Polish Market (177) 04 2011 by Polish Market

Polish Market :: 04/2011

15 years PUBLISHED since 1996 No. 4 (177) 2011 :: www.polishmarket.com.pl

Telecom and IT Wielkopolska worth investing

Leasing

Andrzej Krzemiński president of the European Leasing Fund (EFL)

20 years on the market and still a leader

Warsaw University of Life Sciences – SGGW

• Student-friendly university • 28 fields of studies • 130 majors • Full-time studies • Evening studies • Extramural studies • Post-graduate and doctoral studies • Studies and training abroad • Experienced lecturers • Modern laboratories and workshops • Well furnished dorms • Super sports facilities • Scholarships and financial aid

CONTACT: Warsaw University of Life Sciences – SGGW Nowoursynowska 166, 02-787 Warszawa http://www.sggw.pl Student Affairs Office Tel. (+48 22) 593 10 25, Fax (+48 22) 593 10 39 e-mail: bss@sggw.pl International Relations Office Tel. (+48 22) 593 10 40 (52), Fax (+48 22) 593 10 42 (48) e-mail: iro@sggw.pl http://www.iro.sggw.pl

The most innovative and creative University in Poland

Contents

4/2011

Prof. JERZY NAWROCKI, head of the Polish Geological Institute: An expert’s view on Polish shale gas, nuclear Power #22

Prof Antoni Szumanowski, Chair of the Hybrid Drive Systems Unit at the Faculty of Automotive and Construction Machinery Engineering at Warsaw University of Technology, and President of the Polish Society of Environment‑Friendly Vehicles: It’s high time # 24

Jerzy Bojanowicz: Patent collectors

From The President’s Press Office

# 6

From The Government Information Centre

# 7

OUR GUESTS

Anna Streżyńska, President of the Office of Electronic Communications (UKE) # 8

IT AND TELECOMMUNICATIONS

IT and telecommunications companies

# 9

The free telecommunications market

Martin Schmiedt-Siebenhaar, Marketing Director for Central and South East Europe, Tomasz Łodziński, Sales Director for Poland: Step ahead in communications # 14

# 12

Dominik Mazur, president and CEO of the Amedar Consulting Group: We cooperate with the science

LEASING

Andrzej Krzemiński, President of the Management Board of Europejski Fundusz Leasingowy SA (EFL): 20 years of leasing in Poland #26

Leasing market financing

Radosław Woźniak: Trends 2011

# 30

RENT A CAR Patryk Mirecki: Rent-a-car in Poland

# 16

# 31

Adam Rozwadowski, founder and President of the private ENEL-MED Medical Centre: Why compete? It is better to cooperate # 20

Elżbieta Wojnicka, PhD: The strong Wielkopolska region # 34

Prof. Dr Maciej Żylicz, President of the Foundation for Polish Science: Creating an elite # 18

Marek Woźniak, Marshal of the Wielkopolska Region: Welcome to Wielkopolska # 36

# 29

WIELKOPOLSKA

Science and InnovatiON

# 25

Ranking of companies in Wielkopolskie region

“Transatlantyk” – a festival of films, music, ideas...” # 39

# 38

Major events in April 2011 with “Polish Market” as a media partner:

Ning Space Gallery, Beijing

PLGBC Green Building Education, Warsaw

Expo Silesia, International Fair of Logistics, Warehousing and Transport, Sosnowiec

Polish-Arabic Investment Forum, International Forum, Warsaw

Business Baltic Forum, the 3rd edition of the Business Baltic Forum: “Europe: North, East - business without borders,” Świnoujście and Heringsdorf

Polish Union of Oncology Conference, Warsaw

2 :: polish market :: 4/2011

Procesy Inwestycyjne, debate – “Year of Energy. The energy dimension of Polish presidency of the EU,” Warsaw

RZESZÓW » The right choice » most dynamic development in Poland (increase of the number of residents from 159,000 to 178,000, and enlargement of the city area from 54 square km to 116 square km within the last five years)

» EU funds acquisition leader (First in Poland – with PLN 5163 of EU funding per one resident – in the ranking published by daily Dziennik Gazeta Prawna, European Commune – European City)

» Increased budget for the City of Rzeszow – by PLN 0.5 billion – 166% (within the last 7 years)

» capital of Aviation Valley and Informatyka Podkarpacka (Podkarpacki IT Cluster) (90% of aviation industry production in Poland, location of the largest IT company in Poland)

» over 60 thousand students at 60 faculties (33.7% of students compared to the number of residents)

» safest city in Poland (three times leader in a ranking published by Dziennik Polska-Europa-Świat)

» city with best living standards (2nd position in the ranking published by the Przekrój weekly magazine)

Rzeszów City Hall Rynek 1, 35-064 Rzeszów tel.: +48 17 875 40 00, fax: +48 17 875 41 05 e-mail: umrz@erzeszow.pl; www.rzeszow.pl

Contents

Przemysław Gonera PhD, chairman of the Convention of Management Board Presidents of Provincial Funds for Environmental Protection and Water Management, President of the Management Board of Provincial Fund for Environmental Protection and Water Management (WFOŚiGW) in Poznań: Repayable assistance funds # 42

Joanna Sinkiewicz: An attractive market

Sandra Wierzbicka: Let off the steam sightseeing Poznań # 48

pOWERFUL BUSINESSWOMEN

# 65

REAL ESTATE AND CONSTRUCTION

# 44

Tomasz Panabażys, Vice-president J.W. Construction Holding: J.W. Construction Holding S.A. – a knack for the market # 68

CEO after hours

EURO 2012 # 50

MAREK TYMIŃSKI, President of City Interactive

INVEST IN POLAND # 54

# 70

CULTURAL MONITOR

POLISH EU PRESIDENCY # 55

Rafał Skąpski, President of the Supervisory Board of the Targi Książki Company, and the President of the Polish Society of Book Publishers: The right for selfdetermination # 74

Honorary Pearls in the category Promoting patriotic values and tradition are historians # 76

LAW AND TAXES

Anna Sieńko, Director General of IBM Poland

Paweł Jabłonowski: Polish Ministry of Finance is planning to diminish most popular in Poland tax haven # 57

FINANCE

Krystyna Kofta: I like what I do because it gives me a sense of freedom # 78

Prof. Marek Belka: A summary of 2010 and prospects for 2011 in the banking industry # 58

Eugeniusz Śmiłowski PhD: Early warning indicators # 60

Prof. Małgorzata Zaleska: From exclusion to wealth # 62

Katarzyna Niezgoda: Invasion of the young

# 63

Andrzej Arendarski, PhD: What is up with innovation?

Polish Market :: 04/2011

President: Krystyna Woźniak-Trzosek

PUBLISHED SINCE 1996 No. 4 (177) 2011 :: www.polishmarket.com.pl

Vice-Presidents: Błażej Grabowski, Grażyna Jaskuła

Telecom and IT Wielkopolska worth investing

Address: ul. Elektoralna 13, 00-137 Warsaw, Poland Phone (+48 22) 620 31 42, 652 95 77 Fax (+48 22) 620 31 37 E-mail: info@polishmarket.com.pl

Leasing

Editor-in-Chief: Rita Schultz rita.schultz@polishmarket.com.pl

Andrzej Krzemiński president of the European Leasing Fund (EFL)

20 years on the market and still a leader 4 :: polish market :: 4/2011

“Turandot” according to Treliński

# 80 # 82

Tourism in Poland promoted in Berlin

Numero Uno presents a world of luxury brands

The innovation and creativity of women for economic development # 86

Product of the Year – Innovation of the Year 2011

# 64

Publisher: Oficyna Wydawnicza RYNEK POLSKI Sp. z o.o. (RYNEK POLSKI Publishers Co. Ltd.)

15 YEARS

Cultural Monitor

EVENTS

OPINION

Editorial board: Jerzy Bojanowicz, Janusz Korzeń, Maciej Proliński, Jan Sosna, Magdalena Szwed, Janusz Turakiewicz, Sandra Wierzbicka, Elżbieta Wojnicka, Małgorzata Wyderka

# 72

10 years of the Kozminski Law School

# 84

# 87

# 88

English Editor: Sylwia Wesołowska-Betkier

Cover photo by: Łukasz Giersz

Translators: Maciej Bańkowski, Marek Gogolewski, Elżbieta Krajewska, Grażyna Śleszyńska, Sylwia Wesołowska-Betkier, Sandra Wierzbicka

Printing: Zakłady Graficzne TAURUS – Stanisław Roszkowski, www.drukarniataurus.pl

Photographers: Jan Balana, Łukasz Giersz

Oficyna Wydawnicza RYNEK POLSKI Sp. z o.o. Nr KRS 0000080385, Sąd Rejonowy dla m.st. Warszawy XII Wydział Gospodarczy Kapitał zakładowy 80.000,- zł. REGON 011915685, NIP 526-11-62-572

Polish Market Online Editor-in-Chief: Wiktoria Grabowska Marketing: Phone (+48 22) 620 38 34, 654 95 77 Katarzyna Malinowska – Marketing Director k.malinowska@polishmarket.com.pl Natalia Suhoveeva natalia.s@polishmarket.com.pl Ewelina Surma e.surma@polishmarket.com.pl PR: Joanna Fijałkowska j_fijalkowska@polishmarket.com.pl

Design and DTP: Foxrabbit Designers

Basic circulation: 8,000

Published articles represent the authors’ personal views only. The Editor and Publisher disclaim any responsibility or liability for their contents. Unsolicited material will not be returned. The editors reserve the right to edit the material for length and content. The editors accept no responsibility whatsoever for the content of advertising material. Reproduction of any material from this magazine requires prior written permission from the Publisher.

Editorial The world existed without the Internet not so long ago. It was just on 30 April 1991 that Jan Sorensen, the head of Computer Science at the University of Copenhagen, registered the Polish domain “.pl” – and it’s this date from 20 years ago that is considered to be the beginning of the Polish Internet. This was a symbolic inclusion to the group of world leaders – something of a first oasis in the desert. This desert was the entire Polish telecommunications sector – due to a technological embargo imposed by the West on all communist countries, deprived of access to the latest technology for 40 years. A generational gap formed – at the start of the 1990’s, we did not have a single digital telephone switchboard in Poland, nor a single digital network. The downfall of the communist system and the technological embargo have revolutionised this world and the telecommunication revolution was one of its main driving forces. In the span of only several years we became global citizens – citizens of the global village, taking advantage of this opportunity with the zeal of neophytes. However, how this actually came about in Poland deserves particular attention. It was a simple operation in most of the post-communist countries – due to their size, it was enough just to swap out one or two telephone switchboards, lay-down several hundred kilometres of fibre optics and - it was ready. Equipment was ordered from the world’s potentates, together with the installation crew, and everything was up and running in several months. On Poland’s scale, it was not that simple. It was necessary to build several hundred digital switchboards in a short time, with a combined capacity of around 10 million ports, and successively switch subscribers from around 6,000 analogue switchboards that were being retired. This was not a quantity laying around in a warehouse, and not one that was possible to be installed by a dozen specialists. But it has worked out. A method was chosen that allowed global giants to produce in Poland and to educate Polish specialists. Already in 1991, the first digital network in Poland, POLPAK, started, and the leading operator was formed in December – Telekomunikacja Polska SA.

None of us now remembers how it was like to call from a phone booth, how all information about the world was in the form of newspapers, TV and radio broadcasts, or through direct contact with our business partners or friends who shared their knowledge. We now have cell phones, the Internet, Skype, networking portals, discussion forums and even blogs. The virtual world has taken over at work and at home, and as Anna Streżyńska, president of the Office of Electronic Communications says „the coming years will certainly be marked by efforts to ensure broadband access to all Polish people.” What’s more, there were as many as 47.15 million active SIM cards in Poland in the fourth quarter of 2010, meaning that the trend of an average user possessing more than one active number continues. The leader of our market continues to be Orange, who sold 14.33 million SIM cards. The telecommunications branch continues to show a growth tendency, but the remaining branches of the information technology market are returning back to the game and back to dynamic growth. “Businesses are willing to invest in IT projects again. They no longer only seek to cut costs through IT solutions but are primarily interested in new functionalities. The data at our disposal indicate that the market will continue to grow in 2011,” saysAnna Sieńko, general director of IBM Polska. More and more of us listen to audio books and read e-books. New forms are adopted by all who value modernity and make an effort to meet readers’ expectations. “Writing a blog is a new kind of literature. Not finessed, spontaneous, more spoken to someone than written, I’m trying to lose the thoughts about literature. Although it surely is also a new kind of fast literature. Especially if the author is a writer,” says Krystyna Kofta. I hope that even the biggest fans of modernity will want to reach for the traditionally published copy of the latest “Polish Market.” Highly recommended. Rita Schultz Editor-in-Chief

The first fibre optic cable in Poland was designed and created at the end of the 1970’s by scientists at Maria Curie-Skłodowska University in Lublin, less than 5 years after the world debut of the product of the American company, Corning Glass. The conditions were not there for its production for another 10 years – now it has started, as the production of other elements of a modern telecommunications network. In the mid 90’s we had everything – automatic digital connection to the rest of the world, access to the Internet, connections to electronic banking, bank machines and bank cards, even cell phones. We entered the 21st century with almost universal access to these services. This was truly a Giant Leap Forward. It’s worthwhile to remember this when we are facing challenges of a similar scale in quantity and quality. Krystyna Woźniak-Trzosek President Rynek Polski Publishers Co. Ltd. 4/2011 :: polish market :: 5

Poland – Estonia

The President to support the campaign promoting Masuria President Bronisław Komorowski declared support for the campaign promoting Masuria. The President, responding to explorer Jacek Pałkiewicz’s appeal, gave an assurance that it would be a great pleasure for him to engage in the promotional campaign for that region. “Masuria is truly a paradise for both nature lovers and yachtsmen,” said the President and, smiling, offered to go sailing with Pałkiewicz. Bronisław Komorowski asked about the details of the Masuria promotional campaign, and whether only Polish Internet users were involved, or also foreign ones. Pałkiewicz underlined that Internet users from all over the world are taking part in the campaign. “We have a great chance to make it to the winning Seven Natural Wonders of the World,” the explorer told the President, asking for support for the campaign and a mobilising appeal to the public to take part in the publicity activities for Masuria, and to vote for this beautiful Polish region. Masuria is the only Polish region to have been shortlisted along with 28 other finalists, selected by Internet users from 261 candidates from all over the world. Besides the picturesque Polish lake district, the finalists include the Great Barrier Reef, the Maldives, the Dead Sea, the Grand Canyon, and Kilimanjaro. According to Pałkiewicz, Masuria’s victory in the competition may further improve the positive image of Poland in the world, which has been seen through the prism of such figures as John Paul II, Lech Wałęsa, and Adam Małysz, or associated with Polish sausage and export vodka. The promotional campaign of the Polish finalist has been supported by former Presidents Lech Wałęsa and Aleksander Kwaśniewski, and by Cardinal Stanisław Dziwisz. People of culture, such as Andrzej Wajda, were also involved in the campaign. ::

6 :: polish market :: 4/2011

The Presidents of Poland and Estonia, Bronisław Komorowski and Toomas Ilves, discussed in Tallinn the situation in Northern Africa, the European Union and the euro area. During the press conference the Presidents were asked about NATO’s decision on taking control over the operations in Libya. “NATO’s decision to take command of the operations in Libya also entails the shared political responsibility of all member countries, including Poland. It will not, however, necessarily result in direct involvement in the military operation,” said Komorowski. The Estonian President emphasised that Poland’s presidency

of the European Union Council, due in the second half of this year, makes the meeting particularly important. “There is one big country in Europe that understands us perfectly. It understands us when we speak about democracy, and when we fight for defence plans,” said Ilves. Bronisław Komorowski pointed out that Poland and Estonia share the opinion that the countries of Central and Eastern Europe which have recently regained independence are particularly active in the pro-democratic mission of the EU in relation to their EU neighbours, both from the south and from the east. ::

The European Commissioner for Energy in the Presidential Palace Polish President Bronisław Komorowski received European Commissioner for Energy Günther Oettinger during the latter’s official visit to Warsaw. Their talks concerned the key questions of Europe’s energy security. The President presented Poland’s priorities in the field of energy policy

during the country’s presidency in the Council of the European Union. Prospects for constructing nuclear power plants near the borders of the European Union, and the development of European energy infrastructure, were discussed, particularly in the context of regional cooperation. ::

The Polish President’s Economic Prize On 14 June 2011, during the inauguration of the Poznań International Fair, the President of the Republic of Poland Bronisław Komorowski will award the best Polish entrepreneurs and research institutions with the Polish President’s Economic Prize. This is a continuation of the prize which was awarded by the Polish President from 1998 to 2005. The Polish President’s Economic Prize is a prestigious economic distinction honouring and promoting the best Polish companies and research institutions conducting economic activity in the field of marketing production. The Polish President’s Economic Prize is an honorary prize. The Prize Laureate will receive a diploma and bronze statuette from the President.

This year the prize will be awarded in four categories: 1. Innovation 2. Corporate governance and corporate social responsibility 3. Presence on the global market 4. Green economy. The Polish President’s Economic Prize is a way of expressing gratitude to and honouring the companies and research teams who have made a great contribution to Poland’s economic growth and to building the prestige and positive image of the Polish economy. Through promoting good models and behaviour on the market, it will popularise the methods of achieving success in the economy. ::

Investing in energy “Several Gordian knots had to be cut to get to the moment when we placed a symbolic cornerstone under one of the major investments in Polish history,” said Donald Tusk during the ceremony of launching the construction of the Liquefied Natural Gas (LNG) terminal in Świnoujście. The Head of Government also visited the construction site of the gas compressor station in Goleniów. The Prime Minister said the talks about the need to build a gas terminal and about its location had been going on since the 90’s, but the project had only been started over the previous three years. “There were many barriers that had to be overcome because of flawed regulations,” said Donald Tusk, referring to the complicated procedures for acquiring environmental and construction permits. The Prime Minister emphasised that the success of that project resulted from the ability to acquire funds and additional sources of financing. “We managed to convince our European partners that Świnoujście was becoming an element of strategic security for the whole continent, not only for Poland,” stressed the Head of Government, referring to the additional EU funds transferred for the project. Another important step was the adoption of the so-called “special law,” which has introduced more flexible regulations, accelerating the realisation of construction works. Similar laws have facilitated the construction of roads and infrastructure for the UEFA EURO 2012 football tournament. As one example of recent activities for the purpose of constructing the LNG terminal, the Prime Minister mentioned concluding a longterm agreement with Qatar for the supply of liquefied gas. “Up to 1/3 of Polish gas needs can be met due to this investment,” said the Head of Government. “This is real diversification. This special word encapsulates both security and real non-dependence on one source of gas supply,” he pointed out. Donald Tusk also added that shale gas could be another source. ::

Poland-Moldova “Poland will do everything to accelerate the process of integration of Moldova with the EU,” said Donald Tusk after a meeting with Moldovan Prime Minister Vladimir Filat. The head of the Polish government stressed Poland’s involvement in the fastest possible integration of the Republic of Moldova. “We do it with strong conviction, not only because we feel respect and friendship towards Moldova. This country has shown in recent years that it is determined, courageous, and directed by state leaders who are aware of their objectives,” the Prime Minister pointed out.

Donald Tusk also spoke about the successes of Moldova, as well as about the recognition and reputation of a responsible state with thoughtful development plan that Moldova enjoys within the European Union. “You have achieved what every country strives for, but not all countries achieve – a fine reputation,” he summed up. Polish Prime Minister added that Moldova’s integration with the European Union is not only to this country’s best interest, but also to the interest of Poland and the EU.

Poland in the Euro-Plus Pact Launching the Euro-Plus Pact is crucial for the future of European economy. It aims to bring together national macroeconomic policies, especially in areas like competitiveness, innovation, employment, public finances stability and tax coordination. “The aim of the pact,” Prime Minister Tusk explained, “is to impose high standards in financial discipline and the coordination of economic policies.” Apart from Poland, five other countries from outside the eurozone have decided to join the Pact: Denmark, Lithuania, Latvia, Romania and Bulgaria. “Our membership in the Euro-Plus Pact does not mean financial obligations in relation to Poland,” the Prime Minister emphasised. “For Poland, the presence in this pact is neutral, because it does

not impose any serious obligations. However, this presence is crucial from the political viewpoint,” added Prime Minister Donald Tusk. The Head of Government said that Poland fulfilled the standards of financial discipline envisaged by the EuroPlus Pact, with the national debt limit at 60% of GDP included in the Constitution, and the legally-secured security thresholds and expenditure rule. In April, the signatory states to the pact are to put forward their solutions – related to the realisation of its provisions – for the following 12 months. This will take place annually, and the fulfilment of these obligations will be assessed in the annual, separate summits of the “Euro-Plus Zone” groups. ::

4/2011 :: polish market :: 7

Our Guest

Anna Streżyńska President of the Office of Electronic Communications (UKE)

As regards the telecommunications market and activities planned by the President of the Office of Electronic Communications, the coming years will certainly be marked by efforts to ensure broadband access to all Polish people. But several conditions have to be met for this to happen. Firstly, we have to smoothly carry out projects partially funded from the European Union budget. In 2007-2013 Poland may use over EUR1 billion for the development of local and regional broadband networks. It is worrying, however, that less that 20% of this amount has been spent so far. There are many reasons behind this state of affairs. First of all, local governments, which are supposed to absorb a major part of the money, have no experience in implementing this kind of projects. They need support in the form of legal reports and consultancy services offering advice on a current basis. The complex procedures involved and the long time needed for applications to be considered are not helpful either. The lack of sufficient knowledge about how EU-funded projects should be accounted for means that in some cases

8 :: polish market :: 4/2011

beneficiaries have to give back the EU money granted to them. The UKE President has prepared the Systemic Project, whose aim is to coordinate measures 8.3 and 8.4 of the Operational Programme Innovative Economy, the Operational Programme Development of Eastern Poland, Regional Operational Programmes and investment projects carried out. Unfortunately, due to a decision by the Ministry of Internal Affairs and Administration, the Systemic Project will be implemented much later than planned. Recent consumer research shows that the number of people who have Internet access at home is on the rise. In 2010 over 86% of the surveyed individuals and almost 95% of small businesses said they had access to the World Wide Web. As access to the Web is growing so is the popularity of broadband Internet. The survey indicates that as much as 90% of the households which are connected to the Web have broadband access. In 2006 only 13.5% of Internet users used connections with a bit rate higher than 1 Mbit/s while now this percentage has risen to over 65%. Despite that, there are still many places in Poland where people do not have Internet access. The draft law on supporting the development of telecommunications services and networks prepared by UKE and adopted by the parliament in mid-2010, coupled with an agreement signed by the UKE President and the TP SA telecom company, may contribute to solving this problem. The law makes it easier to carry out telecom projects while the agreement has encouraged TP SA to intensify its investment activity. The company promised to build 1.2 million broadband links, mainly in areas where people are threatened with digital exclusion. More than 450,000 such links were already built in 2010. In 2009 spending in the telecommunications sector totalled almost PLN8 billion, or 32% more than in 2005. In mobile networks, investment spending was the highest. Most of the money was invested by new market players: P4, Aero and Centernet. Also, the end of disputes between operators, coupled with a favourable legal

environment, should impact positively on investment in the sector. In 2006-2008 investment spending by Netia, the main alternative operator, was rising steadily. The company estimates that its investment spending exceeded PLN220 million by the end of 2010. Since 2007 the market has become slightly competitive as TP SA has granted access to its links to alternative operators. By the third quarter of 2010 the incumbent operator unbundled over 130,000 local loops. But the level of competition on individual market is still not satisfactory. The position of TP SA is still very strong on the LLU and BSA markets, which are of key importance for the development of competition. This is due to years’ of neglect. Some progress has been seen in recent years but alternative operators want us to take more measures conducive to the development of competition and modern telecom networks. Regulating the LLU and BSA markets is also very important in the context of developing the next generation network (NGN). It is necessary to develop a transparent and indiscriminative model of access to the incumbent operator’s infrastructure as this would stimulate the development of real competition on the telecommunications market and encourage telecom operators in Poland to increase their investment spending. It is very important for the future of the telecommunications market and the development of information society so that Poland is able to bridge the gap to the most developed EU countries within a short time. We are going to make broadband Internet and new services and service packages more accessible by introducing procedures enabling the implementation of LLU and its promotion, expanding wholesale BSA and wholesale line rental (WLR) services and introducing the service provider (SP) model. We are going to put in place solutions conducive to the implementation of provisions of the law on supporting the development of broadband services and networks and implement new technologies for providing telecom services in connection with the planned regulatory decisions. ::

IT & Telecommunications

IT and telecommunications companies Net sales revenue 2010

Net profit/ loss 2010

Gross profit/ loss 2010

Operating income

Employment 2010

449,000

908,000

25,636

1,431,544

1,537,010

3666

No.

Company

Based in

Head of the company

Telekomunikacja Polska S.A.

Warsaw

Maciej Witucki

15,715,000

108,000

Polkomtel S.A.

Warsaw

Jarosław Bauc

7,672,481

1,151,910

Polska Telefonia Cyfrowa Sp. z o.o.

Warsaw

Miroslav Rakowski

7,345,000

n/a

Asseco Poland S.A. GK

Rzeszów

Adam Góral

3,237,733

562,091

1,076,749

568,963

13,638

AB S.A. GK

Wrocław

Andrzej Przybyło

2,882,109

35,160

45,393

58,276

n/a

ABC Data S.A. GK

Warsaw

Marek Sadowski

2,730,603

39,417

48,588

53,061

n/a

Action S.A. GK

Piaseczno

Piotr Bieliński

2,105,901

26,288

30,420

34,551

745

Tech Data Polska Sp. z o.o.

Warsaw

Ireneusz Dąbrowski, Marek Jankowski

1,588,300

n/a

205

Netia S.A. GK

Warsaw

Mirosław Godlewski

1,569,296

263,895

288,769

285,755

1,441

Cyfrowy Polsat S.A. GK

Warsaw

Dominik Libicki

1,482,463

258,470

321,282

325,754

864

Comarch S.A.

Kraków

Janusz Filipiak

761,744

43,385

n/a

23,467

n/a

Oracle Polska Sp. z o.o.

Warsaw

Andrzej Dopierała

590,000

n/a

330

NTT System S.A.

Warsaw

Tadeusz Kurek

541,648

-6,231

-7,684

-6,028

n/a

Telefonia Dialog S.A. GK

Wrocław

Arkadiusz Miszuk

528,755

80,155

46,049

50,299

1,339

Sygnity S.A. GK

Warsaw

Norbert Biedrzycki

524,018

-42,640

-43,787

-34,296

n/a

Exatel S.A.

Warsaw

Zdzisław Nowak

510,200

40,200

n/a

Blue Media Sp. z o.o.

Sopot

Andrzej Antoń, Konrad Kucharski

482,523

699

1,018

937

Asseco South Eastern Europe S.A. GK

Rzeszów

Piotr Jeleński

450,336

43,647

51,796

51,068

1,194

Telefonia Dialog S.A.

Wrocław

Arkadiusz Miszuk

449,457

76,048

41,151

45,132

954

ATM S.A. GK

Warsaw

Roman Szwed

401,837

21,453

26,085

33,471

n/a

Qumak – Sekom S.A.

Warsaw

Paweł Jaguś

329,045

13,249

16,594

14,856

n/a

Wasko S.A. GK

Gliwice

Wojciech Wajda

294,417

7,505

9,985

8,645

709

Comp S.A.

Warsaw

Jacek Papaj

258,681

25,580

26,975

23,576

718

Biuro Informatyczno-Wdrożeniowe "Koncept" Sp. z o.o.

Kraków

Andrzej Wójtowicz

257,468

1,659

2,062

2,145

Infovide-Matrix S.A. GK

Warsaw

Jan Maciejewicz

227,040

7,077

9,794

12,847

528

Infovide-Matrix S.A. GK

Warsaw

Jan Maciejewicz

186,810

3,043

4,581

6,673

498

Wilk Elektronik S.A.

Łaziska Górne

Wiesław Wilk

181,436

n/a

129

Asseco Business Solutions S.A.

Warsaw

Romuald Rutkowski

168,587

30,092

37,641

35,778

660

Tele-Polska Holding S.A.

Warsaw

Bernhard Friedl

152,000

3,500

4,197

4,103

n/a

B3system S.A.

Warsaw

Mirosław Kaliński

148,505

1,542

1,821

2,512

n/a

Netmedia S.A. GK

Warsaw

Andrzej Wierzba

131,886

8,416

9,683

8,019

n/a

Consortia Sp. z o.o.

Warsaw

Artur Smółko

127,264

757

1,039

1,789

100

S&T Services Polska Sp. z o.o.*

Warsaw

Maciej Wiśniewski

111,000

n/a

302

Netline Group Sp. z o.o.

Wrocław

Jacek Wilczyński

107,258

6,096

7,943

8,448

170

Talex S.A.

Poznań

Janusz Gocałek

105,836

2,244

2,529

n/a

Hawe S.A. GK

Warsaw

Robert Kwiatkowski

101,096

37,232

46,095

43,133

222

NASK

Warsaw

Michał Chrzanowski

89,521

4,976

8,203

7,912

355

Advatech Sp. z o.o.

Wrocław

Jacek Szubert

88,443

2,612

3,108

3,213

Andra Sp. z o.o.

Warsaw

Andrzej Sikorski

81,678

5,297

6,590

6,332

SAS Institute Sp. z o.o.

Warsaw

Alicja Wiecka

72,435

n/a

188

BCC Sp. z o.o.

Suchy Las near Poznań

Bartłomiej Buszczak

68,600

n/a

189

Elzab S.A. GK

Zabrze

Krzysztof Urbanowicz

64,297

1,039

1,655

2,829

269

One-2-One S.A. GK

Poznań

Piotr Majchrzak

62,520

-3,333

3,247

-3,386

Calatrava Capital S.A. GK

Warsaw

Paweł Narkiewicz

61,047

12,091

12,804

8,568

Sage Sp. z o.o.

Warsaw

Elwira Sokołowska

60,465

6,834

n/a

250

Opteam S.A. GK

Tajęcina near Rzeszów

Janusz Bober

60,099

2,074

2,355

2,646

154

Zeto-Rzeszów Sp. z o.o.

Rzeszów

Ryszard Rzym

57,717

1867

2263

1386

130

Transition Technologies S.A.

Warsaw

Konrad Świrski

54,704

5,444

6,213

6,305

295

Macrologic S.A.

Warsaw

Krzysztof Szczypa

52,631

4,161

5,993

6,123

347

Logon S.A.

Bydgoszcz

Krzysztof Jurek

50,534

1,378

1,658

1,587

Milmex Systemy Komputerowe Sp. z o.o.

Sosnowiec

Zbigniew Krzyśko

46,123

8,066

8,234

8,529

Koma Nord Sp. z o.o.

Gdynia

Zbigniew Szymkowiak, Wojciech Kotas

45,156

963

1,269

1,252

4/2011 :: polish market :: 9

IT & Telecommunications

Net sales revenue 2010

Net profit/ loss 2010

Gross profit/ loss 2010

Operating income

Employment 2010

No.

Company

Based in

Head of the company

Hyperion S.A.

Warsaw

Andrzej Piechocki

44,915

18,346

19,142

4,804

n/a

Procad S.A. GK

Gdańsk

Jarosław Jarzyński

43,933

622

689

248

119

ITelligence Sp. z o.o.

Warsaw

Arnold Nowak

34,499

1,670

2,072

Bonair S.A.

Warsaw

Andrzej Wach

28,385

650

1,150

1,180

123

Hardsoft Telekom

Poznań

Jarosław Kaźmierczak

25,833

545

677

671

Simple S.A.

Warsaw

Bogusław Mitura

23,027

1,900

2,443

2,735

n/a

Telestrada S.A. GK

Warsaw

Jacek Lichota

22,618

3,508

4,228

4,160

n/a

Insert S.A.

Wrocław

Jarosław Szawlis

20,666

3,333

4,481

3,829

151

LSI Software S.A. Consolidated

Łódź

Grzegorz Siewiera

20,394

1,433

1,561

1,892

n/a

Golemba Sp. z o.o.

Warsaw

Marek Gondzio

20,146

2,291

2,802

2,753

Unima 2000 Systemy Teleinformatyczne S.A. GK

Kraków

Krzysztof Kniszner

19,869

193

479

-60

Syntea S.A.

Lublin

Piotr Fałek

19,400

1,050

1,350

1,200

Quantum Software S.A. GK

Kraków

Tomasz Hatala

18,885

-1,132

-1,070

-1,356

116

Softex Data S.A.

Warsaw

Wojciech Warski

18,231

-528

-501

SMT Software S.A.

Wrocław

Sebastian Łękawa

18,158

2,674

3,342

3,338

n/a

Zakład Elektronicznej Techniki Odlewniczej Sp. z o.o.

Koszalin

Weronika Kazimierowicz‑Kobierska

17,420

1,768

2,294

2,073

Hicron Sp. z o.o.

Wrocław

Bartosz Fudala, Remigiusz Efinowicz, Michał Guzek, Ireneusz Czapski

15,235

1,591

1,866

1,660

PC Guard Consolidated

Poznań

Dariusz Grześkowiak

15,151

1,096

1,451

1,414

n/a

Surfland Systemy Komputerowe S.A.

Wrocław

Dariusz Kucharski

13,700

276

n/a

Q4net Quality For Networking

Wrocław

Robert Pernak

13,324

437

567

568

Streamsoft S.J.

Zielona Góra

Dariusz Chojnacki, Zbigniew Jastrzębski, Cezary Miadziołko, Jacek Szaferski

10,665

n/a

Advacom Sp. z o.o.

Poznań

Paweł Krysztofiak

10,661

407

503

471

Interactive Intelligence

Warsaw

Marcin Grygielski

10,555

n/a

BMM Sp. z o.o.

Rzeszów

Bogdan Michałek

10,036

565

668

688

Rodan Systems S.A.

Warsaw

Witold Staniszkis

10,002

465

634

n/a

Biztech Konsulting Sp. z o.o.

Warsaw

Sławomir Chabros

9,093

n/a

PGS Software S.A.

Wrocław

Wojciech Gurgul

8,817

1,267

1,586

1,466

n/a n/a

Mineral Midrange S.A.

Warsaw

Tomasz M. Lewicki

8,735

606

782

n/a

Makolab S.A.

Łódź

Wojciech Zieliński

7,799

633

735

812

n/a

Positive Advisory S.A.

Warsaw

Monika Reszka

7,718

n/a

698

909

n/a

Xplus S.A.

Warsaw

Karol Sudnik

7,504

1,426

1,767

1,756

n/a

Trimtab S.A.

Warsaw

Sebastian Pielach

7,332

2,316

2,225

2,252

Power Media

Wrocław

Wojciech Narczyński

7,267

-317

-298

-408

M2 Net S.A.

Warsaw

Marcin Piołun- Noyszewski

6,629

612

719

811

Igroup S.A. GK

Warsaw

Jan Ryszard Wojciechowski

5,159

-61,819

-1,866

n/a

Biuro Projektów i Zastosowań Systemów Informatycznych – Microsystem Sp. z o.o.

Sopot

Georgis Bogdanis

5,069

158

196

211

Soneta Sp. z o.o.

Kraków

Robert Czuła

5,000

n/a

Insoft Sp. z o.o.

Kraków

Jacek Dutka

4,124

n/a

PSI – Projektowanie Systemów Informatycznych – Bolesław Rudnik

Wrocław

Bolesław Rudnik

4,036

577

648

Infosystems S.A.

Warsaw

Mariusz Sosnowski

3,640

1,581

1,713

1,794

n/a

Consileon Polska Sp. z o.o.

Szczecin

Marcin Kaczmarek, Piotr Roubo

3,536

144

221

Comp Soft Sp. z o.o.

Mielec

Stanisław Wanatowicz

3,269

384

490

470

IAI S.A.

Szczecin

Paweł Fornalski

3,080

143

n/a 18

GDF IT Consulting Sp. z o.o.

Warsaw

Arnold Stypułkowski

2,200

n/a

MGA Sp. z o.o.

Toruń

Marcin Orylski

2,032

188

239

244

Marsoft S.A.

Świdnik

Marek Pawluczuk

1,725

-541

-594

-280

n/a

99 100

Inteliwise S.A. Consolidated

Warsaw

Marcin Strzałkowski

1,250

-1,493

-1,534

n/a

HMSG S.A. Consolidated

Ciechanów

Bartłomiej M. Matusiak

1,171

n/a

101

ODL Sp. z o.o.

Warsaw

Patrick Flanagan

1,137

406

474

487

* Estimate ** Exchange rate as of Dec. 31, 2010 1 EUR = 3.9603 PLN Financial data in PLN thousands

10 :: polish market :: 4/2011

IT-HPS

Ecologically pure energy Industry Technology for High Pressure System (IT-HPS) is a Polish leader in providing innovative technologies and equipment for the production of ecologically pure energy from biomass, biogases and natural gas in the form of ecological fuel for public utilities, industry and power stations. Our innovative production technologies are based on the latest technological developments in fuel gas compression, as well as efficient and economical use of cheap pure energy in production processes. We are looking forward to doing business with you. PaweĹ&#x201A; Malkowski â&#x20AC;&#x201C; IT-HPS Director

Office: 1 / 214 Lukasiewicza Street Poland, Cracow 31-429 Contact: + 48 12 617 76 16/17 www.it-hps.pl

IT & Telecommunications

The free telecommunications market The dynamic development of the telecommunications market in Poland is the result of market liberalisation. There have been three times as many fixed telephone lines installed in Poland during the last decade than during the previous 45 years, and mobile telephony appeared 11 years after its world premiere: the first standard analogue network NMT (Nordic Mobile Telephone) was launched in 1981 and in Poland in 1992.

Jerzy Bojanowicz The free market means the end of the monopoly era. Naturally, subscribers who can pick and choose between the offers of the operators take advantage of this, though most often it relates to mobile (cellular) telephony. According to the “Report on the state of the telecommunications market in Poland in 2009” published by the Office of Electronic Communications (UKE), the value of the Polish telecommunications services market, measured by the amount of revenues from the sales of services of the three major segments (fixed telephony, mobile telephony and Internet access) has been decreasing for several years. In 2009 it amounted to over PLN42 billion (by 4% lower than in 2008, and by 45% less than in the years 2005-2009). This trend is the result of a significant decrease in the value of the fixed telephony market. An exception are services provided in the VoIP (Voice over Internet Protocol) technology, from which the revenue (PLN119 million) increased by almost 35% in 2009 as compared to 2008. However, the trend of an increasing market share of alternative operators has not changed - at the end of 2009 they had an almost 29% share in total revenues derived from the provision of fixed telephony services.

