Filology
Warsaw UniversityOriental Institute
WarsawPoznan
Chinese Faculties at Polish Universities
Krakow
Lodz
Students from Poland are winning major programming contests
Country Ranking
2200
2300
2400
2500
2600
USA Poland Canada China Russia
poin
ts
Best Universities1. Warsaw University2. Moscow State University3. Saratov State University
...9. Jagiellonian University23. Poznan University of
Technology
TopCoder is fast becoming the major league for programming competitions
Source: www.topcoder.com, May 2005
Polish students were the best coders in 2003, 2004 and 2005
Source: www.topcoder.com, August 2005
Poles are hard working and determined to succeed – leading global survey
Strategic Location\ Manufacturing Hub
(i) EU member• 450 million consumers in the EU• New road infrastructure – massive investment of EU funds• 90 billion Euro of EU Funds (2007-2013)
(ii) Bridging East and West• 250 million people within a 1000 km radius• Deep sea terminal access – Gdansk• Access to air and railway connections
(iii) Services&Manufacturing hub• 19% CIT• Human resources• Low risk
• Part of the single market of 455 million
• Free movement of goods, services, capital and labour
• A rise of production volume
• Increase in FDI inflow
• Increase of economic credibility
• Transparent and known legal system
• Financial aid funds from the EU
• Saving of time on procedures while exporting and importing to the EU
• Easy transport within the EU, no delays on border crossings
• No exchange rate risks after Poland joins the Euro
Polish EU Accession is beneficial for your Company
Strategic Location
Easy access to Established EU and New Markets of EE
EUROPE – THE BEST DESTINATION OF FDI
Job creation 2005
Number of projects 2005
Source: Ernst & Young
EUROPEAN UNION – CORPORATE INCOME TAX
EU COUNTRIES CIT
GERMANY 38.34%
SPAIN 35%
FRANCE 33.33%
THE UK 30%
GREECE 29%
CZECH REPUBLIC 24%
SLOVAKIA 19%
POLAND 19%
Vs.
ASIAN COUNTRIES CIT
JAPAN 40.7%
INDIA 33.66%
CHINA 33%
MALAYSIA 28%
REPUBLIC OF KOREA
27.5%
Source: KPMG
Major cities in Poland offer direct air connections
Direct flights to major European and world cities
TO FROM
LONDON
WARSAW
GDAŃSK, WROCŁAW
KRAKÓW, BYDGOSZCZ
SZCZECIN, RZESZÓW
COPENHAGEN
WARSAW, SZCZECIN
GDAŃSK, WROCŁAW
POZNAŃ, KRAKÓW
FRANKFURT
WARSAW, GDAŃSK
RZESZÓW, KATOWICE
WROCŁAW, KRAKÓW
POZNAŃ
PARISWARSAW, KATOWICE
KRAKÓW
MUNICHWARSAW, WROCŁAW
KATOWICE, KRAKÓW
BARCELONAWARSAW, KATOWICE
KRAKÓW
NEW YORK,
CHICAGOWARSAW, KRAKÓW
TEL AVIV WARSAW, KRAKÓW
Overseas flights
European flights
Domestic connections
SZCZECIN
GDAŃSK
BYDGOSZCZ
POZNAŃ
ZIELONA GÓRA
WROCŁAW
KATOWICE
KRAKÓW
WARSAW
RZESZÓW
ŁÓDŹ
Source: Polish Airports
SLAWKOW - Railway connection
Possibility to use faster railway connection straight to Poland
• Central geographic location
• Excellent logistics options
• New road infrastructure – massive investment of EU funds
• Several deep sea terminals access– Gdansk, Gdynia,
Szczecin
• Easy access to East
Poland as a hub for expansion in CEE
Structural & Cohesion Funds
Source: EU Commission
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
Czech Rep. Estonia Hungary Latvia Lithuania Poland Slovenia Slovakia
€m
2004 2005 2006
More than 90 billion Euros in 2007-2013
WHO WE ARE
Company Country
of origin
Sector Location Jobs
LG Philips LCD
South Korea
electronics Kobierzyce 3149
Michelin France Motor-vehicle Olsztyn 520
Heesung South Korea
electronics Kobierzyce 2742
AAM USA Motor-vehicle Oława 361
Cadbury Schweppes
UK food Skarbimierz 500
MAN Trucks Germany Motor-vehicle Niepołomice
650
Sharp Japan electronics Toruń 3000
Bridgestone Japan automotive Stargard 750
Last year: 46 projects, 2 bn Euro, 24 thous. jobs
Poland – key sector locations
Metallurgy & MetalAutomotive
SERVICES
PolandMachinery & Equipment
Electrical Machinery & Apparatus
Bielsko-Biała
Kraków
Łódź
Warszawa
Olsztyn
Poznań
Shared Service Centres in Poland
Wrocław
accounting, taxes, salaries, IT, legal division.
