Polish Market No. 6 (179) 2011

Polish Market :: 06/2011

15 years PUBLISHED since 1996 No. 6 (179) 2011 :: www.polishmarket.com.pl

Polish EU Presidency Innovative businesses Developers

Adam Struzik President of Mazovia Region

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Contents

6/2011

New environment-based frames for Europe # 24

Kazimierz Borkowski, Managing Director of PlasticsEurope Polska: Plastics industry: contribution to sustainability # 26

Maciej Proliński: Attention! Culture in Polish cities # 27

Maciej Proliński: Promotion cross 10 time zones! # 28

SCIENCE AND INNOVATION

From The President’s Press Office # 6

From The Government Information Centre # 7

OUR GUESTS

The best Innovative projects Progress 2011 # 29

Andrzej Wodecki: Online crowdsourcing for a better life # 34

Jerzy Marszalec, Owner of Innovatech Consulting and founder of the Edison Centre: Who governs innovation in Poland – NIK (Nobody I Know)? # 36

Jerzy Buzek, President of the European Parliament # 8

Marek Sawicki, Minister of Agriculture and Rural Development # 10

POLISH PRESIDENCY

Adam Struzik, President of Mazovia Region: Mazovia: innovative and attractive # 12

The Polish Presidency of the Council of the EU – Priorities # 16

Jarosław Chałas, Attorney at Law, Managing Partner of the Chałas & Partners Law Firm # 18

Henryk Skarżyński, the creator and founder of the International Centre for Hearing and Speech in Kajetany, outside Warsaw, and the organizer of the World Centre of Hearing # 20

Piotr Bieliński, President of the Board of ACTION S.A. # 21

Ewa Małyszko, Vice-President of the Board, KGHM Investment Funds Association # 22

Poland as an honest broker in the negotiations of the EU’s Multiannual Financial Framework – the greatest challenge of the Polish presidency? # 23

LFC: to be competitive today, and to measure up to nature tomorrow # 38

The innovativeness of Polish economy according to PAN # 40

Jerzy Bojanowicz: Technology – for a society of knowledge # 41

OPINION Małgorzata Zaleska # 60

ECONOMY AND FINANCE

Krzysztof Pietraszkiewicz, President of the Polish Bank Association: The Presidency as seen by the banking sector # 44 Kazimierz Małecki, President of the Board of Krajowa Izba Rozliczeniowa S.A.: We are investing in the development of the Polish e-Economy # 46

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

Teraz Polska Gala

Conference of the Association of Polish Exporters

VII Congres What’s going on in Retailing 2011

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VI Outsourcing Forum

VII Aviation Congress

VII International Conference

Gala of Gazeta Bankowa

Residential Brand of the Year Gala

Conference “Investor, Contractor – partners in investment implementation. True or False?”

Warsaw School of Economics Alumni Club & Bocconi Alumni Association

Contents ECONOMY AND FINANCE SwedeCenter’s Green Business Garden Project # 90

The development of bank franchise networks in 2010 # 48

Ludwik Sobolewski, President of the Warsaw Stock Exchange.: Local, international, and competitive # 52

Adam Poniatowski: Customized transaction security instruments # 54

Piotr Karwiński: Europe’s first biometric trans action platform # 56

PODKARPACKIE REGION

Eugeniusz Śmiłowski: Private Banking # 58

2nd Innovation Forum in Rzeszów # 92

The risk of institutional clients vs. segmentation of auto insurance # 64

Ranking of companies in Podkarpackie Region according to revenue in # 93

EXPORT

Mikołaj Oniszczuk: Export and innovation: the drivingforce of Polish economy # 67

Ranking of exporters according to revenue in 2010 # 68

INVEST IN POLAND

Zygmunt Haduch, Marian Szczerek: Doing innovative business with Mexican Polonia # 72

Invest in Poland # 73

Piotr Kroenke, Globe Trade Centre: Ecology driven business # 91

Artur Erdmann: Thoughts on the Innovations Forum in Rzeszów # 94

Katarzyna Michnikowska: The retail Premises Market in Podkarpackie Region # 95

Rzeszów – a place worth visiting # 97

CULTURAL MONITOR Monitor kulturalny # 100

The secret of Roger # 102

CHEMICAL INDUsTrY

Jerzy Bojanowicz: Good prospects # 78

Sandra Wierzbicka: Step-by-step to succeed in chemicals # 81

A successful fair # 99

EVENTS INFRASTRUCTURE & CONSTRUCTION & GREEN BUILDING

Making a recovery # 82

Ranking of developers by market value May 2011 # 83

Piotr Tokarski: Beautiful, modern and ecological # 86

Significant energy and emissions savings over the life cycle # 88

Polish Market :: 06/2011

Publisher: Oficyna Wydawnicza RYNEK POLSKI Sp. z o.o.

(RYNEK POLSKI Publishers Co. Ltd.)

15 YEARS

President: Krystyna Woźniak-Trzosek

PUBLISHED SINCE 1996 No. 6 (179) 2011

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www.polishmarket.com.pl

Vice-Presidents: Błażej Grabowski, Grażyna Jaskuła 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

Polish EU Presidency Innovative businesses Developers

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

Adam Struzik President of Mazovia Region

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

Teraz Polska Emblem # 66

Will a common Europe survive the crisis? # 76

A collection for Pajacyk # 104

English Editor: Sylwia Wesołowska-Betkier Translators: Maciej Bańkowski, Marek Gogolewski, Elżbieta Krajewska, Grażyna Śleszyńska, Sylwia Wesołowska-Betkier, Sandra Wierzbicka Photographers: Jan Balana, Łukasz Giersz 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

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REGON 011915685, NIP 526-11-62-572 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

A few remarks about the Presidency

Setting innovation to work

1 July is a very important date, because we are entering the most important stage in our membership of the European Union – here we are, rising to the occasion, as the 6-month-long Polish Presidency of the European Union begins. It will be a time of promoting our country and our negotiation skills, a time of fighting for achieving the planned priorities. It is evident that the trails are already blazed, after all a Pole is the President of the European Parliament. Jerzy Buzek’s personality and competence, coupled with the experience he acquired as the Prime Minister of Poland, and, earlier, as an opposition activist, resulted in him being elected the President of the European Parliament on 14 July 2009. He won 555 out of 644 valid votes the strongest support achieved by a President of the European Parliament since 1979, i.e. from the time of the first general election. He became the first President originating from one of the new EU member states. He is keen for the European Parliament to be closer to the people, and we must admit that he pursues this goal with consistency. We are all the more grateful and particularly honoured that Professor Jerzy Buzek accepted to be the guest of this issue of “Polish Market,” which is dedicated to the Polish Presidency.

What is innovation? It is a fairly broad concept. When asked, most people will answer that it is modernity, the use of IT, enhancing the system. According to the definition, innovation means introducing something new, carrying out reforms, and making improvements. It may concern all the areas and fields of influence in various directions. All improvements to machines and devices, reforms of existing systems, and the creation of completely new things, phenomena and values may be innovative. Innovation may be related to both stateof-the-art technologies and elements of everyday life. In most cases, innovation is applied in the IT, ICT, and production industries.

Less attention is paid to innovation in services, and to the fact that a bank, an insurance company, and an investment fund may also be innovative. What is worse, services companies themselves often fail to realise this, and most of the media relations divisions from the services sector see no reason for presenting their achievements in this respect.

The “Polish Market” monthly is the biggest magazine in Poland to promote Polish economy, science, and culture all over the world. In cooperation with the Chancellery of the President of the Republic of Poland, the Chancellery of the Prime Minister of Poland, and various ministries, we are working towards popularising Poland as a brand and Polish entrepreneurs, and we are glad of each and every achievement of Polish businesses.

What does innovation mean to us? It is, first of all, progress. Progress that is to allow better functioning, to bring benefits to the company itself and to its business environment, to show what can be done better, and to prove that it is possible to work more efficiently and conceive brand new services and products, which are innovative and environmentally-friendly.

I am sure that everyone will find something interesting to read in the current issue of “Polish Market.”

Krystyna Woźniak-Trzosek President Rynek Polski Publishers Co. Ltd.

“Polish Market” invited companies operating in Poland to participate in a survey examining the innovativeness of Polish businesses.

We chose the most innovative companies in several categories. The survey was conducted jointly with the Vistula University in Warsaw.

You will find a list of the winning companies and a description of their innovative projects in this issue of “Polish Market.”

I also invite you to take a look at the ranking of developers, exporters, and companies from the Podkarpackie province. We are writing about what is worth knowing about Poland, about its business activities, and about the fact that Poland is a great place for investment, and that the Polish Presidency will be an opportunity to showcase how innovative a country we are becoming.

Rita Schultz Editor-in-Chief

6/2011 :: polish market :: 5

President Barack Obama in Poland

The President has decorated members of NGOs

“In this place where we now are, the Warsaw Pact was signed. This very room witnessed the dismantling of the communist system in Poland. It is here that the round table stood at which the opposition, Solidarity, reached a wise consensus with the then government, paving the way for Polish democracy,” said Bronisław Komorowski, welcoming the participants of the 17th Meeting of Presidents of Central European States and the honourable guest of the summit, the President of the United States Barack Obama.

“We have taken great inspiration from the blossoming of freedom and economic growth in this region. We are confident that we will be a part of this process, which will strengthen your democracies, your economies. We will be a full partner, because we think it will be beneficial to the United States as well,” said the US President. Bronisław Komorowski claimed that Obama’s words about maintaining the open-door policy of both NATO and the EU struck a chord in the hearts and minds of many leaders of this part of Europe. He also confirmed that the Lisbon summit arrangements concerning the construction of an all-NATO anti-missile shield are fully reflected in the policy of both the United States and NATO as a whole. ::

The Polish President Bronisław Komorowski has decorated the founders and members of non-governmental organisations who contributed towards building the civil society after 1989.

“For me, it was a special moment, and also, I admit, a deeply moving one.

That is because, besides having the opportunity to observe the good work of many organisations and associations, it dawned on me that you are the fruit of the free, democratic, and civil society in Poland,” said the President.

He added that the anniversary of the elections of 4 June 1989 is an occasion to express gratitude and to ask for further effort, work, and activity.

“I take this opportunity to honour, on behalf of Poland, the people and institutions which in wise, beautiful, and interesting ways were able to make use of the Polish freedom, turning it into a civil freedom, a freedom that serves

not just the authorities, but also society, without excluding those who are the weakest,” declared Bronisław Komorowski.

Commander’s Crosses Polonia Restituta have been conferred upon Halina Bortnowska-Dąbrowska (hospice movement, Helsinki Committee, Otwarta Rzeczpospolita, Polis); Izabela Dzieduszycka (Stowarzyszenie Przymierze Rodzin); Alfred Janowski (scouts movement, Education For Democracy Foundation); Irena Kornatowska (Fundacja Dzieci Niczyje - Nobody’s Children Foundation); Janina OchojskaOkońska (Polish Humanitarian Action); Jerzy Owsiak (the Great Orchestra of Christmas Charity); Anna Rajner (Fundacja Synapsis); Maria Sielicka-Gracka (Stowarzyszenie Lekarze Nadziei Doctors of Hope); Zbigniew Wierzbicki (Towarzystwo Wolnej Wszechnicy Polskiej). The President also conferred Officer’s Crosses Polonia Restituta. ::

Presidents of Poland and Slovenia at the Slovenian Square The square at the junction of Wiśniowa and Komedy Streets in the Warsaw district of Mokotów has been named Skwer Słoweński – the Slovenian Square. The President of Poland Bronisław Komorowski and the President of Slovenia Danilo Turk attended the naming ceremony.

With the Mayor of Warsaw Hanna Gronkiewicz-Waltz, they jointly unveiled the plaque with the name of the square. The celebration was also attended by the Ambassador of Slovenia to Poland Marjan Setnic. President Komorowski expressed his wish that the square

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should reflect a strong community spirit, symbolise all that Slovenians and Poles have in common. He stressed that the initiative of naming the Slovenian Square in Warsaw is a way to instil a sense of closeness between Poles and Slovenians.

The Slovenian President, for his part, emphasised that there is a close relationship between the Polish and Slovenian people. “I will be very glad if today’s celebration becomes a confirmation that Poland and Slovenia are very close to each other, and strive to reinforce their community further field,” he added. ::

Prime Minister at the CEE IPO Summit Prime Minister Donald Tusk participated in the opening of the Central and Eastern Europe IPO Summit, an event devoted to the capital markets of the Central and Eastern Europe. The head of government talked about the good economic condition of the local countries and the high confidence investors have in the Warsaw Stock Exchange.

“Today, on the global economic map, Poland and Warsaw Stock Exchange are the symbols of hope that it is possible to resist the crisis,” stressed the Prime Minister. He also noted that the countries from Central and Eastern Europe have handled the consequences of the global economic crisis better than the other EU member states. “The countries of the region have suffered many misfortunes over the recent decades, therefore they are more resilient to pessimism accompanying the wave of economic crisis,” he added.

Donald Tusk also remarked that for many years, private ownership, free market, and competition were considered as synonyms of evil in this region. Today, however, Central and Eastern Europe can serve as a role model for the entire EU. “This whole part of Europe is perceived as a region of hope.

It is here, right before our eyes, that a new engine for the EU is being built,” Donald Tusk summed up. ::

Poland can count on France During his meeting with President Nicolas Sarkozy and Prime Minister François Fillon in Paris, the Polish Prime Minister Donald Tusk presented the programme of Polish Presidency of the Council of the European Union, in particular the issues related with the energy policy, enlargement and budget.

“We have discussed matters that are especially important for Poland in terms of the upcoming Presidency”, said Donald Tusk. “We have reached a full consensus as to the key elements of Polish priorities. The ambitious agenda regarding joint security policy, including energy safety, met with considerable appreciation,” he explained. He

added that whenever Poland undertakes serious challenges within the EU, it can count on President Sarkozy.

The meeting addressed also other topics, such as the assessment of the current situation in Northern Africa and the currently implemented reform of economic management in the European Union. The politicians discussed the enlargement and potential changes to the Schengen zone, as well as the European Neighbourhood Policy, especially in the context of strengthening the Eastern Partnership. “It is not unlikely that we will be hosting President Sarkozy at the Eastern Partnership summit,” Donald Tusk announced. ::

Poland and Sweden on the development of EU Prime Minister Donald Tusk has met the leader of the Swedish government, Frederik Reinfeldt. The politicians talked about the priorities of the Polish Presidency in the EU, the Eastern Partnership, Ukraine’s European aspirations, the Schengen zone, and the situation in Belarus.

Donald Tusk remarked that on the eve of the of the Polish Presidency, the strongest common point between Sweden and Poland is the issue of a single market. “A uniform market is a chance for stimulating economic growth and greater competition in the European Union,” he stressed. “If we want more jobs, higher wages, and the progress of the economy, we need to rely on practical tools to achieve all these goals,” the Prime Minister explained.

With regard to the Schengen zone, Donald Tusk emphasised that Poland and Sweden share a similar view on the problem of citizen migration within the EU. “Conducting a review of the Schengen policy would require careful reflection,” he pointed out. “We, in Poland, highly value the freedom to move between the countries that meet the Schengen criteria. I am pleased that we have found common ground in this respect,” the head of the Polish government added.

Prime Minister Frederik Reinfeldt said that, in terms of European policy, Sweden and Poland have cooperated for years, hence they hold the same view on numerous matters. “We are two European countries that serve as corridors for economic growth in the Northern Europe,” he stressed. “One of

the most important tasks of the Polish Presidency will be to continue the recovery after the crisis. Poland will have to adequately respond to the current situation in this respect,” he underlined. “Both our countries are also open to handle the problems of the single market and the freedom to move within the EU,” added the Swedish Prime Minister.

Frederik Reinfeldt stressed that the idea of the Eastern Partnership was to encourage particular states to engage in the democratisation process. “The Eastern Partnership is an example of how to develop cooperation with countries at various levels of development,” said Mr Reinfeldt. ::

6/2011 :: polish market :: 7

Our Guest

Prof. Jerzy Buzek President of the European Parliament

On 1 July Poland takes on the baton of the Presidency of the European Union from Hungary. Poland will be in Europe’s, if not the world’s, spotlight, and its leadership of and commitment to the EU will be under close scrutiny. It is both a historic opportunity and a formidable challenge. Europe needs new life breathed into it, giving it fresh impetus for further integration. Openness and entrepreneurship – two great Polish assets – need to become effective tools in combating stagnation in the EU. The Polish Presidency will have to achieve its aims in a challenging global environment. The EU and world economies are still struggling in the wake of the economic crisis. We have to take firm action to solve these problems, even when that means taking unpopular decisions. The main priority is the EU multiannual budget, which must be based on solidarity and

8 :: polish market :: 6/2011

has to reflect our shared ambitions. It must bring sustainable growth, new jobs and sufficient funding for the cohesion policy. We need more European added value, and not less. Important negotiations on the structure of the budget will begin during the Polish Presidency.

The European Union will not be able to find a lasting remedy to the crisis without strengthening its intellectual capital and its internal market.

Herein lies the Union’s greatest asset, its boundless potential. Poland should aim to step up the free exchange of services and further bring down barriers to trade. The EU’s response to the pressures on the Schengen system will no doubt mark the Presidency. The European Parliament will make its voice heard.

Economic development is only possible if there is political stability.

“A secure Europe” is one of the Polish Presidency’s mottos, and it will therefore be vital to bolster the Common Security and Defence Policy. The current operations in Libya show just how important it is that the policy works properly. Guaranteeing energy security is another crucial task. I often emphasise that whilst Europeans do not have to understand geopolitics, they have the right to expect their homes to be heated in the middle of winter. That is why, together with the former European Commission President, Jacques Delors, I have launched the idea to create a European Energy Community, which will help strike a balance between combating climate change and providing energy security. I am sure that Poland will consistently support this initiative.

Openness to others could well be another of the Polish Presidency’s hallmarks. The negotiations for Croatia’s accession to the EU will hopefully be concluded during the second half of 2011, and with this in mind it is worth noting Poland’s “Moldova in Europe” initiative.

It is the desire for closer cooperation with the European Union that binds the countries of the Eastern Partnership – one of Polish diplomacy’s greatest achievements in recent years,

accomplished together with Sweden.

Poland itself was east of the EU until only a very short time ago. In 1989, it has committed itself to building a democratic state and a free-market economy. Today, as member of the European Union, Poland is a natural advocate for Eastern Europe within the EU and for the EU within Eastern Europe. With some justification, the Polish Presidency is expected to help the Partnership gain the momentum it needs. The EU is hoping that an association agreement can be signed with Ukraine during the Presidency. The Eastern Partnership Summit in Poland this autumn will be supremely important.

We should remember that the Presidency of the Council of the European Union is primarily about the art of reconciling contradictory positions.

The country in the chair is expected to be able to resist the temptation to put national interests before EU interests, and to have the ability to react quickly and effectively to events taking place from one day to the next, as will always be the case. Planning is essential, but it cannot replace the ability to react in real time to changing situations.

Poland will not be standing alone during its Presidency: within the “trio,” it will be deciding on the work programme alongside Denmark and Cyprus, the two countries which will be assuming the Presidency after Poland. Furthermore, under the Lisbon Treaty, the European Parliament and the Council of the European Union are actually co-legislators on an equal footing. In drawing up around 80% of all EU legislation, we are deciding on Europe’s future together.

This means that effective engagement with the various EU institutions will also be important if the Polish Presidency is to be a success.

A successful Polish Presidency actually means success for us all – each of the other 26 EU Member States. That is the beauty and magic of Europe today. It is also a question of responsibility, which now rests on Polish shoulders. In the European Parliament, we await Poland’s first EU Council Presidency with pride and with high expectations. ::

Our Guest

Seven years after Poland’s accession to the European Union, we are facing a responsible and difficult task – the presidency of the EU Council.

We have been preparing for this for a long time. Naturally, as a new member state, we want our first presidency to not only to go well, but also to be fruitful.

The Common Fisheries Policy reform should be finalised in the course of the coming six months. Final decisions concerning the fisheries policy will be made during this time. I would like for this new policy to be up to the task and to be pro-development.

Our presidency falls also in the time of the clarification of views regarding the Common Agricultural Policy (CAP) after 2013. Final decisions will be made next year. Nevertheless, discussions around the shape of changes in agriculture will enter into a decisive phase. Poland has very clearly defined views regarding the future shape of the CAP, one of the oldest EU policies. During the course of our presidency we want to focus on three priorities: :: reform of the direct payment system within the Common Agricultural Policy after 2013, :: comprehensive and complementary rural development policy after 2013, :: biomass and renewable resources as an element in energy security improvement and economic development in the EU. Since taking office, I have been in favour of a deep and real reform of the Common Agricultural Policy. Present-day challenges clearly demand such actions. Constantly heavier burdens related to environmental protection, ecology and well-being of animals create an increase in production costs. At the same time, CAP mechanisms cause disturbances to competition conditions. One cannot talk about fair competition in a situation where some countries allot 80% of funding to direct support while others only 20%.

This is also the reason why we are in favour of simplifying and unifying the rules. We recommend that the scheme based on payment entitlements is renounced and new, fair and homogenous rules are ensured for everyone.

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Marek Sawicki, PhD Minister of Agriculture and Rural Development

We also postulate an equal division of funds between pillar I and II, in other words, allocating 50% of funds to direct support and 50% to developing rural areas. Pillar I should be wholly financed from EU sources. However, there should be a limit in pillar II in national support in favour of the beneficiary’s own share. In my opinion, this structure of the future CAP after 2013 would foster the development of the European agriculture. Thanks to these kinds of solutions, CAP will cease to support stagnation and will start to promote innovation and competitiveness.

The solutions adopted in Poland concerning direct payments and the development of rural areas confirm the soundness of this concept. The Polish countryside has changed. It has, however, been able to maintain its most valuable environmental and cultural qualities. Polish farmers grow excellent produce, which is then processed by modern industry. Thanks to this, the export of alimentary products has been going extremely well for years. We are the fifth largest food producer in the EU and more importantly, a considerable food exporter.

The combined value of agricultural and food product exports totaled

EUR14 million last year, and the positive balance, which has been maintained for years, amounted to almost EUR2.6 million.

Therefore, this year, aside from issues related to our presidency and the CAP reform, I am putting a particular emphasis on promotional activities. We were present at the agricultural and food product fairs – in London in March and in Canada in May. During the latter, I affirmed that Poland is interested in a rapid elimination of existing barriers to the availability of Polish food on the Canadian market. The procedures allowing the access of Polish pork and its products to this market were completed in April. I also spoke about procedures related to the access of Polish poultry and its products to the Canadian market. Polish and Canadian veterinary services will agree on certificate templates, and the export of Polish poultry will be possible once negotiations towards balancing the food safety systems, conducted together by the EC and Canadian inspectors, are completed.

We were also very engaged in the promotion of Polish agriculture in Shanghai. We have already had prior successes there. Polish meat producers are in the course of obtaining proper permits to export their products to China. We have also negotiated the necessary conditions regarding quality and food safety, we have agreements with Japan, Singapore and Vietnam, and these are markets on which we also want to be present.

The role of the Ministry is also to ensure promotion and help in gaining new sales markets. We establish the access conditions to particular markets for Polish food and agricultural products. And the role of exporters is to use these opportunities. As can be seen by the balance of foreign trade, they are taking advantage of it very well. ::

building trust over years

STABILATOR Spółka z o.o. is a company with a tradition.

Established in 1995, and initially based in Gdynia, it originated from the Stabilator AB Group, owned by the Swedish company SKANSKA. Today, STABILATOR operates as a Polish private entity with its registered office in Gdańsk.

STABILATOR Sp. z o.o. provides comprehensive specialist building services in the following fields of the construction market – the preservation of monuments of culture, and foundation, and hydraulic and sanitary engineering.

These services are generally provided through the company’s own capabilities, its qualified and experienced engineers, and the use of innovative and green technologies.

Our services are comprehensive – concept and design prepa­ ration, contracting – all compliant with quality, environmental and health and safety standards.

In 2010 the Company completed the construction of a complex of facilities composed of: the Company’s headquarters, a laboratory with a testing ground and an equipment base.

The headquarters is a “model intelligent” building. It was equipped with four ­operational systems – fire-fighting, intelligent monitoring, ICT, and energy-heating. The new headquarters also introduced a new opportunity to cooperate with Stabilator Sp. z o.o.

Office and warehouse space will be designated for rent (900 sq.m.), particularly for enterprises that complement the Company’s range of services. Stabilator would also like to cooperate with foreign entities in the field of energy-­saving technologies and innovative construction technologies.

You are invited to cooperate!

www.stabilator.com.pl

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Polish Presidency

Mazovia: innovative and attractive Interview with Adam Struzik, President of Mazovia Region

There are 680,000 enterprises, employing about 1.3 million people in the Mazowieckie province. Are you satisfied with these figures? Why is Mazovia so attractive to entrepreneurs?

It is true that businessmen appreciate the economic assets of Mazovia, and that they are willing to invest here.

Our role is to do what we can to make it easier for them. Why is Mazovia so attractive to investors? Mainly because we’re the central region, and the biggest one in the country. We have a very-well developed economic and social infrastructure, as well as the greatest absorptive power on the market. We are investing in infrastructure and Internet systems favouring the growth of innovation. We are also taking good care of our entrepreneurs. We have established the Mazovia Development Agency (ARM) whose main tasks include supporting SME’s, local-government units, and sourcing and servicing investors. Thanks to ARM, enterprises from Mazovia can count on establishing business contacts with foreign entities and promotional support, among other things.

Of course there can be no investments without funds. That is why we

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have established 2 loan funds for entrepreneurs – the Mazowiecki Loan Guarantee Fund (MPFK) and the Mazowiecki Regional Loan Fund (MRFP).

Thanks to the former, already over 3,000 entrepreneurs have received support in obtaining a loan. Another 3,000 companies will have this opportunity, as MFPK has signed an agreement for EU co-financing in the amount of PLN70 million. This way the capital of the Fund has doubled – from PLN60 to almost PLN130 million. Financial support in the form of loans for entrepreneurs is also provided by MRFP. Over 400 businessmen have already taken advantage of this support.

The level of absorbing EU funds is another of your successes. How much funds were acquired and for what projects?

Mazovia has received the greatest amount of funds to distribute. We had at our disposal EUR1.8 billion for the years 2007-2013 within the Regional Operational Programme of the Mazowieckie province. There is an additional EUR907 million within the Human Capital Operational Programme. This is a lot of money, and yet we have to remember that Mazovia

is the biggest province, with 42 districts and 314 communes. EU funds are for those local governments a great opportunity to develop, providing a chance to implement many important investments which would not be possible without this support.

EU funds are usually associated with the broadly-defined infrastructure – the construction and redevelopment of roads and bridges, sewerage and water supply networks. In fact, EU funds cover many more areas of our lives. They are used to finance the renovation of historical buildings and monuments, and they go to projects connected with environmental protection – recycling, constructing plants for waste sorting, and landfills of hazardous waste. They are also an enormous support for entrepreneurs, who receive funds for investments in their companies, for example to purchase machines, equipment, or software. We should not forget about funds for the so-called “soft” projects, these are all types of funds for new jobs and professional trainings, but also for kindergartens, schools, and so on.

W hat are your investment plans for the coming years?

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Polish Presidency

We have a very -well developed economic and social infrastructure, as well as the greatest absorptive power on the market. We are investing in infrastructure and Internet systems favouring the growth og Innowation.

We are also taking good care of our enterpreneurs

The most important task has been, and still is, sustainable development of the entire province. Mazovia is a very big and internally-diversified region.

We have a rich capital city, and also some poorer subregions which are constantly in need of our support. We are working and will be working on that, either through our regional policy and EU funds, or with funds from the province’s budget. Today Mazovia has speeded up significantly, and we need to stay on this track. We have already started making efforts to acquire new funds within another EU agenda.

This will also be a time of huge investments. One of the vital projects will be the construction of the airport in Modlin. Another important project is the construction of a broadband Internet access network for the entire region. We are living in the time of an information society, and access to Internet resources is a standard, which is why we would like every resident of Mazovia to take advantage of it. It is equally important to introduce a variety of electronic services in city and town offices, schools, libraries, and other public institutions. Thanks to this, the image of city and town offices is changing, and they are becoming more and more friendly to citizens, who do not have to stand in queues for hours any more.

