POLAND TODAY magazine #14

The economy needs a caffeine kick, claims top economist in an exclusive interview. page 30

Startups are beginning to be recognised by the mainstream, but could do a lot better. page 64

The Rolling Stones played Warsaw in 1967 and most had never seen anything like it. page 88

PRICE: 25 PLN / 7 EUR

artwork: Tytus Brzozowski (www.t-b.pl)

Capital Ambitions

How Warsaw’s passion to blend old with new is driving a nationwide real estate renaissance pages 36-51

Magazine • Portal • Conferences • find out more at www.poland-today.pl

H1 2017 issue No. 14

2

3

4

5

6

7

8

9

photo: Maciej Jarzębiński (Forum)

Laughter is definitely the best medicine Bringing smiles and fun to some of the places which need it most – children's hospitals.

Czerwone Noski (Red Noses) knows a simple truth, which is that making children laugh while they are ill or in pain, can help drive that pain away. Czerwone Noski clowns are professional artists who bring humour and laughter to children, parents and medical staff. These clowns go into hospitals - always with a red nose – and transform hospital rooms into a small theatre where the children join in the fun. So we can keep doing this, and bring sunshine to the lives of many more children, we need support.

If you would like to help Czerwone Noski, please donate to this account: PL 89 1240 6292 1111 0010 5270 8472, SWIFT Code: PKOPPLPW. To find out more about Czerwone Noski, please visit:

www.czerwonenoski.pl

12

table of contents

EDITORIAL

14

26-27

Macro-economic investments will be key to growth in 2017

16-22

Several factors could influence the future of the Polish economy: from exports, to the presence of international retailers present on the Polish market. But there are other issues such as changes to the judiciary which will likely to also be making headlines this coming year.

POLITICS & ECONOMY

28-29

IN FOCUS

24-25

Exports, retail, legal and foreign policy

The political scene: the last 30-32 election-free Walking year a tightrope Polityka Insight's Wojciech Szacki writes that the tight grip the governing conservative Law and Justice (PiS) party holds on local issues could define the economic and political future of Poland and the EU as a whole.

Four Polityka Insight experts give their analysis of what lies ahead in key areas.

Prof. Elżbieta Mączyńska, president of the Polish Economic Society, speaks to Poland Today about the balancing act the government is performing to help the country's finances move forward.

SOCIETY & CULTURE

34-35

We’re really into you!

Table of contents

Poland is a premier destination for its culture, food, nightlife, sporting events – and the general buzz in the air. As William Tomaney notes, it's with good reason too! But with more and more people venturing off the beaten track, there is still much to discover.

LEADER

36-51

Capital Ambitions

Developers are raising their game with inspiring new projects and bringing a new lease of life to formerly abandoned locations.

While Warsaw is certainly leading the pack, there are striking examples in other cities.

BUSINESS

53-60

Time for Polska

After achieving domestic success, Polish consumer brands and tech companies are making a mark on international markets. New and established businesses are ready to place Poland on the map with their innovative solutions and dedication to quality.

62

Social-media inactive

Top Polish companies and CEOs are falling behind the digital curve, meaning that they’re not ready for a situation when they have to communicate with their customers or clients fast. In fact, only 40% having a LinkedIn page, meaning they have to rely on others to get their message across.

64-65

Starting up the engines

The Polish startup scene pales in comparison with western counterparts, but that only means that the potential for growth is so much bigger!

EDUCATION

66-68

Rising up the rankings?

Where a university sits in international rankings has a major influence on the quality and quantity of foreign students a country can attract. Poland’s positions aren’t particularly impressive. We talk to an English academic and a Polish academic to find out if there’s scope for improvement.

We’re really into you! page 34

Walking a tightrope. page 30

Eyewitness: The 1967 Lorem ispum Rolling Stonesdolor concert Walking tightrope. page xx88 page 30 sitWarsaw. amet. apage in

URBAN ISSUES

71-87

Special focus on real estate for MIPIM

A lot of property changed hands in 2016.

Will 2017 offer more or less of the same?

HISTORY

88-89

92-93

Rowers used to be a common sight on the country’s rivers and waterways before the two world wars, but like the crown on the head of the eagle, they all but disappeared during the second half of the century.

Now the sport is catching on again, especially amongst those of university age.

A round up of conferences either organized or supported by Poland Today

90-91

It happened in… February

During the bleak communist period, the crown had been absent from that proud symbol of an independent Poland – the white eagle. The emblem that had resonated with Poles down the centuries was restored to its head almost as soon as the country regained independence and has stayed firmly there ever since.

Capital Ambitions. pages 36-51

table of contents

Rowing sees a renaissance in Poland

Eyewitness: The 1967 REVIEW Rolling Stones CONFERENCES 96-100 concert in Talking & networking Warsaw When one of the two leading bands of the 60’s came to Poland, it left a deep impression on all who saw them, including Leszek Fidusiewicz.

The traditional order of things at concerts was blown out of the water, and would never be the same again.

13

SPORT

FOREIGN IMPRESSIONS

102

A Nigerian in Warsaw

Despite – surprise surprise – struggling with the language and being refused business loans by banks, Adekunle Ayoola from Nigeria kept pushing ahead and has established his business importing African food to Poland.

Dolorfor Time sit amet.

Polska.page pages xx 53-60

It happened in... February. page 90

14

editorial

Poland Today Sp. z o. o.

ul. Złota 61 lok. 100, 00–819 Warsaw, Poland tel/fax: +48 224648269, mobile: +48 694922898, www.poland-today.pl

The real estate industry doesn’t get its fair share of recognition or praise.

It’s a business sector that has on balance done extraordinarily well for the country over the last few years.

Richard Stephens

Editor’s Note

Founder & Editor, Poland Today

Poland, like any other country, is grappling with economic and social issues which can seem intractable. How to forestall the demographic problems created by a low birth rate that will see the country’s population shrink dramatically in the future? What to do about the growing divide between the wealthier and the poorer levels of society? How to incorporate the benefits of globalization while fending off its more insidious effects? These are some of the questions that leading economist Elżbieta Mączyńska explores in our in-depth interview with her. She makes several pertinent observations, such as highlighting Poland’s seeming inability to harness the potential benefits of the diaspora.

Find out more on page 30. Not everything is intractable of course. On page 34 we take an unashamedly positive look at some of the great assets Poland boasts, including one of my personal favourites – fresh seasonal fruits and vegetables in abundance. Roll on spring! I have spent much of my professional life in and around the real estate market in Poland and it seems clear to me that the industry doesn’t get its fair share of recognition or praise. It’s a business sector that has on balance done extraordinarily well for the country over the last few years, especially in recent times, creating some of the most advanced buildings in the world without ever falling into the major oversupply trap that befall markets in other countries from time to time. There are some fantastic schemes underway or recently built, and we profile our selection on page 38.

Founder & Editor Creative Director

Richard Stephens Bartosz Stefaniak

Financial Director Business Development Director New Business Consultant International Client Director Business Strategist

Arkadiusz Jamski James Anderson-Hanney Tomasz Andryszczyk Toby Hancock Ana Hermoso

Contributing Journalists

Maciej Czapluk Adam Czerniak Hanna Dymek-Jara Bartek Godusławski Maciej Kuziemski Jacek Ojrzyński Olaf Osica Joanna Popielawska David Sands Piotr Semeniuk Wojciech Szacki William Tomaney Monica Zielinski

Cover artwork Photographs

Tytus Brzozowski Polska Agencja Fotografów Forum, Narodowe Archiwum Cyfrowe, Polona.pl Leszek Fidusiewicz, Oleh Diakon

Photo output

Printing house

ArtDruk Zakład Poligraficzny ul. Napoleona 4, 05-230 Kobyłka Poland Today Magazine is printed on Munken Print Cream ecological paper © 2017 Poland Today Magazine reproduction without permission is prohibited

Magazine layout

Bartosz Stefaniak www.madeinPolska.eu

15

16

in focus

Africa

Asia and Pacific

dailynewsegypt.com Polish SEZ to open in Egypt

Xinhua First China-UK freight train passes through Poland

Americas

New York Times EU lawmakers vote to reintroduce visa requirements for American citizens

Global news review

The European Parliament passed a nonbinding resolution that would reintroduce visa requirements for US citizens unless Washington grants visa-free access to citizens of five EU countries – Bulgaria, Croatia, Cyprus, Poland and Romania. The Parliament gave the European Commission two months to take measures toward imposing visas for American travellers. However, some European officials oppose the decision, saying doing so will affect the economy and not necessarily resolve the hurdles citizens of those countries face.

The resolution puts pressure on the European Commission, and the Parliament warned that it could bring the Commission to court if it does not confront Trump’s administration.

Variety New generation of Polish filmmakers grabbing artistic reins

Following the death of auteur director Andrzej Wajda in October, a new generation of filmmakers is emerging into the international spotlight.

Some of them are highlighted by Agnieszka Holland, whose film “Spoor” is showing at the Berlin Film Festival. She lauds Małgorzata Szumowska, who won a Berlin Silver Bear in 2013 with “Body,” and Tomasz Wasilewski, who snared the Silver Bear in 2016 with “United States of Love.” Among the newcomers Holland singles out are Agnieszka Smoczyńska, whose “The Lure” won a Special Jury Prize at Sundance last year; Jan P. Matuszyński, whose “The Last Family” competed at Locarno in 2016; and Kuba Czekaj, whose “The Erlprince” plays in Berlin’s Generation section this year.

Voice of America Coming soon: private mini-satellites from Poland

Researchers in Poland are using off-theshelf technology to create a mini-satellite they plan to offer to scientists, companies and even individuals, for gathering useful data from space. The spacecraft – named “Światowid” after the ancient Slavic god of war, fertility and abundance – is meant to make space exploration available to ordinary people.

photo: Wikipedia

Ahmed Darwish, chairperson of the Authority for the Suez Canal Economic Zone, signed a memorandum of understanding with the Pomeranian Special Economic Zone during a visit to Poland, to create a Polish industrial zone at the Suez Canal area. Darwish met a number of representatives of Polish companies wishing to invest in Egypt in the fields of plastic container manufacturing, construction and others. He expressed his happiness with the visit, which aims to pave the road for the establishment of an industrial zone in the Suez Canal area, which is considered a good addition to the region and existing projects, adding that he is looking forward to more Polish investments in the region.

After its 18-day journey, the first freight train from China to Britain arrived in London in late January. The train departed east China's Yiwu city in Zhejiang province and travelled some 12,000 km before reaching Barking in East London. During its journey, the train passed through Kazakhstan, Russia, Belarus, Poland, Germany, Belgium and France. The cargo on board the train includes various small commodities, such as household items, clothes and bags. The train service is expected to boost the China-Britain trade ties, strengthen connectivity with western Europe, while better serving China's Belt and Road Initiative, the China Railway Corporation said.

Smithsonian Institute Poland searching for last living Auschwitz guards

OANA news Mongolia discusses ¤50m loan from Poland

Europe

Middle East

Deutsche Welle Merkel seeks common ground on Poland trip

Khaleej Times Emirates celebrates four years of flying to Poland

Poland has issued a new database of 25,000 names which lays out details of the SS guards and commanders who carried out some of history's most terrible crimes. The Polish government – now ruled by the conservative Law and Justice party – has banned the phrase “Polish death camps”. The list released by the country's Institute of National Remembrance (IPN) was compiled by historian Aleksander Lasik, and covers personnel of multiple concentration camps built and operated by Nazi German troops in occupied Poland.

During a visit to Poland, German Chancellor Angela Merkel has said the situation in Ukraine remains unacceptable. The German Chancellor also warned against “exclusive clubs within the EU”. The visit marked the German leader's first trip to Poland since a populist government was elected in 2015. With trade between the two countries booming, Merkel's trip has been widely seen as a chance for Berlin and Warsaw to continue nurturing the slowly-improving diplomatic relations. Following a 60-minute talk with Merkel, the leader of the governing PiS party Jarosław Kaczyński said there was a “good atmosphere”. Kaczyński, a politician deeply distrustful of Germany, once said the chancellor's goal was to make Poland “subordinate to its western neighbour”.

BBC Polish government wins standoff over Gdańsk war museum

Poland's government has won a court ruling that will enable it to take over a brand new WWII museum and reshape its exhibition to fit a narrower Polish perspective. The museum in Gdańsk presents the events of 1939-1945 in a global context. It does not give a conventional Polish history of the war and begins with the rise of authoritarian regimes in Europe and Japan after WWI. The $ 12.3 mn (GBP 9.8 mn; €11.4 mn) permanent exhibition, which took eight years to collect, includes an American tank, a Soviet tank and a German rail carriage.

Credit agreement between the governments of Mongolia and Poland was discussed by a standing committee in Ulaanbaatar. According to the agreement, Mongolia is to receive €50 mn loans from Poland with 0.15 percent in annual interest rate. Also, late payment will result in additional 1.5 percent of penalty interest.

The loan is presently planned to be used in agricultural, education and infrastructure sectors of Mongolia. Mongolian MPs said: “The loan capital should be invested in one single beneficial project as it would be more efficient”.

The world's largest plane, the A380 in Emirates livery, touched down at Warsaw Chopin Airport as the airline commemorated the fourth anniversary of the launch of its scheduled services between Warsaw and Dubai. The behemoth was welcomed by hundreds of well-wishers, watching from the airport perimeter. When Emirates launched the route in February 2013, Poland became the airline's 129th international destination. The new scheduled flight opened up enhanced opportunities for business, trade and tourism, strengthening ties between the UAE and Poland and forging a long-standing partnership between the two countries.

Jewish Telegraphic Agency Polish police raid offices of anti-racism centre

Police raided the offices of the Centre for Monitoring Racist and Xenophobic Behaviour in Warsaw as part of a fraud investigation.

The search came at the request of the Białystok prosecutor’s office as part of its probe into fraud, counterfeiting of documents and other offences, Łukasz Janyst, a spokesman for prosecutors in Białystok, told reporters. The antiracism centre said on Facebook that it operates legally and accused Poland of “turning into a police state”.

17

nazwa działu

18

in focus

US army soldiers

attend an official welcoming ceremony in Żagań, western Poland. US troops deployed to Poland as part of the NATO build-up in Eastern Europe. The deployment was considered a diplomatic success

by Warsaw, which fears increased aggression from Russia beyond its eastern border.

Snapshot

Photo by: Kacper Pempel (Reuters)

20 in focus

Polish opposition stages month-long parliament sit-in

When the Rolling Stones played in

Warsaw in the late 1960s, the country was still firmly behind the Iron Curtain, and many who attended were shocked (and delighted) by the rock and roll antics. see page 88

Dozens of opposition MPs from Civic Platform (PO) and Nowoczesna parties staged a month-long sit-in over Christmas in protest of perceived undemocratic practices by the governing conservatives, the Law and Justice (PiS) party, which came to power in late 2015. The issue came to a head during a key debate on the 2017 budget when a PO MP, Michał Szczerba, took to the rostrum to raise the issue of proposed changes to journalists' access to the building. He was excluded from the debate by Speaker Marek Kuchciński, who then announced a recess. Opposition deputies stormed the speaker's platform and remained there for several hours. Meanwhile, Kuchciński decided to hold the vote on the budget in an ancillary room, with the participation of PiS and a handful of opposition MPs from the Kukiz'15 movement – which has a history of supporting the ruling party. PO and Nowoczesna criticised the vote, questioning whether a quorum was met, since media were largely barred from entering and no CCTV evidence from the vote was provided. PiS denied accusations that the vote was rigged, and said that all deputies were allowed to vote. In the days which followed, hundreds of thousands took to the streets in solidarity with opposition deputies who decided to occupy the lower house until the vote was repeated. However support quickly waned, as the two protesting parties starting disagreeing on how to proceed. Days later, the upper house passed the budget bill, which was swiftly signed by the president. PiS leader Jarosław Kaczyński announced that legal action would be taken against the protestors, with officials saying that the MPs could face a prison sentence of up to ten years. The protest was called off just under four weeks after it started.

Polish government not supporting Donald Tusk for EuCo chief The Polish governing party has said that it will not support Donald Tusk's bid for a second term as the President of the European Council. Poland is reported to be the only EU country not to back Tusk, a former prime minister of the country. In a statement issued in early March, PiS said that Tusk had done little to help his own country from his position Government announces in Brussels, and indicated that he had overhaul of security services in fact acted “against Polish interests”.

The country's Foreign Minister Witold The Polish government has announced Waszczykowski put forward MEP Jacek it will overhaul the Government Saryusz-Wolski's name as the coun- Protection Bureau (BOR) following try's official candidate for the position. several high profile incidents involvAt the time Poland Todaywent to press, ing top officials. In February Prime the story was developing rapidly, and Minister Beata Szydło was hospitalised Tusk was still believed to have a strong for a week following a car accident in support base among other EU mem- the south of the country. Local media ber states. But the fact that Poland reported that the convoy she was travis not supporting its countryman, is elling in was well over the speed limit widely regarded as a stumbling block at and the car carrying Szydło had its siren a time when the Union is trying to hold turned off, which is in breach of the law. together in negotiating with the UK over Only weeks earlier, the car carrying Brexit. Ironically, Saryusz-Wolski was an Defence Minister Antoni Macierewicz MEP for the Civic Platform (PO) party was involved in an eight-car pileup which Tusk co-founded and headed while travelling back to Warsaw from until his appointment to the European the city of Toruń some 220 km away.

Council in 2014.

Macierewicz was reported as praising his driver that same trip had earlier taken around 90 minutes. Last year a BMW carrying President Andrzej Duda landed in a ditch after a tire burst.

PiS head Jarosław Kaczyński, said that “significant reforms” are required within BOR, adding that “at present, within this institution, as well as the entire state structure, there is too little discipline and we need to raise it”. The interior ministry added that it would employ an additional 130 BOR officers in 2017 in an “intensive recruitment process”.

21

22 in focus

Rowing is making a comeback in Poland with dozens of clubs mushrooming around the country, harking back to the popularity of the sport before WWII. see page 92

Web app screens internet for ‘Polish death camps’ misnomer The incorrect phrase "Polish death camps", in reference to camps set up and run by Nazi Germany in occupied Poland during WWII, is one that has plagued internet content for some time. It’s been used by presidents and respected news organisations – and despite gaining coverage, the misnomer still slips into stories. Now, the pomozpamietac.pl website has developed a web app which screens the internet for the phrase in both English and more than a dozen other languages.

It conducts real-time monitoring of all online content, including large social networks such as Facebook and Twitter, then shows users where the incorrect wording has been used. The site documents entries, so internet users can check context and react instantly by notifying authors and publishers.

Interactive agency Mint Media, which created the campaign, is encouraging people to voice their objections by adding comments of their own. According to the software’s operators, during the last month the term "Polish death camps" has been used more than 5,000 times on English-speaking sites. This is described as a huge number and, with social media, each false message could potentially reach up to 800,000 people. The pomozpamietac.pl website is a non-profit initiative that encourages "all those who care about Poland’s good image" to become involved, its operators say.

Warsaw to mark 2017 as year of Woodrow Wilson

First solo Polish woman reaches South Pole

In the early 20th century, US President Woodrow Wilson was a strong advocate for an independent Poland, so it is not uncommon to see streets named after him across the country, as well as a square in Warsaw. And authorities have decided the Polish capital will mark 2017 as the year of President Wilson, giving the green light to a proposal by the Ronald Reagan Foundation in Poland.

A number of concerts, exhibitions and seminars will highlight the role of the 28th president of the United States in achieving independence between the two World Wars. Warsaw City Council made the announcement as Poland prepares to celebrate the 100th anniversary of its independence after WWI. Wilson helped Poland regain its independence in 1918, with one of his Fourteen Points, stating: “an independent Polish state should be erected which should include the territories inhabited by indisputably Polish populations, which should be assured a free and secure access to the sea and whose political and economic independence and territorial integrity should be guaranteed by international covenants”. The declaration was signed by Mayor of Warsaw Hanna GronkiewiczWaltz and Janusz Dorosiewicz, President of the Ronald Reagan Foundation in Poland, in the presence of Andrzej Halicki, a Polish MP, and Ewa Malinowska-Grupińska, President of the Warsaw City Council. Speaking at City Hall, Gronkiewicz-Waltz recalled the famous speech by President Wilson on 22 January, 1917, in which he recognised the rebirth of Poland as one of the objectives of the war. Wilson was US president from 1913 to 1921.

