No. 232 / 2015 Polish Market SPECIAL EDITION

PU B LISHED SIncE 199 6 No. 232 /2015

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www.polishmarket.com.pl

special edition

POLAND INDIA

economic cooperation

,

POLISH

special edition

PUBLISHED SINCE 1996

MARKET

ECONOMIC MAGAZINE

PRESTIGE. QUALITY. PROMOTION.

P O L I S H M A R K E T. C O M . P L

June 2014 polish market

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special edition

Chance for a long-term SUCCESS A

ccording to a report by Citigroup, in 2010 the world’s biggest economies were the United States, China and Japan. By 2025, China will take over the leadership, but by mid-century it will give way to India. Goldman Sachs gives India a more modest, second place.

The Indians themselves are optimistic, too, with the ambition to make the country the third largest economy in the world.

These calculations are not unfounded. India is already today inhabited by over 1.2 billion people. The Indians are a very young society - more than half of them are aged below 25 - and are the largest English-speaking population of the world. India is also today one of the world’s largest zones of consumer goods production and trade. The retail sector is estimated at USD 800 billion.

No wonder, therefore, that, after abandoning the doctrine of economic self-sufficiency, India has become a market of global interest.

When Poland and India were reborn as independent states in the 20th century, despite many cultural barriers and the most important, geographical one, it turned out that we can find areas of fruitful economic cooperation. In the years 1960-1980 in particular, both countries maintained close diplomatic relations and intense economic cooperation, especially in terms of energy infrastructure and defence industry. But as the two economies entered a phase of political transformation in the 1990s, mutual contacts became rare.

Now we are gradually rebuilding them. Naturally, this rupture is reflected in the negligible share of India in Polish foreign trade (0.21% in exports and 0.55% in imports). Nevertheless, India is one of the most important non-European economic partners for Poland - it ranks fifth after China, the United States, South Korea and Japan - and the Polish-Indian trade and investment present positive dynamics.

Polish exports to India cover in particular the electromechanical, chemical and metallurgical industries. We buy mainly light industry articles, including clothing and clothing accessories, but also chemical and electromechanical products. Foreign direct investment is also a very promising segment. India is the second (after Singapore) location of Polish FDI in Asia. Among the biggest investors are Toruń’s TZMO, Bioton and Polmor. As regards Indian companies, they have made capital investment - apart from the global giant Arcelor Mittal - mostly in business service centres, serving markets of Western Europe: Tata Consultancy Services, Infosys BPO, HCL Technologies, Wipro, MphasiS, ZenSar Technologies.

Other Indian companies operating in Poland include Sharda Group (textiles and bedding), Videocon (CRTs), Escorts (tractors), Eurobatt (batteries, household appliances), Essel Propack (production packaging), Rishabh Instruments Pvt. Ltd. (an 85% stake in LUMEL SA) and Uflex (plastic packaging plant).

Transactions and investments made in recent years do not exhaust the list of possibilities and realistic proposals for the future. For Poland, these are supplies or investments in areas such as the arms industry, coal mining and the extraction industry, agri-food exports and renewable energy. We can also offer cooperation in the field of IT and ICT, high technologies, biotechnology and medical devices that are already exported to the Indian market. An example of cooperation that has already started and offers wide, not only economic, prospects is that of Polish cinematographic companies with “Bollywood.”

Do we have a chance for a long-term success? The problem lies in a difference in potentials between the 38-million population of Poland and India with more than 1.2 billion people. However, increasing bilateral economic diplomacy, confirmed by frequent state visits, gives us hope for success.

Krystyna Woźniak-Trzosek Editor-in-Chief President Rynek Polski Publishers Co. Ltd. SPECIAL EDITION

President: Krystyna Woźniak-Trzosek

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Contributors: Agnieszka Turakiewicz

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POLAND STRONG ECONOMY AND SOLID FOUNDATIONS

Janusz Piechociński, Deputy Prime Minister, Minister of the Economy

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I

ndia is one of the most important partners for Poland in South Asia and globally. It gives us satisfaction to note that the state of Polish-Indian relations is very good. The two countries are linked by intensive economic cooperation, political dialogue and well-developed cultural and scientific exchange. We are also aware of the growing role of India as a global superpower, a member of the G-20. The pace of its economic growth and success in the development of hightech sectors make India one of Poland’s most important economic partners.

On my visit to India at the beginning of January 2015, I met Narendra Modi, the prime minister of India’s new government.

During our talk, Prime Minister Modi outlined his economic programme for India, which he had just announced. The programme is called “Make in India.” It is an ambitious project for bringing the Indian economy back onto a path of rapid growth.

The programme is targeted especially at the industrial sector and foreign investors. During the meeting, the Indian prime minister also encouraged Polish firms to directly take part in the activities undertaken within this project.

During my visit to India, I announced the launch of the Go INDIA project in Poland. Go INDIA is an initiative of the Ministry of the Economy, which – in conjunction with other government agencies – wants to propose a common coherent strategy for the development of economic relations with India. The aim of this strategy is to develop activity in traditional spheres of cooperation and to promote new economic sectors for bilateral cooperation. Go INDIA is Poland’s response to the “Make in India” strategy. In my view, India is a country of boundless opportunities for the Polish exporter and investor, a nation looking for new economic partners and very open to cooperation with Poland. Our country has to meet these plans halfway so as to find itself among the states which reap great benefits from cooperation with the Indian market. However, if the strategy of this project is to work Polish businesses need to be active - Go INDIA is an instrument designed to encourage Polish businesses to show more initiative in starting cooperation with Indian partners. The project also confirms the commitment of the Ministry of the Economy to supporting the activity of Polish businesses on especially important and promising foreign markets.

I wish to stress that Poland attaches very great importance to strengthening its economic cooperation with India. This country is a market with a huge potential for development. It is an economic leader in South Asia, and a promising place for the Polish exporter and investor. As the Polish deputy prime minister responsible for the country’s economic development, I wish to stress that Poland is interested in strengthening Polish-Indian relations and raising them in the near future to strategic partnership. I wish to express my hope that, thanks to top-level talks with representatives of the Indian government, cooperation between our countries will be exemplary and will bring notable benefits to the economies of the two countries.

Poland and India need partnership based on solid business and cultural foundations. We are on the right track to build it in the area of economic cooperation and political dialogue. My talks with members of the Indian federal government confirm this, being another important development on the road to building our new solid relations as partners.

We have a lot to offer to India. We want to pursue not only bilateral cooperation, but also plan to exploit our experience on

third markets, including South Asia, but also on other continents, like for example Africa. We have a huge potential to offer India a wide range of cooperation proposals. The rapid expansion of the Indian economy, its large potential and the growth of India’s importance on international markets allow us to project that trade between our countries will intensify. We also count on increased interest from Indian investors in Poland. I can see opportunities for cooperation in such sectors as coal mining and the extraction industry, agri-food exports and renewable energy. We also offer cooperation in the area of the IT and ICT sector, high technology, biotechnology and medical products, which are already exported to India.

I am convinced that the initiatives and economic programmes planned and already carried out in the two countries will contribute to intensifying mutual economic and trade relations, and ties between individual sectors of Polish and Indian industry.

Poland is an attractive and stable economic partner. We create good conditions for the development of enterprise. As a result, we have noted a rise in exports and attracted foreign investment to Poland. We are valued by foreign companies, including Indian ones, which decide to bring their projects to Poland.

The recent years witnessed changes not only to the value of foreign investment in Poland, but first of all its structure and motives behind the decisions to invest. The service sectors are becoming Poland’s advantage. Today, investors’ interest moves towards knowledge-based sectors: shared services centres, research and development centres and centres providing specialist ICT services.

Poland’s strong economy and solid foundations for its further growth mean that investment in our country is guaranteed to be profitable. Our economic results stand out against other European Union countries, making us one of Europe’s growth leaders. This is why global corporations eagerly choose Poland as a location for their new investment in Europe.