W hy is Mazovia worth visiting – is it an attractive tourism destination?

Mazovia is not only attractive, but beautiful and interesting. Although you will find neither mountains nor a sea here, there are lakes. I really recommend the Gostynin Lake District, the only fragment of post-glacial landscape in Mazovia. The terrain is diversified by high hills, and several dozen lakes of various sizes. From here it is close to Płock – the historical capital of the Mazowieckie province.

Personally, I recommend visiting the Płock Cathedral, which houses sarcophagi with the remains of two Polish rulers – Władysław I Herman and his son Bolesław III Wrymouth. A true pearl is also the Mazowieckie Museum in Płock, with the greatest collection of Art Nouveau in Poland. When visiting Mazovia you just have to see the Museum of the Mazovian Countryside in Sierpc, where we can see what life looked like in this region several hundred years ago. It is also worth paying a visit to the Jacek Malczewski Museum in Radom, with an impressive collection of paintings and drawings of the artist, or to the less fa-

mous Museum of Romanticism in Opinogóra. There are many picturesque places, such as the castle in Czersk, the Gothic-Renaissance residence in Szydłowiec, the Castle in Liw, and the Castle of Mazovian Dukes in Ciechanów. All this is within arm’s reach, a several-dozen-minute drive from Warsaw. ::

An old model of the town of Płock is one of the attractions in the Mazowieckie Museum in Płock. In a 1:160 scale it occupies 40 square metres and is one of the biggest models displayed in Polish museums.

Photo: Grzegorz Piaskowski, Mazowieckie Museum in Płock

6/2011 :: polish market :: 13

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Polish Presidency

Mazovia is the leader of change in Poland and the fastest-growing province in the country. It is here that the dynamic of Polish transformation is most visible. Its convenient location – at the crossing of trade and transportation routes connecting the East and the West of Europe – is the reason why investors interested in Poland usually choose the Mazowieckie province for their offices.

an information society and a knowledge-based economy, through establishing integrated knowledge bases in Mazovia,” which is valued at PLN180 million, PLN153 million of which is covered by EU funds. Entrepreneurs and investors will gain access to a thorough and integrated database of spatial information, containing data on land development and intended use of specific areas in the province, as well as on economic and natural assets.

Mazovia as a tourist brand

Mazovia is a region of many possibilities. Its economic potential, varied cultural base, and buoyant educational sector, make for its undeniable assets. The local government of Mazovia focuses on the sustainable growth of the region.

Here too, a key role is played by the possibility to use EU funds, including funds within the Regional Operational Programme of the Mazowieckie Province (ROP MP) for the years 2007-2013. Owing to this, key projects with strategic importance to the region may be implemented by the local government of Mazovia to close the gap even more, while safeguarding the even development of the quality of life of the residents.

E-development Emphasis has been put on developing the information society and e-services. The local government will earmark PLN400 million form financing for three projects prepared by the local government – “Internet for Mazovia,” “Developing e-services and their accessibility to citizens within the Mazovian Information Society Network M@zowszanie” and “Developing e-administration in the local governments of the Mazowieckie province to support bridging the dichotomy in the province’s potential”. The estimated total value of the projects is nearly PL580 million. This will facilitate the construction of an optical-fibre network to provide ICT services to residents, covering 90% of the population and 100% of businesses and public entities in Mazovia. A third of the projects listed above are expected to streamline the city’s office-entrepreneur and office-citizen relations. This significantly supports the development of the information society, through the creation of a regional, consistent e-administration model.

Economic promotion Distributing e-services and implementing the idea of information society are starting points for other actions taken up by the local government of the Province with EU support and in cooperation with communes and districts.

One of them is the continued and coherent economic promotion of Mazovia – an investor-friendly region that welcomes new technologies. Completing this task will be supported by the project entitled “Advancing the growth of the competitiveness of the Mazowieckie province by creating

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Design of the accommodation centre at the European Centre for the Promotion of Regional and National Culture “Matecznik – Mazowsze” Archival photo of PZLPiT “Mazowsze”

The economic growth of the region is also propelled by its cultural heritage and tourism. That is why the local government of Mazovia is implementing a project aimed at creating a single and consistent tourist brand for the region (its value exceeds PLN5.6 million, with PLN4.8 million EU support). Mazovia has a lot to offer – it is after all the centre of cultural life, and cultural tourism is gaining momentum. Equally important is the preservation of material and spiritual tradition, while devoting attention to appropriate presentation. In this area the local government can also boast many successes. It runs 18 museums, including two open-air ethnographical museums – in Sierpc and Radom. Mazovian open-air museums enjoy enormous popularity among tourists. They are attractions in themselves, showing not only the characteristic architecture of bygone times, but also depicting what life was like back then. Thanks to the project being implemented in Sierpc (the Museum of the Mazovian Countryside), an accommodation and conference base will be created. Its convenient location, paired with state-of-the-art furnishings and cosy atmosphere, will make the planned investment a perfect leisure destination. Over PLN20 million of the total costs of

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Polish Presidency Passenger terminal for low-cost and charter carriers in Modlin Airport (Source: APA KURYŁOWICZ & ASSOCIATES / Mazowiecki Port Lotniczy Warszawa-Modlin Sp. z o.o.)

PLN61 million will be EU-funded. In the second open-air museum (The Museum of the Radom Countryside) within a project to receive PLN10 million of EU funds (with a total value of PLN25 million), 10 additional buildings will be constructed – 8 historic reconstructions and an amphitheatre with exhibition and conference facilities, and a monument restoration workshop.

The European Centre for the Promotion of Regional and National Culture “Matecznik - Mazowsze” fits perfectly with the idea of cultural tourism – another of the region’s showcases. A lot has been done thanks to EU funds in Karolin near Warsaw, where the "Mazowsze" Tadeusz Sygietyński State Folk Song and Dance Ensemble, acting under the auspices of the Provincial Local Government, is based. A facility for organising training, workshops and concerts has been created, and the construction of the Staropolska Tavern and the Inn in Zielony Gaj is being finalised. The park around the buildings will also be revitalised. The overall cost of these projects is nearly PLN95 million, PLN64 million of which is EU-funded.

Air transport An airport is a magnet both for potential investors and tourists. It also reduces the unemployment rate, while airport-related activities generate good budget revenue. Thanks to the investment in Modlin, Mazovia will have a 24-hour airport to service short- and medium-range international air traffic and national flights between regional airports. It will serve the passengers of low-cost airlines and charter flights. The investment cost is about PLN400 million. The province’s local government has succeeded in negotiating EU co-financing of PLN76 million. The airport will have good connections to Warsaw.

The key projects implemented by the Mazovia local government and province-budget-funded institutions have been prepared in such a way as to be consistent and comprehensive, and to boost the region’s development, taking advantage of its human, cultural, tourist, and economic potential. ::

Marcin Kierwiński Vicepresident of Mazovia Region EU funds granted to Poland and Mazovia for the years 2007-2013 have provided a real opportunity to develop such sectors as entrepreneurship, transportation, health, culture, tourism, education.

The Mazowieckie province is the biggest beneficiary of EU funds.

Within ROP MP EUR1.8 billion has been invested in Mazovia. The extent of interest in EU support has exceeded all expectations. The aggregate of the subsidies applied for within the projects submitted by Mazovian communes and districts have often been greater than the available funds.

What is most important, however, is that these funds are needed, and the results of the projects implemented have already brought measurable social and economic effects to our residents. The first calls for applications were announced in 2008. In the period of three years MJWPU (the institution responsible for implementing funds in Mazovia) has announced 31 competitions. Our beneficiaries are very active and courageous in applying for EU grants. The number of submitted applications for financing exceeds 4,800, and the total amount applied for is over

PLN16.7 billion. Over 1,030 of the best projects have been selected for co-financing by the Board of the Province. 319 investments have already been completed and settled, with a total value of PLN835.7 million, including PLN488.1 million of co-financing. The implementation of projects co-financed by the EU injects new life into the economy, creates new jobs, and favours the growth of the competitiveness of Mazovia against other regions. All investments are important and needed – let me just mention a few areas of support, such as constructing new culture facilities, renovating hospitals and equipping them with state-of-the-art equipment, creating IT networks, introducing IT solutions to commune and district offices, supporting research centres, technology parks, and constructing roads and water and sanitary infrastructure. All entities involved in the process of spending EU funds, both the institutions responsible for implementation and project initiators, have been going through a time of hard work, learning complex procedures, solving emerging problems, and realising their ideas. Today I can safely say that it has been worth it. Mazovia is changing and is becoming a more beautiful and better place to live in.

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Polish Presidency

The Polish Presidency of the Council of the EU – Priorities On 1 July 2011 Poland will take over the Presidency of the Council of the European Union, which is a decision-making body of the European Union. The Council of the EU is composed of one minister from each EU member state, typically the minister in charge of a department relevant to the subject matter being currently discussed. The member states’ Presidency was instituted by the 1957 Treaty, which established the European Community. The European Council’s decision of 1 January 2007 determined a new order of countries to hold the office of the President of the Council of the European Union.

Ewelina Janczylik Poland will hold the office along with the Kingdom of Denmark and the Republic of Cyprus. In order to prepare for the event as best as they can, the three countries established cooperation as early as in 2008. The Council of Ministers document of 15 March 2011 established a preliminary programme for the Presidency.

The major priorities are to negotiate a favourable EU budget for the years 2014-2020, to cut down the budget deficit, and to reduce the public debt.

It is equally important to carry out the 2012 annual EU budget approval process efficiently. During its Presidency, Poland will be in charge of work on the implementation of the first stage of the so-called European Economic Semester. The representatives of the Polish government will make every effort to finalise the process of amending the Treaty of Lisbon to establish the European Stability Mechanism, which is to safeguard both economic and financial security and to restore confidence in the financial markets, which is of particular importance nowadays.

While continuing the Cohesion Policy, we should not forget about the need to strengthen the internal market, taking action towards greater economic growth. In the wake of the global crisis, it is necessary to adopt measures that will stabilise the public

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finances of the EU. Boosting the internal market involves not only allowing the free flow of goods, people, and capital, but also placing special emphasis on developing the services sector, especially electronics, paired with eliminating trade obstacles to on-line cross-border transactions, and generally facilitating transactions over the Internet.

Another of Poland’s intentions is to publicise issues related to the Eastern Partnership. Poland will advocate for signing Association Agreements, setting up free trade zones between the EU and the East, and finalising agreements with Ukraine. A further issue of significance to the Polish Presidency is making progress in visa and trade liberalisation, as well as intensifying economic cooperation. Poland plans to encourage Belarus to cooperate with the West, but the essential condition is respecting human and civil rights and standing by the principles of a democratic state. The Council of the EU will also aim at establishing a new EU-Russia

Poland has set very ambitious targets for itself, if it wants to carry out all that it sets out to do. And yet, over the time of 184 days, which is the duration of the Polish Presidency of the Council of the European Union, given that all the member states cooperate with us, we can achieve all the programme’s goals

cooperation framework and signing a new treaty with Russia, while developing the EU-Russia Partnership for Modernisation. The Eastern Partnership – Civil Society Forum is scheduled to take place in October 2011, setting out new objectives for cooperation between the EU and its Eastern neighbour countries.

As for the common security and defence policy the Polish side will make efforts to increase EU’s potential in the area of crisis management, advance the cooperation of member states in the area of defence and ensure partnership with NATO. Furthermore, Poland will aim at completing work on amending the regulations on Frotnex (The European Agency for the Management of Operational Cooperation at the External Borders of the Member States of the European Union), in order to more effectively support the member states in the event of a crisis.

In the case of EU foreign relations, it is planned to increase the effectiveness of EU development policy, security policy (fighting terrorism), energy policy, and consular affairs (agreements on visa facilitation within the framework of the Eastern Partnership and the common trade policy).

Poland intends to advance accession negotiations with Iceland during the Presidency and finalise the process of Croatia’s accession. Accession negotiations with Turkey should also continue. As far as trade policy is concerned the preparation of a WTO Ministerial Conference will be an issue of vital importance, as the meeting is expected to feature decisions concerning the most difficult issues of the Multilateral Trade Negotiations of the Doha Development Agenda of the WTO. Russia’s accession to the WTO may be finalised, and a strategy of action towards reducing the use of and/or dropping protectionist measures and activities undertaken during the crisis may be implemented. The work involving seeking solutions to the ever-growing

Polish Presidency limitations to international trade will certainly be a featured issue, and a set of aids to streamline trading operations and transit will be worked out, as will be new systems of EU customs preferences for developing countries.

It is possible that during the Polish Presidency the EU will sign free trade agreements with India, Singapore, Ukraine, and the Persian Gulf countries. Free trade agreement negotiations with Malaysia, Vietnam, and Thailand may also be concluded, while the previouslynegotiated EU agreements with Latin American countries and the Andean Community of Nations may come into force. Poland also wants to work out new relations between the EU and the Arab world and a comprehensive strategy of action for that region. In addition, taking into account the recent national liberation movements, there will be support for the democratisation process and the creation of a new order in the countries of North Africa.

Another significant issue is the intensification of the EU’s external energy policy. A discussion on new solutions to help the European energy sector retain its competitiveness is to be expected. The Council will aim at working out a coherent standpoint on regional and global energy-related problems.

Poland will continue the actions concerning the Energy Infrastructure Package.

To harmonise EU law with the laws of specific member states, Poland will focus on judicial cooperation, both in civil and criminal cases. In civil cases this will involve the regulations concerning the rights of inheritance and the establishment of the European certificate of inheritance (the European Contracts Law). As regards criminal cases the members of the Council of the EU will examine the European Commission draft project concerning protecting the rights of victims and the procedural rights of suspects and defendants. The work on updating the Schengen Borders Code, and on improving the protection of under-aged people crossing borders, is also due to be completed. Other planned actions include starting work on developing the eastern aspect of the Global Approach to Migration, bolstering cooperation in the field of mass events safety, preparing a new strategy and tightening cooperation across customs offices; also with the police.

During the Polish Presidency, besides the standard subject matter strategic to the EU, the Council will also address issues connected with education, environmental protection,

and healthcare. It wishes to invest in culture and promote cultural and artistic education, also promoting the Culture and Europe for Citizens programme. In the field of education a discussion is planned on the subject of supporting the education of children whose parents have migrated, modernising universities and establishing cooperation between higher schools and business. 2011 was declared the European Year of Volunteering to promote the trend of youth voluntary service, and promote the idea of creating conditions conducive to involving society in volunteering. As for health, Poland will put an emphasis on improving public health and reducing health inequalities between the EU countries and the countries of the Eastern Partnership.

The question of implementing early diagnosis, prevention, prophylaxis, and the treatment of non-infectious respiratory diseases is also of great importance.

Poland has set very ambitious targets for itself, if it wants to carry out all that it sets out to do. And yet, over the time of 184 days, which is the duration of the Polish Presidency of the Council of the European Union, given that all the member states cooperate with us, we can achieve all the programme’s goals. ::

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Polish Presidency

Jarosław Chałas Attorney at Law, Managing Partner of the Chałas & Partners Law Firm On 1 July Poland begins its six-month-long Presidency of the Council of the European Union, an opportunity to boost the prestige of our country and Central Europe. The question of whether we will be able to achieve any ambitious goals in this period is the focus of discussion among Polish political elites. Unfortunately, it is no use counting on them being creative or forward-thinking. If Polish politicians fail this test, and the Presidency will no doubt be a test, the issue may be eagerly picked up by our opponents in the EU to disparage Poland.

The period of the Polish Presidency will largely coincide with the parliamentary election campaign in Poland. I am afraid that the main aim of the debates will be the self-promotion of the political parties involved. On the one hand, they will be making efforts to strenghten their position, avoiding any issues that hold threat of spectacular failure. On the other hand, there will be bitter accusations of wasting the chance to influence on EU policy as far as Poland’s direct interests are concerned.

Unfortunately, the arena of this struggle will also be, as we have already seen, the European Parliament.

This will not be conducive to achieving any ambitious goals. We have already seen examples of this during the Belgian Presidency, when Belgium had no government, and the Hungarian Presidency, dominated by internal problems connected with amendments to media law and controversial draft provisions to be included in the Constitution.

Both these presidencies have contributed to further deprecation of the EU Presidency. The most significant restriction, however, has been introduced pursuant to the Treaty of Lisbon.

The capacities of the country holding the Presidency have been limited by excluding the right to represent the EU outside, guide internal policy, and presiding over the European Council.

Nowadays, the Presidency is confined to organisation and logistics. It will mainly coordinate the proceedings of the Council of the European Union.

All the above leads to believe that this Presidency will not have more merit than the previous ones.

Promotion alone is not enough Still, we are not doomed to fail. It seems that the government rightly emphasises that a lot of effort will be put in promoting Poland as an EU country that counts, the leader of

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Polish Presidency

Central Europe. This provides the opportunity to completely do away with the division into the old and new countries of the EU. The preparations in this respect are already nearing completion. Several dozen ministerial meetings, and a few hundred expert meetings and conferences are scheduled. About 30,000 official visitors are expected. The promotion of Poland, although extremely important, cannot be the only programme implemented. There are certainly many issues to be addressed during the Polish Presidency – we should identify the priority tasks, which are of vital importance to Poland, while remaining in the interest of the EU at the same time.

order to reanimate the Eastern Partnership, will be changing the attitudes of Germany, France, and Russia. If we fail to convince our partners in the EU and outside that Poland’s intention is not competing with Russia for influence in the region, we can already cross it off the list of Polish priorities and focus on, say, the Baltic Strategy. It would be optimal to carry out both projects, especially when you consider the future of Ukraine, where the post-Orange Revolution opportunities will never arise again. Counting on EU membership of Ukraine is rather unrealistic, and perhaps Ukraine will find its own way as the actual link between the East and the West.

Taking into account the interests of the EU’s strongest players will benefit Poland

No illusions

We should not delude ourselves – if we fail to provide for the interests of the strongest players in the EU - Germany and France – while setting our priorities, then we should not count on success. These days we are unable to push any issue in the EU against these countries. The Polish Presidency falls at the time when Europe is struggling to recover from the financial crisis. In this context, the negotiations on the budget, due to come into force after 2013, will be particularly difficult.

The short period of the Presidency does not allow the exertion of a durable and effective influence on EU policy. Nevertheless, it is an extremely important issue, given the longlasting consequences of the new budget perspective – effective between 2014 and 2020 – insofar as it will affect the distribution of funds directed at especially-important areas from the point of view of Poland, such as infrastructure and energy.

The Polish Presidency, which is due to start soon, will be a difficult test for our politicians – a test of their negotiation skills, their ability

to reach a compromise, and their determination in relations with leading EU countries, but also a test of their responsibility before the country and their ability to refrain from destructive criticism solely in the name of particular interests. If we fail this test, our opponents may use it against Poland.

Admitting such pessimism, one cannot help but feel a little ashamed, but, unfortunately, I do not see the six months of the Polish Presidency as very promising. ::

Promotion is not everything, or why the Polish presidency is not going to be an improvement over the ones before

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Activating the Eastern Partnership Also, the Eastern Partnership, initiated by Poland and Sweden, requires considerable activation on the part of the EU. This is important for several reasons. Firstly, it is a project in which Poland has staked its international prestige, and a fiasco of this programme would also affect our position in the EU. Secondly, tighter economic cooperation with the Eastern partners would stimulate the economic growth of Poland. Democratisation and reduced corruption, prompted by such cooperation, would contribute to building a stable and developing region – and can there be a better guarantee of economic progress and peace? The most important problem, though, which needs to be tackled in

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Polish Presidency

Professor Henryk Skarżyński the creator and founder of the International Centre for Hearing and Speech in Kajetany, outside Warsaw, and the organiser of the World Centre of Hearing

The first Polish Presidency in a united Europe is an opportunity to share our history, capabilities, strengths and ideas. These will be changing Europe, because it needs to be changed and is aware of that. It also knows that this geographical area, to which it has been formally extended recently, is home to many talented and hardworking people who have always lived in Europe, and who can significantly contribute to the further development of our modern society. These concepts should guide our actions in all areas, including that of public health care. It is worthwhile encouraging the EU to pursue a programme of equal opportunities in health and education for the young generation of Europeans. After the implementation in Poland of programmes for early detection of hearing, sight and speech defects on an unprecedented scale in Poland, we wish to share our solutions with the rest of Europe, so that each generation of 7-year olds is covered.

Early detection of disorders is an opportunity for early, cheaper and more effective treatment. It is also a very specific contribution to the development of European society in its many dimensions. Our initiative is the first designed for the young generation, in whitch we all put hope. We cannot squander the opportunity, which is the cyclical Presidency of the EU. ::

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Polish Presidency

Piotr Bieliński President of the Board of ACTION S.A. The Presidency of the Council of the European Union is a notable distinction for Poland and the opportunity to highlight our role in the EU’s decision-making process. We will have a chance to present the main objectives of the Polish policy, indicate crucial areas from our perspective and submit our own solutions.

However, from the point of view of the industry I represent, the most important are the assumed priorities. I mean the strengthening of economic growth through the development of the internal market, including the electronic market. Taking actions to eliminate barriers hindering online cross-border transactions has been widely-discussed. Indeed, paying attention to this issue and including it in the strategic objectives is the first step towards a solution.

The level of cross-border transactions is a measure of the degree of integration in the internal EU retail market. After all, the Internet sales channel is the one most often chosen by customers who make their purchases at a distance. Meanwhile, many online shops are not prepared to handle consumers from all EU countries. This means that Internet

transactions are often cancelled because the consumer’s home address is outside the shop’s domestic market. According to a survey conducted by the European Commission, 61% of cross-border sales are rejected because the sellers refuse to serve the consumer’s country. Such an action may even be seen as a kind of discrimination against customers because of their country of origin. This serious flaw in the system and the lack of adequate regulations prevent EU citizens from equal access to the most competitive services and products.

Along with ever-wider access to the Internet the popularity of e-commerce is growing not only in more developed markets of the “old” EU, but also on the Polish market.

A few years ago Action, which had previously focussed on the distribution of IT equipment, saw a market niche and invested first in A.pl delicatessen operating in a new segment in Poland, namely e-grocery, and then in gram.pl – a shop selling games combined with a portal bringing together the gaming community. Many companies which were retailers have also decided to open e-shops.

An example is Sferis. With the number of online transactions haveing increased its overall

sales volume, is able to build the brand image and deliver the shop’s offer directly to the customer’s home.

The introduction of solutions that would facilitate the access of EU citizens to Polish shops, and vice versa, would have a huge impact on the retail sector and the results of Polish companies operating in this sector. The Internet can become a bridge integrating the EU internal market, and a channel for providing services, material goods and intangible goods distributed in electronic form, where the registered premises would be of secondary importance.

The finalisation of proccesses leading to the integration the EU internal market, particularly at a retail level, will directly contribute to the dynamics of EU economic growth.

It will also provide considerable benefits for the citizens of each EU member state, such as access to a wide range of high-quality products at competitive prices and the security of transactions. I am convinced that this will be helped along by the Polish Presidency of the European Union. ::

6/2011 :: polish market :: 21

Polish Presidency Opinion

Ewa Małyszko Vice-President of the Board, KGHM Investment Funds Association Poland, which is taking over the leadership of the EU Council in July, will have to take care of the post-crisis repair of European economies. Not only does it present a great challenge which requires strategic planning and full political and organisational activity at the national and European levels, but it is also a great opportunity for Poland to “mould” the European Union and the position of Poland itself within its structures.

Our aims, discussed by the government for a long time now, will be better economic management in the EU, which will allow the implementation of structural reforms and the consolidation of public finances, and most importantly, will help develop cooperation for economic growth, security and openness in the EU. Poland, with its initiatives, should contribute to Europe’s return to the path of fast economic growth in order to improve the prosperity of its population.

However, from the point of view of the company I represent and the line of business we operate in, the perspective of Polish Presidency has two dimensions. First of all, these are the priorities officially established by all the countries which begin their Presidency of the Council of the European Union. The most important among them are obviously to strengthen economic growth, because the better the economy functions, the better business conditions are. The second aspect is the huge opportunity to promote Poland abroad, in the case of KGHM TFI to boost Polish spa tourism. The role of this form of tourism in our country is repeatedly cited as one of the priority quality products directed at foreign markets. Our sanatorium resources, as well as our spa and tourism infrastructure, are reaching higher and higher levels, not different from European standards, but often even exceeding them. The future of Polish spas is and will be considerably influenced by EU funds allocated to the development of spa infrastructure (hotels and basic therapeutic standards of spa therapy locations). Thanks to the investments financed with aid funds from the European Union, the desirable image of spa centres as well-known and appreciated resorts will be enhanced. Therefore I hope that our Presidency of the Council of the EU will facilitate the promotion of Polish spas among our European neighbours.

It is worth remembering that the Presidency will only last six months and not everything can be implemented within such a short time. This is why it is good to focus on some particular issues and prove that it is possible to agree upon policies, which are of key importance to economic growth insofar as they are likely to improve the competitiveness of the EU through, for example, the facilitation of trade and business conditions of big, small and medium sized enterprises.

After all, we have experience in this area; we went through economic transformation and were the “green island” in the time of crisis.

From the point of view of Polish business, one of the more important aims will be to improve the internal market’s transaction potential and its further development, which is necesarry to ensure the free flow of human resources, capital, services and goods.

The enhancement and ultimate completion of the internal market can be achieved thanks to the set of amendments in the EU market directives prepared by the European Commission. Another task ahead of the Polish Presidency will be to take action with

a view to enhancing the services market, which generates circa 70% of EU’s GDP. It is worth remembering that Poland will start negotiations concerning the EU Financial Framework for 2013-2017 during its Presidency of the EU Council. I hope that we will manage to achieve the most beneficial financial proposal for the whole EU and for Poland.

The new EU budget is supposed to be an investment tool which will contribute to the economic growth of all member states. The main element of the investment policy of the Union should be the Cohesion Policy, serving to achieve the aims of “Europe 2020.”

I also strongly believe that Polish Presidency will undertake activities which will contribute to a better use of the intellectual capital of Europe. This would be facilitated by the modernisation of universities, the utilisation of scientific potential and the mobility of young people. Cooperation between higher education institutions and business, would greatly benefit both of them.

The EU Presidency, along with their related challenges, are ahead of us, and so are great hopes, expectations and opportunities. I believe that we will make the most out of our time and effectively meet the majority of the objectives we set for ourselves. The return of Poland to the track of fast economic growth will influence the development of the country, the business sector and the whole of society. ::

Polish Presidency

Poland as an honest broker in the negotiations of the EU’s Multiannual Financial Framework – the greatest challenge of the Polish Presidency?

The extent of the EU budget, financing the Cohesion Policy and the Common Agricultural Policy, the amount of discounts, and the own-funds system, will be the main contestable issues in the debate concerning the new EU budget. Negotiations are to start during the Polish Presidency.