For the first time in history a Polish woman has reached the South Pole alone and without support. Małgorzata Wojtaczka, 51, who lives in Wrocław, has become one of the few women in the world to complete the journey, taking 69 days to cover a distance of 1,300 km on foot, pulling a sledge weighing about 100 kg and loaded with equipment and food. She travelled from the Ronne ice shelf at the edge of the continent and reached the South Pole at midday after nearly 70 days, sending out a dispatch announcing, “I have arrived”. Keeping a blog during the journey, Wojtaczka described the freezing -30C temperatures, saying how the combination of chilly winds made the temperatures feel like -46C. A typical post went like this: “There is a lot of fresh snow. I can’t manage to go faster than about a kilometre an hour. Now that the refreshments have run out, during the breaks I eat warm cereal from my thermos.

It gives me energy.” Wojtaczka has taken part in several polar, skiing and sailing expeditions including to the Antarctic, but it was a strong ambition of hers to reach the South Pole. The first unassisted woman to get to the South Pole was Norwegian Liv Arnesen, who skied there in 50 days in 1994. The first Pole to reach the South Pole alone was Marek Kamiński in 1995.

23

24 politics & economy

PiS leader Jarosław Kaczyński (right) is merely an MP on paper, but plays a much greater role in Polish politics, with top officials like Justice Minister Zbigniew Ziobro (left) often turning to him for advice.

‘Kaczyński’s ultimate goal is to change Poland’s constitution and institute a more centralised state, thereby facilitating his party’s hold on power. ’

The political scene: the last election-free year As Polish political parties get in gear for another electoral season next year, cracks could start to show in the upper echelons of the country's political elite.

slowly be getting ready for an electoral marathon starting with the local elections in autumn 2018. The things to watch are the reform of the judiciary, the implementation of the so-called Morawiecki plan, Prime Minister Szydło’s position and the state of the opposition. And Kaczyński.

Most foreigners still have to get used to something that Poles have become quite familiar with – that in Polish politics the actual pecking order is a lot different from a formal hierarchy. Today it’s perfectly clear that the most powerful figure in the state is the leader of the governing Law and Justice (PiS) Jarosław Kaczyński. Although theoretically just one of 460 MPs, within his party he is usually referred to as “Prime Minister” (he served in this position between 2006 and 2007) or – less formally – “chief of state”. Knowing the actual role of Kaczyński is the key to understanding Polish politics.

He decides on the strategy not only of his party, but also the government, formally led by Beata Szydło. Even foreign leaders like Angela Merkel know that Jarosław Kaczyński is the person to talk to when visiting Poland.

The kingmaker Kaczyński holds more power than any Polish leader since the fall of communism. In 2015 his party took control over key political institutions, winning both the country’s presidency and an overall majority in parliament, something no party has achieved since 1989. Kaczyński wishes to further increase his sway over the country, and this will be the theme driving Polish politics in 2017.

In late 2016 PiS managed to install its own judges in the Constitutional Tribunal – which gives the final say on whether legislation is within the confines of the constitution. The previous head of the Tribunal, a vocal critic of the government, had blocked some laws, leading to a public battle over the independence of the court. As it stands, PiS – with a majority in both the lower and upper houses, the presidential palace, and alleged control of the Constitutional Tribunal – could use this power to pass controversial laws aimed solely to further its own agenda.

Ignoring pressure from the European Commission and the Council of Europe to respect its independence, PiS staffed the Tribunal with deferential judges. The year 2017 will see judicial reform aimed at controlling regular courts. The government already has direct oversight of the prosecutor’s office enabling PiS to close unwanted proceedings and initiate politically expedient ones. The ruling party has taken control over the state media and is considering measures to limit private outlets through limits on foreign capital. PiSfriendly media have run a vicious campaign against liberal NGO, and PiS is also working on a new electoral law, which will probably limit the number of terms for which mayors will be able to serve. Some other changes in the electoral law, including the alteration of constituency boundaries of cities such as the capital Warsaw, are also expected.

The government will focus both on its social agenda and on implementing the Sustainable Development Plan prepared by deputy PM Mateusz Morawiecki. The plan is centred around, among other issues, reindustrialisation based on new industrial sectors, support for investment growth

politics & economy

and enhancing export growth. One of the most significant changes in 2017 will be the abolition of middle schools, a move which has provoked strong opposition among teachers. The government will continue to introduce other social reforms, such as “Home+”, a key social programme to build housing for rent at affordable prices.

Polling strong in Poland Although PiS has a history of axing a lame-duck PM to replace them with Kaczyński, the current head of government appears to be here to stay... at least for now.

A major reshuffle of the government seems unlikely at present. Beata Szydło, who has an approval rating exceeding 50 percent, is the second most popular Polish politician, trailing only president Andrzej Duda. According to recent polls, the whole cabinet is enjoying the strongest support since Szydło took her post in late 2015.

The Prime Minister has also proved her loyalty to Kaczyński, who is probably the only person who could replace her and remains the supervisor of the government. Only a major political crisis, compounded by plunging support in the polls or significant protests from various social groups might lead to Szydło's dismissal. PiS is polling high (c. 40 percent) on the back of anti-elite rhetoric and fulfilled electoral promises, first and foremost the child allowance scheme from which Polish families get monthly payouts. The government still has to find long-term financing for the project, but it won’t stop new promises coming to fruition in 2017: the retirement age will be lowered in October, securing support for PiS among early pensioners.

Looking ahead What about the rest of the political arena? 2017 will be a testing year for the opposition, which has had a difficult time finding its voice and sense of direction. The centrist PO (some 20 percent in the polls), which had ruled Poland for the previous eight years, has lost almost half of its supporters and new leader Grzegorz Schetyna is still learning how to manage a divided party. The liberal Nowoczesna – now third in the polls – headed by former economist Ryszard Petru, lacks experience and is yet to present its full agenda.

PO and Nowoczesna will continue to compete with each other, even though their voters expect them to unite, with the recent Sejm crisis (see page 20) exposing the opposition leaders' inability to cooperate. The third big opposition player, the Committee for the Defence of Democracy (KOD), has found itself in a deep crisis due to revelations that some funds collected by KOD were transferred to a company owned by the wife of its leader Mateusz Kijowski. So government opposition is likely to remain weak in 2017, divided and leaderless. Additionally, following the PiS takeover of the Constitutional Tribunal, PO, Nowoczesna and KOD lack political fuel to protest as often and in such huge numbers as in 2016. Kaczyński’s ultimate goal is to change Poland’s constitution and institute a more centralised state, thereby facilitating his party’s hold on power.

But to amend basic law, PiS needs to gain a constitutional majority in the 2019 general election. For now, this seems to be too tall an order. by Wojciech Szacki

Wojciech Szacki

heads Polityka Insight’s political desk.

He is responsible for party coverage and maintaining relations with PO and PiS. He also prepares PI’s daily political briefing.

From 2002 till 2012 he was a journalist at Gazeta Wyborcza where he followed party politics and public opinion polls.

He is a Law graduate from the University of Warsaw.

photo: Adam Chelstowski (Forum)

In 2017, political parties will

25

26 Politics & economy

Macroeconomics: Investment will be the key to growth in 2017 Polish GDP growth disappointed in the second part of 2016, but could increase slightly this year.

According to Polityka Insight’s forecasts the growth rate

Adam Czerniak,

Chief economist at Polityka Insight, where he heads the macroeconomic desk and conducts tailored research on wealth, consumers and the housing market. Czerniak is also assistant professor at the Warsaw School of Economics (SGH).

will top at 3.4percent in Q3 2017 and then return to below three percent, averaging out at 3.1 percent compared to 2.7 percent in 2016. Falling investment outlays, lacklustre consumption growth – despite a spike in household incomes connected to the 500+ plus programme – and no contribution to growth from the external sector, led to an economic slowdown from 4.3 percent GDP growth in Q4 2015 to 2.5 percent in Q3 2016. The gloomy picture was only slightly more colourful thanks to better-than-expected data for the last quarter of 2016 – the flash reading showed a slight uptick in GDP growth to 2.7 percent, most likely thanks to a rebound in investment dynamics and a larger Christmas spending spree.

Economic sentiment should continue to improve throughout 2017, but GDP will accelerate only marginally. There is, however, large uncertainty about the exact pattern of GDP growth in the forthcoming quarters due to a high dependence of economic sentiment on the timing of EU funds disbursement, which will have an influence both on public and private investment outlays. Most important for economic growth will be the start of the government’s infrastructural projects managed at the central level, like construction of new roads and railway maintenance. This type of public investment causes a positive demand increase for construction and many manufacturing companies.

As a result these firms also extend their capital formation spending and increase their labour demand in order to have a larger production capacity. This multiplier effect gives a big push to the economy. According to government declarations, this year infrastructural investment outlays should amount to a similar level as in 2016, with a tendency to increase in the second half of the year.

However, these declarations need to be treated with caution, as the government might experience some further delays in disbursing EU funds, due to larger red-tape obligations than in the previous budget perspective, and more scrutiny inside public agencies that deal with large infrastructure projects. EU funds also matter for investment by large private companies and local government units. The former are awaiting the start of tenders for EU funded projects with ready-to-implement investment strategies. This is especially the case in the ICT sector, where companies have plans to improve their broadband internet infrastructure with the use of external funding. Large investment projects are also on the table in the energy sector. Electricity

producers are planning new power plants and an extension of their energy grid. At the same time refineries are willing to increase their petrol production capacity. The lowest eagerness to invest is among small and medium enterprises, which, despite a large financial cushion, are afraid of the increasing uncertainty. They fear more frequent administrative controls, a higher tax burden and unstable demand due to the switch in government economic policy.

The second, much more predictable factor that will boost economic growth in 2017, is private consumption. Coming as a surprise to many economists, households decided to save a large share of the child-benefit transfer, especially through reducing their outstanding debt in the form of consumer credit and payday loans.

Another part of the 17 bn zł transferred to households had been parked in saving accounts, increasing households financial safety nets.

Private spending As a result, only up to one-third of the benefits were spent on consumption, and mainly in the last quarter of 2016, when households decided to increase their expenditure on education and recreation with the beginning of the school year. Also, some households decided to spend a share of the 500+ government payout to buy more Christmas presents and groceries. In 2017 and 2018 we will see the delayed effects of the 500+ programme, as households decrease their propensity to save to their initial levels, and taking up more short-term loans for consumption purposes. This consumption-growth smoothing will bring a positive contribution to GDP growth for a longer period, boosting consumption even after the higher income dynamics fade out. Furthermore, in the forthcoming quarters, private spending will also be driven by higher wage growth, all-timehigh consumer sentiment and a falling unemployment rate.

Summing up, consumption will be the second most important driver of economic growth in Poland. Despite a solid growth in exports, the external sector will drag on GDP due to accelerating demand for foreign goods. An increase in investment activity, especially larger outlays on equipment, will boost imports, as many capital goods used in Polish companies are made in eurozone countries, or even outside the EU. Also, a further uptick in consumption, together with a largely constant EUR-PLN exchange rate, will also support imports. Hence, after a couple of years of improvement in Poland’s trade balance, 2017 might see a slight deterioration in net exports. by Adam Czerniak

‘In 2017 and 2018 we will see the delayed effects of the 500+ programme’

27

Politics & economy

GDP growth forecast (y/y)

Q1/2017

Q2/2017

Q3/2017

Q4/2017

2017 yearly average

by Polityka Insight:

+3.3%

+3.2%

+3.4%

+2.5%

+3.2%

Gross capital formation forecast (y/y)

Q1/2017

Q2/2017

Q3/2017

Q4/2017

2017 yearly average

+0.5%

+3.1%

+0.1%

by Polityka Insight:

Exports forecast (y/y)

by Polityka Insight:

-4.3%

-2.6%

Q1/2017

Q2/2017

Q3/2017

Q4/2017

2017 yearly average

+6.8%

+4.3%

+6.1%

+5.2%

+5.6% The 500+ programme was a cornerstone

Imports forecast (y/y)

by Polityka Insight:

CPI inflation forecast (y/y)

by Polityka Insight:

Unemployment forecast by

Polityka Insight:

Q1/2017

Q2/2017

Q3/2017

Q4/2017

2017 yearly average

+8.1%

+6.5%

+7.6%

+5.3%

+7.0%

Q1/2017

Q2/2017

Q3/2017

Q4/2017

2017 yearly average

+2.0%

+2.4%

+2.4%

+1.8%

+2.1%

Q1/2017

Q2/2017

Q3/2017

Q4/2017

2017

8.5%

7.4%

7.0%

6.5%

6.5%

of the election pledges of PiS ahead of the 2015 general election, leading to the government under Prime Minister Beata Szydło (pictured) to sweep to power.

28 politics & economy

Polityka Insight

partnered with Poland Today to provide a prognosis of what issues will be making the headlines in business and politics over the coming year.

Exports: between protectionism of the West and crisis in the East

The retail sector: difficult times could lead to M&As

The legal system: a power struggle for the judiciary

Although Poland’s exports are at their highest since 1989, the political situation to the East and to the West could curtail their growth.

After the 500+ programme which spurred consumption, morale isn’t very high in a sector which is waiting for legislation that will most probably dent its profits in the years ahead.

A new set of laws on the functioning of Poland’s legal system is on the table, with the ministry wanting to exert more power over judges.

Among exporters’ concerns are Brexit, regulations coming from Brussels, the crisis in Ukraine and the economic situation in postSoviet states. Early data published by Poland’s Central Statistical Office (GUS) shows that Polish exports in 2016 hit their peak, reaching €183 bn. This is a 2.3 percent growth year-toyear and a surplus of €4.8 bn, up from €3.7 bn in 2015. This third consecutive surplus resulted not only from low commodity prices but also – and perhaps more importantly for the future of Polish trade – from the growing number of Polish companies looking for business opportunities abroad.

British retailer Tesco is said to be reviewing its options on the Polish market. Some M&As could follow suit. The departure of Tesco’s managing director in February renewed speculation about a possible sale of the British group’s assets in Poland. Finding a potential buyer would not be easy for the retail chain: instead of an acquisition, other chains may simply choose to wait until Tesco frees attractive office space, for instance in shopping centres. The decision of the British owners of Tesco would also be influenced by a model of trade relations between the EU and United Kingdom, one that would take shape during Brexit negotiations.

The terms and conditions of Brexit are still unknown., but it will have a significant direct effect upon Polish exporters and the Polish trade surplus of €6.8 bn. The introduction of customs duties would hit Polish exporters who compete on the UK market primarily by price. The automotive, machine, food processing, furniture and household appliances sectors would suffer most. Polish exporters could also be hurt by non-tariff barriers and the decline of the pound. A decline in exports will also have a direct effect on the profitability of Polish logistic firms, for which transport to the UK constitutes 20 percent of operations.

The Polish retail market is relatively concentrated with Carrefour, Auchan and Tesco competing in the hypermarket sector and large discount chains (Biedronka, Lidl) undercutting the rest of the competition. Poland also has a well-developed sector of convenience stores dominated by Żabka (recently sold to Private equity fund CVC Capital Partners for over €1 bn) and chains belonging to the Portuguese Eurocash group. Intense competition might lead to M&As, other than a potential exit of Tesco.

The European Commission is looking at a number of regulations which are intended to put an end to so called “social dumping” of Polish companies which provide services to EU markets. These include the extension of foreign posting regulations to include truck drivers, potentially harmful for Polish transportation companies. The Commission is considering a scenario in which drivers would be treated as posted workers after working nine days a month in a country different than the company’s headquarters. The requirement would necessitate signing separate contracts with drivers for each country in which the monthly limit is reached, leading to increased administrative costs for transport companies, increased costs of employing additional legal help, and accountancy costs for preparing contracts in line with country-specific regulations.

The economic crisis in Russia, Ukraine, Belarus and Moldova has resulted in growing poverty and shrinking consumer markets. This trend continues in the post-Soviet Community of Independent States. Whereas the share of Polish export to V4 – also including the Czech Republic, Slovakia and Hungary – reached 12 percent in 2016, for CIS it stands at 5.6 percent.

To summarize, the tense political situation in Europe and beyond, as well as the potential rise of populist and anti-European groupings in France, Italy and the Netherlands, wars to the east and south, and Donald Trump’s “America first” policy will all contribute to a growing sense of anxiety and uncertainty among the business community in Poland. Polish exporters and investors have to prepare themselves for a roller-coaster ride.

Olaf Osica is Polityka Insight’s director for risk assessment. He holds a PhD in social and political science from European University Institute in Florence. He is a former visiting fellow of the US State Department, Ministry of Foreign Affairs of France and of GFPSPolska. From 2011 until 2016 executive director of the Centre for Eastern Studies (OSW).

The market is also closely following proposed legislative changes that would further reduce margins. The government and the European Commission are still locked in a dispute over the retail tax. The tax was suspended by the Ministry of Finance in September 2016 as a result of an injunction issued by the Brusselsbased Directorate General for Competition.

The Commission claims that a high tax-free amount (17 mn zł a month) and the tax's progressive nature (0.8 and 1.4 percent of revenue) can constitute illegal state aid. The government is ready to fight the Commission in the European Tribunal, but in the meantime it can reshape the tax to alleviate the concerns from Brussels, for example by introducing a flat 0.8 percent tax rate.

Another significant upset that could hit retailers is the draft law banning Sunday trading prepared by the Solidarity trade union. It is currently subject to the works of a parliamentary committee, but the government should present its official position about the draft by the end of H2 2017. MPs will almost certainly change some details of the draft legislation, with an exemption of terminals at ports and airports from the ban, for example, seemingly a foregone conclusion. It is also highly likely that individual franchisees who are currently covered by the ban, will be allowed to work on Sundays.

An increase of retail workers’ minimum wage instead of a ban is also an option.

Piotr Semeniuk heads the legal desk at Polityka Insight. He is responsible for monitoring legislation, court rulings and acts of Polish regulators. Prior to joining Polityka Insight he worked at top legal offices in Warsaw.

Piotr cooperates with the Centre for Antitrust and Regulatory Studies of the University of Warsaw and often publishes articles on antitrust and consumer protection law. He is an attorney-at-law of New York State, he holds a PhD in law from Jagiellonian University and an LLM from New York University.

This conflict could be one of the more important, if less mediatised, battlegrounds over the rule of law in Poland. Draft legislation that aims to strengthen the position of court directors was submitted to Poland's lower house in the last days of 2016. According to the proposal, each activity of a chief justice that results in financial consequences that are not included in the financial plan would necessitate a prior approval from an appropriate director. The directors would be independently appointed by Justice Ministry Zbigniew Ziobro (currently, the ministry does so at the request of chief justice).

Mr. Ziobro would also like to restrict the powers of chief justices or department heads with regard to selecting the make-up of adjudicating panels. The ministry is planning to create an IT system of automatically selecting adjudicating panels, managed by the ministry.

Furthermore, in January Mr. Ziobro proposed the setting up of an autonomous disciplinary chamber at the Supreme Court which would consider disciplinary issues concerning judges (including the Supreme Court ones) and prosecutors, as well as advocates and legal advisers.

The chamber’s head would be appointed by the president at the request of the general assembly of the chamber's judges. This tool is meant to discipline judges – it was preceded by the amended law on courts that came into effect on 1 January. It includes a new disciplinary penalty: lowering the salary by 5–20 percent for a period of 6-24 months.

It would also make it more difficult for judges to take up additional employment, for instance at universities. A formal acceptance of a judge’s request to seek such employment would be necessary. Currently, they merely need to declare the fact. In addition, Mr. Ziobro wants to extend a catalogue of information on the judges’ income, which they have to include in their declaration of assets – since the beginning of the year, such declarations have to be published online on court websites. The minister also wants to limit the number of judges holding functional positions (currently there are 4,000 of them, out of a total of 10,000).

The list includes department heads or court inspectors, which would result in the judges losing functional allowance.

The National Council of the Judiciary (KRS) would now mainly be involved in presenting the president with requests for judges’ appointments. Currently, only eight members of a 25-person strong council are not judges.

Mr. Ziobro would like to create two chambers in the council – one consisting of judges, the other one including MPs. All KRS resolutions would have to be approved by both chambers.