Our high position is also due to the activities of the Ministry of the Economy, which supports the development of investment in Poland. Investors may receive, for instance, financial support in the form of grants, assistance in staff training and funding for innovative investment projects. At the Ministry of the Economy, we have also drafted regulations which make it easier to conduct economic activity in Poland. Thanks to our efforts, the operation of special economic zones in Poland has been extended. The investors who are active in the zones are offered tax breaks and sites ready for the construction of their facilities. They may also count on support from efficient regional Investor and Exporter Service Centres.

Our reputation and position is also built by professional and well-qualified personnel. We offer excellently educated workers who are valued highly across the world. Consequently, we increasingly often compete with other countries in quality rather than merely production and labour costs.

Being glad with our country’s development in recent years, we still remain aware of further challenges. The world is gathering momentum and the processes we are taking part in require commitment and mutual cooperation. I am convinced that, thanks to our hard work, the favourable trends in the development of the Polish economy will continue and brand Po• land will be recognized around the world.

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CONSTANTLY GROWING Marek Sawicki, Minister of Agriculture and Rural Development

L

ast year, we celebrated in Poland two important anniversaries: 25 years of political and economic transition and 10 years of our presence in the European Union. After the changes in Central and Eastern Europe in the early 1990, Polish agriculture also underwent enormous transformation. We were the only country among the 10 states which entered the European Union in 2004 to have agriculture based on private family farms. The changes in the Polish countryside were very big, but not revolutionary. Polish farmers started modernization processes very quickly, as did food processors. Thanks to their hard work, and the inflow of pre-accession aid and money available under the Common Agricultural Policy, the large-scale process of modernization began first in meat and milk-processing plants. Western Europe had undergone changes of a similar scale in the mid-1970s. Today, it is us who have some of the most modern processing plants in the meat and dairy sector.

It is easy to see the impact of this funding on Polish rural areas as you travel across Poland. This is also confirmed by statistics.

According to Eurostat data, in 2007-2014 alone, Poland raised the value of its agricultural production by 20% to EUR22.6 billion and its contribution to the EU’s agricultural output grew from 5.5% to 5.8%, putting us in 7th place in the Community.

For several years we have been the largest apple producer in the EU, the second largest in Europe and the third largest in the world. At the same time, we produce the largest amount of apple juice concentrate in the EU and are the second biggest producer of this concentrate in the world. Additionally, Poland is the largest producer of blackcurrant in Europe and the largest exporter of blackcurrant in the world. We rank first in Europe in the production of button mushrooms. It is worth stressing that 35% of the button mushroom imports in the world originate in Poland.

We rank first in the EU in the production of poultry, triticale and cabbage, and have second place in the production of rye, oats and strawberries and third place in the production of sugar beet, wheat, rapeseed, potatoes, cauliflowers and onion. These results would not have been attainable without the hard work of farmers who, using EU support mechanisms, modernize their farms and increase their productivity, specialization and the concentration of production. In 2007-2014 alone, more than 54,000 Polish

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farmers benefitted from support for farm modernization under the Rural Development Program 2007-2013. The support was worth PLN9.3 billion. Around 51,000 farms were modernized, nearly 440,000 machines and pieces of equipment for agricultural production were purchased, and nearly 3.6 million square metres of farm buildings were constructed or modernized.

The process of establishing producer groups continues. This year, there are 1,338 such groups registered in Poland, with most of them set up in the years 2007-2014. In 2015, 309 groups of this kind were active in the fruit and vegetable sector. Agricultural producer groups had a membership of 27,600 farmers while groups and organizations of fruit and vegetable producers had 6,700 members.

Our agricultural exports are constantly growing thanks to the ongoing changes. For years trade in agri-food products has constituted a significant part of Polish foreign trade. It accounted for 12.7% of overall trade last year against 9.4% in 2007. Additionally, the agri-food sector is one of the few sectors of the national economy with a positive trade balance. If it had not been for this year’s drought we would have certainly achieved the agricultural exports value of EUR25 billion. The above is the presentation of only some data illustrating the changes which have taken place in the Polish countryside in recent years.

I am convinced that the new solutions concerning the system of direct payments and Rural Development Programme for 2014-2020 will enable further modernization of farms and Polish agriculture. This is undoubtedly a historic chance, which should be exploited as effectively as possible. We can produce very good food, which is constantly gaining new consumers on more and more markets. Our food enjoys recognitions for being not only tasty, but also having the highest quality parameters. This is our advantage, of which the Indian consumer will also have an opportunity to become increasingly convinced. I have no doubt that our products will find here their enthusiasts, who will appreciate their unique taste, aroma and top quality. Our experience in modernization as well as techniques and technologies serving agriculture and agricultural processing are undoubtedly further areas which may contribute to Polish-Indian cooperation.

•

T

he export success of the Polish agrifood sector, reflecting Poland’s high position in the international arena, can be attributed to the following factors: - high quality of Polish agri-food products, - price/cost advantage in exports, - flexibility of the food-processing industry in terms of product range, - wide promotion of Polish food products, - cooperation between agricultural producers and processors coupled with intensive activity conducted by the Minister of Agriculture and Rural Development to acquire new marketing outlets.

It is worth stressing that the Polish food-processing industry is a major food producer in the European Union, ranking sixth in the Community with a market share of almost 9%. There are many factors which have contributed to this significant increase in the amount of food produced by the Polish agri-food sector. The most important ones include: - taking – as early as the pre-accession period and then after Poland’s entry to the EU - a wide range of restructuring measures in the institutional environment of the sector and within agriculture and the agri-food industry themselves, - opening access to the EU market of over 500 million consumers to Polish producers, - wise use of money available from EU sources and the national budget, - modernizing farms and their technical equipment, improving agricultural techniques and animal production methods, increasing crop and animal yields, - increasing the scale of production on farms, improving the structure of agricultural holdings in terms of their area, - increasing agricultural output intended for sale,

- horizontal integration of farms (concentration of the supply of agricultural products), setting up producer groups, - broad scope of modernization and restructuring processes, especially in the agri-food industry, - inflow of foreign direct investment, which enabled easier access to modern technologies and management methods, and contributed to the concentration of production to enable economies of scale, - competitiveness resulting mainly from a price/cost advantage.

Since the time of Poland’s entry to the European Union Polish agri-food exports have grown considerably. In 2014, these exports were worth EUR21.9 billion, which represented an increase of 4.5% from the EUR20.4 billion in the previous year. In the first half of 2015, Poland’s agri-food exports were worth EUR11.2 billion, which represented an increase of 6.4% compared to the first half of 2014 when the value of agri-food exports had been EUR10.5 billion. Around 80%, or almost EUR9 billion worth of the agri-food products exported in January-June this year went to the EU market. A significant part of the products was then re-exported to third countries.

In January-June 2015, Poland’s dairy exports were worth EUR931.8 million versus EUR1,122 million a year earlier. Vegetable exports were worth EUR441.3 million versus EUR510.3 million a year earlier and fruit exports were worth EUR488.1 million versus EUR592.3 million.

MAIN EXPORTS IN 2014: - meat and meat products - dairy products - fish and fish products - tobacco - chocolate - bakery products

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THE POLISH AGRI-FOOD SECTOR - sugar syrups - fruit - cereals

The opening of new markets for the agri-food sector is of very great importance, especially in a situation when there are problems on traditional marketing outlets due to a deterioration in economic conditions or because of markets’ being closed for political reasons. The Indian market is considered to be promising, judging by todate cooperation between the two countries, trade figures and interest shown by entrepreneurs. Under the plan for the promotion of agri-food products in 2016, India has been chosen as one of the 13 non-European target markets on which promotional activities are to be concentrated. The remaining markets are the United Arab Emirates, Singapore, Japan, China, Canada, Algeria, South Africa, the United States, Saudi Arabia, Egypt, Vietnam and Iran. We are present at the Aahar fair and Annapoorna World of Food.

In late 2015 or early 2016, a counsellor for agricultural affairs is to be appointed at the Polish Embassy in New Delhi. The importance of agri-food products in Polish exports to India is growing. In 2014, the value of Polish food exported to India increased by 64% compared to 2013. According to preliminary data, in January-June 2015 the value of agri-food exports almost doubled compared to a year earlier to reach EUR5.1 million, with a significant rise in the exports of bread, crispbread, cakes, cookies and apples. Until recently Polish agri-food products used to reach India through the intermediary of Western European compa• nies.