“From the very beginning of the Polish Presidency we will be given the difficult role of an honest broker in the negotiations. The presiding country must act in the interests of the entire EU and represent the interests of the entire EU,” said Paweł Tokarski, an EU economic analyst at the Polish Institute of International Affairs (PISM) during the debate “The Polish Presidency and the EU’s Multiannual Financial Framework 2014–2020,” which took place at PISM. In late June the European Commission will publish a communiqué presenting the general outline of the Multiannual Financial Framework (MFF). Poland will be the moderator of the negotiations, and then this role, along with the Presidency of the EU, will be taken over by Denmark. PISM analysts are expecting that negotiations will not be easy, particularly due to the different interests of the member states, which can be divided into net beneficiaries and net contributors. Taking into account the balance of the transfer

Schedule of the MFF negotiations :: The European Parliament’s Budget Policy Committee announces its conclusions – May/ June :: The vote on the European Parliament’s position – 9 June :: The European Parliament announces the MFF proposals – end of June :: Detailed proposals of the European Parliament – September-December :: Discussions – the Danish Presidency :: Conclusion of negotiations – end of 2012 or later

between national and EU budgets, in 2009 Poland was the biggest EU beneficiary, receiving over EUR6 billion. Greece came in second with half the amount Poland received. Hungary, Portugal, the Czech Republic, and Romania are just behind. As for net contributors – those who lose on transfers from the EU in their balance – Germany tops the list (with about EUR6 billion), followed by France, Italy, UK, and Belgium. “The size of the budget in the next financial framework will be very controversial, owing to the current taxation problems in EU countries. Because of them, there is more pressure to look for savings in national budgets, which is also reflected in seeking savings at the EU level and in the attempts to reduce the EU budget,” said Patryk Toporowski, a PISM analyst. “It is primarily the net contributors that advocate the reduction – Germany, France, UK, and Sweden. These countries expect the budget to be below 1% of the gross national income of the EU. The countries that would expect an increase (up to 1.24%) of the budget are the net beneficiaries – Poland, Hungary, Romania, and Bulgaria. This will probably result in the annual budget for the next perspective running at a level of 1.05-1.1%.” Other advocates of increasing the EU budget are the European Parliament and the European Commission, which naturally use the budget as a tool to exercise power in the EU. Another controversial debate will take place over the new own funds, i.e. new forms of financing EU’s activities. Last year the European Commission suggested 6 new ideas for own funds. This would be revenues from taxes on financial markets, income from the sale of greenhouse gas emissions, aviation tax, EU

VAT, energy tax, and EU CIT. The majority of member states are against introducing a EU tax. “Poland is open to proposals, but it clearly states that this cannot be an own resource that does not correspond to how well-to-do a member state is. Poland rejects the suggestion of profits from the sale of greenhouse gas emission entitlements straight away, as it would pay too high a price in relation to its financial condition,” stressed Toporowski.

The Cohesion Policy, of which Poland is the greatest beneficiary, will be another controversial issue during the Polish Presidency. “I have no good news in this matter either. The biggest member states with the greatest political power aim at reducing the funds used by this policy. Germany suggests confining this policy to the most needful regions, Sweden to the most needful countries,” warned Toporowski. He added, however, that these suggestions will most probably remain unfulfilled, as the Cohesion Policy is supposed to implement the Europa 2020 strategy, which is important to all EU countries.

When it comes to agricultural policy, the largest item in the EU budget, and one of the most difficult political subjects, opinions are also divided. UK, Germany and Sweden are for weakening this policy, while France advocates it, as it needs more direct subsidies for financing rural areas. Poland, supported by, among others, Hungary, is of the opinion that similar conditions for competition on agricultural markets should be provided to all member states.

Paweł Tokarski stressed that Poland is preparing for its difficult duty as the honest broker in advance. Meetings of the governments of the countries supporting the Cohesion Policy, and of the Prime Ministers of the Poland-Denmark-Cyprus Trio, have already taken place. During the latter, the Multiannual Financial Framework was declared the most important component of the Trio’s work. ::

Prepared by Sandra Wierzbicka

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Polish Presidency

New environment-based The environment and climate protection are two of the most important subjects of EU policy. Poland will be responsible for the coordination of actions taken by the Council of the European Union in this area from July to December. Decisions concerning worldwide climate policy, the future of the Kyoto Protocol, species survival, and biodiversity, are there to be made. Work concerning the economics of natural resource use is to be continued.

Jerzy Bojanowicz

During Poland’s Presidency of the EU, the Polish Ministry of the Environment is going to head and coordinate preparation efforts for around 200 different meetings (mainly abroad), and the work is going to cover 40 political subjects (including 3 draft bills). The main emphasis of Poland’s Presidency in the field of the environment will be put on climate protection, Europe’s adaptation to climate changes, and reducing the loss of biodiversity. Apart from actions taken in aid of the environment within EU borders, Poland is going to raise global issues, too. It will aim to reach aim reach an international climate agreement during the Durban Climate Change Conference, as well as to prepare the most significant event concerning sustainable development, which is the Rio+20 Conference.

“One of the most important elements of effective enviromental protection is solidarity of actions taken regardless of country borders and in cooperation with all partners. Poland’s Presidency is going to take place at a very special moment – during the discussion concerning the shape of new EU policies and the implementation of the Europe 2020 Strategy that defines major development directions for the Union.

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The greatest challenge that the EU will have to face over the next few years will be to reconcile the question of economic growth with effective environmental protection. One of the major aspects of economic growth is the availability of natural resoures, which has a significant influence on energy and ecological safety. In times of financial crisis, the main task for the ministers of the environment will be to secure the proper financing of the actions concerning environment protection,” says Andrzej Kraszewski, the Polish Minister of the Environment, who is going to preside over the work of the EU Environment Council.

One of the most important events concerning the environment during Poland’s Presidency will be an informal meeting of the EU Environment Council, which is going to be held at the beginning of the Poland’s Presidency i.e. on 11–12 June in Sopot. The Ministry of the Environment proposed the organisation of two high-level conferences devoted to biodiversity, climate, forests, and spatial planning issues. Moreover, the Ministry is going to coordinate the preparation of political stands and participation in international environmental meetings,such as Climate Convention, or Basel, and

the Geneva Conventions. The most significant event, however, will be for Poland’s Presidency the next UN Climate Change Conference in Durban, South Africa, during which Poland is going to conduct negotiations on behalf of the whole European Union.

The Ministry of the Environment is also planning to make the Presidency “greener”, i.e. take care of its ecological aspects. Administration representatives, who are to be responsible for the organisation of the events, have already started training.

Priority Matters for the Ministry of the Environment Biodiversity-Nature The loss of biodiversity is one of the biggest environmental issues the EU should face due to its actual and calculable threats, such as the violation of the functioning of ecosystems, the loss of genetic resources, and other interactions whose effects are difficult to predict but affect people’s health and safety.

The most significant actions to be taken are the implementation of the biodiversity conservation strategy in Europe, i.e. the Convention on Biological Diversity reached in November 2010 in Nagoya, and the selection of the biodiversity conservation tools (spatial planning, financing nature from

Polish Presidency

frames for Europe different sources, developing the financial instrument LIFE+, and the significance of forests in biodiversity conservation).

Climate After 2012 a new climate policy is needed in order to secure solidarity and the effectiveness of global actions taken in aid of climate protection. The aim of Poland’s Presidency is to make the Council of the EU adopt a single uniform stand for the whole Union on this matter, and to reach a new agreement during the UN Climate Change Conference in Durban, South Africa (COP17/MOP7).

The Presidency is going to strengthen Europe’s preparation for climate change and to start a discussion concerning the integration of the adaptation processes to sector policies.

Joanna Maćkowiak–Pandera Undersecretary of State in the Ministry of the Environment, responsible for the Presidency, admits: “Poland’s Presidency of the EU Council is a priority matter for the Ministry of the Environment. It is a wonderful opportunity to prove that Poland is responsible in its way of thinking on a common Europe, is able to coordinate the work of member states, and search for a reconciliation of various key matters. We can demonstrate our achievements and enormous efforts over the last several years. Having gained this experience, we are ready to coordinate the work of the EU in the process of shaping new frames of EU actions in aid of the environment and climate.”

Efficient use of resources (Resource-Efficient Europe) Resources are not only natural materials or fossils (fuels, minerals, and metals), but also food, soil, water, air, biomass, and ecosystems. The availability of all these elements affects the safety of Europe’s residents in its broadest meaning.

Poland’s Presidency is going to aim at the implementation of such environment protection tools that eliminate the dependence of economic growth on natural environment degradation.

The effective use of resources is one of the key initiatives of Europe 2020.

RIO+20 20 years after the United Nations Conference on the Environment and Development (the so-called Earth Summit), organised in Rio de Janeiro, during which the idea and the rules of Sustainable Development were agreed upon and adopted, a new conference, Rio+20 (the United Nations Conference on Sustainable Development) is planned for 2012 in Rio de Janeiro.

Rio+20 is going to be the most prominent international event concerning sustainable development for the last 20 years. The major goal of the conference will be to secure and renew political obligations in aid of sustainable development and to address new urgent challenges in this area. The most important subjects are the green economy in the context of sustainable development and poverty reduction, and institutional frames for sustainable development.

The European Union, being the worldwide leader in sustainable development, attaches great importance to the organisation of the Rio+20 Conference,

Major conferences :: Meeting of the Parties, 4th session, Aarhus Convention, Chisinau, Moldova, (29 June–1 July), :: 63rd Meeting of the International Whaling Commission ( Jersey Island, 10–15 July), :: Informal Meeting of the Ministers of the Environment (Sopot, 11–12 July) :: Conference on Agriculture and the Water Framework Directive – water payments in agriculture (Warsaw, 13–15 Sept.), :: 7th Ministerial Conference “Environment for Europe” (Kazakhstan, 21–23 Sept.), :: Ministerial Conference “Forestry for Climate and Biodiversity” (Ryn, 27–30 Sept.), :: Environment Council (Luxembourg, 10 Oct.), :: Ministerial Conference “Rio+20” (Warsaw, 11–12 Oct.), :: COP 10 of the United Nations Convention to Combat Desertification (South Korea, 10–21 Oct.), :: COP 10 of the Basel Convention (Colombia, 17–21 Oct.), :: Conference on “Planning for Biodiversity”, (Warsaw, 7–9 Oct.), :: COP 10 of the Convention on Migratory Species (19–25 Oct.), :: COP 10 of the UN Convention on Climate Change, South Africa (28 Oct.–9 Dec.), :: Environment Council (Brussels, 19 Dec.).

the subject of the Conference, reaching common agreement and setting the directions for the further development of global, regional, and state policy in the field of sustainable development.

The vast part of the preparation works for the Rio+20 Conference is going to take place during Poland’s Presidency of the Council of the EU. ::

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Plastics industry: contribution to sustainability

Kazimierz Borkowski, Managing Director of PlasticsEurope Polska

Energy is a vital part of our daily lives. Tackling climate change through energy conservation and clean energy production is a responsibility we all need to share.

It is rather widely accepted that energy is the main factor in climate change - a report by the European Commission states that energy accounts for some 80% of the EU’s greenhouse gas emissions. The European Union has been taking various initiatives targeted at the reduction of CO2 emissions accompanying energy generation and conservation.

The most energy-consuming are transport and construction industries. Plastics can play a significant role in helping these two sectors achieve greater energy efficiency and energy savings. They can do this in a variety of ways.

For example, plastics being up to 85% lighter than many

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other materials, they require much less fuel for their transportation. And because an increasing use of plastic components in vehicles or soft-drink packages results in lower fuel consumption, the environment will also benefit from lower emissions. Another example shows that plastics application in thermal insulation, together with smart design, can save up to 90% of the energy used in buildings for lighting and climate control.

Finally, we need not forget the growing importance of renewable energy in combating climate change. If we are to maximise energy efficiency, innovations and technological advances are vital. Here again, plastics have a crucial role to play here: they enable the construction of solar panels, wind power plants and photovoltaic cells – all important weapons in the fight against climate change.

In order to benefit from all these advantages of plastics during their life cycle, we need to produce them first and for that, like for any other material, energy is required and emissions of CO2 occur. But thanks to their properties (e.g. lightness, excellent insulating properties etc.) and due to the use in innovative applications, the savings of in CO2 emissions that are done during life phase of plastics products, overweight by the factor of 5 to 7. In other words, for each ton of emitted CO2 during the production phase of plastics, there is a saving of 5 to 7 tons of avoided emissions of CO2.

Plastics industry has made a tremendous step forward in increasing the efficiency and eco-efficiency of plastics production over the last decades. This means a very important reduction of all resources involved, from raw materials and to energy, lesser emissions to the atmosphere.

Unfortunately, the new rules of CO2 emission trading that the European Union has recently adopted, are very dangerous for Polish chemical and plastics industry, but also for other high-energy consuming industry sectors (e.g. cement, metal, glass industries). These regulations put coal-based economies in a really disadvantageous position and threaten their competitiveness on the European and world markets.

Therefore, as energy is one of the priorities of the Polish Presidency in the EU (secure Europe, food, energy, defence), the industry hopes it is still not too late to convince the European Community that such rules may eliminate a number of Polish industrial sectors from fair competition on the market. If necessary, Polish authorities should use all necessary means to defend Polish industry against this unjust and unproportional measures. ::

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Promotion across 10 time zones! says Paweł Potoroczyn, Director of the Adam Mickiewicz Institute responsible for the concept and organisation of cultural events to take place abroad during the Polish Presidency of the EU. Maciej Proliński

The foreign culture programme, entitled “I, culture” and prepared as part of the Polish Presidency 2011, is the biggest of all the Adam Mickiewicz Institute’s programmes promoting Polish culture abroad. Taking over the Presidency by Poland is surely a unique opportunity to present contemporary Poland to the world. That is why from July to December 2011,

The core of our foreign appearance is made up of six pillars, including the promotion of the works of Karol Szymanowski, Stanisław Lem, and Czesław Miłosz.

not just within the EU, but also beyond its borders – in 10 world capitals – almost 400 events will be organised, they will show Poland as a modern and unique country, with a rich contemporary culture. Poland is indeed a creative centre of Europe, and Polish culture is still the best vehicle for building its brand, and surely the less costly and the best-targeted. For years, I have insisted that the strongest and most recognisable Polish brand among the global elite is our culture. Our programme will be implemented by as many as 159 diplomatic posts, including 21 institutes all over the globe!

The Polish projects prepared by the Adam Mickiewicz Institute in cooperation with Polish and foreign partners will be presented in the finest galleries, clubs, and festivals, and on the greatest stages of Brussels, Paris, London, Berlin, Madrid, Moscow, Kiev, Minsk, Beijing, and Tokyo. There may be a lot of hype about Poland!

The core of our foreign appearance is made up of six pillars, including the promotion of the works of Karol Szymanowski, Stanisław Lem, and Czesław Miłosz. One of the main undertakings of the foreign programme is also “I, Culture Orchestra” – an orchestra composed of young musicians from non-EU Eastern European countries, which is to perform in the most respected concert halls in Europe, under the direction of the Polish conductor Paweł Kotla. This project has enormous symbolic potential, because there is no better metaphor of cooperation and common values than an orchestra.

Another important project is a series of Polish documentaries – “A Guide to Poles,” presenting Polish creativity in such diverse fields as music, mountaineering, fashion, toys, and

even sexuality. The series will feature “Art of Freedom,” a documentary on the phenomenon of Polish mountain climbing, and “Toys,” about what children used to play with during over 40 years of communism in Poland. We put great emphasis on promoting Poland through jazz. Our jazz musicians will this year be the ambassadors of Polish music abroad. In Brussels we will be promoted by the outstanding Motion Trio, playing the accordion. In Flagey there will be concerts by the klezmer Bester Quartet, and the avant-garde Mitch & Mitch. The major event of this year’s London Jazz Festival will surely be the performance of the excellent Polish vocalist Aga Zaryan. She will sing at the Tokyo Jazz Festival, the Berlin Jazz Festival, and the Madrid Jazz Festival. Our artistes will also be present in the concert halls of Beijing, and in the Tokyo club Pit Inn. Among the events of our cultural programme abroad it is also worth mentioning the performance by Teatr Biuro Podróży about Stanisław Lem, Wilhelm Sasnal’s monographic exhibition in London, and the exhibition “Poland-Germany. 1000 years” in Berlin. This is only a part of our offer. One thing is certain – we want to speak of Poland with great earnestness – of our creativity, culture, and history. It is also important to extend this effort beyond individual projects.

Our method is to be constantly present, to allow no major international event go without our participation in it. Each project is constructed in such a way that its effects will last as long as possible. We are achieving this primarily by creating ties. Not on the level of governments, ministries, or institutions, but among people, artists, and professionals, culture managers.

We also wish to establish a strong geography of contacts between institutions and individual entities of international cultural exchange. We are trying to give them a stable, regular, I would say organic character. :: 6/2011 :: polish market :: 27

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Polish Presidency

Attention! Culture in Polish cities says Michał Merczyński, Director of the National Audiovisual Institute responsible for the concept and implementation of the national programme of the Polish Presidency of the EU. Maciej Proliński “Attention! Culture” is the slogan of the national cultural programme of the Polish Presidency 2011. Extremely rich in content, it anticipates over 1,000 artistic projects, implemented with 170 partner organisations and 60 cyclical events during our Presidency.

Culture is not a form of spending free time, as many would think. It is an important element of life, an integral part of the social process. Finally, culture is part of the environment we are living in. This conviction has guided our efforts while preparing the Presidency programme. That is why we still have to pay “attention to culture.” The main message of the programme is “Art

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for Social Change” – a notion describing artistic activities which raise the social and artistic awareness of participants.

The programme stresses, therefore, the role of non-governmental organisations and grass-roots culture initiatives, and touches upon the issue of the Eastern Partnership.

Our programme is being implemented in five cities – Sopot, Warsaw, Wrocław, Kraków, and Poznań. Special events will also take place in Lublin, Białystok, Katowice, and Krasnogruda – a former manor complex of Czesław Miłosz’s family. And it will be by the Polish-Lithuanian border that, on the eve of the Polish Presidency, and on the 100th anniversary of Miłosz’s birthday, the Borderland Foundation, along with the Centre “Borderland of Arts, Cultures and Nations,” will organise the European Agora – a project under the auspices of UNESCO. Poets, philosophers, and artists will meet in discussion, with such honourable participants as Julia Hartwig and Professor Zygmunt Bauman.

The event which is most open to NGOs will certainly be the European Culture Congress, due to take place between 8 and 11 September in Wrocław.

The intellectual axis of the debates will be set by the already-published book about the state of contemporary European culture, by Professor Zygmunt Bauman, who has been involved in the works of the Congress from the very beginning. There will be over 300 participating artists, scientists and philosophers. Their discussions on the phenomena of contemporary culture will be complemented by interdisciplinary projects with artists, theoreticians, and culture animators from the countries of the EU and Eastern Partnership. These will include such figures as Umberto Eco, Vaclav Havel, Krystian Lupa, and Andrzej Wajda. The Congress will

feature an artistic encounter between the Polish composer Krzysztof Penderecki, the guitarist of Radiohead Jonny Greenwood, and a musician representing a radical trend in electronic music – Aphex Twin. Another major event during the Congress will be the world première of Krystian Lupa’s theatrical performance, based on a text by the renowned young Polish writer Do­ rota Masłowska.

On 1 July, the inauguration of the Polish Presidency of the EU will be visible in almost all of Warsaw. We have planned an all-day music event, which is to take place in four stages prepared especially for this show. Each stage will present a different musical genre, including classical music, ethnic music, and jazz. The National Philharmonic will feature the première of a composition by Paweł Mykietyn – one of the most prominent contemporary Polish composers, written exclusively for the inauguration.

The big event of the day will be performance of “Tu Warszawa” (“Warsaw Here”) near Defilad Square. The show will be made up of three combined multimedia stages offering the most popular compositions of classical and popular music, performed by Polish and foreign artists. In the summer, Sopot will proudly present “The Open Culture Spa” – a project which is to direct the visitors’ attention to attractive, but still not fully-discovered, places in the city.

In the autumn in Kraków, we are planning to stage the world première of the great “St Luke’s Passion” by Krzysztof Penderecki, directed by Grzegorz Jarzyna. Poznań will organise a project combining the worlds of contemporary dance and artists performing old music – “Old Music – New Dance.” There will be numerous events in other Polish cities too. Katowice will become the venue of the Temporary Cultural Action and the OFF Festival. Białystok is preparing an exhibition entitled “A Travel to the East”, and Lublin, which has for years been an advocate of the Eastern Partnership, will continue its cultural policy, inviting artists, animators, and non-governmental organisations from Lviv, Vilnius, Minsk, and Kiev. ::

Science and Innovation

The following companies were awarded the following titles :: The best innovative company - Integer.pl, for projects created independently by ­e‑InPost and Inpost Paczkomaty :: The best innovative project created with a research institution - Grupa TP :: The best innovative project in the utility and versatility category - Hydromega, Unikkon Integral :: The best innovative project in the telecommunications category - Exatel :: The best innovative project in the banking category - Alior Bank :: The best innovative project in the ecology category - TFP, Ecotech Polska, Ferro :: The best innovative project for an SME mis24.pl

The Scientific Board of the competition consists of persons with recognised successes in various fields related to innovations: :: Tomasz Czechowicz, Managing Partner and Senior Equity Partner at MCI Management S.A.; :: Jan Fazlagić, Professor at the Poznań University of Economics, expert in the field of knowledge and intellectual capital management; :: A ndrzej Jajszczyk, Professor, AGH University of Science and Technology, worldfamous specialist in the field of telecommunications; :: Mariusz Jarzębowski, New Ventures and Competitive Strategy Manager at Microsoft Polska, with many years’ experience in Silicon Valley, including working with Steve Jobs; :: Janusz Marszalec, PhD., owner of Innovatech Consulting, with many years’ experience in Finnish scientific research institutions and the Technopolis technological park; :: Mirosław Miller, Professor, President of EIT+ in Wrocław, :: A ndrzej Wodecki, PhD., Director of elearning at Maria Curie-Skłodowska University, specialist in the fields of e-learning, web 2.0 and intellectual capital, founder of many innovative companies; :: K rzysztof Rybiński (Chairman of the Board), Professor and Dean, Vistula University; :: R ita Schultz (Vice-Chair of the Board), Editor-in-chief, “Polish Market.”

The best innovative projects Progress 2011 “Polish Market” and Vistula University have conducted research into innovative projects implemented by companies in Poland. Companies which received more than 50% of the total number of points qualified to the pool of companies taken into consideration when choosing the most innovating organisations and projects. Companies submitted their projects by filling in a survey. Participation in the research was free of charge.

Category: best innovative company Company name: Integer.pl • for self-developed project by e-InPost Innovation review: InFlavo Commercial is a commercial version of a company service involving a self-developed, innovative and pioneering on the Polish market platform for trade companies. InFlavo Commercial enables complex sales through Facebook.com, one of the world’s most popular social networking services. This excellent e-commerce and social shopping tool is addressed to firms striving to strengthen and expand their sales channels. Besides being an innovative teleinformation tool, InFlavo Commercial offers complex communication services for social network users, which markedly raises their shopping activity.

Innovatory features: :: pioneering solutions enabling fast growth of domestic e-commerce, social-commerce and social-shopping branches, :: InFlavo Commercial has set a new and fastgrowing trend in online shopping, :: self-developed software for a self-developed business concept.

In February, 2011, in a bid to improve InFlavo Commercial, the service was integrated with the newest version of cStore software (3.13). The aim is to raise the effectiveness of e-commerce auxiliary systems. Thanks to

this, online shops using cStore can export product data directly to the InFlavo panel on Facebook.com. This solution also allows the synchronization of current stock inventories, which in turn enables effective operation of shops similar to those operating with cStore on Facebook.com. Only six months after appearance of InFlavo it is used not only by Komputronik and the Vobis chain (which was the first to open its Facebook store), but several hundred other operators with further known brands currently testing the system. Market surveys carried out by e-InPost show that by the end of 2011 about a thousand e-shops will offer their products and services via social-commerce platforms.

• f or self-developed project by Inpost Paczkomaty Innovation review: Paczkomaty 24/7 is the only available in Poland innovatory solution allowing 24/7, prompt and safe forwarding/receipt of packages without queuing and in customer-chosen locations.

Paczkomaty 24/7 guarantees fast and ontime services at considerably lowered costs.

The system is a major support for the dynamically-growing e-commerce branch but is also useful for private users and offline traders.

Innovatory features: :: innovatory, pioneering solutions which have revolutionized the domestic courier branch, :: the service is based on self-developed commercial and technological concepts and solutions, 6/2011 :: polish market :: 29

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:: Paczkomaty 24/7 is the only forwarding service in Poland requiring no more than the recipient’s e‑mail address, :: t he first service in Poland to eliminate traditional forwarding/receipt problems, :: Paczkomaty 24/7 sets new trends in the courier and e-commerce branches.

Paczkomaty 24/7 offers: :: 24/7 forwarding/receipt without queuing and in customer-convenient locations, :: prompt delivery (within 2 working days), :: receipt in only 17 seconds without queuing, :: attractive prices, :: receiver notification by text message and e-mail, :: receipt by third persons (e.g. family members), :: convenient payment options (credit card, e-transfer, payment on receipt), :: permanent video monitoring.

Category: best innovatory project in usefulness and universality Company name: Hydromega Sp. z o.o.

Innovation review: One of the innovatory solutions in our company is a self-developed and self-built hydrostatic drive used in Lewiatan-type vehicles, for which we have filed two patent applications. The hydrostatic drive is universal and therefore an excellent solution for civilian and military use.

When starting the vehicle, the drive powers all three axles, which corresponds to first gear. At higher speeds the first axle functions as a free wheel and the drive powers the remaining two axles, raising speed and cutting torque. The third gear switches axles 2 and 3 to the free wheel function with the drive powering axle 1 (maximum speed). Additional speed can be attained by adjusting engine revolutions and drive strength. The applied solutions make for maximum fluidity, stability and reliability.

complete core network in this technology in Poland (2010-2011).

IPoDWDM technology enables infrastructure consolidation (IP network with DWDM transport network), which lowers outlays (Capex) and network maintenance costs (Opex). Thanks to high-capacity interfaces the technology also considerably cuts energy usage in data relaying [kW/Gbps]. According to estimates energy usage is 2-3 times lower than in currently-used solutions.

Company name: Unikkon Integral Sp. z o.o.

Category:

Innovation review: A self-developed system enabling the transcription of speech into MagicScribe text (Polish). In effect the user’s spoken statements are transformed into written text.

The system is currently in broad commercial use, notably by physicians preparing medical reports. The resulting text is legible (contrary to handwriting), almost perfect grammatically (98% correct) and produced at a pace comparable to fast handwriting (four times faster than by keyboard).

The system is also used by commercial companies for protocols and reports, TV broadcasters for transcribing interactive programmes into writing for better comprehension, lawyers and judges for transcribing dictaphone-recorded trial materials, parliament and local authorities for transcribing sessions and meetings, and disabled persons for commanding computers.

It is also a frequent component of call centre systems, where it enables voice steering.

Military applications: :: unmanned platforms, :: universal human/cargo transporters (loads up to 1,500kg).

best innovatory project developed with r&d unit Company name: Grupa TP b-Link b-Link is an application that facilitates people with a high degree of mobility disability precluding them from using a computer.

The principle of b-Link is based on controlling the computer by eye blinks. Working with b-Link, the disabled person is able to: write with the keyboard, navigate the mouse, create and edit documents, browse the Internet, open favourite applications, configure the computer settings. It is an open source application that can be downloaded for free.

The application has been created in strong cooperation with Łódź University of Technology.

Category:

Category:

best innovatory product in banking

best innovatory project in telecommunication

Company name: Alior Bank

Company name: EXATEL S.A.

Innovation review:

Civilian applications: :: civil defence, :: firefighting vehicles, :: agricultural vehicles for use in swampy terrain, :: beach-cleaning services (algae-removal equipment carrier).

This universal drive can be adapted to work in other vehicle types, including caterpillar vehicles. Such drives are also in demand by firms, institutes and universities which cooperate with us in R&D work.

The drive’s innovatory feature entails an automatic gear transmission system which steers the vehicle’s three axles.

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Innovation review: Super Core IP The introduction of links between core routers in IP/MPLS networks in trunk connections using IPoDWDM 40 Gbit/s technology.

IPoDWDM 40 Gbit/s is a unique technology on the telcom market. Development work on the technology is underway in IEEE and ITU-T groups, the first pilot installations were carried out in 2008 in Brazil and the United States. Exatel is the first operator to build a

The first-ever application of Digital Signage solutions on such a broad scale. The system enables to cut time needed to reach consumers and allows on-the-spot preparation of new announcements and their updates. Alior Bank was the first bank in Poland to use Digital Signage in such a complex way. Also introduced were touchscreens and LCD monitors. Customer service stations at Alior are equipped with computers and special touchscreens never used before in Polish banks, nor probably anywhere else in the world. This makes for better communication between customer and bank employee and enables product,

Science and Innovation

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Science and Innovation

contract and customer/bank profit simulation presentations. Customers can also sign their acceptance of dispositions directly on the touchscreen.

The Digital Signage project was part of a strategy aimed at eliminating paper documentation at Alior Bank. In effect we use half as much paper as traditional banks.