The council would present the president with at least two candidates for a single position of a judge. The changes are included in draft legislation submitted by the ministry, which is currently held up in public consultations.

Maciej Czapluk is Polityka Insight’s legal affairs analyst. He has experience both in the private sector as well as public administration. Previously he worked in PGE Energia Odnawialna S.A. and the Chief Sanitary Inspectorate. He studied law at the University of Warsaw.

Foreign policy: Poster child no more Once a European favourite, Poland has become a thorn in side for Brussels. According to the European Commission, the government’s rule is not a rule of law by EU standards, straining relations between the bloc and Poland's conservative government. At the same time Poland is trying to take the initiative. Jarosław Kaczyński has a plan for Europe – what he needs is like-minded allies.

The landscape of the Polish retail market

could change dramatically over the next few months, especially if Tesco leaves the country.

In January last year Brussels launched a special procedure against Poland hoping it would make the PiS government withdraw from its most controversial decision concerning the Constitutional Tribunal. As it hasn’t, Brussels is now in a tricky situation between giving Warsaw underserved leeway or trying to fight it on issues it does not have a clear competence over. PiS wants to see the EU reformed – Kaczyński is calling for power to be moved back to capitals, national parliaments to regain influence and decisions on matters of energy and migration to be taken unanimously.

Regardless of this, support for European integration remains very high.

Often referred to as Europe’s enfant terrible, Hungarian strongman Victor Orbán inspires Kaczyński, for whom Hungary is the best example of how to stand up for “European democratic standards.” The Polish government would like to set up a CEE bloc including Hungary in order to fight for what it sees as longneglected interests of the region. Still, this concept is not entirely carried by Hungary, which has its own strategy of looking for partnerships with Russia and Turkey. Poland and Hungary’s views on many issues differ – not least in areas prioritised by Warsaw, for example the Russian invasion in Ukraine or energy policy. At the same time, Warsaw has Budapest’s back when facing criticism from EU institutions.

After years of strengthening Polish-German ties under the PO-led cabinet (in government between 2007 and 2015), times have changed for relations between the two countries. In internal debates PiS’s rhetoric is strongly antiGerman. Conversely, fears of isolation (in an increasingly hostile international environment) push Warsaw to look for rapprochement with Berlin. However, old differences remain, the main one being climate and energy matters – Poland depends on coal and opposes the EU’s climate policy, whereas Germany is pushing for renewable energy sources and deeper CO2 emission cuts. Warsaw counts on more solidarity in gas supply matters, while Berlin supports the construction of the Nord Stream II pipeline that links Russia with the West, bypassing Poland and Ukraine.

Britain was among the first EU countries to open its borders to workers from new member states. Almost one million Poles took the opportunity and settled in the UK. Warsaw supported London’s push for deepening the single market, and both countries shared views on the Ukrainian crisis and security issues. Upon taking power, PiS identified Britain as Poland’s strategic ally in the EU – only to find it heading for the exit six months later. Bilateral relations tense up in 2017 as the UK starts its Brexit negotiations and will inevitably use EU residents’ benefits on the isles as a bargaining chip.

Joanna Popielawska heads the European Affairs desk at Polityka Insight. A graduate of European Affairs at Collegium Civitas in Warsaw, between 2007 and 2013 she worked in the European Parliament, focusing on internal markets, as well as constitutional and foreign affairs. She is a former advisor to the minister of administration and digitisation.

29

politics & economy

Britain was among the first EU countries to

open its borders to workers from new member states. As many as a million Poles now call the UK "home".

New laws relating to truck drivers could lead

to increased administrative costs for transport companies, increased costs of employing additional legal help, eventually affecting consumers (for more see Exports section).

The PiS government has tightened

its grip on the judiciary, allegedly limiting the freedom of judges nationwide (for more see the Legal System section).

30 Walking on business

a tightrope

Prof. Elżbieta Mączyńska, President of the Polish Economic Society, says Poland's economy needs a shot of caffeine, like a monrning coffee.

Last year brought a significant slowdown in the GDP growth rate in Poland, mainly due to a decline in investments. Is this a cause for worry, or just an effect of the break between two EU budget forecasts?

Prof. Elżbieta Mączyńska: It’s crucial to draw conclusions and look for answers to the question of why the slowdown occurred, and whether it affects other economies as well. We have to consider whether, and to what extent, the slowdown was determined by internal or external causes. It’s worth noting, for example, that the World Bank recently raised its 2017 GDP growth forecast for Poland. Most experts forecast that this year will be good for Poland in terms of GDP growth. But we can only be moderately pleased by this, just as we should be only moderately worried by the slowdown. After all, to a certain extent the acceleration in the growth rate is the result of the low statistical base last year. But primarily, the downturn in investments is the consequence of a pause in the use of EU funds, and for this we can blame both the previous and the present governments. Those are internal factors.

Can we look at the last year as a sad sequence of events?

I wouldn’t treat it that way on any account. Our economy suffered a collapse in investment, and that always brings on a slowdown. However, the slowdown in GDP growth would have been much more serious if not for assistance in the form of private consumption, and that was reinforced by the 500+ [government social aid] programme. Also important is an increase in household purchasing power as a result of increasing salaries and deflation. This is all the more important in that Poland’s existing model for development, based on low wages, has not only exhausted itself but has begun to harm the economy. First of all, it constitutes a barrier to innovation – high wages, contrary to low wages, encourage businesses to seek alternatives to increased employment. In terms of the labour market this can be a problem, but not in Poland, because unfortunately Poland is suffering from a demographic collapse, meaning a low birth rate and a declining number of people of working age, plus emigration.

‘It is important today to build up domestic capital.’

Surely demographic problems aren’t the best way to drive innovation?

According to forecasts by the Government Population Council and others, Poland’s population will decrease by about 4.5-5 million by 2050. That’s a very big loss. The fertility rate currently averages 1.3, while for the population to remain constant it should be 2.2. A bigger problem, how-

ever, is not the falling population, which his publications in which he showed that such conditions, demand does not dramatically worsens the demographic a socialist, non-market economy is an keep up with supply, resulting in marstructure, including by reducing the economy of perpetual shortages. Today, ket excesses and the foundation is laid number of people of working age. however, he points to the threats result- for crises or a permanent weakening in The only social group that is growing is ing from the economy of excess that the tempo of economic growth. In such seniors. And this entails future budget is characteristic of countries with free- a situation, symptoms of the economy problems. In terms of market poten- market systems. An economy of excess of excess and deflationary tendencies tial, the seniors group isn’t very attrac- inevitably leads to a waste of resources. intensify. The risk of secular stagnation tive, because Poland lacks a developed Certainly, given a choice between the increases in a situation where growth 'silver economy', that is, an economic two, an economy of excess is bet- in production, driven by technological policy aimed at activating seniors and ter than an economy of shortage, but progress, does not go hand in hand with their resources on the market. There that doesn’t mean that in an economy growth in purchasing power. The loomare still no market solutions that are of excess it’s the customer who rules. ing crisis of globalisation and the growsenior-friendly, such as reverse mort- The fierce struggle among producers ing tendency towards protectionism gages, mortgage loans and life annui- for the market, for buyers, means that constitute an additional barrier when ties. Current solutions are not beneficial various methods are employed in order seeking new markets and purchases of and secure enough for seniors; in fact to gain them, including ones that harm goods and services. Naturally, Poland consumers. To mention just a couple of is not exempt from this type of threat. they tend to put seniors off. examples: advertising, which is irritation The shaky growth rate in many counLet’s get back to the condition of and an eyesore; as well as the increas- tries, including those in the eurozone, the economy today. Is basing growth ing phenomenon of corrupt products, will certainly have an adverse effect on on consumption rather than investironically described as 'gold-plating the Polish economy. The more open the products' or 'anti-features'. The latter economy, the greater the effect. ment heading in the right direction?

Of course it isn’t. Everyone knows deliberately limit the yield and durabilthat a condition of long-term, stable ity of equipment, especially items used Can we somehow separate the growth is investment. This is all the regularly, in order to drive demand for influence of external factors on more important in that in Poland we are new products. the slowdown in Poland from dealing with a liquidity trap, that is, a sitthose we’ve cooked up ourselves? uation where businesses have money, So now we know that Poland Of course those factors are conbut don’t invest. And why not? Because engineered its own slowdown. nected. One of the internal factors is the they haven’t got enough motivation to What about external factors? political situation. Yet, it turns out that decide to invest, or clear, encouraging Since at least 2013 there’s been a dis- Polish entrepreneurs are quite tough, enough prospects for seeing a satisfac- cussion going on in the US that was resistant to changes in the political sittory rate of return. In the second case, started by Prof. Lawrence Summers. uation; they know how to adapt, whatdeflation has had an adverse effect. Actually, he referred to a publication ever happens. And this is an important One can discuss at length when and by Alvin Hansen from 1938. A discus- competitive advantage of Polish comfor whom deflation is beneficial and for sion on the subject of secular stagna- panies. This ability to adjust to change, whom it isn’t. But even when it’s com- tion. Summers and other economists, including political turbulence. In some bined with a reduction in costs, defla- including Nobel laureate Paul Krugman, measure, one can look on this adapttion still has a discouraging effect on point to the growing risk of an absence ability and flexibility of producers as a producers. This has been proven by the- of prospects for strong growth. To some legacy of the previous system, which ory – especially behavioural economics extent, that hypothesis is being con- was extremely unfavourable towards – and practice. So after a long period of firmed today, and is related to increas- enterprise. The harsh conditions forced obstinate deflation, we should be glad ing social inequalities. This in turn is producers to be flexible. This doesn’t when inflation appears, and there’s no a consequence of fetishising economic mean, however, that political instabilreason – at least for the moment – to growth while at the same time neglect- ity or a bad political situation are not lament over rising prices if that growth ing the issue of social progress. Under harmful. Practice shows that compadoes not exceed the 2.5 percent inflanies are ready to cooperate with any tion target set. Such moderate inflation political party, and are able to skilfully separate politics from business. For the is invigorating for the economy, like a morning coffee, where deflation has economy, this is certainly a benefit, although it may sometimes be seen a numbing effect. A further problem, not only for Poland, is that symptoms as a sign of conformism. of an economy of excess are appearing.

Are we still an economy capable of attracting capital and investors who are not just looking for a quick profit, but are ready to make green field investments?

You mean demand is lagging behind supply?

That’s right. On the one hand, this results from progress made in technological production, which has overtaken the growth in the population’s purchasing power, while this in turn is tied up with a great asymmetry in the distribution of wealth and social inequalities.

In Poland, and in all free-market economies today, it would be pretty hard to find an example of a product or service people are queuing up for, even in the face of post-consumerist activities.

The Hungarian economist Prof. Janos Kornai became famous decades ago for

Elżbieta Mączyńska

Prof. Mączyńska is the president of the Polish Economic Society. She is a professor and the head of the research institute of enterprise of bankruptcies at the Warsaw School of Economics. She is a member of the National Development Council to the President, a member of the forecast committee “Poland 2000 Plus”, and a member of the Institute of Economics of the Polish Academy of Sciences. She was also the secretary of the Committee of SocioEconomic Strategy at the Council of Ministers.

The example of the latest investment in Poland by Mercedes Benz Cars of about 500 million euros says yes.

The Polish economy is mature enough that it can and should place demanding conditions on investors. We are an attractive economy for investors, especially because we are a large market that is still receptive. We also have welleducated personnel, cultural values, and better and better infrastructure.

Those values, combined with the matu-

31

politics & economy

32

nazwa działu

rity of the market, are factors that in the near future should support restrictions in special economic zones. This is a complex problem in relation to estimating costs and benefits, but there’s a lot to show that the benefits have not always been satisfactory. It requires serious consideration and very detailed analyses, particularly in terms of creating better conditions for activating domestic capital.

is paid in the SRD to the co-op sector.

Throughout the period of transformation, that sector was treated a bit like an unwanted child. To some extent this is the legacy of the socialist system, in which co-operatives sometimes became caricatures of themselves. Yet, co-operatives can constitute an important element in activating local capital and developing social capital. They can also constitute an additional, stabilising, anti-crisis economic force. This is confirmed by experience in Germany and Scandinavia. Despite these and other shortcomings, I see the Strategy in a positive light. Even if not all of its goals can be achieved, even the partial implementation of them will have value and a strategic dimension, in line with the saying, 'He who has begun is half done'.

Do you agree with deputy Prime Minister Mateusz Morawiecki that we don’t need foreign capital in Poland to exist, famously using the expression 'capital has a nationality'?

Bartek Godusławski writes about top-

ics related to public finance, monetary policy and financial markets. Since 2015 he has worked for leading daily business newspaper Puls Biznesu. Before this, he was deputy head of macroeconomic unit at Polish Press Agency (PAP) for two years. In 2016 he received the Grand Press Economy award for the best economic journalist in Poland.

Foreign capital is important, and very necessary to Poland, but not at any cost. The highly preferential conditions foreign capital obtained in Poland during the initial period of transformation were maintained for too long, and often without taking account of the full balance of benefits and costs. Simplifying somewhat, metaphorically, we can speak of the assembly hall syndrome as the dominant form of foreign investment. This together with the syndrome of an insufficient domestic rooting of foreign investments and foreign capital, meaning ease of capital emigration and an increased risk of economic destabilisation. That’s why it is so important today to build up domestic capital. After all, it’s hard to ignore the fact that capital does have a nationality. I’m a supporter of the Strategy for Responsible Development (SRD), though I have many reservations about the programme. But I agree with the direction it takes, and I believe that, almost 30 years after the transformation, it’s high time for a greater activation of domestic capital. If every year tens of billions of złoty are draining out of the country in the form of dividends, share of profit or interest, there’s something to fight for. So I’m not surprised when Mateusz Morawiecki says that, while Poland’s debt is slightly over 50 percent of GDP and Japan’s is over 200 percent, he’d prefer the latter. And why not? Because the government of Japan is in debt to its citizens, and it’s paying interest to them, and in that way domestic capital resources are increased.

So why do we have to build our growth on increasing participation of the State in the economy, on a growing deficit? Is this the right direction?

With a budget deficit of around three percent of GDP, as it is now, we are walking a tightrope. There are many threats to our maintaining a balance in public finances, but at the same time certain reserves do exist. A document like the SRD helps identify long-term directions and socio-economic goals for the development of the country. By the

‘Moderate inflation is invigorating for the economy, like a morning coffee.’

But this is not the first long-term plan to have been undertaken

by Polish governments over the last quarter-century since the fall of the Iron Curtain. And the fate of the others has been quite paltry.

That’s why we have to draw conclusions and consider why the strategies of Grzegorz Kołodko, Jerzy Hausner, Michał Boni and the rest were never achieved. A number of factors contributed. Certainly one of them was a strategic discontinuity as a consequence of changes in government. Each succeeding government worked out a new nature of things, this does not concern strategy, ignoring the strategic work of operational activities. Certainly, given its predecessors. That’s why it’s worth financial and other limitations, not all of noting that in the SRD, previous stratethe goals set forth in the SRD can be gic documents have been incorporated, achieved in full, but even a partial imple- distinguishing this document from the mentation will bring us closer to them. others. No doubt the SRD’s biggest Some of them require an initial impulse weakness is the lack of clarity in its from the State. The electromobility description of how the goals accepted programme is one of these. The expe- can be financed. Despite what is cerrience of other, more developed coun- tainly a good diagnosis, a shortage tries proves that State support here is of sources of financing can be a barjustified. For example, in France, under rier to the implementation of the SRD. their electromobility development pro- The strategies of previous governments gramme the State subsidises citizens were constructed almost solely in terms for pro-ecology solutions, which initially of using EU funds, and that was their causes an increase in expenditures, but weakness. In contrast, the SRD places gradually brings measurable benefits, great emphasis on activating domestic while those outlays are returned, say, capital. That’s why one of the importhrough reductions in smog and health- tant issues for the success of the SRD care costs. Someone has to get the pro- is that the financial assistance process started. If private investors won’t, vided to various entities should mainly it has to be the State. And those are the be in the form of repayable assistance. assumptions and goals of the SRD. Because as practice shows, non-repayable assistance can prove destructive, You mentioned that you support the demobilising. Whereas the repayabilMorawiecki plan, but don’t like every- ity of financial assistance ensures that sources of financing never dry up. This thing in it. What are its weak points?

There are no clear foundations in the was confirmed in Germany, among Strategy for using the 20-million strong other places, in connection with the Polish diaspora, mainly, though not assistance obtained under the Marshall only, to promote Poland and the Polish Plan. Those funds, granted to busieconomy abroad. Such a large dias- nesses as repayable assistance, are still pora represents an enormous potential functioning today as an assistance fund in social capital that is still insufficiently allocated primarily to small businesses. used. Furthermore, too little attention interview by Bartek Godusławski

Poland Today at MIPIM 2017 For the 3rd year in a row Poland Today is running the Poland & CEE content at the world’s leading real estate fair in Cannes. find out more at www.poland-today.pl

Tuesday 14Th March

Wednesday 15Th March

16.30 – 18.00, Verriere Grand Audi

14.00 – 15.30, Ruby Room (5th floor)

– Showing of film specially commissioned for MIPIM – Q&A’s with developers of Poland’s leading commercial real estate projects, hosted by Richard Betts, Publisher of PropertyEU

– Panel discussion featuring Jacek Jaśkowiak, Mayor of Poznań, Ewa Łabno-Falęcka from Mercedes-Benz Manufacturing Polska and leading real estate figures, moderated

by Judi Seebus, Editor of PropertyEU and Wiktor Doktor, CEO of Pro Progressio

Is this Poland’s golden age of development?

19.00 – 21.00, Verriere Grand Audi

Poland & CEE at the heart of Europe – Cocktail Party & Buffet Dinner Co-hosted with PropertyEU

Polska & CEE: Closer together or further apart?

34 society & Culture

We’re really into you!

Look beyond the divided political atmosphere in Poland and you find a country buzzing with culture.

There’s so much to be positive about

of ride-sharing app Uber) one of the latest international food crazes to launch in Warsaw. The services complement the growing culture in Poland to enjoy eating out as well as home cooking. Getting a move on Or, you can choose a mix of both. New On the sporting front, Poland is no service Eats Me is just one of many such stranger to success on the field, tracks small companies which have sprung up and slopes, but it’s only recently to bring those who are too busy to pre- become a country organisations feel pare their own food a fresh, ready- able to look to host events. After sucto-eat meal, delivered daily. Locals cessfully co-hosting the 2012 European highlight a change in culture during Championships with the Ukraine, UEFA the last decade as eating out becomes has handed Poland the sole-hosting more regular for Polish families. responsibilities of this year’s European As an Englishman living in Poland, under-21 football championships popping back to my home country, in June. Four cities will welcome teams seeing the uniformly “perfect” (read and fans from all over the continent Music to my ears “flavourless”) fruit and vegetables, it’s to Lublin, Kielce, Gdynia, Bydgoszcz, So, what will tourists find when they get hard to revert back to the supermar- Kraków, and Tychy – some of these here? And why should Poles be more ket culture there – packaging, “fresh” cities showing themselves off on the excited about their own country? Every from New Zealand, and ready-meal national and international sporting country loves music, it’s true, but Poles aisles. In Poland, ready meals are vir- stage for the first time. It’s an opportureally love their music – and bands tually impossible to find. Instead, the nity that must be grabbed, and if sucreciprocate. British band Bastille picked markets are packed out with fruit and cessful, will have football fans returning out the country after their recent world vegetables that are actually fresh, and to countries across Europe telling their tour, saying they are “constantly over- most importantly – seasonal! From late friends and family all about what Poland whelmed” by the atmosphere and the May until early July you can gorge on has to offer – just as it happened after fans here. Now regularly scoring head- fresh strawberries. In June you can eat EURO 2012. liners as big as those at world famous plums to your heart’s content. In August festivals such as Glastonbury, the and September it’s time for all different Too cool for school?