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PARTNERSHIP

BASED ON SOLID BUSINESS AND CULTURAL RELATIONS Jerzy Witold Pietrewicz, head of the Polish-Indian Joint Commission for Economic Cooperation, Deputy Minister of the Economy

I

ndia is a promising market for our trade, with a huge potential for development. This is why we have decided to carry out the Go India programme. We would like to strengthen our economic cooperation and conduct joint projects. The significant scale of both business and tourist contacts confirms our efforts as do visits to India by Polish government officials accompanied by Polish entrepreneurs and visits to Poland by Indian government officials, also with the participation of Indian business.

The value of trade between our countries reached in 2014 almost USD2.3 billion, rising by 16%. We hope that the figures for 2015 will be equally strong because we would like to double our trade in the coming period and establish cooperation in such industrial sectors as coal mining, the power industry, defence industry, agri-food processing and environmental protection.

The Polish-Indian Joint Commission for Economic Cooperation held its fourth meeting in Warsaw on June 15, 2015. The plenary session was preceded by meetings of three joint working groups appointed under the Protocol of the 3rd Session of the Polish-Indian Joint Commission held on October 8, 2013 in New Delhi.

The appointment of the three joint working groups – for mining and the extraction industry, for agri-food processing and for the innovative IT/ICT sector – is to enable in-depth analysis of the economic sectors which are of special interest for the two countries. The meetings of the working groups were attended by Polish and Indian businesses. The main goal of their work is to indicate specific needs of the economy in the analysed sectors in the context of the government’s economic policy on the one hand and to point to opportunities for cooperation and trade beneficial to both sides.

As the Polish head of the Committee, I would like to stress that Poland believes that a greater commitment on the part of

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Polish firms to cooperation with Indian business may bring enormous economic benefits to both countries. We also perceive India as the economic leader in South Asia and a promising market for Polish exports and investment.

The basic task of the working groups and the Joint Committee is improving conditions for access to the partner’s market.

The Indian authorities’ opening access to the Indian market for Polish milk and dairy products, after the partner has approved Polish certificates issued by relevant authorities for Polish exports, is an example of such efforts. We expect that the certificates for access to the market for fish will be confirmed in the near future.

The process of agreeing on the question of access to the Indian market for Polish apples, and fresh fruit and vegetables is still underway. Poland imports from India many agri-food products which are not available in Poland, like for example mango, papaya and other exotic fruits.

I would like to stress that the main task of the civil service is to identify each other’s needs and the economic policy directions outlined by the two governments as the most desirable for our countries’ further economic development. Making Indian businesses and administration more familiar with what Polish exporters have to offer will generate greater interest from Indian firms in seeking trade partners in Poland.

Poland and India need partnership based on solid business and cultural relations. We are on the right track to build them in the area of economic cooperation and political dialogue.

I hope that thanks to our joint activities at the highest governmental level cooperation between our countries will be exemplary and will bring notable benefits to the economies of the two countries.

•

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THE POLAND-INDIA ECONOMIC RELATIONS POLISH TRADE WITH INDIA The state of Polish-Indian economic relations is very good. India is for Poland one of the most important strategic partners in the global arena. The two countries benefit from extensive economic cooperation and political dialogue, as well as solid economic relations. However, despite the steadily increasing mutual trade, they do not fully exploit the potential of their economies. India continues to offer Polish enterprises untapped opportunities in terms of exports and investment.

THE COMMODITY STRUCTURE OF TRADE WITH INDIA In recent years, there have been positive changes in the commodity structure of Polish exports to India. The exports have seen a steadily increasing share of relatively highly processed goods, i.e. electromechanical products. In 2014, these accounted for 41.6% of Polish exports to India compared to approx. 35% in 2010.

In 2010-2014, the exports of electromechanical products increased nearly two-fold, to USD 230 million, with the following goods gaining most in importance: • machinery and mechanical appliances and their parts, whose sales increased more than two-fold (up to approx. USD 120 million), and the share rose by 4.3%, to 22.1%; • electrical machinery and equipment and their parts, whose exports increased three-fold, to nearly USD 80 million, and the share soared from less than 8% to 14.3% in 2014.

Janusz Piechociński, Deputy Prime Minister, Minister of the Economy and Prime Minister of India Narendra Modi.

The second place in terms of export share fell to metallurgical products (25.9% in 2014), whose exports in 2010-2014 grew by 50%, to USD 143 million. The dominant role was that of iron, cast iron and steel, although their exports grew relatively slowly (by 5.3%). On the other hand, sales clearly accelerated of tools, utensils, knives, spoons, forks, cutlery (6.7-fold), copper and copper products (2.8-fold) and aluminum and aluminum products (three-fold).

Polish trade with India in 2012-2015 (in USD m) 2012

2013

Growth 2013 / 2012

2014

Growth 2014 / 2013

H1 2014

H1 2015

Growth H1 2015 / H1 2014

1 905.9

1 956.3

103.0%

2 261.8

116.0%

1 134.1

1 021.2

90.0%

EXPORTS

665.8

491.2

74.0%

550.6

112.0%

256.5

204.9

80.0%

IMPORTS

1 240.1

1 465.2

118.0

1 711.2

117.0%

877.5

816.3

93.0%

BALANCE

- 574.3

- 911.6

x

- 1 160.6

x

- 621.0

-611.3

x

SALES

Source: INSIGOS/Ministry of the Economy

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The sales of chemical products increased in 2010-2014 by 75%, to nearly USD 110 million (20% of the export share, third place).

This was the result of a dynamic increase in exports of plastics and plastic products (more than three-fold) and rubber and rubber products (2.7-fold).

As regards Polish imports from India, the most important changes in 2010-2014 were registered for: • chemical products, whose imports increased almost threefold, to more than USD 0.5 billion, and the import share soared from 18% to approx. 30%, with organic chemicals in the lead (an approx. 3.5-fold increase); • light industry products, whose imports grew much slower than average, i.e. by less than 30%, to approx. USD 480 million, which resulted in a decrease in import share from 37.6% to 28% in 2014; • electromechanical products, whose imports increased by almost 40%, to USD 240 million, while the import share decreased to 14%, down by 3.5%.

In H1 2015, there was a marked deterioration in trade with India: exports fell by 20% (to USD 205 million), and imports by 7.0% (to USD 816 million), resulting in a trade deficit increasing by more than USD 10 million, to approx. USD 611 million. The decrease in Polish sales to India was due to a decline in exports of key product categories, i.e. electromechanical products (33%), metallurgical products (25%) and chemical products (40%). At the same time, agri-food products are becoming an increasingly important category of Polish exports to India. Over the 12 months of 2014, food sales to India saw a spectacular boom, rising by 64%, to USD 8.6 million.

By the end of 2014, there were over 1,033 Polish exporters to and nearly 4,000 importers from India.

The year 2014 was a special one in Polish-Indian economic relations: we celebrated the 60th anniversary of the establishment of diplomatic relations. On this occasion, the Governments of both countries, with the support and involvement of their respective diplomatic missions, took a number of initiatives in terms of promotion and information aimed at boosting mutual economic cooperation.

INVESTMENT AND CAPITAL COOPERATION India is one of the most important economic partners of Poland among non-European countries. Poland is one of the EU leaders in terms of attracting Indian capital. At the same time, we are the largest recipient of Indian FDI in Central and Eastern Europe.

According to NBP estimates, the value of capital invested by Indian companies in Poland amounted to USD 92 million by the end of 2013, which represented 0.04% of the total capital invested in Poland. It should be noted, however, that its cumulative value hits new highs every year, with a seven-fold increase relative to 2004. In 2012 alone Indian companies invested in Poland a total of USD 2.7 million.

According to GUS data, by the end of 2012, there were 122 companies with Indian capital operating in Poland, most of which (99) employing up to 9 people. The value of foreign investment of these companies, calculated according to GUS methodology, amounted to PLN 93.1 million, which represented 0.05% of total foreign capital. During this period, there were 7 Indian

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companies on the Polish market whose investments exceeded USD 1 million.