Fixed telephony The shortest description of the sector: total revenue - PLN6.4 billion (a 15% decrease compared to 2008), 9.1 million subscribers and 1.1 million subscribers using the services of the operator as part of Wholesale Line Rental (WLR) (Source: UKE). In terms of revenues from the sales of voice services in the fixed-telephony sector, Telekomunikacja Polska SA (TP), which is the socalled incumbent, is still the market leader. It dominates because its share in this sector is over 40%. In 2009, it also owned over 73% of subscriber lines. From among alternative

12 :: polish market :: 4/2011

operators Netia had the largest share in the revenues from fixed telephony services, Telefonia Dialog had almost by a half less, and Polska Telefonia Cyfrowa and UPC Polska had more than 1%. In the analysis of the fixed telephony market, cable television operators must also be taken into account, but not only these who offer a service called Triple Play, that is, cable TV, the Internet and telephone, and even quadro play, because mobile telephony is also provided. Of course, they do not operate throughout the country but in selected locations, but the number of their subscribers is growing, because the offer is competitive, and for all the services they pay a single invoice. They include Aster, Multimedia Polska, Sferia (the first in Poland and one of Europe’s first mobile fixed telephony networks), UPC Polska and Vectra. For example, in 2010, the number of Multimedia Polska users increased from 108,800 to 114,800. A major player is also Telekomunikacja Kolejowa (TK Telekom), which - due to the size and network bandwidth - is one of the largest backbone network operators in Poland (over 6,000 km of fibre optic cables and 22,000 km of copper cables).

Mobile telephony The Polish mobile market can be defined - according to UKE - as a mature market, and therefore its development, measured by the growth of penetration, is not proceeding as rapidly as in previous years. Operators are more interested in the maintenance and maximum management of the existing customer base by introducing new services and promotional price reductions. Infrastructure (Mobile Network Operator, MNO) and virtual (Mobile Virtual Network Operator, MVNO) providers operate on this market, offering services to their customers based on the ICT infrastructure owned by the MNO.

Poland’s first digital mobile telephony network was Era, which was operated by Polska Telefonia Cyfrowa. The first test (noncommercial) base stations were launched during the Poznań International Fair in June 1996 (antennas in pavilion 23 and a platform car with a mast and antenna) and several base stations in Warsaw. The commercial launch of the network took place on 16 September 1996. In October 2006, PTC Era, as the first in Poland, commercially launched the HSDPA service. In the second quarter of 2011 its name will probably be changed to T-Mobile. The key MNO players include Plus (operator: Polkomtel) operating from October 1996, Orange Polska (operator: PTK Centertel, earlier, from 1998 as Idea) and Play (operator: P4, earlier, from 2007 as Netia Mobile), which is developing its own network. In 2009, the value of the mobile telephony market, measured by the revenues of retail services operators, amounted to about PLN18.66 billion and was by only 1.6% higher than a year earlier. Virtually all of these revenues (99.84%) were earned by infrastructure operators. However, the market value, measured by revenues achieved by telecommunications companies from telecommunications activities at the end of 2009, amounted to approximately PLN42.2 billion (in 2005 - PLN37.7 billion). It is worth noting that in 2009 revenues from mobile telephony accounted for more than 44% of the revenues of the entire telecommunications market. Currently, there are 6 MNOs, because in 2009, CenterNet (CenterNet Mobile wRodzinie) and Mobyland became MNOs. These companies signed a letter of intent for the mutual provision of infrastructure, and possible network connections and the creation of a single telecommunications operator. According to UKE, the entry of CenterNet into the market has created a realistic chance of improving the competitiveness of the mobile market as a result of the planned expansion of its network by next base stations. In December 2006, mBank mobile, the first MVNO network, debuted on the market, which was operated by emFinanse (now Aspiro). MVNOs can be divided into entities operating on the telecommunications market and treating this business as a form of extension of their activities (e.g. Aster - bought by UPC Polska, Cyfrowy Polsat and Netia), not connected with the telecommunications market, whose activities in this area are merely

IT & Telecommunications

a supplement, a kind of a loyalty programme (e.g. Carrefour) treated as their basic operations (e.g. Mobilking). Before a business start-up it is necessary to make an entry into the register of telecommunications companies, kept by the president of the Office of Electronic Communications. Therefore, any special licences, permits or concessions are not needed to obtain professional rights. It is not surprising that the list of MVNOs, as reported in the registry on 2 February 2011, included... 312 entities! A necessary condition for the actual commencement of providing services is primarily the conclusion of an agreement on cooperation and network availability with a mobile network operator with adequate telecommunications infrastructure. On the market there are 14 MVNOs who - using the MNO networks - provide pre-paid, post-paid and business services (in Poland, as in the EU, the number of pre-paid services users is decreasing in favour of subscription users: from 58.2% in 2008 to 55.3% in 2009 - the highest share of pre-paid services users due to the strategies adopted by the operators occur in Italy and Malta). They include Aspiro, MNI Mobile (Ezo mobile, Snickers mobile), MNI Telecom (Simfonia), Mobile Entertainment Company (Mobilking), CP Telecom (Carrefour Mova), Cyfrowy Polsat, ASTER, Crowley Data Poland (CROWLEY TeleMobile), Netia (Netia Mobile) GG Network (GaduAIR), Telefonia DIALOG (diablo), INEA, FM GROUP Mobile and Hyperion (Hyperfonia). Avon Mobile (myAvon), Wirtualna Polska (WPmobi) and Mediatel S.A. (telepin mobi) have resigned from the provision of MVNO services. The share of MVNOs on the mobile telephony market, measured by the number of SIM cards, still remains marginal (in 2009–0.4%). The top positions are taken by the Mobile Entertainment Company and Aster, of which each achieved an over 20% share in the segment at the end of 2009. Aspiro and Cyfrowy Polsat (96,000 mobile service users at the end of 2010, an increase by 67,000) have a share of about 15% and CP Telecom- nearly 10%.

Infrastructure development The total capital (including intangible assets, such as computer software) outlays (expenditure) incurred by telecommunications companies, excluding expenditure on R&D, licence fees and fees for frequencies in the telecommunications sector at the end of 2009, amounted to PLN7.5 billion, which is an increase of about 26% compared to 2005 and just 2% compared to 2008. In 2009, the capital outlays of Telekomunikacja Polska, as well as the three largest mobile operators (PTC, PTK Centertel and Polkomtel), decreased (compared to 2005) by more than 29% and nearly 6% respectively, and of Telefonia Dialog by 41%. However, at the same time Netia recorded as high as a 120% increase in investment compared to 2005, and UPC Poland - 118%. The state of the telecommunications infrastructure in Poland, as well as its availability and coverage, is still very poor, especially compared to other EU Member States. Legislative intervention was necessary, resulting in the Act on supporting the development of telecommunications networks and services, passed by the Parliament on 7 May 2010. However, we will have to wait for its results. :: 4/2011 :: polish market :: 13

IT & Telecommunications

Step ahead in communications Aastra is a global leader in Unified Communications. It has recently introduced a new product on the Polish market. The communication platform allows employees to answer their desk phone in a car, make a call from their home that looks like a call from the office, access their phone book from any phone, instant message their coworkers or see if their phone is taken. And that’s just the basics!

When did you enter the Polish market?

Martin Schmiedt-Siebenhaar

Tomasz Łodziński

Marketing Director for Central and South East Europe

Sales Director for Poland

W hat are your plans now?

Martin Schmiedt-Siebenhaar: Aastra entered the Polish mar-

MS: Simply start growing again.

ket in two ways. In May 2008 Aastra took over the Enterprise Communication Division from Ericsson. Secondly our partner – MCX Telecom 2 was already selling Aastra telecom systems at that time. Aastra is a Canadian company which expanded to Europe, precisely to Switzerland by taking over Ascom PBX, in 2003. It grew through acquisitions and mergers and has become one of the leading suppliers in the EMEA region. Tomasz Łodziński: The first devices were sold by MCX on the Polish market some 20 years ago, but the first Ericsson devices appeared here over 100 years ago. Therefore it can be said, that we have been selling our products in Poland for more than a century, although the Aastra brand has existed since May 2008.

TŁ: And to grow dramatically - our

How does Poland compare to other countries in terms of sales? MS: The last two years, due to the difficult economic situation, were generally a difficult time - not so much for Aastra but for the whole industry. What we saw in Poland, was a big positive development in the second half of 2010. The sales increased significantly reaching “normal”, pre-crisis levels. In 2010 in Poland we even noted growth as compared with 2009. So the crisis hit also the IT and telecom sector? MS: Due to the fact that Aastra does its business exclusive-

ly in the B2B segment freezing of planed customer projects is directly influencing Aastra. If companies see that their own business is not going to develop as expected, they stop investing and start just checking the scene. Only when the situation improves and the companies themselves are stable again they continue with their plans. This phase of “wait and see what’s going to happen” has passed now.

14 :: polish market :: 4/2011

expectations for 2011 are very high. And the signs we are collecting from the market show that our plans are possible to come true. W hat is the competition on the telephone market in Poland? TŁ: Our competitors in Poland are the same companies as in the entire region. However, in Poland we do have a specific situation on the SMB market as we face a special kind of competition - local vendors. In Poland the market share of local vendors in the SMB segement is bigger than 50% in terms of shipped lines (extensions). Is IP the new trend? MS: IP is not a trend, it is just a pro-

tocol. But there is a big topic in the world of business communication, being in focus. This is Unified Communications and Collaboration (UCC). It’s more to be seen as an umbrella offering different communication means. And in order to have a useful UCC solution it has to be tailor-made for each and every company. Each company has its specific needs, different focus, processes and ways of working. If you want UCC, you have to

understand how your employees communicate, if they need mobile devices to be integrated in the communication system, or if they move a lot in the building and if you have a lot of out-bound calls or incoming calls. It should be understood by enterprises that unified communication is not something you take of a shelf, it’s something that has to be reached step by step together with a system integrator by asking the questions: “What is already in place and what do I have to add to reach the perfect way of communication?” Some of our applications include other ways of communication - not only voice, but also video and file-sharing representing the collaboration tools. W ho does this analysis for a customer? MS: This is the task of our partners like MCX Telecom 2. TŁ: So far the analysis has been a part of preparing an offer for the customer. However, if a company’s requirement is to get a really detailed analyses it’s rather something for consulting companies, but a very general analysis of communication processes on your company is something MCX Telecom 2 can deliver. Usually this analysis is enough to make a good decision. ::

Science and Innovation

We cooperate with the Dominik Mazur, president and CEO of the Amedar Consulting Group

clients to decipher the contemporary alchemy written with the use of Scorecard, KPI, PPI, and other systems. W hat are you working on right now? Several weeks ago we started a new initiative which stays outside the mainstream of our business operations. It is a new project that aims at creating Business Innovation and Technology Committee at the Israel‑Poland Chamber of Commerce. The project is being implemented in cooperation with the Israel‑Poland Chamber of Commerce.

What does the Amedar Consulting Group deal with? We are an expert team specialising in the fields of knowledge that are useful for managing a company’s operational level. The team comprises statisticians, actuaries, IT specialists, financial and process analysts, and people with long-term managing experience gained in the companies operating in various sectors of the economy. We cooperate with our clients so that we can provide them with individually-suited methodological, organisational, and computer solutions that support the process of calibration of the company in a way which improves the realisation efficiency of their strategic objectives. We deal with projects in three areas: project management, process management (including workflow implementation) and operational risk management. Within the framework of implemented projects we help our

16 :: polish market :: 4/2011

W hat are the principles of the project? The project’s aim is to import the techniques invented in Israel in the field of university projects commercialisation. The idea assumes close cooperation of both Polish and Israeli university communities. We wish to make use of the connections brought by the Israel – Poland Chamber of Commerce in the field of cooperation with Israeli representatives of the world of science and business. We would like to make use of their experience. The project assumes the import of techniques of establishing companies in the “spin off” and “spin out” models. It means that people working at a university or research laboratory are going to become independent and form a new company using the intellectual and/or material resources of the parent organisation, and implementing their own commercial project or projects commissioned by commercial companies. The aim of such an entity is to commercialise technical and scientific knowledge. What is more, we are planning to take up close cooperation with several

selected universities from Poland, for whom there will be created a special business – organisation structure facilitating faster and shorter project incubation processes. From what we have observed, there is a tendency on the market to obtain financial resources for individual, specific ventures. There is no longterm forward planning. The resources obtained are spent and nothing goes on, there is no further support. The projects that emerge are interesting, but there are no financial resources for their commercialisation and market promotion. It is true that in the case of higher education institutions there are business incubators, but they only allow to develop a concept. A similar problem was faced in the 1990s by projects in Israel that could perfectly carry out the R&D process, but lacked support to introduce products onto the market, and advertise themselves to clients. That is why in mid1992 the Yozma project arose, later to become a driving force behind the Israeli economy, and innovative projects in particular. As a Chamber, we want to support and mediate in the implementation of specific projects. People, and, in the case of a higher education establishment, students, who specialise in a specific field, can develop their abilities, and their ideas, if they are wellreceived, may form the basis for new projects to be commercialised. The Chamber wants to encourage young people to establish businesses themselves, support them in a wider scope, also by taking advantage of contacts with Israeli entrepreneurs, so that the project does not limit itself to Poland. We should also take advantage of the fact that many young people from Eastern Europe come to study in Poland. They should be encouraged

Science and Innovation

scientific community to act and create. This is noticed by more and more universities, and two good examples are Vistula University run by prof. Krzysztof Rybiński, PhD., and Wyższa Szkoła Biznesu – National-Louis University of Krzysztof Pawłowski, PhD. They are both doing their best to show that managers with a vision see opportunities for people who are open to innovation and strive to motivate them to turn their ideas into reality. I think that there are more places like that in Poland. A re they interested in taking part in the project? On principle, the project is to address the scientific community, business, and investment funds. We will conduct talks so that patronage over the project will be taken up by the representatives of Poland’s and Israel’s authorities. Although the project is in preparation, it is being created with a view to develop it and continue for a longer period.

What has been done so far to launch the project? We have started internal and external consultations aimed at procuring partners and patrons for this project. Talks are underway with the Eugeniusz Kwiatkowski Association, which promotes Poland abroad. Next, we will approach universities, proposing cooperation on the projects, which then could go from the scientific to the commercial stage. We believe that the project will be received well, and, most importantly, that it will be efficient in pursuing its goals. We are convinced that young people will be interested in participating in this innovative project.

To achieve the desired success you must dedicate a lot of time and effort. Young people starting their adventure with business must realise that creating your own business never comes without difficulties. This is exactly why we want to support them, and this support is our goal. Young people are very creative, they have plenty of ideas for their own business, and the only thing to do is to set them on a right course and provide support. Interview by Ewelina Janczylik

We believe that the project will be received well, and, most importantly, that it will be efficient in pursuing its goals. We are convinced that young people will be interested in participating in this innovative project.

Where did the idea to create such a committee come from? The initiative arose as an opportunity to use the space that is not fully taken advantage of and has a great potential. As a Chamber, we have a goal of supporting entrepreneurship, and the contacts we have are excellent in fulfilling this goal. One more reason that inspired us to implement this idea was our direct experience during the visit to Israel, where I could see for myself the results of the Yozma project. Reading the book Start-Up Nation, a story of the Israeli economic miracle published by Dan Senor & Saul Singer was very helpful while I was thinking about the concept. The book showed the way that Israel had to go through to change from an agricultural country with a considerable national debt into a country with highly-developed technology. I would also like to add that the experience derived from the Yozma project was implemented in many countries globally. 4/2011 :: polish market :: 17

Science and Innovation

Creating an elite Interview with Prof. Maciej Żylicz, President of the Foundation for Polish Science, by Jerzy Bojanowicz.

The Foundation for Polish Science is celebrating its 20th anniversary this September. How would you sum up the accomplishments of Poland’s largest non-government source of research funding? The greatest accomplishment is more than 7,000 beneficiaries of our programmes – scientists in all areas and of all generations. This is the essence of what we do – directly support the most talented researchers, allowing them to spread their wings much wider. Nearing our twenties, we have asked ourselves the question: Is our way of doing things the most appropriate way for the current needs of the environment, in whose interest we are acting. We have been conducting an internal evaluation for several years now on all of our programmes, we have also undergone an external organisational evaluation of the Foundation – in 2010 we asked directors of European foundations and other institutions administering science funding to take a bird’s-eye look at our Foundation. The evaluation was positive, although the evaluators have concluded that we should limit, which we are already doing even thought it can’t be done in one day, the number of programmes, of which we have over 20 at the moment. Closing down programmes, however, is not easy because each has their “godfather or godmother” who believe that their programme must not be cancelled. Nevertheless, we want to limit their number to 6-7 flagship programmes in the course of several years. We are convinced that the restructuring of our programmes is a necessary move to close a certain era – the support of the Foundation to the infrastructure of Polish science (It was an important need in the initial years following the political transformation, when we needed to quickly make up

18 :: polish market :: 4/2011

for years of neglect at a basic level – scientific apparatus, laboratory equipment, modernisation of buildings and space dedicated to scientific work. We are discovering today’s essential needs elsewhere – generally speaking in speeding-up scientific careers, encouraging young people to them, equalising the level of work conditions between Poland and abroad so that work at home would be attractive even for Polish researchers working abroad. This is all a precondition for science in Poland to have a chance to stand-up to the challenge that the world is placing in front of it – innovation, competitiveness in relation to the scientific accomplishments in highly-developed countries. A mbitious goals. But can a foundation that is independent from the government have the ability to measure-up to them? We do realise the scale and limits of our actions. However, I do believe, and we have many confirmations of this, that positive examples and bottom-up action can really accomplish a lot. I will provide two examples of indirect, but at the same time symptomatic effects of our actions. Based on an internal evaluation of the START programme (one of the first FNP programmes, directed at young scientists under 30 and assisting them in the first years of their carrier), we have found out with great satisfaction that its recipients usually earn the title of professor around 10 years earlier than their peers, who pursue their career in the traditional manner (based on data from the Central Commission on Degrees and Titles, it appears that the average age of a professor is – depending on the area of science – 56-57 years). This speaks on the effectiveness of our selection process and on the appropriateness of our main motto – support the best,

Prof. Maciej Żylicz Photo: A. Świetlik

so that they will become even better. The contest is very difficult since around 1,000 people vie for 150 scholarships, who must submit their scientific achievements for evaluation. As is clearly seen, this selects the relative sparse circle of “the best” from the many people who will rise above the average later on in their carriers. But I believe that the scholarship alone, in the amount of PLN24 thousand per year is, using the language of mathematics, a necessary condition but not sufficient to reach success, since it really does not have an influence on speeding-up someone’s carrier. What is important is that we are able to draw to us really talented people. These people simply want to win this contest, they are in some sense determined and I guess that’s how they remain. One success deserves another. And that’s how we create an elite. Another very important success is that other institutions adopt our standards. When we have announced that PhD students – beneficiaries of MPD, TEAM and VENTURES programmes, or participants in the WELCOME programme will receive PLN3

Science and Innovation thousand per month (tax-free), the amount itself was questioned. It was asked: Why so much? And suddenly it turned out that we have created a standard. Today the Ministry of Science and Higher Education and provincial marshals fund scholarships of a similar amount. It’s with great satisfaction that I am observing how the goals of our programmes are adopted by new government institutions financing science – the National Centre for Research and Development (NCBiR) or the newly created National Science Centre (NCN). The Foundation’s most famous awards are the FNP Prizes, the so called “Polish Nobel Prizes”, awarded for outstanding achievements in science. Why are there so few laureates in the sciences of mathematics/physics and engineering? In previous award sessions, it has only happened on two occasions that there was no laureate in the area of exact science. However, several times already there had been no laureate in the area of technical sciences because we were facing (and continue to face) a dilemma: does the award have to be only for education or for education and its application? In the latter case, we would be duplicating other existing distinctions in the area of technical sciences, for example, the Minister of Science and Higher Education Awards, which honour the application of new technologies in practice, or the Prime Minister’s Awards. Our laureates, who applied their achievements in practice, can be counted on one hand. Particular cases are, inter alia, Prof. Bogdan Marciniec (laureate of the 2009 FNP Award and a “Polish Market” Honorary Pearl winner, Prof. Krzysztof Matyjaszewski, who is working aboard on polymers, Prof. Wojciech J. Stec from the Centre of Molecular and Macromolecular Studies PAN in Łódz and Prof. Leon Gradoń from the Warsaw University of Technology. Th en perhaps you should grant awards for scientific ideas that may have an industrial application potential. This year we have introduced a new division of areas in which Awards will be granted. Technical sciences (engineering, to be more exact) have been

grouped together with exact sciences (mathematics/physics), chemistry with material sciences, life sciences with earth sciences and finally – humanities with social sciences. How will this work to strengthen the share of engineering achievements in the statistics of the most important Polish scientific awards? It’s too early for an answer, but… we are a Foundation for Science, hence there has to be an element of “science” in the laureates’ achievements and not just the industrial implementation of a new idea. Professor, there is very little money for science in Poland, especially when compared to expenditure on R&D of well-known companies. Is there any sense in competing with them? This is a race that you have to take part in. Even for the necessity of, what I call, technological alertness. There have to be experts in a 38 million country who know how to, for example, produce crystals for a blue laser. The educated, who, due to the level of science funding, may not win the most important contests, but know what is going on in the world. So that we avoid situations where we purchase vaccines from abroad when similar ones are produced in Poland and… exported! But these companies, leaders in innovation, are private! I believe that that the recent amendment of the Act on NCBiR, which has a budget of almost PLN1 billion, will stimulate private enterprises to begin cooperating with science, making it worthwhile for them to invest. In order there is both a push and a pull. Is the Foundation represented in other countries? No, only in the United States for now, which – whether we like it or not – play the first fiddle in science. In my area (molecular biology), 85% of the scientific achievements are created there. I think that, with full respect to European scientific achievements, it is similar in other areas. W hat new projects run by FNP are you particularly proud of? We have introduced a very well received programme, POMOST, addressed to parents who return to scientific work following parental leave

and receive PLN500-600 on the basis of a 3-year grant, and also to women implementing scientific projects during pregnancy – they can receive money to finance a substitute in tasks that could have a negative impact on the pregnancy, and therefore do not have to interrupt the continuity of the project. We managed to do something entirely new in Poland and to fill an important gap in the system of supporting subsequent phases of a scientific career. We help to combine a scientific carrier with maternity and family life, which is particularly important for female scientists, who frequently “fall out” of intensive work after having a baby and for whom it is difficult to catch-up to colleagues who did not have a break. I was very concerned about this programme and even considered that I would have to, something that I had never done, lower the bar in the contest. I have to state, however, that I was positively surprised because the programme participants are very fantastic and scientifically competent individuals. I was also surprised at the high level of the people participating in the HOMING PLUS programme. It turned out that 1/3 of them are laureates of school mathematics, physics, biology and chemistry competitions, who have left to study abroad following high school. They are now returning. One of your press releases contains information that the aforementioned Prof. Krzysztof Matyjaszewski became a laureate of the prestigious 2011 Wolf Prize in the field of chemistry. This distinction is considered a “prelude” to the Nobel Prize, since as many as 9 among 42 of the existing laureates in chemistry became honoured with the ultimate award. Does this mean that we finally have a successor to Maria Skłodowska-Curie? Of course, Prof. Matyjaszewski, working in the USA, has been a candidate for the Nobel Prize for several years and this makes me very happy! When it comes to scientists working in Poland, the probability of attaining the Nobel Prize exists but is much lower. The causes are prosaic. In my field, molecular biology, I would need a budget 100 times greater in order to be a player. Poland cannot afford spending of this magnitude. ::

In France, expenditure on R&D amounts to about EUR250 per head, in Poland – only EUR28

4/2011 :: polish market :: 19

Science and Innovation

Why compete? It is better to cooperate Adam Rozwadowski, founder and President of the private ENEL-MED Medical Centre, talks about top-down and bottom-up challenges faced by healthcare sector this year.

Five bills concerning healthcare have been submitted to the Parliament (Sejm). They evoke various controversies. Will they cause problems for the private health sector? On the one hand, these bills do not include anything that directly impedes or develops private healthcare. On the other hand, however, some of the provisions should be carefully considered because they can legitimise unfair competition. The Healthcare Institutions Act is to be amended and the division into public and private institutions abolished. However, those public institutions which will not undergo transformation will be subject to quite specific legislation. They will still not pay tax. We consider it as unfair competition. They may also be subsidised by its founding bodies in terms of investment and maintenance. This is also in a sense unfair competition because the institutions which are transformed into private ones will not be able to use this privilege. Another Act which has been submitted for public consultation is the Health Insurance Act. It raises much controversy in the circles of private health centre, especially those who offer the pre-paid health packages. This Act introduces far-reaching unfair competition because it gives insurers the ability to sell health insurances on a preferential basis. Health insurances are not new - there are 6-7 insurance companies operating on the Polish market that already sell them. Therefore it can be said that basically the Act introduces only an incentive to buy insurances (tax credits), and grants the possibility of buying insurances from the company social fund by

20 :: polish market :: 4/2011

employing institutions and allows insurance companies to contract for occupational medicine. Until now it was the responsibility of entities registered as an occupational medical service and was not available to insurers. In the proposed system, the prepaid system has been somewhat overlooked. And yet about 1.5-1.8 million patients are already covered by the system. The private health service considers this as inequality and unfair competition. We can imagine that with incentives and allowances,

the insurance system will be more attractive to an employer than the prepaid system. Generally, the introduction of insurance is the right direction for development, but the existing prepaid system should not be run down. If both parts - the insurance and prepaid - have the same options, it would be an appropriate proposal. In summary, the Act opens up the possibility of introducing additional resources to healthcare, but in the wrong way. We suspect, however, that insurance companies will have to, in large part, refer patients to private companies because public ones are not yet prepared for serving commercial patients in terms of quality. Hence, it is not a major threat to the private medical sector, but it is a wrong course of action. The National Association of Private Health Service Employers will certainly respond. What other changes are expected in the private healthcare sector in 2011? This market is growing very rapidly, but on the side of the providers. Their potential is far ahead of market demands in some areas, particularly in hospitalisation. The private patients market, in terms of hospitalisation, is quite narrow. It results to some extent from the habits of our society, but price is also the problem. An operation which costs PLN 2-3,000 is available to large numbers of patients, but more serious treatments cost from PLN 10,000 upwards. Acquiring patients may be a potential challenge this year. Private investors have speeded up hospital investments. Last year, in Warsaw, as many centres were established as in the entire history of private healthcare – the Medicover hospital, Lux-Med in Józefów, in Otwock, the cancer hospital in Wieliszew, the EMC hospital being established in Piaseczno, the SwissMed hospital being built in Bródno and ENEL-MED’s second hospital in Warsaw already being built on Solidarności

Science and Innovation

Avenue. This is an unprecedented rash of investment activity. But this raises a problem with the possibility of filling up the potential. Also gaining a contract with the National Health Fund (NFZ) may be a problem. A dangerous trend that may become apparent this year has been marked by the so-called Lublin incidents. Directors of public hospitals have terminated the contracts for ICUs and diagnostic imaging to private healthcare institutions. To get a contract with the NFZ a hospital must have either its own ICU or diagnostic facilities in the form of MRI, CT scanning, ultrasound or X-ray facilities. If it does not have them, it must have a contract signed with one of the hospitals which provides this. This year public hospitals signed slightly fewer contracts and came to a simple conclusion: if they terminate contracts with private hospitals, such hospitals will not meet the conditions of the NFZ, so contracts will be taken away and transferred to public hospitals. It is a disease that can spread. As the National Association of Private Hospitals we have filed a protest to the Office of Competition and Consumer Protection (UOKiK), because it is an overt cartel conspiracy. Another worrying trend is signing the so-called loyalty document. It happened in Lublin and in several other cities - the directors of public hospitals require from its medical personnel that they work only in their centres. This is another example of cutting competitiveness. This can be dangerous. The “struggle” begins between public and private hospitals, initiated by public hospitals. Fortunately, ENEL-MED has had excellent relationships with public hospitals for years. We have diagnostics centres in many of them, and we also serve many hospitals in our institutions with complex diagnostics. We have a teleradiology system, which handles more than 20 public hospitals throughout the country. I think that it is necessary to cooperate for the good of the patient.

services. They sell these services. Just like any company. The public sector now understands that it also runs a business activity. The public sector often raises the question of whether a hospital should make money, suggesting that it doesn’t. Hospitals should generate profit to invest in new infrastructure, train doctors, raise salaries – that’s why profit is needed. In Poland there isn’t much talk about non-profit hospitals, but the hospital is a nonprofit entity. For example, ENEL-MED does not distribute a dividend. We spend it on investments, which largely makes us a non-profit entity. There has never been a time when we used the dividend. All the money generated has always been spent on investment. It is not true that if a hospital makes a profit, the patient is provided with worse services.

Why are there so many attempts by the public sector to stop the development of the private sector? Public hospitals have finally understood that they do not provide medical

A re you talking about the ENELMED debut on the WSE? Yes. Our credit rating is slowing the pace of our development. We have concluded that we need to develop

ENEL-MED is a phenomenon on the Polish market of private medical networks, because it is the only network based on 100% Polish capital. What is your strategy? ENEL-MED has been present on the market for 17 years and we remain a family company. We have been developing throughout this time because all the money earned is spent on development. We had no external resources, except for loans. We have been developing at the maximum rate towards our credit capabilities. Sometimes it was even slightly ahead in relation to market needs. The company has focussed on development all the time. And in several directions. Our sales are diversified. Pre-paid packages constitute only 50% and the remainder is diagnostic imaging and contracts with the NFZ. Diversification always helps in the case of market disruptions. Fortunately, we are able to maintain good relations with the Fund. This contract has been slightly growing every year. We care about relationships with our customers, ensuring the quality of our services. We try to make them the best possible. Hence, we are able to cover the potential, and it is time to take a step forward.

faster. We want to raise funds for investment. By 2013 we are planning a series of investments which will definitely increase our potential. The biggest investment is a new hospital, because the one we have doesn’t have free potential. In the new hospital there will be 30 beds, 3 post-operative beds, 2 surgical rooms and complex diagnostic facilities very advanced in terms of technology. We are also moving two specialties there - neurosurgery and orthopaedics. We want to make it before the end of the facility adaptation. It is ideally located, so we want to use it as a short-term assistance centre in the field of orthopaedics and traumatology. W hich of the services offered by ENEL-MED would you particularly recommend? Manager’s Health. We’ve always thought it would be good to create the possibility of complex examination in a single day. Seven years ago we launched the programme 24 hours for your health. The patient comes for an hour visit to the General Practitioner who takes a thorough case history and chooses the right path for examination. In the fixed time the patient comes to our hospital, where he/ she gets a room and goes through the whole series of examinations - ranging from analytical tests, ECG, exercise tests, a whole body scan, colonoscopy, gastroscopy, coronary vessels CT, resonance of the cervical and lumbar spine, to visits to specialists. Everything is done in a very pleasant atmosphere and a friendly environment. At the end the general practitioner assesses the state of the patient’s health and advises how to change his/her lifestyle. It is a programme to which people return. A man comes out happy that no complications or minor abnormalities have been detected. This allows the disease to be caught at an early stage, which is crucial to effective treatment. We want to promote prevention and health checks. Interview: Sandra Wierzbicka

This market is growing very rapidly, but on the side of the providers. Their potential is far ahead of market demands in some areas, particularly in hospitalisation. 4/2011 :: polish market :: 21

Science and Innovation

An expert’s view on Polish “Initial shale gas surveys in Poland are quite reassuring, there’s enough gas there. However, today it is too early to say that Poland will exploit it on a mass scale and that we’re a gas super power. Things aren’t that far advanced yet, but the possibilities are there,” professor Jerzy Nawrocki, head of the Polish Geological Institute, tells “Polish Market.”

unprecedented in our post-war history. Nonetheless, it will take time before we get reliable information and right now it is certainly too early to say anything definite about the size of the resources. But what we do know looks optimistic.

According to recent estimates, Poland has 5.3 billion cubic metres of shale gas. Can this be true? These figures are not based on hard data, so they’re not fully reliable. However, such surveys are in demand – for instance by banks, who use them to assess the profitability of shale gas projects they help finance. As for prospecting, it’s noteworthy that a number of very wealthy global firms are involved in searching for shale gas in Poland, which is

It appears that Poland’s shale gas resources are the biggest in Europe, but some are also to be found in countries like Ukraine. I believe Poland should consider exporting solutions we develop to our close neighbours.

22 :: polish market :: 4/2011

What part does your institute and Polish science in general play in the shale gas plans? The institute plays a dual role here. For one, there’s what we are actually doing now, namely processing and publishing data on Polish shale gas which we ourselves have gathered over years. It was this data that initially enabled us to ascertain that we have shale gas and to locate the depth, extent and volume of the resources. Shale gas is a relatively fresh topic for public opinion, but we have been prospecting for it for decades and it was our drillings in the 1960s and 70s which helped in the compilation of a map of the resources. Thus, one of our roles is providing knowledge to prospecting firms, also foreign units. In a sense we’re offering them a running consultancy on Polish shale gas. Our second function is overseeing and averting environmental threats connected with shale gas prospecting. National geological and hydro-geological services operate water monitoring systems enabling depth control, and are therefore best-suited for such tasks. What are the main environmental threats? There are three kinds, all often mentioned in the media. The first is

often shown on Youtube, where film clips show gas leaks and gas appearing in wells and water taps. This is absurd and manipulative as what they are showing is biogenic methane, which appears very shallowly and is currently in formation. Shale gas, on the other hand, is found 3 kilometres underground, well isolated by thick crust layers, and there can be no talk of it leaking out anywhere. Therefore, such threats are completely unrealistic in this case and we shouldn’t worry about them. The second hazard involves the inconveniences of shale gas prospecting for local communities. Prospectors really do have a lot to do in this sphere. Drillings must be isolated by special soundproof screens, which partly depends on the right technology. I hope Poland imports quieter equipment than we have now as this would solve the problem to a considerable degree. The third danger is connected with fracturing technology, which needs appropriate amounts of water to pump. The water is subsequently reclaimed. We must remember that this water contains softeners which make the fractured rock yield gas. This fluid is then returned to the surface for use in subsequent drillings, but some of it must be utilized so that we can obtain pure water. It is the job of environmental inspectors to see that no impure water is pumped into drillings. W hat about unconventional gas technologies? Here we must pose a fundamental question: can we have any influence on gas obtainment technologies developed in the US, or should we develop our own methods? As matters stand today, we have no such technology. We are unprepared as no one has trained for this before. I hope there will be more training in such fields. I know for a fact that Polish academics and college

Science and Innovation

shale gas, nuclear Power principals visit American schools, so they will probably adapt some of their education programmes for their own use. Everything in this respect is still before us. The assessment of Poland’s shale gas resources will also take time, so I’m optimistic that Polish scientists will be able to contribute to the process. Right now we’re almost at zero point in this respect. I say “almost” because directional drillings and fracturing have for some time now been conducted by our PGNiG corporation. We will certainly have a shortage on specialists in some areas. We lack the equipment and personnel necessary for certain mechanical rock surveys which are crucial for fracturing plans and gas reclaiming. Today the whole project will be monopolized by western firms, who are well-practiced in such work and operate research facilities worldwide. Nonetheless, I believe that we shouldn’t rely on them only and should develop our own research potential even if today we are at the very start of this road. Our institute will also participate. If we are to oversee processes we must learn about them. Can anything more be done? It appears that Poland’s shale gas resources are the biggest in Europe, but some are also to be found in countries like Ukraine, where the geological conditions are similar. In this context, I believe we should consider exporting solutions we develop to our close neighbours. Training shale gas specialists may also prove profitable in this respect. Shale gas is said to be a priority for Poland’s energy security. In what way can your institute contribute to energy security? This is a very important matter. The national geological service can and should play a meaningful role in building energy security. This is not just a matter of the climate package and obligatory CO2 reductions which

force us to seek safe geological structures to store surplus CO2. In energy security matters we try to work in many directions. Our involvement in shale gas is driven by the fact that if CO2 storage proves impossible or too costly, our chance to meet the climate package requirements will lie in building gas-fired generation units and basing our energy mainly on gas, at least for some time. Opportunities are offered here not only by shale gas, there are also some promising survey results concerning underground coal gasification. Such gas can be supplied to power plants, which will also reduce CO2 emissions. Gas can resolve the CO2 problem for a while. As we know, all mineral resources are limited and it is also our institute’s task to seek renewable energy sources and introduce new geothermal solutions. Another segment of our work concerns the national nuclear energy programme, although nuclear power is questioned today because of the recent events in Japan. What is your private opinion about nuclear energy and its safety? It seems that the Japanese did not expect a catastrophe quite this size. Besides, they had not exchanged their technology on time – the more advanced the technology, the safer it is. In Poland’s case there are two very important aspects: we have an overview of our geology and seismic potential. We know that there are areas here which will never be as seismic as Japan, not even in hundreds of thousands of years. This is what we are certain of. Also, the reactors which will be installed in Poland in 10-20 years will surely be built in still newer and safer technologies. I am totally convinced that both technologywise and geologically Poland will be capable of producing safe nuclear energy. Of course human errors can always happen, but that’s exactly what multiple safeguards are for. There are R&D units in Poland which are quite abreast

with nuclear energy and everything related to it. So we will not be starting from rock-bottom here, though we will need technology and equipment transfers. In this sphere we are to a large degree dependent on imports. Poland’s first nuclear plant is to be built in 2020, so we’ve still eight years to train its personnel. An important geological aspect here is the plant’s siting. An ill-chosen site can bring dangers which, while smaller in extent than the Japanese disaster, could nevertheless have similar effects. Some of the plants are to be located along the Baltic coast because of the closeness to water. We must bear in mind that nuclear power is a very long-term investment, therefore we must ask ourselves, if our coastline will look the same in 30 or 50 years. We know that it is changing all the time and the present warming has additionally speeded up erosion. So the Baltic coast will expectedly change to a considerable degree. This problem can be resolved by the geological service. We’ve submitted a project in which we suggest the compilation of a longterm coastal change forecast. Some of the coastal nuclear plant sites currently taken into account may prove very unsuitable due to erosion and the resulting recession of the coastline. This can be slowed down but not stopped, just like a tsunami wave can’t be stopped. In our case the “tsunami” can prove a slow one, with erosion slowly but surely destabilizing a huge facility like a nuclear plant. I hope our warnings in this respect don’t go unheeded. ::

I am totally convinced that both technologywise and geologically Poland will be capable of producing safe nuclear energy 4/2011 :: polish market :: 23

Science and Innovation

It’s high time “It’s high time Poland started the expert-guided and responsible construction of an environment-friendly vehicle market,” stresses Prof. Antoni Szumanowski, Chair of the Hybrid Drive Systems Unit at the Faculty of Automotive and Construction Machinery Engineering at Warsaw University of Technology, and President of the Polish Society of Environment-Friendly Vehicles.