Open’er Festival in Gydnia is becom- types of apples. And who can resist the And Poland is becoming hip. As a young ing one of Europe’s biggest and most sweet, flavourful little garden-variety Australian visitor recently put it after essential music events. Complemented cucumbers available throughout the traveling from Berlin, Warsaw is “edgier” by other popular summer festivals such summer months? As an added bonus, than Germany’s capital, he said. Praga, as Orange Warsaw, Woodstock Festival put them in salted water with garlic one of Warsaw’s districts on the right in Kostrzyn nad Odra and OFF Festival bank of the Vistula river, until a decin Katowice, as well as less mainstream ade ago had the highest crime rate fare such as Audioriver – a three-day in the city – and suffered from a bad electronic music festival in Płock – conreputation across the country. Now the UK-based Culture Trip website, cert-goers are not short of options or quality if they stay at home. The feshas described the quarter as a “must tivals not only attract revellers from see” – up there with areas of London, across Poland – increasingly backpackAmsterdam, Berlin and Barcelona, and boasting some of the best clubs in the ers through central and eastern Europe city. Staying along the river, where else make Poland an essential stop off point can you enjoy beach life in the heart of to join the party. a major capital? The area is full of life The way to someone’s heart… with bars, music, and sports – groups of friends just relaxing, and even bicyBut it’s not just music that has got Poland buzzing. The country’s passion cle tours through the wild areas that line the riverbank. And Praga is not for food is spreading. A popular celebration of Polish cuisine takes place unique. In cities large and small across in Kraków every August with the city’s Poland, there’s a vibrancy in the air Pierogi Festival. One of Poland’s most that foreigners seem to pick up immefamous foods, the little white dumpdiately. But it’s not only happening in ling comes in all shapes, sizes, colours the cities. Poles have an affinity to the and fillings – including chocolate. And countryside, and why wouldn’t they? bigger players are sitting up and takThe land has a fantastic coastline and beautiful landscapes – awesome mouning note, with UberEats (an offshoot in Poland. Politics aside, the country has a huge amount going for it and it is often the foreigners who live here or visit Poland who see it much more clearly than Poles themselves. Poland regularly plays host to some of the world’s biggest bands, sporting events, and other hidden gems. The country is embracing its history and culture, with museums, festivals, and tourism all designed to show it off. And it appears to be working – budget airline Ryanair has announced it expects Poland to be Europe’s fastest growing airline market in the next five-to-10 years.

William Tomaney

works as a creative writer in marketing for an international company in Warsaw, where he lives. He is a British journalist and has worked at daily and weekly newspapers in England. He has interviewed politicians about British/ Polish relations and has helped develop the English language section of the Polish Press Agency website.

He has a degree in journalism and politics from De Montfort University in Leicester.

cloves, and you have the moreish ogórki małosolne which Poles like to eat just as is, or on lightly buttered bread.

As the days shorten and the nights draw longer in autumn, forest mushrooms make their appearance on the dining room table, and in winter you can have all the fruits and vegetables you enjoyed in the summer – but pickled, often by a beloved babcia or ciocia.

At the market, the bread is fresh, the meat is fresh – it’s all fresh. Who would want packaged, processed microwaveable ready meals when you have hearty, healthy ingredients like these?

‘It seems the secret may now be getting out – but it’s as much about convincing Poles about their own country as potential foreign visitors.’

35

society & Culture

Lunch on the grass

is a relatively new phenomenon in Poland, but locals have taken to the practice with gusto. Breakfast markets such as this one in Poznań (left) have popped up all over the country.

The Warsaw district of Praga

(right) has become a hipster magnet, and has gained the attention of international media with its vibrant selection of bars and hole-inthe-wall cafes.

Poland has gained a reputation abroad

for its music festivals, with hundreds of thousands of tourists attending concerts.

The Open'er festival in Gdynia (picture below) is one of the most awaited events in the calendar of many a music lover.

photos: Łukasz GŁowala (Forum), Piotr Malecki (Napo / Forum), Targ Śniadaniowy

tains, great lakes, deep forests, hidden valleys and farms. Poles like to take advantage of the opportunities there are to go cycling, walking, skiing and sailing. And culturally, the Polish countryside contains some gems – churches, castle ruins, palaces. There’s so much to see and do.

Poland is a country with a story to tell and history plays a large part of the fabric of the country, which is reflected in the new-found quantity and quality of its museums – the Warsaw Uprising Museum, the POLIN Museum of the History of Polish Jews, and the National Museum in Warsaw paint the story of Poland’s past. Across the country, regional history museums such as the Silesian Museum, the Kraków History Museum, and Brama Poznania ICHOT, tell the many stories that make up the rich historical heritage of this great nation. It’s not just history. The Copernicus Science Museum in Warsaw is internationally recognised as one of the best science museums in Europe, and has been praised for its interactivity. There are museums marking famous creations. Toruń’s Live Museum of Gingerbread, Kraków’s Stained Glass Museum and the Museum of Soap in Bydgoszcz are more interesting than they sound!

Watching the headlines in the international news, the mood of Poland can sometimes be misunderstood. What’s happening on the political scene doesn’t fully represent all the positive things going on here. Foreign visitors generally glow with positivity when talking about the country. One travel blog describes Poland’s capital as “cool and upcoming and full of surprises”, while one of the authors of Intrepid Travel described Poland as Europe’s “most underrated destination”, remarking: “I always assumed the secret would eventually get out on Poland. I assumed its rolling hills and awe-inspiring Tatra mountain range would benefit from snow-loving thrill seekers. I had to believe a trip to northern Poland on the country’s constantly-improving train service to Gdańsk – a must visit for any 20th century history buff – would be commonplace.”

It seems the secret may now be getting out – but it’s as much about convincing Poles about their own country as potential foreign visitors. With a buzzing music and cultural scene, and one of the most interesting cuisines in the world, it’s not just business that’s sitting up and taking note of Poland and its high-rise buildings – it’s everyone who comes into contact with the country. This may all seem obvious to those who know Poland well, but sometimes people just need to be reminded about how abundant this country is with natural gifts. by William Tomaney

Tytus Brzozowski

is the author of our cover. He is an architect and watercolourist who presents Warsaw as the city of his dreams: full of decorative buildings, narrow streets and soaring towers. Using the elements of architecture and landscape that are characteristic of Warsaw, he creates new worlds that, despite their fairytale nature, are still local. In Brzozowski's paintings, you can find intriguing, surreal elements, hidden threads and events. More at: www.t-b.pl

See pages 38-51 for our selection of Poland’s

leading recent and upcoming projects.

of commercial property comes up in conversation, people usually talk about price per square metre, supply and demand, location and other vital topics.

But the industry has so much more to offer, particularly in Poland, where real estate developers have been honing their skills over the last two decades. And what a run it has been!

Yet despite years of constant innovation, the property industry in Poland still has aces up its sleeve, and keeps on coming up with inspirational projects - now more than ever. Warsaw is clearly leading the trend, with developers taking inspiration from the melting pot that is the Polish capital. Tenants are increasingly demanding space that matches the usability and high standards of their homes, while retaining the cutting-edge design of their aspirations. We chose a handful of projects that we feel are inspired in some way or another – by either breathing new life into an old, long-ignored site, or creating a new landmark destination where nothing stood before. These following pages pay tribute to the innovators.

Because real estate has them too!

37 leader

artwork: Tytus Brzozowski (www.t-b.pl)

Creating new landmarks and revitalising old ones

When the subject

38 leader

top projects

Warsaw Spire by Ghelamco: symbol of a modern capital city

Warsaw Spire by Ghelamco, one of the Polish capital's newest skyscrapers, at Plac Europejski 1, combines ultra-modern architecture, environmentally friendly technology and innovative solutions. The site, designed

by Jaspers-Eyers Architects, with PROJEKT Polish-Belgian office of Architecture Ltd., Mac Stopa and Wirtz International Landscape Architects, fills the public square with greenery, fountains, a stream, restaurants, and art.

39 leader

40 leader

top projects

Hala Koszyki by Griffin Real Estate: creating a destination out of a rundown market

Hala Koszyki, currently Warsaw’s latest must-visit destination, developed by Griffin Real Estate, is a modern food market located at ul. Koszykowa 63. Designed by JEMS Architekci, the development combines a century old, restored market hall with 18 ethnic restaurants, shops and art space. It is close to the city centre and provides a new, vibrant meeting place for people in the city. Construction started in 2014.

top projects

Browary Warszawskie by Echo Investment: bringing vibrant life to a former brewery

Browary Warszawskie, Echo Investment’s flagship project, is a complex featuring more than 10 residential and office buildings and a lively public square with revived historical objects. Located at ul. Grzybowska 58, the development by JEMS Architeckci is set to create an essence of a city in Warsaw’s Wola district. Construction started last year.

41 leader

42 leader

top projects

High5ive by Skanska Property Poland: energy revival in the heart of Kraków High5ive is an energetic office park close to Kraków’s main train station. Five elegant buildings in three phases offering 70,000 sqm GLA will be accompanied by carefully thought out public space with restaurants, summer cinema, speed climbing wall, urban bicycle station as well as amenities such as smartphone chargers and free Wi-Fi connection spot. The first phase is due for completion in Q4 2017.

top projects

Varso Place by HB Reavis: soaring up into the future Varso will be a hotspot for business, residents and tourists located in the heart of Warsaw.

Featuring a skyscraper 230 m high designed by Foster+Partners, and two adjacent towers by Hermanowicz Rewski Architects. Built to BREEAM “Outstanding� standard, Varso will provide 140,000 sqm of world class office space with people-centred retail ground floors. Visitors will also enjoy views of the Warsaw skyline from the tallest observation deck in Europe. The project will be ready in 2019-2020.

43 leader

44 leader

top projects

Skyliner by Karimpol: the Austrian developer's most ambitious project yet

Skyliner office tower located at Rondo Daszyńskiego in Warsaw will be 195 metres tall and comprise 30 office floors and four commercial levels available both to tenants and Warsaw inhabitants. Due for completion in 2019, the 43,633 sqm leasable scheme, a design by APA Wojciechowski Architekci, includes more than 3000 sqm of shops, restaurants, fitness clubs and showrooms.

At a height of 164 m there will be two levels of the Skybar.

top projects

CEDET by Immobel: bringing back the glory of a much-loved building CEDET, by Immobel, is a restoration and expansion of a historic building at ul. Krucza 50, Warsaw – a modernistic pearl of Polish post-war architecture. Under the concept of AMC Andrzej M. Chołdzyński and RKW Rhode Kellerman Wawrowsky, it combines retail and offices, and consists of a revitalized department store and new building at the intersection of Bracka and Krucza streets.

Unique architecture and a prestigious location will ensure it becomes an attractive centre for business and social life in Warsaw.

Completion is due for October this year.

45 leader

46 leader

top projects

Koneser by Liebrecht & wooD: revitalizing a district on the east bank of the river

Centrum Praskie Koneser, developed

by Liebrecht & wooD, is a mixed-use project located at ZÄ…bkowska 27/31 on the site of a former vodka distillery in the heart of the Warsaw district of Praga. Koneser includes retail, office, residential, a hotel (the Moxy Warsaw Praga), the Polish Vodka Museum, Campus Warsaw Google Space and public squares, and is set to transform urban life on the east side of the Vistula River when it opens early in 2018.

top projects

Business Garden Warsaw by Vastint: Scandinavian elegance in an inspiring work environment Business Garden Warsaw, located at Żwirki i Wigury 16/18 in Warsaw, is an office scheme developed by Vastint Poland, part of the Inter IKEA property division which is active across Europe. Situated close to Warsaw Chopin Airport, the project offers a total of 90,000 sqm of space spread between seven buildings surrounded by landscaped gardens – very much in the Scandinavian style. Designed in accordance with the LEED Platinum certification standards by J.S.K. Architekci, the complex is set to be complete in Q1 2017.

47 leader

48 leader

top projects

ArtN by Capital Park: rekindling the spirit of a turn-of-the-century factory ArtN, also known as ArtNorbin, is – according to developer Capital Park – a modern day makeover for a post-industrial site’.

The mixed-use scheme at 51/53 Żelazna Street, in Warsaw, is a revitalisation of the former metal-products Norblin Factory (established at the end of the 1800s) under the concept of PRC Architekci. Spread over two hectares, the project aims to convert the industrial interiors into a modern, open space offering 64,000 sqm of usable area, including 40,000 sqm of office space and more than 70 stores and cafes. There will also be a museum of the former Norblin Factory and a BioBazaar with ecological food. The project is due to start in Q3 2017 and be ready in Q1 2020.

49

50 leader

top projects

Heweliusza 18 / Rajska 8 by Apollo Rida: modern space evoking old Gdańsk

Apollo Rida’s Rajska 8 / Heweliusza 18 project is a modern complex consisting of office and apartment buildings located in the heart of Gdańsk. The more than 10,000 sqm development, under the concept of JEMS Architekci, aims to preserve the historical character of the location, while offering modern technology and well-balanced amenities. Construction started in December, 2016, and should be completed by July 2018.

top projects

Olivia Star by Olivia Business Centre: star of the north with views of the sea

Olivia Star is the latest office building in Olivia Business Centre, a prestigious business park located at the very heart of the Gdańsk metropolital area, immediately adjacent to the University of Gdańsk. At 156 m, Olivia Star is the tallest building in northern Poland, with 44,000 sqm of leasable space spread over 34 floors. It boasts an openable façade, enabling fresh sea air to come into the building, and the top floors will be open to the public.

51 leader

52

53 Business

Time for Polska You've come

a long way, Poland! Anyone who has ever seen a picture of pre-WWII Warsaw, it is immediately obvious to them that the Polish capital was a veritable metropolis, with people from different cultures mingling together, sharing ideas and trading together.

The horrors of the years which followed not only stopped Poland's advancement in its tracks, but some say also wound back the clock for Polish innovation. However, despite the politics, the people were filled with a verve to succeed, in spite of the odds. Perhaps the restrictions actually taught Poles the skill of “making hay while the sun shines” which no western country ever needed to learn. Fast forward to the present, and finding themselves open to global commerce, Poles are making a name for themselves in all sectors of business. In this edition of Time for Polska, we bring you a range of brands making a splash on the local and international stage. These span from multi-million dollar companies employing hundreds of dedicated staff, to small establishments with just one employee. Despite their vast range in size, they all have one thing in common: to make the term “Made in Poland” great again!

See pages 54-60 for our selection of Poland's best.

Monica Zielinski is Poland Today’s online editor and manages its social media platforms. She is a PolishAmerican journalist who also works on international projects headed under Rzeczpospolita. After earning a journalism degree from Southern Connecticut State University in the US, she moved to Warsaw to reconnect with her Polish roots and work in her field.

Advanced Graphene Products (AGP) A venture that started at a Polish university turned into a company that developed an innovative method to mass-produce a new type of graphene – High Strength Metallurgical Graphene. HSMG is much stronger and more durable than chemical vapour deposition (CVD), the structure used by producers like Samsung.

AGP produces graphene for applications in energy, medicine, electronics and fabrics.

FlyTech UAV

Time for Polska

A passion for aviation inspired FlyTech’s CEO to launch his own drone company. A team of aircraft engineers, pilots and specialists develop professional unmanned systems that can provide aerial visualisation, photogrammetry and teledetection. With three systems already in its product line, FlyTech works with individual clients, universities, energy companies and rescuers from Poland's Mountain Volunteer Search and Rescue organisation.

VoicePIN.com

Medivio

This voice recognition tool eliminates the need to remember passwords. VoicePIN can be used to log into web-based systems, authorise transactions, reset passwords and perform other security functions. A user’s voice is as unique as a fingerprint which makes this a safer alternative to traditional identification methods. The Software as a Service (SaaS) technology has been used by corporate customers such as banks ING and Alior.

With the potential to revolutionise the European healthcare system, Medivio allows doctors to manage health records, schedule appointments and contact patients with chronic illnesses. Premium subscribers have access to expert advice through video chat or phone call, and can order prescriptions using the Medivio application. The certified tele-medical consultation service presented its solution to the European Commission in 2015.

55

56 business

Reality Games

Braster

Freemium apps have proved to be a runaway success for Reality Games which generates revenue and continues to grow in the world of mobile games. The studio developed three games that have already received millions of downloads: Landlord Real Estate Tycoon, Weather Challenge and Speculate Social Media Stock Market. Reality Games was recognised

by IBM and the Google Starter Programme.

Scientists developed a revolutionary selfexamination device to detect breast cancer that is already on the market in Poland. The noninvasive tool enables women to perform regular 15-minute screenings at home and receive results on a mobile application. Braster holds patents in 45 countries and received the Golden Laurel of Innovation award presented by the Polish Federation of Engineering Associations.

Kontakt.io

Time for Polska

Companies everywhere are taking advantage ofIoT technology to reach and engage with customers in new, real-world ways. This leading provider of smart hardware produces beacons – small Bluetooth radio transmitters which send signals which smart devices can detect and perform actions such as updating a map with the user’s location. With over 500,000 beacons shipped, Kontakt.io has the most beacon use cases implemented world-wide.

Currency One Stemming from a personal need for money abroad, two cousins developed an online service to simplify the currency exchange process.

Their websites Internetowykantor.pl and Walutomat.pl provide favourable rates and ensure convenience and security by eliminating the need to physically go to an exchange bureau.

With more than 400,000 users, the company accounts for 50 percent of the revenue of the Polish online currency-exchange market.

57

58 business

Fibaro Fibaro’s smart home systems simplify managing appliances without running cables throughout the home. Using a computer, tablet or smartphone, homeowners can remotely control not only lights and thermostats, but also blinds, awnings, gates, alarms and monitoring systems. This manufacturer of advanced home solutions received the Innovation Award for its motion sensor at the 2015 CES Awards in the US.

NOTI Top Polish designers teamed up to create modern collections for homes, offices and public interiors. NOTI is a brand for people who have already shopped at flat-pack furniture stores, and want more unique, durable and ambitious styles. The furniture brand was awarded the quality seal by the international Red Dot experts and its pieces are displayed in showrooms throughout Europe.

Time for Polska

Pollight Lighting specialists at Pollight help facility owners navigate the world of LED and are in the process of developing an inexpensive breakthrough alternative to natural sun lighting indoors. Most notably, the consulting firm worked with architects to design the interior lighting for Galeria Młociny which will open in Warsaw in 2017. The experts recently teamed up with the tech company Ideaflex to experiment with artificial full-spectrum lighting at an affordable price.

Regalia A local craftsman creates interior elements using only recycled wood and materials recovered from buildings destined for demolition.

After rebuilding his own house, the company’s founder decided to make furniture that gives wood and bricks a new lease of life. Regalia crafts one-of-a-kind tables, chairs, frames and structural components according to traditional designs where simplicity and nature create a unique, authentic effect.

59

60

Kazar Kazar’s avant-garde footwear and accessories for men and women are designed by leading stylists and designers. In over 20 years since its launch, Kazar has built a brand that sets trends, dictates ambitious styles and has received awards for its design and dynamic development. With a focus on international expansion, the leader among Polish footwear brands is entering foreign markets and has been featured during New York Fashion Week.

business

Mokate For generations, Mokate’s family coffee and tea business has maintained age-old traditions while developing new beverages and products.

The leading Polish exporter of coffee, tea, cocoa and instant beverages was founded in 1927, and its exports account for 60 percent of the company’s total sales to over 60 countries in Europe, Asia and Africa.

Time for Polska

Chic Smart Clothes A team of women designed a children’s clothing line that leaves room for growth and imagination. The versatile collection is aimed to inspire and excite children by allowing them to play with clothes and dress themselves. Clothes suddenly become a favourite toy in which the child can play with mixing, matching, zipping and popping. CHIC clothes are made using only natural fibres obtained according to fair trade agreements.

Chylak Designer Zofia Chylak launched the Polish handbag brand which won the 2015 Polish Elle Style “Brand of the Year” Award. The limitededition leather bags and accessories are manufactured in Poland and sold exclusively in 10 boutiques in Europe, Israel and Taiwan. Chylak worked as a designer’s apprentice in New York City before designing her own collection of elegant and practical pieces.

61

62 Business

Top Polish companies and CEOs are falling behind the digital curve We asked ourselves a pretty simple question: are Polish companies truly digital?

How many

of the top Polish businesses and CEOs are at the top of their game with the digital communications?

We were intrigued by this question, and when we did the homework the results surprised us. It seems pretty obvious, doesn’t it? Any top company needs to be able to communicate with a huge number of people at any one time.

Reaching out to customers, stakeholders, journalists or politicians to influence and engage with them is the bread and butter of any business today. It matters all the time, but especially when there’s a crisis or situation in which you need to connect with your clients, fans and followers, rather than reach them through someone else’s media channels.