Also, 7 companies from India made it to the ranking of Major Foreign Investors by the Polish Information and Foreign Investment Agency (PAIiIZ) in 2012.

In recent years, there has been an increase of interest from Indian companies in the Polish services sector. The vast majority of Indian companies have been investing in business services centres serving Western European markets. The list of Indian companies that set up their centres in Poland includes among others: Tata Consultancy Services (Warsaw), Infosys BPO (takeover of the Philips BPO centre, including in Łódź), HCL Technologies (Kraków), Wipro (Wrocław), MphasiS (Wrocław) ZenSar Technologies (Gdańsk). Here are some examples of other Indian companies established in Poland: Sharda Group (textiles and bedding), Videocon (CRTs), Escorts (tractors), Eurobatt (batteries, household appliances), Essel Propack (packaging), Rishabh Instruments Pvt. Ltd. (85% shares in LUMEL SA), Uflex (a plastic packaging factory in Września).

NBP statistics regarding the Indian capital investments in Poland fall short of Arcelor-Mittal, which, due to it being headquartered in Luxembourg, is considered as Luxemburgian capital. Arcelor-Mittal Poland is the biggest steel producer in Poland, with a headcount of over 11,000 people working in six locations in the provinces of Śląskie, Małopolskie and Opolskie. In 20042013, the company invested in Poland approx. PLN 4.8 billion.

After Singapore and ahead of China, India is Poland’s second largest FDI location in Asia. By the end of 2012, Polish FDI in India was worth a total of USD 217.5 million, while the amount of Polish investment inflows to India in 2012 reached USD 34.2 million. Polish investors in India are thus more active in terms of capital involvement than Indian investors in Poland.

The majority of Polish investment flowed into the manufacturing industry. Among the largest Polish investors in India are: Can Pack (can producer), Bella India (Toruń’s dressing materials producer TZMO has formed a joint venture with an Indian partner). Bioton is also present in India (construction of a factory in Pune), and Polmor has teamed up with an Indian partner to form a company producing welded structures for rail vehicles in Hyderabad.

India is a highly attractive market for foreign investors due to its growth prospects (the size of the internal market, as well as development opportunities, including for technologies). Polish companies can count on cooperation opportunities in the manufacturing industry: food processing, machine building, shipbuilding and armaments. Other attractive investment sectors in India are energy, construction, chemical and pharmaceutical industries and services.

ECONOMIC SITUATION OF INDIA There was a shift in Government in India after the parliamentary election in 2014. The country’s new Prime Minister Narenda Modi pledged to put the Indian economy back on the track of fast growth (during the last 2 years of the previous Government’s term of office India’s economic growth weakened seriously).

The most important industries in terms of growth are: mining, manufacturing, construction, commerce, hospitality, transport and telecommunications.

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India’s key macroeconomic indicators

GDP growth (%)*

POLISH ESTABLISHMENTS IN INDIA

2010

2011

2012

2013

2014

10.1

7.5

5.1

5.0

5.6

1 729.0

1 729.0

1 843.0

1 758.0

2 048.0

Trade and Investment Promotion Section Embassy of Poland in New Delhi

Nominal GDP (in USD bn)**

Zbigniew Magdziarz Counsellor, Head of Trade and Investment Promotion Section 50 M (Gate 4) Shantipath, Chanakyapuri

GDP per capita (in USD)**

3 500

3 800

5 300

5 500

5 800

110021 New Delhi Tel.: +91 11 414 96 959 Fax: +91 11 268 89 215

10.2

10.2

9.7

10.0

5.0

www.newdelhi.trade.gov.pl

Unemployment (%)

*

*

9.5

9.1

8.6

Economic Section

Outward FDI

*

*

109.7

119.8

129.8

Exports (in USD bn)

353.9

353.9

301.9

317.8

317.8

Imports (in USD bn)

436.7

436.7

503.5

515.1

515.1

Inflation (%)

Embassy of Poland in New Delhi 50-M Shantipath, Chanakyapuri, New Delhi Tel.: (+91 11) 414 96 918 Fax: (+91 11) 414 96 952 www.newdelhi.msz.gov.pl Source: OECD Economic Outlook, May 2015; *except for GDP growth, all figures refer to the fiscal year starting in April; **World Bank data.

Polish Honorary Consulate in Kolkata: Mr Mohan Goenka - Honorary Consul 687 Anandapur, EM Bypass, Kolkata 700 001 West Bengal, India Tel.: 0091 33 6613 6264

POTENTIAL AREAS OF FURTHER BILATERAL COOPERATION

Fax: 0091 33 6613 6800, 6613 6400 Email: pol_con_kol@emamigroup.com Polish Honorary Consulate in Bangalore

A relatively rapid pace of growth of the Indian economy, its great economic potential, as well as its growing importance in the world economy allow to anticipate an increase both in Poland’s activity on the Indian market and in India’s interest in Poland.

According to the Ministry of the Economy, new opportunities are opening up for cooperation in traditional sectors where Polish companies have already an established reputation, e.g.: -mining (underground and open-cast) – construction of complete plants (including mines and coal preparation plants), supply of machinery and mining equipment, as well as services and works for the Indian coal mining; -energy – supply of services and assemblies, components and spare parts for repairs and overhauls (improving energy efficiency) of power plants built in India in the 1970s and 1980s, among others, by Elektrim and Megadex; -armaments – cooperative partnership, technology transfer, development of R&D cooperation.

Mr Abhishek Poddar - Honorary Consul Sua House, 26/1 Kasturba Cross Road, Bangalore - 560 001, Karnataka, India Tel.: 0091 80 41120782 Fax: 0091 80 22128189 Polish Honorary Consulate General in Colombo (Sri Lanka) Mr Desamanya Kandiach Ken Balendra - Honorary Consul General Phoenix Ventures Ltd, 409 Galle Road, 2nd floor, Colombo 3, Sri Lanka Tel.: 009411 2565612 Fax: 009411 4727060 Email: CherylD@brandix.com Polish Honorary Consulate General in Kathmandu (Nepal) Mr Lokmanya Golchha - Honorary Consul General Golchha House, Ganabahal, P.O.Box-363, Kathmandu, Nepal

New opportunities have emerged in areas such as:

Tel.: 00 9771 4250001, 4249114 Fax: 00 9771 4249723

-on-shore exploration of oil and natural gas, including supply of equipment, instrumentation and software, and conducting drillings (research, exploitation and directional drillings) -pharmaceuticals and medical equipment – due to the expanding Indian health care sector, both state and private, with a market of over one billion potential patients and consumers of medical and hygiene products and medicines; -food processing machinery and equipment; -installations and technology transfer in the field of environmental protection; • -R&D cooperation.

Email: lmg@golchha.com or polishconsulatenepal@gmail.com Polish Honorary Consulate in Dhaka (Bangladesh) Mr Reshadur Rehman - Honorary Consul Erectors House (10th Floor), 18 Kemal Ataturk Avenue, Banani C/A, Dhaka - 1213, Bangladesh Tel.: 00 88 02 9821426; 00 88 02 9821422-23 Fax: 00 88 02 8822244 Email: polcondhaka@gmail.com

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RESURGENT INDIA IS A PROMISING PARTNER FOR POLAND Ajay Bisaria, Ambassador of India to Poland and Lithuania

I

ndia is going through a phase of strong economic resurgence. The new Indian government, elected only last year, has put in place several new policies and programmes to put India on a higher growth trajectory. These programmes are aimed primarily at unleashing the creative energies of an increasingly youthful and aspirational India. But they also present a bouquet of diverse opportunities for global partners.