Professor, on the one hand, we absolutely cannot question the fact that our access to liquid fossil fuels is becoming more and more limited and expensive, and at the same time we are experiencing extreme climate changes more often. The awareness of our neighbours, their politicians, supranational institutions such as the European Union, and even car producers, is undergoing change, and “Sustainable Mobility” is getting its way. On the other hand, Polish people still seem to find classic vehicles, and especially those with the highest CO2 emission rates, simply irresistible; while having the qualities of natural environment in high appreciation (providing that no costs are incurred); and the authorities are not particularly interested in the implementation of unpopular projects. So isn’t it the right time for Poland to take decisive actions in favour of environmentfriendly transportation and open the market to environment-friendly vehicles? This is the issue that my work colleagues and I have been dealing with, also internationally, for several decades, and as far as my opinion is concerned, even though I may not be absolutely sure that this is the best of times, I have no doubts that it is high time. This isn’t yet another short-lived “green fashion.” Just take a look at not only what is being said but what is actually being done in Europe. The EU has presented its stance, not only by adopting major campaign slogans and strategies, but also by preparing directives ready to be implemented, and very specific levels to be reached, and by assigning specific financial resources to implement the said directives. France, Germany, Great Britain, Italy, Spain, Portugal, Belgium, the Netherlands, Denmark, Sweden, Ireland, and even Romania, which is poorer than Poland, have all introduced financial incentives and

24 :: polish market :: 4/2011

tax preference programmes for the purchase and use of environment-friendly vehicles. Poland, having some of the oldest, that is high – emission, cars, has done literally nothing. The matter is all the more urgent, as it serves not only to reduce the emission of CO2 but also to protect the climate. CO2 emission is also considered as an indicator of the energy efficiency of the car. We need no complex mathematics to calculate that PLN 72 billion is spent on petrol each year, while 50 billion is the “cost of the fumes,” that is the purchase of energy we do not transform into usable movement. Our vehicles are running so much out of order. Do we still need to follow this economy? We tend to console ourselves with the fact that we don’t have to take any special actions and we do it in a sense spontaneously, while the prices of electric cars on our market are highly exotic... I’d rather we used a more precise definition which states that environment-friendly cars are the ones that take up the least energy and produce the highest energetic efficiency (e.g. where CO2 emission is directly related to the amount of energy used), have the lowest-possible level of noise, and are safe, thanks to the use of automatic drive regulation. Battery-electric vehicles, hybrid-electric vehicles, natural-gas vehicles, and alternative-fuel (e.g. hydrogen or biofuel) vehicles all follow these criteria. LPG is neither a natural nor a renewable fuel, and it shows no better emission or energetic efficiency indicators. It is certainly not the future of the motor industry. Does it mean that our condition is critical? Poland has this ambition of becoming a modern country which is taking part in the global technological progress. It means

that we need to cooperate with those leading countries and become a significant partner in a sustainable Europe. The reduction of energy consumption, its accumulation, and highly-effective conversion are needed now and will be required in the future. The best way to predict the future is to create it. Despite all the reservations we have discussed, our country already has the necessary conditions to create a market for environment-friendly transportation. And the state has got a significant role to play in this process. It is obvious that both consumers and car producers will not be willing to pay to survive that is to pay for progress. Therefore, we should start the construction of the environment-friendly vehicle market in an expert-guided and responsible way! What does this mean? We definitely should not read it as the mass introduction of some new types of vehicles. The environmentfriendly vehicle market means for a country the necessity to develop research, technologies, materials, automatic regulation techniques, and construction optimisation, and to create jobs in the niche market of environment-friendly city vehicles and the construction of new infrastructure. For instance, the weight of a vehicle is of high significance as far as energy costs are concerned. Therefore, current work revolves around a triple reduction in the weight of vehicles, and it not only depends on the type of materials used but on production technology as well. Mass robotic production is still far away from such technologies. In this context new opportunities for the niche-market and small-lot production of environment-friendly, electric, and especially “plug in hybrid” vehicles arise. We do have such constructions in Poland, but the Government still creates no proper conditions for the development of the companies or academic centres that make use of them. We should certainly strengthen the link between academic and technical research, and the implementation of Polish solutions. The “fleet of the future” itself should be perceived as functionally diversified. Environment-friendly vehicles should be used in a reasonable way, in certain transport conditions for example in within urban centres, using limited power and driving speed. On the other hand, hybrid motors that significantly improve the efficiency of the combustion of the above-mentioned fuels in heat engines may be used in various ways. The “plug in hybrid” vehicle is of particular importance here. And what is more, all the things we have discussed will not eliminate classic vehicles until some of their functions can be replaced with more efficient ones. ::

Science and Innovation

Patent collectors Almost 200 of the 900 Polish companies which hold patents for selfdeveloped solutions and processes received their patents in 2010, shows a ranking of patent-holding firms compiled from data provided by the Patent Office of the Republic of Poland (UPRP) by the MSN Scientific Network at the Polish Academy of Sciences’ Institute of Economics (INE PAN). Jerzy Bojanowicz The ranking was presented at a seminar entitled, European Funds and Their Importance for Patent-Holding Firms, the second such meeting hosted by INE PAN as part of an Innovation Strategy for Poland. “We must remember that companies can file for patents in the European Patent Office as well as in the US and Japan. Moreover, in the figures published by the URPR it is impossible to distinguish between companies and private persons – many of whom probably conduct businesses,” explains Professor Tadeusz Baczko, PhD, from the INE PAN Scientific Council and coordinator of the MSN Scientific Network project. New patents rose in number until 2008. In all, 690 firms were granted patents between 2005

and 2009, of these 120 had two patents, and 423 had one. “They put in enormous effort to get the patents, which means they already know how to move about in this area,” Professor Baczko believes. However, although the number of new patents is 14.8% up on 2005-2008, over 60% of all new patents are held by only one-fourth of Poland’s enterprises. Corporate patent figures for 2004-2010 reflect the effects of the global crisis. Whereas the number of new patents grew between 2004 and 2008 (respectively 171, 247, 266, 345 and 414), 2009 saw only 340 and 2010 a mere 269 (a 20% drop on 2009). All were granted to 194 companies. Nonetheless, the ranking authors note, even in such difficult conditions patents considerably

Top 20 patenting companies in Poland in 2005-2010 Company

Patents

1. ABB Sp. z o.o. (ABB Ltd, Warsaw)

2. SIGMA SA ( Jastków near Lublin)

3. Fabryka Maszyn Górniczych PIOMA SA (Pioma SA Mining Machinery Plant, Piotrków Trybunalski) 4-5. Zakłady Azotowe Puławy SA (Puławy SA Nitrogen Plant, Puławy) ZELMER SA (Zelmer SA Household Appliance Company, Rzeszów)

30 24 24

6. Rybnicka fabryka Maszyn RYFAMA SA (Ryfama SA Engineering Plant, Rybnik)

7. KGHM CUPRUM Sp. z o.o. (KGHM Cuprum Ltd R&D Centre, Wrocław)

8. Innowacyjne Przedsiębiorstwo Wielobranżowe POLIN Sp. z o.o. (Polin Ltd Innovatory Multi-branch Enterprise, Katowice)

9. Południowy Koncern Energetyczny (Southern Energy Concern, Katowice)

10. KGHM Polska Miedź SA (KGHM Polish Copper Combine, Lubin)

11. GESTIND Poland Sp. z o.o. (Gestind Poland Ltd, Bielsko-Biała)

11-15. ICSO Chemical Production Sp. z o.o. (ICSO Chemical Production Ltd, Kędzierzyn-Koźle)

Przedsiębiorstwo Farmaceutyczne JELFA SA ( Jelfa SA Pharmaceutical Company, Jelenia Góra)

Zabrzańskie Zakłady Mechaniczne SA (Zabrze Engineering Plant, Zabrze)

Zakłady Chemiczne Organika-Sarzyna SA (Organika-Sarzyna SA Chemical Plant, Nowa Sarzyna)

16-17. Becker-Warkop Sp. z o.o. (Becker-Warkop Ltd, Świerklany) Bombardier Transportation (ZWUS) Polska Sp. z o.o. (Bombardier Transportation Poland Ltd, Katowice) 18. Kompania Węglowa SA (Coal Company, Katowice) 19-20. Fabryka Maszyn Górniczych FAMUR SA (Famur SA Mining Machinery Plant, Katowice) Fabryka Zmechanizowanych Obudów Ścianowych FAZOS SA (Fazos SA Powered Longwall Support Plant, Tarnowskie Góry)

13 13 12 11 11

raise a company’s prestige. The more so as 62% of the top 50 patent-holders in 2005-2009 increased the number of patents in the Patent Office of the Republic of Poland, as compared with 2004-2008. As in 2005-2010, last year’s leader was ABB Sp. z o.o. in Warsaw, which obtained 11 patents from the UPRP. Runners-up were Tobacco Machinery Poland Sp. z o.o in Radom (7 patents), KGHM Cuprum Sp. z o.o. – Research and Development Centre in Wrocław (6), Sigma SA in Jastków by Lublin, (5, leader in 2009 ranking) and the Koksoprojekt Sp. z o.o. Design Studio in Zabrze (4). Marcin Łata, Deputy Head of the Managing Department for Competitiveness and Innovation Programmes at the Regional Development Ministry, believes that Innovation Union, the flagship project of the EU 2020 strategy, will be instrumental for the future of cohesion policy. “Innovation Union will mean the introduction of a uniform European patent by 2014, lower costs for businesses, support for knowledge markets, improved trade in intellectual property rights and the use of ‘dormant’ intellectual property rights by universities and research institutions.” In its March report Europe 2020 Poland: Fuelling Growth and Competitiveness in Poland through Employment, Skills, and Innovation, the World Bank stated that low outlays spelled low effects. According to Professor Baczko, the gap in intellectual property is widening and patents – as rightly noted by Professor Elżbieta Mączyńska, President of the Polish Economic Society and member of the INE PAN Scientific Council – further creativity and future-oriented thinking. Beata Jaczewska, Head of the Economic Development Section in the Economy Ministry, believes the situation is bad and much needs to be done. The Ministry is currently working on an Economic Innovation and Effectiveness Strategy aimed at building a knowledge-based, competitive economy offering new jobs. The EU’s Operational Programme Innovative Economy offers co-financing of domestic and foreign industrial patents to R&D units and companies. The programme’s financial share in company patents is usually 70%. :: 4/2011 :: polish market :: 25

Leasing

20 years of leasing in Poland For five years now you have managed one of the biggest leasing companies in Poland. How would you describe that time? To be precise, the biggest lease company in Poland, in fact a group of financial companies established around EFL during that time. Our group comprises the mother company - EFL S.A., the car fleet management company Carefleet S.A., the insurance company EFL Finance S.A., the real estate operator EFL Service S.A., and, by the end of the year, also a factoring company. These 5 years have been a time of EFL’s restructuring from an entity financing mainly cars for small businesses to a corporation financing all forms of assets, including real estate, and serving customers from all other segments. In developing the Group we have maintained both our market

26 :: polish market :: 4/2011

position and profitability potential. I believe we have significantly increased the Group’s value. My associates are my friends, and coming to work every day is a pleasure to me. These 5 years have been a wonderful time in my life. What are the prospects for the leasing market in Poland, and does versatility yield the desired results? Over the 20 years of its presence in Poland, leasing has become one of the strategic industries of our economy. Alongside credits, it currently constitutes the principal source of investment financing. In 2010 lease companies transferred almost PLN 27 billion worth of funds to entrepreneurs. This amount would suffice to cover more than half of the Polish budget deficit! One in three investments in the

Andrzej Krzemiński President of the Management Board of Europejski Fundusz Leasingowy SA (EFL)

enterprise sector is financed from the funds of lease companies. In some segments this share is even greater, as with tractor units, where it exceeds 60%. These are good prospects for the future. It also means that at this stage the versatility of lease companies is proving effective. As the market matures, however, companies clearly tend to specialise more. Our analyses show that this tendency will continue. While Western markets are already past that stage, Poland is about to go through it. More and more lease companies with just one type of fixed assets in their range are sprouting up. Th is year EFL celebrates its 20th anniversary. You’ve gone through good times and bad times, both successes and crises – what in

Leasing your opinion has been the greatest achievement of your company, and what has given EFL its stability? With these 20 years in mind, I can readily say that our greatest success is that we’ve managed to keep our market position. Irrespective of the shifting macroeconomic conditions and business cycles, each year EFL is at the top of the lease companies’ ranking. It is the years of experience that constitute our capital. Not only have we grown as the market has grown, but we have also had a share in creating it. Our wide range of products and close cooperation with all leading fixed assets producers and dealers translates into reliability and client loyalty. Over 200,000 entrepreneurs have already put their trust in us. Some have worked with us for several, even a dozen or so, years, coming back to us whenever they are planning a new investment. Our portfolio features products and customers whose variety enables us to avoid a crisis that may occur in a single industry. For example, the investment cycles of corporations, local governments, companies dealing in exports, domestic market producers, and small family service companies are governed by different rules. Similarly, cycles of demand vary, for instance between passenger cars and lorries with a dozen or so tonnes weight, and the financing of transport fleets for cities is independent of the GDP. Our presence in each of these segments safeguards us against significant demand slumps. What’s more, our position as borrowers on the money market and the high credit rating of both EFL and our owner – Credit Agricole – ensures a steady inflow of funding. Which way will EFL’s development go? Are there any changes planned for the 20th anniversary? Our company is currently implementing the EFL Group strategy for 2011– 2015. The document, prepared last autumn with Boston Consulting Group, and approved for implementation by the Supervisory Board, envisages doubling the net profit of the Group as its main objective. We have prepared a dozen or so initiatives that will help us achieve this goal. We plan organic growth, increasing the efficiency of our assets and cooperation with partners, but this does not exclude the possibility of our participation in integrating the leasing and fleet markets. Having

led the industry for 20 years, and being its primary supplier from the very beginning, we would like to continue our activity in the fields of innovation and development support of the whole industry. In order to fulfil our goals, we have created a set of key strategic actions, which assume corporate support through, for example, intensified trading activities, customer- and supplier-targeted actions, marketing and product support, and issues closely corresponding to the pricing and risk policies. What I do is look at the 20 years ahead of us – I would like one of my successors to proudly describe the rapid growth of the EFL Group on a similar occasion in the future. The 20th anniversary is obviously a perfect occasion to sum up the long period of the company’s activity. During these two decades, EFL has evolved from a private and independent leasing company into a powerful, trustworthy player, since 2001 belonging to one of the biggest capital-wise financial institutions in the world – the Crédit Agricole Group. The fact that EFL is part of the Credit Agricole Group has many benefits, both for the company, and for our clients. It delivers great financial stability and security, but primarily, it provides an opportunity to take advantage of the knowledge and experience of an international financial institution. During the 20 years of the company’s activity, its dedication to creating the leasing market in Poland has been noticed by the opinion-making media and institutions. We have been building our reputation among our clients and business partners, and among the media, which have recognised EFL’s financial solutions and contribution to the development of Polish enterprise. We engage in cooperation with organisations of entrepreneurs, participating in the works of the Polish Leasing Association (ZPL), the Polish Confederation of Private Employers Lewiatan (PKPP Lewiatan), and Fundacja Centrum PPP. We cooperate with various industry organisations, staying close to our clients, thanks to a developed trade network, and over 200,000 customers have chosen us as their business partner.

These 5 years have been a time of EFL’s restructuring from an entity financing mainly cars for small businesses to a corporation financing all forms of assets, including real estate, and serving customers from all other segments.

Thinking about the development of our company, we must not forget about ensuring the continuity of certain proven good business practices. The anniversary itself is a symbolic date, but if we want to achieve our goals, we can’t confine ourselves to closed timeframes. We need to look to the future and create an economic reality, continuing the initiatives we have already started. This will be a special year, not just for EFL, but also for the whole country. In July Poland takes over the presidency in the European Union, and parliamentary elections are due in autumn. The economy will be constantly active, and entrepreneurs will be developing their activities. Our role will be to provide them with the best financial instruments from our range of services. Are you planning any special offers for your clients? As of 2011, changes in the regulations concerning the tax on vehicles with official certification as goods vehicles came into force. The possibility of deducting the entire amount of VAT was replaced by the possibility of deducting 60%, while the total amount cannot exceed PLN6,000. The end of last year saw a real boom for cars equipped with a cargo partition. Entrepreneurs hurried to buy new cars before the new year, and the leasing industry experienced significant growth. In 2011 the major driving forces behind growth will be the lorry transport and machine sectors. Forecasts concerning the former speak of as much as an almost 30% growth by the end of the year, a result of the improving situation of transport companies. The machines and devices sector is expected to achieve a roughly 25% growth. By the end of 2011, the entire market will exceed the psychological threshold of PLN30 billion, which means a 13% improvement over 2010. From the point of view of products, the anniversary will not be an occasion to offer new solutions to clients in this field. Certainly promotional campaigns will be undertaken, however, involving both our current and potential clients. Is the range of leasing services sold in Poland different from the one in France or Germany? Definitely countries such as France or Germany, with more mature leasing markets, are characterised by a more developed hire purchase market than 4/2011 :: polish market :: 27

Leasing a country like Poland. In this case, the risk of the final value remains on the lessor – the final, residual value is close to the level of the item’s market value. According to Leaseurope data from 2009, the share of this type of leasing on the real estate leasing market amounted to 19%. The indisputable leader, with a 66% share in the hire-purchase market, is Great Britain. Behind it are Germany – 12.3%, and Sweden - 9%. Of 24 member countries of Leaseurope, only 9 provide reporting. One of the countries that do not provide data is France, so we cannot determine the share of hire-purchase transactions on the French leasing market. We should, however, assume that the actual share of this type of transactions on the entire European market is much higher. In order to illustrate the difference from the Polish leasing market, which, despite its 20 years of existence, is still developing, it is worth mentioning some figures. In the crisis year of 2009 the European hire-purchase market slumped by 30.3%, while at the same time the leasing market in general lost 32.7%. The share of vehicles on the hire-purchase market in 2009 amounted to 52%. Road transport and machines and devices sectors had 14%, IT hardware 4%, while railways, ships, and airplanes 6.6%. 43% of these services were offered to consumers, 32% to the services sector, and 18.5% to industry. According to our estimates, the share of agreements defined as operational leasing in Poland, as provided for by the Accounting Act, amounted to about 16% of the balance. To sum up, I believe that the calculation of residual value and its use in products is much more complex on mature markets such as Germany and France, than here, which can be related to the differences in the development of secondary markets and cooperation with suppliers and producers in the turnover of used items. What further changes need to be introduced in Polish law for leasing companies to develop better? The leasing industry finances mainly small and mid-sized businesses. If we want to support the investments of SMEs it is not enough for us to offer simple and quick financing. Leasing is not only supposed to be a secure financial instrument, but also an

28 :: polish market :: 4/2011

instrument that supports and stimulates the development of these enterprises. That is why, on behalf of our clients, we lobby for legislative changes to support the growth of Polish entrepreneurship. The Polish Leasing Association, of whose Executive Committee I have the honour to be the chairman, is currently discussing changes which are very important to entrepreneurs with the Ministry of Finance. The first of our propositions is releasing – the possibility to lease again the item from a contract terminated before the expiry of its term. This necessitates a change to the definition of initial value in the taxation regulations. The second matter concerns the possibility to transfer obligations and rights from one user to another – the so-called cession of lease agreement. Another very important proposition is connected to the possibility of leasing perpetual usufruct. Today land can be leased, but the right of perpetual usufruct cannot, even though property is often located on state-owned land. As for real property leasing, the leasing industry also proposes that the leasing term be shortened from 10 to 5 years for real estate operational leasing. It is difficult to obtain money on the market for 10 years, and besides there is a need to perform a risk assessment of the client for 10 years, which is often impossible. A very important element that stimulates investment growth is introducing and providing a series of leasing instruments in the process of EU funds absorption in the form of refunds of the purchase price of the subject of leasing in all regional and agricultural programmes (this is still possible – though I have doubts about its practical application – in 6 regional programmes, while in 10 it is not, and in all state programmes, apart from agricultural). Our next proposition is related to the introduction as of this year of the higher VAT for medical equipment. We believe that the legislator should

allow the settlement of leasing medical equipment at the rate of 8%, and not 23%. In the opinion of some tax experts no legal obstacles should arise – virtually only loan or financial lease agreements are concluded for medical equipment, as medical institutions and doctors do not pay VAT, and in operational leasing they have to pay 23% VAT, while on purchase (credit, loan, financial leasing) - 8% VAT. We have also been striving to make operational and financial leasing equal in VAT settlements, by distributing VAT payment in time. Currently in financial leasing, VAT is paid in advance, even though it is not known, for example, what the final calculation basis is, as both the capital and interest after 10 years of the agreement may undergo changes in relation to the initial level, while the Internal Revenue Office (US) demands, after an agreement is concluded, that the initial declaration be verified, even when it goes back 10 years into the past. The issue of VAT also concerns providing the possibility to deduct VAT from all vehicles used in economic activity and the fuel used for them, as in EU countries. An extremely important issue which is worth raising, for instance in relation to local governments constantly getting into debt, is providing the possibility to sell and lease back municipal real property. We are facing a jumble of regulations today, making it impossible to reconcile the Real Property Management Act with the Public Procurement Law. It is my conviction that it is extremely important from the point of view of Polish entrepreneurs that the Tax Ordinance Act should be changed with amendments that would oblige the Minister of Finance to take an unambiguous stand at a specified date in cases in which the taxpayer notices an inconsistency in: a. individual interpretations issued in similar cases, b. an individual interpretation of a treasury decision, c. treasury decisions.

During the 20 years of the company’s activity, its dedication to creating the leasing market in Poland has been noticed by the opinion-making media and institutions. We have been building our reputation among our clients and business partners, and among the media, which have recognised EFL’s financial solutions and contribution to the development of Polish enterprise.

At the same time, taxpayers who acted within the existing, conflicting decisions/ interpretations of treasury organs, should receive guarantees that they will not bear the consequences of the wrong decisions they have made on their basis. ::

Leasing

Leasing market financing net value of assets leased in 2010 (in PLN millions) No. Company

Vehicles

Machines and equipment

Other means of transport

Other movables

Movables

Real estate

Total

Europejski Fundusz Leasingowy S.A.

2,334.37

793.41

63.51

13.34

0.00

3,204.63

49.50

3,254.14

Raiffeisen Leasing Polska S.A.

1,868.68

504.47

18.66

45.42

0.00

2,437.23

89.63

2,526.86

BRE Leasing Sp. z o.o.

1,251.22

456.61

15.06

49.97

24.23

1,797.10

137.20

1,934.30

Pekao Leasing Sp. z o.o. (Pekao Leasing i Finanse)

1,163.94

392.52

29.11

17.21

8.36

1,611.14

94.57

1,705.71

Millennium Leasing Sp. z o.o.

796.79

682.59

14.77

76.75

0.00

1,570.89

112.66

1,683.55

ING Lease Polska Sp. z o.o.

263.80

304.57

40.77

205.20

11.91

826.25

531.43

1,357.67

BZ WBK Finanse&Leasing S.A.**

651.00

590.30

6.42

9.02

0.69

1,257.43

64.27

1,321.70

VB Leasing Polska S.A.

693.87

538.42

3.65

9.53

11.29

1,256.76

0.00

1,256.76

Bankowy Fundusz Leasingowy S.A.

643.05

412.36

3.66

28.98

17.91

1,105.96

143.88

1,249.83

SG Equipment Leasing Polska Sp.z o.o.

347.89

574.70

132.48

128.27

0.00

1,183.34

0.00

1,183.34

BNP Paribas Lease Group Sp. z o.o.*

139.96

484.67

8.28

15.12

0.00

648.04

114.37

762.41

Siemens Finance Sp. z o.o.

11.03

661.84

7.66

0.00

680.53

0.00

680.53

Mercedes-Benz Leasing Polska Sp. z o.o.

564.32

0.28

0.17

0.00

564.77

0.00

564.77

Getin Leasing S.A.

436.39

93.59

0.54

0.00

18.08

548.61

0.00

548.61

Deutsche Leasing Polska S.A.

Volkswagen Leasing Polska Sp. z o.o.

75.99

401.89

11.68

22.20

0.00

511.76

0.00

511.76

495.02

15.69

0.00

510.71

0.00

510.71

BGŻ Leasing Sp. z o.o.

167.29

278.17

0.00

445.46

0.00

445.46

Masterlease Polska (FUTURA)***

425.42

0.00

425.42

0.00

425.42

VFS Usługi Finansowe Polska Sp. z o.o.

332.78

82.27

0.00

0.25

415.30

0.00

415.30

Scania Finance Polska Sp. z o.o.

343.55

2.61

0.00

0.54

346.70

0.00

346.70

Impuls Leasing Sp. z o. o.

248.98

80.75

0.90

0.00

0.47

331.10

0.00

331.10

IKB Leasing Polska Sp. z o.o.

Kredyt Lease S.A.

3.00

327.79

0.00

330.79

0.00

330.79

159.80

82.17

5.72

0.80

2.04

250.53

0.00

250.53

De Lage Landen Leasing Polska S.A.

19.33

224.16

5.89

0.00

249.38

0.00

249.38

Caterpillar Financial Services Poland Sp. z o. o.

0.00

230.12

0.00

230.12

0.00

230.12

26 27

Handlowy Leasing Sp.z o.o.

110.53

102.85

0.18

0.00

1.27

214.82

0.00

214.82

FGA Leasing Polska Sp. z o. o.

164.17

0.00

164.17

0.00

164.17

ORIX Polska S.A.

117.91

23.26

8.14

0.00

6.84

156.14

0.00

156.14

MAN Financial Services Poland

148.50

0.00

148.50

0.00

148.50

BAWAG Leasing&Fleet Sp. z o. o.

37.07

1.78

0.69

0.00

19.90

59.44

14.97

74.41

SGB-Trans-Leasing Polskie Towarzystwo Leasingowe Sp. z o.o.

22.57

29.84

3.12

2.37

3.66

61.56

7.16

68.72

Nordea Finance Polska S.A.

25.48

9.77

0.67

21.97

0.64

58.53

0.00

58.53

NL Leasing Polska Spółka z o.o.

49.88

2.96

0.00

52.84

0.00

52.84

Grenkeleasing Sp. z o.o.

0.23

8.18

24.92

0.00

4.93

38.25

0.00

38.25

* Lease companies: BNP Paribas Lease Group and Fortis Lease Polska ** Lease companies of Bank Zachodni WBK S.A.: BZ WBK Finanse & Leasing SA and BZ WBK Leasing SA *** Masterlease Polska: Futura Leasing SA and Prime Car Management SA Source: Polish Leasing Association

4/2011 :: polish market :: 29

Leasing

Trends 2011

However, it will be compensated by the previously-mentioned increase in the value of goods vehicles leasing, which should not decline.

The next months in the leasing industry will bring a substantial increase in funding for machines and goods vehicles. Due to this fact, leasing companies should not have a problem with compensating for the negative influence of regulation amendments which caused a considerable drop in funding cars with a cargo section. Radosław Woźniak

The author is Deputy President of Europejski Fundusz Leasingowy

The leasing industry expects that in 2011 the market will grow by ca. 13% in comparison to 2010. This is mainly a result of the improvement in the economic situation in Poland, which could be observed in the last quarter of 2010. Enterprises are again beginning to see the opportunity to increase competitiveness and development in new investments, especially due to the continuing possibility of using EU grants.

Machines and transport as an engine of growth In 2011 the leasing market will see an increase in the financing of new machines and goods vehicles. Firstly, the first two months of the year brought an increase in the value of leased machines of over 30% in relation to the corresponding period of 2010, and this trend will be maintained. With regard to goods vehicles, this year, in comparison to the previous year, an increase of financing of ca. 1/3 can be expected. There are several reasons for this situation. The most important fact is that Poland’s economic situation is improving. According to the estimates of, for instance, the International Monetary Fund, this year GDP growth will amount to 3.8%. This enables entrepreneurs to hope for an increase in orders, which in turn will create the necessity to make new investments in machine facilities. Already in the first quarter of this year, the projected increase in investments will amount to over one fifth in relation to the corresponding period of 2010. In turn, transport companies, whose situation after the crisis is also improving, expect a considerable growth in transport orders. An increase in investment in this sector

30 :: polish market :: 4/2011

has been seen before - the first three quarters of the previous year saw an increase in expenditures on means of transport of 20% as compared to 2009. Another factor conducive to financing investments in the abovementioned sector is the continuation of large infrastructure projects before the UEFA Euro 2012 tournament. The companies wishing to participate in the construction of roads, stadiums and hotels must invest in new equipment in order to gain advantage over their competitors. Leasing provides such opportunities, even to smaller entities as it does not require a large amount of equity.

The empty space after cars with a cargo section The results of the leasing market will be negatively influenced by regulation amendments concerning cars with a cargo section. This will be apparent especially in the fourth quarter of this year, mainly due to the fact that the end of 2010 in particular saw a real upswing in the financing of cars with type approval for goods vehicles. According to the Samar Institute’s data, in the previous year 97 thousand cars with a cargo section appeared on Polish roads, represented an increase of over 100% compared to 2009. In the whole of the previous year, leasing companies rendered for use nearly 50 thousand goods vehicles with a weight of up to 3.5 tonnes, generating PLN5.4 billion. Thus it can be expected that in comparison to such a large base in 2010, in the fourth quarter of this year the industry will record a decrease in the funding of all vehicles of over 5%. The largest, i.e. a 15% drop, will be seen in the smaller-car segment.

The last chance for funding in e-business Another segment of the leasing market in which an evident growth trend has been observed is the financing of IT equipment. In the period between January and February 2011, leasing companies recorded an increase in their share value by nearly 30%. The reasons for such growth in interest can be attributed to EU grants for projects associated with e-business. This year is probably the last year in which applications within the Operational Programme Innovative Economy can be submitted. Due to these EU programmes entrepreneurs have an opportunity to replace or modernise their IT equipment and to introduce new technologies. However, lack of money often turns out to be a major obstacle for them as obtaining EU funding also requires investing their own funds. This is when leasing companies are of assistance.

Consumer leasing stimulates further growth As far as financing cars is concerned, in the next few months another evident trend will probably occur. Representatives of the leasing industry can count on a change in regulations in Poland from 1 July, providing opportunities for the development of socalled consumer leasing. It will make it possible for leasing companies to provide funding not only for entrepreneurs but also for individuals. It can be expected that after a change in the regulations this form of financing will become an engine for the whole industry in the next years. Especially in the vehicles segment, leasing will become real competition for other financial products for individuals. Among the advantages of such a solution it is possible to mention less formalities than in the case of bank credit and more attractive vehicles prices. This stems from the fact that with the purchase of a higher number of vehicles, the leasing company will be to a greater extent able to negotiate discounts with the producer or dealer. ::

Rent a car

Rent-a-car in Poland As in many other industries, car rentals operating in Poland can be divided into the group of several major branch offices of international companies and hundreds of smaller and medium-sized companies scattered all over Poland. Patryk Mirecki Several car fleet management (CFM) companies managing car fleets for the largest businesses, most often offering long-term rent, as well as vehicle lease form a specific group. A typical rent-a-car service involves, in turn, shortterm and medium-term car rental. Some companies (such as Express or Hertz) have been successfully operating in both market segments. Before 1989, under the communist rule, there was virtually no demand for such services. It appeared in the final years of the Polish People’s Republic (PRL), in the 1980s, together with a certain intensification of international contacts with Poland, a gradual breaking free from the ideological straitjacket and a slow opening up of the economy to free market mechanisms.

The first was Hertz A symbol of these changes was the emergence of Hertz RentA-Car, the first and global company of this type in Warsaw. It was located in the building of a several-storey-high garage at the rear of the then Forum Hotel – the fans of the old television productions probably remember this facility as it featured in several episodes of the “Kobra” detective series, imitating buildings in London and American cities. The company, as was customary in those days, was allied with Orbis – in practice a monopolist on the luxury tourism and hotel services market. It has been impossible to determine precisely the applicable rent price lists, the fleet of vehicles and the basis on which they were rented at that time. It is known, however, that foreigners from the so-called 2nd-payment-zone who paid in foreign currencies, were the main customers. Currently, Orbis Transport Sp. z o. o. is the exclusive representative of Hertz in Poland, acting as a franchise owner, with rental centres in 11 cities offering rental of about 500 new cars at each of

CFM leaders in terms of the number of vehicles owned at the end of 2010

the Polish international airports and in city centres. The rent-a-car leaders in Poland are international giants. They include – besides Hertz – Budget, Avis, Europcar, and Sixt. Each of these companies, as well as national giants, such as Express, has a fleet of thousands of vehicles.

Tourists and businessmen Two groups of people comprise the basic group of customers for rent-a-car companies. These are tourists coming to Poland for holidays, and businessmen and employees of companies sent to our country for a shorter or longer period for business purposes. These customers can be offered particularly attractive rental conditions by the biggest companies. “Avis, due to its international span, can offer companies special conditions for car rental all over the world. Typically, such contracts are agreed upon by the head office of the company, so the manager who travels frequently can enjoy the privileges facilitating and accelerating the process of renting a car at our company, not only in Poland but also in any Avis location in the world. Companies can use special forms of payment for rent, loyalty cards, guaranteed rental rates and conditions,” says Katarzyna Dobrzyńska, PR & Marketing Manager, Avis Poland.

Benefits 1. Masterlease Poland – 19,997; 2. LeasePlan Fleet Management – 15,291; 3. Arval Service Lease – 13,096; 4. ING Car Lease – 9,353; 5. Carefleet – 6,930. Source: Polish Vehicle Rental and Leasing Association – Polski Związek Wynajmu i Leasingu Pojazdów

Managers and employees of companies who are particularly keen to use the services of large rent-a-car chains can expect a number of benefits. One of the industry portals (www.autofirmowe.pl) emphasises that a person or a company renting cars has far less issues usually connected with a fleet of

vehicles to deal with. “They do not have to worry about such matters as vehicle servicing, loss of value or the necessity to conduct vehicle checkups. In principle, watching over the rented cars is limited to taking care that the drivers do not damage them and do not exceed a mileage limit. In addition, large rent-a-car chains offer yet another fabulous thing – a car does not need to be returned to where it has been rented. However, there is one condition, namely a company must have more than one branch office.” And this condition is met by nearly all major rent-a-cars. Most of them have branches in Poland and Europe. “The advantage of using short-term rental is also the fact that the vehicle can be ordered online and we immediately know all the associated costs. Actually, using the Internet you can also often make payments. Major rent-acar companies also usually offer the possibility to collect a car from several locations, for example not only from the airport, but also from the centre of the city. Key and dedicated customers can, indeed, expect even such facilities as delivering cars to the selected location, e.g. to the company’s registered office,” lists the portal.

Rental options A very wide range of services offered by the rent-a-car market in Poland is shown in often extremely complex pricing lists for such services and the types of rented vehicles. For example, Sixt, in addition to standard cars and trucks in other rent-a-cars, offers motorbikes, and limousines with a driver. In turn, one of the local renta-cars (the Kraków-based DragonVIP Car Rental) – like its competitors – differentiates rates depending on the class of a vehicle, as well as the rental period (the most expensive is for 2–6 days, the cheapest is for over 14 days). In terms of rent per 24 h (excluding VAT) the Ford Fusion is the cheapest to rent – depending on the rental period (see above) from PLN66 to PLN82. The most expensive is the Audi Q7 Quattro Automatic Diesel: from PLN655 to PLN820. Prices for the rental of the remaining vehicles in the same rent-a-car are as follows: Suzuki Swift 2010: PLN90-148; Opel Corsa D: PLN82-115; Opel Corsa Automatic: 4/2011 :: polish market :: 31

Rent a car Radosław Lesiak Country Manager, Avis Poland The rent-a-car market in Poland is still growing, therefore, the Avis package for customers is always tailored to their individual needs. In the 1980s almost all our customers were foreigners, coming to our country by air. Poles did not use Rent a Car (RAC) simply because this service was too expensive. With political changes at the turn of the 1990s, Poles began to discover RAC services which were not previously popular in Poland. Today, almost every company more or less frequently uses RAC services. Business customers who settle invoices for car rentals in their companies, apart from tourists and others who use our services on weekends, make up 90% of all customers. For example, if a company needs 10 cars and buys them, there is a significant risk that two of them will not be used, because someone may change his or her job, position and the car will not be needed. Hence, many companies buy fewer cars than they need and complement them with rental services. Therefore, they pay for a car’s usage and not for standing idle. And this is the niche that Avis is trying to fill. We have noted growing business and individual customer interest in car rental. Increasingly, customers rent cars for weekend trips, but also as replacement cars for the periods of repairs of their own ones.

Rafał Olszewski Short-Term Rent Manager at Express SA The short-term car rental market is still growing rapidly in Poland, particularly in the individual customer segment. The evidence of this is the growing number of rentals and car fleet renta-car year by year. At the time being, Express has a fleet of about 2,000 new vehicles for daily rent. In 2010, Express handled nearly 25,000 rental transactions (...). Rentals in the segment of individual (private) customers are characterised by seasonality. An analysis of rentals in recent years confirms that rental service is the most popular in summer. The number of bookings starts to grow already around April. From June to August, the interest is the highest; in September, there is a natural decrease in the number of rentals. However, in company rentals, we can observe a global increase in interest year by year. Seasonality in this segment is unlikely to occur, although we observe a decrease at the turn of the year in December and January. In other months the number of rentals for companies remains rather stable. Currently, about 1/3 of Express customers are corporate customers. We assume that in this year the scale of all rentals, both for individual clients and businesses, will continue to grow. We are prepared to handle the substantial tourist traffic that is coming. In particular, we also expect the development of rentals in the small, one-person companies segment whose number has been growing at a rapid pace. Hence, simplified rental procedures for such entities.

PLN132-164, Peugeot 207: PLN98-132; Peugeot 308: PLN115-148; Skoda Octavia Sedan: PLN132-164, Peugeot 308 SW Diesel Estate: PLN164-214; Audi A6 Quattro Automatic Diesel Wagon: PLN214-246; Skoda Octavia Diesel Automatic Estate: PLN180-230; Opel Insignia Diesel: PLN245-279; Skoda Superb: PLN230-260; Ford Galaxy Diesel: PLN230-262; Renault Traffic Diesel: PLN279-328; Opel Astra III Cabrio Diesel: PLN262-328. The additional options the Krakówbased company offers include GPS navigation, DVD/DivX/MP3 player – free of charge when renting for at least four days (at customer request), mobile phones, free-of-charge child seats (at customer request), provision and collection of the car in Kraków free of charge when renting for at least two days. Customers make payments in euros according to the average exchange rate of the National Bank of Poland (NBP) at the day of the rental. Express, in turn, apart from the rental price, also charges so-called one-time preparation fees of PLN50. In summer (June, July, August) and during the Christmas and New Year period (from 20 December to 3 January) the company adds 10% to the amounts listed in the pricelist. That’s not all. If you choose additional options, you need to add another extra PLN5-50; for example, for the administration fee for supplementary insurance, GPS, a reflective vest, a child safety seat, a portable DVD, air conditioning, a radio with a CD player, power steering, a bicycle carrier, a refrigerator, the possibility to travel beyond the borders of Poland, an additional driver, a ski rack and snow chains.

For five days for a businessman

Sebastian Syrek Europcar Poland, Coordinator for Cooperation with Partners

We asked three companies about the cost of renting a car (i.e. Mercedes C180 or a similar class vehicle, e.g. Volvo S80) for five days for a manager – a foreigner who has come to Poland. The prices varied from about PLN1,000 to PLN2,000 (excluding VAT). Detailed answers are provided below.

As for individual customers, the peak falls in the holiday season, when a large number of foreign tourists visit our country, and they often use the services of Europcar, a well-known brand throughout Europe. In the case of rentals for companies it all depends on the overall economic situation, both in Poland and, above all, in Europe. It is directly related to the activity of companies – our future and existing customers. We hope that this year (because for our industry, it is really just getting started) will be successful.