outsourcing of IT services
accounting and finance
accounting and finance
accounting and finance
human resources
transactions services
accounting
outsourcing of IT services, accounting and finance
back office support services
human resources
accounting
accounting, payments (salaries), taxes
human resources
outsourcing of IT services, accounting and finance
Bydgoszcz
global competence centre
Source: McKinsey, PAIiIZ
Kraków
Warszawa
Bydgoszcz
Gdańsk
R & D Centres in Poland
Wrocław
Zielona Góra
Source: PAIiIZ
Poznań
Major Chinese Investors in Poland
G R O U P
Koszalin
Wolka Kosowska
Zyrardow
Warszawa
Gdansk
First Chinese Industrial Park in Europe - established in 2004 - SEZ Koszalin City
Athletic Group - quotes
• "Chinese business will benefit from highly favorable investment conditions in the special economic zones.”
• "We see many advantages in conducting business in Poland. One is its developed market. Another is that producing in Poland enables us to avoid customs barriers and high transport costs.”
• ”We're close to the Western European market, which
creates many possibilities for our companies in future."
Location – Biskupice Podgórne near Wroclaw
Declared investment outlays – EUR 429 mln
Activity - electronics
Wroclaw
LG.Philips LCD factory in Poland
„Poland has a central location in Europe and will soon obtain an excellent transport infrastructure. The nearby city of Wroclaw has a student population of more than 100,000, which means that there will be a steady supply of well qualified graduates for recruitment purposes."
Duke Koo,Executive Vice President of Worldwide Sales from LG.Philips LCD
KrakowRichard Lada Corporate Director CEE Motorola EMEA
“Motorola Global Software Group selected Krakow in Poland as the site for its first European software development centre after reviewing numerous sites on the continent. It based its selection on the availability of highly qualified talent, excellent universities, as well as the positive attitude and assistance of national and local authorities”
Motorola IncLocation - Krakow
Capital invested – USD 1 mln
Plans - USA18 mln
Employment - 250
Activity - electronics
Investor’s opinion
Pierre-Yves Fargeas,President of Shell Poland
”The range of operations performed by Shell's financial and accounting centres requires locating them in places with plenty of well-educated, mobile and foreign-languages' savy people.”
Shell PolandLocation - KrakowCapital invested – USD 27 mlnEmployment - 800Activity – financialand accounting centre
Krakow
Investor’s opinion
Conclusions
Investment Potential
- international ranking- economic indicators
Human Capital
- demographic structure- talent pool
Strategic Location\ Services&Manufacturing Hub
- EU member- bridging East and West- services&Manufacturing hub
Conclusions
Poland = Attractive Place for Investment
on the top of that we offer
INCENTIVES
Conclusions
Incentives:
(i) CIT exemption
(ii) Real estate tax exemption
(iii) Financial grants for strategic investors – tailor made
PL 00-585 Warsaw, 12 Bagatela Street, phone: (+48 22) 334 98 00, fax: (+48 22) 334 99 99; e-mail: [email protected]; www.paiz.gov.pl
More information:
individual talks
PAIiIZ stand
www.paiz.gov.pl