Among the measures that have been rolled out are those aimed at a friendlier business environment. Our new Make in India policy aims to encourage domestic and foreign investors to make India a manufacturing hub, raising the share of manufacturing in our GDP from 16 to 25%. To support this process, India plans to create as many as 100 smart cities and rejuvenate 500 others, also to provide opportunities for skilled employment to the millions of urbanizing young. The results are beginning to show on the ground. Global investors are seriously looking at India’s offer of “democracy, demography and demand”. We have seen an almost 50% increase in foreign investments till April this year. The Indian economy is now the fastest growing amongst the large economies of the world, with a growth rate in 2014 of 7.4%. India hopes to grow at over 8% in 2015 and move to a trajectory of double-digit growth over the next decade. We stand on the threshold of one of the most ambitious transformations in history, aimed at bringing hope and development to millions. This process also creates an unprecedented economic opportunity for global partners to not just contribute to India’s growth story, but also profit from it.

POLAND CAN BE A KEY ECONOMIC PARTNER FOR INDIA Poland is a particularly important partner for India. The current bilateral trade level is around USD 2.3 billion. Our bilateral Joint Commission that met in June has set a target of USD 5 billion for 2018. Our investments are also healthy. Indian investments in Poland are over USD 3 billion, including global Indian investors

10 polish marketspecial edition 2015

like ArcelorMittal. Polish investments in India are currently less than USD 1 billion, and we hope to attract significantly increased in-vestments in the coming years.

Our Make in India programme has acquired a great deal of traction in Poland. We launched the programme here in March this year. The programme aims to transform India into a major global manufacturing hub. We are delighted that Poland has responded by an announcement in April of the Go-India Programme, which will facilitate and incentivize Polish companies to engage with India.

Our Joint Commission identified several areas of promise. We have working groups looking into three specific broad sectors: coal and mining; food processing and agriculture; and information technology. Defense technologies are also of great interest under our Make in India programme. Several Polish companies, both in the public and private sectors, are in talks with Indian companies, to make defense products in India. We have also identified sunrise areas such as medical products and renewable energy, (solar, wind, bio-energy and bio-fuel) as areas of promise. We hope to collaborate in research and science so that we could convert Polish technologies into products that could be used in the vast Indian market.

Poland provides a gateway to Europe for Indian business and has a huge cost advantage, skilled manpower and a friendly business climate to attract our investors. We already have companies like Indorama, Uflex in sectors like plastics and packaging, Escorts in tractors and Videocon in TV picture tubes, not to mention the global player ArcelorMittal in steel products. We also have some 11 Indian companies in the IT sector. Infosys has a center in Łódź, which employs 3,000 people. Wipro, based in Wrocław and Gdańsk, has recently signed a big deal with T-Mobile. These Indian IT companies are making use of the friendly near-shoring opportunities in Poland to cater to European markets.

We think the sky is the limit for Polish business with India. •

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PROMOTION OF

POLAND POLAND AND COMPANIES FROM

Tomasz Łukaszuk, Ambassador of the Republic of Poland to India

I

ndo – Polish relations have intensified significantly over recent years. This is best measured by the number of high-level visits as well as visits of business delegations on both sides.

I must emphasize strongly that India is one of Poland’s most important strategic partners globally and we are connected by the intensive economic and cultural cooperation as well as political dialogue.

In 2014 Poland and India celebrated the 60th anniversary of their diplomatic relations. Poland and India officially established their diplomatic relations in 1954 but our cultural bonds should be dated back much earlier. In fact, it was as early as in 1893 when the Chair of Sanskrit at the Jagiellonian University in Kraków was established and scholarly research on Indian culture began.

Figures regarding economic relations between India and Poland are very promising. In 2014 our bilateral trade grew to almost USD 2.3 billion. I strongly believe that these numbers can be even higher in the near future. And my optimism is very well founded as in 2014 our exports to India grew significantly.

Recognizing the status of India as a global economic power, Poland wishes not only to strengthen our economic cooperation, but also intends to identify the most profit-bringing areas in our bilateral contacts, especially in the energy sector, food processing industries, advanced technologies as well as in research and development.

We put big hopes on ambitious and diversified investments in both directions in order to make the presence of Indian companies much stronger in Poland as well as Polish companies more competitive in India. We offer a large number of incentives to the Indian business community, with whom we have invariably excellent relations.

Making review of only one month of October in reference to Polish activity in India shows participation in two big events in India. Poland was a Partner Country during India – Central Europe Business Forum in Bangalore on October 5–6, which means that our country and our economy was in the focus of the Forum.

An official delegation of the Ministry of Foreign Affairs, headed by Mr. Leszek Soczewica, Deputy Minister of Foreign Affairs, and

WE OFFER A LARGE NUMBER OF INCENTIVES TO THE INDIAN BUSINESS COMMUNITY, WITH WHOM WE HAVE INVARIABLY EXCELLENT RELATIONS.

a business delegation of 17 companies from Poland took part in the Forum.

Poland is also to be a Partner Country during Progressive Punjab Investors Summit.

The official delegation headed by Mr. Jerzy Pietrewicz, Deputy Minister of the Economy, with the participation of Deputy Minister of Agriculture and Marshal of Lubelskie Region as well as a business delegation, will participate in the Summit.

While the first of these events was mainly focused on the promotion of India as a business partner , the second event is fully focused on the promotion of the state of Punjab. Our participation in both big events is just taking a unique opportunity for promoting Poland and companies from Poland as reliable and reputable business partners. Our aim is also to present investment opportunities in Poland to business from India and particularly from Punjab.

I always remain committed to strengthening and diversifying Indo-Polish business relations. I am deeply convinced that this publication will enable you to explore Poland as the land of unlimited opportunities where your creativity and entrepreneurial spirit • can be materialized in the best possible way. polish market

11

GOODWILL & COOPERATION J. J. Singh, President of the Indo Polish Chamber of Commerce and Industry

I

ndo-Polish relations are deep rooted and have traditionally been close, friendly and characterized by goodwill and cooperation. There are no major disagreements of a bilateral nature, and there has been cooperation between the two countries in international fora.

Since the 15th century, a number of Polish writers, soldiers and missionaries have visited India. During the 19th century, several Sanskrit classics were translated into Polish. “A History of Ancient India” in Polish was one of the first of its kind to be published in Europe in 1820. A Chair of Sanskrit was set up at the Jagiellonian University of Kraków as far back as 1893.

During World War II, the then Jam Sahib of Nawanagar extended hospitality to some 6,000 Polish orphans released from Siberia. They have formed the World Association of Poles from India.

India and Poland established diplomatic relations in 1954 and the Indian Embassy in Warsaw was opened in 1957. The two countries shared common ideological perceptions, based on their opposition to colonialism, imperialism and racism.

We celebrated last year the 60th anniversary of diplomatic relations between the countries, which has given a new surge in political and business visits on both sides. The value of our bilateral trade is around USD 2.5 billion at present but with the new programmes Make In India and Go India by the Polish government we will see an increase to USD 5 billion within next few years.

Poland has lot of opportunities in India, especially in the sectors like food processing, agriculture, medical equipment, mining and mining equipment, chemical, tourism and entertainment.

IPCCI has assisted more than eight business and political delegations organized by the Ministry of Economy, Agriculture, Environment and Foreign Affairs to India in the last 12 months related to the above mentioned sectors.

India, with its GDP growth of 7.5% and population of 1.3 billion, offers the biggest potential for Polish business to expand

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in the form of joint ventures or green field investment. The potential is not limited to large companies but there are also immense opportunities for small and medium companies which are the engine of economic growth both in Poland and India.

The Polish companies TZMO, Can Pack and Inglot, which have been present for a decade in India have been joined by new ones like Ekolog, TB Hydro and Komandor. There are many more Polish companies which are cooperating with the Indian market and are satisfied with the results.

The potential of the Polish furniture industry will soon be exploited in India by IKEA as it invites Polish furniture producers to India.

We have major Indian investments in Poland namely Infosys, Wipro, HCL, WNS, UFLEX, Lumel, Arcelor Mittal and Indorama, which is increasing its investments by expanding its plant in Poland. Further, we have above 100 small and medium enterprises from India doing business in the textile, home furnishing and electronics sectors, not to forget hospitality services.

Poland is also high on the list of Bollywood producers as more and more feature and short films are being shot in Poland.