Avis Poland: The cost of renting a car depends on several factors, like the length of the rent, the type of car, and also the rental period, whether it is during business time from Monday to Friday, or a weekend including Saturday and Sunday, when special prices apply. Given the Premium class such as

32 :: polish market :: 4/2011

the Mercedes C180, the price of rent for five days starts from PLN990 net with unlimited mileage (weekend prices), while the Volvo S80 can be rented for PLN1,390 net (weekend prices). Express SA: The overall cost of renting a higher E-class car, such as the Mercedes-Benz C-Class 180, depends on the details of the rent that are important to the customer. The basic rental is PLN199 gross per 24h plus PLN50 gross one-time fee for the preparation of the car. The choice of additional options (e.g. GPS equipment) is associated with additional fees. For the purposes of this publication we present two rental options: a) the customer collects and returns the car directly at the branch of Express rent-a-car. Rental price for 5 days will be PLN1,045 including VAT (approx. EUR256); b) the customer expects the collection and return of the car, e.g. from Warsaw airport, then the costs associated with delivering the car will be included. Rental will be PLN1,145 including VAT (approx. EUR281). Cars are fully insured. The price includes unlimited mileage. The renter should be prepared for the requirement to leave a deposit, which is PLN1,000 (approx. EUR245); Europcar Poland: The price for renting a Mercedes Class C 1.8CGI (automatic, turbo, air conditioning) for a businessman depends on many factors. First and foremost is the question of whether the company has signed an agreement with Europcar and, therefore, whether it is eligible for special prices (much lower than general prices). Lower prices are not the only benefit from an agreement with Europcar. We offer the free service of Europcar corporate payment cards. These cards greatly enhance service at the time of the rental, and – above all – provide automatic settlements by transfers for rentals around the world (a Polish entity always settles with Europcar Poland, even if the rental was in another country). An example of rental for the above car, with the five-day option, at an attractive contract rate, is EUR465 net. Of course, there are also contract rates where prices will be even lower. It all depends on the company’s potential and negotiations at the international level. ::

Wielkopolska

The strong Wielkopolska region Wielkopolska is one of the most prosperous regions in Poland. Its GDP per capita is higher than the national average, and, according to 2008 data, which is the most recent data available on regional GDP, Wielkopolska is in fourth place in the country in this respect. This result is, however, worse than the one for 2007, when the province came third. The Mazowieckie, Śląskie, and Dolnośląskie provinces had better results in terms of GDP for 2008. An exceptional rate of economic growth in Wielkopolska was observed in 2004, when Poland joined the European Union – 12.50%, which was better than the national average (Poland’s GDP was 9.65%). Elżbieta Wojnicka, PhD

Elżbieta Wojnicka PhD, lecturer at the Institute of Organisation and Management of the University of Gdańsk, expert and consultant on innovation, regional development and European integration. Author of expert reports, among others, for OECD, Industrial Development Agency, Polish Agency for Enterprise Development, the Ministry of Regional Development and Province Chairmen’s Offices.

The region’s share in the generation of GDP in 2008 was about 9%, giving it third place after Mazowiec kie (22%) and Śląskie (13%). Between 2005 and 2008, according to data from the Central Statistical Office (GUS), the largest growth in the share in the generation of GDP was observed in the construction industry, financial services, and real estate services. Industry’s contribution to the regional GDP was also higher, although this growth was decidedly weaker than in real estate, corporate services and construction. There was a relative drop in the contribution of agriculture and traditional services, such as trade and repairs, to the generation of regional value added. According to GUS data, there were slightly fewer businesses active in Wielkopolska in 2009 than in 2008, but those that survived the economic slowdown achieved a positive financial result as a sector. People in Wielkopolska are very enterprising, running 504 businesses per 10,000 residents, while the national average is 483. 75% of people employed in Wielkopolska’s companies worked in industry, trade and repairs, and construction. The average wage in Wielkopolska’s companies in 2009 amounted to about PLN2,720, which was 15% less than the national average. The biggest contribution to the regional GDP in 2008, as measured by their share in the gross revenue of companies, was made by such sectors as food, the wholesale and consignment

34 :: polish market :: 4/2011

trade, construction, automotive, retail, the production and supply of energy, gas, and water, chemical, machine and electronic devices, rubber and plastic products, other economic activity, the manufacture of readymade metal products, real estate services, and car sales and repairs. Wielkopolska’s economic structure is more modern than the national average – primarily thanks to the greater contribution of entities from high and medium-high technology industries. The automotive industry, machine and electric devices production, machine industry, the chemical industry, and – though to a smaller degree – the computer industry and the production of electronic devices and IT may be considered the region’s specialities in the field of high and mediumhigh technology. The industries with the best prospects in the region, based on the results achieved in recent years, are car production, IT, construction, other services, support activities for transportation and tourism-related services, other economic activity, paper and paperware production, the chemical industry, and machine and devices leasing. Some of these industries, such as the automotive industry, due to their production for export, respond to a global crisis faster. As foreign demand plummeted, there were lay-offs in those industries. This decline in demand should be considered cyclical, and should not last longer than 2-3 years. After all, the

qualifications in those fields will remain present in this region, and as the increase in demand returns, the companies will extend their manufacturing capacities in the regions in which they produced before. The gross household income per head in 2008 was about 1% higher than the Polish average, which gave the region third place after Mazowsze and Śląsk. Wielkopolska is characterised by a relatively low level of spatial diversification of income. It is an example of a highly-developed region with numerous growth centres – the dominant Poznań and Poznań District, whose growth spreads to the entire region, rather than weakens the development of subregions by draining production factors from them. At the subregional level, the strongest economic growth in Wielkopolska was observed in Poznań, and the Kalisz subregion. The unemployment rate in Wielkopolska is far lower than for the whole country. Wielkopolska also has a higher-than-country average, though generally low, economic activity rate, and its fall in recent years was faster than in the country at large. In December 2010 the unemployment rate in Wielkopolska was 9.2%, and was the lowest among all provinces (by 3.1 percentage points lower than the country’s average), even though unemployment in the region rose in relation to 2009. Wielkopolska is threatened by future demographic disturbance in the field of the labour market. The number of people, who, sooner or later, are going to enter the labour market, is decreasing significantly, while the number of those who have already left it is growing. This situation is also present in other regions and bodes ill for the pension system, with the threat of very lotw pensions, and the poverty of elderly people. This means that older people must stay at work, which in turn means the need to take measures to increase their usefulness from the point of view of potential employers, both through suitable training and awareness-increasing activities in this respect.

Wielkopolska Prospective fields of education in the region include professions that require higher education and specialised qualifications, connected with programming, using computers and operating computer-controlled devices, modern technologies, and construction (engineering professions), professions in services and personal care (beauticians, guardians, personal trainers, massage therapists, psychologists), knowledge transfer (teachers, translators), some profession types involving basic jobs – in construction (e.g. painters, pavers, building-shell construction workers, fitters, welders), textiles and clothes manufacturing, telemarketers, and receptionists. Generally in developed countries, and in Poland over about the next 10 to 15 years, demand is to be expected primarily for the professions that must be performed on site, i.e. will not be transferred to countries with lower labour costs (craftsmanship, repair services, personal services, teaching, entertainment, medicine, etc.) and occupations that require highly-specialised,

mainly technical knowledge in industries which are still based to a significant degree on research and development activities. As regards structural funds for 2004-2006, Wielkopolska was among the top provinces in respect of activity in acquiring money under all operational programmes and from the Cohesion Fund. This is evidenced in both the number of projects launched by the beneficiaries, and in the value of financing they procured. An analysis of the use of EU funds in Wielkopolska as regards the location of the beneficiaries confirms that the social capital of a specific area has greater importance, as seen in the activity of local government authorities and residents, their skills in preparing the application, and partly also the probably good attitude of the implementing institutions towards the respective commune, than the level of its development. High and medium procurement of funds was a feature of both the relatively wealthy districts, such as Konin, Poznań, Szamotuły, and those with lower income, such as

Pleszew, Wągrowiec, Jarocin, and Kalisz. The extent to which funds are leveraged depends more on the activity of local authorities and community than on the initial development level of the respective area. Wielkopolska is a significant driving force in the development of the country, but in order to maintain its position as one of the leaders it must favour innovation more. The percentage of innovative companies in the years 20062008, just as in the previous period of 2004-2006, was lower than the country average. This innovation shortage has already caused Wielkopolska to be overtaken in terms of GDP per capita by Dolny Śląsk, the region which stands out in Poland with its high percentage of innovative companies. ::

Source: GUS, Poznań Provincial Employment Agency, and DGA “Dynamics and directions of economic changes in the region of Wielkopolska, as well as their expected impact on the profile of business activities and the labour market in the region.”

POLAND ON THE GLOBAL MAP OF MODERN BUSINESS SERVICES 17th June 2011 Westin Hotel, Warsaw

More information: www.polishinvestforum.pl • info@roadshowpolska.pl • tel.: (+48) 22 357 09 77, (+48) 22 498 92 77

Wielkopolska

Welcome to Wielkopolska There are many reasons why it is worth visiting Wielkopolska. An excellent investment climate, opportunities for entrepreneurship development, a wide range of cultural attractions – these are only some of the factors that cause Wielkopolska rank high among other European regions. Marek Woźniak, Marshal of the Wielkopolska Region

Those who have been doing business in Wielkopolska for some time, point to the “spirit of entrepreneurship” pervading the air. This is true both is case of the approach of the local authorities, as well as people’s general attitude – including competent staff – and the services of institutions working in the business environment. The main factors that stimulate the region’s economic growth include a very attractive geographical situation and well-developed infrastructure. The proverbial Wielkopolska solidity proves effective in tackling dynamic changes that occur in the world’s economy. The local government of Wielkopolska is trying to meet the expectations of global market players and also regional entrepreneurs – we bet on coherent and

36 :: polish market :: 4/2011

comprehensive economic promotion of Wielkopolska. We are set to make business conditions simpler and more friendly. This goal is being pursued as part of the Wielkopolska Strategy of Economic Promotion for the years 2011-2020. The initiative is meant to drive investments and promote local businesses, taking into account assets and development needs of Wielkopolska’s subregions. The Strategy includes tools designed for entrepreneurs, such as the Electronic Base of Investment Offers (eBOI) which offers specialist information, in Polish and English, for entrepreneurs and investors. Data are constantly updated in order to provide potential investors with accurate information. Another popular solution, which we offer, is promotion of investment zones through participation in international fairs, i.a. MIPIM in Cannes and Expo Real in Munich. These activities are largely helped by the European funds. The Network of Investors and Exporters’ Service Centres is an important project. It ensures access to comprehensive, high-quality and free-of-charge information services as far as it is necessary for planning, organising and performing of export activities. Having long-standing experience, we want to even more dynamically participate in the booming sector of business tourism and international events. Our human and infrastructural potential is underpinned by numerous cultural festivals. Renowned international events and innovative artistic projects are like magnets drawing various congresses and business meetings to Wielkopolska.

The cultural life in Wielkopolska is characterized by openness to innovative forms, which is rooted in its rich tradition. Culture is promoted not only by institutions responsible for this sphere of social life, but also by non-governmental organisations and private initiatives. Small onetime projects are carried out alongside large-scale cyclic undertakings partnered and sponsored by the local authorities. Malta Festival, which celebrated its 20th anniversary in 2010, is widely seen as the most important artistic event in the region. Its programme consists of performances, concerts, exhibitions and other activities, thanks to which the streets of Poznań are transformed into colourful theatre stages. The city of Kalisz in the southern part of Wielkopolska is famous for the actor’s art festival “Kaliskie Spotkania Teatralne” that is held every year in May. It is one of the oldest theatre festivals in Poland. Likewise, the International Henryk Wieniawski Violin Competition, organised since 1953, counts among the most prestigious musical events in Poland and plays a crucial role in shaping musical culture in the region. Special consideration should be given to folk culture and traditions that remain very lively in Wielkopolska, and are cultivated by local song and dance ensembles. Such a diversity of artistic projects makes Wielkopolska one of the major spots on the cultural map of Poland. I hope that you will have an occasion to take advantage of the opportunities offered by our region – do come to Wielkopolska! ::

Wielkopolska

Ranking of companies in Wielkopolskie province Name of company

Head of the company

Based in

Sales revenue for 2010 (in PLN thousands)

Net profit/loss for 2010 (in PLN thousands)

Gross profit/loss for 2010 (in PLN thousands)

Operating income for 2010 (in PLN thousands)

Employment

1 GRUPA EUROCASH SA *

Luis Amaral

Komorniki

7791759

128456

145338

170446

2 ENEA SA

Maciej Owczarek

Poznań

6558983

347820

398903

101246

531

3 GLAXOSMITHKLINE PHARMACEUTICALS SA

Jerzy Toczyski

Poznań

5059898

1750

4 GRUPA MUSZKIETERÓW

Marek Feruga

Poznań

3610000

10000

5 PBG SA

Jerzy Wiśniewski

Wysogotowo

2740311

218559

267610

272710

3216

6 ŻABKA POLSKA SA

Jacek Roszyk

Poznań

2339441

449

7 HYDROBUDOWA POLSKA SA GK

Jerzy Ciechanowski

Wysogotowo

1581632

36557

43849

50220

1628

8 RABEN GROUP– represented by: RABEN MANAGEMENT SERVICES SP. Z O.O.

Ewald Raben

Gądki near Poznań

1255000

3500

9 KOMPUTRONIK SA

Wojciech Buczkowski

Poznań

982948

-1855

-5955

-3166

10 EXIDE TECHNOLOGIES SA

Janusz Mieloszyk

Poznań

724593

29224

37233

408

11 KOPALNIA WĘGLA BRUNATNEGO KONIN w KLECZEWIE S.A.

Sławomir Mazurek

Kleczew

668530

32155

40901

46476

3641

12 JUTRZENKA HOLDING SA GK

Jan Kolański

Opatówek

13 NIVEA POSKA SP. Z O.O.

Heinz-Jürgen Stüting

Poznań

621591

30658

39265

39294

586862

323435

344469

370045

260 540

14 TFP SP. Z O.O.

Lucjana Kuźnicka-Tylenda Kórnik

347991

21375

26553

26656

15 TELL SA GK

Rafał Stempniewicz

Poznań

307371

7117

9684

12336

16 DECORA SA GK

Waldemar Osuch

Środa Wielkopolska

263270

4343

3684

8846

856

17 ZAKŁADY PRZEMYSŁU JEDWABNICZEGO WISTIL SA*

Wojciech Fedko

Kalisz

262706

36731

-40736

-22050

18 KREISEL- TECHNIKA BUDOWLANA SP. Z O.O.

Szczepan Gawłowski

Poznań

262728

1330

2282

5610

382 469

19 ATREM SA GK

Konrad Sniatała

Złotniki

200821

15466

19397

19539

20 LUVENA SA

Kazimierz Zagozda

Luboń

187926

4592

5368

5452

251

21 TESGAS SA GK

Włodzimierz Kocik

Dąbrowa

174336

15641

19369

15641

305

22 INTER GROCLIN AUTO SA GK

Zbigniew Drzymała

Wolsztyn

141218

3885

1565

23 CHATA POLSKA SA

Adam Plackowski

Poznań

124216

3070

3760

3584

24 AGROBEX SP. Z O.O.

Krzysztof Kruszona

Poznań

117531

26219

32562

33726

25 TALEX SA GK

Janusz Gocałek

Poznań

105836

2244

2529

26 LENA LIGHTING SA GK

Włodzimierz Lesiński

Środa Wielkopolska

104510

1241

1037

2911

124

27 BSC DRUKARNIA OPAKOWAŃ SA GK

Janusz Schwark

Poznań

100120

14650

17656

19104

28 POZBUD T&R SA

Tadeusz Andrzejak

Luboń

96580

8004

9715

9604

29 BCC SP. Z O.O.

Bartłomiej Buszczak

Suchy Las near Poznań

68600

189

30 ONE2 ONE SA

Piotr Majchrzak

Poznań

62520

-3333

3247

-3386

31 PRZEDSIĘBIORSTWO CHEMII GOSPODARCZEJ POLLENA

Marek Witecki

Ostrzeszów

45532

3266

2926

2748

187 46

32 DGA SP. Z O.O.

Andrzej Głowacki

Poznań

33943

-3189

4 506

- 3 383

33 IZOLACJA-JAROCIN SA GK

Piotr Widawski

Jarocin

33187

1020

1160

1496

34 POZNAŃSKI BANK SPÓŁDZIELCZY

Stanisław Murawski

Poznań

27424

4023

5025

126 21

35 HARDSOFT TELEKOM

Jarosław Kaźmierczak

Poznań

25833

545

677

671

36 R&C UNION SA

Norbert Okowiak

Poznań

24329

-1931

-1463

37 INVESTCON GROUP SA GK

Paweł Śliwiński

Poznań

22457

13239

17877

38 WERTH-HOLZ SA

Jarosław Gniadek

Poznań

20120

-1972

-2865

-1025

39 BANK SPÓŁDZIELCZY w CZARNKOWIE

Władysław Dymek

Czarnków

19594

4495

5776

40 MAŁKOWSKI-MARTECH SA

Zenon Małkowski

Konarskie

18669

1042

1204

1891

41 VERBICOM SA

Bolesław Zając

Poznań

18109

524

683

732

42 LOGOS TRAVEL MAREK ŚLIWKA S. J.

Marek Śliwka

Poznań

17684

2391

2846

2836

43 BANK SPÓŁDZIELCZY w PLESZEWIE

Maria Górczyńska

Pleszew

17095

3668

4781

44 PTI SA

Kamil Jankowski

Poznań

16680

5040

6078

5923

45 PANI TERESA-MEDICA SA

Anna Sobkowiak

Gutowo Małe

15320

1904

2431

2782

103

46 SPÓŁDZIELCZY BANK LUDOWY

Genowefa Goździejewska

Złotów

14678

1934

2448

47 BANK SPÓŁDZIELCZY ZIEMI KALISKIEJ Grzegorz Poniatowski

Koźminek

14286

2721

3445

48 ALKAL SA

Radosław Lipiec

Opatówek

14081

1733

2151

2465

49 PRZEMYSŁOWY INSTYTUT MASZYN ROLNICZYCH

Tadeusz Pawłowski

Poznań

10916

1 473

1 490

1262

50 AQUA SA

Józef Andrzej Kozikowski

Poznań

10892

1830

2306

2341

* data from Bankier.pl

38 :: polish market :: 4/2011

Wielkopolska

“Transatlantyk”

– a festival of films, music, ideas... The first International Film & Music Festival “Transatlantyk,” whose creator and artistic director is Jan A.P. Kaczmarek, one of the world’s best composers of film music, an Academy Award laureate for the music score for Marc Forster’s “Finding Neverland,” will take place in Poznań between 5 and 13 August. The festival’s format is based on film screenings organised in more than ten thematic categories and related concerts. The event is being organised by Fundacja Transatlantyk (Transatlantyk Foundation) under the patronage of the City of Poznań.

The festival will feature almost 300 screenings, including world premières and the most interesting productions of the 2010/2011 season, prize-winners at the most important film festivals. The thematic categories will include Transatlantyk Docs, presenting the most-discussed documentaries, films about artistic events and about music. The festival events will take place in the most prestigious venues in Poznań. “It’s not our intention to compete with any of the existing festivals. We want our main criteria in choosing films to be thoughts and ideas. I define Transatlantyk as a festival of ideas – a platform for intellectual encounters,

looking at music and film as a means to this end. Music and film are very emotional communication tools – it’s hard to find better ones. Film music itself can have many faces. People have various attitudes towards it. I treat it very seriously. I see film as a place where you can write music without compromising one’s ideas. I pick those films that give me the chance to write music with ‘a significant voice.’ Music that can be listened to in concerts, and not only when watching a film,” stressed Jan A.P. Kaczmarek, a graduate in law studies from the Adam Mickiewicz University in Poznań. For years he was associated with Poznań’s theatre Teatr Ósmego Dnia and the chamber orchestra Orkiestra Ósmego Dnia. He has composed music for several dozen famous motion pictures, directed by Agnieszka Holland, Adrian Lyne, Marc Forster, Jerzy Kawalerowicz, Janusz Kamiński, and Yurek Bogayevicz, to name just a few. “Why Poznań? This city has Jan A. P. Kaczmarek, and this is to be his festival. Simply, the originator of this event has captured our imagination with his idea. I believe that the festival will be a great source of pride for Poznań”, added Mayor of Poznań Ryszard Grobelny. Numerous music events will accompany the festival, including film music concerts. The most important is the Transatlantyk Film

Music Competition, an open competition for young composers. The jury will be made up of Peter Golub, director of the music programme of the Sundance Institute created by Robert Redford, and Paul Boucek, the head of music at the famous Warner Bros. Pictures. The Grand Prize is USD 20,000. All events will be concluded by the finale gala which will feature an awards ceremony for the Transatlantyk Glocal Hero Award - awarded to an artist whose work is important both locally and globally, the Paderewski Award – for artists who transcend the boundaries of their professions, and the Chopin Award – for the Personality of the Year. The festival will also take a stand on environmental issues. Celebrities of world cinema (Kaczmarek has not yet revealed who...) will walk a green - not a red - carpet, and will appear at many artistic happenings to develop environmental awareness in Poland. The author of the image campaign, including the festival poster, is Tomasz Opasiński, one of the most famous computer graphics designers in the world, and the author of posters for such blockbusters as “The Bourne Ultimatum” and “Shrek.” Maciek Proliński 4/2011 :: polish market :: 39

Towards better cooperation between scientists and practitioners The vision and necessity of the development of Innovative Wielkopolska assume the intensification of a social dialogue and broad consensus in whose development scientists, entrepreneurs of small, medium and large enterprises, employees of the local government, state administration and institutions of business surroundings will be involved. The Faculty of Engineering Management of the Poznań University of Technology actively participates in the realization of this vision. Regardless of its status researches, it has undertaken a few projects, among which special attention should be paid to: Wielkopolska system of monitoring and forecasting > In this project the partners of the Poznań University of Technology are: Wielkopolskie Province, the City of Poznań and Central Ostrobothnia University for Applied Sciences from Kokkola in Finland. Its idea is to generate information about competence gaps on Wielkopolska’s labour market.

Partnership of science and progress > The leader of this project is the Marshal Office of the Wielkopolska Region and its partners are the Faculty of Engineering Management in Poznań University of Technology and Poznań Division of TVP (Polish Television). The primary aims of the project are popularization of Polish and international scientific achievements, promotion of innovations in connection to new technologies implemented in economy, popularization of study courses which create modern economy and the generalization of knowledge transfer to economy and presentation of science as a solution to increase economy competitiveness and innovativeness. Integrated system of aiding access to information in urban space > The aim of this project is to work out a system with the application of an interdisciplinary perspective of information transmission based on knowledge from the fields of ergonomics, computer science, quality management, teleinformatics and mobile systems.

Knowledge for economy > The aim of this project is adjusting the educational offer of the Poznań University of Technology to the expectations of potential employers, the labour market and the requirements of a knowledge-based economy. In connection to it, education programmes for new courses will be developed in cooperation with representatives of businesses taking into consideration the needs of the labour market and knowledge-based economy. Foresight ‘Wielkopolska Economy Networks’ – scenarios of knowledge transformation supporting innovative economy > Project should inspire thinking about co-creating the future of the region and creating the vision of Wielkopolska’s development on the basis of scientific premises in as broad social circles and different environments as possible. The research concerns recognition of processes, methods, media and barriers for the transfer, diffusion, and particularly, the adjustment (transformation) of knowledge to the needs of businesses in Wielkopolska. It should provide knowledge on if and how the economy networks support transfer and transformation of knowledge between different economic entities.

*** The results of the works on the five above mentioned projects and related activities aimed at bringing together the worlds of science and its implementation should be conducive to the region’s development.

www.fem.put.poznan.pl

Wielkopolska

Repayable assistance funds Interview with Przemysław Gonera PhD chairman of the Convention of Management Board Presidents of Regional Funds for Environmental Protection and Water Management, President of the Management Board of Regional Fund for Environmental Protection and Water Management (WFOŚiGW) in Poznań

which support investors and encourage them to undertake environmental projects with loans, low-interest and partially amortisable, and with subsidies. The Funds do not just administer the resources entrusted to them but rather manage them. They cause the resources to be in constant motion and continually multiplying, which increases the possibility of subsidies for further actions. The WFOŚiGW in Poznań, which I have managed since its creation over eighteen years ago, began with just over a dozen million PLN, and now has funds of over half a billion PLN. The 16 Funds together have over PLN5 billion at their disposal. It should be emphasised that every zloty given to investors is multiplied by PLN3-4 from other sources – from their own funds or from bank loans.

You represent institutions that are… …a special Polish way of solving environmental problems. At the brink of the 1990’s, when it became clear that we must invest enormous funds to make up for our environmental shortcomings, a system of financing environmental undertakings was formed, whose main links are the National Funds for Environmental Protection and Water Management and 16 independent and self-supporting Regional Funds for Environmental Protection and Water Management (WFOŚiGW’s). The system is based on a rule that funds received from fees and penalties for using the environment are directed to its protection. This is guaranteed by the Funds,

42 :: polish market :: 4/2011

How do the beneficiaries assess the functioning of the system? Of course, it would be best to receive subsidies, but this is not always possible. Local government representatives, who are the main beneficiaries of the system - around 80% of our funds go to them, appreciate using repayable assistance. It enables the support of a larger number of investors and encourages them to undertake actions on environmental protection. Scientists and world experts are positively commenting on the Polish system of financing environmental projects, noticing the possibility of increasing funding for environmental protection. Anyway, forms of repayable assistance are being discussed in the European Union. They are to be more widely implemented in the new financial perspective for the years 2014-2020.

Provincial Funds can therefore be regarded as their precursors. We have experience in both project preparation, as well as in financially supporting them through repayable assistance. This is why the Convention of Management Board Presidents of WFOŚiGW’s, considering that it is worthwhile to take advantage of experience, subscribes to including the Funds in the implementation of environmental priorities for the future financial perspective. Provincial Funds are already participating in the implementation of EU programmes. Based on agreements with the Minister of Environment all WFOŚiGW’s are taking part in the implementation of two environmental priorities of the Operational Programme Infrastructure and Environment for 2007-2013. Recently, a meeting of the institutions involved in this programme took place in Poznań. Up to now, 457 agreements have been signed with beneficiaries with a value of subsidies exceeding PLN13.5 billion. Also, three WFOŚiGW’s – Olsztyn, Poznań and Zielona Góra, are participating in the implementation of a Regional Operational Programme. On its basis, the Poznań WFOŚiGW signed 161 agreements with beneficiaries, with the value of subsides exceeding PLN715 million. Many undertakings are conducted with the help of EU funds, everything from the construction of tourist trails, thermal efficiency improvement of schools and hospitals, up to the extension of sewage systems, building of sewage treatment plants, waste management plants and wind turbines. The scope of projects is very broad. But that is what contemporary environmental protection is like. It encompasses almost all areas of life, and the introduction of modern environmental solutions requires knowledge from all areas. We still have to look for newer, better and more friendly solutions, for both the environment and people alike. ::

Regional Fund for Environmental

Protection and Water Management

Regional Fund for Environmental Protection and Water Management local government and nature-friendly, the Fund offers financial transparency for a clean environment. ul. Szczepanowskiego 1A, 60-541 PoznaĹ&#x201E;, tel. 61 845 62 00, fax 61 841 10 09, biuro@wfosgw.poznan.pl

www.wfosgw.poznan.pl

Wielkopolska

An attractive market Joanna Sinkiewicz

Photo: MLP

Negotiator, Industrial Department, Cushman & Wakefield

The Poznań market is one of the oldest locations for warehousing in Poland. The first modern warehouses in the vicinity of Poznań were handed out to lessees in 2005. Their area at that time was a little over 100,000 sq.m. The following years saw further dynamic development of the market. Supply increased by several dozen or even several hundred square metres each year (the biggest growth was observed in 2007 and 2008). Consequently, we can now consider Poznań a mature, developed market. The total supply of floor space is 901,000 sq.m., which constitutes nearly 14% of all Polish resources. Warehousing facilities are concentrated around the capital of Wielkopolska – Poznań. The city itself has a population of 553,000, while the Poznań

44 :: polish market :: 4/2011

urban area is inhabited by 1,200,000 people. This means Poznań is one of the biggest cities in Poland, and one of the most prosperous regions. The GDP of the area is 202% of the country’s average, conceding only to Warsaw, while the unemployment rate, as per August 2010, was 3.3%. This makes Poznań a very attractive ready market. Wielkopolska’s capital is an important centre for the food, motor, pharmaceutical, and chemical industries. The most important companies active in the region include Bridgestone, Exide, Imperial Tobacco, Kraft, Pernod Ricard, SABMiller, Unilever, Volkswagen, Wrigley, Bertelsmann, Carlsberg, Dalkia, Duni, Franklin Templeton Investments, GlaxoSmithKline, MAN, The Lorenz Bahlsen Snack-World, W. R. Grace & Co., Microsoft, Roche,

Telcordia Technologies, Samsung, and Amica. One of the most important factors taken into consideration by investors interested in the warehousing market are communication solutions. In this regard, Poznań is among the leading locations in Poland. The city has good connections with other Polish and European regions. Obviously, the A2 motorway is the most important route, linking Poznań with Warsaw and the German border, planned to become an expressway between Berlin and Eastern Europe. Other important thoroughfares are the S11 main road, linking Poznań with Silesia, and roads no. 5 and 92. Owing to a welldeveloped road network Poznań has become the warehousing centre for the north-western region of Poland.

TAILO R-M A D E

PROJECTS Size: 165,000 sq.m

Size: 96,000 sq.m

MLP has convenient connections both with the centre of Warsaw and the main routes linking Warsaw with other cities.

MLP Tychy is situated in the Special Economic Zone. MLP Tychy is located on the eastern outskirts of Tychy, about 3 km from the E-75 express road and road 44 junction.

Size: 302,000 sq.m

Size: 102,000 sq.m

The estate is located between the road No. 760 and the anticipated section of the motorway A-2.

The plot is located in Koninko, 4.5 km from the A2 motorway, 1.5 km from the ‘11’ expressway and only about 15 km from downtown Poznań.

Size: 250,000 sq.m The property has a cumulate frontage of 514.5 m to DN4 – Oltenitei Road, divided in two sub-frontages of 226 m on the right hand side and 288.5 m on the left hand side.

+48 22 738 30 10 • www.mlp.pl • info@mlp.pl

Wielkopolska

Two major warehousing locations may be identified around Poznań – the north-western (near Tarnowo Podgórne, next to road no. 92), and the southern one (with Komorniki, Gądki, and Swarzędz). The first warehouses for the Wielkopolska region were built in Tarnowo Podgórne, near the airport, before the A2 motorway was constructed. For this reason it is often called “the old location.” ProLogis decided to situate its parks there (ProLogis Park Poznań I & II, 155,000 sq.m. of area in total). A few kilometres away, in Suchy Las, there is the Nickel Technology Park Poznań. Following the opening of the motorway, developers focussed their interest on the areas situated closer to the A2. Segro, and many other private investors, picked the area of Komorniki (south-west of Poznań). The most popular, however, was the land situated south-east of Poznań, near Gądki, Robaków, and Koninek, with Panattoni’s parks – with a total area of 221,000 sq.m., PointPark Properties – 40,000 sq.m. at present, 23,000 sq.m. under construction, and another 100,000 sq.m. planned, and MLP (currently 10,000 sq.m., with 102,000 sq.m. in

prospect). Local entrepreneurs providing smaller modules complement the range of warehousing services. The proximity of the A2/S11 interchange is an unquestionable benefit for those parks. It is also a favourite among lessees, primarily logistics operators (Raben, Kuehne & Nagel, Van Cargo, ND Logistics), and store chains, often singling out Poznań as their central location serving other regions of the country (Piotr i Paweł, H&M, Desa, Carry). Logistics operators prefer locations close to the A2 motorway, while Tarnowo Podgórne is very attractive to companies whose principal activities focus on the Poznań market, local enterprises and companies requiring a large workforce. The impressive growth dynamics of the Poznań market between 2005 and 2009, followed by a rapid fall in demand in 2009, brought about a temporary decline in the number of investments in the region. Only 37,300 sq.m. of new warehouses were established in Poznań last year, and a mere 45,000 sq. m of warehouse area was under construction at the end of 2010.

At the end of December 2010 the warehouse space resources in the Poznań region amounted to 901,000 sq.m. The limited supply of new space was a response to the fall in demand. Since then, the situation has improved. Nearly 157,000 sq.m. of warehousing space has been rented, which is by 54% more than in 2009. With a 70% market share, logistics operators have dominated the leasing market in Poznań. The biggest transaction in 2010 was the contract between PointPark Properties and PF Concept for the construction of a new facility with a surface of some 24,000 sq.m. The vacancy rate by the end of the year was about 8.4%, and nominal rents slightly increased to EUR 3.0–3.6 per sq. m per month. As for the further development of the Poznań market, several major players, e.g. ProLogis, PointPark Properties, and Segro, are planning to extend their parks. These companies own land on which they can develop another 160,000 sq.m. of warehouse space. Investment lots in the region are owned by virtually all investors present. New players are also interested in investing around Poznań. ::

Photo: MLP

POZNAŃ

46 :: polish market :: 4/2011

Existing resources

901,000 sq.m.

Under construction

45,100 sq.m.

Vacancy rate

8.4%

Demand

157,000 sq.m.

Rent levels

Nominal: EUR 3.0–3.6 per sq.m. per month Effective: EUR 2.4–3.0 per sq.m. per month

Major lessors

CLIP, Panattoni, ProLogis, SEGRO, PointPark Properties, MLP

REAL VIENNA – where

the real estate industry meets

REAL VIENNA is THE platform for business and networking opportunities for projects across industries and countries as well as investments and financing focused on Central and Eastern Europe. The REAL VIENNA plays a pivotal role in bringing together leading developers and decision-makers of all major real estate areas as well as representatives of important cities and regions in Central and Eastern Europe.