But what we found showed that many companies are now way behind the digital curve. Not only that, but many CEOs – the public faces of their organisations – are faceless, from a communications perspective. We looked at the social media presence of the Warsaw Stock Exchange's WIG30 – the top 30 businesses in Poland – and examined whether they were on the top social media channels, and if so, how active they were.

Hanna DymekJara is a pioneer of

public relations in Poland, having been involved in the setting up of Burson-Marsteller in the beginning of 1990s, Hanna is CEO and founder of Questia, a leading PR consultancy in Poland working with a wide range of brands and businesses.

The Polish ‘Digital Prezes’ has a long way to go

75.8 percent of

Poles had access to the Internet at home by 2016.

12 hours a week

was the time spent online by an average Pole in 2016.

‘At the top level, the need to influence and engage is absolutely crucial, especially in the digital era.’

Our research shows that just 40 percent of Polish CEOs have a LinkedIn account and of those, most have just a few hundred connections. Only five out of the 30 (some 17 percent) have a Twitter account, but of those, only two have been recently updated. And just one CEO, Energa’s Daniel Obajtek, has a public Facebook page (as opposed to a private profile) although it hasn’t been updated since he left his last role as a politician, suggesting it's not active. Together, these platforms now have almost 20 million users in Poland according to Social Press, yet the top CEOs are almost universally absent.

Perhaps CEOs think that it’s enough to leave their public engagement up to traditional media channels like print, TV or radio? That would be true if their audience was anyone over 35.

A recent report by the Reuters Institute of Journalism showed that on average 56 percent of under 35 year olds use social media as their main source of news. This means that with every

passing year these CEOs are losing the ability to reach people with their story – and that of their company.

So should CEOs be concerned about whether or not they have a social reach?

We think yes. Let’s imagine a situation in which a crisis hits a big business or organisation. It’s critical to come to a corporate position and quickly get the message out there. A truly ‘digital Prezes’ with a big following on core channels has a much better chance of influencing the people that matter, rather than waiting to secure a TV appearance over which he or she has no editorial control.

When things are going well and you want to tell the world about your success, the same rule applies. And when you’re looking to attract the best possible young employees, showing your human side through social media can make a big difference. One US study showed that 61 percent of millennials thought a social CEO came across as more trustworthy.

Perhaps there’s a more painful fact to admit. That in the race to reach the top of his/her game, communicating has never been a CEO’s primary focus.

But at the top level, the need to influence and engage is absolutely crucial, especially in the digital era. Perhaps we’re being unfair. A similar 2016 survey of top Canadian CEOs found that just 45 percent have a LinkedIn account and seven percent are on Twitter. And a 2015 survey of Fortune 500 CEOs found that only 32 percent use LinkedIn and 10 percent are on Twitter.

Hmm. Ask my PR manager…

How are the top Polish businesses doing with their online communications? We rate Polish companies as “average” in terms of their online engagement.

Our research shows that 27 percent of companies don’t have a corporate Facebook page. As many as 15 percent don’t use LinkedIn, and most of those do not regularly update their profile.

Less than half use Twitter, and a full quarter have yet to set up a YouTube account. So there is clearly much to do. For Polish CEOs looking to gain an edge over the competition and lead the pack, putting together a social-first strategy in their companies from top to bottom should be an urgent priority.

by Hanna Dymek-Jara

63

64 Startups and business

their discontents An entrepreneurial mindset is critical for the turbulent times ahead of Europe, but Polish startups are yet to become significant for the country’s economy.

Poland’s

Maciej Kuziemski

is a public policy scholar a the University of Oxford and a board member of Res Publica Foundation, nonprofit Central European publishing house. For the past year, he has led the Coalition for Polish Innovations, a multistakeholder knowledge sharing and capacity building platform. Recently, he co-founded Kuchnia Konfliktu, an Ashoka-awarded social enterprise which aims to create employment opportunities for refugees.

unparalleled development over the last two decades has earned the country a label of post-communist poster child. However, mechanisms that historically propelled growth could soon lose their relevance. Rising labour costs disincentivise multinational corporations from investment in Central Europe, whereas the stream of EU structural funds, which was plentiful in the past, is slowly drying up. There is a widespread consensus among political elites that it is high time to develop systemic instruments which will propel the shift of the Polish economy from being based on natural resources towards one which is more dependent on knowledge. Would betting on startups and SMEs raise Poland’s capacity to innovate?

“For an advanced economy, the path to competitiveness is not to copy what others are doing. It is to do things others cannot do, or to do things in different and better ways.” This short excerpt from a white paper guiding the UK’s post-Brexit industrial strategy sounds trivial, yet is painfully true. As tempting as it sounds, Poland will never become "the second Ireland" (as was stated by former Polish PM Donald Tusk) or "the second South Korea" (current deputy PM Mateusz Morawiecki). Nor should it attempt to.

At the forefront of a new revolution Development is not linear, and on the eve of a fourth industrial revolution, countries endangered by the middle income trap, should make every effort to leap over the global value chain ladder. To embrace its strengths, Poland has to deal with its shortcomings first.

A classic study of the origins of comparative advantage by Harvard Business School professor Michael Porter has long pointed that only the understanding of nations’ deficiencies and global trends can lead to sustained technological advancement.

Jeff Furman, associate Professor of Strategy & Innovation at Boston University, uses the term “national innovative capacity” to capture the intricacies of “nations’ ability to generate new ideas and to translate them into economic growth”. Every metric of his scale leaves Poland with significant

room for improvement, be it availability of public R&D infrastructure, incentives for companies to innovate and their ability to seize foreign markets, or perhaps most importantly, strength of linkages between public and private actors involved with the innovation ecosystem, which translates into level of human capital and trust.

A report published by Startup Poland Foundation in 2016 estimated that Poland has almost 2,700 companies perceiving themselves as start-ups, more than 2/3 of which are three years old or younger. Just one in four Polish startups has been founded by a female, and only one in eight founders boasts a PhD degree. No more than 14 percent of the country’s start-ups hold a patent (or are in the process of securing one), whereas almost half declares copying or modifying existing products. In European Startup Monitor, an annual comparative study of the EU’s innovation ecosystem, Poland stands out on three metrics – the highest share of non-EU founders (33.3 percent), the lowest perceived ability of universities to promote entrepreneurial behaviour, and one of the highest levels of self-financing companies from the get go (bootstrapping). The former only underlines the significance of introducing dedicated start-up visa mechanisms, while the second speaks volumes about the urgency of the reform of Poland’s tertiary education system.

Funding is key Marek Borzestowski, founder of Wirtualna Polska and veteran venture capitalist, says: “Polish start-ups need strong partners able to provide not only financial capital, but more importantly global business development experiences and international networks”.

‘Endemic optimism that characterises the startup mindset can be infectious.’

startups making a wave in POland CD Project: A Warsaw-based video game developer, publisher and distributor founded

by Marcin Kiciński and Michał Iwiński, CD Project is best known for The Witcher series that sold 20 mn copies. In Feb 2017 the company’s valuation hit USD 1.6 bn.

Zencard: This is one of the foremost exam-

ples of the success Poland’s fintech capabilities.

Zencard is a customisable loyalty redemption platform founded by Krzysztof Klimczak, Jarek Sygitowicz and Marek Rogoziński.

It was recently acquired by Poland’s largest bank, PKO BP, heralding a new era of domestic start up acquisitions.

Codewise: One of the fastest growing Polish

SMEs that focuses on tech performance of the marketing sector. Its founder, Robert Gryn is the first start-uper to be recognised by Forbes’ 100 Wealthiest Poles in 2016.

Local experts are cautious as well as enthusiastic. Maciej Sadowski, CEO of StartHub Poland, a nonprofit that aims to facilitate technological growth of Central Europe, points out that entrepreneurs and scientists alike seem to be compelled by startup gospel and availability of public funding: “the Valuation of [video game developer] CD Project, the acquisition of Zen Card by a major bank, as well as public listings of startups, stimulate imagination. However the number of VC investments decreased in 2016, and regulatory framework is still unfavourable.”

Decision-makers seem to be well aware of these constraints. The Polish government’s flagship strategy, so called "Morawiecki plan" responds to many of the industry’s concerns, yet it took 15 months since its announcement to be adopted after lengthy consultations and inter-ministerial push and shove. Startups are particularly looking forward to the promise of launching a 2.8 bn zł (€0.65 bn, $ 0.69 bn) venture capital fund by the state investment arm – the Polish Development Fund (currently under development), as well as the introduction of a simplified capital company model (expected to kick off in January 2018).

Poland has seen many industrial strategies over the last decade, and all of them have been tested by polit-

65 business

Poland ranked 23rd in Bloomberg's

Global Innovation Index 2016, which is higher than other countries such as Italy or Spain.

Polish patent applications to the Eu-

ropean Patent Office: 607 (as of 2014).

“Smart Growth” is an EU cohesion fund for research

and innovation dedicated for Poland.

With a budget of € 8.6 bn, it is the largest such programme among all member countries of the European Union.

ical circumstances, bureaucracy’s inefficiencies and adverse geopolitics. As much as regulatory instability decreases the country’s ability to innovate, a lack of regulation whatsoever may sometimes be beneficial. Earlier this decade, Polish banks were among the first to introduce contactless payments and mobile platforms globally, becoming among the most avantgarde in the world. Today, in the shadow of Brexit and EU’s PSDII directive – that allows non-banking institutions to access customer’s banking account history and initiate payments on behalf of customers – Poland stands a good chance of becoming Central Europe’s fintech hub.

No startup is an island The government’s strategies require making political and economical assumptions with regard to both the process and desired outcomes, hence are never value-neutral – at least in a country where some of the biggest companies on the market are state-owned.

Poland’s technological advancement is not happening in a vacuum, and is subject to geopolitical circumstances and bureaucracy's ability to improve.

Endemic optimism that characterises the startup mindset can be infectious, and blur rational judgement.

As the old adage goes: “what gets measured gets done”. However, as we know, traditional measurement models tend to focus on economic performance, completely neglecting wider social benefits, such as level of trust, and cross-sector collaboration.

Even if startups are still not a significant chunk of the Polish economy, we should still give them a chance – for their real impact on Poland may be far beyond the cost-benefit analysis.

by Maciej Kuziemski

#StartInPoland is a government programme dedi-

cated exclusively for the development and support of technological start-ups. It has a budget of € 680 mn.

A new law on innovation has been signed in November 2016. It is expected to incentivise larger R&D expenditures by companies and intensify commercialization of scientific inventions.

Poland scored 10th in Pearson’s 2016

worldwide ranking of educational systems (4th in Europe). Poland surpassed countries like Denmark, Germany, Russia, USA, Australia, Israel, Belgium, Switzerland, Norway, France, Italy or Spain.

Total public and private expenditure on educational

instutions from primary to tertiary grade in 2013: $25 bn or 4.8 percent of GDP (in current dollars)

Natural sciences and engineering

graduates: 26.6 percent of all tertiary graduates (as of 2015).

The proportion of female tertiary

graduates in sciences is one of the highest among OECD countries.

66 education

Future of Higher Education in Poland Two figures in Univesity education in Poland – one Polish, one British – discuss planned changes by the government aimed to improve Polish institutions' standings in international rankings.

In 2014 Poland

had 100,000 tertiary education teachers, the fifth biggest number among EU member countries after Germany, Spain, UK and France.

Professor Maciej Duszczyk, Vice-

Rector for Research and International Relations at the University of Warsaw. His research focuses on migration policy in Poland and social policy.

‘Next year, we will base our recruitment process not on the number of students, but focus on the quality of those students.’

According to gov-

ernmental aims, by the year 2020, five percent of all tertiary education students should be from abroad. By 2015 there were 57,000 foreign students enrolled in tertiary education in Poland compared to 36,000 in 2014, 29,000 in 2013 and 24,000 in 2012.

Close, but no cigar Due to rapid globalisation, Polish universities are competing with global institutions.

Poland’s largest university and one of the most prestigious, the University of Warsaw, was ranked 319th on the US News Best Global Universities Ranking for 2017. However, neither this, nor any of the dozens of other universities in the country made the top 400 list for the Shanghai Academic Ranking of World Universities, or even the top 500 ranking by Times Higher Education.

In an effort to improve Poland’s status in the world of academia, the education ministry has introduced a number of changes, which it says will improve the quality of education and are a response to the rapidly changing economic and demographic situation in Poland. New rules regarding the allocation of resources and awarding grands have been implemented in an attempt to stabilise university finances. In addition, the student-staff ratio will drop, and the minister in charge said the universities should increase the number of teachers so students have the best possible support from the faculty.

What impact do world rankings have on the standings of Polish universities compared with counterparts overseas?

Maciej Duszczyk: Of course, for universities like the University of Warsaw, the different rankings are very important.

But I often question the method and factors which determine the ranking.

Every day I see 20-25 different rankings from various enterprises, but I decided to only focus on three – the Shanghai Ranking, Times Higher Education, and US News – because these rankings are the most influential in the academic world. However, I have some problems with the methodology. For example, with the Shanghai ranking, universities can improve their ranking by hiring Nobel Peace Prize winners.

Is it difficult to accurately assess a university and measure the quality of education?

Absolutely. That’s why we don’t refer to just one ranking. Most of these rankings are based on publications, but if a Polish historian for example, publishes only in Polish and no one outside of Poland is interested in Polish history, it is difficult to be internationally recognised unless you are a physician or other field of study. It’s easier for researchers in English-speaking countries like the US, Australia or the UK to publish their work. That’s why I decided to focus on three rankings because they use different methodologies.

Do you support the plan proposed by Poland's Ministry of Science and Higher Education?

I am a member of a committee for the ministry and of course I try to do my best to improve our system, but I’m only one of 50 people who are advisors to the prime minister, but I think

520 institutions

of tertiary education were available for studying in Poland. (as of September 2016).

the idea is good because they want to establish strong research universities which can compete with big universities not only from the European Union but also from China, India and other parts of the world.

What are the challenges the higher educational system is facing in the present day and age?

We are currently experiencing a very big demographic change which is why we are in the next stage of our development in the higher education system.

We should not base our system only on the number of students as was previously done. Universities were only interested in improving their offer to recruit more students, but they should build their future on the quality of the studies. The Education Ministry proposed a new model of financing universities and it’s a very good step. The plan also decreases the student-to-staff radio.

It’s 13 to 1 right now. Next year, we will base our recruitment process not on the number of students, but focus on the quality of those students.

Do you expect to see a change in the status of Polish universities in the rankings?

I’m a little optimistic because I think the proposal by the ministry will improve the higher education system in Poland.

I think we also need to ask people in academia about solutions, and I hope to have different conferences all over Poland about different aspects of higher education. The ministry is focusing on research excellence, and to improve the quality of study. I’m optimistic. I’m not a hundred percent sure of course, but I’m looking forward to this process and the final step will hopefully bring about a positive change to Polish universities.

interview by Monica Zielinski

67

68

Have you seen a change or improvements in the higher educational system?

education

21.2 percent of Poles aged 25-64

attained a Master's tertiary education degree. OECD average: 11.4 percent (as of 2015).

0.5 percent of Poles aged 25-64

attained a Doctoral tertiary education degree. OECD average: 1 percent (as of 2015).

By 2015 there were 1.4 mn students enrolled in tertiary education and 0.4 mn new graduates in Poland. 49.5 percent of Poles aged 19-24 were enrolled in tertiary education in 2015.

Why don’t Polish professors try to implement these Western teaching methods?

Kerry Longhurst: Not enough. I think I think the vast majority of academics they have an idea where they have to are simply too busy with very diverse be, but the bureaucracy and the ideas drags on their time and energy; they are old. Poles are quite entrepreneurial have so many teaching hours, their – they have businesses and small enter- salaries are so low – even with a Ph.D. prises, but in academia there aren’t They have so many demands on their many academic entrepreneurs. They time to do research and administraare held back by an old-fashioned aca- tion so they often just don’t have demic culture which is very hierarchical the physical time to reflect and think, and the ministry isn’t dynamic and open ‘what’s the optimal way of teaching Dr. Kerry Longhurst is a enough to change. There’s a lack of pro- my course? How can I best assess professor at Collegium found revolution and not enough evo- my students to benefit them?’

Civitas in Warsaw. She has a Ph.D. in interna- lution. They’re not responsive enough tional relations from to these global opportunities and What is a potential the University of Birthey’re not realistic about demographic solution to this problem? mingham and an MSc changes which means the number of We need a dose of academic entrein strategic studies Polish students is rapidly diminishing preneurship. We need the ministry to from the University of Wales. She comand their parents see more value in pay- give academics and heads of univerpleted an Advanced ing for a UK education, for example. sities more freedom because they’re Marie Curie Fellowthe experts in academia. They know ship in Paris, and was what works but we need to think It has been said that classes in Poland a senior lecturer at the more internationally and implement European Research focus on theory rather than practical Institute at the Uniskills, and when students enter student-centered learning. versity of Birmingham. the workforce they’re unprepared.

The British-native has Is there any truth to this?

What are your other concerns been living in Poland for six years.

This is another way academia is not regarding the students? being responsive enough to changing Some students come in with a sense circumstances and students’ demands, of entitlement – they expect to pass. which is often the case in many coun- They genuinely believe they won’t fail. tries. I’ve done a lot of work for the EU Students have gained more territory in terms of advising universities about and they see themselves as clients too how to improve their curriculum, how to much and they expect to pass. But this make teaching methods more innova- might be a bigger issue in other countive, how to bring elements of employ- tries as well, including the UK. ability into curriculum so that students take up jobs when they leave and have The ministry proposed a decrease critical and analytical skills. We need in student-to-professor ratio. to think whether standing in front of Do you think this will improve a class for hours doing a formal lecture the quality of education? is the best way of teaching these days.

In theory, yes, but it will require that the professors adjust their teaching methods, assessment methods and What about teaching in the UK? It’s more like the American model – stu- attitudes but it’s hard to encourage dent-centered learning. I’d say in terms Polish academics to think differently. of teaching methodology, assessment Also, their salaries are so small that and critical thinking, Poland is a good they’re not incentivised to take on extra 10-15 years behind. People like me and work when they can be doing someother colleagues from the Anglo-Saxon thing else and earning more money. world are trying to bring those elements Professors need to be paid more, have in, but we often hit a brick wall – not at better contracts and only then can we the institutional level, but at the minis- really start thinking about investing terial level because they’re so prescrip- in student-centred learning. tive upon what universities can do. They micro-manage academia rather than Universities all over the world leaving professors to be innovative in are moving towards internationtheir course design and their methods. alisation. Is Poland on board?

In Poland, universities see it as a choice.

But internationalising your institution, your offer, your mission, is not a choice.

It’s really sink or swim and it’s not just about having more classes in English – it’s about having an open approach, it’s about encouraging more student and staff mobility, it’s about engaging in international projects and hiring nonPolish staff. Embracing internationalisation is the key – it’s not just a buzzword.

‘We need to think whether standing in front of a class for hours doing a formal lecture is the best way of teaching these days.’

interview by Monica Zielinski

69

70

Urban Issues: MIPIM 2017

71

real estate in focus

For many, commercial real estate is something

they take for granted – always happening and working smoothly in the background. But in order to run like a well-oiled machine many factors need to work in sync.

Bringing fresh soul to forgotten locations page 72

The art of mediation page 74

CEE sees near record investment activity page 76

How do you provide entertainment to four million people? page 82

Six tips for investors page 84

Finding fortune between the forest and the sea page 86

72

urban issues

Bringing new soul to forgotten locations Maciej Dyjas, co-Managing Partner and co-CEO, Griffin Real Estate, reveals plans for the ambitious retail scheme at the heart of Warsaw’s Wola district, and explains how the company balances its many interests.

Towarowa is a very ambitious project, right in the centre of Warsaw, but it's still unclear what it will be.

Can you give us some details?

Maciej Dyjas is

co-Managing Partner and co-CEO of Griffin Real Estate

Griffin Real Estate

Urban Issues MIPIM 2017

is a partner of Poland Today’s special focus on real estate for MIPIM 2017

tive will be closely coordinated with the city authorities, since this is a common work and common initiative.

It is separate to Echo Investment but Echo will be able to develop some apartments for them. This is important, because the apartments may come from other developers as well.