We can capitalize on our cooperation more if we have a direct connection between Poland and India, which our chamber has songht for four years now. Having six Dreamliners and being a member of Star Alliance, this should not be a difficult task for the Polish national carrier Lot as the numbers show that to start with a thrice-weekly connection Lot can have an appropriate number of customers with good yield.

We have a right environment in India and Poland should not miss this opportunity to increase its business ties with India.

IPCCI is doing its bit in promoting not only business ties but also culture cooperation as it can be an important starting point for any ties.

• Contact: www.ipcci,pl jjsingh@ipcci.pl

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THE POLISH-INDIAN TRADE FIGURES ARE OPTIMISTIC Zbigniew Magdziarz, Counsellor, Head of the Trade and Investment Promotion Section Embassy of the Republic of Poland in New Delhi

I

ndia - a country which fascinates and overawes, intimidates the big and constitutes a question mark for the small. But does it really? Statistics on trade between Poland and India for recent years show that the volume of business between these countries has grown at an impressive pace and this proves that India is a serious and noti¬ceable business partner for Poland.

And vice versa – Poland is more and more recognized in India as a modern democratic, fast grooving and innovating country. Companies from both countries are looking for reliable and competence partners for business and cooperation. Trade and Investment Promotion Section of the Embassy of the Republic of Poland to India is the facilitator of such a contacts.

THE MAIN TASKS OF THE TRADE AND INVESTMENT PROMOTION SECTION IN NEW DELHI ARE AS FOLLOWS: • To promote Poland and Polish economy in India, Nepal, Sri Lanka, Bangladesh, Bhutan and Maldives • To give assistance to Polish exporters seeking new markets • To encourage Indian companies to invest in Poland • To support Indian investors willing to invest in Poland with the information and contacts • To supply the necessary information to Polish companies which consider starting production, unfolding commercial activities, locating investments or providing services in India • To assist Polish and Indian companies in establishing mutual contacts • To search the available data bases for suitable distributors, importers and exporters • To provide information on exhibitions and trade fairs in India and in Poland • To participate in the important trade fairs in India and South Asia • To provide assistance to trade missions of Polish entrepreneurs visiting trade fairs in India • To assist Polish special trade missions to India and other mentioned above

• To support Indian firms and organizations in business missions to Poland • To organize seminars with a view to promote sectors, regions and investment possibilities in Poland • To co-operate with various Indian Chambers of Commerce in the organizations of seminars and trade missions • To answer queries and questions received from Polish and Indian entrepreneurs.

Our services are free of charge.

Please do not hesitate to send your question – will be answered as soon as possible.

Our team is to serve you!

Mr. Zbigniew Magdziarz - Counsellor, Head of Section (Polish, English, Russian) tel: +91 (11) 414 96 959 e-mail: newdelhi@trade.gov.pl Mr. Jan Kucharz – First Secretary (Polish, English, Russian, German) tel: +91 (11) 414 96 925 e-mail: newdelhi@trade.gov.pl Mrs. Seema Bahl – Business Development Manager (English, Hindi, Punjabi) tel: +91 (11) 414 96 959 e-mail: poltrade@trade.gov.pl Mr. Gaurav Sharma – Business Development Officer (English, Hindi, Polish) tel: +91 (11) 414 96 924 e-mail: poltrade1@trade.gov.pl Trade and Investment Promotion Section of The Embassy of the Republic of Poland 50M Shantipath, Chanakyapuri 110021 New Delhi, India polish market

13

THE CURRENT ECONOMIC SITUATION OF POLAND •

The Polish economy in 2014 was characterised by a stable growth of economic activity, the overall economic situation being better than in 2013. According to preliminary estimates of GUS, Poland’s GDP growth for the full year 2014 was 3.4%.

•

In Q1 2015, GDP grew by 3.6% year on year.

•

In 2014, industrial production growth amounted to 3.3% in annual terms, while manufacturing output grew more than the entire sector - 4.6% year on year. In the period of January-May 2015, production growth amounted to 4.1% year on year.

•

•

•

Construction and assembly output in 2014 increased by 3.6% year on year, rebounding from a deep fall in 2013. In the period of January-May 2015, the construction and assembly output rose by 2.9% year on year.

Retail sales in 2014 increased by 4.1% compared to the previous year. The first five months of 2015 saw an increase in retail sales in constant prices by 3.7% year on year.

Prices of consumer goods and services in 2014 remained unchanged compared to 2013. Producer prices decreased by 1.5% while prices in the construction and assembly sector were lower by 1.2% year on year. In the first five months

14 polish marketspecial edition 2015

of 2015, the Producer Price Index (PPI) was lower by 2.6% and prices in the construction and assembly sector fell by 0.4%. In H1 2015 the Consumer Price Index (CPI) fell by 1.2% year on year.

•

Average employment in the business sector in the period of January-December 2014 increased by 0.6%, to 5,529,000. In manufacturing, which has the largest share in employment, the headcount was 2,071,000, up by 2.1%. In the period of January-May 2015, average employment in the business sector was 1.1% higher year on year and amounted to 5,572,000.

•

The average monthly wage in the business sector in 2014 increased by 3.7%, to PLN 3,980. In the first five months of 2015, it was 3.7% higher year on year and amounted to PLN 4,063.

•

The unemployment rate at the end of 2014 amounted to 11.5%, which was 1.9% lower than a year earlier. According to estimates of the Ministry of Labour, the unemployment rate in June 2015 was 10.4% (against 12.0% in June 2014).

•

According to preliminary data of GUS, in 2014 exports increased by 5.2%, reaching the value of over EUR 163.1 billion. During the same period, imports increased by 5.5% to nearly EUR 165.6 billion. As a result, the trade deficit amounted to over EUR - 2.4 billion against EUR -2 billion in 2013. The largest share of Polish exports went to

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Germany (26.1%), Britain (6.4%) and the Czech Republic (6.3%), and the largest share of imports was from Germany (22%), China (10.5%) and Russia (10.5%). In the period of January-May 2015, exports increased by 6.2%, to EUR 72.0 billion, and imports - by 0.9%, to EUR 69.1 billion, with a positive trade balance of EUR 2.9 billion.

•

2014 saw an increase in deficit on the current account relative to 2013 (EUR -5,337 million against EUR -5,252 million a year earlier). In the period of January-May 2015, the current account balance was positive and totalled EUR 3,989 million, while in the same period of 2014 it was negative and amounted to EUR -1,012 million.

•

In H1 2015, the nominal national budget revenue amounted to PLN 137.0 billion, while expenditure stood at PLN 163.2 billion. The budget deficit amounted to PLN 26.2 billion and accounted for 56.7% of the amount assumed in the 2015 budget law.

•

In 2014 the Monetary Policy Council changed interest rates only once (in October). In March 2015, the Monetary Policy Council made a reduction in interest rates by 0.5%. Currently, the interest rates are as follows: reference rate - 1.5%, deposit rate - 0.5%, lombard rate - 2.5%, rediscount rate - 1.75%.

•

In 2014 the zloty strengthened against both the dollar and the euro. The average euro exchange rate amounted to PLN 4.1852 and fell by 0.29% in annual terms. The average dollar exchange rate during the same period amounted to PLN 3.1551, down by 0.18% year on year. In H1 2015 the zloty weakened against the dollar and strengthened against the euro. The average PLN/EUR exchange rate was 4.1420 and the average PLN/USD rate was 3.7106.

PROJECTIONS OF MAJOR FORECASTING CENTRES Poland’s economic results in 2014 are indicative of a gradual improvement of the country’s economic situation. International forecasting centres estimate that economic growth will also remain stable in Poland in 2015. The forecasts of most economists suggest that the Polish economy will grow, for the second year in a row, at a rate exceeding 3%.

According to the macroeconomic outlook for EU member states, which was updated by the European Commission in May 2015, Poland will remain one of the leaders in economic growth

across the EU - only Ireland, Malta and Luxembourg are expected to outperform it.