WHErE THE nEW EuroPE is BuiLT. 24 – 26 MAY 2011, MEssE WiEn, ViEnnA WWW.rEALViEnnA.CoM ER REGIST NOW

In cooperation with:

Supported by:

Let your company take center stage and be sure to invite selected interested parties and potential clients. Take this opportunity to talk to people in a comfortable environment. As a bonus, we offer a comprehensive program of events and top-notch networking opportunities! REAL VIENNA 2011 – your must-attend event for real estate business in CEE ✓ Meet delegations of capital cities and metropolitan areas as well as leading developers and decision-makers ✓ Talk to potential investors/fund representatives as well as tenants looking for suitable projects ✓ Benefit from the attendance of a top-notch expert audience ✓ Participate in first-class ‘Property Talks’ and complementary events

www.REALVIENNA.Com

Łużycka Office Park ALLCON@park 3

2010 2011

Gdynia Sopot

Gdańsk

NEW SPACE

FOR YOUR BUSINESS

www.officepark.pl

Wielkopolska Poznań, one of the oldest and largest cities in Poland, located in the central-western part of the country, may be one of the cities which are known to the most diversified groups of people. Its international fairs are the symbol of modern industry whereas the beautifully-developed site of Lake Malta each year becomes the focal point for alternative theatre. What should not be missed in Poznań? Sandra Wierzbicka

Let off the steam sightseeing Poznań

48 :: polish market :: 4/2011

Already at first sight, Poznań is an ideal place for tourists. First of all, its location is exceptionally convenient. Not only do north-south and east-west railway tracks cross here, but the city also lies on the Berlin-Warsaw route, which means that, when travelling by car, Poznań can be directly accessed from the motorway (A2). Flights are also available due to the Ławica Airport located at a distance of 7 kilometres from the city centre. Secondly, the city has an ideal size. The area of 261 km 2 and slightly more than a half million residents is just enough to get the feeling of staying in a highly civilised, yet enchanting and tranquil, spot. And finally, Poznań has an array of “must-see” sites. As in most Polish cities, the Old Town is on top of the tourist, historical and architectural landmarks of Poznań. Demarcated in 1253 right upon the foundation of Poznań, the Old Market Square was in the centre of social life for centuries. Today it still features a Renaissance Town Hall with the legendary goats butting one another at midday. An inimitable charm of this place stems from the monumental tenement houses, combined with the so-called craftsmen houses in the middle of the Market Square. Currently these narrow buildings with arcades, which used to function as highly prosperous market stalls, mainly sell souvenirs. You should come here at night when the nearby cafes and pubs become crowded with guests while the highlighted Town Hall and fountains make a very different impression, distinct from those neat monuments as they are seen in daylight. Not far from the Old Market Square you will find the Poznań Parish Church. This is a breathtaking Baroque church, restored mostly through the EU funds. Also close to the Old Town, at Marcinkowskiego Avenue, there is the National Museum of Poznań, presenting contemporary and traditional art. Worth-seeing exhibitions are also organised by the museum branches, including the ethnographic, applied arts, and musical instruments branch. Marcinkowskiego Avenue borders on Św. Marcin Street, an old-fashioned promenade with a unique cake shop where you can get a bite of delicious Saint Martin’s croissants – the regional delicacy with white poppy filling,

Wielkopolska traditionally baked on the Saint Martin’s Day. At the end of the street there is a spot which for some time has attracted almost any visitor in Poznań – the Stary Browar commercial centre, featuring the Art and Business Centre. Restored by Grażyna Kulczyk, it is considered one of the greatest buildings in the urban space. The monument proudly standing in front of the Zamek Culture Centre is a certain curiosity. It was built as a tribute to three Polish mathematicians: Marian Rejewski, Jerzy Różycki and Henryk Zygalski, who in the Second World War broke the German Enigma code. It is also worth taking a walk to the Opera house. Built at the outset of the 20th century, it hugely relates to classical patterns, such as the portico and the tympanum, derived from the Ancient Rome. The Ostrów Tumski Island is one of the most prominent attractions in Poznań, and one of the most historically precious spots in Poland. According to the historical records, this was where Mieszko I, who is considered the founder of the Polish statehood, set up one of his seats in the mid-10th century, and where soon after the baptism of Poland the construction of the first Polish cathedral began. Its remnants can be seen in the monumental underground of the current Gothic cathedral, which was in the major part reconstructed after the war’s torment. It is also believed that this is the venue

holding the remnants of the tombs of Mieszko I and King Bolesław Chrobry, the first rulers of Poland. Travellers with children will probably be attracted to Malta and to the Zoological Garden with an elephant house. The artificial Malta Lake was established on the Cybina River. It features a regatta track with a length of 2 km and a ski centre, open all year round. Located slightly farther from the centre, the forested area is home to the Wielkopolska Zoological Park with a three-level elephant house, completed in 2008. The zoo may be

accessed by the “Maltanka” narrowgauge train. If you are lucky enough, you may get the chance to travel in a train led by the steam engine dating back to the 1920’s. The Poznań International Fairs, organised for the first time in 1921, are the real icon of Poznań. It is worth noting that Poznań will host a number of meetings held as part of the Polish presidency of the European Union Council. Most of those meetings will take place in the area of the International Poznań Fairs and in the Poznań Congress Center, currently undergoing some modernisation work. The Urban Stadium, which will be the venue of three matches during the European Football Championship EURO 2012, has recently been one of the milestone investments in Poznań. It was officially opened on 20 September 2010, as the first stadium in Poland completed for EURO 2012. The neighbouring areas of Poznań have also a lot to offer. Kórnik features a beautiful Neo-Gothic castle surrounded by impressive parks while the Rogalin area, located at a short distance, comprises a palace and castle complex, and the Wielkopolski National Park. And if you still haven’t got enough, the City Information Centre at 44 Ratajczaka St. and the Tourist Information Centre at the Old Market Square will offer you more exciting tours and visits to exceptional spots. :

Photos: Mariusz Forecki, courtesy of the Poznań City Hall Archive

4/2011 :: polish market :: 49

EURO 2012 compiled by Joanna Fijałkowska

Joanna Janowicz Strzyżewska Marketing Communications Manager

Ryszard Grobelny Mayor of Poznań UEFA Euro 2012 will certainly contribute to the building of a positive image of the city, both in Poland and abroad. It will showcase Poznań as a modern metropolis, and an attractive, open, and touristfriendly place. I am convinced that the capital of Wielkopolska will once again prove a great host of an international sports event, confirming Poznań’s image as a city of resourceful, creative, and enterprising people. Apart from image benefits – which are rather difficult to measure – the organisation of UEFA Euro 2012 will bring economic profits to Poznań and its region. The UEFA European Championship will attract a great number of foreign visitors (as many as 80 thousand fans are expected to come to our city!), which will translate into an increase in turnover in Poznań’s pubs and restaurants. Without doubt, UEFA EURO 2012 will have a share in the city’s economic growth, as it will stimulate us to put more effort into new investments. The construction of the cutting-edge City Stadium, the tramway line in Franowo, and the extension of the Poznań Fast Tramway line to the West Station, cannot be omitted when listing the city’s key investments. UEFA EURO 2012 has also become a stimulus for many other positive changes. We are supporting Polish State Railways in the renovation of the Central Station. We hope that Ławica Airport will also develop. All these investments will bring more than just short-term benefits connected with the organisation of the tournament – we should see them from a much wider perspective, as they will remain here for Poznań’s residents for many years to come. ::

50 :: polish market :: 4/2011

Our greatest challenge for the year before UEFA EURO 2012 is to prepare as best we can organisationally. The stadium has been fully active for six months. We have had here a big concert, 4 Europa League matches, and one international fixture. These were 6 major tests. The Poznań stadium is the first UEFA EURO 2012 arena to have been opened. Trailblazers will always face more difficulties, but we are collecting very valuable organisational experience. We will be glad if it comes in handy in Warsaw, Wrocław, and Gdańsk, because those cities will have much less time to prepare. Events in the Poznań stadium started on 20 September 2010, when it was opened with a concert by Sting and a symphony orchestra. Matches are hosted. We are preparing at least two major concerts before the summer holidays, and planning a sporting event which is unrelated to football. The EURO stadium is also a multifunctional arena. This is how it will function before UEFA EURO 2012, and that is how it is going to be after the tournament. The schedule will be filled by the stadium operator. Each of the four stadiums is different. The National Stadium in Warsaw is the largest, the representative one; the stadium in Wrocław has an interesting form. In my opinion, the most beautiful one will be in Gdańsk, but our stadium has something that others do not have – a tradition of several dozen years and many great European teams and musicians who have visited Bułgarska Street. It also boasts something really unique – a splendid atmosphere guaranteed by the followers of both the Lech Poznań and Warta football clubs. Thanks to its unusual construction (it was not built from scratch) it has the chance to become one of the most interesting places on the tourist map of Europe. ::

EURO 2012

Poland’s benefits from Euro 2012 preparations The preparations for UEFA Euro 2012 have been a very important stimulus, not just for economic, but also tourist and social developments in Poland. Mikołaj Piotrowski, PR Director, PL.2012 In preparing for uefa Euro 2012, the PL.2012 company, in cooperation with over 170 partners, is implementing 219 infrastructural projects, out of which 46 have a key status, and 37 are designated as important. The value of the key and important infrastructural investments, i.e. the construction and redevelopment of airports, stadiums, and transport routes between the host cities, and within those cities, will be about PLN88 billion. All of those investments are vital for achieving a balanced growth of our country. Thanks to the organisation of Euro 2012 in Poland, their implementation will be much faster. In the case of transport infrastructure, the acceleration in investments is about 3 to 4 years. With regard to sports infrastructure, and particularly ELITE-class stadiums, such as those that are built in the host cities, the acceleration is even greater. When the tournament ends, Poland will find itself well-equipped in modern stadium infrastructure at a European and global level. The results of the research, presented in the “Report on the impact of the preparations for, and organisation of UEFA EURO 2012 on Poland’s economy” clearly indicate that the organisation of Euro 2012 in Poland is more of a long-term investment than a cost for Poland. During the three weeks of the tournament, a total number of 1 million people will be visiting Poland. An increase in the turnover

Termy Maltańskie (Maltańskie Baths) Termy Maltańskie is a sports and recreation complex, which will be completed in the second half of 2011. The facility, which is open all the year round, offers not only

from foreign tourists in 2012 connected to UEFA Euro 2012 will amount to PLN850 million. At the same time, as a result of an enhanced image of Poland as a destination for recreational tourism, the yearly inflow of foreign tourists coming to Poland will rise by about 500 thousand people. This will contribute to an increase in the revenue from international tourism in Poland in the years 2013–2020 by PLN4.2 billion. The cumulative economic impact of the preparations for, and organisation of Euro 2012 will bring a GDP increase of 2.1% compared to 2009, while this gain will be distributed over 20082020. The total value of the cumulative GDP growth will be PLN27.9 billion at 2009 prices, culminating in 2012. The most important source of positive economic results of Euro 2012 is the acceleration of investments in transport infrastructure – it contributes in 77.5% to the cumulative GDP growth. The modern sports infrastructure that will be established thanks to the organisation of Euro 2012 will not only allow Poland to present itself internationally from the best possible perspective during the tournament itself, but will also constitute an excellent spring point for hosting other big sporting events in the future and developing Polish football. Thanks to the preparations for, and organisation of Euro 2012 in our country we will also be facing a series

a sports pool with excellent backup facilities but also a number of water attractions, in both the internal and external parts. Moreover, the use of underground thermal springs will allow the creation of saline pools, whose health and prophylactic features cannot be

Mikołaj Piotrowski, PR Director, PL.2012

of social changes initiated by social projects launched as part of the preparations for the tournament. These campaigns aim at activating society and showing the Polish people that they are all hosts of the tournament. One of them is the Kibice Razem (Fans Together) project, which aims at changing the attitudes of Polish fans, and educating and professionalising their actions. The social campaigns connected to the preparations for UEFA Euro 2012 include the project Akademia Euro 2012 with a view of training about 3000 people who will have direct contact with foreign tourists visiting Poland during the tournament, e.g. people employed at ticket offices, information points, or clearance. The training sessions cover knowledge about Euro 2012, transport connections, and the tourist attractions of the region and country. Separate training will be provided to about 1600 employees of the hotel industry. The objective is to ensure the highest possible standard of services provided to visitors in hotels. ::

overestimated. The world of saunas, and the beauty complex, together with the fitness parlour and the bowling alley, complete the range of services offered to enthusiasts of healthy and active leisure full of pleasure.

4/2011 :: polish market :: 51

EURO 2012

A philosophy of good work Kazimierz Zagozda President of the Board, Luvena S.A.

Nobody needs to be reminded that Wielkopolska has a great economic potential. If we add to this our regional philosophy of good work and order, we get a mixture of excellent investment projects and their superb implementation. In line with this vision, Luvena S.A., for almost one hundred years now, has been busy creating its history in Luboń, by continuing the production of fertilisers, and, most recently, investing in a state-of-the-art warehouse and office centre. The investment concerning the construction of warehouse and office space is implemented by a subsidiary of Luvena S.A. – Park Przemysłowy (Industry Park) Luvena sp. z o. o. The Park is targeted to be a highly-modern office and warehouse complex, with the area of 75,000 sq.m., warehouse-manufacturing space with welfare and office facilities, and 15,000 sq.m. of modern class A office space. Wielkopolska, and particularly the area around Poznań, is the centre of activities for many companies providing large-area warehouses. An analysis showed, though, that providing a range of services of this type is also a good idea in Luboń, due to its perfect location, the vicinity of the A2 motorway (about 2 km away) and its own railway siding. Luboń is also a place with industrial traditions.

52 :: polish market :: 4/2011

The Industry Park will be a centre for trade and distribution by SMEs. As far as present actions are concerned, it creates excellent prospects primarily for companies from the chemical sector. A network of hardened service roads, passenger car parks and lorry yards for various types of vehicles is being created in the area of the Park. Green areas are also being developed. The direct objective of the construction of the Industry Park is the revitalisation of post-industrial areas, to which Luvena S.A. holds the right of perpetual usufruct. At the first stage, in 2008, a hall with the industrial area of 8,400 sq.m. and office area of 600 sq.m. was handed over and fully rented. The next stage involves the construction of a second hall to provide 4,670 sq.m. of warehouse space, 1,694 sq.m. of office space, and 503 sq.m. of service space. Construction work has already started. The completion and handing over for use is planned for 10 January 2012. Park Przemysłowy LUVENA received a subsidy in the amount of PLN7,010,008.80. The project is being implemented within the Wielkopolskie Regional Operational Programme, Measure 1.4 “Support for the activities of the Regional Innovation Strategy.” ::

EURO 2012

Dynamic development Magdalena Strój, the Director of City Park Residence, in Poznań tells “Polish Market” about the development opportunity for Poznań’s hotel and restaurant industries.

of transport infrastructure (the airport, roads, stations) will result in Poznań being a more interesting and more accessible travel destination for both Polish and foreign visitors.

What prospects for development do you see for the hotel industry, considering EURO 2012 ? It has been a long time since the hotel industry in Poland had such prospects for development. Such enormous sports and media enterprise as Euro 2012 requires a huge number of accommodation and restaurant facilities. Investments made to satisfy the needs of Euro 2012 will have a positive impact on the development of Poznań itself. The effective promotion of the city, the readiness of accommodation facilities and the improvement

What should be changed or introduced for Polish luxury hotels to be better promoted abroad? The choice of a hotel rarely determines the travel destination, so the priority should be to promote the region itself and to improve the economic and tourism attractiveness of the city, which will translate into the popularity of hotel facilities. We have upscale luxury hotels in Poland, the standard of which surpasses European norms. Poznań has a vast potential, which should be properly utilised, and an event such as EURO 2012 is definitely going to help promote our city. City Park Residence has won the “Hotel z pomysłem” (“A Hotel with a Vision”) award. Is it difficult to receive an award like that in Poland? What are the criteria? Who designed the hotel? The idea of the “Hotel z pomysłem” award is to promote interesting solutions in architecture and ideas with great aesthetic and utilitarian values. Our facility

combines the most recent trends in design and architecture with the historical nature of old Uhlan barracks, which have been assiduously restored with the aid of Sławomir Rosolski’s Architecture Studio. The location of the Residence itself, in the City Park, a peculiar “town within a city,” turns the City Park Residence into an alternative to multi-storey chain hotels. The popularity and dynamic development of our Residence prove that visitors appreciate unconventional solutions nowadays. A re you planning a special offer for your guests for the duration of Euro 2012 in Poznań? We are constantly extending our package with new services such as a professional fitness centre and Whisky Bar 88, which has the most extensive collection of Whisky in Poznań. We are currently opening a new facility, the Country Park conference and recreation centre near Poznań and are planning to open another restaurant. City Park Residence is also a perfect place in terms of location and apartment size (over 43 sq.m., each with a kitchenette) for supporters, football fans and football groups, which we have had the opportunity to accommodate many times. I hope that until 2012 both the level of services we provide and the range of amenities for our guests will be even more competetive. We will definitely prepare for a proper reception of guests during Euro 2012.

CURRENT EVENTS UEFA has announced E. Wedel as the first Polish National Sponsor for UEFA EURO 2012 on the occasion of a special ceremony held at the Legia stadium in Warsaw. Wedel, Poland’s oldest chocolate brand celebrating its 160th anniversary this year, is deeply rooted in Polish tradition and is renowned as a timeless purveyor of pleasure and sweet moments. As a National Sponsor for UEFA EURO 2012, Wedel will benefit from a wide range of rights, including brand recognition in official premises and the ability to run ticket promotions for its customers. Commenting on the agreement, UEFA Events SA CEO David Taylor, said: “The signing of the first Polish National Sponsor for UEFA EURO 2012 agreement marks another milestone in the build-up to the final tournament. The interest we have received

from many Polish companies to be part of the sponsorship programme shows that these companies wish to be part of an event that will promote Poland and the best of what Poland has to offer. Wedel chocolates clearly fall into this category and it is a great pleasure to welcome them on board.” Paweł Szcześniak, Managing Director of E.Wedel, commented: “The signing of this agreement is an extremely important milestone for us. UEFA EURO 2012 is the biggest event ever to come to this part of Europe. We are very proud that Poland is cohosting this prestigious tournament. Wedel – a timeless purveyor of pleasure and a Polish brand will co-create this great event. We will do our best to make sure that the exciting moments of UEFA EURO 2012 will bring much joy and long-lasting memories to all football fans.” Source: www.uefa.com

The sales of corporate packages has begun :: UEFA has begun the sales of corporate packages for EURO 2012TM. After the tremendous success of over 12 million ticket applications from the whole world, starting from today representatives of the world of business have the opportunity to join the exclusive group of participants in the Club Prestige UEFA EURO 2012™ programme. They can choose the best option among various corporate packages. The Club Prestige packages offer the best seats in stadiums, gourmet cuisine, a special entertainment programme before and after the game, and many other attractions – everything within the stadium. There are two types of packages: Club Prestige Platinum and Club Prestige Gold: Club Prestige Platinum guarantees access to a private lounge, Club Prestige Gold guarantees access to the common business zone. Source: UEFA Events

Security during Euro 2012 :: “Euro 2012 is not only about constructing stadiums but also about the security of residents, tourists, fans and players,” said Jacek Kozłowski, the Mazowieckie province Governor. For this purpose he established an interdisciplinary group for implementing tasks related to the championships. The Internal Security Agency (ABW) will implement a general Polish project entitled “Antiterrorist operations during international sports events. The role of National Antiterrorist Centres.” The ABW project is aimed at developing cross-border cooperation and the coordination of National Antiterrorist Centres in the area of prevention, vigilance and management of the consequences of terrorist attacks. Source: www.abw.gov.pl 4/2011 :: polish market :: 53

Wedding rings from Opole PZ Stelmach will invest in Opole, in the area of the Wałbrzych Special Economic Zone INVEST-PARK. It will construct and equip a modern wedding rings factory for PLN7 million. The company is the third Polish investor in the Opole subzone. It dates back to the beginning of the 19th century, which is when the great-grandfather of the current owners completed studies at the Imperial and Royal College of Art in Zakopane, majoring in figural sculpture and goldsmithery. In this way he started a family tradition which contributed to the launching in 1979 of a goldsmith workshop in Opole by Leon Stelmach. Today’s investor, PZ Stelmach, emerged from this company. The enterprise, which first dealt with manufacturing silver and gold jewellery, after 1989 became specialised in manufacturing wedding rings. At the beginning, production in the company was based mainly on mechanic- manual technologies. Today PZ Stelmach uses the most modern CNC-technology-based machine tools. Owing to modern solutions and long tradition the company may now realise even the most complex projects. The investment within the Opole Subzone is worth PLN7 million and is expected to generate 20 new jobs.

New jobs in Września Nearly 130 people will be employed at the Flex Films Europa facility in the Września subzone. A plant producing modern polyester foil used in food packaging will be constructed on a 6 hectare plot. The investor Flex Films Europa is part of the Indian Uflex Ltd. Group. Września will be the second, after London, place in Europe where the Group’s company will operate. It also has factories in Egypt and Mexico and employs over 5,000 people worldwide. It is worth emphasising that the products of the Uflex Group reach customers in over 100 countries. The polyester film produced in the Wałbrzych Special Economic Zone INVEST-PARK will be exported around Europe, and, in the subsequent stage of the company’s development, also to international customers. The value of Flex Films Europa’s investment in the Września Subzone is estimated at PLN190 million.

Mielec Special Economic Zone issues its 200th permit On 11 March 2011 MPC METAL received a business activity permission from the Special Economic Zone EURO-PARK. The investor declared to create 35 new jobs and invest PLN7 million. MPC METAL is planning to purchase a plot with an area of 1 ha in the Lublin Subzone, and build a manufacturing plant (approx. 1890 sq.m.), together with

54 :: polish market :: 4/2011

the supporting infrastructure, and to purchase two specialist technological lines for producing wire and drawn bars. MPC METAL will process mainly rolled products made of low-carbon steel for general use, medium-carbon construction steel and free-cutting steel. MPC METAL, with headquarters in Lublin, was founded in 2010. The main field of the company’s activity is manufacturing wires and bars. The final products manufactured by the company have wide applications in the automotive and furniture industries, construction, hammered metalwork and art blacksmithery. MPC METAL is planning to export its products to Eastern markets (Russia and Ukraine) and to increase its share on the Polish market (the automotive industry and electrical machinery industries).

Zakłady Azotowe Puławy in the Starachowice Special Economic Zone On 3 March 2011 the board of the Starachowice Special Economic Zone granted another business activity permit. Zakłady Azotowe Puławy plans to launch production of a new solid fertiliser PULGRAN® S plant based on urea and ammonium sulphate, which is an innovation on the Polish market. This is the third permit issued for ZA Puławy. The company will conduct its business activities in the Puławy subzone (the Puławy Commune, Puławy District). By the end of April 2013, the company is planning to incur investment expenditures in the amount of PLN68 million, while by the end of June 2020 it is planning to increase and maintain employment at the level of 85 people. The completion of the investment is planned for the end of June 2013. This is the fifth permission issued by the Starachowice Special Economic Zone in 2011.

The French company Biosyntec in Poland The French biotechnological company Biosyntec has purchased the majority package (70%) in Lubelskie Zakłady Tytoniowe (Lublin Tobacco Factory) for approx. PLN32 million. In the next 4 years, the company is going to invest approx. PLN100 million and, using patented technology, start the manufacture of modern filters reducing the amount of harmful substances in the smoke inhaled by tobacco smokers. The investor also plans to create up to 1,000 new jobs. The investor selected Poland as a location for the investment project owing to the support of the Polish Information and Foreign Investment Agency (PAIiIZ). ::

Polish Presidency

What is the EU presidency really about? Managing legislative work is a core of a modern presidency. After the Treaty of Lisbon, the presidency will probably be perceived as less ambitious, but the ability to form solutions to be accepted by all EU states cannot be overestimated.

At present, there are two concepts that are mistakenly used interchangeably. It is the European Union presidency and the presidency of the Council of the European Union. The latter can generally be limited to running a particular institution, which is closer to the current treaty provisions, though the concept of the presidency itself goes beyond this regulation. What is more important, the area of external relations is no longer the dominant characteristic of the presidency. So what is the role of the country holding the presidency of the EU Council? The first task of the presidency is connected with forming an agenda. Right now, the Polish presidency is at the stage of finalising an action plan. At this stage alone there is the problematic issue of whether it is an action plan for the Council or the EU. From Poland’s formal point of view, it is for the Council. In reality, however, its actual activities go beyond this narrow concept. This can be seen at the moment, when the Hungarian presidency takes action in order to evacuate EU member states’ residents from the territory of Libya. We are living in a very interesting time from the point of view of shaping the presidency. Reactions to and the way of acting in Libya show that with the current

Parliamentary elections will be held in Poland, during its presidency of the Council of the European Union. This is an additional challenge, because the plan for the presidency should be prepared in a way that it can be realised from the viewpoint of other political options. It also introduces an additional uncertainty concerning the time needed to form a new government.

legal situation it is very important how large countries implement their own plans within the framework of a larger context, which is the EU. Another type of task, which awaits every presidency is managing the work inside the Council of the European Union. This is the core of what the presidency dealt with in the past and is dealing with today – to reach an agreement in the EU Council among the 27 member states. The technical effectiveness of the presidency in this area is especially important. It means diplomatic talent – to lead the proceedings and reach a compromise, which is set in the context of the obligation of transparency and neutrality towards other countries. The third essential task of the presidency is the representation of the Council of the EU. It mainly concerns the EU institutions. It is worth emphasising, however, that there have emerged the areas of competition or prospective cooperation, between the presiding state, the European Commission (EC), the European Parliament (EP), and also the EU permanent President, Herman van Rompuy and the High Representative of the EU for Foreign Affairs, Catherine Ashton. An example of such an area is implementing the legislative programme of the EU, which has to be done in cooperation between the presiding state and the EC. Similarly, at the level of representation, meaning the actions of the presidency, there is also some rivalry between the presidency and the EC along with the EP. Various

institutions are responsible for the representation of the Council of the EU: the rotating presidency, but also Herman van Rompuy and Catherine Ashton. As a result, we can observe a very interesting case of breach when it comes to the practical representation of the Council as a system for running the affairs of the member states. It is a hybrid presidency.

Irrespective of the priorities formulated by Poland, it may turn out that actual priorities will be imposed by reality. The situation in North Africa and the resulting migrations will probably be the dominant problems for the Polish presidency, both in terms of politics and finances.

Equally important is the issue of political responsibility. In the past, this was discussed by the presiding state. Today it is impossible, because it is among the responsibilities of the permanent President. Thus, the EU Council has become a more distinctive institution, but less personified and less political. That is why, now, the political responsibility understood as a benefit, in the case of success, or the responsibility for failure, is ”available.” It is an area in which we can expect an initiative of the member states. To sum up, after the Treaty of Lisbon, the rotating presidency has been weakened, but it is still extremely important for the cooperation of the Council of the EU with the European Parliament, and thus for the regulation of the basic rhythm of the EU’s internal life. ::

By Sandra Wierzbicka, based on the speech of Leszek Jesień PhD, during the meeting organised by the Polish Institute of International Affairs (PISM) on 4 April 2011.

3/2011 :: polish market :: 55

Polish Presidency

The priorities of the Ministry of Regional Development for the Polish presidency More than one-third of funds in the current EU budget have been earmarked for the implementation of tasks defined by the cohesion policy, one of the most important EU policies contributing to the development of all regions of the European Union. No wonder it will be one of the main elements in the discussion on the shape of the future financial plan of the EU. Jerzy Bojanowicz “The negotiations on the future EU budget, i.e. the long-term financial framework for the years 2014-2020, will be our top priority during the presidency. We intend to talk mainly about the future of the cohesion policy. We expect that in July the European Commission will present the regulations in the form of norms related to the shape of this policy in the future budget; specifically the guidelines on who will receive the money, for what purpose and what will be the transitional regions,” said Elżbieta Bieńkowska, Minister for Regional Development, at a press conference held on 4 April. There will definitely be changes, because in November 2010 the European Commission adopted the 5th Cohesion Report, which outlines their direction. “They concern a greater thematic focus, which means narrowing intervention areas to a few at the European level, from which each member state will be able to choose for itself the most interesting ones, or the narrowing of the number of targets that can be implemented. This thematic focus will have to relate to the aims of the Europe 2020 strategy; up to now there has been no direct relationship between implemented projects and the all-European strategy. Another important element which we can expect in the regulations is the so-called conditionality. The EC proposes making the possibility of using EU funds dependent on

The dozens of events organised by the Ministry of Regional Development in cooperation with partners from Poland and abroad include the following conferences: • “The cohesion policy based on results” (Gdańsk, 7–8 July); • “The territorial dimension of the European Social Fund” (Warsaw, 29-30 September); • “An integrated approach to development - the key to a smart, inclusive and sustainable Europe” (Poznań, 24 November); • “Effective instruments of territorial development” (Warsaw, 24-25 October) and • A meeting of General Directors for Regional Policy, Territorial Cohesion and Urban Development (Warsaw, 3-4 November); • An informal meeting of Ministers for Regional Development, Territorial Cohesion, Urban Development (Poznań, 25 November); • A meeting of Ministers responsible for the cohesion policy (Brussels, 14 December)

56 :: polish market :: 4/2011

ex-ante compliance of member states with certain conditions. They may involve legal rules, for example the implementation of directives, or their parts, connected with particular investments, having appropriate strategies or proving that we have adequate institutional capacity to implement projects,” says Waldemar Sugocki, Undersecretary of State in the Ministry of Regional Development (MRR). Minister Bieńkowska intends, using the experience of the short period from 2004 to 2006 and the current period (2007-2013), to show and convince the EU partners that the cohesion policy is the only EU development policy which involves a wide range of matters: from very widely-understood infrastructure issues to “soft” social activities. “By the end of our presidency in December we want to have as many matters resolved as possible, and we are going to ‘prepare’ other matters for the next countries to hold the rotating presidency: Denmark and Cyprus, so they can have a very clear vision of the functioning of the cohesion policy in the following period. For Poland the most important thing is to obtain at least the same amount of funds as in the current budget and we would like the ‘contents’ of the cohesion policy to be suitable for us, and all Polish regions and cities to find their place in it. Therefore, the most important issues include ensuring a smooth course of negotiations on the set of regulations for the cohesion policy after 2013 and arriving at a far-reaching consensus in selected areas, showing a new face of a results-oriented, efficient and developmental cohesion policy, i.e. the

reinforcement of its attributes (an integrated approach to development and results-orientation) as a territorial development policy under the new EU system of economic governance and the Europe 2020 strategy, and increasing its priority. We intend to summarise some topics at the meeting of the General Affairs Council in December.” The programme of the Polish presidency on the cohesion policy will be based on two main themes, which are intended to organise work on its shape in the next programming period: an integrated approach to development and orientation of the cohesion policy on results. The first topic will involve issues relating to strategic planning, instruments for supporting territorial development (including special solutions for cities, the functioning of the European Territorial Cooperation and the European Grouping of Territorial Cooperation, the inclusion of the European Neighbourhood and Partnership Instrument in the cohesion policy and the territorial dimension of the European Social Fund), the Territorial Agenda, the challenges for a multi-level governance system in the cohesion policy and conditionality based on the mechanism of the so-called preconditions. The second topic will primarily concern the issues of conditionality based on results (the system of rewards and punishments associated with the implementation of the objectives set out earlier), the thematic concentration of European funds (while retaining flexibility), the strengthening of evaluation tools (evaluation as a basis for making strategic decisions) and the development of a uniform system of indicators. Depending on the stage of advancement of informal discussions in the EU at the time of taking over the presidency by Poland, the priority list may be supplemented with the architecture of the objectives of the cohesion policy, the implementation system and the financial management system, and general principles. ::

Law & Taxes

Polish Ministry of Finance is planning to diminish most popular in Poland tax haven Polish tax regulations allow entrepreneurs to optimize their settlements by engaging foreign tax regimes. The optimization in question is in compliance with Polish and international regulations and does not usually lead to any tax exposure. Paweł Jabłonowski

The Head of Tax Department, Chałas &Partners Law Firm

Cyprus is one of the most preferable tax regimes among entrepreneurs due to several reasons: its general corporate income tax rate is 10% and is the lowest within the entire European Union, dividends received by a Cyprus company from a foreign subsidiary may be exempt from tax in Cyprus, Cyprus is the EU country and has concluded over 45 tax treaties on double tax avoidance. Cyprus has also access to EU Directives such as the EU Parent-Subsidiary and the EU Interest and Royalty Directive. As it is often a crucial issue, Cyprus offers good conditions for entrepreneurs willing to operate on Ukrainian market, due to withholding tax exemption for dividends. The legal conditions described above are very tempting to foreign entrepreneurs that may receive tax exempted dividends, provided dividends are paid by Cypriot (holding) company instead of directly to its shareholder by Polish company. The interposition of a Cyprus holding company can lead to the avoidance of any withholding tax over the dividend stream. The dividends from a Polish company to the holding company should be exempt from withholding tax based in the implementation of the EU Parent-Subsidiary Directive in the Polish tax legislation. According to Cyprus’s internal legislation, dividends received from a Polish company and subsequently distributed to final shareholders will be exempt from Cyprus withholding tax. Moreover, according to the tax treaty between Poland and Cyprus, any capital gain generated by the Cyprus holding company upon the sale of a Polish company may be taxed in Cyprus only. Most of entrepreneurs may imagine the situation where Polish

company owns expensive real estate and, instead of generating income in Poland upon real estate sale transaction, the Polish company is subject to sale generating capital gain, however in Cyprus not in Poland. Cyprus is very attractive for individuals that generate income upon capital gains, especially owners of legal entities distributing profits by dividends. Usually such profit is subject to 19% income tax rate, but use of a Cypriot company allows to decrease the rate in question to 9%. This is because upon distribution of profits by the Cyprus company, a Polish individual shareholder get a credit for deemed Cyprus withholding tax, irrespective of the fact that Cyprus does not levy withholding tax on dividend distributions to foreign shareholders. According to the treaty on double tax avoidance concluded between Poland and Cyprus, the Cypriot withholding tax on dividends is deemed to be 10% of the gross dividend distribution. It should be noted that withholding tax in Cyprus is not deducted, however according to the above mentioned treaty, an individual is allowed to the deduction in question, irrespective of whether the withholding tax in Cyprus was levied or not. The above possibility is based on the English wording of the treaty concluded between Poland and Cyprus that prevails upon interpretation. The Polish Ministry of Finance is aware of the mechanisms provided by the treaty between Poland and Cyprus and has initiated attempts to renegotiate this agreement. This step has confused most taxpayers taking advantage of the described tax sparing scheme. Due to the fact that the treaty on double tax avoidance is in fact an international

agreement between two countries, renegotiations of its content take a long time. It should be stressed that Cyprus is probably not interested in any modifications to the treaty. As the consent is met between two countries, each country should carry out proper legislative procedures. Many years may pass until the tax sparing scheme would not be applicable to certain distributions. Entrepreneurs may take their time to plan and accomplish pending (e.g. liquidation of the company) transactions, however the modification of the treaty proposed by the Polish Ministry of Finance will not come as a surprise due to the vacatio legis required when new legislation comes into force. Elimination of the tax sparing scheme on dividends distributed by Cypriot companies will not diminish benefits of this tax regime. Even basic trade activity may benefit from 10% corporate income tax levied in Cyprus, providing entrepreneur setup holding company in Cyprus, that generate income on trade transactions. It should be pointed out that the movement of goods does not have to follow a formal chain of transaction, therefore in order to be sold to or by a Cypriot company goods are not required to be physically transferred to or from Cyprus territory. Entrepreneurs should also remember that some legislations are very convenient to create so called “financing vehicles”. Poland has concluded treaties on double tax avoidance with countries that do not have thin capitalization rules, which would disallow interests deduction to the extent that debt/equity ratio exceeds a certain level and also do not have withholding tax on interests paid to the lender. The schemes that are applicable according to double tax avoidance treaties concluded by Poland are numerous and may be tailored to individual requirements of the transaction, therefore it is not probable that tax opportunities given by Polish legislation combined by treaties would diminish in the future. :: 4/2011 :: polish market :: 57

Finance

A summary of 2010 and in the banking industry The Year 2010 The situation in the financial markets The Polish economy and financial system remained unaffected by the debt crisis that had taken place in some of the eurozone countries. A stable economic basis in Poland and the strong zloty resulted in the inflow of foreign investors to the Polish capital market. Growing interest was observed both in shares and bonds trading. According to the analysis by the International Monetary Fund, Poland recorded the biggest inflow of capital compared to other emerging markets, as far as the size of the shares and bonds market was concerned.

The situation in the banking sector Although price conditions grew softer, annual credit growth for companies remained negative in 2010. Last year the criteria for obtaining mortgage credits grew stricter, especially during the second half of the year. This situation was caused by the necessity to meet the requirements of Recommendation T. At the same time, growing competition in this sector resulted in the lowering of credit margins. Particular banks decided to reintroduce the possibility of obtaining foreign currency credits, which had been previously withdrawn at the turn of 2008/2009. The segment of consumer credits dedicated to individual households was the one which was the most influenced by the stricter credit policy of banks. As far as consumer credits are concerned, this stricter policy was caused not only by factors influencing credit policy in all market segments, but also by a significant deterioration in the quality of the so-far granted credits’ portfolio.

58 :: polish market :: 4/2011

Credit risk The quality of the credit portfolio in banks continued to deteriorate in 2010 but the process was slower than in 2009. The cost of credit risk was centred around the portfolio of consumer credits. The quality of mortgage credits granted in both foreign and Polish currency was stable. The growing cost of credit risk was a natural consequence of slower economic growth; however, it also reflected the soft credit policy adopted by the banks during the period of rapid development of credit activity, especially in the consumer credit segment. The high quality of mortgage credit was maintained in Poland and the phenomenon of subprime credit did not take place. Nevertheless, the low and deteriorating quality of consumer loans appears to be alarming. Intensive competition between banks in order to secure stable finan-

The speech delivered by Marek Belka, President of the National Bank of Poland (NBP), during the conference of the NBP and the National Association of Cooperative Banks on 14 February 2011. Written down and edited by Sandra Wierzbicka.

cial resources was gradually growing weaker in 2010, which resulted in lower financing costs for the banks. The value of financial commitments made by the banks to their foreign parent companies remained stable, which is proved by the fact that foreign parent banks are continuing to renew the financing of their Polish subsidiary companies. The fact that there are a number of banks whose major financial resources come from parent companies may be considered as potentially negative. This fact is the more disturbing, because the resources obtained in this way serve to finance foreign currency mortgage credits, and this constitutes a major problem from the National Bank of Poland (NBP) point of view.

Financial results Faster economic growth in Poland contributed to improved financial

Finance

prospects for 2011 according to Prof. Marek Belka results in this sector. The slower rate of growth in credit impairment write-offs and operational costs played the biggest role. But the financial results remained lower than in the period before the crisis. As far as the profitability of activities is concerned, the diversity of banks has grown. The majority of the positive financial results of the sector were achieved by the six biggest banks. At the same time the number of banks which recorded losses did not fall, and was even significantly higher than the average from before the end of 2008. Some of the medium-sized and small banks specialising in credits dedicated to individual households recorded a negative rate of profitability, which was caused by the deteriorating quality of consumer credit portfolio.

The equity situation The equity position of banks grew stronger in 2010. Banks’ own in-house funds have grown as a result of shares issues made by several commercial banks which refrained from paying dividends in 2009. Solvency rates remained stable and on a high level, now standing at 13.7%. The majority of the assets in this sector remained in the banks whose solvency rate exceeded 12%. None of the banks required public financial assistance.

The Year 2011 Prospects As the growth in GDP is expected to slightly exceed the level of 4%, the situation in this sector should continue to improve, and the company demand for investment credits should grow gradually. High demand in the housing market will continue. The improvement in the job market situation should stop the tendency for further deterioration in the quality of credits available for individual households and companies. The risk of consumer credits granted during the period of relaxed crediting policy should not grow higher, and the quality of credits granted in

the second half of 2009 should improve significantly as a result of stricter crediting policy in this segment. As far as mortgage credits are concerned, slow growth in the rates of credits whose impairment loss is confirmed is to be expected. It should be emphasised though that a favourable macro-economic scenario may lead to the risk of an excessive growth in credits. The risk is currently low; however, as the economic situation improves, it may grow, especially in the field of mortgage credits. Rapid growth in credit activity in this segment could be particularly alarming, if its main source of financing proved to be capital inflow. NBP participates in the work of the Polish Financial Supervision Authority (KNF), which aims at reducing the possibility of such a risk. We do endorse Recommendation T and limiting the number of foreign-currency credits. According to the NBP, foreign currency credit mortgages should be considered a niche market product available to special types of borrowers. Alteration of Recommendation S – Recommendation S2 – should, in our opinion, provide maximum value limits for foreign currency mortgages granted to individual households. The prospects for global economic conditions remain far from certain. In Europe, the growth in the public debt of developed economies is highly disturbing, and brings up the question of the long-term solvency of some of them. Many countries have taken consolidation efforts, which are going to have a shortterm negative influence on their economic conditions. The issue that debts incurred by Anglo-Saxon countries and the USA may cause a tendency to raise the interest rates of debt securities can be heard more and more often. In such a case, the “second capital” scenario may take place. In order to estimate the influence of such dark scenarios, the NBP has applied the socalled macro stress tests which were designed to prove the resistance - or the lack of it - in the Polish banking sector. During the test, three scenarios were analysed:

:: The baseline scenario – corresponding to the path of the macroeconomic projections made by NBP; :: Shock scenario No.1 – assuming a slowdown in global economic growth in the years 2010-2011 as a result of the exhaustion of the results brought about by stimulus packages and the introduction of stricter fiscal policy in order to secure the solvency of different countries; :: Shock scenario No. 2 – combining shock scenario No. 1 with growing distrust of financial markets in Poland resulting in the growth of profitability of treasury bonds and introduction of stricter fiscal policy in Poland. Test results have shown that the majority of the banking sector is ready to absorb the results of such scenarios by means of their own capital and profits. The sensitivity of banks to the potential growth in the credit spread of Polish treasury bonds is low, due to the fact of the rather short duration of bank portfolios. It may be said, then, that the Polish banks have passed the stress tests. It should be remembered that the Polish economy is characterised by a low banking penetration ratio on the one hand, and high profitability of banks, as well as their high position in international structures, on the other. This may lead to the rapid expansion of the banking sector in Poland, which could be observed during the sale of BZ WBK by AIB. Should any consolidation phenomena take place in the Polish banking sector, the number of parties interested will be very high. We cannot exclude the possibility that when the expansion made by large banking groups in Poland is so strong it will lead to an internal lack of balance. ::

4/2011 :: polish market :: 59

Finance

Early warning indicators Experts are agreed that Poland will still be one of the fastest growing European economies this year. Almost all projections put the country’s GDP growth this year at around 4% or even more. Eugeniusz Śmiłowski PhD Morgan Stanley forecasts the growth rate of 4.4%, JP Morgan 4.2%, the National Bank of Poland 4.2%, the World Bank 4.1%, OECD 4% and the Ministry of the Economy over 4%. Only projections made by some domestic banks are lower, ranging from 3.5% to 3.8%. The strong March data on production, sales and employment seem to confirm the projections. But findings of business climate research, especially consumer sentiment surveys, conducted by various research centres call for much greater caution. Such indicators are regarded as important data supplementing official quantitative statistics and for this reason are worth taking into consideration when making projections and drawing economic growth scenarios.