The project also boasted a unique “green” aspect – Alior Bank planted a tree for each electronically-signed contract. By April 2009 100,000 trees were planted this way in forestries in Wieluń and Lidzbark.

Category: best innovatory project in ecology Company name: TFP Sp. z o.o.

Innovation review: The new product involves components for the production of paper palettes. Developed in tandem with our business partners IKEA Components, this world-unique solution will help introduce paper palettes for all products marketed through IKEA stores worldwide. To meet this demand halfway, TFP launched the project in cooperation with the Aret machinery manufacturer from Tulce near Poznań, the Paper and Polygrgaphic Institute at Łódź University of Technology and the Logistics and Storage Institute in Poznań. The solution consists of a machine for the production of corrugated cardboard palette bases and, subsequently, the palettes themselves. The solution has been patented by TFP. This innovatory system helps save storage space, transportation and recycling costs, etc. Made from paper, the palettes are fully ecological and recyclable, waste palettes can be re-used for the production of paper, etc.

was no technology enabling the permanent stabilization of such waste, our technology makes it safe and, in some cases, re-applicable in construction.

2009, Veneto VerdeLine and Genova VerdeLine in April 2010, Justic VerdeLine line in March 2011.

Developed in cooperation with:

Category:

Self-developed

Company name: Ferro S.A. Innovation review: VerdeLine is the first Polish-developed water tap technology for reducing water consumption in households and public utilities (schools, kindergartens, supermarkets, hotels etc.). VerdeLine involves innovatory, environment-friendly bathroom and sink tap fittings ensuring low water and energy usage, and in effect lower costs. The VerdeLine logo guarantees the application of state-of-the-art water- and energy-saving technology.

VerdeLine features Padwa VerdeLine and Torino VerdeLine (bathroom taps), Genova VerdeLine (sinks, baths, showers, bidets and kitchen sinks /also with extendable outlet/), Veneto VerdeLine (sinks, bathrooms, showers, bidets, kitchen sinks) and Justic VerdeLine (sinks, baths, showers, bidets, kitchen sinks).

Construction elements:

Raised market share (no percentage data)

:: FerroAirMix, a high-class faucet aerator which raises performance by aerating water, :: FerroEasyClean, a system enabling easy removal of limestone to extend the system’s lifespan, :: a two-grade ceramic head with FerroClick hot water control ensures the system’s durability and robustness, precise water dosage and adequate proportions of hot and cold water. The system has two water flow options (economy and full), :: FerroEcoSave, a water flow stop system similar to FerroAirMix assembled in shower tap systems.

Developed in cooperation with:

Product features:

R&D centre, university, business partner

Cuts water usage by up to 52%, reduces costs (simulation available at http://www.ferro.pl/ zobacz-ile-zaoszczedzisz.html), low-priced at offered quality, ensures fast returns (up to 2 months), easy to use and maintain, original design.

The first Torino VerdeLine and Padwa VerdeLine systems came on the market in April,

Effects:

Company name: Ecotech Polska sp. z o.o.

Innovation review: A technology for stabilizing heavy-metalcontaining dangerous waste. Until today there

32 :: polish market :: 6/2011

best innovatory product for smes Company name: mis24.pl Sp. z o.o.

Innovation review: During the past three years we developed and introduced in our company the iPartner24 innovatory e-service which helped raise effectiveness and profits at minimum outlays. iPartner24 is a modern online service for micro- and small firms. Until now professional soft- and hardware as well as the employment of IT staff entailed high costs.

Thanks to iPartner24 our company could raise effectiveness and profits at minimum costs. iPartner24 embraces document and information management, invoicing, income and expense control, a customer e-mail databank with an advanced search system, customer management, project management, staff management (employee dossiers, vacation forms, business trips, sick-leave), purchase management, a professional e-mailing option, an individual and group calendar and a large databank with document forms. Access to company data is possible from all online terminals at any time. iPartner24 also offers efficiency-raising tools which require no lengthy start-ups or high outlays. The service can be adjusted to company needs in several hours and requires no additional equipment, infrastructure, software upgrades or staff. iPartner24 is easy to operate without time-consuming training courses. Thanks to our instruction manuals and with help from our specialist staff the service can be mastered in hours. A central repository with one, common company database enables problem-free operation regardless of employee number or employee location, which makes for faster and more efficient documentation flow both within the company and between the company and customers. iPartner24 is fully safe, server links are protected by a 256-bit code, the data server is located in an excellently-guarded IBM unit, an extensive access system protects data from unauthorized use. ::

A cutting-edge company Hydromega was founded in 1988. From the beginning of its activity it has been dealing with designing and manufacturing hydraulic actuator systems and industrial automation. Parallel with the production of hydraulic power supplies and devices with hydraulic drive systems, Hydromega carries out research, development and implementation works. Permanent cooperation with industrial plants and solving, often difficult, technical issues gave the company practical knowledge which is used in its projects. The company has 17 utility models and patents, as well as over 8,000 solutions in the field on hydraulic actuator systems.

Owing to its many years of reputation and the fact that its brand is well-known, Hydromega was able to establish permanent cooperation with technical universities, including the Military University of Technology, the Gdańsk University of Technology and the Military Institute for Tank and Automotive Technology.

www.hydromega.com.pl HYDROMEGA Sp. z o.o. ul. Wrocławska 93 81-553 Gdynia tel. 58 664 77 04 58 664 72 71 fax 58 644 72 92

Science and Innovation

Online crowdsourcing for a better life In February 2011, the users of www.openideo.com, an online platform for creative thinkers exchanging ideas for a better social future, found a new problem to solve: How might we increase the number of registered bone marrow donors to help save more lives? A ride to win the challenge began…

Andrzej Wodecki, PhD Since then until 7 June 2011, Internet users from all over the world shared 345 inspirations, which gave rise to 287 concepts. Out of them, the 25 best ideas were chosen and evaluated by the online community members. Finally, the winner was announced, together with nine other best solutions. The challenge sponsor, Stanford University Haas Centre for Public Service, chose University-Based Open Innovation Awareness Websites built on a DIY Kit as the winning idea. Thus, the project was launched.

In the same time, on another website, Starbucks fans were floating new ideas for even-better-coffee at mystarbucksidea.force.com. At an average speed of five tips per hour, they have already generated more than 110,000 concepts since the portal started a few years ago. Ideas are grouped into product, experience and involvement categories, and suggest, for example, to organise a Coffee Traveller Club, to price half for half-syrup or teach employees to ice a tea latte.

And, on yet another website, www.innocentive.com, the City of Boston offers an USD25.000 award for the best solution helping create a map of potholes based on acceleration and GPS data collected by volunteers running the StreetBump app on Android smartphones. This challenge is still open, so you are welcome with your ideas.

The three actions presented above were initiated by three different organisations and addressed to three

34 :: polish market :: 6/2011

different types of audience. In the first case, a university agency was looking for volunteers interested in generating ideas to make our world better. No financial award, only personal satisfaction and respect for the winner and his or her best ideas. In the second one, Starbucks, a large international corporation, asked individual consumers for simple tips. No financial reward either, the ideas will not repair the world, but – something crucial for millions – may improve our morning coffee in Starbucks. Finally, a large city with real problems asked software geeks for a solution offering USD25.000. The scale is local, not global, but the problem is serious and needs immediate attention.

All these cases are good examples of the open innovation concept.

A few weeks ago, I found a definition of open innovation that one can learn a lot from. It states that open innovation is a methodology, which intentionally uses system-produced knowledge to increase a number of actors involved in the process of initiation, development and production of products/services. Seems complicated? So let’s look a bit closer.

Imagine Starbucks. The value offered to the customer is a mix of the product (a good coffee, tea or cake), experience (comfort, buzz, etc.) and the possibility to meet inspiring people. Depending on the phase (initiation, development or production) of a new product/service delivery, actors may be Starbucks employees, franchisees, sub-contractors, consulting

companies or just customers. The next component of the open innovation system is knowledge: that may be the know-how (e.g. the perfect espresso secret), company’s procedures and experience or external bodies opinions (customers, but also subcontractors or franchisees). Now, it is time for the final step: the environment which intentionally uses knowledge to increase the number of actors in different phases of product development. How to do this? The key is actor’s motivation.

First, actors should have a clear goal to concentrate on, preferably a SMART objective (specific, measurable, achievable, relevant and time bound). This should be a really important mission, with limited time and a real chance for implementation.

A visualisation of the project timeline and a number of ideas at a given stage (e.g. concepting, applause, refinement and evaluation for OpenIdeo or under review, reviewed, in-theworks and launched for Starbucks) are very helpful.

The next tip comes from OpenIdeo.

Its community members can contribute in a variety of ways, from inspirational observations and photos, sketches of ideas, to business models and code snippets. All concepts are shareable, remixable, and reusable in a similar way as under the creative commons licence.

Finally, the system must allow the user to improve his or her rating. It is very simple: it is enough to display Top 10 stats on the main page, like Starbucks did with its Leaderboard or OpenIdeo with Top Inspirers, Top Concepters, Top Evaluators and Top Collaborators.

There is a great power within open innovation systems. In Poland, we have a very strong Internet community, IT systems are extremely simple and at hand, so both private and public sector can easily utilise that potential. It requires opening

polish bank pioneers

biometric atm Podkarpacki Co-operative Bank (Podkarpacki Bank Spółdzielczy, PBS) is the first bank in Europe to offer a “biometric” ATM which identifies customers by their biometric data.

The ATM is accessible in the bank’s round-the clock self-service branch in Sanok, according to plan by mid-April all PBS ATM’s are to read biometric data.

Biometric technology was developed several years ago in Japan, where it is a standard today. Its main purpose is to raise the safety of ATM payouts.

Biometric ATMs are equipped to scan the pattern of the customer’s finger blood vessels. All that is needed to use them is a biometric matrix of one finger of each hand, which is then fed into the bank’s database together with other customer data.

The biometric scanner x-rays the finger with an invisible, harmless infra-red light for about 1.5 seconds. The light is absorbed by the blood’s hemoglobin, which produces a shadow. On camera the shadow forms a picture of the finger’s blood vessel pattern. The picture is then processed into a biometric shortcode which functions as the customer’s individual and unrepeatable code.

When paying out money, the ATM asks the customer for his/her birthdate, then to place his/her finger on its scanner.

The machine then compares the customer’s biometric data with the bank’s database and, if everything tallies, pays out the required sum in the usual procedure.

The service is available for PBS account holders, it is also used for paying out social welfare and unemployment benefits.

Science and Innovation

digital resources (providing solvers with necessary data) and setting first challenges, and, above all, intentional use of available knowledge to increase number of participating actors.

The City of Boston asks for solution of the pothole problem. The “Economist” looks for a new, innovative Human Potential Index on innocentive. com. Some 3,000 city problems, out of the 4,000 reported in the UK, are solved thanks to the social network of citizens on fixmystreet.com. Elsevier, one of the largest publishers, is offering USD35.000 to software developers for creating applications helping researchers, medical professionals, librarians and students to drive science on challengepost.com.

In Poland, we can do the same! In the “Report on Innovation of the Polish Economy 2011” (more details on www.madra-polska.pl), we strongly encourage to open digital public repositories (reports, analysis and even raw data), organise large, 2-3day events for computer software designers (so-called hackathons) in order to explore these data, unleash its potential and, using the crowdsourcing formula, engage citizens into real-life problem solving. That is really easy, but requires a deep mental change, not only in companies, but mostly in the public sector. Imagine, for example, how the public procurement law should be changed in order to allow a city mayor to fund PLN100.000 reward for the

best solution for a real-life problem.

At the moment, few companies meet the requirements to enter a tender, and the price is set before the product delivery. The open innovation formula works opposite: the award is set at the beginning, and the winner is chosen based on the quality of his or her product.

At the moment, there are some first crowdsourcing ideas on the Polish web like www.ideosfera.pl and ­w ww.­bizuka.net* (a place where organisatios with challenging problems meet solvers with good ideas).

It is high time to start. ::

* biz + uka in Polish means interference of business and science

Who governs innovation in Poland – NIK (Nobody I Know)?

It worries me that innovation in Poland is so low when considered on a global scale. It worries me that Poles dispersed across the globe are capable of achieving globally-significant successes, while our talent-filled country cannot fulfil its aspirations and dreams as a whole.

Janusz Marszalec, PhD Every process has its main causative power, its driving force. What is important in the process of governing is to have a leader with a strong will to succeed, confidence, enthusiasm, and the ability to bring ideas to life.

Janusz Marszalec, PhD, MBA Owner of Innovatech Consulting and founder of the Edison Centre, both promoting and developing innovativeness. He has more than ten years’ experience in Finnish scientific research institutions and the technology park Technopolis. Mr Marszalec was a member of the Vistula University research group preparing the report on the innovativeness of the Polish economy. The report is available on www.madra-polska.pl

36 :: polish market :: 6/2011

I was wondering who in our country is such a leader in creating innovation, the conditions and atmosphere for its development, and enthusiasm.

Who provides encouragement to take risks, and leave failures behind, which should not clip our wings, but create an ever stronger will to stay on the way to final success? I haven’t arrived at an easy answer to this question.

Creating innovation requires taking risks. Risk is inherent in innovation, and, as global experience has shown, on average only 1 out of 10 ideas is truly worthwhile. Nobody has managed to improve this statistic.

And yet this single successful project brings so much return on

investment and reward for the risk taken that it not only covers all other costs, but provides very good profits. Venture capitalists are well aware of that. The countries that take up the challenge and risk of innovation know that as well, and this makes them leaders in the global economy with a very special national resource, almost a natural resource, which is their knowledge.

With a view to having statistically more successful ventures in investment, we reduce the risk levels, simultaneously reducing their innovativeness. Wanting to be more secure, we miss many chances and unique possibilities.

Why is it so that Poles, as individuals, are active, enterprising, not afraid of risks and sacrifices, whereas as a country at large we are so poor in terms of innovation? That is because it happens so often that things called “innovative” in Poland would in other latitudes pass for museum exhibits.

When discussing the evaluation of innovative projects, I have often

Science and Innovation heard people saying that we couldn’t risk too much, because if Supreme Audit Office (NIK) stepped in, we would have to explain why there had been no actual, certain profits, and why all the money had vanished into thin air. People conducting audits are often completely ignorant of the principles which underlie the decisions of brave investors, and even if they know them, they have no legal basis to apply them.

With this in mind, why expose yourself to charges of uneconomic management, given that, when you take a greater risk of innovation hoping for spectacular success, the odds that you get into troubles and lose your position, facing various accusations, are much greater than that you garner recognition and awards? If, when financing innovative ventures of average value, you have a better chance of coming out on top and avoiding NIK’s allegations, why not stay pseudoinnovative as the years go by?

How great in this situation is the actual role of NIK as the highest audit authority, and also of other audit bodies, in stifling world-class innovation in Poland? To what extent does it affect awareness in planning innovative ventures and programmes,

and their implementation? Does it actually play a significant role, as some, who are in charge of the money-spending process for innovation, are afraid? Is it a fundamental component of the infrastructure of innovation development – or rather a cover-up and convenient excuse, justifying (helping to legitimise) inactivity and an overcautious approach to the problem, finally, sometimes maybe just plain laziness?

Innovation in some countries is given so high a priority that there exist organs to coordinate actions, prepare strategies, implement education policy for innovation, and carry out actions in the area of science that unite the prime minister, the government, all the relevant ministries, the president and the parliament. When everybody understands what risk means for innovativeness and are ready to bear that risk, they create the foundations of a world-scale knowledgebased economy.

Do NIK and other Polish auditing institutions, through the respect and fear they evoke, by default or by accident, coordinate innovation policy? Does it mean that NIK – nobody I know – is responsible for this strategic governance on the national scale, and

innovation here is a random concoction of various concepts aimed at safe survival rather than active growth with aspirations of becoming a country that counts and a true knowledge-based economy?

If this thesis is right, then it is essential to adopt actions to define (install) a leader in innovation strategy planning in Poland, encouraging risk-taking and adequate risk management. This should be supported by executive Acts, which ensure the promotion of creativity and risk-taking at the stage of education, and promote appropriate methods of scientific research and cooperation between science and industry. Companies can watch over their own money and manage it correctly, and that is why including them in cooperation with science in scienceindustry consortiums creates better opportunities for safeguarding public money than even the highest-ranking reviewers and scientific committees.

Only wise leadership, and liberating the spirit of innovation, without fears of dire consequences, will enable Poland, which has enormous intellectual potential, to become a country of innovation, one that we’ve dreamt of, and a partner to the world. ::

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Science and Innovation

LfC: to be competitive today, and to measure up to nature tomorrow The innovative company LfC, founded by Lechosław F. Ciupik, creates and produces methods and measures for spine treatment. In order to establish and reinforce its position, it had to become competitive on the market. It chose the path of co-creating surgery by contributing the idea, conducting research, implementing bio-engineering hightech, and introducing new surgical methods. It sold the know-how to the United States, including the patent, and created its own IP management system. The President of the company, Lechosław F. Ciupik, repeats: “In order for LfC to be present on the market tomorrow, we need to be ahead of time.” The future of the company has been created with the new LfC philosophy “Measuring up to nature,” which has been implemented for a year.

L fC has existed for over twenty years. How has its economic position in Poland and abroad been built?

The company was founded in the period of socio-economic breakthrough in Poland and since the beginning it has been a company with a capitalistic approach, attentive to the needs of the market. Due to the difficult field in which we started our activities – medical production, it turned out that Poland was a backward country in this respect, so everything had to be built from a scratch. Since the Polish market was to a large extent controlled by foreign companies, entering this market required us to create a new product at an even higher level. At the same time, those companies made sure to protect their products and legal solutions.

Th is means that generating technical and medical progress in the company in such economic conditions was extra difficult?

38 :: polish market :: 6/2011

Yes, it was difficult, and at the same time constituted a great challenge. We immediately realised that being on the market means that the quality of our products must be at least as good as of the existing ones, but in order to be a match for the competition, they must be better, while not infringing others’ rights and with the best legal protection.

Has taking care of intellectual rights protection always been in the interests of LfC? Well, the issue of intellectual values is totally new in Polish conditions, like the notion of innovation connected with it. We have adopted the philosophy that “if we do, we do it better.”

It means that if something is available on the market, we must do it better because this is the only way to find a place on the market. This notion at the same time has defined our understanding of innovation, which was not present in the Polish vocabulary when we started our activities.

What is the area of innovation in LfC? In terms of our products, we could not limit ourselves to the domestic market. Since medicine is industrialised, our first level of reference was the European level and we had to make a lot of effort in this respect in order to meet the requirements set at this level in relation to surgical treatment. As far as this field of medicine is concerned, we should clearly state that Europe is still behind the United States. The USA still determines the level of biotechnology applied in surgery.

So what should be done, and how, in order for innovation to achieve an above-national and even aboveEuropean dimension?

We should follow the best! To try to match the best, and a success will be creating a better product than the best one available so far. Our task is to go beyond the state of the art in the field of the existing market knowledge and cognitive knowledge.

Science and Innovation Can you provide any examples of innovation with an above-European scope?

Yes, I must emphasize our special achievement. We sold to a large American partner our know-how, our IP, which consists of the new surgical method for spine treatment, including the device, i.e. the implant (this is now patented in several countries) with a training system, with the technology of implant production and practical clinical knowledge obtained by us as regards its application. I would like to add that this is the first comprehensive IP and patent sale to the US in the post-war history of Poland.

LfC created its own system of intellectual property management.

Why is the protection of thought and knowledge so important?

Nowadays, nobody who treats their work seriously will be careless about their intellectual property. In our company, on the one hand we care for the high technical and medical level of our actions, and on the other we reach the best surgeons through science.

We show the benefits of our activities, methods, and products through scientific conferences and meetings with surgeons, who, having acquired confidence in them, start using these products. It is a long and difficult process.

We would like to protect our own intellectual property as well. We are legally protecting ourselves by patents and trademarks, as during the transaction with the Americans. We have appointed a special IA (Intangible Assets) Division, which evaluates and protects intangible assets. These are very complex processes, especially taking into account the fact that IP transfer to the USA is difficult due to the differences in the legal system.

publications presenting the knowledge related to this type of surgery, in acquiring further patents and IP protection, as well as in the fact that countries at a much higher technological and medical level have been interested in our products, we have shown that what we do is valuable, and innovative on a transnational level, even outside Europe. All this has attracted attention from Poland’s medical and technical environments, and we are evaluated separately in each of these fields. As a company which participates in the development of spine surgery, providing new and patented products in this field, we are recognised in the community and are seen in several respects as an example of good practice, which is reflected in the nominations for the prestigious Polish President’s Economic Prize.

You are the creator of new bio-engineering thought in the field of spinal treatment. You have managed to persuade many prominent surgeons to cooperate with you, and you have also initiated the establishment and current effective operation of the Association of Spinal Studies and Treatment. Is it a natural consequence of successful knowledge exchange in the fields of technology and medicine?

Yes, the cooperating bioengineering and surgery group, the exchange of experiences, the presence at difficult

and often insufficiently-equipped surgeries, showed shortcomings, but also a niche, the filling of which required something new. This was the inspiration for action, the basis for creating new knowledge, a new IP. For over twenty years LFC has followed the motto “If we do, we do it better.” Your plans and intentions to date have resulted in success. New technologies in spinal treatment were prepared and implemented, new instrumentarium was introduced, and great progress was made in research. The subject of competitiveness was addressed.

What will the future look like in your company?

It is true that following our 1992 philosophy “if we do it, we do it better,” we wanted to cope with the competition, we wanted our potential customers - hospitals - to be more interested in our products than in the products of the competition. We managed to do it with great success. Having attained this position, we see our future in the world of more advanced activities. As we are dealing with live nature, human nature, our thinking about the near and far future involves “measuring up to nature” which is our newlyintroduced long-term philosophy. This means that in order to help people stay healthy, we will create products closest to nature. ::

In 2003 LfC was nominated for the Polish President’s Economic Prize, in 2007 it received the prize for the most innovative product in Poland, and 2011 brought another nomination for the Polish President’s Economic Prize granted by Bronisław Komorowski. This means the company is known in Poland, but is it also recognisable abroad?

Through actions in the field of medicine, which are visible in the implementation of new surgical methods, new equipment for spine surgery, in 6/2011 :: polish market :: 39

Science and Innovation

The innovativeness of Polish economy according to PAN What Poland needs is a participatory Innovation Strategy that will provide support to innovative actions and facilitate the identification of the financial needs of business owners. This strategy should be based on the existing structure of the innovative sector, the proper financial instruments, and legal and tax regulations. It should provide the framework for communication and cooperation and for the transfer of knowledge between state and local-government administration units and companies, and it should allow user-driven innovation.

Jerzy Bojanowicz Such is the main conclusion of the 6th “Report on the Innovativeness of Polish Economy in 2010” prepared by the Institute of Economic Sciences, Polish Academy of Sciences (INE PAN), as part of the Scientific Network “The Assessment of the impact of R&D activity and innovation on economic and social development,” under the supervision of Prof. Tadeusz Baczko from the Department of Microeconomics at INE PAN. The latest version of the report discusses the gap in innovation and development processes, as well as the financial and expansion policy in the innovation sector in Poland. Although the main conclusion (in terms of strategic and tactical goals) is that in 2011 the share of the commercial sector in R&D investments in Poland will exceed 0.3% of GDP, and by 2020 Poland will join the group of the most innovative countries in the world, the diagnosis is far from optimistic: the gap in innovation is not narrowing.

Why is this so? First of all, progress is blocked by insufficient financial support to R&D; the low percentage of GDP dedicated to R&D; and the reversed structure of financing, in which the state spends more than business does. Furthermore, the majority of resources is allocated to basic research. These are conducted by public-sector units, which hinders the process of commercialisation. Finally, since 2007, the volume of new

40 :: polish market :: 6/2011

order to carry on with their activities, while every eighth company needed less than PLN1 million. Banks claim, however, that financing such projects involves high risk and they require high collateral (obtaining credit for such purposes is more difficult than for regular investments). Nevertheless, the growth in the number of jointstock companies investing in R&D has been four-times-bigger than that in the number of general joint-stock companies. This proves that business owners still see better chances for obtaining financial resources for R&D activities from the stock market.

There is a lack of financial mechanisms that would be suitable for innovative companies at particular stages of their development. Around 50 Private Equity and Venture Capital funds are present in Poland, but Polish investors in these funds are in a minority – around 90% of investors come from abroad. The development of such funds should contribute to the lowering of the equity gap, especially in the first stages of company development.

The procedures concerning the availability of external sources of financing (credits, structural funds), innovation support programmes, and applications for R&D subsidies, are also far too long.

Moreover, legal and tax regulations (investment concessions) and institutional solutions are not suited to the needs of innovative companies. ::

products and services available for sale has been lower than the average for the EU. In order to reach the strategic goals, it is necessary to establish in Poland major research centres with strong European and worldwide connections, oriented to searching for breakthrough technological solutions and increasing their value. It is also essential to ensure feedback and the smooth exchange of data, information, models, and knowledge between science and business, in addition to creating demand for innovation in business (as in a Polish saying “it’s the idea that starts the business”). Moreover, education and university resources should be taken adventage of, and the low-cost workforce should be considered as a basis for the development of human capital, geared to the needs of innovative economy.

The authors have noticed an increase in the number of companies obtaining patents both in Poland and abroad (in the Patent Office of the Republic of Poland the number of such companies rose by 14.8% in the years 2005–2009 in comparison to 2004–2008; the number obtaining 1 or 2 patents is going up too). In 2010, however, the number of patents issued by the Polish Patent Office declined in comparison to 2009. The number of companies financed from European funds is rising, and while only some of them take part in EU Framework Programmes (CIP, 7 PR), they are numerous to participate in Operational Programmes. Still, their influence on the level of the innovativeness of the economy requires conThe results of the research conducted by INE PAN show stant monitoring. that the biggest number of R&D investors can be found in The problem, however, lies in the the Mazowieckie province, and the biggest growth in the banking policy of financing innovanumber of such investors can be observed in the Podlaskie, tive projects. Over 60% of companies Dolnośląskie, and Podkarpackie provinces (Podkarpackie polled declared that having faced fiis characterised by the biggest number of R&D investors nancial barriers, they required financial among all eastern regions of Poland). 70% of investors in support at the level of PLN10 million in eastern Poland come from the SME sector

Science and Innovation

Technology

– for a society of knowledge The participants of the 24th Congress of Polish Technicians welcome the fact that this event, important for the whole community of Polish engineers, summing up nearly a year of debates, discussions, and actions taken in order to consolidate the community of Polish technicians, universities, research and economy institutes, is taking place in the year of the Polish Presidency in the European Union – reads the Resolution adopted on 25 May 2011 ending the 24th Congress of the Polish Technicians in Łódź (one of its media patrons was “Polish Market”) Jerzy Bojanowicz During the Closing Session of the 24th Congress of Polish Technicians (KTP) the summary was presented of the results of a whole-year-long discussion going on in scientific circles in Poland and abroad. The first

Prof. Michał Kleiber

work of the congress began on 8 June 2010, during the 8th Forum of Engineers in Poznań.

This year’s congress was held under the honorary patronage of the President of the Republic of Poland Bronisław Komorowski. The Congress was entitled “Technology – for the Society of Knowledge” and it continued the guiding theme of the previous Congresses of Polish Technicians, and especially of the 23rd KTP - “Technicians – Closer to the Market” (Warsaw – Poznań, 2001–2002).

The Congress was inaugurated by Ewa Mańkiewicz–Cudny, the President of the Polish Federation of Engineering Associations of the Main Technical Organisation (NOT).

Then followed a letter from President Bronisław Komorowski to the participants of the 24th KTP, which was read out by Olgierd Dziekoński, Secretary of State in the Chancellery of the President of the Republic of Poland, and a film recording of a message from Jerzy Buzek, the President of the European Parliament.

Special guests such as the representatives of government, parliament, and Łódzkie Province authorities, delivered speeches during the first plenary session entitled “Politicians and Technicians.” Among the guests were Radosław Stępień, Deputy Minister of Infrastructure; Michał Kleiber,

President of the Polish Academy of Sciences; Andrzej Smirnow, President of the Parliamentary Education, Science, and Youth Committee; Joanna Chełmińska, Govenor of Łódzkie Province and Witold Stępień, Chairman of Łódzkie Province. Among the authors of occasional letters were Barbara Kurdycka, the Minister of Science and Higher Education and Krzysztof Kwiatkowski, the Minister of Justice.