The European Commission’s forecasts for the Polish economy are better than a year earlier. The GDP growth rate is anticipated to amount to 3.3% in 2015 (against 3.2% expected in February), and 3.4% in 2016 (unchanged). The EC points to a relatively high economic growth in Poland in 2014 despite adversities associated with the Russian-Ukrainian conflict. It also draws attention to the strong domestic demand, especially to the buoyant investment, but also to the growing consumer demand, aided by the improving labour market and growing real incomes of households. According to the EC, Poland’s economic growth will remain stable, which should allow to maintain the yearon-year rate of 3% in all quarters of 2015 and 2016. Moreover, it is predicted to remain balanced, increases being registered in consumption (3.4% in 2015 and 3.6% in 2016), investments (6.9% and 5.0% respectively), and exports(6.3% and 6.7% respectively).

With respect to inflation, the European Commission draws attention to the global trends related to the drop in food prices and the embargo effects. What is more, neither demand nor supply-related developments are bound to cause a rapid reversal of these trends. The EC also stresses the improvement in public finances: the general government deficit is forecast to fall to 2.8% of GDP in 2015. The main risk factor, says the EC, is currency fluctuations. Exacerbation of the Russian-Ukrainian conflict may result in a depreciation of the zloty, which may improve Polish exports and the competitiveness of Polish companies on the domestic market. On the other hand, the ECB’s Quantitative Easing (QE) programme may lead to an excessive appreciation of the zloty.

Structural considerations are testament to a stable growth pattern, but also allow a positive assessment of the nearest outlook for the Polish economy. According to the EC, Poland will remain a labour productivity leader, which will not only allow to maintain competitiveness (European Commission forecasts that unit labour costs will remain stable), but also to buffer possible disturbances on the currency market.

•

Comparison of GDP growth forecasts in 2015-2016 2015

2016

European Commission

3.3%

3.4%

IMF

3.5%

3.5%

OECD

3.0%

3.5%

Ministry of Finance

3.4%

3.7%

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OPENING UP TO THE

WORLD Sławomir Sosnowski, Marshal of the Lubelskie Region, talks to “Polish Market”.

Agri-food products from the Lubelskie region are conquering new markets. Your cheese, honey, fruits and vegetables can be found not only in Europe, but also in many countries around the world. What are the export destinations of local food producers?

Germany, the Netherlands, France, Saudi Arabia, China, Canada… The list of export outlets for our agri-food products is long. These countries are both well-proven commercial partners and rapidly growing economies, largely dependent on food imports. I mean here especially Saudi Arabia, although the largest recipient of our agri-food products remains Germany, which is a leading importer of fruits and vegetables, as well as animal feed and meat. It is confirmed in statistics that our producers are doing increasingly well on foreign markets. Agrifood exports have seen a stable annual growth of 11% over the past few years. Products of companies such as Ambra, Agram, Cisowianka, or Apis have been present on foreign markets for years. Dairy producers have been successful, too, if only to mention Spomlek from Radzyń Podlaski and SM Ryki. Cheeses produced by these cooperatives find their way to plates in Russia, Bulgaria, Germany and the United States.

PM

What about the new export directions? What is the place of India on that list?

We are establishing contacts, building relationships. It is a very promising market for the Lubelskie region. In the opinion of Trade and Investment Promotion Department, it is precisely food processing at large that is the most interesting business area for Polish entrepreneurs. But some opportunities are also anticipated for companies offering technologies, machines and equipment, in particular for the processing of fruit and vegetables. Aside from foodstuffs, our forte is machinery, especially spare parts and accessories for food processing. The Indian side is also interested in technologies for the storage of PM

16 polish marketspecial edition 2015

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THERE IS STILL A LOT OF WORK AHEAD OF US, BUT WE CAN ALREADY TODAY BOAST OF FAVOURABLE CONDITIONS FOR DOING BUSINESS, A HIGH RESEARCH AND DEVELOPMENT POTENTIAL OF OUR UNIVERSITIES, AS WELL AS AGRICULTURE PRODUCING HEALTHY FOOD.

agricultural products, as well potential cooperation in milk processing and dairy production. We should not forget about the energy industry, including renewables, biotechnology and health care. In each of these areas we have something to offer our Indian partners.

What could you say about the cooperation of the region’s government and local entrepreneurs with India?

It has gained momentum. In the last few months alone, there have been several meetings with Indian partners. Recently, the Lubelskie region has been visited by entrepreneurs from India and Indonesia, including managers of hospitals and clinics, distributors and importers of laboratory and medical equipment, medical clothing and accessories, as well as a drug manufacturers.

There were also some international trade agents targeting the Indonesian and Indian markets. The Lubelskie region’s delegation was made up of manufacturers of medical equipment and apparatus, medical accessories and hospital equipment (liquid disinfectants, bandages, probiotics) and suppliers of innovative solutions in medical diagnostics and dentistry. Each participant had the opportunity to present his business, illustrating it with slides or films. For our part, we were invited to join the trade mission to India, at the turn of April and May, during which we had an opportunity to present our investment potential. We visited Mumbai, Ahmedabad and Bangalore, and we can already see a growing interest in cooperation. In September, we hosted in Lublin delegations from the state of Punjab. The mission was organised in collaboration with the Ministry of the Economy.

I am pleased to state, without false modesty, that in recent years the Lubelskie region has become one of the fastest growing regions in Poland. Of course, there is still a lot of work ahead of us, but we can already today boast of favourable conditions for doing business, a high research and development potential of our universities, as well as agriculture producing healthy food. Through the use of EU funds we were able to carry out the investments that contributed greatly to strengthening the competitive advantages of the Lubelskie region. In a joint effort, we are building a region that will be associated with high technologies, innovation and smart specialisation.

PM

Is Lublin conquering the whole world?

Yes, we are open to the whole world. Lublin’s company Ursus is already present in Africa. The first contract for the supply of tractors amounted to USD 100 million. We hope it is not the end of cooperation. Asia is a very promising market, as well, an opportunity not to be missed out on by the Lubelskie region. In April, I headed a trade mission to China’s Henan province, which we have cooperate with for 10 years now. In response, Henan’s delegation paid a visit to the Lubelskie region in June. We are seeking opportunities to win further contacts and promote ourselves, both at home and abroad. A series of economic spots have been aired recently on BBC World News channels: Europe, Asia Pacific and the Middle East. We hope this will enable us to reach out to new investors and consumers.

PM

PM

In recent years, the Lubelskie region has got strongly involved in the marketing economy. Are you going to keep up that trend in 2014-2020?

We are opening the world to our companies, and they are developing for the region, creating jobs. We have already done dozens of foreign missions over the last months. They were attended by nearly 300 regional entrepreneurs. The list of countries visited by our entrepreneurs is long. It includes the United States, Germany, Latvia, the United Arab Emirates, Angola, Tunisia and France. Support for entrepreneurship is our priority. We will continue to work hard to strengthen the growth potential of businesses, as well as to increase the region’s export capacity and investment attractiveness. We have a lot of ideas, but the most important thing is full cooperation with businesses and responding to their needs. We want to allocate for this purpose almost PLN 45 million.

You will admit that your plans and activities are very ambitious, won’t you?

This is the result of the developments going on in the region for years. I can happily admit that in recent years the Lubelskie region has become one of Poland’s most active regions in terms of supporting exporters and investors. Through the use of EU funds we were able to carry out the investments that contributed greatly to strengthening the competitive advantages of the Lubelskie region. In a joint effort, we are building a region that will be associated with high technologies, innovation, smart specialisation, and most of all, with openness to the world.

• PM

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17

Photo: Sławomir Kłak ZA Pulawy

LUBELSKIE REGION

A PLACE WORTH INVESTING IN L

ubelskie region is a dynamically developing part of Poland, with a friendly institutional infrastructure and universities with an established tradition. Here, you can not only develop your business, but also relax surrounded by unique nature and benefit from a wide range of cultural events.

One of the biggest assets of the Lubelskie region is human capital. The region offers vast educational opportunities through its 18 universities and a number of vocational schools. You will find there an aburdance of skilled workers, university students, including foreign ones, and graduates. In Lublin, the region’s capital, there is a large supply of office space, and the whole region is known for competitive labour costs and employment stability (low staff turnover).