How do you feel about The company expects to have built You are right, it's going to be a very the future of Warsaw? ambitious project - in fact we are creIn terms of 'hipness', it’s great. 6,000-10,000 apartments within the ating a new quarter of town on an area The city has changed dramatically next three to five years. In Poland there of 6.5 hectares between Towarowa over the last five years, I think we com- is a very large rental market. Warsaw and Miedziana streets and the side pare well to Berlin, the feel is similar. is estimated to have about 80,000streets. There will be 16 different build- It’s also a reasonably large city, more 100,000 rental apartments, but owned ings with streets between the build- like 2.7 million than 1.7 million people, by private people. The biggest aggreings covered by glass roofs, each with because people commute and work gator owns perhaps 100 apartments, a different façade. Most of the streets here. Warsaw can become an impor- but not in one block. Then there are only will be open to pedestrians, some 24 tant business hub. It’s attractive to live two or three companies which rent out hours a day. On the side running down here, it has the largest number of stu- apartments on behalf of individual ownMiedziana street, in the middle of the dents of all the cities in Poland, about ers. The biggest one represents someplot, there will be a park with entertain- 170,000 students. The development thing like 2,500 apartments. This is ment and restaurants facing it. About of new services is driven by the avail- because it’s hard to buy one block of 35 percent of the scheme will be enter- ability of talent, so Warsaw has all the 200 apartments to be rented, because tainment, with a large cinema, restau- opportunities. Cities will compete by typically you’re dealing with 200 ownrants, culture, a professional theatre, education – how many graduates come ers in the apartment block. You could and a space for open-air concerts – the through – as well as quality of life. buy an apartment building directly rest will be retail. Wola is a great disfrom a developer, but apartments for trict of Warsaw, growing very quickly, What is the situation with the project rent are different to regular apartments. but it’s post-industrial, and it doesn’t on the site of the former Emilia build- There are smaller units among other have any kind of centre. There’s office ing – is the final function decided? issues. So it’s not optimal to buy a ready and residential, but not much soul.

Not yet, because we are currently block. So you can build for yourself. For Our project should give a new heart working on two options and we are this you need a considerable amount to the district. We believe it will anchor doing parallel permitting for both of capital and a developer to build it. options. We think we’ll figure it out We’re ideally placed in this regard. But this part of the city. within the next two months. It will either we have a separate management.

What has been the attitude be office and hotel or just office. It’s too of the city authorities? big to make one hotel out of it – there’ll You’re right that there is proven We have had a fruitful exchange with be about 40,000 sqm of usable space. demand for rental apartments, city authorities. It’s not easy to get them but it’s still not a proven busito focus – they must deal with the zon- Your student accommodation ness model in Poland, right? ing plans of the whole city, not just our business seems to be growing Well. Yes and no, because we have plans, but the cooperation was good. – what are your plans there? worked on creating the business plan We’ve also taken ideas from organisaStudent Depot is doing very well. with companies which are mediating tions such as Nowa Towarowa, an initia- We have 1,100 beds under operation in on behalf of private individuals, so we tive put together by Warsaw architects four dorms, and we have several pro- have large samples of data under which and local activists. jects under preparation or construction, we know how much you can lease an with the aim of having 6,000-7,000 apartment for. There’s nothing much beds under operation by 2019/2020 more that needs to be tested. You need What have you learnt from the in Poland’s main cities. We will go to to know how much you can charge for development of Hala Koszyki?

It’s a much bigger project that Hala Warsaw, Wrocław, Gdańsk, we are a studio and how much for one-bedKoszyki, but we want to keep the same already in Poznań, Łódź and Lublin, and room apartment etc. Our co-investors ethos. We want to deploy non-chain obviously Kraków. have developed large businesses of this restaurants, a Warsaw-based theatre, type in other destinations, so we can an artistic cinema to attract the non- The residential rental market learn from their experience. We offer mainstream, which also happens to be is unproven in Poland, as a commera product which is better than that wealthier, generally speaking. There will cial business activity. It’s clear there’s what is already available on the market be a number of architects under one demand, but you are relative pioneers at a similar price. The product is nicer, creative head, but we can’t disclose the in this sector. How substantially are because there’s a building supervisor name of the architects yet. The differ- you looking to go into this sector? who you can call if something is broken, ent designs will harmonise together, We have put together a company and the floors are cleaned – that sort of but you will see many different looks. called ‘Resi 4 Rent’ which has 2,500 thing. And most importantly, you have The planned media launch of the initia- apartments under construction now. the security of prolonged lease.

73

urban issues

How long will a typical lease be?

In Poland, it’s typically a one-year lease which you then prolong. In our case, if people want to continue leasing and everything is fine, they can lease ad infinitum. That’s basically the story. Our product is much more reliable, especially for families who need reliability.

There’s the British ‘buy your home’ mentality and the German and Swiss rental mentality. Where do Poles stand?

Poland has an own-and-live mentality, but clearly there is a part of the population which needs to rent because they can’t afford to buy. Everyone would buy if they could. But before people are able to, they have their entry job, then they get a better job – this is one group of people who can rent. And there is another group – young people who like flexibility, who change their job from time to time because they are IT specialists or engineers and the job market is very good, and they don’t want the liability of a bank loan.

We know the rental market is good, so we see that if we take a bit of the market we can build a nice business out of this.

What makes your company – or in this case your group of companies – stand out?

What is important is that we don’t do it all ourselves. We invest in platforms and companies which have the expertise. Echo Investment knows how to develop. EPP are long-term owners, so they can give the guarantee to Echo Investment because they are the enduser. We have a separate management for Student Depot, a separate management for the rental business, for the platform which is lending money etc. We will have a separate company which does the same as EPP does for shopping centres – it will be the biggest assembly of office and mixed use buildings on the Polish market. Our role is to make sure that there is a right strategy for each platform, proper management in place, enough capital deployed to these companies as well as that they have enough debt financing.

‘The city has changed dramatically over the last five years, I think we compare well to Berlin, the feel is similar.’

Griffin Real Estate's Hala Koszyki

(below) was an overnight sucess for the company when it opened in late 2016, immediately becoming one of the hottest destinations on the Warsaw map.

74

urban issues

The art of mediation RICS, the world's leading professional body for qualifications and standards in land, property, infrastructure and construction, has fine-tuned an approach to mediation which aims to avoid the need for expensive litigation or arbitration.

Why is mediation growing in Europe and around the world?

How does mediation work alongside collaborative Mediation is a voluntary, non-bind- contracting and conflict avoidance?

Dr John Fletcher

Urban Issues MIPIM 2017

is the RICS ADR Products Group Director and is head of the RICS global Dispute Resolution Service (DRS). DRS is responsible for RICS’s arbitration, adjudication, expert assessment and evaluation, dispute board, independent witness and mediation service provision and training in the construction, built environment and related sectors internationally.

ing and private process where a neutral person helps parties to reach a negotiated settlement. It is usually a much quicker and cheaper alternative to going through the courts, and the parties take control over the outcome. For this reason, mediation is strongly supported by judiciaries, and it is now accepted that litigation lawyers must consider whether mediation is an appropriate method of solving their clients’ dispute. Courts have been known to impose cost sanctions against parties who decline mediation and proceed to litigation in cases where the court considered mediation to be appropriate. The European Union has also recognised the value of mediation and sought to increase its use, and the 2008 Mediation Directive called on Member States to encourage and facilitate recourse to mediation..

How does the RICS approach differ to traditional approaches to mediation?

Traditional mediation takes a facilitative approach, where the mediator tries to help the parties find their own solution to a dispute. Facilitative mediators are skilled at negotiation and softer skills, such as verbal and non-verbal communication, but they are not necessarily experts in the area of the dispute. This approach is suitable for disputes related to family, workplace and community matters, for example, but for the land, property and built environment sector, a more robust approach is required. The RICS ACRE (Analytical, Commercial, Restorative, Expert) Mediation Service combines facilitative and evaluative approaches.

There are two elements central to this approach: first is that our mediators are trained and accredited to internationally recognised standards, and second is that they are highly experienced and skilled professionals in the built environment sector. The objective of RICS mediation is for the parties to reach a settlement, or at the very least emerge with a clear understanding of the issues facing them in court or at arbitration, allowing for a narrowing of the issues in dispute.

One of the main aims of collaborative contracting and conflict avoidance is to maintain working relationships, which can suffer if issues are not dealt with at an early stage and grow into full-blown disputes. Conflict avoidance processes encourage early intervention, and promote open and honest communication to prevent matters escalating to formal dispute resolution procedures such as arbitration or litigation. In order to resolve issues, parties engage in amicable settlement procedures such as negotiation and mediation in an effort to avoid conflict and keep working relationships intact. Using conflict avoidance processes ensures that all parties are focussed on dealing with problem issues and communicating in structured conversations without placing blame. This creates a collaborative environment where all parties work together to seek solutions to problems.

How should mediation and arbitration be presented to potential users?

First, both mediation and arbitration are highly effective means of keeping costs down, as the court process can be lengthy and expensive. They are also a means of maintaining the confidentiality of business relationships and of reducing the risk to reputation that judicial processes taking place in the public eye can involve. Finally, where arbitrations and mediations are conducted skilfully, they are a means of minimising the stress and damage to business relationships that traditional adversarial court proceedings can cause.

and mediation to resolve issues, and they have been written into £7billion worth of contracts and have been used successfully on a number of matters that could have otherwise escalated to arbitration or litigation.

How would you define the ‘blended approach to arbitration’?

The blended approach is often used within conflict avoidance procedures, where negotiation and mediation is used as a first resort. If an issue cannot be resolved amicably, then an independent panel of expert(s) will undertake an early review of issues where the parties have acknowledged that there is disagreement. These processes can be adapted to meet the needs of the parties, but the review will usually provide non-binding and fully reasoned recommendations for resolving the issues. These recommendations are non-binding, but if a party decides not to accept them, they must provide a written, fully reasoned explanation for this decision.

What are the benefits of using collaborative contracts in the built environment?

How can the public sector's reluctance to embrace mediation be overcome?

Using collaborative contracts means that from the beginning of a project, all parties agree to demonstrate a genuine willingness to prevent the need for expensive, drawn out litigation or arbitration wherever possible. As all parties have taken ownership in agreeing to use collaborative contracts and conflict avoidance procedures, they trust the process and know the professional appointed to deal with the issues will be an expert who is fully independent and free of conflicts. All parties will be focussed on dealing with problems and working together to seek solutions to these problems.

The experience of organisations who have used mediation and conflict avoidance processes is invaluable when persuading the public sector to embrace mediation. In the UK, Transport for London (TfL) have developed Conflict Avoidance Panels alongside RICS DRS and their major contractors, and have integrated these into contracts on the upgrading works on the London Underground. Conflict Avoidance Panels promote the use of negotiation

‘The objective of RICS mediation is for the parties to reach a settlement.’

75

76

real estate in focus

CEE sees near record investment activity The real estate market in Poland and the rest of Central and Eastern Europe is booming, with developers seeing handsome returns on their investment.

What lies ahead in the sector over the quarters to come?

David Sands has

Urban Issues MIPIM 2017

been writing about European commercial real estate for over 20 years for UK magazine Estates Gazette, where he was news editor, and most recently for EuroProperty as deputy editor. During 1994 to 1996 he had a weekly half-hour slot on LBC Radio commentating on the London commercial real estate market. He is based in London.

The wide range

of new interna- €1.451 bn in Poland, equating to almost tional investors going into central 75 percent of the sector’s entire volume, and eastern European markets con- according to JLL. Investor interest and tinues to broaden. According to Sean pipeline retail transactions for 2017 Doyle, head of capital markets in look promising, with volume potencharge of Poland at international con- tially exceeding that of 2016, and prime sultancy CBRE: “The big story of the yields will be reaffirmed. The total last 18 months is the impact of South for Warsaw office transactions last African capital, which accounted for year reached €1.146 bn. A new prime about 40 percent of the entire region’s yield was established at 5.25 percent investment volumes. [South African when Warburg-HIH Invest Real Estate investor] Redefine backed the largest bought Prime Corporate Center from acquisition of last year with the pur- GolubGetHouse. Other deals include chase of shares in Echo Investment. Invesco Real Estate’s purchase of Q22 Investors Rockcastle and Prime Capital from Echo Investment for €273 mn really established South Africa as the at a yield of 5.35 percent. prime buyers of retail.” Meanwhile, In addition, Malaysian capital entered Adrian Karczewicz, head of divest- the Warsaw office market with EPF, via ments for CEE at Skanska Commercial Savills Investment Management (SIM), Development Europe, says: “New capi- acquiring Gdański Business Center tal flow to CEE is a trend that is gaining (A&B) from CEE developer HB Reavis more popularity among international for €186 mn. Buyer interest in Polish investment funds from western Europe retail real estate is so high that Meyer and the US, but also from South Africa, Bergman recently placed Galeria Asia – in particular Singapore, Malaysia Katowicka, the 47,500 sqm shopping and South Korea – and the Middle East.” centre in Katowice, on the market at €280 mn, but in February increased the Focus on Poland guide price to “well in excess of €300 Poland is the main attraction for inter- mn,” says Peter Evans, vice president national investors. Following an excep- at the London-based fund manager. tional 2015 – during which €4.1 bn Underlining the strength of Poland’s was invested – enthusiasm carried on real estate, Piotr Mirowski, operations throughout last year, when €4.5 bn and team manager for CEE at Colliers changed hands. It was the second best International, says: “The vast majority ever annual total in the country, says of assets put on the market last year property consultancy JLL. Buyers put sold, proving the tremendous demand almost €2 bn into retail real estate, from international investors for quality spent €1.8 mn on offices and €769 mn product in Poland.”

There have also been plenty of coron warehousing and logistics.

Investors encompassed all strategy porate platform deals too, showing profiles, from core through opportunis- the diversity of capital that is comtic across all sectors, and included deals ing to Poland. Singapore sovereign ranging from small to large, plus com- wealth fund GIC bought P3 Logistics plex platform transactions. Swedish Parks for €2.4 bn in Europe's largest property company Skanska sold assets real estate deal last year, from TPG to two investors who made their Polish Real Estate and Ivanhoé Cambridge. market debut last year. The firm dis- Tomasz Trzósło, JLL managing director posed of the Atrium 2 prime office pro- for Poland, comments: “P3 has a subject in Warsaw city centre to Germany’s stantial allocation to Poland of €285 mn HANSAINVEST for €88 mn, reflecting and GIC also took over the team with a 5.4 percent yield. And the compa- plans to expand it in CEE.” ny’s first hotel sale in Poland attracted The largest platform transaction a Qatari investor, Al Sraiya Holding was the agreement between WarsawGroup, who acquired the 361-room based Echo Investment for South African-listed Redefine Properties to Westin Hotel in Warsaw for €56 mn. acquire 75 percent of shares in Echo Shopping for retail Polska Properties’ €1.2 bn commercial Other headline deals last year were portfolio. The company is managed by in the retail sector, with four shopping Griffin Real Estate. Trzósło explains that centre acquisitions by South African despite some investors feeling nervous investor Rockcastle, including Bonarka about Poland as the new government City Centre in Kraków for €361 mn, the last year announced hurried new taxes, Focus Mall Portfolio (centres in Żielona this concern has dissipated. “Since that Góra and Piotrków Trybunalski) for €161 time last year we’ve had historically mn and Galeria Warmińska in Olsztyn high figures for office leasing – the secfor €150 mn. In addition, new South ond-best volumes ever behind 2006.”

African entrant Prime Kapital acquired Redefine negotiated, agreed, and Nova Park shopping centre in Gorzów closed the deal after the government Wielkopolski for €88.5 mn. Prime retail changed, so the incoming investor yields stand at five percent. In 2016, was fully aware of a degree of uncerSouth African investors transacted tainty and negative press surround-

77

Doing Business in Portugal and Brazil UniWerSyTeT ekonomiCzny W krakoWie Sala SenaCka, Ul. rakoWiCka 27, 28 marCH 2017, 10 am

Seminar on: The economic relation between Poland and Portugal and Brazil Practical aspects of doing business in Portugal and Brazil enTranCe Free oF CHarGe

additional information: Wojciech Baczyński, PPCC Director, email: wb@ppcc.pl, tel.: 22 322 76 67

78

real estate in focus

real estate in numbers EUR 1.146 bln: the total Warsaw office transactions last year

900,000 sqm: the total amount of new offices which be delivered this year, according to Colliers.

1.51 mn sqm: industrial space currently

under construction, according to Colliers.

Urban Issues MIPIM 2017

‘Polish lending is not as shiny as the rest of the real estate market and margins might be on the rise.’

ing government plans. “Investors and months a rising number of Asian invesdevelopers are more watchful in gen- tors are looking at Warsaw and this will eral due to the element of populism grow even further over the next two or in the government,” says Trzósło. “But three years as yield spreads have widthey are practical about it: demand ened compared to most other western is there, retail spending continues to European markets.” grow, the residential sector is growing, Some lenders remain cautious about while the business and shared services Warsaw offices. Martin Erbe, head sectors are still good, creating fresh of international real estate finance demand for office space. There is a very for northern and central Europe at Helaba, says: “The sector could be positive sentiment.”

A GDP growth of 2.7 percent is pro- a tough challenge for banks because jected for Poland this year which should of the planning pipeline of 100,000 underpin occupier demand for prop- sqm of space, especially as developerty, but Colliers International sounds ment is financed more by local and a note of caution for the Warsaw office not so much the international banks.” market, and predicts that 900,000 sqm Erbe underlines that the unpredictable of new offices will be delivered this year, Polish government is an issue for banks leading to downward pressure on base as well as developers. “We all prefer and effective rents in all markets where a stable environment and with all the there is strong construction activity. proposed new taxes – although all Prime Warsaw yields are predicted to might not come – Polish lending is not move to five percent with transactions as shiny as the rest of the real estate currently in due diligence. market and margins might be on the Paweł Dębowski, chairman of the rise.” Meanwhile, Dębowski points to European real estate group at Warsaw the constant investor demand for seclaw firm Dentons, is optimistic about ondary city offices, focused on longthe capital’s occupational market, term leases within the shared services for this year at least: “Net absorption industry. This segment is very active in of CBD offices in Warsaw last year was Wrocław, Kraków, Katowice, Łódź, and 300,000 sqm, which is quite good. Gdańsk, which have a strong universityI think this year will be similar and there educated worker base. Companies like is only 50,000 sqm of new space in Credit Suisse and State Street Bank are CBD Warsaw coming to market. I think taking, or have taken, extra space for the problems would start next year expansion in Poland. Yields for logistics if everybody builds what they say they assets with long leases are very close will, which is hundreds of thousands of to office levels, says Dębowski. “Even square metres.” The fringe office area of though rents have not gone up for years, Mokotów could be hit next year by low the size of the market attracts buyers rents and tenants opting to take avail- interested in long term income secured able space in the CBD, says Dębowski. by a high-quality tenant. Colliers calDeutsche Asset Management head culates that more than 1.51 mn sqm of of European alternatives strategy, industrial space is under construction, Matthias Naumann, says of Warsaw of which around 75 percent is already offices: “We expected demand to go leased. Demand for Polish retail space up two and a half years ago when we will be similar to last year, and 400,000 bought there. While there has been sqm of new shopping centre floorspace strong demand, we think that the sup- will come onto the market.

Poland is by no means the only thrivply will take longer to be absorbed – another two years for the supply to ing market as the yield gap between fade. So rents were hit maybe more CEE and western European commerthan we thought outside prime areas, cial real estate is expected to narrow but we own all sorts of assets in differ- further this year across all countries ent sub markets and so have a good and sectors. According to Skanska's view of what is working. This knowl- Karczewicz: “The 100-150 bps prime edge should create more chances for yield spread between western and eastus to go back into the market over the ern Europe acts in favour of the CEE next 12 to 18 months and to optimise markets. Prime office yields ranged our portfolio, targeting assets with between five percent in Prague and very low effective rents with chances Warsaw to 7.5 percent in Polish cities for future rental growth.” and Bucharest. It’s no wonder then that Deutsche acquired the 70,000 sqm CEE locations are attracting an increasRondo One and the 38,000 sqm ing number of global players who seek Metropolitan office complexes in both profitability and diversification of Warsaw in 2014. Naumann adds: “We their asset portfolio.” Presently, interrepresent mainly German institu- national investors are highly focused tional investors but also all sorts of on taking advantage of the region’s international ones in our core funds. healthy occupational leasing marOur US and Asian clients understand kets and increasing their exposure to that Poland is the gateway to central the region before prices rise further.