The Congress, which continues its 175-year-long tradition of the Polish Engineers’ Movement and the first Convention of Polish Technicians held in 1882 in Kraków (the last one before World War II was organised under the honorary patronage of Ignacy Mościcki, the President of the Republic of Poland), was attended by representatives of the Polish technical societies in Poland and abroad - associations of technicians and engineers, industry and business organisations, and academic teachers from technical universities and research institutes.

Towards the end of the meeting, during the plenary session entitled “To be Useful to the Country,” there was a debate concerning the documents of the 24th KTP and the Resolution of the Congress. The positions taken by the participants of the Polish forums for innovation, energy, and transport constitute an integral part of this Resolution. Furthermore, the Congress 6/2011 :: polish market :: 41

Science and Innovation proposed the Ministers of the Economy, Science and Higher Education, and Regional Development, that the technical society would take patronage over a group of companies from the SME sector to implement innovative projects in the years 2011–2015. The results of these projects will be presented at the Innovation, Technology, and Machines Fair as part of the International Fair in Poznań.

The adopted Resolution also states that: “The participants of the 24th Congress express the belief that the main priorities of the forthcoming actions taken by the state should be securing the conditions to invest in science, technical progress - especially in the fields indicated in this document, new technologies, and environmental solutions resulting from European programmes. The proper implementation of these and other suggestions requires very special commitment on the side of the academic circles – technical universities, research institutes, members of the Academy of Engineering in Poland, and technical societies engaged in the actions taken by the Polish Federation of Engineering Associations within the Main Technical Organisation.

The Polish Engineers’ Movement, with its 175-year-long tradition, should become a real partner in

42 :: polish market :: 6/2011

creating and building up of a modern, strong organisation, able to meet the challenges of the 21st century and to assume part of the responsibility for driving progress.

Participants of the Congress express the opinion that the Polish Presidency of the European Union provides the ideal conditions for ever greater integration and adjustment of social, legal, economic, and technical realities to the EU regulations.

In the light of the above, the allocation by the government of particular

authorisations, responsibilities, and resources to non-governmental organisations is of special significance.”

Therefore, the final result of the 24th KTP will be setting of the provisions of the Strategy for Poland 2030+, and the elaboration by the Experts’ Committee of a common stand for the European Innovation Summit, which is going to be held in October 2011 in Warsaw. EIS is considered one of the most important annual events in Europe dedicated to the issue of innovation. ::

Economy and Finance

he Presidency as seen by T the banking sector Krzysztof Pietraszkiewicz, President of the Polish Bank Association, speaks about stabilising European financial markets and implementing new solutions – the key issues of the Polish Presidency of the Council of the European Union, and about cooperation between banks and insurance institutions.

Which priorities of the Polish Presidency, from the point of view of the Polish banking sector, are the most important, and which ones are missing?

Clearly, issues connected with the next financial perspective are, from the standpoint of our country, the most important. From the point of view of the financial market, continuing work on building a monitoring system for it, and favouring the stabilisation of European and international financial markets, are particularly significant issues. The Polish government seems to be well prepared to continue the projects started by our predecessors in previous years. This involves implementing solutions which define new capital requirements regarding the size and nature of conducted activities, as well as building the potential of the deposit protection system, shaping supervision over the financial market system, and projects connected with the controlled insolvency of financial institutions. We are, however, warning against over-regulating the financial market, as this could mean a dramatic fall in the capacity to finance economic growth. The legal and institutional solutions to favour the construction and extension of a secure interbank money market and its connection to the capital market are also problems. The debate will not pass over the issue concerning the fiscal and parafiscal burden on the financial market.

In what way is the Eastern Partnership important for the Polish banking sector?

The subject of economic cooperation, including cooperation between financial institutions and non-EU countries, is being, and no doubt will be, discussed. Certainly the talks will concern the expectation that the solutions and standards announced by the Basel Committee, which are already in

44 :: polish market :: 6/2011

use in the EU, will be gradually implemented in non-EU countries. This particularly concerns the security of financial institutions.

I think we can expect that the EU approach to individual non-EU countries will include the requirement to comply with the agreements of, and act according to the standards of OECD and WOT. Financial institutions and banks, knowing that their partners in their respective countries act according to the same standards, are likely to behave more openly and take greater risks. Issues beyond the Polish Presidency, concerning the cooperation of banks and a variety of institutions which insure against the risks resulting from cooperating across countries with incompatible economic and political systems, will certainly be discussed. Favouring the stabilisation of the economic situation of various regions in the coming years will definitely be a challenge for the Polish Presidency. Within the framework of creating a new architecture, a new cooperation with various regions, the building new elements of this cooperation, new legal solutions, regulations and agreements – all are components of the strategy facing any Presidency.

A re Polish banks interested in opening branch offices in the East?

A great number of banks active in Poland have their sister companies in other countries of Central and Eastern Europe. What we emphasise during talks with EU authorities, e.g. in direct conversations with Commissioner Barnier and investors, is the need to analyse the cooperation between daughter companies, as part of the promotion of the expansion of Polish entrepreneurship beyond country borders, and also within the promotion of cooperation across companies in other countries and in Poland. Such work has been taken

up in some bank groups. Special products and projects promote cooperation between daughter companies located in various countries.

There is no reason to create organisational mess, with a daughter company creating its own daughter company – a granddaughter, in fact – in a country where another daughter company of the respective bank group already operates. Forms of cooperation between those “sisters” should be created rather than an excessive number of new entities. Some global banks have their own experiences in this area. Through a specific system of managing certain projects they provide services to Polish entities acting on completely different markets with relative ease. :: Interviewer: Sandra Wierzbicka

Holding the Presidency of the EU is a great test for the Polish authorities and Polish democracy. I am convinced that the leading political powers of our country, jointly with entrepreneurs, are capable of passing this test in good style.

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Economy and Finance

We are investing in the development After creating one of the most modern clearing systems in Europe from scratch, Krajowa Izba Rozliczeniowa S.A. plans to introduce a promptpayment system and a comprehensive invoice-services package. The new solutions are intended, on the one hand, to support the activities of banks connected with extending the field of services provided, and – on the other – to popularise electronic currency circulation.

Twenty years ago, when on the ­initiative of the Polish Bank Association KIR S.A. was established, and when Poles learned how to function in the new free-market reality, nobody expected that in no time at all we would become one of the few European countries with a positive GDP increase.

Today we are not aware of the fact that the clearing system, which became the foundation of commercial banking, has had a big share in attaining it.

“In 1994 we introduced electronic settlements and digital signatures, which back then, in the times when paper was omnipresent, could have seemed an abstraction. Thanks to this, we have ensured a fast, efficient, secure, and fault-free handling of payments across banks,” says Kazimierz Małecki, President of the Management

KIR S.A. was nominated by the Chapter in the 9th edition of the Economic Award of the President of Poland in the Innovation category.

“This nomination means that our nearly 20-year-old business has been appreciated. Over the years, the KIR S.A. has developed and implemented many modern and secure solutions, which have significant influence on the shaping and development of Polish e-economy. The electronisation of economic trade is one of the foundations of Poland’s development and affects its image. I am extremely pleased that the contribution of the KIR S.A. in this field has been highly rated,” says Kazimierz Małecki, the President of the Management Board of KIR S.A. “Please accept this nomination as recognition for the contribution which you have made to the economic development of our country and shaping a positive image of Polish economy.

I wish you continued successes. I believe that the nomination will contribute to the promotion of your achievements, and thus, to the economic success of the Republic of Poland,” congratulated President Bronisław Komorowski.

46 :: polish market :: 6/2011

Board of Krajowa Izba Rozliczeniowa S.A.

Payment-support services From its first days, KIR S.A. has always met the market’s expectations, and often exceeded them. Today, although clearing activities still remain a priority to KIR S.A., the time has come to intensify actions connected with the development of paymentsupport services.

“Over the two decades which have passed since the establishment of KIR S.A., the market has changed radically. Currently the challenge to the economy is to substitute expensive cash with its electronic substitute. From the point of view of banks it is extremely important to introduce such services that will improve client loyalty. That is why we want to implement solutions to facilitate this goal,” explains K. Małecki.

In accordance with its development strategy for the years 2011-2013, KIR S.A. aims to emphasise the development of services supporting payment. It is not a new idea – KIR S.A. has been developing this type of service for some time already. One of them is P ­ ayByNet – a system of direct and guaranteed e-payment used on the Electronic Platform of Public ­Administration Services (ePUAP) and ­e-commerce. Currently over 70 units of public administration are connected to the PayByNet system through ePUAP, and in the e-commerce segment, the system has been implemented in over 200 shops. A good prognosis for the further development of ­PayByNet is the growing interest in

this service expressed by units of government and local-government administration, companies in the field of e-commerce, and banks.

Within the framework of extending the field of payment-support services, KIR S.A. has also introduced the ­BILIX service – the first EBPP (electronic bill presentment & payment) service on the Polish market, consolidating bills and invoices from many suppliers of mass services and presenting them on electronic banking channels, along with the possibility of payment that is just a click away.

Currently 85% of electronic-banking users in Poland may already be using BILIX, and a pioneer implementation of the system is soon planned in large telecommunications companies, which will join the ranks of two PGE companies, ITI Neovision, Link4 and Kozminski University in Warsaw.

A comprehensive invoice-services package KIR S.A. wishes to take one more step forward. Following its strategic objectives, BILIX is expected to become the starting point for creating a comprehensive invoice-services package, also including the enterprises segment. After the system has been implemented in the biggest banks in ­Poland, KIR S.A. will focus on recruiting further invoice issuers for the system. The implementation of BILIX in more companies providing mass services will surely contribute towards a wider use of banking products by clients and the increased popularity of self-service channels.

“Banks have long been interested in providing services related to ­e-invoicing, which is evidenced by the fact that the majority of them have entered the BILIX system. We would like to integrate the invoice service process with the payment process within the banking sector. We will strive to combine the new solution with other systems mediating in the exchange of electronic invoices in this country and abroad,” argues K. Małecki.

Poland finds itself on the eve of a mass migration to e-invoicing. In

Economy and Finance

of the Polish e-Economy than 2 thousand clearing documents a month, we will be offering solutions suited to their individual needs.

To small companies, and retail clients we will be offering standardised services,” adds K. Małecki.

Prompt payments

Kazimierz Małecki, President of the Management Board of Krajowa Izba Rozliczeniowa S.A.

Europe an average of 28% of entrepreneurs use e-invoices, and there is a yawning gap between ourselves and the leaders. The breakthrough has to come about eventually. KIR S.A. wants to build an invoice-processing centre, with access through a variety of channels: e-banking, websites, and financial and accounting systems. A company which is a mass issuer of bills and invoices will be able to outsource the entire invoice-services process – from issuance, to sending to the client, and digitalising, and archiving, in accordance with legal and fiscal requirements. The integrality and authenticity of invoices will be guaranteed thanks to digital signatures.

“In practice we would like to combine several products already provided by KIR S.A. – digital signatures, eArchives, and BILIX – and give our clients a comprehensive invoiceservices package. To medium-sized and large enterprises, issuing more

From the very beginnings of KIR S.A., clearing activity has been its strategic priority. Following the strategy of action for the years 2011-2013, KIR S.A. started implementing a project of fundamental significance to banks and the economy, i.e. a project of launching a real-time prompt-payment system, with quick transaction exchange resulting in immediately charging the bank account of the remitter and crediting the bank account of the receiver.

The prompt payment system, allowing the carrying out of real-time credit transfers, is to be first implemented at the turn of 2011 and 2012. KIR S.A. will be responsible for both accounting and clearing, due to which payments will be made 24/7. The system will support only clearings between banks which are direct participants in the system.

The orders processed will have a limit imposed on the amount of a single payment, agreed upon with the participants in the system – the banks.

This is not the end of the intensive work in the field of KIR’s clearing activities. We have also started actions connected with the implementation of SEPA standards for domestic clearings

Polish clearing system is among the most modern and secure in Europe. Anually, KIR S.A. processes more than 1.3 billion non-cash payment transactions.

in PLN. With Poland’s accession to the euro area, this solution will give the Polish banking sector a trouble-free transition from settlements in PLN to clearings in EUR.

Another link in communications with banks These are not all the changes in KIR’s product package. In April of this year it launched another module in the ­OGNIVO system. Till now OGNIVO has been used for electronic information exchange connected to clearings between banks, Poczta Polska (the ­Polish Postal Service) and ZUS (the Social Insurance Institution). This April, court enforcement officers became new u ­ sers of the system, and they will now be able to obtain information on debtors’ bank accounts from banks more efficiently thanks to OGNIVO. “We have put in efforts to anticipate the market’s expectations.

20 years ago nobody even imagined that the Polish clearing system was going to be one of the most modern in Europe. I strongly believe that the actions currently undertaken will be as positively received in the future,” summarises K. Małecki. ::

From the introduction of the Single Euro Payments Area (SEPA), KIR S.A. has been an active participant in it. Thanks to adjusting the EuroELIXIR system to support the SEPA Credit Transfer (SCT) instrument, KIR S.A. allows banks from the Polish payments area to use pan-European payment instruments. Recently, work has been started on the implementation of SEPA standards in the domestic clearings system in PLN. The process of launching a tool to allow direct exchange of trans-border payments between clearing houses acting within the European Automated Clearing House Association (­E ACHA), which is an alternative to the STEP2 system, has also been started. As a result of the actions undertaken in November 2010, the SCT was launched between KIR S.A. and the clearing house Equens SE. In April of this year we started the direct exchange of crosssystem payments SCT with the British clearing house VocaLink. Talks with other EACHA members are also under way. These actions allow the further extension of the package of clearing services addressed to banks in Poland, and the development of the network of connections provides opportunities to make KIR S.A.’s position on the European market even more significant.

6/2011 :: polish market :: 47

Economy and Finance

The development of bank franchise networks in 2010 In 2010, independent Polish entrepreneurs decided to open around 500 locations, working under the brand names of 17 of the largest banks developing franchise networks in our country. This is a considerable drop compared to 2009, when 800 such units were created. Also, the owners of around 700 franchise locations closed down their business last year.

2010 was the first year that showed a higher decrease, rather than growth, in the number of franchise locations in the banking sector. Undoubtedly, the main cause of this situation was the crisis on the financial markets, which led to a tightening of banks’ credit policy. This, in turn, led to a reduced number of clients receiving loans, and hence, lower commissions for agents.

It is worthwhile to add that before the crisis, the main source of income for many of them were commissions from the sale of cash loans.

Up to the end of 2008, banks in Poland, and their agents, did not feel any considerable effects of the crisis, which back then started to wear down banks in other parts of the world. Optimism around this fact transformed into the opening of numerous franchise locations in the following year. Around 800 of them were created. However, in 2009, the effects of the crisis started to be felt in Poland, in almost all sectors of the economy, which caused the strongest reaction in the financial sector, changing sales policies.

Many agents were not able to bear this burden and, as a result, around 400 franchise locations disappeared from the market. The negative trend was continued in 2010, when around 700 agents gave up.

Many institutions were not able to realise their expansion plans last year.

A year ago only seven of them decided to disclose their projections in this

48 :: polish market :: 6/2011

The openings plan for 2011 was also not realised by Alior Bank, however, an impressive number of 70 new agencies was enough to put it to the podium.

As the only one in this group, Monetia is a network not dedicated exclusively to the sale of banking products.

The basis of its activity are small financial services, such as accepting cash payments (i.e. electricity, water or telephone bills), sale of prepaid phone cards or cash withdrawals from cards.

These are small locations, requiring relatively little investment, drawing a considerable crowd of people interested in this type of business. Presently, around 400 locations function under the Monetia brand in Poland. In this network, as in PKO BP, considerable reshuffles take place. Every year, a substantial number of locations are opened and a substantial number disappear from the market.

Alior Bank, however, since the beginning of its franchise existence, from 2009, closed down only one agency. The number of partner locations working under the bank’s brand name is growing dynamically, although not

area. They amounted to around 700 new franchise locations. Meanwhile, all 17 banks developing franchise networks were able to launch a total of only around 500 of such locations.

Biggest changes in bank networks General statistics are considerably influenced by reshuffles occurring in the PKO BP network, which is the largest bank network in Poland. Presently, it is made up of 1,208 own locations and 1,942 agencies. In the prior year, PKO BP opened 150 new franchise locations, while closing down 383. To a large extent, this is the effect of implementing new standards for the franchise network since November 2009.

The PKO BP franchise network has been built since the 1950’s. Many of its units, opened during this great time span, simply became outdated and not fitting into the bank’s present image.

PKO BP introduced new visual standards, and also the requirement for at least two workstations at each location (before, some of them were only small one person businesses). The commission rules have also changed for partners, in order to motivate them to achieve higher sales. Locations that are not able to adjust to the new rules are systematically closed down.

Nevertheless, PKO BP is last year’s record holder for the greatest number of new openings. More than 100 units were also opened by Monetia.

0

20

40

60

80

100

120

140

160

PKO BP Monetia (DnB Nord) Alior Bank Getin Bank BZ WBK Meritum Bank BPH Eurobank* Multibank

Franchise locations opened in 2010

* franchise locations created due to the restructuring of bank-owned units

Economy and Finance

as dynamically as had been announced before. According to initial plans, 200 new locations were to function before the end of 2010, and to the end of 2011– 400. Presently, there are only 114 of them. Alior Bank says this is due to a change in prior assumptions on candidate recruitment methodology. The bar has been set higher in order to reduce the number of closings in the future. The bank is trying to build a professional and stable network of agents, requiring of future agents knowledge in the sale of bank products and a financial backing (beyond the amount required to be invested in the location alone), enabling a stress-free operation during the start-up period.

Many new openings were realised by agents who began working with Getin Bank and BZ WBK. Unfortunately, part of the existing partners of those banks has decided to end the cooperation. For this reason, the total growth in the number of BZ WBK franchise locations is minimal, and in the case of Getin, it is negative.

Among bank networks which opened new franchise locations in 2010, it is worthwhile to look at Me­ ritum Bank. As the youngest network of agents, Meritum did not begin its creation until 2010. The bank succeeded in acquiring 36 partners, who opened locations under its brand name, and plans a further dynamic growth of its network.

A picture of the market will not be complete unless we account for closedowns. The highest number of liquidated locations belongs to the franchise network of PKO BP, as previously discussed. Further down the chain are Getin Bank, Bank DnB Nord with the Monetia, Pekao and BNP Paribas networks. In total, around 700 locations disappeared from the market last year.

The causes of closedowns are varied. In some cases, they are the result of a lack of desired financial results.

However, in the case of the majority of banks, which noted the highest number of closed agencies, it was the result of a change in strategy, i.e.

PKO BP. Cleaning of the network has also occurred in Pekao and BNP Paribas Fortis, whose franchise networks were thinned out by more than 40 units. Pekao says that due to ongoing

processes and changes, it is not able to give exact numbers for the opening and closing of locations. The fact is, however, that a year ago, the bank had 840 own locations and 192 agencies. Presently, it has 1,014 own locations and only 147 agencies.

Attention should also be paid to mBank’s network, which is no longer just a typical banking network. ­mKioski Partnerskie, which were previously managed by mBank and which were dedicated to selling its products, back in 2009, were transferred to a company that is part of BRE Group (mBank also belongs to it) – Aspiro.

This is a company dealing in financial intermediation and this is the function introduced to mKioski Partnerskie. Presently, aside from the mBank’s products, they also sell products from other institutions. The number of mBank/Aspiro partner units melted down last year by 21, no new ones were opened during this period.

Plans for 2011 Banks are presently more cautious when it comes to growth plans than before. Their estimates of the number of new openings were given away by only 5 banks. Together they want to launch 330 franchise units.

The most ambitious plans for this year, just like the year before, belong to Alior Bank. It wants to launch 100 franchise locations. Similar assumptions were accepted by Meritum Bank.

For this institution, 2011 will surely not be the only year for an extensive expansion of its franchise network. The bank revealed that it wants to have 350 such units by the end of 2013. Presently, there are merely 36 of them.

The entire time, Monetia, too, is trying to remain at the forefront of network development, planning over 80 openings. During this year, there will also be a chance to join the networks of PKO BP and Invest Bank. Certainly, the networks of Getin Bank, BZ WBK and Bank BPH, which have not yet achieved full development, will be open to new partners. They announce their intention to open further locations in the franchise model, however without specifying a solid number or timeframe.

It should be noted that not all networks, possessing franchise locations,

are open towards new partners. No new openings are planned this year by Multibank, which has already realised its growth plan. The bank underlines, however, that it is still possible to apply to transform already existing bank branches into partner locations. AIG is also not planning any new openings this year. Eurobank is not planning dynamic growth either, potential openings will be due to efforts to improve the effectiveness of the franchise network – taking on better partners, better locations, etc. Polbank also does not presently concentrate on actively acquiring new partners. This bank’s partner locations have lately been opened by former Polbank employees. Thanks to this, those running them already possess knowledge about the products, system and the specifics of the bank.

Watch out for mergers and takeovers The majority of firms, which offer small businessmen the possibility of running a business under their banner, on the basis of a franchise or agency, are Polish firms from the medium and small enterprise sector. Banks are the largest entities – on the basis of the scale of their operations, brand strength and generated financial results – giving an opportunity for such cooperation. Potential partners might take note of the many advantages of this, such as a known, prestigious brand, strong marketing support for products offered by the bank, a feeling of security from working with an institution that enjoys great public trust and is expected to care about stability at all organisational levels.

Unfortunately, the number of agency closures shows that, in reality, the truth does not always meet expectations. We have already mentioned the sudden impact of the crisis in the banking sector, which forced a tightening of the credit policy, and by the same, reduced the income of many agents. A second, but not less important, reason for changes that take place in franchise networks are mergers and takeovers. In recent times, the banking sector in Poland is one of the most active branches in terms of changes in the ownership structure of individual institutions.

In cases where small institutions are taken over, specialised in only certain kinds of activity and not possessing a widespread bank network, agents have no reason to fear.

For example, last year, Getin Noble Bank finalised the purchase of GMAC Bank Polska, specialising in car loans. This kind of acquisition has no impact on the agent network.

0

20

40

60

80

100

120

PKO BP Getin Bank Monetia (DnB Nord) Pekao* BNP Paribas Fortis*

Planned opening of franchise locations in 2011

6/2011 :: polish market :: 49

Economy and Finance

No. of locations year end 2010

Bank

own

agent

PKO BP

1,208

1,942

Pekao

1,014

147

527

100

Eurobank

399

146

Getin Bank

234

242

Lukas Bank

385

58

Bank BPH

285

157

ING Bank Śląski

379

62

19

377

Polbank

190

133

Alior Bank

195

114

BNP Paribas Fortis

n.a.

73

AIG

186

54

Invest Bank

111

46

BZ WBK

Monetia (Bank DnB Nord)

Multibank

72

61

Meritum Bank

16

36

mBank/Aspiro

0

28

Source: ARSS (Academy of Franchising Systems’ Development)

However, when these transactions take place between the largest entities in the market, one should expect that the integration of strategy and distribution chains of both banks can result in changes in the functioning of agencies. This was the case, for example, in the franchise network of Dominet (the first, aside from PKO BP, bank in Poland that began growth using this formula), which was first acquired by Fortis Bank, which then itself was incorporated into the structure of BNP Paribas Fortis.

The latest example concerning mergers and acquisitions among banks building franchise networks is the acquisition of BZ WBK by the Spanish Santander. Two other institutions vied for the purchase of the fourth largest bank in Poland – PKO BP and BNP Paribas Fortis – which already have a strong position on the Polish market.

The acquisition by Santander, using it to begin a wide scale expansion into Poland, may mean further development in the bank’s product offering and network.

A further vital change occurring last year was the merger of AIG Bank Polska with Santander Consumer Bank Polska. It is already known, that AIG locations will be rebranded soon. The banks clients are not to feel any changes, one may hope that the same will be true for agents. Nevertheless, the bank withdrew from expansion using this formula for now.

In the past year, AIG did not open any

50 :: polish market :: 6/2011

franchise locations, and is not planning any this year.

There is every indication that the next bank in Poland to change ownership will be Polbank. The Italian Bank Intesa Sanpaolo and the Austrian Raiffeisen Bank International are both vying for its purchase from the Greek EFG Eurobank.

Costs and rewards The terms of a franchise partnership differ depending on the bank.

A partner, choosing the institution with which to associate, should analyse a range of factors. The scope of the product line available to the franchisee should be considered (the wider, the better, as close to the bank’s own product range as possible), and also the commission received for the sale of each product. A business plan should be prepared that takes into account the potential of a given city in terms of purchasing power for each of the products.

Of course, it might happen that the number of available partnership options is reduced by the fact that, in a given city, branches of certain banks are already operating. One should therefore check which banks do not have a unit present in that city but would like to have one. It is worthwhile to note that, in the most attractive locations, and in the largest cities, banks frequently create their own branches. Partners are sought to operate locations in midsized towns or on the outskirts of large cities.

The opening of a bank location does not usually require a high initial investment. The cheapest is to open a location under the Monetia banner – PLN4.500 plus investment in adapting the space, depending on its condition.

However, as mentioned previously, Monetia works differently than the other bank chains.

The cost to join the chain, in which franchise locations assume the role of fully functional bank branches, starts at over PLN20.000. BZ WBK assures that the cost of opening a franchise unit under the company’s name now starts at PLN22.000, although the final amount is dependent on the range of renovation work required. A similar level of costs is declared by Eurobank, and also Alior Bank. The latter has reduced them by half last year, thanks

to a considerable engagement of the bank’s own funds.

A branch of Meritum Bank and PKO BP can be opened starting at PLN30.000. Around PLN35.000 should be reserved for a unit of Getin Bank.

In this case, start-up costs include the renovation and furnishing of the premises (around PLN25.000) and a licence fee (PLN10.000 + VAT) Many banks stress that the costs of commencing the partnership are determined individually with new partners. This is the case in Multibank, for example, which has completed the development of its network, however there is still an option of working together with the bank by taking over one of the bank’s own branches. Individual negotiation is also the way at Polbank, however, franchise locations starting up recently have been opened by former employees of the bank.

A specific solution was chosen by ING Bank Śląski, which hands over a turnkey branch to the new partner.

The bank prepares it at its own expense and does not require any participation from the partner in these costs. The partner pays the franchise fee, operating costs related to the location being handed over and personnel costs related to the team employed there.

The issue, alluded to by ING, of funds to support current operations is not less important than the ability to handle the initial investment and concerns a partnership with every bank.

In the majority of cases, the bank location is not profitable from the first month of operation. This means, that part of the ongoing costs, such as rent and payroll, the agent will have to cover out of his/her own pocket. This situation can take place for about half a year, and sometimes even longer. Experts on the development of bank networks underline that in order to run this business with success, equal stress should be placed on the sale of all the products offered and adjusting to market situation. Prior to the crisis, the bestsellers were credits and deposits, today bank agents base their success on investment products, but are also slowly returning to more boldly offering loans. Institutions stress that more and more applications are accepted, although surely the situation has not returned to that from before the crisis. ::

Economy and Finance

Innovative investments involve risk Financial risk is inherent in every business. This aspect is particularly important in those industries in which new investments are implemented, and deferred payments are a matter of everyday life. Information about contracting parties, which is more and more accessible nowadays through the BIG Debtors Register, acquires particular importance. Lack of knowledge usually means unpaid invoices and delays in investment implementation.

Mariusz Hildebrand, President of BIG InfoMonitor S.A.

In your opinion, how big an obstacle to conducting economic activities in Poland is posed by late payment?

The scale of the failure to comply with financial obligations is confirmed by the results of surveys commissioned by the BIG InfoMonitor and carried out by Pentor. Their results show that 76% of entrepreneurs believe that late payment is a serious obstacle to conducting economic activities in Poland. Although this result is a little lower than it was three months ago – by 2 pp – it still shows the enormous scale of the problem.