Eugeniusz Śmiłowski PhD, Member of the Statistical Council

Business climate in industry, construction, trade and services The March business climate indicators published by the Central Statistical Office (GUS) indicate an improvement in the business climate in Poland. The general business climate stood at +4 (against +2 a month earlier) in manufacturing, -5 (against -9 a month earlier) in construction, and -1 (against -3 a month earlier) in retail trade. In the service sector, the most optimistic assessments came from

Pengab banking indicator – ZBP/Pentor

25 20

PESK

PENKON

OGD

15 10

5.6

5 0 -5

-3.1

-2.1

-10

-9.6

-15

-8.6 -9.4

-13.9

-10.0 -14.4

-20

-19.3

-25

-28.4

-30 2007 M03

-19.0

2009 M03

2010 M07

2010 M09

60 :: polish market :: 4/2011

2010 M11

2011 M01

2011 M03

businesses providing financial and insurance services and those operating in the information and communications sector. The indicator stood respectively at 29.8 and 16.5 and was slightly lower than in February for the former businesses and slightly higher for the latter. The most pessimistic indicators were in the “other service activity” and transport and materials management sectors – respectively -5.1 and -3.1. Positive figures indicate that the business climate is favourable, negative ones indicate that it is unfavourable and that pessimists outweigh optimists. The March business climate indicators are slightly lower than those recorded a year earlier. And even for the positive indicators, the number of optimistic responses is in most cases only slightly higher than the number of pessimistic ones. The HSBC Poland Manufacturing PMI (Purchasing Managers’ Index) compiled by Markit has behaved in an ambiguous manner this year. In March it rose to 54.8 after drops in January and February. Any figure greater than 50.0 represents an overall improvement in business conditions in the sector. Compared to February, there was a major increase in new domestic orders and production growth while foreign orders remained strong. Inventories declined. Purchasing activity and job creation accelerated in March but costs and prices were on the rise. It is worth adding that the March reading of the PMI index for Poland was among few in Europe indicating an improvement in business conditions in the manufacturing sector. Other research centres have also obtained varied business climate research results in the first quarter of the year. The Research Institute for Economic Development of the Warsaw School of Economics (IRG SGH) recorded a further deterioration in the business indicator

in manufacturing (by 5 points) in January, followed by an improvement by 2 points in February, however, mainly in the private sector. Meanwhile, the Gdańsk Institute for Market Economics (IBnGR) signalled a successive improvement in its current business indicator in February and March, by 0.6 and 13.0 respectively, and an improvement in the leading indicator since January. Its March reading (25.4) is almost identical with that in February. According to the IBnGR, the improvement in business conditions is stronger in the trade and service sector and in manufacturing than in the banking sector.

Business climate in the banking sector The main business climate indicator in the banking sector is Pengab, calculated by Pentor for the Polish Bank Association (ZBP). This year’s readings of the Pengab index have hovered around 30 points – 28.9 in January, 30.8 in February and 30.0 in March – and have been slightly lower than the 2010 average of 30.9. This means that the climate in the banking sector is good and stable, although the cycle-trend indicates that it has slightly deteriorated compared to the previous year, largely because banks have tightened lending criteria to meet new requirements imposed by the Polish Financial Supervision Authority (KNF). In March GUS recorded even higher optimism, with the business climate indicator in the group of businesses providing financial services, excluding insurers and pension funds, standing at 36.7. However, the reading is lower by 5.7 points than a month earlier.

Consumer sentiment The readings of consumer sentiment indicators are the most surprising. At least three research centres reported a strong deterioration in these indicators. The current consumer confidence index calculated by GUS stood in March at -29.0 pct. points, down by 4.0 pct. points, while the leading index was at -34.1 pct. points, down by 4.9 pct. points. The two indices may range in value from -100 to +100, with

Finance 50

the negative figures indicating that the number of pessimistic assessments is higher than that of optimistic ones and the positive figures indicating that it is the other way round. The GUS indices are by over 10 points lower than a year earlier. In March, compared to a month earlier, consumers were more pessimistic in their assessments of the economic situation of the country in the past 12 months and predictions for the next 12 months, with the two indices falling respectively by 7.4 pct. points and 4.9 pct. points, and in their assessments of unemployment and changes in the financial situation of households expected in the next 12 months, with the indices going down by 4.6 pct. points and 4.5 pct. points. Assessments of households’ potential to save in the next 12 months, changes in households’ financial situation in the past 12 months and their current potential to buy were also pessimistic, with the indices dropping by respectively 3.1 pct. points, 2.1 pct. points and 1.3 pct. points. The Penkon consumer sentiment index calculated by Pentor declined in March by 12.4 pct. points to -34.9 (the index may range in value from -100 to +100). Such a low reading had been earlier noted only temporarily two years ago when the impact of the global financial crisis on Poland was the strongest. Opinions about the value of the zloty deteriorated sharply, with almost two thirds of those surveyed, or by 12 pct. points more than in February and 28 pct. points more than a year earlier, projecting that the Polish currency would lose in value. Almost half of those surveyed (46%) said the economic situation in Poland was bad while 45% feared it would deteriorate further in the next 12 months. As much as 38% of households said their financial situation was worse than a year earlier while 28% feared it would deteriorate in the next 12 months. The deterioration in current assessments of the country’s economic situation and the financial condition of households and expectations for the future was noted in all social classes and occupational groups. The IPSOS research agency also reported a strong deterioration in consumer sentiment. The IPSOS consumer confidence index fell in March by 10.47 pct. points to 76.23 points, the economic climate index fell by 15.46 points to 59.37 pct. points and the propensity to buy index fell by 7.14 points to 87.48 points. The IPSOS indices may range in value from 0 to 200 points. Figures below 100 mean that pessimists outweigh optimists. Inflationary expectations have also grown strongly. According to the National Bank of Poland (NBP), the inflation rate expected by households in 12 months rose in March to 4.6% from 3.2% in February. Bankers surveyed by Pentor expect that prices will grow this year by an average of 4.17% while in February a 3.63% increase had been expected. Rising food and fuel prices were the main reason behind the dramatic deterioration in consumer sentiment. However, they were not the only reason. Another one was the government’s determination to reduce contributions to the Open-Ended Pension Funds because it made many Polish people realize that the situation of the national budget was really bad if the government was forced to take such unpopular measures. Consumer moods must have also been affected by the news of the disastrous consequences of the recent earthquake in Japan and the war in Libya, contributing to public anxiety. The sharp deterioration of consumer optimism, and consequently reduced purchasing activity, may soon result in a drop in internal demand, which is the main driver of economic growth in Poland. But despite the warning signals reflected in the business and consumer indicators, there are many factors indicating that the Polish economy has strong fundamentals and that the economic revival will last. ::

32.1

34.8

30.3

29.6

2010 M06

2010 M07

31.8

30.8

30.9

29.5

29.4

28.9

2010 M12

2011 M01

30.8

0 2010 M03

2010 M04

2010 M05

2010 M08

2010 M09

projections

2010 M10

2010 M11

current assessments

2011 M02

2011 M03

overall indicator

Consumer sentiment indices – Pentor % 50 40 30 20 10 0 -10 -20 -30 -40 -50 -60 Jul 2000

Jul 2001

Jul 2002

Jul 2003

Jul 2004

Jul 2005

improvement

Jul 2006

Jul 2007

deterioration

Jul 2008

Jul 2009

Jul 2010

Jul 2011

Jul 2009

Jul 2010

Jul 2011

Jul 2009

Jul 2010

Jul 2011

indicator

General business climate in manufacturing % 30 20 10 0 -10 -20 -30

Jul 2000

Jul 2001

Jul 2002

Jul 2003

Jul 2004

Jul 2005

improvement

Jul 2006

Jul 2007

deterioration

Jul 2008 indicator

General business climate in construction % 20 10 0 -10 -20 -30 -40

Jul 2000

Jul 2001

Jul 2002

Jul 2003

Jul 2004

improvement

General business climate in trade

Jul 2005

Jul 2006

deterioration

Jul 2007

Jul 2008 indicator

Source: GUS

4/2011 :: polish market :: 61

Opinion

From exclusion to wealth Prof. Małgorzata Zaleska, PhD

The author is a member of the board of the National Bank of Poland, full professor at the Department of Banking at the Warsaw School of Economics (SGH), member of the Presidium of the Committee on Financial Sciences of the Polish Academy of Sciences.

2010, a year declared by the European Commission as the year of fight against poverty and social, including financial, exclusion is over. The time has come for a summary. It is essential that the problem of poverty and social exclusion was considered not only on a micro scale (regions and groups of people), but also on a macro scale, which has an influence on economies. It should be underlined that the problem not only concerns same poor countries but all countries, to a different degree. At the same time, the process of combating poverty and social exclusion is long-term and it is not possible to eliminate the phenomenon in a short time. It is also worthwhile to note that every one of us observes poverty and exclusion, as well as wealth, in an individual and subjective way. The official measures of these phenomena are also far from perfect, or actually, disputable. One of the commonplace measures of financial exclusion is the number of people not possessing a bank account. This measure is not perfect since it does not consider the causes of not possessing a bank account and considers only one type of financial instrument. While at the same time, the frequent cause contributing to exclusion is excessive debt and problems with paying back loans. As an example, during the last 2 years in Poland, the share of delinquent loans as part of total loans on credit cards grew by around 10 percentage points and at the end of September 2010 amounted to 17.5%. The above trend and the implementation of Recommendation T has contributed to the creation of a new phenomenon, the so called decline in the number of credit cards (by almost 16% in the course of the first three quarters of 2010). Returning to the measure of exclusion, it should be pointed out that some 78% of adult Poles have a bank account (as compared with less than 50% five years ago), and around 22% of them is not able to or does not wish

62 :: polish market :: 4/2011

to use banking services. The absence of the need to possess a bank account and a preference for transacting in cash among a considerable group of Poles should be underlined. The scale of the unavailability of banking services is mainly related to the level of education and living standard. Accordingly, the lowest level of banking is noted in the group of individuals with primary and vocational education and among the unemployed. Also, exclusion from access to a bank account concerns mainly people that are 60 years of age and older and inhabitants of rural areas. Higher banking level is noted among groups of individuals with permanent employment, including state and local government employees. At the same time, the most common access to a bank account is noted in the group of individuals with higher education, living in large cities, aged 3044 years old. A separate issue, although related to a bank account, is the level of savings of Poles, being an imperfect measure of their wealth. Unfortunately, 63% of Polish households did not have any savings in 2010, which poses them at risk of falling into financial exclusion in the event of a loss of stable income. It is worthwhile to mention that the percentage of Poles not in possession of a bank account is considerable in comparison with other EU nations. Only Bulgarians and Romanians rank decidedly worse than Poles, while Italians, Hungarians and Latvians at a comparable level. The above data also shows the close correlation between the scale of poverty and access to a bank account. Greater poverty rate occurs principally only in Romania and Bulgaria. At the forefront, in terms of having a bank account, are Scandinavians, where around 98-99% of citizens possess this basic banking product. The scale of social exclusion, including financial one, is determined primarily by macroeconomic factors. The basic method of combating

exclusion is therefore striving for national economic growth, growth of the wealth of society and for ensuring the possibility of finding employment. It is however a fact, that people possessing permanent employment are less frequently among the excluded group than the unemployed. Therefore, the nation and people governing it play a key role in the fight against social and financial exclusion. They should also place considerable pressure on increasing public awareness and education. It is financial education of society that is one of the underlying methods of fighting exclusion, which can bring results over the long, and not the short term. Therefore the issue of education should not be looked at through the prism of short election cycles, which are not conducive to long-term actions. The choice of the appropriate channel of bringing knowledge to excluded people is also important. In relation to this group of society, a particular education role should be played by labour offices and social assistance centres, since they have direct contact with excluded people. In addition, attention should be paid to the need to combat the debt spiral, in the context of a “bad debtor’s burden” with the existing credit information systems. There are many registers of debtors in Poland (for example, the National Debt Register / KRD/, Credit Information Bureau / BIK/, Register of Insolvent Debtors / RDN/), based on different criteria of listing debtors, and also storing data and making them available in different periods. It should be recommended to create a single information system on debts, which would make it easier to ascertain and implement a strategy of combating social and financial exclusion. We should all wish for ourselves that we do not feel excluded and that we have a basis to be classified as wealthy people and nation, and also that we would be able to admire people and nations that are successful. Their success should motivate us to act constructively in place of feeling useless envy. ::

Opinion

Invasion of the young In a few years’ time, the Generation Y will represent a half of the total workforce. In the United States it already does – their presence in the marketplace compels firms to reflect on new ways of acting and creates a considerable challenge to managers. Katarzyna Niezgoda

The author is president of Deni Cler Group S.A.

The Generation Y, dubbed the Millennial Generation, or the iPod Generation, refers to individuals born between 1977 and 1997. Having grown up in the computer era, they spent their youth surfing the Internet, sending e-mails and texting. It is the first generation to enjoy unlimited access to all goods and services. They are well-educated, aware of their worth (even overconfident), which translates into excessive financial expectations, something they don’t hesitate to speak overtly about – as opposed to the Generation X. They expect to be offered flexible working hours, overall comfort, and are reluctant to make any concessions whatsoever. They also have no intention to work overtime unless, with a half an hour added to their daily schedule, they will be allowed to finish earlier on Fridays. What matters is professional development and self-perfectioning – if working conditions no longer suit them, they will have no scruples to leave for a rival firm. On the other hand, as their interactions with the world are mainly through the Internet and SMS messages, they often experience difficulties handling situations which involve direct personal contact. Therefore, they expect the employer to set them goals and assist in professional development.

Apart from mentoring, it is also worth investing in coaching, individual and group alike. The latter enables employees to realise their potential and learn from each other taking turns as learners and mentors.

Whether we like it or not, the Millennial Generation cannot be ignored. The question is how to satisfy their expectations and how to make up for their deficiencies. The fundamental issue is to be given feedback. Employees from Generation Y, raised on computer games with the score visible all the time on the screen, and used to receiving immediate information updates – which impacts their relationships at workplace – look forward to receiving permanent feedback about their results and professional development possibilities. Feedback can be provided through mentoring and coaching. Three types of mentoring can be applied: group, reversed and anonymous. Group mentoring is led by a high-level manager or between individuals of an equal status. Reversed mentoring is when a regular employee assumes the mentor’s role towards his manager, which allows him to see what the work at a higher organisational level is like. It is meant to be a kind of a bridge-building between staff having different kinds of experience. Reversed mentoring works both ways – one person learns from another. In the last type of mentoring, the anonymous one, learners and mentors are selected on the basis of psychological tests, as well as their previous experience. Both sides interact through e-mail only, and thus remain anonymous. Apart from mentoring, it is also worth investing in coaching, individual and group alike. The latter enables employees to realise their potential and learn from each other taking turns as learners and mentors. Group coaching facilitates integration at the workplace, which is of vital importance if we want to introduce the Generation Y into the firms where staff belong partly

to the Generation X and thereby have a different attitude to work. An interesting example of feedback mechanisms applied at workplaces is microfeedback which uses instant messagigng and SMS messages for evaluation. Brief and concise information goes down well with the Generation Y because that’s what they are used to since the early years of their lives. Micorfeedback can for example take the form of texts sent to several employees with a request to evaluate a meeting they attended. Coaching benefits not only the employees who were born after 1977. Despite tremendous differences between them, the Generation Y and the Generation X often have convergent expectations. The problem is that the older employees, educated under the former regime and remembering censorship, are not able to articulate their expectations overtly. In one survey, staff members belonging to different generations were asked to assess the importance of eight managerial skills. The result was that both the older and the younger gave highest ratings to direct feedback. It can be assumed that there are also some other expectations that the Generation Y feel free to express and that are shared by the Generation X. After all, does anyone enjoy working overtime at the expense of their family life? Do older employees not want to be valued? At least certain changes occurring owing to the Millennial Generation will please the older generation, too. And perhaps today’s 20-year-olds, as opposed to their older colleagues who become rapidly burned out, will still be full of energy and ideas after 30 years in job. And no doubt this will be beneficial to businesses as well. :: 4/2011 :: polish market :: 63

Opinion

What is up with innovation? Andrzej Arendarski, PhD

Co-founder and president of the Polish Chamber of Commerce right from its inception

The European Commission has published its latest edition of the EU innovation ranking (for 2010). The present edition is different from the previous ones – since the adoption of the communication “Innovation Union” in October 2010, the former European Innovation Scoreboard, EIS, has been changed to the Innovation Union Scoreboard, IUS. The change does not only apply to the name, the content has also been altered. The scoreboard for 2010 is based on 25 indicators in the area of research and innovation, divided into 3 major categories. The first is called “enablers”, or basic elements enabling the existence of innovation – human resources, financing and support, open and attractive research systems characterised by excellence. The second one is “firm activities”, or the degree of innovation of European firms (investments, networks and entrepreneurship, intellectual capital). The third category is “outputs”, or the way in which innovation translates into economic gains. As argued by the EC,

thanks to the methodology, member states will be able to identify their strong and weak points, as well as improve their results in the area of innovation in terms of national reform programmes as part of the “Europe 2020” strategy. Unfortunately, even the use of new innovation level measurement instruments has not allowed the EU to surpass its rivals in this area: USA and Japan. The European Union still remains behind those two. What’s more, Europe is steadily feeling pressure from the dynamically growing China. The greatest distance between the EU and the world leaders was noted in the “firm activities” category. “EU-27 remains behind in the area of cooperation between public and private sectors, business expenditures on R&D and, compared to Japan, patents covered under the Patent Cooperation Treaty (PCT),” says the EC. Conclusion? The private sector is still the weak link in European research and innovation. Europe also remains behind when it comes to revenue earned abroad from

Year of energy The energy dimension of the Polish presidency of the EU Every six months another EU member state takes over the rotating presidency of the EU, i.e. oversees the work of the Council of the European Union. During this time, the member state in question becomes the host of the majority of EU events and plays a key role in all fields of the EU’s activity. On 1 July 2011, Poland will take over the presidency of the Council of the European Union. “If Poland only manages to recover a little from the euro crisis, 2011 will be the year of energy,” the Polish Secretary of State for European Affairs, Mikołaj Dowgielewicz, highlighted in one of his interviews. For this reason, our priority for this period should be to increase solidarity within the EU – construed among others as taking the form of an internal energy policy. Our debate, which will fit

64 :: polish market :: 4/2011

in with discussions as to the energy-related dimension of the Polish Presidency, is aimed at attracting attention to changes occurring on the Polish and European energy market. Poland is a country that has the greatest potential in respect of energy savings of all of the EU member states – our economy is 2.67 times more energy-intensive than the economies of the EU-15. For this reason, in the light of international discussions on safe and efficient energy, we will try to concentrate on modern technologies aimed at increasing energy efficiency and reducing greenhouse gas emissions, as well as energy security. We will also focus on the diversification of the supply of energy resources to this part of Europe. Poland wants to establish bilateral cooperation (within the framework of the energy policy)

licences and patents. On a high note, EU is ahead of USA in areas such as public sector spending on R&D and export of innovation services. It is worthwhile to mention that Poland has been listed in the “Innovation Union Scoreboard” as part of the group of moderate innovators, or countries whose results place them below the EU-27 average. This result should certainly give us a lot to think about. An excellent opportunity to reflect on the state of Polish innovation, its problems and future will be the 2nd Innovative Economy Congress, organised by the Polish Chamber of Commerce in June. Representatives from the research sector, prominent politicians and businesspeople will debate on how to direct Polish economy on a more innovative track. During the Congress, we will also present the results of a survey on innovation in the Polish economy. Is the situation really as the authors of the “Innovation Union Scoreboard” ranking believe? The survey is in progress, its results will be known in June. ::

between member states, in order to create a regional development strategy in relation to, for example, the Vysehrad Group or cooperation in the Baltic region. During the debate, we will not be afraid to touch upon difficult issues. We will outline the concept of domestic offset and discuss its significance as a solution allowing for the achievement of reductions in areas and regions where the costs thereof are lowest. In addition, this mechanism will allow for the flexible transfer of reductions obtained in the non-ETS sector to the ETS sector. We will also talk of carbon labelling based on carbon footprints. The provision of information on products would allow consumers to make informed decisions and could become a point to note, for example in the context of procurement proceedings. Countries placing carbon labels on their products include the Scandinavian states. Finally, we will also discuss the topic of smart grids, i.e. innovative solutions relating to electricity networks. ::

Powerful Businesswomen

On the occasion of the centennial of International Business Machines (IBM), Anna Sieńko, Country General Manager of IBM Poland, tells “Polish Market” about the company’s exceptional social policy, women’s situation in the IT industry and the outlook for 2011.

industry; thirdly, we look into the future more willingly. Maybe it lies in women’s nature to wonder what will happen next, what to do next. It helps a great deal in management.

I am an IBMer You are the first woman to hold the position of Country General Manager of IBM Poland. Does IBM bet on women? Absolutely, and right from the beginning of its existence. IBM celebrates this year its centennial, so let me tell you a bit about the company’s history. Our most important asset are people, and that’s why we have always been extremely committed to the equality policy. In 1943, Ruth Leach became the first female vice-president of IBM and the first woman ever in the United States to serve as a vice-president. It all first started with IBM! We were also pioneers making happen something that was unthinkable in the 1940s – an African-American, Tom Laster, was appointed sales manager at IBM. At that time, is was a groundbreaking social occurrence. IBM embarked on a social equality policy as early as in 1953, that is eleven years before the USA adopted the Civil Rights Act. When Thomas Watson (IBM’s legendary president from 1914 to 1956, to whom the company owes its present

name) was opening new agencies in various American cities, he would put it as a condition to municipal authorities to be given permission to employ as many women and black people as he considered necessary. There were strict regulations at that time which limited the possibility for women and Afro-Americans to work in such innovative businesses. In 1962, IBM adopted a code of business ethics. It was a remarkable step, especially given the fact that the European Union is only now drafting documents that describe how business should be run in terms of ethics, and what we call “integrity.” As regards gender equality, even nowadays IBM is very active in this field, particularly in the Asian and Latin American countries. Do you believe that there exists a female style of management? Perhaps it’s our nature that makes it exist. Firstly, we have a sense of humbleness; secondly, we always try to do our best because we are being watched very closely, at least in the IT

Will more women enter the IT industry? You have to put some effort to look for and find candidates suitable for the IT sector. When I studied computer science, there were five women in my year. On this year’s Women’s Day we invited to our premises women from the Warsaw University of Technology to talk, in an informal atmosphere, about who they want to become in the future. I asked them how many women were there studying with them. It appears that there are 5-10 female students in each year of information technology. That’s why you do have to put some effort to find really good female architects, computer programmers, or managers. But we need to make this effort, because otherwise we won’t be able to build a stronger female base on the managerial level. While talking about IBM’s people we cannot omit to ask about the staff of the newly-opened IBM’s Delivery Centre in Wrocław. The Centre was officially launched on 30 September 2010. We provide employment to science and engineering graduates, as well as experienced IT specialists with expertise in IT infrastructure management and good command of foreign languages; we are also looking for project managers. In order to enlarge the recruitment process, enrich teaching programmes and prepare students for the opportunities offered by the IT sector, we intend to cooperate closely with universities in Wrocław, Lower Silesia, throughout Poland. Currently, recruitment is going on well, the labour market is large. Graduates and experienced staff represent respectively 40% and 60% in the employment structure. Experienced staff share knowledge with their younger colleagues in our Centre. They are all based in Wrocław. Some people stay for a year or two to train and then transfer what they learned. Will 2011 be a year of economic recovery in the IT industry? Yes, the crisis is already behind us. Businesses are willing to invest in IT projects again. They no longer only seek to cut costs through IT solutions, but are primarily interested in new functionalities. Available data show that the market will be again growing in 2011. Interview: Sandra Wierzbicka 4/2011 :: polish market :: 65

Real Estate and Construction

J.W. Construction Holding S.A. – a knack for the market In 2010 the company booked the best results of all developers quoted on the Warsaw Stock Exchange. J.W. Construction Holding Vice-president, Tomasz Panabażys assures that the company’s current strategy aims to lift it onto an even higher level.

government credit subsidies, on the other that their credibility will sink after the introduction of S and T recommendations. Thus, our good results were built not only on contracts sealed in earlier years but also on running sales.

In March the company published its 2010 financial report. Despite the recent economic slowdown J.W. Construction Holding noted the best result of all developers on the Warsaw Stock exchange. Did 2010 see the global crisis out? Most importantly, 2010 restored stability to our branch. Last year our customers regained access to financing sources and received aid from the “Rodzina na swoim” (Families In Their Own Homes) programme. Simultaneously the media ran information that also mobilized many Poles, especially low-bracket earners, to buy flats. On the one hand customers feared regulation changes in

68 :: polish market :: 4/2011

Does this mean that the recent years have changed sales strategies in your branch? J.W. Construction certainly brought some changes in this respect. In 2010 there was a growing supply of new flats on the market. Developers who halted construction work under the crisis now began new projects. The market offered less and less attractive, ready-to-inhabit flats, which became very coveted by customers who like to “touch” their purchase before buying. Because of our broad work front in earlier years we were the only stock-exchange-quoted developer with a portfolio entirely of ready flats. We were able to predict our customers’ preferences, thanks to which we were able to meet our sales target (1,300 flats). Most in demand were flats measuring about 50 sq. m. J.W. Construction said it would raise its financial stability through diversifying income sources, notably by entering the commercial segment. How did this work out? We’re working hard on it. In our portfolio we have commercial projects with a total floorage of 80,000 sq. m. We hope office, trade and hotel projects will boost our growth, especially in our construction section. As planned, we are currently building the Jerozolimskie Point office tower

in Warsaw, we’re also working on several office, trade and hotel projects in Warsaw and Wrocław and preparing to start work on the Nowa Dana building in Szczecin. Possibly we will launch further commercial projects. Expanding your activity and land purchases under new projects surely need financing. Where do you get your funding from? First of all the company is in a good financial situation, largely due to payments for 1,969 new flats and debenture bond issues. We also managed to secure PLN 130 million from the market on very good conditions. We see this as proof that financial institutions have confidence in our company. The first months of 2011 are behind us and more and more developers are beginning new projects. How will rising supply influence the primary market and its prices? I’d call the current situation on the primary market stable, similar to 2010. Buyers have a growing offer of newly-built flats while the number of ready flats is shrinking. However, the supply is not big enough to push down prices, whose level settled firmly during the crisis. Also, higher VAT rates and the transfer of road construction projects near new developments from local authorities to developers can even result in higher per-square-metre prices. Moreover, the gap between offered and actual prices is decidedly smaller. A good example is J.W. Construction – we’re open to negotiations but the market leaves us little room for sizeable discounts. Nonetheless customers are quite interested in our offer, which is an optimistic sign. In March the demand was higher than in previous months, we’re also waiting for decisions about the Families In Their Own Homes programme. Developments on the primary market will also depend on new rules regarding government subsidies to mortgage loans. ::

Cementownia Warta is the leader in transportation construction in Poland The commercial portfolio of Cementownia Warta cement plant includes Portland cements and special-purpose cements for motorways, road bridges, and airport bridges. A valuable material All special-purpose cements produced in Cementownia Warta are characterised by low alkalinity, achieved owing to the unique features of limestone from the deposits of the cement plant from Jura KrakowskoCzęstochowsko-Wieluńska and speciallyselected additives for producing clinker and cement purchased from outside. “We have a stable base of materials. We can use the mined deposit for at least 70 years,” said Dariusz Gawlak, President of the Board of Cementownia Warta.

Special-purpose cements The following special-purpose cements are produced in Cementownia Warta :: cement for motorways, low alkaline – CEM I 42.5N-NA, :: cement for roads and bridges, low alkaline – CEM I 42.5N-MSR/NA, :: cement for bridges and airports, low alkaline – CEM I 42.5N-HSR/NA, :: cement for bridges and airports, low alkaline – CEM I 52.5N-HSR/NA. Together with the introduction of CEM I 52,5N-HSR/NA cement to the commercial portfolio, Cementownia Warta offers a complete set of products for transportation construction.

The manufacturing process “The manufacturing process of special-purpose cements requires high batch and process

stability at each stage of production, due to the required high reproducibility of all features of cement,” explained Sławomir Kaźmierczak, Chief Production Engineer. Some brands have additional features such as average (MSR) and high (HSR) sulphate resistance. They are made of other batch components, which is connected with a change in the process and the product of grinding the material, and the process and product of clinker firing. CEM I 52,5N-HSR/NA Cement has all the above-described features. Moreover, it meets class 52.5 resistance requirements, achieved due to the considerably smaller grain of the product. “Special-purpose cements are produced on the basis of the same aggregates as normal ones, and thus batches are manufactured according to a schedule – from extracting the material to grinding cement. The size and the duration of such schedules depend on the client’s needs, therefore they require great involvement, knowledge and experience from the workers participating in them,” said Sławomir Kaźmierczak.

Reference facilities Cement from Warta has been used for 15 years in, i.a., the surfaces of motorways, airports and engineering facilities such as tunnels, bridges, flyovers, trestles and facilities exposed to aggressive substances such as biological sewage treatment plants, dykes, canal locks and dams. “Best brand cement is our strong product line with testimonials, wide experience and proven quality for contractors. We do our best to maintain our leading position in the sector,” said Dariusz Gawlak. Special-purpose cements produced by Cementownia Warta are used in the largest transportation constructions in Poland.

Krzysztof Szczepaniak, Deputy Marketing and Sales Officer listed the projects: “Our cements are being used for the construction of the A2 motorway in the section from Nowy Tomyśl to Świecko – approximately 120 km of a two-way road with sideways and supporting facilities such as flyovers, bridges, trestles, and underground passages. We supply cement for the construction of, among others, the A1 motorway, the Bielsko Biała ring road, the S69 Bielsko Biała Żywiec express road, and the renovation of the Zielona Góra section of the S3 road. We have supplied cement for the construction of the S7 express road in the section from Warsaw to Kraków, and the S8 national road in the section from Syców to Oleśnica. This year we started supplies to sections from Piotrków to Rawa Mazowiecka and from Rawa Mazowiecka to Konotowo.” Maintaining the position of the leader is possible due to the constantly developing capacity of Cementownia Warta SA, confirmed by quality and environmental certificates NATO-AQAP 2120, PN-EN ISO 9001, PN-EN ISO 14001, PN-EN 18001. ::

CEOs after hours

How old were you when you first picked up a golf club? Around 30, but I wish I had started at least 20 years earlier. All other sports that I grew up playing are not as cool to me as golf is today. A re golf players a closed club? I don’t think so. Snobs are everywhere, so you’ll always find them in golf, but from my experience, I have met and played with many nice, down to earth people. The truth is that golf is a huge sport worldwide with millions of people playing and even more watching it. It is not yet big in Poland but I’ll bet this will change over time. Where are the best golf courses? Poland has some great courses to offer. My favorite is Rosa, near Częstochowa. It is a premium facility that’s always in great shape, has a world class design and beautiful Polish landscapes. Why do certain courses attract golfing fans and others don’t? The courses design and conditions are the most important factors. Views and the location are also critical. Golfing is for you a sport, way of relaxing or… Everyone is different but for me it’s a sport first. There is also a relaxing quality in getting out on a course and being surrounded by nature and beautiful environments. Of course walking around for 4 hours each time you play helps to keep yourself healthy and slim, too.

Is it true that you would like to be a professional golfer? The longer I play, the more time I want to practice and get better. Unfortunately though, right now my talents are more geared towards video games development than golf. So beating pros is not doable, at least not in the near future. How did this fascination start? After so many years of watching other people golf and not really being attracted to the sport I finally decided to give it a try. Suddenly my perception of that sport changed 180 degrees, I love it now.

Marek Tymiński Marek Tymiński launched his first business in 1997 (at the age of 20), and in 2011 he made it to the 87th place in Forbes list of richest Poles, with his fortune estimated at over PLN237 million (as of 4 April 2011). Since 2002 he has been the president, founder, and principal shareholder (over 51% of shares) of City Interactive, the largest producer and distributor of video games in this part of Europe. He also has nearly 90% of shares in Premium Food Restaurants, the owner of the Sushi 77 restaurant chain.

70 :: polish market :: 4/2011

Which one of your golfing partners do you appreciate the most? I like to play with my friends because regardless of who wins it’s always a good time. I also like to play with Peter Bronson, the best coaching pro I have ever met. ::

World without hunger For the third time already, Polish fashion designers are uniting to counteract child malnutrition and hunger within the Polish Humanitarian Action (PAH) campaign “World without hunger” As part of a world programme of combating child hunger and malnutrition, whose symbol is a puppet clown (Pajacyk), the greatest Polish fashion designers will dress the wooden Pajacyk puppets with garments of their design. All projects will be put on a charity auction, which will take place on 22 May at 15: 00 at the Cybernetics Centre in Warsaw. All proceeds from the auction will be donated to the programme of combating child hunger and malnutrition. The auction will be hosted by Pajacyk Ambassadors – actors Agnieszka Dygant and Tomasz Kot. Pajacyk is one of the best known PAH programmes. We have funded over 10 million meals for children with malnutrition in over 15 years in Poland. This year, designers have joined the PAH campaign with tremendous commitment to fighting hunger also all over the world, realising the power that world fashion can have on a humanitarian cause.

Dorota Wróblewska, Peggy Pawlowski, Tonia Turnau and Janina Ochojska. An unusual event at the May auction will be the ability to bid on Pajacyk puppets decorated by First Ladies Anna Komorowska and Jolanta Kwaśniewska, who are honorary patrons of this year’s auction. Undoubtedly, it will also be an attraction that during the auction, famous Polish models, including: Małgorzata Niemen, Bogna Sworowska, Ewa Wachowicz, Lidia Popiel and Agnieszka Maciąg will appear on stage. We believe that the third edition of Collection for Pajacyk will grasp the future owners of these garments, and will allow us to collect donations to be used for the programme of combating malnutrition and hunger among children. A declaration of intent to participate in the auction can be sent via email to: aukcja.pajacyk@pah.org.pl.

Dorota Wróblewska

Marcin Paprocki / Mariusz Brzozowski Tonia Turnau

Gosia Baczyńska

Peggy Pawlowski

Outfits for Pajacyk have been prepared for this year’s auction by: Teresa Rosati, Marcin Paprocki and Mariusz Brzozowski, Gosia Baczyńska, Natalia Jaroszewska,

Natalia Jaroszewska

Teresa Rosati

Photos: Eva Gampel

Events

Tourism in Poland promoted in Berlin It has been the largest of all projects to promote Poland as a tourism destination! As an Official Partner Country in the International Travel Trade Show at Berlin ITB 2011 (8-13 March), Poland presented a range of its destinations, regions, and tourism companies, not just in the Messe Berlin venue but also in the entire capital of Germany. From the formal opening ceremony, with Lech Wałęsa as an guest of honour, during which over 4,000 visitors from all over the world watched the innovative film and dance show that illustrated the new slogan of the Polish Tourist Organisation “Move Your Imagination” (by Tomasz Bagiński and Agustin Egurrola) and participated in the tasting of delicacies of Polish cuisine (prepared by chef Robert Sowa), through press conferences, seminars, trade presentations, and the ITB Convention (with the participation of Orbis president Laurent Picheral) to more than ten map and tourist guides publishers awarded in the “ITB BuchAwards 2011”. The 1.500-sq.-m fair hall which traditionally houses Poland’s presentations, acquired a new dimension this year. It was dominated by the motif of the UEFA EURO 2012 Football Championship, with special roles played by host cities Gdańsk, Poznań, Warsaw, and Wrocław, which had their own separate stands. The focal point of the exhibition were the presentations of 16 regions, supported by tourism companies. Baking St. Martin Croissants (Wielkopolska), a moving model of the Elbląg Canal (Warmia and Masuria), a sculptor creating figures of salt from Wieliczka (Małopolska) – these were only a few of the attractions that invited visitors to Polish

72 :: polish market :: 4/2011

destinations. The presentation of the cultural package of the cities also played an important role, with dance shows and festival presentations. Highlights also included presentations on Polish nature and cuisine, hotels and travel agencies, spas, and organisers of congresses and fairs. An important addition to the national exhibition was the presence of the Wrocław Opera and Philharmonic in the Cultural Tourism international hall. The promotion was supported by hundreds of posters and billboards in the urban space of Berlin, and by the “creatures” that captured popular attention. This year’s ITB attracted 11,163 exhibitors in total, and 170,000 visitors. As the Minister of Sport and Tourism Adam Giersz stated during the press conference, the presence in ITB guarantees reaching all those who are potentially interested in visiting Poland, especially from the German market, which generates over 4.5 million travellers in Poland. ITB is not the only event for tourism development taking place in spring in Berlin. Between 7 and 9 March over 1,600 people from 62 countries, which included the representatives of the Polish hotel industry, participated in the 14th International Hotel Investment Forum (IHIF), which is currently the biggest meeting of this industry in the world. The event took place during IHIF, which could have a similar significance for the Polish hotel that the construction of the first worldclass facilities in the 1970s brought to Poland as part of investment importation and the later involvement of Accor in the listed Orbis. As Alex Kloszowski, who, on the behalf

of Colliers International, signed an agreement with Eric Danzinger, CEO of the Wyndham Hotel Group, the largest hotel network in the world with more than ten hotel brands in its portfolio, told us, “IHIF is a great opportunity to present Poland as a country worth investing foreign capital in. The Wyndham Group, which was previously known primarily in the USA, will open at least 10 motels of budget brand Super 8 in Poland. Each will have 75 to 200 rooms. Our task is to find appropriate locations and recommend suitable project partners. According to the plans, each region will contain two Super 8 hotels - on the outskirts of a big city, and next to petrol stations close to main routes. Advanced talks are under way with one of the biggest petrol station networks in Poland.” :: Janusz Turakiewicz

Eric Danzinger and Alex Kloszowski

Board of Management of the Palace of Culture and Science in Warsaw offers luxurious conference and exhibition halls for organisers of congresses, concerts, events, exhibitions, fairs and banquets as well as comfortable offices for event handling and companies and institutions concerned.

Zarząd Pałacu Kultury i Nauki Sp. z o.o. Pl. Defilad 1 00-901 Warszawa tel. 022 656 77 23, 022 656 61 34 fax 022 656 62 08 pkin@pkin.pl, www.pkin.pl

Cultural Monitor

The right to self-determination Interview with Rafał Skąpski, President of the Supervisory Board of the Targi Książki Company, and the President of the Polish Society of Book Publishers.