Europe. We also note that in the last 24 Tom Leahy, director of market analysis

79

80

Urban Issues MIPIM 2017

real estate in focus

‘Some political uncertainty ... has caused temporary nervousness among the investment community.’

for EMEA at Real Capital Analytics, said: “The demand for the region is clearly an occupier-led story. Some of the income returns on real estate outside the core western markets are very attractive.”

Sources of funds from outside Europe are a major boost to the region, and last year amounted to around 30 percent of the market, adds Leahy.

Some political uncertainty – with the change of government in Poland last year, the anti-corruption demonstrations in Romania, past worries about the Hungarian government’s policies – has caused temporary nervousness among the investment community.

But set against this, the fundamentals are secure with future economic growth for the whole region forecast to be strong. According to Invesco Real Estate, GDP growth in Poland will be three percent in each of the next five years, 2.5 percent in Czech Republic, 2.4 percent next year in Hungary, and in Romania 4.2 percent growth is expected – the strongest level since 2008 – and in the coming years, rises of 3.4-3.6 percent. Last year Romania was the EU’s top performer with an estimated GDP growth of 4.8 percent and the country saw €4.1 bn of foreign direct investment – the highest volume since its 2008 peak. “Such a strong economy will certainly boost the office market here, where the business services sector is already strong. Last year 265 SSC, BPO, IT, and R&D centres located in Romania, hiring 109,000 people,” says Karczewicz.

Real Capital Analytics' Leahy adds: “Some US and French capital has been going to Romania this year, it’s definitely on the overseas investor radar.

Purchases are very much dictated by the deals that are out there in the CEE region. For example, international investors can get their hands on a luxury hotel in Prague for a third or quarter of the price of London or Paris.” Leahy also points to the possibility of Brexit adding to the demand for the region’s shared office sector by banks moving some mid-office type roles from London to Warsaw or Prague, given the well-educated workforce and less expensive rents and salaries. Investors have understood that the CEE region is a very large and diverse set of property markets, says James Chapman, head of the region’s capital markets at Cushman & Wakefield: “Different groups of global investors have come up with a wide range of differing strategies; some target regional retail in Poland, while others are active in Serbia and Croatia.”

Bank lending for investors is relatively plentiful. According to Londonbased, US-backed fund manager Europa Properties’ principal head of central Europe, Robert Martin: “There is quite a lot available for investment

finance today, although loan-to-value ratios remain quite low in the sixties, and margins are fairly high.

On the development side there is finance available but lenders want a lot of risk mitigated in terms of planning and leasing and it is quite difficult to obtain funding for speculative projects. It is possible, but we have struggled with that,” says Martin. “Warsaw and Poland’s big regional cities is where people like to be lending. In Prague, a lot of banks are available to fund and in Budapest banks seem to be lending quite heavily.” He comments that there is a proliferation of local money these days and investors do not always need the banks.

Czech Republic remains a big draw for buyers and investment volumes in the country’s real estate last year totalled more than €3.6 bn – the highest ever level and a 36 percent increase compared to 2015. Significant transactions included Germany’s Deka buying Prague office asset The Park for €360 mn from Starwood Capital Group, while Florentinum was bought by CEFC for €280 mn from Penta Investments. This was the first major office acquisition by a Chinese investor in the Czech Republic.

Last year, Hungary’s annual volume was €1.7 bn, the highest volume since the market peak of 2007. Offices took a 47 percent share, followed by retail with 28 percent, industrial and hotels totalled 15 percent. The country’s biggest single office deal ever was the sale of Millennium City Centre office complex in Budapest by Heitman/TriGranit to German firm CA Immo for €175 mn.

Romania’s largest transaction was the acquisition of 26.88 percent of Globalworth, the country’s biggest office landlord, by South African group Growthpoint for €186 mn. Another South African buyer, NEPI, acquired Sibiu Shopping City from ARGO for €100 mn, the largest single asset deal outside of Bucharest since the crisis.

CEE’s smaller countries are also proving attractive to international buyers. South African REIT NEPI made its first foray into Croatia, with the largest single asset transaction in the SEE region, buying the country’s biggest shopping centre Arena Centarin Zagreb for €237.5 mn. In Bulgaria, Arco Real Property Holdings, a joint venture between Arco Capital and Deutsche Asset Management's DB Private Equity and Private Markets group, this month (February) announced plans to expand Business Park Sofia with a new €30 mn building.

The future for the CEE real estate market looks bright. And for new investor opportunities, Chapman is tipping the private rented residential sector to take off over the next two or three years. by David Sands

81

82

urban issues

How do you provide entertainment to four million people?

Poland Today sits down with Andrzej Bojanowski, Deputy Mayor of Economic Policy in the City Hall of Gdańsk, and Iwona Żygowska, President of Arena Gdańsk, owner of the Stadium Energa Gdańsk.

Arena Gdańsk

is a Partner of Poland Today’s Special Focus on Real Estate in Poland for MIPIM 2017.

Andrzej Bojanowski, Iwona Żygowska, Deputy Mayor of Economic Policy in the City Hall of Gdańsk

President of Arena Gdańsk, owner of the Stadium Energa Gdańsk

stantly adding to our portfolio of destinations such as Shakespeare’s Theatre, the European Centre of Solidarity or the Stadium Energa Gdańsk. We focus on promoting mass entertainment. Pretty much anywhere can easily be reached from Gdańsk. In 2016, Gdańsk airport serviced some four million passengers. It has direct air connections with over 50 cities across Europe – and the network is still developing. Our activities have resulted in an increase in the number of visitors, with almost a third from abroad, mostly Germany and Scandinavia, as well as Russia. In 2015 almost two million tourists spent over 24 hours in Gdańsk. We want to double this number, and the key to doing so is investment in leisure infrastructure.

Can Gdańsk achieve this goal?

Urban Issues MIPIM 2017

Gdańsk was the only Polish city nominated for the “European Best Destination 2017” competition, and came away in 3rd place out of 20 finalists from a total of 260 destinations. How did the city achieve this?

A.Bojanowski: Gdańsk boasts a natural predisposition for tourism and leisure. For ages trading routes have crossed paths here and so have the culture and histories of several nations.

The city has always known how to use its potential – the St. Dominik Fair, for example, is over 750 years old, and is one of the great outdoor events of its kind in Europe. Today, when planning Gdańsk’s future, we take inspiration from tradition, history and the natural features of the environment, such as the beautiful sandy beaches and our green hills shaped by ancient glaciers. As is our tradition, we make it a point to receive our guests in style, hence we are con-

A.Bojanowski: Statistically, each Polish tourist has a budget of PLN 1,000 annually while on holiday, whereas western European counterparts spend six times that amount. In Poland the share of tourism in GDP is about five percent, while globally the figure is almost ten percent. Tourism is an area of immense potential and is helped by the fact that the wages of Polish people are increasing. In the past five years the average wage has risen by 15 percent, and much of this is spent on leisurerelated activities and entertainment.

Do you also expect the standard of living of Gdańsk residents to improve?

A.Bojanowski: The development of the leisure industry means rising prosperity through new job opportunities and increasing incomes. So the first beneficiaries of the improved leisureindustry infrastructure are the residents of Gdańsk and the Pomeranian region.

The newly-generated jobs are mostly taken by the local community, and as a consequence, cooperation between the facilities and local suppliers is developing. These are tangible benefits which raise the quality of our lives.

I.Żygowska: If you look at how people spend their spare time you can see that there is demand for family entertainment. There is a need for places you can spend all day strolling inside without leaving the facility, taking advantage of its attractions, restaurants and cafes – and accommodation. There’s a reason why big family-friendly entertainment parks are so popular around the world. To some extent we have tested the concept of the entertainment centre by creating the FUN ARENA near the Stadium Energa Gdańsk. Today this is a go-to destination offering a relaxing atmosphere for all the family. It provides 20 different forms of leisure such as go-karting and a trampoline park. In 2015 the largest 25 entertainment parks in the world attracted a total of 235 million visitors, a 26 percent increase over the last 10 years. Gdańsk intends to attract experienced investors so we can tap this market.

How is Gdańsk going to turn this wish into reality?

I.Żygowska: We have strong assets in our hands, most importantly our location. Gdańsk is an interesting tourist destination which guarantees

demand. We are offering a building plot of 4.66 ha in the close vicinity of the Stadium Energa Gdańsk, between the beach and the Old Town. We’re looking for an experienced investor who will be selected via a competition, an investor who will build the scheme and manage it, and whose project will supplement the operations of the stadium and other facilities operating nearby. We will expect to have influence on the choice and know what will be built in the stadium's neighbourhood. As a municipal company we will work hand in hand with the investor, who will contribute know-how as well as funds, and we expect the company to become the facility's operator. It’s a proposal for an entity which sees potential in this area to develop its own business. There are several different models and possibilities of cooperation. On our part we can offer support in negotiations and obtaining permits at the preliminary stage of the investment.

When will the project be realised?

I.Żygowska: We have just announced a competition for the selection of an investor. Now we are waiting for offers from companies specialising in the leisure industry. The results of the first stage of the competition should be announced by the end of H1 2017.

After verification of the projects and investor background checks, we intend to negotiate for some months to get familiar with the project and try to perfect it. We would like to announce the investor by the end of the year.

If everything goes according to schedule, the investment should start the following year and, divided into several stages, it will take about four to five years to complete.

83

urban issues

Arena Gdańsk

(formerly, Biuro Inwestycji Euro Gdańsk 2012) owns the Stadium Energa Gdańsk. For more information about the competition check out arenagdansk.pl

4.66 ha: the investment plot

next to the Stadium Energa Gdańsk to be used as a leisure destination

54 European cities

which have direct air connections with Gdańsk.

84

urban issues

Six tips for investors There are some things that new investors – and seasoned ones too – need to keep in mind when buying a property in Poland. They may seem obvious, but it’s amazing how many times they are overlooked, or not carefully considered.

Noerr Biedecki,

a member of the Noerr Group, is a partner of Poland Today’s special focus on real estate for MIPIM 2017

Paweł Żelich, As-

Urban Issues MIPIM 2017

sociate Partner, Attorney at Law, Co-Head of the Real Estate Investment Group and Head of Litigation, Arbitration & ADR Practice Group in Warsaw, has over 16 years of experience in real estate transactions and construction / infrastructure projects, contract law, litigation and arbitration proceedings

Exclusion of land from agricultural use

Expropriation

State aid

If an area is designated by the authorities for

It is crucial to establish if a property has

been expropriated in the past. Previous owners or their heirs may have certain claims to the property, for example the preemption right, or even the right to request the return of the property. Any potential expropriation claims may turn out to be important for the entire transaction, necessitating additional security of the purchaser’s interests or, in some cases, leading to the project being dropped.

An investment in Poland may receive state

Environmental permitting

Public law preemption rights

Zoning

Under Polish law some types of business

Under Polish law the state or local authori-

withan existing local zoning plan. Should the property not be covered by such a plan, the investor is obliged to obtain an individual zoning permit defining some of the permitted technical parameters, for example some capacities of a production facility, the area percentage of real estate available for development, media supply parameters – prior to applying for a construction permit. An investment carried out in breach of the local zoning plan can lead to severe legal consequences that could even include a demolition order against erected buildings. There are some possibilities to mitigate such harsh legal consequences, but an nvestor has to take the necessary steps fast in order to be able to counter the actions of building authorities.

agricultural use, investors need to obtain a decision excluding the land from such use at the beginning of the investment, before applying for a construction permit. This entails the payment of fees which may total up to 437,175 zł per hectare. Should the construction permit be granted without previously obtaining a decision on excluding the land from agricultural use, the construction permit may be declared invalid.

activity require an environmental permit prior to commencing the investment, for example before applying for a construction permit.

Moreover, for investments that may have a major impact upon the environment, an environmental impact assessment must be conducted - including, in some cases, producing an environmental report to the authorities. In practice, obtaining a construction permit without prior receipt of an environmental permit because of incorrect classification of an investment (i.e. as an investment not requiring an environmental permit), may result in the construction permit being rendered invalid.

ties, and even some public companies, may hold preemption – or first refusal – rights to properties. These can be, for example, undeveloped properties previously acquired by the seller from the state or local authorities, a perpetual usufruct over an undeveloped piece of land, a property entered in the register of monuments or a property located in a special economic zone. A contract on the acquisition of a property in breach of public laws on the preemption right is null and void. We have recently advised on several projects where, due to statutory preemption rights, it proved necessary to structure the transaction by going through three separate contracts before the title was acquired: a preliminary purchase agreement followed by a conditional purchase agreement, and finally an agreement transferring the ownership title (or perpetual usufruct title) to the property. Thanks to these steps, the safe acquisition of the property, ready for the investment project, was secured.

aid financing, for example in the form of a cash grant under the lengthily-named “Programme of support of investments of considerable importance to the Polish economy in 2011-2023”.

Also, locating an investment in one of the 14 special economic zones, and obtaining a permit for conducting business there, allows investors to benefit from special tax incentives. This has proved attractive for a number of foreign investors over the last few years.

An investment project must comply

85

86

special focus real estate

Finding fortune between the forest and the sea A business hub on the Baltic Coast is reaping the rewards of a far-sighted decision taken in difficult times

Olivia Business Centre is a partner of Poland Today’s special focus on real estate for MIPIM 2017

When Maciej Grabski

Urban Issues MIPIM 2017

Olivia Star is almost 90-percent leased or reserved, ahead of its June completion date.

- today the CEO of Olivia Business Centre and a successful entrepreneur – bought the plot almost 10 years ago, it certainly raised a few eyebrows. While the aftermath of the Lehmann crash still wreaked havoc on the world’s financial markets, Olivia Business Centre’s vision of an eight-ten building business park in the genteel district of Oliwa on the outskirts of the 2nd-tier Polish city of Gdańsk, famed for its villas and the summer organ recitals, seemed far-fetched, even reckless.

But now, as the 156-metre Olivia Star office tower – the latest stage in the Olivia Business Centre scheme – nears its June completion date, with almost 90 percent of its 44,000 sqm space either leased or reserved, the buyers have been fully vindicated. “No-one else had that kind of vision,” says Jake Jephcott, the company’s Business Development Director. “While the purchase may have seemed reckless to some, we knew the area and the region intimately. It’s right next to the university, in the middle of the Tri-city metropolis. From the beginning we knew it was going to be at least eight buildings, and our vision was to create a mix of residents to really build a unique atmosphere,” he adds. The company refers to tenants as residents.

Olivia leans towards companies with an IT bent, as well as being home to major international and Polish brands like PKO Bank Polski, Amazon, PwC and ThyssenKrupp. “We see ourselves as being able to create relationships between different types of companies, which is always stimulating for those companies. We see it as cross-pollination between fields, which is increasingly the way the business world is going”.

Maciej Kotarski, Olivia’s Leasing Director, says that seeing the surrounding area from high up has given him a new appreciation of the Tri-City.

“At higher than 100m you really see the whole area in a new way – you can see the real nature of the place. I had never before realised how narrow the area is between the hill forest and the sea,” he says. Kotarski cannot hide his pride in the scheme. “Olivia Star, which we call the ‘Beauty of the North’, is very different to other buildings. The floor plate is very narrow – we think it’s slim and beautiful, but it also means that people who work there get a lot of natural sunlight. It has a triple-glass façade which is openable, so you get fresh air – the first and only office building to have this in Poland.” At the base of Olivia Star is a Winter Garden which covers almost 1,000 sqm and has a height of 12m, the idea behind it being that the natural area where people can relax shouldn’t only be available in the summer. “We don’t accept winter,” says Kotarski, and you almost feel he’s not joking. According to Kotarski, the company is in no hurry now to lease the remaining floors at the top, just under the floors which will be open to the public, right at the top of the tower. The three highest floors will offer an external terrace, cafe, a restaurant and event space for up to 400 people. Tenants which have committed to Olivia Star include Nordea, Fujifilm, Schibsted (the nordic media giant), IT companies SII and Goyello. The company is already constructing the next step of development, Olivia Seven.

Jephcott believes that no-one else in the industry could have, or would have, done this project. “The team behind Olivia weren’t in real estate originally – we are all business people rather than property people. I don’t think property people would have taken the decision we did, a decision that was perceived to be risky, when in fact it wasn’t. But it did defy logic,” he states. Logic, it seems, isn’t always applicable in this industry.

‘At higher than 100m you really see the whole area in a new way’

88 history

Eyewitness: 1967 The Rolling Stones concert in Warsaw Leszek Fidusiewicz shares memories of experiencing The Rolling Stones live in Warsaw in 1967, the first time a major Western band performed behind the Iron Curtain.

The Rolling Stones

were rugged, uncensored and their music was lively — a cross between American blues and rock. That’s what I loved about them.

Seeing them perform live in concert for the first time in 1967 was an incredible experience and to this day, music from those times cannot be imitated because it was the best sound in the world.

After the war, folk songs were popular until some Polish singers like Janusz Gniatkowski took the stage. In 1956, Leszek Fidusiewicz my friend from Legia Warsaw, Jerzy was born in Warsaw Pawłoski, won a silver medal in fencing in 1943. An athlete at the Summer Olympics in Melbourne, turned artist, he is recAustralia and brought back an album ognized as one of the best Polish sports pho- of some unknown singer named Elvis tojournalists. He prePresley. With the boom of rock ‘n’ roll, sented his work at the youth in Poland fell in love with renowned exhibiPresley and Bill Haley, then came Ray tions and won many Charles and Roy Orbison. I travelled all awards such as Sports Photo of the Year by over the world as the photo reporter for the International Legia Warsaw, so the players and I had Association of Sports a chance to listen to all kinds of music.

Journalists in 1982.

Fidusiewicz now runs I remember hearing a band on the radio an art gallery with his whose name started with the letter "B". son. To see more of A few years later we discovered it was his photographs, go the Beatles. They revived the music to www.fotofidus.pl. scene – not just with their fantastic music but with their attitude and hair.

They made mainstream music more dynamic and shook things up. I also liked The Stones because their music was so energetic and unapologetic.

So how did I get a ticket to the 1967 Rolling Stones concert in Warsaw? My friend Andrzej Badeński, an Olympicwinning sprinter, asked me to take pictures at his wedding. I agreed and afterwards I presented him with a photo album. Of course, I wouldn’t take any money for it, so he gave me tickets for the first Rolling Stones show at 5.00 pm. The seats were in the seventh row at that! I was 24 years old, wearing leather boots like Jagger and got to my seat. Suddenly I was in shock.

At concerts with Polish artists, everyone bowed after each song and the audience applauded. The artist would usually take a drink of water and prepare for the next set. Followed by more applause. This cycle would last an hour.

Here, the curtain opened and this lunatic, [Mick Jagger] started going crazy and he didn’t stop. This was a huge shock for me. Supporting him were Brian Jones, Charlie Watts and Bill Wyman. For the first time, I saw how

you can present sets without breaks and this was such a moving experience for me that I couldn’t bring myself to go to other bands’ concerts. I also didn’t want to see another Rolling Stones concert because I didn’t want it to ruin my initial reaction and brilliant memories.

Their performance was excellent.

At the sound of the amplifiers, my eyes widened, my locks of curly hair straightened out, my ears perked up and I felt my body go numb — I felt like I couldn’t move. ‘Satisfaction’ was my favourite. Going into the concert, it was a shock, I must admit, not because there were masses of people gathered before Congress Hall, but because the Citizens’ Militia had armoured vehicles and water hoses. I thought, these sorts of things are seen at war and not used against civilians in a country that continuously fought for peace. What were the water hoses there for? I don’t know.

And I don’t know if they were used at all, but it was rather provocative.

I took a camera to the concert which my twin brother and I got after saving up lunch money our mom gave us. We bought a German Altix camera. We started training in pole vaulting and we needed a camera to analyze our techniques. Besides, we needed this camera to document our ambitious sporting achievements. My athletic career never panned out but I became a sports photographer. At the time, photography wasn’t considered an art form, but thankfully it is now. I published these photographs 45 years after the concert. I wasn’t in the music scene so the pictures were more for myself. It was such an experience that it was worth documenting. I remember how mad I was that my brother and I couldn’t go to the second concert. At the time, that was my biggest tragedy.

by Monica Zielinski

‘The curtain opened and this lunatic, [Mick Jagger] started going crazy.’

experiencing legends In 1967, The Rolling Stones hit the road

to promote their ‘Between the Buttons’ album.