By the end of the 1990s banks created a professional system of financial risk evaluation using information from the Credit Information Bureau (BIK). Unfortunately this data was for a long time unavailable to the business sector. Establishing the Economic Data Bureau (BIG) was a response to this market need. This institution not only collects information on unreliable payers from consumers, entrepreneurs, public institutions and banks,

Small obstacle

Serious obstacle

I don’t know

subscription services, and acquiring new business contacts. This comes from the fact that the BIG Debtors Register is accessed by representatives of various industries acting on the market on a daily basis. The only way to avoid this type of trouble is paying the liability in full. It is the only way to have your data deleted from the BIG Register.

The growing interest in the services of BIG undoubtedly testifies to the growing awareness among market participants of the significance of information about the contracting party. Joint participation in this system of economic information exchange will in our opinion contribute to an increase in investment security in Poland. The BIG InfoMonitor supports such ideas – this year we have once again become patrons of the “National Leaders of Innovation and Development – 2011” competition, organised by The Foundation for Innovation and Development. Its goal is to promote events and initiatives by micro, small, and medium-sized enterprises, NGOs, and other entities. Participation is free of charge.

In our opinion it is a very valuable initiative. It focusses general attention on outstanding projects implemented in Poland, which are, after all, few.

This state of play has been confirmed by previous editions of the competition.

We are glad that from the very beginning we could support such a noble end and we hope that our company’s mission will contribute to minimising the risks run by Polish investments. ::

but also collects and makes it available within its Debtors Register.

Thanks to these solutions, entities operating in the private sector can gain access to similar information on debtors, even data stored in BIK and the Polish Bank Association (ZBP) databases. One of the BIGs, the BIG InfoMonitor, cooperates with those institutions. Through it, business entities may obtain knowledge on whether there is data on the debts of the contracting party in the BIK, BIG, and ZBP databases. This service is gaining popularity. In 2010 the BIG InfoMonitor made available 7.1 ­m illion reports on debts, i.e. 1.6 million more than in the previous year.

BIG also has soft-debt collection instruments at its disposal. Being entered into its Debtors Register means serious problems for unreliable payers with obtaining a loan, leasing, purchasing Internet and telecommunications 8 000 000

7 156 828

Enquiries by year General

23%

76%

1%

5 529 744

6 000 000 4 556 298

Finance

Bulk services

30%

23%

70%

4 000 000

3 098 016

77%

1 455 501

2 000 000

Entrepreneurs

18%

237 660

82%

7268 0 2005

Source: the BIG report, April 2011

2006

2007

2008

2009

2010

May 2011

Source: The BIG InfoMonitor

6/2011 :: polish market :: 51

Economy and Finance

Local, international, and competitive Interview with Ludwik Sobolewski, the President of the Warsaw Stock Exchange.

Did the CEE IPO Summit confirm that Warsaw is the stock exchange centre for the region?

The CEE IPO Summit was a very successful conference, which attracted to Warsaw nearly 500 guests from many different countries, from Singapore to the USA, including major business representatives working for the leading investment banks and law companies, together with issuers for the whole region, and companies who are interested in carrying out IPOs in Warsaw. As far as I am concerned, we have achieved our goal, i.e. promoting the local capital market and the Warsaw Stock Exchange as the financial centre of Central and Eastern Europe.

Was the topic of the Warsaw Stock Exchange taking over other local stock exchanges also tackled?

No, we haven’t discussed taking over other stock exchanges. There has been, however, much recent discussion about which path to take for the further development of the Polish stock exchange. In the recent decade, the Warsaw Stock Exchange (GPW) has gained the status of a leader in Central and Eastern Europe, and its growth will depend on the availability of capital, attractiveness to foreign issuers and the development of other markets and financial instruments.

What are the key factors in capital market growth from the perspective of the Warsaw Stock Exchange as a stocklisted company?

GPW as a stock-listed company tries to differentiate its income sources, i.e. to develop its product variety so widely as to answer the needs of different investors and business holders, and, consequently, to be profitable for its shareholders. It concerns not only shares and bonds, but also forward contracts, options, ETF start-up schemes, and other products of this kind, giving different opportunities for capital investment. The diversity and completeness of GPW’s offer is going to be the major factor in drawing Polish and foreign investors’ capital to our market. Their activity on our market, on the other hand, attracts new issuers of shares, structured products, and ETF start-up schemes. Thus, constant diversifying the offer for investors, and, on the other hand, for new companies and issuers of other instruments, are the two conditions of the growth of our stock exchange.

Both are necessary and vital for our strategy.

Among issuers, those of the most significant importance are, obviously, large companies, being introduced to our market – they are the major decisive force in the development of GPW as a public company. It is they who draw the

52 :: polish market :: 6/2011

attention of global investors, for whom international investment houses open their local offices in Warsaw.

Our goal is transforming the Warsaw Stock Exchange into a local, international stock exchange which is capable of competing with the largest European markets over new issuers and fresh capital inflow.

How is this strategy related to taking over the Polish Power Exchange (TGE) and is it already known if this is going to happen this year?

The activity of GPW on the electricity market was initiated in 2010 by creating a platform for electricity trading. From our point of view, it was not only the entry into the electricity market, but also the first stage of the consolidation of this market in Poland.

In general, GPW is going to gradually establish a commodity market so that it will be another source of income for our corporate group, and at the same time it will give the investors another opportunity for investment diversification. GPW is interested in consolidating this market but it is too early to talk about when and how it is going to happen.

What about the forecast for 2011 as regards debuts?

2011 is already on the roll as far as debuts are concerned. After the first three months the Warsaw Stock Exchange was the leader among European markets as regards debuts, and second in line to China, on a global scale.

One could claim that this is going to be the peak year in this regard.

As regards foreign companies, are we talking about the companies from neighbouring countries only, or are other European countries included as well?

Regarding foreign companies, we want the local ones to consider Warsaw as their first choice in placing their shares. Nevertheless, among 38 foreign companies quoted on our stock

market we also find companies from Western Europe and North America. This means that the reputation of GPW reaches much further than only our closest neighbours.

The index of Ukrainian companies has been established – any further plans?

We have no plans regarding indices for other countries for the time being.

On the other hand, there are certain ideas concerning creating new indices and instruments facilitating investments and better exposition for issuers. We are planning an introduction of a new index called the WIG Growth in the fourth quarter. This index will list about 300 companies from the exchange-regulated market. It is going to be the solution for investors who call for an index which measures the stockmarket valuations of the companies.

W hat is your opinion on public shareholding?

Public Shareholding (AO) is a longterm programme initiated by the Ministry of Treasury during the debuts of PZU and Tauron PE; it was further developed during the GPW privatisation. This programme is the Ministry’s response to the growing interest of Polish citizens in the Warsaw Stock Exchange. Huge privatisations have drawn the attention of thousands of individual investors to GPW, including masses of people for whom it was the first encounter with the capital market. Thanks to Public Shareholding many individuals have a chance to start their adventure in investing and learn effective investing. ::

21 Economic Forum st

Krynica, Poland, September 7-9, 2011

„European Dilemmas- Partnership or Rivalry?”

The Economic Forum in Krynica has became an important spot on the political map of the world and probably the only one, where East meets West on such a large scale

» More than 120 plenary sessions and panel discussions, lectures of the personalities of the public sphere, workshops and round table discussions; » 2 000 invitees from Europe, Asia, USA and Middle East countries

The base for the 2011 Economic Forum programme will be groups of topics discussed during the 2011 edition: Macroeconomics, Business and Management International Politics, Forum of Regions, Energy Forum, Innovations and Sustainable Development, New Economy, State and Reforms

Cultural programme: literature evenings, presentation of movies, concerts, evening cocktails organised by the Economic Forum partners; Wide variety of recreational events scheduled for September 8 and 9 after 4pm more various than in 2010

www.economic-forum.pl

contact: forum@isw.org.pl

Economy and Finance

Customized transaction security instruments An interview with Adam Poniatowski, Director of the Trade Finance Department at PKO Bank Polski

What kind of risks an entrepreneur must consider wanting to start business cooperation with foreign contractors, either as an exporter or a party importing products from a different country?

This kind of entrepreneur has to be aware, that - before and during the transaction – he must face a range of different risks present in almost every foreign trade deal. For example, Polish exporter/importer should know enough about the other party of transaction (among other, especially important is his credit reliability or quality of products produced). Polish importing or exporting party should also know the contractor’s country risk (bans or restrictions like for Iran), custom system and level of duties and other charges which must be paid while exporting or importing, the legal system of the country, the exchange rate risk and its influence on business calculations etc. Moreover, there are risks connected with the commodity itself; for instance: it may always happen that the commodity is damaged during its transport from place X to place Y, freight costs and time needed for delivery, the risk that delivered goods don’t exactly correspond to the order and than – do not satisfy the expectations of the importer and his or her business partners, the delivery of commodities of inadequate quality or quantity.

The majority of risks can be avoided or at least mitigated by the use of different instruments offered by commercial banks, especially from so-called Trade Finance group. However, we know from our long practice, that the awareness among banking clients concerning the existence of such products and services is not good enough.

In the field of securing transaction settlements in respect of foreign trade, what can PKO Bank Polski offer to business clients?

The type of security instrument depends on the type of risk or range of risks which can occur in a given transaction, and against

54 :: polish market :: 6/2011

which the entrepreneur has to be secured. The most popular are those instruments which give security for both partners of the contract. The most popular are documentary credits and bank guarantees. The main reason why businesspeople decide to use documentary credit is that after opening a letter of credit the issuing bank is obliged to pay a defined amount to the seller (the beneficiary of the letter of credit). But only on the condition that the seller will present documents defined in the stipulations of the letter of credit and in accordance with those stipulations.

That means that documentary credit is used mainly as a product used for settlement of the contract.

In the case of guarantees, the bank which gives the guarantee (the guarantor), is obliged to pay to the beneficiary (in more cases that means exporters) of the guarantee a defined amount, but only in the case if they present the so called “demand for payment.” In this demand the beneficiary must clearly state, that the applicant (importer) did not fulfill the contractual obligation as per contract terms and this is the reason for the mentioned demand. Of course, if the demand is construed and presented as per guarantee terms there is no other way but to pay the demanded sum.

Comparing documentary credit and bank guarantee it can be seen that a guarantee is used mainly to secure party interest (mainly exporter’s interest) and at the beginning nobody expects that demand for payment will be presented. That is why we treat guarantees as products securing somebody’s interest not settlement interest.

Another popular product that secures transactions is documentary collection. The function of the collection can be described in the following way. The contractors sign a contract and after that, the exporter (supplier) send the commodity to the importer’s address (recipient). However, documents such as invoices, transport and insurance documents,

certificates etc. are not directly sent to the recipient’s address, but the exporter prepares instructions and passes them to his bank. Basing on instructions received, the bank prepares the so-called cover letter in which this bank prepares instructions for the importer’s bank.

They give precise indications concerning the terms and conditions after that commercial documents may be delivered to the importer.

Finally I would like to ask about the cost of using this type of security instruments.

Does the entrepreneur have to take into account substantial expenses?

Undoubtedly the most expensive is guarantee, then letter of credit, and finally documentary collection. This order results from the combination of three elements: the length of time of the risk, the amount of the transaction, and the time which has to be spent by bank clerks to prepare, conduct and monitor the transaction. Therefore, for the operation of a collection which makes its way directly to the bank, we can negotiate a flat fee. On the other hand, it should be kept in mind that security instruments, despite certain financial expenses, can help to avoid much more serious risks and as a result losses. In PKO Bank ­Polski we do our best to assist and – at the request of our customers - to propose how to secure transactions as early as possible. The best solution is to ask the bank advisors at the stage of contract negotiations. ::

Economy and Finance

Solutions facilitating financial management in enterprises Money has its time value. An amount received today is worth more than an amount received in a month’s time – this is due to both inflation and lost opportunity cost. If an enterprise invests its money wisely it can hope for a significant increase in capital in the future.

It has to own or acquire this capital in the first place, however, and a loan is a relatively expensive way of obtaining it.

Anna Serdak Hence, the fast and easy obtaining of amounts due from contracting parties, debtors, and financial partners becomes an interesting alternative. Debt collection and manual-error handling involve additional costs generated by employees who perform routine work that could be done by a machine. Monitoring which receivables have been settled, and which have not, checking how much time has passed since the maturity date, identifying debtors – these take time, and time is money.

In the wake of the financial crisis, reviewing the history of outstanding payments before signing another contract may help avoid uncomfortable situations during its term.

Each enterprise should evaluate the financial situation of the other contracting party.

In order to maintain liquidity at the proper level, businesses ensure the timely inflow of receivables. On the other hand, they manage their own payments, extending the maturity date of payables, and remitting financial resources as late as possible. PKO Bank ­Polski provides express transfer services for domestic and foreign payments. For example, express domestic transfers may be completed by corporate clients up to 3.25 p.m. Contacting an advisor once is all that needs to be done to launch the service in iPKO business.

Solutions provided by PKO Bank Polski SA primarily involve cost reduction. If, for instance, a company receives 500 transfers monthly, and each transfer takes 10 minutes of the employee’s time, this consumes half of his or her monthly work. The savings coming from automating these activities can easily be calculated.

Bank products, such as the System of Virtual Contracting Party Accounts (PKO Virtual

Accounts) or Direct Debit, allowing the automation and digitalisation of receivables management from contracting parties, are addressed particularly to the beneficiaries of bulk payments - companies whose accounts receive many transfers and payments from various contracting parties. These are, e.g., power and gas distribution companies, water-supply companies, debt collectors, universities, trade chains, wholesalers, city offices, housing cooperatives, insurance companies, Internet stores, telecommunications operators, cable TV networks, etc.

A company launching the SWRK service (PKO Virtual Accounts) assigns its contracting parties (debtors) individual, virtual account numbers. The amounts paid to virtual accounts are credited on one or several real accounts indicated by the company. Detailed solutions facilitate the automatic identification of debtors, e.g. by their REGON, PESEL, and Tax Identification numbers, invoice number, reference number, etc. “embedded” in the virtual account number. Usually a company has its own financial and accounting system, in which properly adapted files generated in the electronic banking system may be imported with a set of data defined by the company.

Receivables management systems in PKO Bank Polski support standard financial and accounting systems such as Symfonia, Księga Handlowa by CDN, Rewizor, ­W F-Fakir, and AP. A specialised entity within PKO Bank Polski SA is capable of preparing highly-sophisticated reports for any financial and accounting system, and of solving such problems as lack of invoice number in the payment title, even if the payment involves a set of several invoices.

A company equipped with this tool may undertake rapid action against payers who have not paid their due amounts, thanks to so-called payment matching. It facilitates the elimination of errors in data entries, and also identifies the transfer when it is a set of several expected payments (for example one payment for several invoices), a partial payment, or repeated payment, by indicating records in the output file as receipts for consolidated, partial, or repeated payment. All payments which will not cover the expected receipts (incomplete or incorrect data, etc.) will be qualified as unidentified payments.

Another solution to monitor the inflow of receivables is Direct Debit (PZ). This service automatically charges the account of the debtor with the amounts of liabilities against the creditor for products and services provided.

The creditor is the active party in the process of settlement for products or services under Direct Debit. It organises the entire process, signing an agreement with the Bank, and its goal is persuading its debtors to carry out settlements in this form. The role of the debtor is limited to filing at the creditor, or in its bank, a Consent to debit its account in the form of a Direct Debit and provide appropriate money amounts on this account.

PKO Bank Polski SA provides its clients with solutions such as taking over the distribution of Consents, which is essential in Direct Debit.

The above description covers only a small part of PKO Bank Polski’s portfolio of services in the field of costs and cash-flow optimisation. In choosing the right solution for a particular client, it is essential to analyse the client’s specific needs. Such an analysis gives the Client Advisor, supported by the expertise of Product Specialists, the capability of offering highly-personalised solutions for each company. ::

The author is Junior Specialist in Cash Management Department of PKO Bank Polski

6/2011 :: polish market :: 55

Economy and Finance

Matching investment credit availability with demand We are still observing a relatively low demand for investment credits, despite the high availability of credits in the banking sector, which is visible both in the more liberal criteria of granting credits, and the more attractive price conditions.

Beata Majcher-Jucha, Monika Karolak

Beata Majcher‑Jucha – Director, Head of Structured Finance, Investment Banking and Structured Finance Department, Bank Pekao SA

Monika Karolak – Director, Head of Corporate Solutions, Investment Banking and Structured Finance Department, Bank Pekao SA

After stagnation in the years 2009-2010, the year 2011, especially in second half, should bring an increase in the demand for investment financing. High overliquidity in the banking sector is stimulating the banks to liberalize the credit policy. This is leading to the availability of comparable terms of structured financing as before the crisis.

In the first half of 2011, the growth in the dynamics of investment credits has remained at a relatively low level as a result of the high proportion of enterprises’ own funds.

These funds have constituted a main source of financing for the reviving investment demand in the private sector. The observed economic recovery translating into an increase in the turnover of enterprises (and the demand for working capital financing) to a certain degree is consuming part of financial surpluses accumulated in 2010.

The progressive use of these resources is increasing enterprises demand for using external financing sources.

This gradual process also results from the fact that launching new investment credits is planned for subsequent years, in many cases only after 2012.

Many enterprises have stopped the implementation of their development plans and postponed their investments in fixed assets for better times..

These concerns to a lesser extent have resulted from the financial crisis in some European countries or from the general political and economic situation in a particular country or worldwide.

Postponing development plans stems mainly from uncertainty surrounding the demand for products and services in the immediate future.

At the same time, differences can be observed in demand for investment credits depending on the size of the enterprise. The most activity can definitely be observed in the case of the largest enterprises, as opposed to the SME sector, where demand for investment credits is considerably lower.

At present, the most frequent form of investment financing is corporate financing applied in the case of investments connected with extending the existing production capacities of enterprises.

56 :: polish market :: 6/2011

This type of financing is relatively inexpensive and easily accessible, especially for entities with a good rating and a well-established, stable position on the market.

In this respect, the attention of the banking market is related to the power sector , which, due to its dynamics, required investments and strategic character for the economy, receives very attractive financing conditions.

Apart from financing of infrastructure and transportation projects associated with EURO 2012, we have observed a growing interest in financing projects in the renewable energy industry (including financing based on the “project finance” formula). This involves especially the wind energy industry and power plants using biomass, including biogas plants.

The economic value of this type of investments is based mainly on the existing system of support (the duty to collect energy and green certificates, EU funds, etc).

Due to the considerably more complex structures of those projects, project financing requires substantially more time at the stage of structuring financing and the related credit analysis in comparison to corporate financing . However, the stipulated deadlines are much longer and the lack of recourse from the sponsor does not encumber his individual credit availability.

The number of requests for tenders addressed to the bank definitely is pointing to an increase in interest from potential investors.

Moreover, the demand for credits designated for the acquisition of domestic and foreign companies is increasing. Acquisition financing for takeovers in Poland are related inter alia with the continuing State Treasury privatisations, as for instance in the energy, pharmaceutical, chemical sectors, etc.

To conclude, we are still observing a relatively low demand for investment credits, despite the high availability of credits in the banking sector, which is visible both in the more liberal criteria of granting credits, and the more attractive price conditions. ::

Economy and Finance

Europe’s first biometric transaction platform As of April 2010 users of the PekaoBIZNES24 online transaction platform can log into the system and authorize transactions by fingerprint. This identification system guarantees that only authorized users have access to the system and bans access to persons in illegal possession of a user’s PIN code or chipcard.

the fingerprint pattern on the card.

Biometric data are stored and verified in a microprocessor to protect their privacy.

Card theft does not endanger the user nor upset the system thanks to cryptographic safeguards which do not permit the biometric patterns to be read from outside.

Highest safety levels

biometric ATMs, which use a system based on finger blood vessels. In connection with Poland’s entry into the Schengen zone fingerprint biometrics are used for identity documents like passports and ID cards.

As global experience shows, fingerprint biometrics – the oldest and best-developed biometric method – proves itself well for access control to IT applications, also owing to the easy availability of fingerprint scanners, which many laptop, keyboard and computer mouse producers build into their products. For this reason Pekao was the first bank to introduce this method in its corporate transaction system. This innovatory solution is in keeping with banking and personal data protection laws and meets all required norms.

How it works Registering biometric data Biometrics (from the Greek bios – life and metron – measurement) involves the automatic usage of unique physical or behavioral features for identification. The most popular biometric techniques involve fingerprints, the iris, palm, finger and wrist blood vessels, or facial and palm features. Typical behavioral biometrics involve handwritten signatures, keyboard writing, eye movement and voice. Biometric safeguards are already in successful use by banks in China, Japan, the United States, Mexico and Germany to identify ATM users. Poland is currently testing its first

Piotr Karwiński, Managing Director of the Transaction Banking Department at Bank Pekao SA

When a card is activated, a fingerprint scanner registers the fingerprint patterns of two of the user’s fingers (an injury safeguard) during the generation of his or her electronic signature and PIN code. These patterns are contained only on the card and are not registered in the bank’s internal IT system.

Verification The verification of user biometric (fingerprint) data is carried out in a match-on-card procedure – the fingerprint is compared in real time with

The biometric data supplement so far identification mechanisms (password, PIN code, chipcard, token) to guarantee that only the authorized user has access to the system.

Convenience The new Pekao authorization cards may be used both with new and todate (non-biometric) scanners. The new scanners also work with traditional chipcards.

“When we decided to introduce biometrics to PekaoBIZNES24, we expected it would revolutionize electronic banking safeguarding. The positive market response we received was even bigger than we had anticipated. In 2010 our biometric system received as many as three distinctions – awards from the Global Finance magazine and the Electronic Economy Congress, and the Innovation of the Year 2010 title”, says Piotr Karwiński, Managing Director of the Transaction Banking Department at Bank Pekao SA. “As pioneers in implementing this innovatory solution we are invited to various branch meetings as experts to share our know-how. I’m convinced our clients and the competition will not forget that Bank Pekao SA was the first in Europe to introduce this innovatory user authorization method,” adds Piotr Dusza, Acting Head of the Electronic Distribution Channel Office at Bank Pekao SA. :: 6/2011 :: polish market :: 57

Economy and Finance

Private Banking Private banking is a personalised and comprehensive service for wealthy clients, who own sizeable financial assets. It remains the most attractive segment of contemporary banking, even though the financial crisis has taken its toll.

Eugeniusz Śmiłowski PhD To become a member of the global club of the wealthy, your financial assets must be at least USD1 million.

Private Banking

Eugeniusz Śmiłowski PhD, Member of the Statistical Council

CapGemini/Merrill Lynch estimates that the population of the wealthiest people in the world has again exceeded 10 million, and their assets run to USD40 trillion, having increased by 19% in 2009. According to Credit Suisse, millionaires are much more numerous – 24.5 million. In the opinion of the famous Polish economist, Professor Grzegorz Kołodko, just 0.15% of world’s population is in the possession of assets with net worth equal to the 150-year GDP of the 38.5 million Poles, and probably even more than the remaining 6 billion 667 million people, i.e. 99.85% of mankind. The Boston Consulting Group estimates that, by the end of 2008, 15% of wealthy households commanded 85% of global wealth.

High Net Worth Individuals The minimum value of assets to enter the elite club of the wealthy, which is the target group of private banking, is the equivalent of USD1 million.

Such clients are called HNWI (High Net Worth Individuals). According to CapGemini/Merrill Lynch (World Wealth Report 2008), HNWIs are the most numerous in the US – with 3.028 thousand people, in Germany – 826 thousand, UK – 495 thousand, China – 415 thousand, Canada – 274 thousand, Australia – 172 thousand, Brazil – 143 thousand, Russia – 136 thousand,

The Polish private banking market sparked intrest from international institutions with many years of expierience and recognised brands, such as UBS, Credit Suisse, Bank Tarasin, Commerzbank, Friedrich Wilhelm, Raiffeisen, Sal. Oppenheim, HSBC and Franklin Templeton Investments

58 :: polish market :: 6/2011

and India – 123 thousand. Poland is mentioned in the report as having 7.7 thousand HNWIs. It cannot be precisely ascertained how many people actually have financial assets of this value in Poland, and expert estimates differ substantially. The Gdańsk Institute for Market Economics mentions 5.5 thousand, Credit Suisse - 25 thousand, and HSBC – 15-30 thousand. According to Ernst & Young, this number exceeds 60 thousand, and the British company MRDC reports 78 thousand, an increase of 30% between 2006 and 2008.

That is why the amount of USD1 million is conventional at best in the case of Poland, and private banking institutions set their own criteria. By necessity, the thresholds are lower than on mature markets. In the majority of banks they start from PLN500,000 or 1 million, but there are also banks recognising minimum monthly earnings of PLN7-10,000. In public opinion – according to GfK Polonia’s survey – a wealthy person is most frequently someone whose fortune exceeds PLN1 million (34%), whereas for 75% of respondents, wealth is indicated more by high savings, than by flats, lots, cars, and other luxury goods. This is understandable, as it is enough to compare the wealth parameters of Poles with that of other nations. It should be added that, in contrast to other countries, wealth in Poland is hardly based on the accumulation of wealth by the previous generations. Wealthy Poles made their fortunes in the first generation, within the last 20 years only (half of them are still under 40 years of age).

European statistics on wealth in Poland Taking GDP per capita as the criterion of wealth (at purchasing power parity,

in PPS – current prices), which in the case of Poland is 14,300, i.e. 56% of the average achieved in the Eurozone (25,500), while the GDP per capita of Germany is 110% of that average. The situation is similar with financial assets per capita. The Eurozone average is EUR54.300 (100%), while in the case of Poland, it is only EUR4.500 (8%). As we can see, Poland’s GDP per capita is just twice as low as the Eurozone average, while Poland’s financial assets are as much as twelve times smaller. Credit Suisse calculated Poland’s GDP per capita in 2010 as USD12.575, and wealth per capita (assets less credits raised) as USD22.342. By comparison, wealth per capita in Germany is as high as UDS133.207, six times as much.

Parameters of wealth Wealth can obviously be measured using various methods – salaries, income from different sources, savings in banks, owned shares, and other capital instruments, real estate, valuable metal ores and precious stones, artworks, antique coins, and many other luxury goods. In Poland, most attributes of individual wealth are difficult to measure, if possible at all.

The data from the Central Statistical Office on pay by occupation (October 2008) shows that the number of best-paid employees, whose remuneration exceeded PLN10.000, was 163.4 thousand, i.e. just above 2% of all the employed. Only one in a hundred out of this number earned PLN50.000 a month or more.

The Ministry of Finances, based on the tax settlement for personal income for 2008 and 2009, has calculated that taxes in the highest fiscal group (annual income exceeding PLN 85,528) were paid by 342.8 thousand, and 387.3 thousand people respectively, which amounted to 1.6% of all taxpayers.

Counted among the wealthy may also be some of the 392,000 people running businesses, and paying flat tax on the 19% scale, some of the 257,000 investors who paid tax on the sale of securities and derivatives (also 19%) and some of the almost 18,000 people who paid tax on the sale of real estate and acquired

Economy and Finance

rights, or real estate constructed after 2008. The tax returns submitted to Internal Revenue Offices also show that in 2008 15,236 people, and in 2009 13,502 people earned more than PLN1 million.

Polish millionaires Polish millionaires come from four social groups – private entrepreneurs, high-ranking managers, professionals, freelancers, and individual investors. According to Qualifact, the sources of wealth in Poland are – in order of importance – high salaries/ managerial contracts (19%), entrepreneurship, income from one’s own company (29%), freelance activity/ private practice (15.5%), and family/spouse wealth (4.3%). The process of amassing individual fortunes has a short history, though the first fortunes began appearing towards the end of the People’s Republic of Poland. They were created by the so-called enfranchisement of the nomenclature, i.e. appropriating some state property by the then political establishment, and as a result of a boom of private businesses, especially in the sales and import of foreign products. The post-1989 transformation, the introduction of market mechanisms and free competition, the privatisation of national enterprises, launching of the capital market and the stock exchange, and primarily the possibility of private investment, both national and international, have created a class of people whose income is above average – the owners of Polish private companies and high-ranking managers of international corporations. Many of these people come from the lower reaches of society, from poor working-class families, who, following rags to riches scenario, made fortunes with their hard work, though not always in line with the law. These are the conclusions from a MillwardBrown survey prepared for Pekao SA. Polish millionaires – including those who make it to the rankings of the wealthiest Poles (produced yearly by “Wprost” weekly and “Forbes” monthly) – are often ashamed of their own wealth, due to the persisting Polish conviction that you cannot make a fortune in an honest way, as public and ostentatious displays of wealth are met with social jealousy.