Where did the idea to organise the Warsaw Book Fair originate from? Already for the second time Warsaw will host two competitive events – the 56th edition of the International Book Fair (IBF) and the 2nd edition of the Warsaw Book Fair (WBF). The idea to organise a new exhibition – the Warsaw Book Fair – derives from the sense of community and historical memory of the most important Polish publishers. It should be remembered that the IBF were always created and organised with the participation of publishers. The Polish Society of Book Publishers (PTWK), apart from Ars Polona, have always been a partner in international fairs, and at the time of the ownership restructuring of Ars Polona from Centrala Handlu Zagranicznego (the Foreign Trade Centre) to an employee-owned company, the sole organiser of the IBF was PTWK. Thus, Ars Polona is not the only originator of the tradition of the fair. Tradition is one thing, and brand new market experience is another. The experience of a Catholic and historical book fairs, which are organised by associations of publishers, has shown that when we cannot reach an agreement with the company which applies monopolistic practices, when we are beginning to become an object and not the subject of the event, the simplest solution is to organise an event on our own. This is not only my opinion that the community is entitled to self-determination. The Polish publishing industry needs an ambitious promotion and marketing project in Warsaw. The organiser of the WBF is the Targi Książki company, an innovative project associating publishers and the fair company, focussed on professional and effective cooperation between the publishing market and the market industry. The company was established on 9 March 2010 on the initiative of a group of Polish publishers consisting of, among others, the Bellona Publishing House, Firma Księgarska Jacek, and the Bosz Publishing House. The executive organiser of the WBF is Murator Expo Sp. z o.o., an exhibition company with recognised achievements and a significant position on the market. How many exhibitors do you expect this year? At present fairs, from a trade event, often turn into large cultural festivals, with numerous supporting events, attractive both to readers and exhibitors. What can we expect at the WBF this year? The 2nd edition of the Warsaw Book Fair will take place on 12-15 May 2011 in the Palace of Culture and Science in Warsaw. The WBF will be held under the patronage of the President of the Republic of Poland and the Minister of

74 :: polish market :: 4/2011

Culture and National Heritage. It is already known that the fair will attract much more exhibitors than in the previous year and will encourage visitors with a richer programme of accompanying events. As of today, approximately 300 of the most prominent Polish publishers have declared participation in the event. Only Znak and Muza publishing houses will be missing because, for reasons known only to them, they decided not to participate in any Warsaw fairs. Among others, the following publishing houses will appear for the first time at the WBF: from Poland – Arkady, Iskry, Wydawnictwo Czarne, and from Germany – the Frankfurt Book Fair, with a collective stand of German publishers. There will also be guests from the Czech Republic, Greece, Russia, India, Sweden and Taiwan. The WBF will also be a place for announcing many important news and awarding prestigious prizes and distinctions on the Polish book market. Among the awards will be nominations for the Gdynia Literary Prize, nominations for the Nike Literary Prize, nominations for Ikar, the Prize of the Publishing and Book Season. The fair will reveal the winners of Przecinek i kropka, the Competition for the Best Children’s Book. This is the first poll on the market concerning books for children in which the winner is selected directly by readers – parents and children. The Polish Society of Book Publishers will announce the results of the 51st Competition for the most beautiful books of the year, this year held under the honorary patronage of First Lady Anna Komorowska. Traditionally, the

awarded books will be exhibited at the fair’s exhibition. The Jerzy and Hanna Kuryłowicz Prize for translators of scientific literature will be awarded. One of the most important events of the WBF will be the presentation of books nominated for the Ryszard Kapuściński Prize, awarded for a literary report. As in the previous year, new technologies will play an important role in our fair – among others, a forum devoted to e-books and audiobooks. It is worth adding that under the auspices of the WBF already for the first time a virtual fair will be organised; apart from the direct access to the content presented on the book portal, it will be possible to chat with authors. We will join the Night of Museums – on 14 May in the Kisielewski’s Hall there will be another debate in the series entitled “Debates on the Polish authorities”, and the National Centre for Culture, focussing on Czesław Miłosz and Stefan Kisielewski. After the fair, we invite everyone to a book exhibition on Rynek Mariensztacki from 21 to 22 May 2011. Do you think that fairs are still the best kind of event for book promotion? Of course. Fairs are trade events, but first of all an opportunity to contact the reader. Today in places where books are sold the reader can hardly ever talk about books. In shops and various sales chains there are no partners to talk to about books. The profession of a book seller is nearly extinct. And people visiting a fair know that here it is possible to find out what the book can offer to the reader. It always involves creating a bond between the publisher and the author. These are also direct meetings with writers. Interviewer: Maciek Proliński

Cultural Monitor

Honorary Pearls in the category Promoting Patriotic Values and Tradition go to historians Two of the winners of “Polish Market’s” Honorary Pearls in the category Promoting Patriotic Values and Tradition are historians, prolific writers and authors of numerous books. They both write to reveal the truth about Polish history.

Professor Norman Davies, the 2008 Honorary Pearl laureate, is a British historian and a distinguished researcher of 20th century Polish history. His attitude towards Polish history is somewhat that of a traveller passionately discovering an unknown land. Yet his perspective of an “outsider” allows him to speak the truth. He writes about history in the way accessible to everyone. His best-known work include, “God’s Playground. A History of Poland,” released in the English-speaking world in 1981, but in Poland published officially only after the fall of communism in 1989 and reprinted several times since then, is a work presenting a passionate vision of Polish history to Western readers. His other important books are “Europe: A History,” sometimes called the first book really presenting the history of all Europe taking account of its peripheries and provinces ignored by historians, and “Rising ‘44. The Battle for Warsaw,” a moving depiction of the Warsaw 1944 uprising in a new light. His more recent publications are: “Europe at War 1939-1945. No simple victory” and “Europe: East and West.” He studied in Oxford, Grenoble, Perugia, Sussex and Kraków, and worked with the School of Slavonic and East European Studies at London University. Davies was honoured by Poland with the Order of Polonia Restituta and Order of Merit of the Republic of Poland. In an interview for “Polish Market” at the Pearls of the Polish Economy Gala in 2008, Professor Davies said he first became interested in Poland by a complete accident. “I came to Poland 46 years ago with a group of students who had been refused a Soviet visa entirely by accident. There was no design or plan behind it at all. (…) I was immediately struck when I came to Poland as a graduate of the great university of Oxford that I knew nothing about this country. Nobody had told us anything about Polish history. Possibly about the partitions of Poland (when it was divided up by Russia, Prussia and Austria in the late 18th century), but nothing about Polish history for its own sake. I realized immediately that there was a big subject waiting for someone to explore” he said. ::

76 :: polish market :: 4/2011

Count Adam Stefan Zamoyski 2010 winner of the Honorary Pearl, a British historian, is a member of the ancient Zamoyski family of Polish aristocracy. It could be said that Polish history flows in his veins and that connection was what had ultimately drawn him to Poland, although he was born in New York and raised in England. He promotes a clear and captivating style in writing about Polish history and also is a commentator, critic and reformer profoundly concerned with cultural heritage, its preservation and popularisation through the Princes Czartoryski Foundation over which he presides. Zamoyski is the author of bestsellers “1812. Napoleon’s Fatal March on Moscow”, “Rites of Peace. The Fall of Napoleon and the Congress of Vienna” and “The Polish Way.” He has published several other acclaimed books including “Chopin Prince of the Romantics,” “Paderewski,” “Warsaw 1920. Lenin’s Failed Conquest of Europe,” “The Last King of Poland,” and more. He was educated at Downside and read History and Modern Languages at the Queen’s College Oxford. He is a Fellow of the Society of Antiquaries, of the Royal Society of Arts, and of the Royal Society of Literature. He was honoured with the Order of Polonia Restituta. In an interview for “Polish Market” he said: “What has always surprised me when looking at the history of our nation, is the lack of consistency and concrete things. Beautiful words and beautiful ideas are tossed around, discussed and applauded, but nothing comes out of that. Laws are adopted but not enforced. Institutions are set up but somehow they do not set in. (…) The future of Poland does not rest in the hands of politicians but in the hands of the hundreds upon thousands of people who work, who build their own businesses and thus generate the country’s wealth, who will in time learn to make better use of their capital and consequently exert pressure on politicians.” ::

Photo: Wawrzyniec Kofta

Cultural Monitor

I like what I do because it gives me a sense of freedom Krystyna Kofta talks to Rita Schultz.

You are a writer, painter, columnist, blogger – what gives you the most pleasure and why? I am very capricious at work. And demanding. It means that every kind of creativity requires a different mood, state of mind. Work doesn’t give me any special pleasure. Honestly, writing is enjoyable for a top pupil who gets praised by a teacher, or for a scribbler. If I like my job, it’s because it gives me a sense of freedom, not a pleasure. I worked on my novel “Fausta” for eight years. It was very hard, because the theme was bitter: the passing of time, desperate attempts to regain youth that will never come back

78 :: polish market :: 4/2011

even if you get a head-to-toe surgery, have fat sucked out, wrinkles smoothed, breast, lips and whatever possible filled with silicon. But the problem goes deeper than that. It reaches down to unconscious fears. The two heroines are different: one of them wants to start over, live again her younger years, while the other, self-aware, reconciled with life, but depression-prone novelist (not myself, though having a lot of my features) is eventually happier. I get relaxed while painting. I write columns because I like short forms. This is always a challenge. I like punchlines, the construction. Blog is by contrast a

Cultural Monitor

totally different and completely new to me platform of contact with the reader. A rather one-sided contact, so to say. I don’t read commentaries, I don’t find it worthwhile. Initially I did, but then I realised it’s a waste of time picking the dump. Some readers email me and it’s OK. Where do you find inspiration for your artwork and how do you collect materials? How do you handle accumulated ideas so that they don’t get dispersed, don’t slip your mind? I have lots of ideas. I fiddle with them, sometimes carelessly, and forget them because I have failed to write them down. I even keep a note pad on my dresser. It’s been there for years. It happens that I make some notes at night: ideas about painting, about art, first sentences of my novels, those already written and those that have not been yet. I’m constantly collecting materials. Isaac Singer used to say that themes lie on the street, and the only thing you have to do is to pick them up. I wrote many columns, as I was watching people, other were inspired by the stories I heard. Life brings about countless themes. W hen you watch a theatre performance based on your writings, do you regard it as new piece of art? Watching one’s own drama or a film based on one’s own screenplay is often traumatic, for it’s either completely failed or poorly-played or else well-done and moving. It’s always interesting to see how differently people interpret your creation. I was upset when I first saw “Femina,” a film by Piotr Szulkin, directed somewhat against my script. Now, after many years, I find it quite good! “Salon Profesora Mefisto” was brilliantly performed in Frankfurt (Oder), exactly scene after scene, and, though in German, I believe I perfectly understood it all! That was a great experience. In Poland, this play wasn’t staged at all. On the other hand, I saw “Pępowina” in two theatres with great cast, as well as in Teatr Telewizji (TV theatre). The TV performance was the best one. Translated into English, it was shown at the Glasgow Festival which I unfortunately

didn’t attend because I hate flying! Now I regret it. It’s going to be played again, so perhaps this time I will go and see it. Do you think book fairs are needed? Of course, they are needed. It’s an injection of fresh blood, I mean an international book fair. Polish ones provide an opportunity to meet writers, to network or buy books at lowest rates, which is not without significance given current book prices. Crowds that attend them every year best prove the need to hold such events. There is a reading elite, and fortunately there are still people keen on literature! The most popular and best-selling items are handbooks. Do you think people need to have ready answers to everything, and that they only look for the simplest solutions possible? I think that people turn to handbooks to see how others behave. They want to learn something about those who find themselves in the same situation as they do. They will not necessarily follow the proposed advice; they might only choose a part of it, or perhaps nothing at all. But knowledge, even drawn from handbooks, always enriches human experience. There are outstanding medical handbooks or health encyclopaedias. Supposing that the author is not a crook, you can always learn something. I read medical and psychological literature from which I draw a lot of information. If I had started to do it earlier, perhaps I could have prevented my disease because I would have known that it is necessary to make regular check-ups even when you don’t feel pain. In handbooks, you can also find some useful tips on gardening. Likewise, I often take advice from business newspapers and programmes such as “Fakty, ludzie, pieniądze”. This is extremely interesting for me and, what is more, it helped me to go through the crisis period unharmed. I made a wise decision withdrawing my savings from aggressive funds. I’m lucky that I didn’t lose money because, as a self-employed person, I have to take care of my financial security by myself. :: 4/2011 :: polish market :: 79

Cultural Monitor

Compiled by Maciek Proliński

Master’s Anniversary

A simple, moving voice... Jerzy Skolimowski’s widely-discussed “Essential Killing” (Special Jury Prize at the 2010 Venice Film Festival, Best Film, Best Director, Best Music, Best Editing, at the Orły – Polish Eagle Film Awards) was released on DVD by TIM FILM STUDIO on 10 March. It is a moving film almost without any words – a film great in its small scale. “Essential Killing” tells a straight yet ambiguous story of an Afghani taken captive by the Americans. When he is taken to Europe for interrogation, he escapes. He is pursued and a fight for his life begins... In the 1960s Skolimowski – director, screenwriter, and actor – wrote and directed a series of highly-original films such as “Hands up!” “Barrier,” “Walkover,” and “Identification Marks: None.” They all depicted a man “tangled up” in the 20th century – his reckonings and longings. With his new film, the old master once again reveals something important about the mysterious age we are living in, which is often the scene of “anonymous evil.” His is a voice to listen to and remember. ::

80 :: polish market :: 4/2011

The co-founder of the Polish Film School, the director of “The Promised Land,” “Man of Iron,” “Katyń,” and the winner of an honorary Oscar, Andrzej Wajda, turned 85 on 6 March 2011. He debuted as a director in 1954 with “A Generation.” The true hero of our times, however, in Wajda’s view, is the legendary leader of “Solidarity,” Lech Wałęsa. Now, the director whose early films have already earned him a place in the history of European cinema, exerting influence on entire generations of filmmakers all over the world, and known for his hard-working attitude, is preparing to make a feature film about this hero. It was also in March that Wajda was awarded the highest Polish distinction – the Order of the White Eagle – bestowed upon him by the Chapter of the Order led by President Bronisław Komorowski. ::

Upcoming publishing event! The most prominent Polish directors and actors will be featured in digitally re-mastered classics of Polish cinema to be published by Agora S.A. The “Masters of Polish Cinema” series comprises 20 films to be published in 20 volumes released each Saturday until 16 July 2011. The volumes, each of which consists of a book and a DVD, are structured around directors and actors, showing the phenomenon of the Polish cinema through its major creative talents. The series was launched with a book on Andrzej Wajda, including his masterpiece “Ashes and Diamonds.” The second volume contains the long-awaited re-mastered version of “The Saragossa Manuscript,” directed by Wojciech Jerzy Has, its first DVD release on the Polish market, with a book depicting the screen legend Zbigniew Cybulski, who starred in the film. The remaining volumes in the collection will present a constellation of other Polish stars – actors Lucyna Winnicka, Elżbieta Czyżewska, Jan Machulski, and Jan Nowicki, and directors

Tadeusz Konwicki, Jerzy Kawalerowicz, Janusz Morgenstern and Juliusz Machulski. The collection will present such masterworks as Kawalerowicz’s “Night Train,” Has’s “The HourGlass Sanatorium” (its first Polish DVD release!), Morgenstern’s “To Kill This Love,” and Machulski’s “Vabank.” “Even if you have already seen the film, digital re-mastering will give you the feeling that you’re watching it for the very first time. Only digital quality will deliver an insight into the original intentions of the artist” – the book says. This magnificent film collection can finally be seen in a quality it deserves.

Cultural Monitor

Pop stars on tour in Poland

Special feature: About women in the period of socialist realism... The exhibition “Mothers, wives, and tractor drivers, or, about Polish women in the period of socialist realism” can be seen in the Regional Museum in Stalowa Wola until 15 May. The exhibition

has an interdisciplinary character, with over 130 items from museums all over Poland (paintings, graphic art, posters, and photographs) showing a highly simplistic image of the women of socialist realism: tractor drivers or “superproductive” workers with trowels in their hands... “The exhibition is intended as a practical history lesson, not just for the young generation. Apart from the interest and astonishment that something like that could have happened in culture, looking at the official art of the People’s Republic of Poland must elicit in the viewer a need for intellectual reflection and search for answers to a set of important questions. The works displayed are a testimony of their times, provoking to reflect on the use of art for propaganda, and providing more insight into the mechanisms of manipulation than into the evolution of art,” said the curator of the exhibition Aneta Garanty.

Shakira – currently one of the most exciting and popular stars in the world, will perform for the first time in Poland. The concert by the singer, who stormed the charts in 2010 with her songs “Waka Waka,” and “She Wolf”, will take place on 17 May in the Łódź Atlas Arena. The performance is a part of the global “Sun Comes Out Tour.” As the organisers claim it is a bustling spectacle that transcends all music borders. “Hollywood Reporter” described it as “an effervescent message of love from a world music diva with dance fever.” It should be added that Shakira’s latest album “Sale El Sol”

is already a double Platinum album in Poland, and still counts among the best-selling CDs in our country.

“Yellow Submarine”, “With A Little Help From My Friends”, “All You Need is Love” and many other hits will be performed by the legendary Beatles member, Ringo Starr. On 15 June the Congress Hall in Warsaw will host the first and only concert in Poland of one of the four legendary musicians from Liverpool! In 1989 Ringo founded the Ringo Starr and His All Starr Band, which has already been giving concerts across the globe for two decades. What is unusual about this band is its ever-changing lineup. Each year, Ringo takes different instrumentalists on tour. Even though the group always plays The Beatles’ hits, the changing musicians give the interpretations a unique character... And we will hear this band in Warsaw. “It was our initiative to see at least one of The Beatles in Poland,” said Magdalena Poskart from Makroconcert, the event’s organiser.

Cinema Music The 4th Festival of Film Music will be organised from 19 to 22 May in the hall of the Arcelor Mittal Poland tinning plant in Kraków. It will be inaugurated by Joe Hisaishi, a legend of the Japanese Studio Ghibli. It will be his first concert in Europe, presenting music from the movies “Spirited Away” and “Howl’s Moving Castle.” On the second day the audience will listen to “Distant Worlds: Music from the Final Fantasy” with material prepared by Nobuo Uematsu and Masashi Hamauzu. The concert will be led by one of the most important conductors in the genre, the discoverer of game soundtracks, and their promoter, Arnold Roth. Kraków’s festival will also include the premiere of soundtrack to game “The Witcher 2” composed by Polish composers Adam Skorupa and Krzysztof Wierzynkiewicz. The next day will feature a screening of “Pirates of the Caribbean: The Curse of the Black Pearl,” which will be accompanied by live music. The Festival’s special guest will be the composer of the film’s musical score, Klaus Badelt. The suite from the Polish television series “Czas honoru” (“Time of Honour”) by Bartosz Chajdecki will be presented on the Festival’s last day. ::

Jazz at the foot of the Tatra Mountains... The long May weekend from 29 April to 3 May will be the time of the Zakopane Jazz Spring. It will deliver plenty of improvised music from the very best of Polish musicians. On 30 April in Hotel Belvedere, the Top Jazz Gala run by Jazz Forum magazine will feature concerts by the Marcin Wasilewski Trio (playing their latest album, “Faithful”), voted the best acoustic band, and by Aga Zaryan and her band (who won the Jazz Forum Awards Vocalist of the Year and Album of the Year – for “Looking Walking Being”). On 1 May, the day of the beatification of John Paul

II, there will be a special concert in the Church of the Holy Cross, entitled “Santo Subito – Jazzmen for John Paul II,” with Karol Wojtyła’s poetry and Polish Eucharistic adoration songs in jazz arrangements. Among the performers will be the Marek Bałata Chamber Orchestra. During the Top Jazz Gala in Hotel Belvedere we will hear the pianist Krzysztof Herdzin, the wonderful ensemble Jarek Śmietana-Wojtek Karolak Quartet feat. Maciej Sikała, and other artists. The Jazz Spring will be crowned by “The Day of Niemen” on 3 May, with concerts by Soundrise and Grażyna Łobaszewska in Hotel Belvedere. ::

4/2011 :: polish market :: 81

Cultural Monitor

“Turandot”

according to Treliński

“Turandot” by Giacomo Puccini returns on April 17 to the Teatr Wielki (Grand Theatre) - Polish National Opera in Warsaw. The new production comes from the already proven and admired duo of Mariusz Treliński and Boris Kudlička. “The Treliński and Kudlička production of ‘Turandot’ recalls Mariusz Treliński’s dazzling debut, which was ‘Madame Butterfly.’ We welcome with high hopes this staging realized in co-production with the Teatro Comunale of Bologna. Turandot, the story of a Chinese princess, originally told by Scheherazade in ‘One Thousand and One Nights’ and

The stage design for “Madame Butterfly” attracted the attention of Placido Domingo, so much so that the Warsaw Opera team has been invited with its performance to the Washington Opera House!

82 :: polish market :: 4/2011

discovered later in the EighteenthCentury Venice by Carlo Gozzi, became one of the icons of European opera owing to Puccini and the legendary premiere at La Scala, conducted by Arturo Toscanini,” said Waldemar Dąbrowski, General Director of the National Opera. After the death of Puccini the opera was completed by his friend Franco Alfano, who used the sketches and personal guidelines left by the composer. Puccini’s opera libretto was based on Gozzi’s play edited by Friedrich Schiller. In its musical layer, “Turandot” is undoubtedly the most valuable work of Puccini. It has very tuneful melodies, great instrumentation and complex harmonies. Another remarkable musical aspect of “Turandot” is the use of a rich set of percussion instruments, such as celesta, bells and small bells, to imitate the instruments used in traditional Chinese music as the plot of this opera is set in China. Its main character is a beautiful princess, the daughter of Emperor Altoum, who, having learnt that her great-grandmother had been seduced and murdered by an unknown foreigner, decided to marry only the one who would solve three riddles posed by her... Failure to solve even one of the riddles would lead to the suitor’s death by decapitation… This true masterpiece in the hands of Mariusz Treliński is a promise of a great opera performance. Treliński – the Artistic Director of the Warsaw Opera - is one of the most talented theatre, opera and, occasionally, film directors. He became famous for his productions in the National Opera, where, together with Boris Kudlička, stage designer, he created an artistic duo which resulted in the production of musical performances breaking the classical form of an opera spectacle. The most famous are “Madame Butterfly” by Puccini, “King Roger”

by Szymanowski, and “Eugene Onegin” and “The Queen of Spades” by Tchaikovsky. Mariusz Treliński says about his work in the opera: “I want the opera theatre to be like the other arts. I want it to be a conversation among human beings. My cooperation with Boris is based on constant exchange. We influence each other. He has a lot to say about directing, and I have a lot to say about stage design. The cooperation with Waldemar Dąbrowski is similar. I am responsible for the artistic programme, but it originates from our shared conversations.” Kudlička also speaks in this spirit: “‘Madame Butterfly’ by Puccini this was certainly the birth of a common vision of style... We have worked together for several months on this performance. I think that my meeting Mariusz has shaped us both. Our cooperation has always been a conversation. The whole concept and staging originates and is born from our conversations about everything - about art, not just opera art, and about life.” But where is the “key” to success in the contemporary opera theatre? The stage design for “Madame Butterfly” attracted the attention of Placido Domingo, so much so that the Warsaw Opera team has been invited with its performance to the Washington Opera House! “Organic thinking about the whole performance is very important. Plus the mutual trust of the producers. A similar view of reality, and you have to be very frank in your opinions”, says Kudlička. In Warsaw, the main tenor part of Prince Kalaf will be sung by Kamen Chanev, a Bulgarian singer. The Orchestra and Chorus of the Teatr Wielki – Polish National Opera will be conducted by the Italian conductor Carlo Montanaro. Maciek Proliński

teatr wielki.pl

Events

Numero Uno presents March 2 saw the official opening of the exclusive Numero Uno furniture store, which brings Italian and German designer furniture recognised in the world of fashion to Polish upmarket apartments. The concept of Numero Uno captures the atmosphere of Milan’s finest furniture stores. On nearly 1000 sq. metres of arranged exhibition the products of the most exclusive furniture brands which are the trend-setters in design and architecture, like Ipe Cavalli, Selva, Emmei, Zanetta, Poggenpohl, EGO, Calia, Kettnaker and Presotto are featured. Music enthusiasts and fans of home cinema will enjoy Poland’s largest exhibition of Bang&Olufsen audiovideo equipment. A professional design studio will be opened in the store, in which architects and interior designers will help customers create unique designs for their houses and apartments. The comprehensive exhibition in Numero Uno will serve both retail and contract customers. The store will also become a meeting place for people from the art and fashion worlds; exhibition openings, fashion shows and premieres will be held there. The first of them, the Polish premiere of Porsche Design P7340 kitchen, accompanied the opening of the store. “The idea for a furniture store with world-class brands originated in response to the growing demand for luxury goods in Poland. We started looking for the highest quality, exclusive products. Numero Uno is an investment that should fill a niche on the growing market for luxury furniture and interior furnishing accessories,” says Marek Kołakowski, president, owner and mastermind of Numero Uno. The opening of the store was organised in an Oscar-style gala. The event attracted over 600 guests, including Edyta Herbuś, Krzysztof Hołowczyc, Agnieszka and Marek Włodarczyk, Małgorzata Potocka, Grażyna Wolszczak, Grażyna Hasse, Renata Dancewicz, Maria Czubaszek, and Przemysław Saleta. After the official ceremony there was a banquet and a business card drawing with

84 :: polish market :: 4/2011

Ewa Gawryluk and Waldemar Bałszczyk

attractive prizes from such brands as Bang&Olufsen, Porsche and Bistro de Paris. Stanisław Soyka’s solo concert, Angelo Mike’s DJ show and the food of excellent chef Michel Moran added splendour to the evening. The multibrand Numero Uno store is the latest investment of Mebelplast. In January the company took over Weco, a German manufacturer of furniture. The investment has significantly increased the attractiveness of Mebelplast and the opportunities for further development due to the great potential of both companies and the complementarity of their product ranges and distribution channels. Mebelplast does not exclude further development of the group through further acquisitions, and it is planning to debut on the Warsaw Stock Exchange in 2011. ::

Marek Kołakowski , president of Mebelplast

Małgorzata Herde and Edyta Herbuś

Events

a world of luxury brands

Andrzej Tyszko surrounded by ladies

Iwona Buchner

Krzysztof Hołowczyc

Marek Włodarczyk

Mariusz Pujszo

Joanna Klimas

Ewa Kuklińska

Rafał Olbrychski

Stanisław Sojka

Michael Moritz

Marcin Prokop

Grażyna Wolszczak

4/2011 :: polish market :: 85

Events

The innovation and creativity of women for economic development The conference was organised on the initiative of the Polish Patent Office, in cooperation with the World Intellectual Property Organisation (WIPO), the Office for Harmonisation in the Internal Market (OHIM) in Alicante and the Warsaw Stock Exchange.

86 :: polish market :: 4/2011

Global solutions and best practices concerning pattern design in innovative economies and in gaining competitive advantage, the processes of implementing modern pattern design in production, and problems with educating designers were presented during the session. Prominent experts were invited to participate in the conference: designers, representatives of scientific and business circles from Poland and abroad, including China, South Korea, Spain, Sweden and Britain. High-ranking representatives of the World Intellectual Property Organisation from Geneva and the Office for Harmonisation in the Internal Market in Alicante also attended the conference. After the opening ceremony prestigious distinctions were awarded by the World Intellectual Property Organisation to the Institute of Industrial Design, the Silesian Castle of Art and Enterprise in Cieszyn, 2+3d Quarterly and the City of Kielce for contributing to the development of Polish design, art and the educating of new generations of specialists in these fields. Exhibitions accompanying the event organised by individual young creators, as well as institutions and enterprises promoting pattern design, were held on the premises of the Novotel Hotel and the Warsaw Stock Exchange. Among them were the Pro-Design.PL Foundation, the Silesian Castle of Art and Enterprise in Cieszyn, Volvo Auto Poland, Muji, Domo TV, the Abonda Gallery, Happy Barok, the Association of Applied Graphic Designers, Three Mice (Trzy Myszy), the Faculty of Materials Science and Technology of the Technical University of Radom, and the Faculty of Architecture and Design of the University of Arts in Poznań, and also the designers Zofia Przybyło and Dominika Bablok. ::

Events

Product of the Year

– Innovation of the Year 2011 We already know the consumers’ choices for the Product of the Year - Innovation of the Year 2011. The right to use the distinctive red logo has been awarded to 41 new products this year

Product of the Year – the consumers’ choice The winning products were selected based on an opinion survey by TNS OBOP (Public Opinion Research Centre) commissioned by Produkt Roku Polska. Respondents nominated the most proven, reliable and innovative products. The survey was conducted through the Internet and direct interviews. Respondents were divided according to gender, age, education, and place and region of residence, so that the group of respondents was representative for the entire country’s population aged 15 +. The survey results show relevant data that might indicate how to persuade consumers to choose new products, what advantages women pay greater attention to, and what is important for men. Packaging, price, quality - we know which of these features guarantee the success of an innovative product. The survey results showed significant consumer expectations about new products on the market. The overriding objective of the project is to indicate to consumers (by consumers) of the most proven, reliable and innovative products.

“This year, just as in the previous editions of the competition, some manufacturers can boast success in several categories. These companies include Unilever, Kupiec, KimberlyClark, and Henkel. The effectiveness of the concept of the Product of the Year is primarily based on a high awareness of the logo among consumers, and the objectivity of the selection (consumers indicate the winners in each category themselves), as well as the marketing support which is provided by the organiser of the Competition – the Produkt Roku Polska company,” says Janusz Feliks, President of Produkt Roku Polska Sp. z o. o., organiser of the Polish edition of the project. ::

The logo of the Product of the Year – quality assurance Winning products are marked with a special Product of the Year red logo. It is easy to recognise the winners in stores and in television advertisements. Holding the Product of the Year title is a guarantee of quality and satisfaction from using the product, as evidenced by thousands of consumers. 4/2011 :: polish market :: 87

Events

10 years of the Kozminski Law School On 28 March 2011, the celebrations of the 10th anniversary of the Kozminski Law School took place at the headquarters of the Kozminski University. The meeting was attended by prominent law theoreticians and practitioners, including representatives of the judiciary and other organs of the government, members of law firms and other numerous guests. During the course of the celebration, which served as a chance to sum up the ten years of the law programme at the Kozminski University, honours were paid to individuals who had contributed the most to the growth of the Law School. The anniversary celebrations were capped by a national academic conference on “Privatisation of public authorities and making the public sector private. Directions and the scale of penetration,” in the course of which representatives of doctrines of different branches of law and economics took on this current and important topic in their presentations, related to the interconnection and fluctuation of phenomena in the two sectors: private and public. This ended the series of anniversary events, which had taken place during all of March 2011. The anniversary celebration for this short, though very fruitful and by imposing, growth period of law studies at the Kozminski University began on 1 March 2011 with the opening of the “10 Years of Law School” exhibition and the formal Lawyer’s Ball. As part of the anniversary events, numerous meetings, seminars, lectures and open student debates, as well as exhibitions took place, including an open presentation of the works of the Student Legal Aid Office, operating as an “emergency service” law office. Over the 10 years the Law School, has produced several hundred graduates, enjoying success on the labour market and educating themselves further in legal internship programmes. It can boast of excellent educational/research achievements of several dozen scientists working in twelve departments, 134 participants in two editions of the doctoral seminar in law, the first and successful doctoral theses in the area of legal sciences and the first PhD degrees. Also hundreds of conferences, seminars and meetings organised by the Law School alone and in cooperation with other organisations (higher education institutes and research units, foundations, public government organs and others) were held in this period. These also including the so called scientific breakfasts, to whose organisation the entire body of the Kozminski Law School contributes, in particular, students active in legal research circles. The full programme of anniversary events, including both articles and photos, is available at the Kozminski Law School’s website, at www.prawo.kozminski.edu.pl. E njoy! ::

88 :: polish market :: 4/2011

Economic Monitor

Economic Monitor February 2011

Key economic trends

formation (investment) seems to be especially important because investment had been on the decrease until mid-2010, pushing the economic growth rate down. Seasonally adjusted Gross Value Added (GVA) rose in 2010Q4 by 3.9% year on year against 3.4% in 2010Q3, with value added in construction up by as much as 7.2% year on year. This represented a major improvement compared to the previous quarter when GVA in construction had increased by 3.2%. GVA growth in the industrial sector was slightly slower but also relatively fast – 6.3% year on year. GVA growth in transport, warehousing and communications sector was also slower – 4.5%. However, the improvement in the trade and repair sector was stronger than a year earlier – up by 4.5%. In 2010Q4 GVA growth in the service sector was the lowest of all economic sectors. The increase in the gross value added of market services and non-market services was respectively 2.6% and 2.1% year on year. Non-seasonally adjusted GDP (in constant average annual prices of the previous year) grew by 4.4% year on year in real terms. In 2010Q4 the main factor behind GDP growth was domestic demand, which contributed 5.6

In 2010Q4 Poland’s economic growth slowed slightly but was still high compared to other European Union countries. In the EU, United States and Japan, GDP growth was also lower than in previous quarters. Forecasts for 2011H1 are generally optimistic. According to preliminary estimates by the Central Statistical Office (GUS), in 2010Q4, Poland’s seasonally adjusted GDP (in constant prices with 2000 as the reference year) grew by 0.8% in real terms quarter on quarter and was higher by 3.9% than a year earlier (Source: www.stat.gov.pl). The economic growth rate slowed from 4.6% year on year in 2010Q3. The rate of growth in seasonally adjusted GDP decreased for the first time in four quarters. Looking from the expenditure side, this was due to a lower rate of growth in gross capital formation and exports – respectively by 7.9% and 7.1% year on year. A slight acceleration in the growth of public consumption and gross fixed capital formation, which increased by 4.2% and 0.4% year on year, had a favourable impact on GDP growth. The increase, though small, in gross fixed capital 10

1.5%

1.4%

1.0%

2.9%

3.1%

3.7%

4.6%

2009Q1

2009Q2

2009Q3

2009Q4

2010Q1

2010Q2

2010Q3

3.9%

0 2010Q4

-5

-10

-15 Gross Domestic Product

Total consumption

Gross capital formation Source: Central Statistical Office (GUS)

Fig. 1. GDP growth rate in Poland, seasonally adjusted, Qt/Qt-4

pct. points to the economic growth rate. The contribution of total consumption was 3.2 pct. points while the contribution of capital formation was 2.4 pct. points, with investment demand having contributed 0.3 pct. points and inventory change 2.1 pct. points. The contribution of foreign demand (net exports) was negative and reached -1.2 pct. points. Source: www.stat.gov.pl

In 2010Q4 real GDP growth in the EU, the United States and Japan was slower than in the previous quarter. Seasonally adjusted GDP increased by 1.9% year on year in the EU and 2.2% year on year in Japan versus 2.1% and 4.9% in 2010Q3 respectively. The U.S. economy grew at a rate of 2.7% year on year versus 3.2% in the previous quarter. The GDP growth rate of the EU-27 dropped for a second successive quarter. In Japan, seasonally adjusted GDP growth differed significantly from quarter to quarter last year. The U.S. growth rate dropped for the first time in 1.5 years. Among the EU countries for which data were available1, the fastest growth rate in 2010Q4 was recorded in Sweden (7.7% year on year), Estonia (6.6%), Finland (5.2%) and Lithuania. Poland was in fifth place with a growth rate similar to that noted by Germany. Greece and Romania were in negative growth. Greece’s situation is steadily deteriorating. In 2010Q4 its GDP dropped by as much as 6.6% year on year. Meanwhile, in Romania, the decline in GDP is increasingly slow – in 2010Q4 the country’s GDP dropped by 0.6% year on year. In 2010Q3-2010Q4 Lithuania and Finland witnessed the sharpest acceleration in their economic growth rates while Greece, Denmark and Poland saw quite a significant slowdown in their growth. The findings of CESifo World Economic Climate surveys conducted in 2011Q1 among experts worldwide indicate that after weak performance at the end of 2010 the world economic climate improved again at the be1 D ata were not available for Belgium, Bulgaria, Ireland, Latvia, Luxemburg and Malta.

4/2011 :: Polish Market :: I

Economic Monitor

ginning of 2011. The assessment of the current situation improved compared to the previous months and forecasts for the coming months were also more optimistic than in 2010Q4. Asia and Latin America were the regions where the assessment of the current economic situation was favourable. In Eastern Europe, the assessment was poor. Expectations for the next six months were the most optimistic in North America while projections for Latin America and Asia were less optimistic.

in Germany at the end of last year. Stocking up at the end of last year, before the imposition of higher VAT rates, could have been an additional short-term factor dampening demand at the beginning of this year.

Industry In 2011M1 the rate of change in industrial output in constant prices in year-on-year terms diminished but was still relatively high. More segments of the manufacturing industry recorded increases in output in 2011M1 than in the last several months of 2010.

e BIEC (Bureau for Investments and EcoTh nomic Cycles) Leading Index (LI), which indicates future economic trends, dropped sharply in 2011M2. A one-off drop by over 4 points had been last seen in the early 1990s, in conditions which are incomparable with the present ones. It is difficult to say now whether this sharp trend reversal will be a lasting phenomenon or whether it just resulted from many unfavourable developments at the end of last and the beginning of this year. These developments include first of all global hikes in raw material and food prices and consequently the strengthening of inflationary processes which pose a threat to economic revival, coupled with the financial instability of some European Union countries and a periodical deterioration of the economic situation

In 2011M1 industrial output rose by 10.3% year on year, slightly down from 11.5% in the previous month. Growth in seasonally adjusted output also slowed a little – from 11% in 2010M12 to 8.4% in 2011M1. Throughout 2010 growth in seasonally adjusted output was in the order of 10% year on year, with the highest rate recorded in 2010M8. Since that time it had been decreasing slowly but steadily, which may indicate that output growth had already peaked and that industrial production will be growing at an increasingly slow pace this year. However, these signs need to be confirmed in coming months.

7.7 6.6 4.8

Japan

-0.6

2.2

2.7

United States

1.6

Euro Area

0.9 0.6

Switzerland

France

Portugal

United Kingdom

Hungary

Cyprus

Slovenia

Austria

Denmark

Netherlands

Czech Republic

Poland

Slovakia

Germany

Finland

Lithuania

Estonia

Sweden

1.5 1.4 1.3

1.9 1.9

European Union

2.1 2.1 2.0

Greece

3.1 2.4 2.4

Norway

2.7

Romania

2.9

Spain

3.5

Italy

4.0 4.0

-6.6 Source: Eurostat, OECD Fig. 2. Change in seasonally adjusted GDP in 2010Q4, Qt/Qt-4, in selected European countries, Japan and the United States data not available for remaining EU countries

II :: Polish Market :: 4/2011

Source: Informacja o sytuacji społeczno-gospo darczej kraju. Styczeń 2011; www.stat.gov.pl

Source: www.biec.org

Source: CESifo World Economic Survey, www.ifo.de

5.2

In 2011M1 labour productivity in the industrial sector measured by sales per employee was by 7.5% higher than in 2010M1.

This represented a drop in its rate of change compared to the rate for 2010, which amounted to 10.4% year on year. In 2011M1 there was a slight decrease in new orders. This seems to have been merely a correction after a sharp increase in orders at the end of 2010. In 2011M1 the number of orders was by 3.7% smaller than in 2010M12 but larger than in the previous months (seasonally adjusted data). Compared to the beginning of 2010, the number of orders was up by 10%. Since 2010M3 orders have been growing at a stable pace and are at a much higher level than in 2009. Among commodity groups in key industrial sectors in 2011M1, sales of energy-related goods fell by 0.8% year on year in seasonally adjusted terms and sales of durable consumer goods went down by 0.9%. Negative changes in sales trends had been noted in the case of these two types of goods in 2010. As a result, in 2010M12 their sales dropped year on year. But in 2011M1 sales of consumer durables were up by 5.2% and those of energyrelated goods up by 11.5% compared to the previous month, easing to some extent cyclical downward trends. In 2010M12-2011M1 sales of investment goods dropped slightly by 0.6%. Since 2010M5 sales of investment goods had been growing increasingly fast year on year. Despite the drop, the pace of growth in these sales year on year was still higher than the average for the industrial sector and reached 12%. Sales of non-durable consumer goods rose by 3.7% in 2011M1 in year-onyear terms while sales of intermediate goods went up by 17.3%. The pace of growth in intermediate goods sales was showing an upward trend, despite some temporary declines, while sales of consumer non-durables were growing at a stable pace for three months after a sharp increase in 2010Q3. In 2011M1, of all segments of the industrial sector, the year-on-year increase in sales was the fastest in manufacturing. Manufacturing sales were up by 9.5% in seasonally adjusted terms compared to a year earlier and the growth figure was slightly lower than in 2010M1. In the mining and quarrying sector, sales were up by 7.2% year on year, which represented a major improve-

Economic Monitor 15% 14% 13% 12% 11% 10%

The seasonally adjusted general business climate indicator in manufacturing rose slightly in 2011M2 to 5.1 points, the level it had hovered around since 2010M5. The February increase resulted from a slight improvement in assessments of the current situation on the part of industrial managers and their slightly better expectations for coming months. The reading of the indicator means that the managers expected that the situation of their businesses would be improving further, however not at a fast pace. In 2011M2 the outlook on production was again the strongest while the outlook on financial obligations was the weakest. In their expectations for the coming months, the managers were the most optimistic about production and order books, both domestic and foreign. Employment pre-

8% 7%

8.5

9.0

2010 M1

2010 M2

9.4

10.1

10.6

10.4

10.7

9.6

9.7

10.3

2010 M5

2010 M6

2010 M7

2010 M8

2010 M9

2010 2010 2010 2011 M10 M11 M12 M1

9.8

6% 2010 2010 M3 M4

cumulative

non-cumulative

Source: Central Statistical Office (GUS)

Fig. 3. Change in industrial output, Mt/Mt-12

19.5 15.4

13.8 13.2

12.6 12.0 11.6

11.0

11.0 9.0 8.2

food products

computers and consumer electronics

beverages

wearing apparel

furniture

paper and paper products

metals

chemicals and chemical products wood, cork, straw and wicker products printing and reproduction of recorded media

electrical equipment

textiles

rubber and plastic products

metal products

0.6

machinery and equipment...