They performed two shows at Congress Hall in the Palace of Culture and Science – at 5.00 pm and 8.30 pm. Their opening act was the popular Polish band Czerwono-Czarni. News of the concert spread throughout Poland causing a crowd to gather in front of the Palace trying to force their way in or purchasing counterfeit tickets. Congress Hall was drastically overcrowded — at double its capacity.

89

history

Behind the Iron Curtain The Roll-

ing Stones were the first such band to play in a communist country, and people went crazy over their concert.

90

It happened in… February

history

To celebrate the return of an independent Poland following decades under the communist yoke, the nascent government in February 1990 decided to restore the symbolic crown to its white eagle emblem.

Open your wallet and take a close look at your złoty coins. Irrespective of the denomination, they all have one common element – the crown atop the eagle. This diminutive crown, although small in size, makes up for it in significance. It was a symbol of independent statehood for nearly nine centuries until it was removed by communist authorities after World War II.

‘The crown represents a strong, independent nation.’

photo: Ireneusz Sobieszczuk, Jan Bogacz (Forum)

Centuries of history The “crowned eagle” had been the offi- as the country was left defeated followcial symbol of Poland since the 13th ing the war, calling it an opposition to century – but it goes back even further. the ruling Communist Party. The crown Legend has it that the founder of the on the eagle was the almost imperceivaPolish nation, Lech, found himself face- ble difference in the iconography of the to-face with a treacherous white eagle Polish government in exile in London while hunting. The aquiline image with – during WWII and later, as Poland lina backdrop of the blood-red setting sun gered behind the Iron Curtain – and became the proud image of the country. that of the Polish People’s Republic, The country’s first dynasty, the Piasts, whose eagle was uncrowned. So it was used the symbol as far back as 1222, only natural that the new government although coins bearing the image of the adopted the golden headgear once the eagle had been used much earlier. Piast country regained independence. ruler Przemysł II made the white eagle a symbol of state unity at his coronation Yay, or Nay? in 1295, and it was adopted by all subse- In late December 1989, parliament quent rulers, with very few changes to decided to reinstate the pre-WWII symthe design for hundreds of years. bols of Poland, including the symbolic The present version of the eagle was eagle which appeared on national flags, designed during a prosperous period in official documents, stamps, money Polish history in 1927 as a symbol of the orders and uniforms. In February the nation’s independence. However, com- following year, deputies debated munist authorities abolished the crown, the details of the national emblem.

On Friday, 9 February 1990, the Polish parliament voted to restore the majestic headpiece upon the white eagle as we know it today – with its head facing right, with outstretched wings, beak and talons of gold, and placed on a field of red. But the seemingly simple decision to add a crown to every single eagle around the country was not met with universal approval.

Reporting the commission’s decision in 1990, United Press International journalist Jan Cienski, reported on the scale of the operation to change the national symbol, including concerns that it would be too costly for the new cash-strapped country.

However, Solidarity official Piotr Nowina-Konopka was confident the change was important enough that Poland would come up with the necessary funds. “A state should be able to find the money for its symbols,” he said. “I really don't think there will be a problem with the costs.” It turned out he was right, and the symbol was adopted. The emblem unites a sometimes divided nation, reminding modern Poles of the country’s proud history.

The white eagle is synonymous with Poland and may be the most noticeable part of the emblem, but the crown represents a strong, independent nation.

And the eagle would be somewhat less regal without it. by William Tomaney

91

history

Coat of arms: the White Eagle symbol

appeared for the first time on the coins made during the reign of Bolesław I (992-1025), initially as the coat of arms of the Piast dynasty. The eagle’s graphic form has changed throughout centuries. Its recent shape, accepted in 1927, was designed by professor Zygmunt Kamiński and was based on the eagle’s form from the times of Stefan Batory’s reign (1576-1586).

92 sports

Rowing seeing a renaissance in Poland A sport which was popular in Polish society at the beginning of the 20th century is seeing a new wave of interest among millennials.

In its heyday, rowing was one of the most popular sports in Poland – but interest has dwindled, and not much of the legacy is left. People nowadays struggle to tell the difference between a kayak and a rowing boat, and most people cannot name any of the sport’s top athletes. Commentators covering the action are inexperienced – all this despite a flurry of medals at Rio 2016.

Jacek Ojrzyński

has rowing in his blood. The history graduate captained the Warsaw University Boat Club between 2013 and 2016, and competed with the rowing crew of the University of Warsaw for five years.

He co-founded one of the biggest amateur rowing clubs in the Polish capital: “Towarzystwo Wisła dla Wioślarzy”. He is the author of Rowing in Interbellum Warsaw (1918-1939).

So how did we get here?

‘The communist political system destroyed the social element of sport.’

In the first half of the 19th century, rowing became a global phenomenon, with the establishment of races such as the UK's Henley Royal Regatta and The Boat Race. Poland couldn’t just sit and watch.

In 1878, four decades before gaining independence, the first Polish rowing club – Warszawskie Towarzystwo Wioślarskie – was founded. By the time WWI broke out, there were more than a dozen clubs across the country – including in Kraków, Kalisz, Lwów and Płock.

After the war in the newly inde- the 20th century, Poland won 21 medpendent Poland, the Polish Rowing als at the European Championships Federation (PZTW) was established, and five at the Olympic Games. This encompassing a total of 13 clubs. That included the achievements of Roger number had soared by the outbreak Verey, winning eight medals, including of WWII, with 73 clubs, and more three golds, at the EC, and a bronze than 10,000 rowers across the coun- at the 1936 Berlin Olympics. In 1935, try. The sport was prestigious and very Verey took second place in the singles popular, For many it wasn’t just a sport, race at Henley. There were also many it was also a way of life. Boat houses promising female rowers. Warszawskie became social clubs used by hundreds Towarzystwo Wioślarskie sent a team to of people, equipped with cantinas, London in 1931, and went on to win the dance floors, restaurants, and tourist sparring regatta on the River Thames boats. Away from the rowers, thou- at the Ace Ladies Rowing Club. Then sands of spectators gathered to watch came WWII, and after all those sucnational championship tournaments. cesses, Polish rowing was left in a desIn one venue, Brdyujście in Bydgoszcz, perate state. Only a handful of clubs a crowd of over 50,000 people would had survived, and the new communist attend to watch races – unimaginable political system destroyed the social in Poland nowadays. element of sport.

From a large rowing community According to a 2016 report, there came many great athletes and com- are now just 30 rowing clubs in the petitive successes. In the first decade of whole country, with 1,730 athletes –

Los Angeles, 1932 The Polish

national rowing team (above) which won the bronze medal in the coxed four competition.

From left: Edward Kobyliński, Stanisław Urban, coxswain Jerzy Skolimowski, Janusz Ślązak and Jerzy Braun.

A rowing parade

(below) to mark the opening of the season passes through Poniatowski Bridge in Warsaw, May 1927.

merely half the number active in prewar Warsaw. The good news is that the situation is slowly improving, with clubs nowadays investing in infrastructure, university teams increasing in popularity, and new clubs such as Towarzystwo Wisła Dla Wioślarzy in Warsaw, introducing the sport to amateurs, old and young. Maybe a renaissance for Polish rowing is on the horizon.

by Jacek Ojrzyński

93 sports

Boat parade on Poland's longest river, the Vistula (left).

This photograph in Warsaw in May 1927, was taken when the popularity of rowing was at its peak in the country.

modern success In recent years Poland has had some suc-

cess in rowing, particularly the women's team.

At the 2012 Olympics in London, Magdalena Fularczyk and Julia Michalska took home the Bronze in the Double sculls. Four years later in Rio de Janeiro, Fularczyk teamed up with Natalia Madaj and won Gold. The women's Quadruple sculls team also managed to stand on the podium, winning the Bronze medal.

Roger Verey (left)

after winning gold at the European Championships in Berlin in 1935. Photo taken moments after leaving the water with the boat on his shoulder.

Thousands of spectators (above)

gathered to watch the Polish Rowing championship in 1925 in Brdyujście, Bydgoszcz.

94

95

96

EVENT rEViEw

Risks & TRends 2017 confeRence

Government officials and business leaders at Polityka Insight’s conference

Left: Günther

H. Oettinger, European Commissioner for Budget and Human Resources

Above: Deputy

PM Morawiecki presented plans to develop the Polish economy in 2017.

Top left: Wawrzyniec Smoczyński, Managing

Director, Polityka Insight; Neera Tanden, President, Center for American Progress; Richard Shirreff, Former Deputy Supreme Allied Commander; Arup Banerji, Regional Director for the European Union, World Bank

Over 300 business leaders, policy makers and diplomats attended Polityka Insight's flagship conference “Risks and Trends 2017". Poland's deputy Prime Minister Mateusz Morawiecki delivered the opening speech at the conference. Morawiecki, who also serves as Development and Finance Minister, presented plans aimed to develop the Polish economy in 2017. The plans are based on an assumption that the country cannot act as a liberal “night watch”, nor can it go back to the notorious central planning of the communist era. The second priority involved reinstating social cohesion, so that all of the country’s citizens benefit from the economic growth.

Also speaking at the conference, former Deputy Supreme Allied Commander Europe gen. Richard Shirreff warned that it is unclear how the new US administration under Donald Trump could react to Russia’s nuclear blackmail. The most damaging of Trump’s statements was the one that undermined NATO’s collective defence, he said, adding that US forces in Eastern Europe are weak. Meanwhile, the head of the Centre for American Progress think tank, Neera Tanden, remarked that in all major issues, ranging from US-EU relations, to the annexation of Crimea, Donald Trump takes the most pro-Russian stance among US leaders.

The Risk and Trend's closing speech was delivered by the EU commissioner for budget. Günther Oettinger said that the European Union is not the reason for the crisis, but a method of responding to it. He argued that populism,

protectionism and nationalism are not a way of addressing real challenges – globalisation, immigration and digitalisation.

He opted in favour of making the next EU budget more flexible, as it would allow funds to be shifted between goals and member states.

Other speakers at the conference included the head of the Polish Development Fund, Paweł Borys, Chinese economist Justin Yifu Lin, and World Bank regional director Arup Banerji. Domestic and foreign experts discussed global, European and Polish risks and trends in 2017 in three panels. Representatives of business, legal firms, public administration, the World Bank and key embassies attended the conference. Guests included PKO BP chief executive Zbigniew Jagiełło, BZ WBK board members, deputy development ministers Jadwiga Emilewicz and Tadeusz Kościński, presidential spokesman Marek Magierowski, and the head of the EurCom representation in Poland Marek Prawda.

The conference took place in Warsaw’s InterContinental hotel.

Polish-duTch Business foRum in The neTheRlands

Cheap labour no more

International investment interest in Poland remains very high if The PolishDutch Business Forum in the Netherlands, which took place in The Hague recently, is anything to go by. Attended by deputy Prime Minister Mateusz Morawiecki and Henk Kamp, Dutch Economic Affairs Minister, the large hall was full to bursting with many attendees forced to stand.

The main message the Deputy Prime Minister conveyed was that Poland is no longer a business destination whose chief hallmark is cheap labour. The country, he said, provides a well-educated, highlytrained and highly-motivated workforce, a message reinforced by subsequent speakers. When challenged that the new government was hostile to foreign capital, Morawiecki countered that Poland had

Above: Poland Today was a media patron of the event, alongside Rzeczpospolita and Polityka Insight.

Right: Richard Stephens, Editor of Poland Today, moderated a panel which discussed the ‘Partners For International Business’ (PIB) initiative.

97

EVENT rEViEw

enjoyed a significant increase in foreign greenfield investments in the past year in contrast to the ‘easy’ wave of privatisation investments of the past.

Morawiecki’s session was followed by a panel of success-story case studies from prominent Polish and Dutch entrepreneurs. Highlights included the information that Ewald Raben, CEO of logistics provider Raben Group, first arrived in Poland soon after the fall of the Berlin Wall, Left: Deputy Prime fresh out of university and keen to make Minister Mateusz his mark in a country turning a new page Morawiecki stressed that Poland’s chief in its history, his only asset being a 2nd attribute is no longer hand Volkswagen. The company now cheap labour, but has a multimillion euro annual turnover. highly-educated For his part, Marek Huzarewicz, General skilled workers.

Manager and Chairman of the Board of Philips Lighting Poland, revealed that the company had first arrived in Poland back in 1923 and since its re-engagement in at The demand the beginning of the new economy, had for spaces at only been led by Poles, such was the trust the Forum defied all expectations, placed in the local team by the company. with standing room Another panel focused on three ini- only for latecomtiatives under the Dutch government’s ers (right).

‘Partners for International Business’ initiative: Linked by Rail, represented

by Frank Schuhholz, AgroFresh Park Łódź, represented by Theo Tiegelaar, and Vistula River Park, represented by Sylwia Mikołajczak. All three talked about the relative ease of bringing together several partners for each project in Poland and how they had benefited from sharing knowledge.

98

EVENT rEViEw

execuTive cluB confeRence

Leaders meet to discuss the future of Poland’s infrastructure

Above: Dariusz

Blocher, Chairman of the Board, Budimex S.A.

Above right: The

photos: Executive Club

panels discussed public procurement, road construction, the housing situation and other key topics

The state and future of Poland’s infrastructure and construction challenges were discussed at the eighth Polish Infrastructure and Construction conference. Housing, transport, and the state of Warsaw were all up for discussion. Organised under the honorary patronage of the Infrastructure and Construction Ministry, participants included leading political and business figures.

The first panel focused on public procurement issues. The panel discussed improving the situation of contractors and positive system changes and discussed the effective use of EU funding, appropriate implementation of non-price criteria in tenders, and the implementation of electronic tender submission and communication with ordering parties. The panellists agreed the amendment of the Public Procurement Act was a step in the right direction, that the atmosphere between contractors and ordering parties is improving, and appropriate use of other aspects of contractor selection is a fundamental issue.

The second panel focused on roads, especially the investments that have already been completed. The importance of long-term planning was stressed, and

panellists called for the use of available, alternative sources of funding to make sure projects can be completed. They agreed the implementation of the Road Programme would considerably affect economic development.

The conference also talked about the need for simple construction and the benefits and savings it would provide.

The panellists said quality was an unclear measurement criteria, adding strong competition would help stimulate growth.

Warsaw’s infrastructure was discussed by the third panel. They talked about the importance of having consistent longterm policy for mass transportation. The panellists also discussed improving the capacity of municipal transportation, the main concerns associated with PPP, such as a legal culture reducing trust towards negotiations, and plans for the extension of the Warsaw subway. Summing up, they said long-term planning, long-term contracts providing operators with the necessary means, and the integration of various means of transportation into a single cohesive system were vital.

The final panel discussed construction, with a debate on housing in Poland.

Above left: Winners of the ‘Infrastructure and Construction Diamonds’ included Strabag and Unibep as ‘Innovation Leaders of the Year’

Above: Jerzy Szmit,

deputy Infrastructure and Construction Minister, opened the conference

It was mentioned that unclear future population estimates made it difficult to plan.

Panellists agreed the country was open to foreign capital, while the large construction market was identified as the main reason foreign companies are so eager to open offices here. Environmental issues were also discussed, and new technologies were considered too expensive and their effects delayed. The panellists emphasised the necessity of implementing innovations and increasing activity on the Polish internal market.

99

100 EVENT rEViEw

ouTsouRcing sTaRs 2016 gala

Outsourcing Stars shine in Lublin

Winners of the awards included the City of Poznań

for Best City and Echo Investment for Best Office Developer (below)

The conference preceding the gala

(above) was held at the Lubelskie Conference Centre and the gala itself took place at the stunning Lublin Philharmonia (bottom right).

The Outsourcing Stars Gala on 31 January 2017 organised by Pro Progressio in Lublin, was the fourth consecutive time that city mayors, heads of businessservices companies, suppliers, media and real estate developers from Poland, Europe and the US met to discuss the future of the industry.

The aim of the Gala was to summarise the business services industry and underline the trends, opportunities and challenges not only for services suppliers but also for the cities where BSS operation centres are located. Among the VIP speakers were: Lublin mayor Krzysztof Żuk; Lublin Voivedship Vice President Krzysztof Grabczuk; PwC partner Romek Lubaczewski, and Quint Group CEO Arno Ijmker, who was representing IAOP. The official part of the Gala was moderated by Pro Progressio CEO Wiktor Doktór. During the awards ceremony Pro Progressio awarded the fastest growing outsourcing companies, cities and institutions supporting growth of BSS in Poland.

101

102 impressions

A Nigerian in Warsaw There are few Africans living and working in Warsaw. But at least one is intent on making his stay count, and improve his own life and that of those around him.

Adekunle Ayoola was born in Kano, a city

in Northern Nigeria. After earning a degree in insurance and risk management from Lagos State Polytechnics in Nigeria, he earned a political science degree from Olabisi Onabanjo University. In 2005, he moved to Warsaw to study political science at Collegium Civitas, and social research at the Polish Academy of Science. The entrepreneur started his own company selling African products and is currently working towards growing his business.

He is happily married and has two daughters.

What were your first impressions of Poland?

When I first arrived in this country, I was reminded of Poland’s history.

During the last occupation [in WWII], as the Germans were leaving and the Russians were approaching, Warsaw was completely destroyed. Warsaw was ground zero. Now if you look at the Warsaw of yesteryear, compared to the Warsaw of today, you could see that Poland is marked for greatness. I saw that this country has been progressing gradually over the years. Any wise entrepreneur who is willing to grow with the country will definitely reap the benefits of it in the years to come.

What was the hardest thing to adjust to when you moved to Poland?

Language was something I struggled with. We were given Polish lessons at Collegium Civitas to give us enough knowledge to survive, but if I had known I was going to stay in Poland, I would have opted for additional language lessons from the beginning. I tell people who plan to move here that if they want to break through in Poland, they must assimilate and take time to learn the language. In my own situation, this was most certainly a mistake, but you learn from your mistakes, and I’m trying to learn it now.

What has been the strangest experience in Poland?

‘This was a country and a capital city that was almost destroyed, and look at what it turned into.’

One of my strangest experiences has been with the banks. As a young entrepreneur who is trying to build a business, you approach people who are supposed to help push your idea to another level. However, I encountered people who didn’t seem to believe in me, which reduced my spirit and caused me to lose focus. I prepared a business plan and approached a few banks to help finance my company and they said my paperwork looked good but wouldn’t approve my loan. Even with a resident card, I didn’t get approval because I wasn’t Polish. I sensed an element of discrimination. But I don’t blame anyone for my misfortunes, so I carry on.

Even when I called the bank again when I wanted to buy a house they gave me a hard time, but what can you do? I keep pushing until I get there.

What was the business you started?

When I came to Warsaw as a student, I couldn’t find my favorite foods from back home. I said to myself, 'Africans travel with their food and music'. That put me into action and I started a business importing groceries and selling them in Poland. Unfortunately, not many people know about African food so we had to rethink our strategy, but the business is still growing at its own pace.

What are the most striking similarities between Poles and Nigerians, and what are the most striking differences?

Both countries are filled with hardworking people, but you can’t really compare the two. If you look at it from a religious point of view, back in Nigeria we see Poland as a Catholic mission. In Nigeria, religion defines the country.

Poles also have nationalist traits and during periods of occupation, scholars still taught people the language to preserve it. Nigeria’s official language is English, but trying to tie people together is quite difficult. Poland sees the advantage of uniting people for the common good of all – this isn’t the case in Nigeria, which is slowing its development.

What keeps you here now?

I want to be part of the Polish success story. I had the privilege of traveling around the world as a high school student – it was a real privilege for a young Nigerian, thanks to my mother who was so supportive. I had the opportunity to stay in London. Every Nigerian goes to London like Polish people go to Chicago. But I realised that if you want to start something new, like what I am doing presently, you need to start on a new ground because markets are saturated elsewhere. Therefore, when I came here, I saw a lot of opportunities but also many challenges. This was a country and a capital city that was almost destroyed, and look at what it turned into. This was a country that almost went extinct, but it came back. So, I want my business to grow and be successful because if I don’t do it, somebody else will.

interview by Monica Zielinski

103

104