Private banking in Poland Characterising Polish private banking one must take into account the lack of any historical basis for wealth and of a group that would represent old, inherited property (old money), the short history of banking services for the richest, and of the special treatment of them, as well as the low level of accumulated assets and the relatively low and dispersed class of the wealthy – its potential target group.

The beginnings of Polish banking dedicated to wealthy and demanding clients date back to the early years of the transformation. Three banks – Bank Handlowy w Warszawie SA (1993), BRE Bank (1995), and Pekao SA (1997) were the trailblazers, who set a special standard of individual services for the managers of their corporate customers. These three banks remain the leaders in Polish private banking, although almost all major banks in Poland include services for wealthy clients in their portfolio. In the meantime, Noble Bank was launched, specialising exclusively in the wealthiest clients, but after several years of operation it was forced to extend its target group. The Polish private banking market sparked interest from international institutions with many years of experience and recognised brands, such as UBS, Credit Suisse, Bank Tarasin, Commerzbank, Friedrich Wilhelm Raiffeisen, Sal. Oppenheim, HSBC, and Franklin Templeton Investments.

While Polish bankers are quite careful in their predictions as to the potential and growth opportunities of private banking (only 2% of Pentor’s respondents sees substantial opportunities for development in this segment), international institutions have started treating Poland as a high-potential market.

In spite of the difficulties in identifying wealthy people, and considerable, though systematically decreasing, disparities, Poland is an extremely attractive private banking market thanks to the dynamics of some social groups getting rich. According to various estimates, the number of wealthy Poles is rising year on year by 7 to 11% and the financial assets of wealthy Poles make up almost 70% of the total assets of wealthy people in the countries of Central and Eastern Europe. ::

Table 1. The wealth of European countries according to Credit Suisse.

Quoted after: L. Wilkowicz, Private Banking, Parkiet, April 2011 No.

Country

GDP per capita (USD)

Wealth per capita (USD)

1 Switzerland

69,839

293,411

2 Norway

88,590

242,570

3 France

42,414

192,720

4 Sweden

47,935

186,503

35,231

183,402

6 Luxembourg

5 Italy

107,599

178,336

7 Great Britain

35,721

174,947

8 Belgium

43,354

162,749

9 Denmark

56,790

154,378

10 Iceland

38,835

148,953

11 Austria

47,087

142,268

12 Germany

40,679

133,207

13 Finland

44,651

116,730

14 The Netherlands

48,224

113,465

15 Ireland

48,578

105,157

16 Spain

30,960

,81,668

17 Greece

29,060

,80,193

18 Portugal

21,185

,68,350

19 Cyprus

28,379

,64,114

20 Malta

18,995

,54,776 ,46,431

21 Slovenia

24,330

22 Czech Republic

19,084

,25,360

23 Poland

12,575

,22,342

24 Hungary

14,598

,20,989

25 Slovakia

17,044

,16,502

Table 2. The number of people whose income exceeded PLN1 million in Poland and in separate provinces in the years of 2006-2009 according to Internal Revenue Offices.

Quoted after: M.Czujko, The crisis decimated the ranks of millionaires, www.platine.pl 2006

2007

2008

2458

2987

3350

3237

Śląskie

903

1281

1501

1277

Wielkopolskie

878

1302

1439

1155

Małopolskie

759

1216

1238

1050

Łódzkie

483

716

865

720

Pomorskie

550

795

810

689

Dolnośląskie

425

1191

905

657

Kujawsko-Pomorskie

367

526

600

543

Zachodniopomorskie

336

577

526

430

Lubelskie

173

313

349

331

Podlaskie

182

281

306

286

Mazowieckie

2009

Podkarpackie

241

297

305

281

Warmińsko-Mazurskie

191

306

323

244

Lubuskie

167

213

197

234

Świętokrzyskie

140

220

269

208

Opolskie

131

205

245

151

10390

14435

15236

13502

Total

6/2011 :: polish market :: 59

Opinion

The big can do more Small may be beautiful, but the big can certainly do more!

Prof. Małgorzata Zaleska There are interesting changes going on in the cooperative banking sector, including those connected with the consolidation of associations.

In Poland, the cooperative banking sector operates on a two-level structure, i.e. with bank groups, which are joint-stock companies, and cooperative banks. Out of the three bank groups functioning in 2010, only two will remain this year. The biggest bank group (Bank Polskiej Spółdzielczości SA), affiliating over 60% of cooperative banks, will continue to operate on its own. The two remaining banks (Gospodarczy Bank Wielkopolski SA, and Mazowiecki Bank Regionalny SA) will merge, forming one bank group, affiliating over 30% of cooperative banks. This means that the number of commercial banks in Poland will be reduced, and the banking licence will be lost.

The merger of bank groups has both its advantages and drawbacks. The consolidation of banks provides opportunities to intensify marketing activities, create a more comprehensive product portfolio, gain a competitive edge, wider access to capital on the international market and on securities, and also reduces fixed operating costs.

On the other hand, the most important risks of consolidation include the centralisation of management, the loss of autonomy, replacing local thinking by the “Warsaw perspective,” and the striving to maximise profits. There is no doubt, however, that consolidation contributes to creating a bigger and stronger organisation, according to the rule that the big can do more.

Important processes are also visible among the 570+ cooperative banks, affiliated under the above-mentioned banks. The cooperative banking sector is the biggest in terms of the number of banks, as there are much fewer commercial banks in Poland – less than 50. Such an abundance of cooperative

60 :: polish market :: 6/2011

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

Table 1 The dynamics of selected key parameters in the cooperative banking and commercial banking sectors (September 2010/ September 2009) Dynamics Number of branches Employment Balance sheet total

banks makes them diversified, both in terms of size and scope of operation. We should not put cooperative banks “in one pot,” then. Considering their size, it should be mentioned that about 50 of them have their own funds which exceed EUR5 million, which is the level required for commercial banks. The two biggest cooperative banks operate in Kraków, and for years they have been able to maintain their position against not only competition from their own sector, but also against the numerous commercial banks.

At the same time, the share of cooperative banks in the sector, calculated using parameters other than the number of banks (e.g. the value of own funds, the deposits collected, the loans granted), is not large and does not exceed 10%. It should be emphasised that cooperative banks have recently developed more rapidly than commercial banks in some areas.

Cooperative banks have seen a faster increase in deposits, the number of branches and employment than commercial banks. A conclusion may be drawn that Poles have been more willing to put their savings in cooperative banks, and that cooperative banks have, to a greater degree, shaped the increase in employment and extended the network of its branches. It should also be emphasised that such activities generate costs, which may negatively affect banks’ financial results.

Regardless of the above, commercial banks are stable and profitable. Not Cooperative banks

Commercial banks

4.1%

-2.3%

4.4%

-1.1%

13.3%

9.2%

Household deposits

17.9%

7.8%

Own funds

12.8%

11.7%

Source: data of the Polish Financial Supervision Authority

one cooperative bank has faced bankruptcy in the last 10 years, and these banks went through the great financial crisis without major disturbance.

Over the recent period, cooperative banks have increased the amount of loans granted, and, to an even greater extent, the value of deposits. Thus, they expanded their cash surplus even more, making it amount to PLN10 billion. At the same time, cooperative banks have good-quality credit portfolios (better than commercial banks).

What is important, during the crisis cooperative banks did not cut the flow of loans, unlike some commercial banks. However, the credit activity of cooperative banks is limited by the low level of their own funds, compared to commercial banks. This means that they can only give credit to small and medium-sized enterprises. In order to enhance their credit-granting capacities, cooperative banks must merge or increase their own funds (e.g. by retaining profits, or gaining new shareholders, which is not easy). Hence, the rule that although small may be beautiful, the big can certainly do more finds its application here.

The expansion of cooperative banks is also needed when it comes to product range, and especially to the products addressed to young clients. Current and savings accounts for students and young people are still rare in cooperative banking. The young target group is particularly open to online banking. Still, in cooperative banks only 11% of clients take advantage of it, while in commercial banks the proportion reaches 30%. Young people certainly make for demanding clients, but they are also good prospects.

Thinking prospectively, we must ensure that cooperative banks do not lose their importance along with the natural outflow of their long-standing clients. ::

Economy and Finance

Members’ Dynamics by Open Pension Funds* Open Pension Fund

members as of:

market share as of:

members as of:

2010 – 03 – 26 AXA OFE

847,092

market share as of:

2010 – 12 – 31

5.82%

983,889

members as of:

market share as of:

2011 – 03 – 25

quarterly absolute change

quarterly change in %

annual absolute change

annual change in %

quarterly

quarterly

yearly

yearly

6.59%

1,057,027

6.92%

73,138

7.43%

209,935

24.78%

Generali OFE

714,739

4.91%

788,002

5.28%

849,807

5.57%

61,805

7.84%

135,068

18.90%

Allianz Polska OFE

414,950

2.85%

448,525

3.00%

490,306

3.21%

41,781

9.32%

75,356

18.16%

OFE Pocztylion

483,392

3.32%

518,081

3.47%

566,350

3.71%

48,269

9.32%

82,958

17.16%

PKO BP Bankowy OFE

418,884

2.88%

468,322

3.14%

490,527

3.21%

22,205

4.74%

71,643

17.10%

AEGON OFE

778,219

5.35%

834,366

5.59%

877,074

5.75%

42,708

5.12%

98,855

12.70%

Amplico OFE

1,109,336

7.62%

1,135,730

7.61%

1,176,133

7.70%

40,403

3.56%

66,797

6.02%

839,069

5.77%

868,505

5.82%

875,418

5.73%

6,913

0.80%

36,349

4.33% 2.49%

Nordea OFE OFE PZU “Złota Jesień”

2,148,354

14.76%

2,193,502

14.69%

2,201,837

14.42%

8,335

0.38%

53,483

ING OFE

2,923,059

20.09%

2,929,848

19.62%

2,953,345

19.35%

23,497

0.80%

30,286

1.04%

Pekao OFE

356,292

2.45%

349,499

2.34%

347,505

2.28%

-1,994

-0.57%

-8,787

-2.47%

OFE POLSAT

319,728

2.20%

311,113

2.08%

308,802

2.02%

-2,311

-0.74%

-10,926

-3.42%

Aviva OFE Aviva BZ WBK 2,879,412

19.79%

2,786,190

18.66%

2,759,714

18.08%

-26,476

-0.95%

-119,698

-4.16%

319,115

2.19%

315,419

2.11%

312,678

2.05%

-2,741

-0.87%

-6,437

-2.02%

14,551,641

100.00%

14,930,991

100.00%

15,266,523

100.00%

335,532

2.25%

714,882

4.91%

OFE WARTA Total:

* Data concerns the number of OFE members according to the Central Register of OFE members kept by the Social Insurance Institution (ZUS)

Pension Contributions Transferred to Open Pension Funds by ZUS Contributions transferred in period 19.05.1999 – 31.03.2011 Open Pension Fund

ING OFE Allianz Polska OFE

total number of contributions

average contribution in PLN

average basis in PLN

315,188,419

125.33

1,716.85

38,475,819

117.86

1,614.52

Aviva OFE Aviva BZ WBK

362,709,132

116.77

1,599.59

Amplico OFE

125,817,262

109.76

1,503.56

AXA OFE

67,188,516

104.12

1,426.30

Generali OFE

63,058,579

103.25

1,414.38

Pekao OFE

28,755,497

102.70

1,406.85

PKO BP Bankowy OFE

50,821,950

100.38

1,375.07

OFE PZU “Złota Jesień”

234,242,567

95.72

1,311.23

Nordea OFE

68,254,512

92.12

1,261.92

OFE WARTA

28,788,097

92.02

1,260.55

AEGON OFE

87,572,831

89.72

1,229.04

OFE Pocztylion

43,881,476

87.58

1,199.73

OFE POLSAT

24,479,031

81.53

1,116.85

1,539,233,688

108.38

1,484.59

Total

Source: ZUS

Source: ZUS

Rates of return for Open Pension Funds from 31.03.2008 to 31.03.2011 * Open Pension Fundt

Accounting unit’s value as of:

Rate of return

31.03.2008* 31.03.2011*

three-year** annualised****

in PLN

in %

AEGON OFE

26.32

30.35

15.312

4.863

Allianz Polska OFE

25.05

29.41

17.405

5.494

Amplico OFE

25.90

29.74

14.826

4.716

Aviva OFE Aviva BZ WBK

27.00

30.68

13.630

4.351

AXA OFE

26.50

30.69

15.811

5.015

Generali OFE

27.81

32.09

15.390

4.887

ING OFE

28.80

33.28

15.556

4.937

Nordea OFE

27.34

31.55

15.399

4.890

Pekao OFE

25.98

29.72

14.396

4.585

PKO BP Bankowy OFE

25.75

29.98

16.427

5.201

OFE Pocztylion

25.09

28.93

15.305

4.861

OFE POLSAT

29.30

33.93

15.802

5.012

OFE PZU “Złota Jesień”

27.23

31.36

15.167

4.820

OFE WARTA

27.47

31.51

14.707

4.680

Weighted Average

×

15.177

4.823

Minimum required rate of return

×

7.589

Inflation rate

×

10.864

3.498

317.20

20.070

6.286

48,729.83

1.497

0.496

Change in FTSE Poland Government Total Performance Index

264.18

Change in WIG index

48,011.28

×

* The last working day in the quarter. ** C alculated in accordance with the Act on the Organisation and Operation of Pension Funds (Articles 172 and 173). *** For 36 months, annualised.

Source: Calculations based on OFE data, IGTE

6/2011 :: polish market :: 61

Economy and Finance

Agnieszka Nogajczyk-Simeonow, President of PTE Allianz Polska S.A.

Since 1 January 2009, Universal Pension Funds (PTE) have provided pension benefits from the so called second pillar in the form of periodic capital pensions (calculated individual resources are directed to the Social Insurance Institution (ZUS) and the total pension from the first and second pillar is paid). Pensions of this type can be paid to pensioners until they reach 65 years of age. Then, for the rest of savings left in the Open Pension Fund (OFE) they will be required to purchase a lifelong capital pension.

The payment of pensions from the second pillar: pension benefits from OFE should be available in two basic forms: (1) a periodic capital pension - (serviced - as it is now - by PTEs paid by ZUS in combination with pensions from the first pillar) and (2) a lifelong capital pension – handled by life insurance institutions and ZUS, and paid by the latter in combination with pension benefits from both pillars). A mixed pension would be acceptable, i.e. part of the financial resources would be devoted by a pensioner to purchasing a lifelong pension, and the rest would be paid to him or her in the form of a capital pension.

Lifelong capital pension can be calculated individually for the person who chooses such a form of benefit. For the capital accumulated in an OFE, the future pensioner could buy a product, namely an individual lifelong capital pension from the life insurance company which would offer him or her the most attractive service package, taking into consideration the value of the capital accumulated in the OFE and estimate tables of life duration. The insurance company would pay pension benefits until the end of the pensioner’s life. A lifelong capital pension is an insurance product, and in the case where the sum of the amounts paid by the insurance company is lower than the capital transferred from the OFE for the purchase of the lifelong capital pension, no funds are eligible for inheritance. Moreover, the decision to choose this type of benefit would be irrevocable.

A lifelong capital pension should be paid by existing life insurance companies. At the moment, these are the only entities willing to offer this product to clients, as they employ specialists who are qualified in the field of actuarial and asset management and have an adequate IT and technical infrastructure. Some life insurance companies currently offer voluntary pension insurance.

The periodic capital pension should be calculated individually based on the value of the capital accumulated in the account in an OFE, and a set period of payout of the benefit. The amount of benefit would be verified on an annual basis taking into consideration the decreasing capital in the retirement account. In the event of the pensioner’s death, the unused capital would be eligible for inheritance. To exclude cases of irrational use of these resources, the minimum period of payout would be specified statutorily. The decision on the periodic capital pension would

62 :: polish market :: 6/2011

not have to be final. Not being satisfied with this form of pension benefit, a pensioner would have the possibility, at any time, of purchasing a lifelong capital pension in a life insurance company.

A periodic capital pension would be preferred by persons in specific life circumstances for whom the selection of a lifelong capital pension would seem irrational, due to the insignificant probability of using the accumulated capital.

That product would be chosen by people suffering from terminal illnesses who, at the moment of retiring, know that they have only few years of life left, and they do not want their families to be bereft of the means of support. Adequately-planned periodic capital pensions would replace the marital pensions or lifelong pensions with a guaranteed period, proposed in previous draft laws.

Periodic capital pensions are currently implemented by PTEs, but only for people aged up to 65. After this period, they will be obliged to purchase a lifelong capital pension.

Resources paid in the form of a periodic capital pension would be – as it is now – managed by PTEs. They should be managed by a fund with an investment strategy adjusted to the nature of these savings.

Establishing specialist pension entities handling only the payout of resources from OFEs requires large expenditures, from the perspective of a future pensioner, as the offered pension product will be burdened with part of these costs. ::

: g n i h t e On t s e Inv h t i w t s e b e th Allianz Polska Pension Fund – the best Pension Fund in the Polish market.

Allianz Polska Pension Fund reached the highest rate of return in the last 3-year ranking published by Polish Financial Supervision Authority for the period from 31 March 2008 to 31 March 2011.

With you from A-Z

www.allianz.pl/ofe

Economy and Finance

The risk of institutional clients vs.

The 14th Brokers’ Congress took place at the end of May. During the congress a panel discussion took place under the title “Client’s risk vs. segmentation of auto insurance.” The participants present at the discussion were Grzegorz Kulik, Vice-President of the Board in charge of insurance activities, Uniqa; Grzegorz Komosa, Board Member, Marsh; Rafał Hiszpański, Executive Director of the Department of Independent Distribution Channels Management, Warta; Arkadiusz Sulich, Director of the Department in charge of Transport Fleet Insurance, Nord Partner.

The moderator of the panel discussion was Rita Schultz, Editor-in-chief of “Polish Market” magazine.

How is segmentation interpreted by an insurance company, an insurance broker and a leasing company?

Grzegorz Kulik: Segmentation is a difficult subject, especially regarding

insurance companies. As far as insurance tariffs are concerned, Uniqa distinguishes 4 basic segments: tariffs for individual clients, car-dealer tariffs, transport-fleet tariffs, and leasing. It’s

the simplest division. The problems concerning segmentation are different for insurers and individual distribution channels. The largest conflicts between distribution channels are connected with leased cars.

Arkadiusz Sulich: Nowadays we are, indeed, dealing with the simplest division of segmentation. However, our market is currently facing the introduction of different prices, depending on the form of vehicle purchase (cash, credit, leasing). Three different prices for the same client and they still do not involve such factors as the location of vehicle utilisation and daily mileage. We should, first of all, focus on the end user, the driver of the car, and not on the form of purchase.

Rafał Hiszpański: The problem with segmentation is the fact that each participant of the process of auto purchase by a business client wants to

Grzegorz Kulik, Vice-president of Board, Uniqua

Rafał Hiszpański, Executive Director, Warta

Arkadiusz Sulich, Director, Nord Partner

Grzegorz Komosa, Board Manager, Marsh

64 :: polish market :: 6/2011

Economy and Finance

segmentation of auto insurance offer insurance. This means that each party in the automotive market thinks that it is the one to insure the client, whether the client is an individual or a corporate body (when we buy from a car dealer, he is the one to offer insurance, when leasing the car it’s the leasing company who offers the insurance; in the case of a transport fleet this role is played by the agent responsible for the fleet; in CFM service, the financing scheme price very often involves an insurance premium for the whole period of the rent, etc.) It is vital that all parties reach an agreement, as in many cases we have 4 partners offering separate insurance schemes. It is very difficult to achieve, as respective partners are very often represented by agents or are themselves agents for insurance companies.

W hat are the components of risk assessment?

Grzegorz Kulik: In risk assessment concerning insurance, statistics are very helpful. In vehicle insurance we take into account vehicle data, its make, model, cylinder capacity, and engine power, as well as repair costs for a particular vehicle category. We try to make a full client characteristic, including the type of vehicle he or she purchases. However, the most important parameter in risk assessment is the client, his or her age, driving experience, driving style, but also his or her profession. A fleet driver often behaves differently from a private owner. To assess the risk concerning transport fleets, companies want to have complete damage data and the fleet has to be trustworthy.

Rafał Hiszpański: When assessing risk, future events are also taken into account. As regards corporate clients, the important factors are the branch of their economic activity, fleet management methods, prevention measures, and employees’ and managers’ awareness, whether the client, even with a high claims ratio, introduces repair programmes, such as installing GPS, staff training, an appropriate car policy for the company, etc.

Arkadiusz Sulich: In my opinion insurance companies are the party

who should be responsible for risk assessment and presenting the components of the evaluation. We cannot raise prices because of the need to assess future risk and expected increases in prices, and this is what actually happens. We must not be afraid of assessing risk and explaining clearly what the price results from.

Grzegorz Komosa: I agree - we should assess the risk. But the problem also concerns the person responsible for the assessment. We, as brokers, in a way bear this responsibility. If the client receives offers from the market with higher insurance rates the brokers are obliged to explain the reasons for the rise, including how the loss ratio has been calculated. Through precise risk assessment we want our client to avoid the shock concerning the increase in prices. It is vital that we make it clear to the client what he or she is buying and what he or she is paying for, and what is the total risk cost.

W hat are the components of the insurance price?

Grzegorz Kulik: The final price depends on spare parts costs, rates for man-hours, the insurance company’s claims adjustment policy, agency commission, the company’s operating expenses, the Insurance Guarantee Fund, reinsurance cost, and margins.

Rafał Hiszpański: It is worth noting that insurance companies, as well as the services of brokers and agents, are not non-profit services. The price also includes margin, although, as we may see in the expenses-revenues balance of insurance companies in 2010, most companies recorded a financial loss as regards vehicle insurance.

As far as man-hours are concerned, their rates seem different from different points of view. The client may complain that the rate is outrageously high, whilst dealers may claim that it is definitely too low. Despite certain agreements with dealers, regulating the issues concerning man-hours, we find clients who have their own agreements regarding man-hours with garages, and we respect that.

Gr zeg or z Komosa: Prices also include commission-based

remuneration. Its amount is equal to a certain percentage of the insurance rate and, depending on the rate, it may vary considerably. There is no set commission-based remuneration but the amount of the broker’s fee should be overt to the client. Commission-based remuneration should cover brokers’ activity costs.

Broker’s regular duties include risk assessment, preparing the product according to client’s needs, and claims services. Obviously, the broker always wants to receive commission high enough to cover all activity expenses, and these expenses are huge, because the service available for clients is becoming more and more diverse. Apart from covering expenses, commission-based remuneration ought to guarantee a certain profit to the company, which is absolutely normal in trading.

Is there any limit concerning the increase in automobile liability insurance rates?

Grzegorz Kulik: This Congress saw a discusion of the issue of the rates increase and whether it should happen at all. In the case of corporate clients, it is the clients themselves who have an influence on their automobile liability rates, e.g. through prevention programmes, which exclude reckless drivers or change their behaviour. ::

Rita Schultz and Grzegorz Kulik

Photos: Hanna Smolińska

6/2011 :: polish market :: 65

Events

Teraz Polska Emblem

goes to 31 winners On 6 June 2011 the Grand Theatre in Warsaw hosted the official award ceremony of the Teraz Polska (Time for Poland) Promotional Emblem. The aim of the Polish Promotional Emblem Foundation is to distinguish, both in Poland and abroad, Polish products, services and communes. The Teraz Polska competition entered by Polish businesses fulfils this objective.

This year, the Chapter of the Te­raz Polska Promotional Emblem nominated 94 companies out of which 31 winners were chosen, including 6 communes that since 2007 can also apply for the Teraz Polska Emblem. The winners received awards in several categories including products, services and innovation. For the second time, the Chapter awarded prominent personalities. The “Outstanding Pole” title goes to those who through their professional achievements promote Poland around the world. This year, the winners are Prof. Maria Siemionow, Prof. Jacek Jassem and Adam Małysz. This is the first time the award has been received by a sportsman.

Receiving the Teraz Polska Emblem is a great distinction for the companies honoured with the statuette. It proves not only the prestige of the product, but first of all its quality and rendered services. The right to use the Teraz Polska Emblem is a big advantage for the awarded companies, as it inspires confidence among partners, and what is even more important, among Polish consumers.

The statuettes were presented by the Chairman of the Chapter Prof.

Michał Kleiber and the President of the Foundation Krzysztof Przybył. ::

66 :: polish market :: 6/2011

Export

Exports and innovation: the driving-force of Polish economy In the years to come exports and innovation will be increasingly decisive about economic growth in Poland and Poland’s international leverage.

Innovation will determine economic competitiveness, especially in exports.

Mikołaj Oniszczuk To meet these challenges halfway, the Association of Polish Exporters (Stowarzyszenie Eksporterów Polskich) under Mieczysław Twaróg hosted its 7th programme congress entitled Pro-Export and Pro-Innovation Changes in Polish Economy – Openings and Prospects on June 7 in Warsaw’s Hotel Marriott. Attending the congress were prominent ministry and banking representatives as well as economic experts, who outlined possible steps to boost exports and innovation in Poland. Especially noteworthy were speeches by professor Jerzy Osiatyński, who sits on a team of economic experts advising President Bronisław Komorowski, Henryk Szymański, section head at the Economy Ministry, and professor Ryszard Michalski, head of the Institute for Market, Consumption and Business Cycles Research and co-author of a Strategy for the Pro-Export Growth of Polish Economy. Especially important for exporters was the news that the Economy Ministry is winding up work on a strategy for building an innovatory and effective economy, which proves that theory is gradually becoming fact.

Dominant among the round 200 congress participants were businesspeople, exporters and investors from all over the country, who were avidly interested in presentations by representatives of Polish economic missions abroad – Halina Gołębicka, 1st Counsellor and head of the Trade and Investment Promotion Section at the Polish Embassy in Bucharest, Andrzej Grabowski, Counsellor, Minister and head of the Trade and Investment Promotion Section at the Polish Embassy

in Kiev, Jacek Robak, Counsellor, Minister and head of the Trade and Investment Promotion Section at the Polish Embassy in Berlin and Andrzej Kiepela, Polish Honorary Consul in Durban, South Africa.

Their addresses at the congress, accompanying printed material and appropriate embassy websites contain valuable information about business and business partnerships on their respective markets. It can be safely said that Poland’s foreign missions are a reliable information source and businessfriendly, and their knowledge should be used to the best effect.

The congress participants also spoke about doing business under the present crisis, and discussed ways and means to deal with the crisis on different markets, each of which has its own, specific features. Esepcially informative in this respect were representatives of the banking sector, especially Bank Gospodarstwa Krajowego (BGK) Vicepresident Jerzy Kurella and the President of the Export Credit Insurance Corporation (KUKE), Zygmunt Kostkiewicz. The debates during this part of the congress concerned financial risk insurance in dealings with Belarus and Ukraine. It was concluded that caution on these markets was advisable, but without undue panic.

It was concluded that business is always accompanied by some risk and in such cases enterprisers should make avail of insurance instruments provided by institutions like BGK or KUKE. Polish exporters also mentioned restrictions and embargos in vegetable and fruit exports, which they saw as harmful and, in the case of exports from Poland, unjustified. The

participants stressed that Polish food was the healthiest in Europe.

The conference participants also concluded that Polish exports this year should rise at least 10-12% against 2010.

Future years also augur growth, they said. Although it could be moderate, it should still help hoist the national GDP. A pleasant accent at the congress was the awarding of Polish Export Leader 2011 medals and commendation letters to 25 companies. Among the awarded firms were Sokołów S.A. (meat), ZM Łmeat Łuków S.A. (meat), Huta Szkła Gospodarczego (glass), Okręgowa Spółdzielnia Mleczarska w Pajęcznie (dairy), Sandomierski Ogrodniczy Rynek Hurtowy S.A. (fruit), Mokate Spółka z o.o. (tea, coffee), Polexpo Exhibitions, Fabryka Łożysk Tocznych (ball bearings) in Kraśnik, Stalowa Wola Steelworks, Inter Groclin Auto S.A., WSK (engineering) in Poznań and the Polfa SA pharmaceutics plant in Warsaw.