Lubelskie region can boast of well-developed border crossing infrastructure, one of Europe’s most modern car terminals in Koroszczyn and a dry transshipment port in Małaszewicze.

It neighbours on a free customs zone, open to investors interested in the production and distribution of goods. Recent years have seen an increased importance of the Broad Gauge Metallurgy Line, in the southern part of the region, connecting the east of Europe with the terminal and logistics centre of western Poland. The accessibility of the region has been helped along by the commissioning of the Lublin-Świdnik Airport and the proximity of transcontinental routes. A significant role is also played by the presence of science and technology parks and research institutions, which encourage the creation of start-ups and innovative business solutions. The region offers investment areas available as part of the special economic zones (14 subzones),

18 polish marketspecial edition 2015

which are geared towards particular industries and have a wide range of tax reliefs and investment incentives.

Biznes Lubelskie, a team of experts providing support to exporters and investors, makes for the region’s new quality of business service, based on international standards. Both foreign companies interested in starting business in the Lubelskie region, and local entrepreneurs who want to venture outside Poland are assigned a dedicated investment pilot – a person who has adequate knowledge of investment areas (greenfield and brownfield), the list of potential clients within the Lubelskie region and provides professional support.

Biznes Lubelskie organises study visits, B2B meetings and serves as facilitator in contacts between business and science and semi-business institutions. It operates a help desk, which is the first point of contact for entrepreneurs with its team.

A dedicated phone number and email are available outside normal office hours. Help desk is a fast-reaction service response, whose operator communicates the whole package of economic information about the region and, if needed, can efficiently put you in contact with potential business partners.

Lubelskie region has ambitions to become a worldwide recognisable region. As part of the project Biznes Lubelskie, economic missions abroad and participation in trade fairs are organised for local entrepreneurs. In the period 2013-2015, there were almost 40 such outgoing trade missions, attended by nearly 300 entrepreneurs. There were also incoming missions of entrepreneurs from outside the EU who held bilateral talks with local partners, and attended study visits and seminars, during

Photo: Lubelskie region / Kazimierz Dolny

while the existing partners represent a stable, well-known and safe market, it is developing countries that will experience the greatest demand for foodstuffs, opening up additional opportunities for entrepreneurs from the Lubelskie region.

The agri-food trade structure in the Lubelskie region is stable - the largest importer has long been Germany. In recent years, local producers, mainly due to the geographic location and quality products, have strengthened their presence in Britain, Belarus and Russia. Large exports are also shipped to the Netherlands, Italy, and Ukraine.

Last year’s experience reveals the growing interest of Asian and African business players in cooperation with businesses from the Lubelskie region. Local entrepreneurs have been on economic missions to China seven times already, where they took part in trade fairs. Entrepreneurs from Africa can also prove to be good partners for Polish companies – the Ursus tractors assembled in a factory in Lublin are already sold to Ethiopia.

The company is handling an order for 3,000 tractors, a contract worth close to USD 100 million. TV spots designed to encourage investment in the Lubelskie region were aired on Al Jazeera.

The local government wants to take advantage of the wave of interest in the Lubelskie region and open up to Arab markets, as a follow up to the economic mission to Saudi Arabia and the United Arab Emirates.

The common challenge ahead for the initiative Biznes Lubelskie and the entire region in the coming years is to create the economic image of the region as a competitive and investor-friendly partner, boost the export potential of local firms and build a coherent system of economic information enabling professional services dedicated to businesses from the Lubelskie region. •

special edition

which the region’s economic potential and investment incentives were presented.

A study commissioned by the local government identified foreign markets with the absorptive capacity for Polish goods, leading to an increase in the value of exports to these destinations. Considering the most promising export directions, the following sectors are of key importance for the region: agri-food, mechanical engineering/automotive/aviation and furniture.

The region harbours a high agri-food potential. Good soil and sunlight conditions are conducive to the cultivation of extremely demanding plants. In addition, high-quality soils keep down the costs associated with irrigation and fertilisation of crops. The Lubelskie region specialises in growing fruits and vegetables, with a number of dedicated research units. Organic food creates a great opportunity for the region’s food industry, including its expansion on foreign markets. The increasing consumer awareness as to healthy lifestyles, as well as production processes drives the demand for natural and organic products, something that - coupled with the natural image of the Lubelskie region - is a fertile ground for promoting brands that rely on healthy eating. This is confirmed by the increasing number of organic farms across the region - over 2,000. Eastern Poland’s largest agri-commodity exchange in Elizówka near Lublin makes wholesale trade ever easier.

The value of agri-food exports in the Lubelskie region continues to increase. In 2009-2013, exports grew at an annual rate of 11%, reaching a total of almost PLN 2.8 billion, which affords fine prospects for the future. Among export directions preferred by local food exporters are developed countries, mostly in Europe.

It comes as a natural result of the geographical proximity and an established track record of business relationships. However,

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P

WHY POLAND

oland is one of the most attractive locations for foreign investments. International reports highlight Poland’s economic and political stability, educated and competent human capital and large domestic market. In times of global economic crisis Poland has strengthened its position, not only in the region of Central and Eastern Europe but also all over the continent. Foreign investors willingly invest their capital in Poland treating it as a safe haven in times of economic instability. Tourists, in turn, are enchanted by Polish hospitality and friendliness, Poland’s cultural heritage and the country’s natural landscape.

Poland’s 38-million strong consumer market is one of the biggest in Europe. The country’s favourable location, in the centre of Europe, where the main transport routs intersect, makes it possible to export goods to all European countries and thus reach over 500 million consumers. Poland’s major trade partners are, among others, Germany, Russia, China, France, the UK, Italy, Hungary, Ukraine and Spain.

Well-educated Polish economists, engineers, IT specialists and scientists are highly sought-after and appreciated employees who find employment in IT companies, R&D centres and scientific institutes. Every year, the number of graduates of Polish universities increase, including faculties useful in high-tech industries.

The country’s sustainable development has much to do with its solid economic foundations.

20 polish marketspecial edition 2015

The global economic crisis has not harmed Poland, which is the only country in Europe to have avoided a recession. Additionally its economy grew at the highest rate on the continent. Assessment of the investment climate for foreign entrepreneurs is getting better every year. All the factors together with the country’s international security and stability guaranteed by membership in NATO and the EU make Poland a credible and important business partner for foreign investors. Among the most important challenges to be faced by the country in the foreseeable future there are issues connected with the adoption of the single European currency and all the criteria which the country has to meet in order to enter the euro zone.

Global corporations often choose Poland as an investment destination in Europe. According to Bloomberg Rankings 2013 Poland is the best CEE country for business. In FDI Intelligence Report Poland took 3rd place worldwide, behind China and the USA, as the best quality location for manufacturing projects. According to the report of European Attractiveness prepared by Ernst & Young, in the next three years Poland will be the second in Europe (after Germany) most attractive country for investment.

The report highlighted a very stable macroeconomic situation of the Poland noting that it was the only country in the EU, to avoid recession in 2009, and since the crisis has reached far the highest growth not only in the region but throughout

the European Union. As the strengths of Poland, other than a stable macroeconomic situation, the E&Y experts have mentioned the availability of well qualified and productive employees, a business friendly climate and transparent tax and legal systems. The business climate in our country is improving. A World Bank report Doing Business confirms that Poland enhanced the ease of doing business through four institutional or regulatory reforms, making it easier to register property, pay taxes, enforce contracts, and resolve insolvency.

The country offers a wide range of investment incentives. Investors are invited to locate their projects in 14 Special Economic Zones (SEZ). i.e. special zones where economic activity may be carried out in favourable conditions. Polish SEZs offer attractive tax exemptions, employment incentives and well-prepared sites for investment.

Poland is a country with a number of tourist and sport opportunities. The diversity of landscape and natural wealth together with the wide range of recreation forms ranging from sea sports through lake yachting, skiing and mountain climbing attract tourists from all over the world.

Recreational tourist opportunities may effectively be combined with elements of Poland’s rich • cultural heritage and history.

Source:PAIiIZ

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