21.6

tobacco products

23.1 22.5

pharmaceutical products

24.4 23.7

coke and petroleum products

42.6

other transport equipment

For 10 months the business climate indicator in manufacturing has not shown any clear downward or upward trend. Businesses expect an improvement in their situation in coming months but the improvement will not be fast.

other non-metallic mineral products motor vehicles, trailers and semitrailers leather and related products

ment on the previous month and was the highest increase since 2010M8. In the case of water supply/sewage and waste management/land reclamation, sales increased by 4.6% in year-on-year terms. The increase in sales was the slowest in the electricity, gas, heat and hot water sector. Sales in this sector grew by 0.7% in 2010M1-2011M1 and by 2% compared to 2010M12. Among 22 selected manufacturing sectors, four reported a decrease in sales in 2011M1 compared to 2010M1, two sectors less than in 2010M1-11. This may indicate that favourable changes are consolidating in industry and spreading onto more and more areas of economic activity. It is worth noting, however, that sectors which respond to changes in economic activity earlier than others have been growing for some time and their pace of growth may now start slowing. The largest drop – by 18.7% was in the manufacture of machines and equipment and of tobacco products. A strong increase was observed in the manufacture of “other non-metallic mineral products” (up by 42.6%) and in the manufacture of motor vehicles, trailers and semitrailers. In relation to the annual growth rate for 2010M1-12, the rate at which production grew decreased in eight sectors in 2011M1, while increasing in the remaining sectors.

-5.4 -12.8

-15.5 -18.7

Source: Central Statistical Office (GUS) Fig. 4. Change in output in selected manufacturing sectors, 2011M1, Mt/Mt-12

25 20 15 10 5 0 -5

2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 general business climate

output

2011 M2

order books (projection) Source: Central Statistical Office (GUS)

Fig. 5. Business climate indicators in the manufacturing sector

4/2011 :: Polish Market :: III

Economic Monitor

20% 11.2

15% 10% 5%

0.2

2.3

3.5

0% -5%

-3.4

-10%

-8.7

-15% -20%

-6.1

-5.7

2010 M6

2010 M7

-1.5

-11.5 -15.2

-15.3

-25%

-20.9

2010 M1

2010 M2

2010 M3

2010 M4

in cumulative terms

2010 M5

2010 M8

in non-cumulative terms

2010 M9

2010 M10

2010 M11

2010 M12

2011 M1

Source: Central Statistical Office (GUS)

Fig. 6. Change in construction output, Mt/Mt-12

Source: Informacja o sytuacji społeczno-gospo

darczej kraju. Styczeń 2011; www.stat.gov.pl

Business sentiment in the construction sector improved in 2011M1 for the first time in many months. Although the current situation was assessed pessimistically, projections for coming months were much better.

-10 -20 -30

of construction companies, especially those dealing with the construction of civil engineering facilities. According to preliminary data, 9,300 homes, or by 27.2% less than a year earlier (when a drop of 42.1% had been recorded), were completed in January 2011. The number of home completions was smaller than in January last year in all types of construction, with the completions of homes designated for sale or rent down by 35.9% and those in the self-build construction sector down by 8.2%. In January this year the number of home permits dropped again year on year – by 9.2% to 9,600. Also recorded was a major increase in the number of home starts compared to the poor result a year earlier – up by 40.4% to 6,200. It is estimated that 689,600 homes, or by 4.2% more than a year earlier, were under construction at the end of January this year.

2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 M2 general business climate

output

domestic orders (projection) Source: Central Statistical Office (GUS)

Fig. 7. Business climate indicators in the construction sector

dictions were pessimistic, but slightly less so than a month earlier. The percentage of managers who planned job cuts was larger than the percentage of those who planned to hire new workers.

Construction In 2011M1 construction and assembly output dropped slightly month on month but its growth in year-on-year terms was still high in all groups of construction businesses. In 2011M1 the pace of growth in construction and assembly output slowed slightly to 11.2% year on year. Seasonally adjusted growth amounted to 8.7% year on year against 12.9% in 2010M12. However, this did not mean a reIV :: Polish Market :: 4/2011

versal of the strong upward trend witnessed for almost a year but merely a temporary slowdown. In 2011M1 seasonally adjusted growth in construction and assembly output decreased by 3.1% compared to the previous month. Construction output increased the fastest in companies providing specialised construction work (by 17.7% year on year, in non-seasonally adjusted terms). Additionally, output growth also accelerated month on month. In this period, growth in output in companies dealing with the construction of civil engineering facilities was also faster (an increase of 16.2% year on year). Companies whose core business is the construction of buildings recorded a positive rate of output growth (an increase of 5.3% year on year), though lower than in 2010M12. There was a strong seasonal drop in activity in all groups

After three quarters of consistent decline, the business climate indicator in construction rose significantly. The optimistic news is that an improvement in the outlook on the situation of the sector in the coming months was the main factor behind this increase. Although the current situation was still assessed negatively, there is some optimism in projections. The outlook on production, order books and the financial situation was negative. But assessments of these areas of activity had improved for a second successive quarter. Forecasts for orders books and production for the next three to four months were optimistic. For the first time in six months pessimism did not dominate forecasts for the financial situation. Slightly worse predictions applied to employment, with the percentage of the surveyed who planned to cut jobs in coming months being higher than the percentage of those who planned to increase employment. However, the difference between the two groups had been diminishing from month to month and was already slight in 2011M1.

Economic Monitor

10% 8%

Trade

In 2011M1 retail sales grew year on year but at a much slower pace than in the last several months of 2010. Growth in wholesale sales was relatively fast.

4% 2%

-0.5

-0.1

2010 M4

2010 M5

-2% -1.1 -4% 2010 M1

0.2

1.9

2.2

2010 M10

2010 M11

-1.6 2010 M2

2010 M3

in cumulative terms

2010 M6

2010 M7

2010 M8

2010 M9

in non-cumulative terms

2010 M12

2011 M1

Source: Central Statistical Office (GUS)

14.1

other retail sales in non-specialised stores

furniture, radio and TV equipment, household appliances

textiles, clothing, footwear

pharmaceuticals, cosmetics, orthopaedic equipment

1.3

newspapers, books and other goods from specialized stores

21.5

other…

23.4

food, beverages, tobacco products

29.0

motor vehicles, motorcycles and parts

Fig. 8. Change in retail sales, Mt/Mt-12

darczej kraju. Styczeń 2011; www.stat.gov.pl).

In 2011M2 the assessment of the business climate in the trade and repair of motor vehicles improved. Assessments of the current situation in the sector had been improving for several months but forecasts for the next three to four months were still pessimistic, largely reflecting a poor outlook on financial obligations of businesses operating in the sector.

0.3

1.5

0.8

2.1

Source: Informacja o sytuacji społeczno-gospo

The fastest decline in sales occurred in the case of newspapers, books and “other sales in specialised stores.” In six of the nine retail trade segments, year-on-year growth in sales slowed in 2011M1 compared to a month earlier. In three groups of goods – “other retail sales in non-specialised stores;” furniture, radio and TV equipment, household appliances; and textiles, clothing and footwear – growth in sales was faster than at the end of last year.

0.7

solid, liquid and gaseous fuels

After sharp increases in sales over the last few months of 2010, retail sales slowed considerably in early 2011 but continued to grow. In 2011M1 retail sales in constant prices increased by 2.1% year on year versus 9.1% in 2010M12. Wholesale sales in current prices rose by 22.1% in year-on-year terms. January was another month seeing the acceleration of wholesale sales. Among sectors with a major share in total retail sales, growth was recorded by retailers dealing with “other sales in specialised stores” (up by 29%) and those selling solid, liquid and gaseous fuels (up by 1.3%). There was a drop in the retail sales of motor vehicles, motorcycles and parts (down by 2.5%), and food, beverages and tobacco products (down by 4.6%).

3.1

-6.9

-17.7

-2.5 -4.6

Source: Central Statistical Office (GUS) Fig. 9. Change in retail sales of selected products in 2011M1, Mt/Mt-12

10 5 0 -5 -10

In 2011M2 the seasonally adjusted business climate indicator stood at 1.5 against -0.7 in 2011M1. The indicators showed an upward, though still weak, trend. Periods when positive business climate assessments outweighed negative ones were short in 2010. But for several months now assessments of the gener-

-15

2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 M2 general business climate

sales

demand (projection)

Source: Central Statistical Office (GUS)

Fig. 10. Business climate indicators in the trade and repair of motor vehicles

4/2011 :: Polish Market :: V

Economic Monitor

9.9%

4.9%

9.0%

Euro area

Japan

United States

4.3%

Austria

9.5%

4.3%

Netherlands

European Union

6.1%

4.7%

Malta

Luxembourg

7.4%

6.5%

Cyprus

Germany

8.0%

Finland

7.5%

8.0%

Belgium

The BIEC Economic Welfare Indicator, which reflects the economic condition of the population, increased in 2011M2 by almost 3 points. The last time the improvement in the indicator was equally sharp had been in 2004M1, just before Poland’s entry to the European Union. Both now and seven years earlier, the main reason behind the increase in the indicator was a rise in employment. The impact of changes in wages was also positive, though not as strong. The economic condition of the

Czech Republic

8.2%

Denmark

www.stat.gov.pl

7.9%

9.6%

9.7%

Poland

8.6%

10.2%

Bulgaria

Italy

11.2%

Portugal

France

13.3%

12.6%

13.5%

Ireland

Hungary

14.5%

Slovakia

Croatia

20.4%

Spain

The current consumer confidence index, which describes current trends in individual consumption, decreased in 2011M2 by 2.4 pct. points compared to the previous month and reached -25 pct. points, down by 9.3 pct. points compared to February last year. The leading consumer confidence index, which describes trends in individual consumption expected in the next months, rose by 0.8 pct. points to -29.2 pct. points. The index was

Source: Koniunktura konsumencka. Luty 2010;

7.8%

The Current Consumer Confidence Index (BWUK) calculated by the Central Statistical Office (GUS) fell in 2011M2 to the lowest level since 2009M3. The Leading Consumer Confidence Index (WWUK) rose slightly in 2011M2 after a sharp drop in the previous month. However, the index is still at a low level.

Slovenia

Consumer sentiment

by 4.5 pct. points lower than a year before. In 2011M2 consumers were more pessimistic than a month earlier in their assessments of changes in their financial situation in the past 12 months and changes in the general economic situation of the country – the indices fell respectively by 5.2 pct. points and 6.4 pct. points compared to 2011M1. The outlook on the financial situation of households in the next 12 months and their propensity to buy was also pessimistic, with the two indices falling respectively by 1 pct. point and 2.3 pct. points compared to 2011M1. Assessments of the expected changes in the economic situation of the country, and the potential to save improved slightly, with the indices rising respectively by 3.1 pct. points and 0.4 pct. points. The index describing expected employment trends fell by 0.5 pct. points.

Sweden

al situation in the sector have been gradually improving. Projections for coming months were still pessimistic in 2011M2, although better than those in 2010M12. Financial liabilities were still a component of the business climate indicator receiving negative ratings from managers, both as regards current situation and projections for coming months. Employment was also rated quite pessimistically, although in this case assessments had been improving for some time. The outlook on sales was the most optimistic.

Source: Eurostat Fig. 11. Harmonised Unemployment Rate in selected countries in 2011M1, seasonally adjusted

VI :: Polish Market :: 4/2011

Polish population was negatively affected by high prices, which have been growing in recent months, especially food prices. Source: www.biec.org

Labour market The seasonally adjusted unemployment rate has remained at a stable level in Poland for several months. Long-term unemployment is now one of the greatest problems of the Polish labour market. Changes in the structure of unemployed have a negative impact on consumer demand in Poland. In 2011M1 the seasonally adjusted harmonised unemployment rate (HUR) for Poland amounted to 9.7% for a fourth quarter in succession. The EU unemployment rate stayed at 9.6% almost throughout 2010 and then dropped slightly to 9.5% in 2011M1. In Japan, the unemployment rate has been slowly decreasing since mid-2010. In 2011M1 it stood at 4.9%. The unemployment rate in the United States was falling at a faster pace – in 2011M1 it stood at 9% compared to as much as 9.8% in 2010M11. Among the EU countries for which data were available for 2010M12, the highest unemployment rate was noted in Spain, Slovakia and Ireland, while the lowest in Austria, the Netherlands and Luxembourg.2 In most EU countries, there was no significant change in the HUR in 2010M12-2011M1. But disquieting trends were noted on the Hungarian and Danish labour markets where the unemployment rates rose by 0.8 pct. points and 0.3 pct. points. The HUR dropped in the Czech Republic and Ireland. In Poland, the registered unemployment rate amounted in 2011M1 to 13% and was by 0.7 pct. points higher than in 2010M12 and by 0.1 pct. points higher than a year earlier. The month-on-month increase was largely due to the impact of unfavourable seasonal factors. The seasonally adjusted unemployment rate stood at 12.3% and was only slightly higher than in the previous month. Over the previous four months, it increased by 0.1 pct. points. After an accelerated inflow of newly unemployed individuals lasting for one 2 L atest data unavailable for Estonia, Greece, Lithuania, Latvia, Romania and United Kingdom.

Economic Monitor

quarter, in 2011M1 the rate of inflow slowed again. The number of newly unemployed registered with employment agencies was lower by 4.5% than a year earlier. The number of unemployed who were taken off the official register because they took up jobs was by 9.4% higher than in 2010M1. The number of registered unemployed totalled 2,105,000 in 2011M1 and was by 2.6% higher than a year earlier. This means a slower rise in unemployment than in the previous month when the number of unemployed was 3.3% higher than a year earlier. Among the selected groups of unemployed, the number of registered unemployed who are not eligible for unemployment benefits and the number of unemployed women increased relatively fast – by 6.8% and 5.4% year on year respectively. However, growth in the number of unemployed not eligible for benefits had been slowing in recent months. But it may still have an adverse impact on consumer demand. The number of unemployed who have lost their jobs for reasons related to their workplace dropped by 13.2% year on year, much more than in the previous two months. Among the unemployed with an especially difficult situation on the labour market, the situation of the long-term unemployed is the most difficult. This is due to a rise in unemployment during the economic crisis and the fact that unemployment has since remained more or less unchanged. The number of long-term unemployed is growing at an increasingly fast pace – in 2011M1 the increase reached 17.1% year on year. The long-term unemployed are the largest group of unemployed, accounting for 50.6% of the total (data from employment agencies). The good news is that this percentage has not risen in recent months. This, however, represents a temporary stabilisation because in 2010 the percentage was increasing consistently. Moreover, the percentage is still high and may contribute to a rise in structural unemployment. The number of single parents, people over 50 and the disabled was growing at a faster pace than the total number of unemployed. But the number of unemployed without job qualifications dropped last year by 0.8%. The number of unemployment aged 25 or under was growing at a relatively slow pace compared to growth in the total number of unemployed. Labour Force Survey (BAEL) data, which complement statistics provided by em-

ployment agencies, indicate that in 2010Q4 the number of economically active people amounted to 17,724,000, which represented an increase of 2.1% year on year. The economic activity rate stood at 55.8% and was by 0.7 pct. points higher than in the same quarter of the previous year. The seasonally adjusted employment rate was declining for two quarters after a long period of increase. In 2010Q4 it dropped by 0.2 pct. points. In 2010Q4 the number of working people amounted to 16,075,000 and was higher by 1.2% than a year earlier. The rise in the number of working men was higher than in the number of working women – 1.6% versus 0.7%. In 2010Q4 the number of people working in the service sector continued to increase year on year (a rise of 2.4% to 9,146,000) and the number of those working in the industrial and agricultural sectors continued to decline (down by 0.4% and 0.3% respectively to 4,879,000 and 2,044,000). The number of people working in the private sector rose by

1.0% to 11,848,000 and the number of those working in the public sector went up by 1.6% to 4,227,000. Source: Informacja o sytuacji społeczno-gospo darczej kraju. Styczeń 2011; www.stat.gov.pl

The employment rate amounted to 50.6% and was by 0.2% higher than a year earlier. According to the seasonally adjusted data, the employment rate dropped in 2010Q3-2010Q4 by 0.2 pct. points after stagnation lasting for one quarter. In 2010Q4 the number of unemployed according to BAEL amounted to 1,649,000. It increased by 12.1% year on year and by 1.4% quarter on quarter, mainly due to seasonal factors. In 2010Q4 the unemployment rate stood at 9.3% and was higher by 0.8 pct. points than a year earlier. The BIEC Future Unemployment Rate Index, which provides data on expected changes in unemployment, has shown a weak upward trend since November 2010. It increased the most in February 2011.

13.5 13.0 12.5 12.0 11.5 11.0 10.5 2009 2009 2009 2009 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 M9 M10 M11 M12 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 seasonally un-adjusted

seasonally adjusted

Source:Central CentralStatistical StatisticalOffice Office(GUS) (GUS) Source:

Fig. 12. Registered unemployment rate, %

3,600

3,550

3,500

3,450

3,400

3,350 3,300

-1%

3,250

-2%

3,200

-3%

3,150

-4% 2009 2009 2009 2009 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 M9 M10 M11 M12 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 average nominal wages (seasonally adjusted, left axis) Source:Central CentralStatistical StatisticalOffice Office(GUS) (GUS) real wage change, Mt/Mt-12 (non-seasonally adjusted, right axis) Source:

Fig. 13. Wages in the corporate sector

4/2011 :: Polish Market :: VII

Economic Monitor

Table 1. Selected labour market indicators 2009M12

2010M1

2010M3

2010M6

2010M9

2010M12

Average employment in the corporate sector, in thousands

5,255

5,301

5,294

5,336

5,364

5,379

5,501

Change in average employment, year on year, %

–2.0%

–1.4%

–0.6%

1.1%

1.9%

2.4%

3.8%

3,652.40

3,231.13

3,493.42

3,403.65

3,403.68

3,847.91

3,391.59

2.9%

–3.0%

2.1%

1.3%

2.3%

1.2%

12.1%

12.9%

13.0%

11.7%

11.5%

12.3%

13.0%

–11.5%

–10.7%

25.2%

15.1%

12.6%

8.2%

–22.8%

50.4%

–

49.4%

50.4%

51.1%

50.6%

–

Average nominal monthly wage in the corporate sector, in PLN Change in real wages, year on year, % Registered unemployment rate Change in the number of job offers submitted to employment agencies, y-o-y, % Employment rate according to LFS (BAEL) * Unemployment rate according to LFS (BAEL) *

8.5%

–

10.6%

9.5%

9.1%

9.3%

–

Economic activity rate according to LFS (BAEL)

55.1%

–

55.2%

55.7%

56.2%

55.8%

–

* Quarterly data

(Source: www.biec.org). This indicates that a further rise in the unemployment rate, though very slight, is expected in coming months. 2011M1 was another month in a row with an increase in average employment in the corporate sector. What is more, the rate of increase was much higher than in the previous month. Employment rose by 3.8% year on year versus 2.4% in 2010M12. Seasonally adjusted employment was by 1.5% higher than in 2010M12, growing by around 83,600. Compared to a year earlier, the number of jobs in the corporate sector rose by 200,000, which meant a continuation of the upward trend in employment, driven by businesscycle factors. The year 2011 started with a major rise in the number of job offers posted on the Internet, indicating that demand for new workers was on the increase. In 2011M2 the number of job offers was even higher than a month earlier and much higher than a year earlier. An increase was recorded in almost all categories of offers. Changes in the structure of job offers, with more offers for people with degrees, may indicate that employers are increasingly confident that the current economic revival will last and may be more eager to invest and hire more workers. In 2011M1 average nominal wage in the corporate sector amounted to PLN3,391.59, up by 5% year on year. The increase was smaller than in the previous month when it had been exceptionally high. Compared to 2010M12, seasonally adjusted wages dropped by 1.7%. Growth in nominal wages was much faster than average in the electricity, gas, heat and hot water; and transport and warehousing sectors and much slower in the hotel and restaurant sector. In the remaining sectors, including manufacturing, differences from the VIII :: Polish Market :: 4/2011

Source: GUS and authors’ calculations

average for the corporate sector were smaller. Among selected segments of the manufacturing industry, businesses dealing with the manufacture of tobacco products, coke and refined petroleum products, and chemicals and chemical products registered fast increases in wages. Nominal wages paid by pharmaceutical producer grew at a slower pace than average. However, the downward deviations were much smaller than the upward ones. After a quite significant increase in real wages at the end of 2010, in 2011M1 the wages returned to the average growth rate of 1.2% year on year as recorded in the previous four months.

Prices Inflation has gone up both in Poland and the EU and forecasts for coming months indicate that it is very likely to growth further. In 2011M1 Poland was among the countries with the harmonised index of consumer prices (HICP) higher than the EU average. HICP for the 2010M1-2011M1 period stood at 2.8% in the EU, at 2.3% in the euro zone and at 3.5% in Poland. In 2011M1 the highest inflation was in Romania, Estonia and Greece. The lowest was in Ireland (0.2% year on year) where deflation had been recorded for quite some time. In recent months inflationary trends intensified both in Poland and the EU. In 2011M1 Slovakia, Portugal, Latvia and Cyprus were the countries recording the sharpest rise in HICP compared to the previous month. Poland was in fifth place in the EU in this respect, with the inflation rate going up by 0.6 pct. points. Inflation has been growing in Poland consistently since 2010M10. Inflation-

ary trends have eased in Romania, Lithuania, Sweden and Malta. In most non-EU European countries inflation declined in 2011M1. In the United States it stood at 2% against 1.9% in the previous month. In 2010M12 producer prices accelerated sharply. The acceleration was driven by prices of energy and intermediate goods. In 2010M12 producer prices increased by 6.2% year on year against 4.2% a month earlier. The rise in producer prices has been the fastest in several years. Additionally, the increase in producer price inflation in 2010M11-2010M12 was especially dramatic. The acceleration in producer prices was driven mainly by prices of energy-related goods and intermediate goods, which rose in 2010M12 by 16.4% year on year and 8.1% year on year respectively. Prices of non-durable consumer goods and investment goods grew at a much slower pace. Prices of consumer durables fell by 1.8% year on year. The fastest growth was in prices in the mining and quarrying sector (up by 23.6%), the slowest in manufacturing (up by 5.1% year on year). Average prices in the construction sector remained unchanged in the last several months of 2010. Transport prices increased by 1.6% year on year in 2010M12 and the rate of change was slightly smaller than in previous months. Telecommunications prices also started to grow at the end of 2010. However, the increase was very weak – by a mere 0.2% year on year. In 2010 CPI inflation stood at 2.6% and was close to the NBP inflation target of 2.5%. However, in recent months inflation accelerated clearly above the 2.5% level to 3.1% in 2010M12 and 3.8% (preliminary data) in

2.0% United States

2.0% Netherlands

2.3%

2.0% Germany

Euro area

2.2% Iceland

2.7%

2.3% Slovenia

European Union

2.5% Austria

0.2%

2.6% Denmark

Switzerland

2.8% Lithuania

0.2%

3.0% Cyprus

1.4%

3.0% Spain

Ireland

3.1% Finland

1.8%

3.2% Slovakia

Sweden

3.3% Malta

1.9%

3.4% Luxembourg

Croatia

3.5% Poland

1.9%

3.5% Latvia

Italy

3.6% Portugal

France

3.7%

1.9%

4.0%

Belgium

Czech Republic

4.0%

United Kingdom

2.0%

4.3%

Hungary

Norway

4.9%

4.9% Greece

Turkey

5.1% Estonia

Bulgaria

7.0% Romania

Economic Monitor

Source: Eurostat. No data available for Ireland and United Kingdom Fig. 14. Harmonised Index of Consumer Prices in selected European countries and the United States, 2011M1, Mt/Mt-12

2011M1. The main contribution to inflation in 2010M10-2010M12 came from a surge in prices of fuels and natural gas. Another factor keeping inflation at a heightened level was fast growth in food prices. In 2011M1 the acceleration of inflation was mainly caused by VAT rate increases from January 1, a further rise in agricultural and petroleum prices on global markets and hikes in official prices of energy carriers. Source: Raport o inflacji. Marzec 2011, NBP, Rada Polityki Pieniężnej; www.nbp.pl

2011M2 was another month in a row seeing a rise in the inflationary expectations of individuals. The expected inflation rate for the next 12 months was 3.2%, against 3% a month earlier. The detailed results of a survey from the previous month showed that the percentage of respondents who said that prices would grow at a faster rate than at present,

increased by 3.8 pct. points. The percentage of respondents predicting a higher inflation rate stood at 30.2%. The percentage of those who chose one of the five other responses declined. The highest percentage of those polled, 40% -0.5 pct. points less than in the previous survey -predicted that prices would rise at the same rate as today. The percentage of those saying that prices would grow at a slower rate than at present was 13.6%, down by 1.2 pct. points. Finally, 3.9% of respondents said that prices would be the same or lower than today, down by 1.6 pct. points. The remainder were undecided. Inflation projections for the next year made by financial sector analysts have ranged from 2.9% to 3.1% since 2010M8. Meanwhile, inflationary expectations of enterprises rose to 3.4% in 2010Q4, which resulted from the heightened level of current inflation rather than a deterioration in the structure of

7% 6% 5% 4% 3% 2% 1% 0% -1%

Source: Raport o inflacji. Marzec 2011, NBP, Rada Polityki Pieniężnej; www.nbp.pl

The BIEC Future Inflation Index, which provides data on consumer goods and service prices several months in advance, did not change much in 2011M2 compared to 2011M1. Throughout 2010 it showed a strong upward trend, which weakened somewhat in recent months. However, this may be a temporary situation because producers have very strong expectations for price increases in the near future and because of unfavourable external factors. Increases in the prices of food and other materials on global markets pose a major threat to many economies, triggering a rise in inflation. The FAO food wholesale price index has reached the highest level since 1990 and the price of petroleum has crossed the barrier of USD100 per barrel. The impact of external factors, combined with a moderate growth in domestic demand and a relatively relaxed monetary policy, will not be conducive to a fall in inflation in 2011. Source: www.biec.org

-2% -3%

responses to the survey questions. Under the March projection – assuming that central bank interest rates remain unchanged – there is a 50% probability that inflation will be within the 2.8%-3.7% band in 2011 (against 2.5%-3.5% under the October projection), the 2.2%-3.4% band in 2012 and the 2.1%-3.7% band in 2012

2009 2009 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 M11 M12 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 inflation

industrial prices

Fig. 15. Producer and consumer prices in Poland

construction prices

Central bank and monetary policy

Source:Central CentralStatistical StatisticalOffice Office(GUS) (GUS) Source:

At a meeting on March 1-2, 2011 the Monetary Policy Council decided to keep interest 4/2011 :: Polish Market :: IX

Economic Monitor

rates at an unchanged level. The reference rate now stands at 3.75%, the Lombard rate at 5.25%, the deposit rate at 2.25%, and the rediscount rate at 4.00%. The interest rates were kept on hold because the growth trends in the global economy are strengthening. An additional factor behind the decision was optimistic data from Germany, Poland’s main trade partner. The improvement in Germany’s economic situation may have a favourable impact on trade between the two countries and consequently may strengthen economic growth in Poland. Global economic growth is hampered by high unemployment in most developed countries. Source: RPP; Informacja po posiedzeniu RPP, March 2, 2011

High unemployment prompts some countries to apply unconventional strategies to stimulate their economies. The tightened monetary policy pursued by many emerging economies and monetary expansion carried out by some countries has a major impact on raw material prices on world markets. The cooling of the Polish economy may be a direct result of this policy. The uncertain political situation in the Middle East and North Africa is an additional factor pushing raw material prices up. The present political and economic situation is reflected in growing uncertainty on financial markets and a rise in inflation in the world. The Council document of March 3, 2011 includes an opinion on measures taken to reduce the supply of household loans denominated in foreign currencies. At the same time, an important factor influencing the Council’s decisions is the ERM II criteria and entry to the euro zone.

Trends on the Warsaw Stock Exchange 2011M2 on the Warsaw Stock Exchange (WSE) saw the launch of the first official index of Treasury bonds in Poland and the WIGSUROWCE sub-index. A Polish-Ukrainian economic summit attended by the presidents of the two countries was also held in February. The new sub-index was launched on February 28, 2011. It is the 11th sectoral index to be calculated by WSE. The previously launched indices are made up of banks, building comX :: Polish Market :: 4/2011

Table 2. Selected data on monetary policy and currency exchange rates Position M3 money supply in millions of PLN

2011M1

2010M12

2010M11

2010M10

769,142.30

782,533.20

763,350.10

756,551.70

Average NBP USD/PLN exchange rate at end of month

2.8845

2.9641

2.8845

2.8873

Average NBP EUR/PLN exchange rate at end of month

3.9345

3.9959

4.0734

3.9944

Source: GUS

panies, chemical companies, developers, IT companies, energy companies, food processors, fuel companies, telecom companies and companies operating in the media sector. The new sub-index will be composed of all companies from the raw materials sector classified in the WIG index at the same time. The base date for WIG-SUROWCE is December 31, 2010. The initial value of the index was 4,748.99. WIG-SUROWCE is made up of KGHM, Bogdanka, NEWWORLDR, Sadovaya and DSS. Eighteen issuers debuted on WSE in 2011M2 – three on the main market, 11 on the NewConnect market and four on the Catalyst market. Among the companies which debuted on the main market were Inpro, Idea TFI and Megaron. In 2011M2 turnover on the cash market amounted to PLN19,828 million and was down by 3% month on month. On the

futures market, turnover reached PLN25,387 million, or 23% less than in 2011M1. On February 4, 2011 Presidents of Ukraine Viktor Yanukovych and of Poland Bronisław Komorowski held a meeting at the WSE building as part of the Polish-Ukrainian economic summit. The presidents talked about economic relations between the two countries. WSE is present in Ukraine through its Kiev office, which builds business links between the two countries’ financial markets. There are now six Ukrainian companies listed on WSE markets. Source: www.gpw.pl

On February 10 the exchange announced that the first issuer from Ukraine, Kernel Holding, will join the WIG20 index of the largest and most liquid companies. The change will be made as part of the annual revision after

Table 3. Selected indices of the Warsaw Stock Exchange Indices, change in PLN WIG20

2011M2

2011M1

2010M12

2,717.81

2,704.86

2,265.01

mWIG40

2,871.57

2,825.92

2,304.80

sWIG80

12,746.85

12,525.07

11,559.19

WIGdiv

1,020.18

1,002.67

WIG

47,540.91

47,156.76

38,708.61

WIG-PL

46,692.91

46,289.38

37,938.71

WIG-BANKI

6,783.95

6,737.23

5,635.11

WIG-BUDOWNICTWO

5,012.55

5,155.84

5,179.61

WIG-CHEMIA

6,802.59

6,408.57

3,305.63

WIG-DEWELOPERZY

2,524.83

2,461.19

2,519.70

WIG-ENERGIA

4,165.33

4,251.30

3,756.56

WIG-INFORMATYKA

1,248.12

1,252.78

1,182.91

WIG-MEDIA

3,727.18

3,652.40

3,250.43

WIG-PALIWA

3,204.82

3,211.69

2,345.69

WIG-SPOŻYWCZY

4,799.07

4,771.12

3,456.98

WIG-SUROWCE

4,870.11

4,690.54

WIG-TELEKOMUNIKACJA

1,328.76

1,300.89

Source: WSE

1,106.59

Economic Monitor

the session on March 18. As part of the same periodical revision, WSE stock will be included into the mWIG40 index.

million in 2009M12. The value of reserve assets dropped to EUR3,482 million.

Source: www.gpw.pl

The current account figure resulted mainly from a deterioration in the balance on income and the balance on goods. In 2010M12 the balance on goods showed a deficit of EUR1,106 million, compared to EUR-442 million in 2009M12, and the balance on income showed a deficit of EUR-1,280 million, compared to EUR-919 million in 2009M12. The balance on services in 2010M12 was at EUR375 million versus EUR319 million in 2009M12. The balance on current transfers amounted to EUR438 million versus EUR158 million in 2009M12. The value of exports increased by 19.1% to EUR9,771 million and the value of imports by 25.8% to EUR10,877 million. The balance on foreign travel amounted to EUR237 million and the balance on transport services to EUR188 million. In 2010M12 there was also a 24.4% increase in revenue from service exports to EUR2,290 million. Expenditure on service imports rose by 26.4% to EUR1,915 million. The drop in revenue on the income balance reached 10.5%, or EUR461 million. The figure was determined by income earned by foreign direct investors (EUR1,034 million) from their capital involvement in Polish businesses. The balance on foreign investment totalled EUR-270 million. The value of foreign direct

On February 16, 2011 the Treasury bond index which has been published since that day on the WSE and BondSpot websites was presented at WSE’s trading room. The conference included the official granting of awards for activity on the Treasury BondSpot Poland market in 2010. The Treasury BondSpot Poland (TBSP) index is the first official index of Treasury bonds in Poland. Its launch is aimed at giving retail and institutional investors a universal market instrument being a reference point for assessing the efficiency of their investment decisions. Source: www.gpw.pl

Balance of payments Preliminary data from the Central Statistical Office (GUS) and the National Bank of Poland (NBP) indicate that in 2010M12 Poland’s current account balance amounted to PLN-1,573 million, dropping by EUR689 million compared to a year earlier. In 2010M12 there was a positive balance of EUR1,553 million on the capital account compared to EUR683 million in 2009M12. The financial account showed a surplus of EUR4,452 million versus EUR154 Table 4. Components of the balance of payments

Current account Balance on goods Balance on services Balance on income Balance on current transfers Capital account Revenue Expenditure Financial account Portfolio investment – assets Portfolio investment – liabilities

2010M12

2010M11

2009M12

2009M11

–1,573

–2,286

–884

–1,637

–1,106

–1,254

–442

–266

375

440

319

277

–1,280

2,238

–919

–1,310

438

–254

158

–338

1,553

159

683

395

1,581

170

717

412

–4,452

3,509

–154

2,523

–574

173

–156

–233

537

1,508

370

502

Other investment – assets

–2,307

284

817

1,093

Other investment – liabilities

–1,632

2,652

–1,652

1,370

3,482

271

2,109

–184

Official reserve assets

investment in Poland was EUR825 million while the value of Polish direct investment abroad was EUR-1,086 million. Portfolio investment amounted to EUR537 million versus EUR370 million a year earlier. Assets on the portfolio investment account stood at EUR574 million and liabilities at EUR537 million. Source: www.stat.gov.pl and www.nbp.pl

Compared to 2010M11, the current account balance improved in 2010M12 by EUR713 million. Improvements were also noted in the balance on goods (by EUR148 million), the balance on current transfers (by EUR692 million) and the capital account (by EUR1,394 million). Drops were registered in the balance on income (by EUR62 million), the balance on services (by EUR65 million) and the financial account (by EUR7,962 million).

National budget In 2011M1 national budget revenue amounted to PLN24,594 million, which accounted for 9% of the total revenue planned for 2011 under the budget law. Expenditure amounted to PLN27,350.6 million, or 8.7% of the total amount planned under the budget law. The budget deficit was PLN2,756.6 million (6.9%). In 2011M1 the implementation of the budget revenue plan was by 0.1 pct. points more advanced than a year earlier. Receipts from taxes amounted to PLN19,325.7 million, and were by 10.8% higher than in 2010M1. Receipts from excise tax reached PLN4,128.9 million (up by 1.7%), receipts from corporate income tax PLN547.3 million (up by 49.2%), and receipts from personal income tax PLN2,726.2 million (up by 3.3%). Receipts from the European Union and other non-refundable sources accounted for 0.3% of the total revenue. In 2011M1 the implementation of the budget expenditure plan was by 0.2 pct. points less advanced than a year earlier. Payments to local government units amounted to PLN6,552 million, which accounted for 13.5% of the amount planned. The share of payments to local government units accounted for 24% of the total expenditure. Spending on domestic and foreign debt service accounted for 10.3% of the total expenditure. Subsidies for the Pension Fund and the Social Insurance Fund amounted to PLN1,322.3 mil-

Source: NBP

4/2011 :: Polish Market :: XI

Economic Monitor

lion and PLN5,643 million respectively (4.8% and 20.6%).

Table 5. Government revenue and expenditure according to preliminary data

Source: Ministry of Finance; Authors’

Notes It is always clearly stated in the text if the data given are seasonally adjusted or in cumulative terms. Otherwise, the data are nonseasonally adjusted and in non-cumulative terms. GUS and Eurostat use the TRAMOSEATS procedure for seasonal adjustment. Time series cleared from the impact of seasonal factors by the authors of the report have been adjusted using the ARIMA X-12 method. 2010M12 – December 2010 2010Q4 – fourth quarter of 2010 2010H2 – second half of 2010

XII :: Polish Market :: 4/2011

In PLN billions

% of annual target

2011 Budget Law

2010 Budget Law

2011M1

2010M1

2011M1

2010M1

Revenue

273.1

249.0

24.5

22.0

9.0%

8.9%

Expenditure

313.3

301.2

27.3

26.8

8.7%

8.9%

Deficit (–) / Surplus (+)

–40.2

–52.2

–2.7

–4.8

6.9%

9.3%

calculations, NBP

Source: Ministry of Finance, December 15, 2010

2010M1-12 – cumulative data for the January-December 2010 period 2010Q1-4 – cumulative data for the period from the 1st to the 4th quarter of 2010 Mt/Mt-12 – rate of change for a given month compared with the same month a year earlier Mt/Mt-1 – rate of change for a given month compared with the preceding month Qt/Qt-4 – rate of change for a given quarter compared with the same quarter a year earlier

Qt/Qt-1 – rate of change for a given quarter compared with the preceding quarter Compiled by a team of experts comprising: Robert Pater, PhD Łukasz Cywiński, and Tomasz Soliński, PhD Institute of Economics University of Information Technology and Management in Rzeszów www.ig.wsiz.pl