Traditionally, the congress debates and conclusions were contained in a Congress Position document which stressed the need to introduce effective support instruments for exporters, including help from the Export Development Council at the Economy Ministry (a platform for programming, coordinating and monitoring pro-export policy), trade and export promotion sections in Polish embassies, the Polish Agency for Foreign Investment (PAIiIZ), the Agricultural Market Agency (ARR), BGK and KUKE, to ensure complex financial and insurance aid for exporters by crediting, insurance programmes, guarantees and financial counselling. In the promotion sphere it was concluded that the main weight should be laid on the most export-boosting branches like motor industry, electronics, aviation, furniture, bio-technology, food and services, and the most promising export markets like Russia, Ukraine, Kazakhstan and Belarus in the East, and the EU, the US, China, Japan, Brazil, Argentina, Chile and some Arab markets. :: 6/2011 :: polish market :: 67

Export

Ranking of exporters according to revenue in 2010 (in PLN thousands) Revenue from exports

Net profit/loss

Gross profit/loss

Operating income

5,059,898

3,400,000

na

na

na

1,750

Warsaw

3,589,913

2,740,848

395,130

na

447,588

1,553

Jerzy Podsiadło

Katowice

2,947,759

2,721,285

179,914

222,204

180,963

134

Wiesław Smulski

Kraków

3,589,735

2,304,610

310654

398,871

451,518

3,542

CIECH SA

Ryszard Kunicki

Warsaw

3,960,316

2,276,135

20,603

54,479

146,853

6,705

BORYSZEW SA

Małgorzata Iwanejko

Warsaw

3,145,555

1,595,175

126,371

147,351

188,066

5,657

7

MONDI ŚWIECIE SA GK

Maciej Kunda

Świecie

2,263,674

1,437,197

249,317

263,690

330,724

1,022

8

FIRMA OPONIARSKA DĘBICA SA Jacek Pryczek

Dębica

1,793,351

1,357,491

81,686

101,848

110,320

2,819

9

IMPEXMETAL SA

Piotr Szeliga

Warsaw

2,417,585

1,178,860

73,218

96,055

10,752

1,910

10

ZAKŁADY AZOTOWE PUŁAWY

Paweł Jarczewski

Puławy

2,236,500

1,151,210

187,000

236,000

184,100

3,300

11

GRUPA ANWIL SA

Remigiusz Paszkiewicz

Włocławek

2,525,090

1,110,022

46,031

56,024

30,478

3,241

12

PRZEDSIĘBIORSTWO CHEMII GOSPODARCZEJ POLLENA

Marek Witecki

Ostrzeszów

45,532

1,000,938

3,266

2,926

2,748

187

13

PGNIG SA GK

Michał Szubski

Warsaw

21,281,161

988,786

2,457,184

2,936,099

2,886,689

32,716

14

ZAK SA

Jerzy Marciniak

Kędzierzyn-Koźle

1,791,598

879,704

32,435

43,753

58,561

2,324

15

SITECH SP. Z O.O.

Gerhard Schäfer

Polkowice

875,532

797,611

64,334

56,366

55,333

1,414

Company name

Head of company

Based in

Sales revenue

1

GLAXOSMITHKLINE PHARMACEUTICALS

Jerzy Toczyski

Poznań

2

BSH SPRZĘT GOSPODARSTWA DOMOWEGO SP. Z O.O.

Konrad Pokutycki

3

WĘGLOKOKS SA

4

GRUPA CAN- PACK

5 6

Employment

16

STALPRODUKT SA GK

Piotr Janeczek

Bochnia

1,732,272

789,608

145,627

182,222

177,767

2,858

17

ZAKŁADY CHEMICZNE POLICE

Krzysztof Jałosiński

Police

2,022,636

755,530

26,302

5,178

5,431

3,378

18

RONAL-POLSKA SP. Z O.O.

Krzysztof Brosig

Wałbrzych

845,377

752,094

34,267

48,719

48,189

1,192

CRONIMET PL SP. Z O.O.

Michael Vogel

Kłopot (by Inowrocław)

599,158

587,228

23,397

24,648

27,274

78

19 20

PFEIDERER GRAJEWO

Wojciech Gątkiewicz

Grajewo

1,390,388

550,789

-30,431

-34,770

47,100

1,618

21

KOPEX SA

Marian Kostempski

Katowice

2,365,194

498,517

41,197

56,156

100,087

6,759

22

BARLINEK SA GK

Paweł Wrona

Kielce

588,108

426,156

2,327

8,164

30,519

3,321

23

EXIDE TECHNOLOGIES SA

Janusz Mieloszyk

Poznań

724,593

416,937

29,224

37,233

37,233

408

24

INTER CARS

Robert Kierzek

Warsaw

2,413,008

410,606

63,683

77,494

115,255

2,105

25

GRUPA KĘTY SA

Dariusz Mańko

Kęty

1,224,989

380,000

89,708

112,279

117,961

819

26

HUTMEN SA

Kazimierz Śmigielski

Wrocław

747,406

370,785

-16,695

-12,093

-4,474

1,029

27

KRAJOWA SPÓŁKA CUKROWA SA

Marcin Kulicki

Toruń

1,517,402

353,725

188,286

267,446

na

1,648

FABRYKA MEBLI FORTE SA GK

Maciej Formanowicz

Ostrów Mazowiecka

468,888

341,912

29,319

38,087

24,786

2,063 1,726

28 29

KOELNER SA GK

Radosław Koelner

Wrocław

559,631

318,563

871

3,116

18,216

30

COMARCH SA

Janusz Filipiak

Kraków

761,744

315,695

43,717

24,979

24,819

3,462

31

Fabryka Maszyn FAMUR S.A.

Waldemar Łaski

Katowice

885,819

270,040

80,024

na

94,130

3,110

32

ZELMER SA

Janusz Płocica

Rzeszów

640,022

257,000

37,781

47,544

49,205

1,902

33

CERSANIT SA GK

Mirosław Jędrzejczyk

Kielce

1,531,462

250,800

103,170

128,547

142,032

6,174

34

PKM DUDA SA GK

Maciej Duda

Warsaw

1,455,295

217,941

32,393

38,713

57,794

2,200

DECORA SA GK

Waldemar Osuch

Środa Wielkopolska

263,270

190,690

4,343

3,684

8,846

856

36

TARGET POLSKA SP. Z O.O.

Jacek Migacz

Warsaw

261,292

138,240

na

3,280

2,908

13

37

GRAAL SA GK

Bogusław Kowalski

Wejherowo

492,104

127,334

6,614

9,976

20,425

38

ORZEŁ BIAŁY SA GK

Zbigniew Rybakiewicz

Bytom

332,246

117,413

38,483

48,077

47,833

39

STALPROFIL SA GK

Jerzy Bernhard

Dąbrowa Górnicza

630,751

107,145

30,050

36,912

42,771

448

40

GRUPA APATOR SA

Janusz Niedźwiecki

Toruń

409,213

105,046

50,050

62,199

45,419

1,746

41

INTER GROCLIN AUTO SA GK

Zbigniew Drzymała

Wolsztyn

141,218

83,636

516

1,337

3,885

1,566

35

68 :: polish market :: 6/2011

393

Export

Ranking of exporters according to revenue in 2010 (in PLN thousands) – cont.

Revenue from exports

Net profit/loss

Gross profit/loss

Operating income

200,879

70,621

13,440

14,698

21,373

1,132,874

66,815

25,452

32,201

34,673

435

151,151

60,741

1,918

3,039

5,597

556

Katowice

185,987

60,696

-8,323

-9,359

-9,856

1,022

Łódź

120,877

53,089

2,416

2,936

6,136

525

Konrad Hernik

Kraków

284,679

49,318

14,121

15,350

18,536

500

RAFAMET SA GK

E. Longin Wons

Kuźnia Raciborska

86,780

48,976

1,889

2,712

6,050

647

ZREMB CHOJNICE SA GK

Krzysztof KosiorekSobolewski

Chojnice

102,337

44,267

-8,986

-10,145

-9,185

na

2,105,901

41,488

26,288

30,420

34,551

745

104,510

39,611

1,241

1,037

2,911

124

Company name

Head of company

Based in

42

HARPER HYGIENICS SA GK

Robert Neymann

Warsaw

43

KONSORCJUM STALI SA

Robert Wojdyna

Warsaw

44

FASING SA GK

Zdzisław Bik

Katowice

45

ENERGOINSTAL SA

Stanisław Więcek

46

COMPLEX SA GK

Michał Nowacki

47

Armatura Kraków SA GK

48 49 50

Sales revenue

Employment

803

ACTION SA GK

Piotr Bieliński

Piaseczno

LENA LIGHTING SA GK

Włodzimierz Lesiński

Środa Wielkopolska

52

RELPOL SA

Rafał Gulka

Żary

89,198

36,433

-8,002

-6,550

-6,565

na

53

YAWAL SA GK

Edmund Mzyk

Herby

168,532

34,847

-5,538

-4,876

-3,272

420

54

MAKRUM SA

Rafał Jerzy

Bydgoszcz

56,965

31,869

-22,895

-23,274

-27,254

252

55

STARDOM SA

Krzysztof Zięba

Częstochowa

63,253

26,361

na

na

na

na

56

HYDROTOR SA GK

Wacław Kropiński

Tuchola

72,054

25,153

4,216

5,257

5,586

756

177,158

24,600

5,307

na

6,753

na

55,774

23,620

-11,786

-12,280

-9,885

216

51

57

CERAMIKA NOWA GALA SA

Waldemar Piotrowski

Końskie

POLCOLORIT SA

Barbara Urbaniak-Marconi

Piechowice

59

WAWEL SA GK

Dariusz Orłowski

Kraków

355,649

21,542

47,739

59,153

56,963

700

60

ZPUE SA

Andrzej Grzybek

Włoszczowa

310,296

21,364

14,474

18,313

19,735

1,272

61

JUTRZENKA HOLDING SA GK

Jan Kolański

Opatówek

621,591

21,205

31,238

35,348

35,377

1,557

62

IZOSTAL SA

Marek Mazurek

Zawadzkie

138,329

17,801

7,438

8,538

11,131

120

63

RADPOL SA GK

Andrzej Sielski

Człuchów

112,394

16,321

14,124

16,844

17,494

545

64

BAKALLAND SA

Marian Bogdan Owerko

Warsaw

194,468

16,026

9,326

10,126

13,116

232

65

MAKARONY POLSKIE SA GK

Paweł Nowakowski

Rzeszów

149,969

13,200

-4,971

3,170

2,628

na

66

LUVENA

Kazimierz Zagozda

Luboń

187,926

12,601

4,592

5,368

5,452

251

SUWARY SA GK

Walter Tymon Kuskowski

Pabianice

56,847

10,352

2,654

3,255

3,458

257

68

ADVADIS SA

Adam Brodowski

Kraków

568,733

9,621

-48,794

-46,882

-44,468

na

69

PPS PEPEES SA

Wojciech Faszczewski

Łomża

93,910

8,161

1,330

1,356

2,418

286

58

67

70

NETMEDIA SA

Andrzej Wierzba

Warsaw

131,762

8,023

8,412

10,052

8,044

98

71

BSC DRUKARNIA OPAKOWAŃ SA

Janusz Schwark

Poznań

100,130

7,770

14,659

17,506

18,964

na

ZAKŁADY AUTOMATYKI POLNA SA

Miroslav Kozlovski

Przemyśl

28,000

7,583

752

846

618

203

72 73

ATM SA GK

Roman Szwed

Warsaw

401,779

6,739

20,439

25,941

33,150

450

74

HYGIENIKA SA

Kamil Gerard Kliniewski

Lubliniec

36,424

5,152

-2,707

-2,707

-2,169

106

75

DREWEX SA

Piotr Polak

Kraków

19,482

4,538

-3,508

-3,508

-828

187

76

ERG SA

Dariusz Purgał

Dąbrowa Górnicza

52,930

2,935

1,425

1,554

1,994

na

77

GRUPA IZNS SA

Paweł Sobków

Iława

24,372

1,738

5,866

7,630

-1,097

25

78

DROZAPOL- PROFIL SA

Wojciech Rybka

Bydgoszcz

166,103

1,648

4,393

4,413

5,213

258

79

LAI SOFTWARE

Grzegorz Siewiera

Łódź

16,584

1,368

769

769

1,067

na

GRUPA ATM

Tomasz Kurzewski

Bielany Wrocławskie

113,357

1,253

3,469

3,469

4,857

na

69,019

301

6,719

8,428

11,293

na

80 81

BUMECH SA

70 :: polish market :: 6/2011

Katowice

Invest in Poland

Doing innovative business with Mexican Polonia Zygmunt Haduch, Marian Szczerek The structure and intensity of the Polish emigration altered through centuries. The oldest Polish Diaspora was formed by uneducated people from the poor regions under Austrian occupation, desperately seeking a better life. Hundreds of thousands of landless Polish peasants settled down in South America, mainly in Brazil and Argentina. They were tough men who did not lose heart in case of first signs of misfortune. This is probably why the President of Argentina, establishing 8 June as the Day of the Polish Settler, said: “You, the Polish settlers, have taught us how to work.”

The contemporary Polish Diaspora is completely different. The massive emigration to the countries of Latin America has ended. Nowadays Polish emigrants are recognised specialists in their areas: scientists, musicians, coaches, reaching high positions in the new communities. And it is Polish emigrants whose potential is still not exploited enough for the good of Poland.

The popular image of Mexico country is shaped on one side by wonderful beaches, monuments, pyramids, preColumbian culture, but on the other side it is perceived as a poor country, situated somewhere in the Third World. Only the first part of this stereotype is true. In fact, poverty exists, driving many Mexicans to emigrate north of Rio Grande River. But only uneducated people leave. Those who wish to educate themselves, meet unlimited opportunities (free of charge) in this rapidly developing country. To provide education and for the purpose of the overall technological development of Mexico, lecturers and specialists from many areas are attracted. In

Nowadays Polish emigrants are recognised specialists in their areas: scientists, musicians, coaches, reaching high positions in the new communities.

72 :: polish market :: 6/2011

each respected Mexican university one can meet scientists, including Polish ones, representing many specialties.

The University of Monterrey (UDEM) is a good example.

UDEM, a private university located in one of the most industrialised Mexican regions, and the Institute for Sustainable Technologies - National Research Institute, Radom, Poland (ITeE-PIB) have decided to convert private, interpersonal relationships of their employees into measurable effects in the area of technological development and education. Is it possible in spite of so long distance between our countries? Zygmunt Haduch, Professor of the University of Monterrey, is convinced that in his case a very strong motivation was a will to do something for Poland, for his homeland, where he was born and educated. It all began a few years ago when Prof. Haduch invited his fellow student, Prof. Marian Szczerek from ITtT-PIB Radom, to give lectures at UDEM. Unexpectedly, strong interest of the Mexican side quickly resulted in an agreement of cooperation between UDEM and ITeEPIB. The below mentioned results of a scientific character have been already obtained: :: Polish-Mexican Tribology Workshop - for the last five years a selected group of about 20 Mexican students has been visiting ITeE-PIB and Kraków University of Technology for summer courses. :: Three Mexican PhD students prepared their PhD theses at ITeEPIB; one of them has successfully defended it, two others are in progress. :: Scientists from both organisations gave about 20 jointly prepared lecturers at international scientific congresses in Poland, Mexico, Peru, Chile, Spain and Portugal.

Soon, the first scientific achievements became accompanied by financial benefits. Research equipment, developed and manufactured by ITeEPIB, has been sold to UDEM. This was the basis for setting up in Monterrey a tribology laboratory - one of the most modern laboratories in Central and Latin America - solving the problems of friction, wear and lubrication.

Using the purchased equipment, the researchers from the Mexican university, trained at ITeE-PIB, carry out ambitious research projects, which is a starting point of joint research projects realised for the Mexican industry.

In the future it is planned to set up joint postgraduate and PhD studies.

The undertaken efforts prove to be attractive, also financially, for the both sides. But what is more important is the promotion of Poland through demonstrating that Polish scientific achievements and innovations can be good export products, competitive on the international level. The offer of the research devices, developed and manufactured by ITeE-PIB, is a good example. Nearly 190 such instruments have been so far implemented in various R&D laboratories both in Poland and abroad (China, Croatia, the Czech Republic, Germany, Hungary, Israel, South Korea, Mexico, Russia, USA, Vietnam).

They have been awarded many gold and silver medals at international fairs and exhibitions - in Brussels, Budapest, Casablanca, Gdańsk, Geneva, London, Łódź, Moscow, Nuremberg, Pittsburgh, Poznań, Seoul, Warsaw.

Other Polish scientific centres seem also to have an interesting offer. It can be widely promoted throughout the world. For this purpose, a significant role may be played by the Polish emigrants, which opportunity has been too little exploited so far. ::

Investments in Łódź SEZ Investments at the level of PLN254 million, and almost 200 new jobs – these are the declarations of companies whose representatives have received permits to conduct their activities in the Łódź Special Economic Zone (SEZ).

The BSH Sprzęt Gospodarstwa Domowego Company announced its intention to increase the production of tumble dryers. The investor plans new production lines for its Łódź plant worth PLN38 million and creating 20 new jobs. This will be the third BSH project implemented in the Łódź Special Economic Zone.

Procter & Gamble intends to start producing women’s shavers in its Gillette plant in the Łódź district of Nowy Józefów. Gillette Poland International has plans to spend several dozen million dollars to buy new production equipment, creating 50 new jobs, and maintaining 850 employees at the plant. To date, the annual outlays have exceeded PLN1.5 billion. Nearly 2,500 jobs were created in the plants in Łódź, Aleksandrów, and Warsaw.

Another investor in the Łódź SEZ, L-Correct in Ociąż, wants to create 100 new jobs. The PLN70 million facility in Nowe Skalmierzyce subzone will produce new generation foam latex and wire for the furniture industry. The new factory will stand next to the plant run by Correct – K. Błaszczyk i wspólnicy Spółka Komandytowa. The company met all the requirements which classify the project as innovative. In fact, the latex foam will be a completely new product on the Polish market. The planned investment will give the Polish economy a competitive edge, making producers of domestic mattresses and upholstered furniture independent from foreign foam latex suppliers from France, Italy, Belgium, and Spain.

Albéa Poland’s plans involve the purchase of a new production line for its plant in Łódź. The company is willing to spend PLN16 million on the new project. Additionally, it wants to create 10 jobs and maintain the existing 200 jobs. Cebal Tuba Albéa Poland is the country leader in tube packaging manufacture for plastics.

Laboratoria Natury in Mielec Laboratoria Natury will create at least 50 jobs and invest over PLN8 million in the Euro-Park Mielec SEZ. The Laboratoria Natury company will purchase a 1-hectare lot in the Lublin subzone, and build a state-of-the-art production plan with an area of 1800 square metres, along with the accompanying infrastructure. It

also intends to buy innovative processing lines for producing dietary supplements in the form of liquids, capsules, and tablets, as well as a computer management system. Applying innovative technological solutions will allow the introduction of new products on the market.

The Euro-Park Mielec SEZ issues new permits Euro-Park Mielec Special Economic Zone has issued two new permits for Partners in Progress and Zielona Budka. The investors declared to hire about 63 persons and invest more than PLN13.4 million.

Partners in Progress declared to create 43 jobs and Zielona Budka plans on creating 20 new jobs and maintain the level of employment at 175 people.

The investment outlays planned by Partners in Progress will amount to over PLN5.4 million. The investment in Trzebownisko subzone will involve the construction of a cutting-edge facility to support the use of IT software in production and development. The investment will cover the design, implementation and integration of IT systems, among other applications.

Gedia Poland invests in Nowa Sól Gedia Poland’s plans to invest EUR20 million and create 40 new jobs. The project is divided into four different parts. One is the construction of a new production hall, in which an advanced press is to be installed; another is the construction of a new assembly hall for vehicle parts (about 8,000 square metres); the third one involves the purchase of an advanced press capable of exerting a pressure of 1,100 tonnes and the final one is the construction of a hot-press line.

The company has invested EUR4 million in the first stage of extending the plant in Nowa Sól. This investment involves the construction of a new assembly hall to feature processes previously carried out in the plants in Kożuchów and Nowa Sól. More projects for the automotive industry based e.g. on new aluminium-welding technology, will soon be implemented in the three-aisle hall, with an area of nearly 9,800 square metres. ::

6/2011 :: polish market :: 73

Invest in Poland

The wives of German politicians and diplomats pay a visit to Bornit The wives of German politicians and diplomats, along with the members of the “Wilkommen in Berlin” diplomatic club at the German Ministry of Foreign Affairs, will spend three days of June in Lower Silesia. The organiser of the study visit entitled “The palaces and gardens of the Jelenia Góra Valley/Hirschberger Tal” is Grażyna Prawda, the wife of the Polish Ambassador to Germany. The ladies will be staying at the Bornit hotel owned by Interferie.

About 30 women will be taking part in the trip, which is scheduled for 6-8 June of this year, including, among others, Veronika Tillich, the wife of the Minister-President of Saxony, Cordula Wellmann, the wife of the member of the Bundestag, and Jane WilliamsBoock, President of “Wilkommen in Berlin” diplomatic club.

The tour will start on Monday 6 June with the visit of the Polish sculptor Małgorzata Chodakowska and her husband Klaus Zimmerling, a wine producer from Pillnitz near Drezno. The ladies will then visit the border towns of Görlitz and Zgorzelec, where, after a meeting with the Mayors they will see the newly-opened “Via Regia” exhibition. After crossing the river through the footbridge and enjoying refreshments in the Zgorzelec Culture Centre, the women will move to Szklarska Poręba to check in at the four star Bornit hotel.

“For the evening we are preparing an official dinner with the region’s hosts – the Mayors of Jelenia Góra, Lwówek Śląski and Szklarska Poręba. It will be a great occasion to get to know better all the people involved in the implementation of this project and spend time in a pleasant and friendly atmosphere,” says Robert Szuber, Director of Bornit.

Over the next two days the participants in the study visit will stay in the Interferie hotel and go on trips

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sightseeing in the Jelenia Góra Valley.

They will see the palaces in Wojanów, Łomnica, and Staniszów, and visit the Foundation of Palaces and the Gardens’ Valley. Eventually, after checkout, they will pay a visit to Jelenia Góra and Lwówek Śląski.

“It is an honour to us to have the pleasure of accommodating so many important people from diplomatic circles. We are glad that the organisers chose an Interferie hotel, which is always eager to engage in projects promoting this gorgeous region,” added Adam Milanowski, President of the Board of Interferie. ::

INTERFERIE is a company with almost 20 years of tradition on the domestic tourist market, and is the biggest tourist company in Lower Silesia, and one of the biggest in Poland. Interferie is a member of the Polish Chamber of Tourism, the Lower Silesian Chamber of Commerce, and the Lower Silesia Tourist Organisation. The company owns hotels and leisure centres in the Sudetes and by the sea. It also has hotels in Lubin and Głogów. Bornit, the company’s hotel situated in Szklarska Poręba is the biggest facility of its type in the Karkonosze Mountains.

Interferie’s history is related to the transformations in KGHM Polska Miedź SA. In 1992 the company took over leisure and summer-camp centres belonging to the copper potentate. Since 2006 Interferie has been listed on the stock exchange. The first listing took place

on 10 August. Interferie S.A. and Fundusz Hotele 01 (a special-purpose entity of KGHM and FIZAN), co-own Interferie Medical SPA sp. z o.o., which is responsible for the construction and management of a large leisure complex in Świnoujście.

The Interferie company is a reliable and trustworthy business partner, a fact supported by numerous awards – the Business Fair Play title (2004), and the Certificates of Business Credibility and Transparent Company awarded by Dun & Bradstreet (both in 2009). Interferie also received the title of a Gazelle of Business in 2010, and was nominated as one of the best tourist companies of the 4th Lower Silesia Key to Success Awards.

More information: www.interferie.pl

Invest in Poland

4 stars by the Baltic Sea The end of summer does not necessarily mean the end of fun, at least not in Świnoujście! By the end of this summer, in this pearl of seaside resorts the state-of-the-art 4-star Interferie Medical SPA hotel will be opened. Great leisure and comfort, a superb range of beauty and rehabilitation services, paired with modern conference facilities – all this will be waiting for about 600 visitors.

Would you like to spend your holiday in a charming town, very near to the widest and most beautiful beach on the Polish Baltic Sea? Would you like to stay fit? Do you like sightseeing and visiting interesting new places? Are you looking for comfortable, wellequipped rooms to hold a training session, or organise a conference or a corporate meeting? The modern Interferie Medical SPA hotel is the perfect address for all – tourists, health-resort visitors, and entrepreneurs.

You are cordially invited to the beautiful city of Świnoujście, the only Polish city situated on several dozen islands, a widely-recognised and popular resort with a unique microclimate.

A pleasant stay filled with attractions The Interferie Medical SPA Hotel is situated in a cosy corner of Świnoujście, right next to the promenade and the most beautiful of all Polish beaches. It will feature 308 comfortable single and double rooms and suites, as well as a lavish leisure centre, a wide range of treatments, and a fully-developed spa & wellness section. The entire facility will have free Internet access, and WiFi on the ground floor.

There will be a comprehensive service for our guests – with two restaurants (including an à la carte section, a buffet with a professional

open show cooking stand) and a lobby bar with original drinks at their disposal. In the evening, it will be a pleasure for us to entertain you in our night club, which will provide great fun till the break of day!

The hotel will also feature a leisure area with bowling alleys and billiard tables, a library, a business corner, computers and an Internet kiosk. All lovers of active leisure will have a rental shop at their disposal (bicycles, Nordic Walking poles, equipment for sports games on the beach) and beach equipment rental, providing beach beds and chairs, and windshields.

For body and soul This philosophy can be found in the hotel’s name – Interferie Medical SPA. An important part of its range of services involves beauty care and fitness treatments using the healing properties of water – SPA is an abbreviation of the Latin phrase “sanus per aquam,” which means “health through water.” It is a way to recover the balance and harmony of both body and soul. The leisure and treatment area, covering three storeys, will provide the conditions for true rest, regeneration, improved fitness and well-being. A wide range of individually-tailored treatments awaits the guests, to make them more

relaxed, healthy, and full of life for the days to come. Interferie Medical SPA also offers a state-of-the-art swimming pool, a large sauna and baths complex, and more than 30 wellness, biological-regeneration, and physical-therapy centres. A variety of massages, therapeutic peat mud and algae treatments, as well as inhalations. Halls for aerobic exercise, yoga, and tai-chi will be available. If you enter the “Beauty Farm,” you will come out with your body and face refreshed, and a great hairstyle.

Business style Rapidly-developing Świnoujście also deserves a professional venue for business meetings, conferences, and training. Interferie Medical SPA will have seven multi-functional halls with a total area of 712 sq. m, capable of accommodating events for over 600 people. One hall will be particularly well equipped to handle videoconferences, and an encrypted connection will ensure a high quality of transmission and full confidentiality. All halls will feature state-of-the-art multimedia equipment.

Visit the hotel’s website today on www.inmedicalspa.pl, and, after the summer, visit us in the 4-star elegant Interferie Medical SPA. You just can’t miss this opportunity!

6/2011 :: polish market :: 75

Events

Will a common Europe survive the crisis?

How is a common Europe possible? Is the Europe we are creating only an economic structure, or can we build a community of values and culture on this basis? Are we on our way to building a society of European citizens, asked Tomasz Kowalczuk, PhD, philosopher and literature specialist from the University of Warsaw, opening the discussion organised at the University in cooperation with the Forum for Polish-French Cooperation.

Participants in the debate included Janusz Lewandowski, PhD, the EU Budget Commissioner, Professor Michał Tymowski, historian, Professor Paweł Śpiewak, sociologist, and Professor Roman Kuźniar, political scientist, and the advisor to the President of Poland.

Each of the participants presented his particular standpoint on, as everyone agreed, the current great crisis of values of a common Europe.

Commissioner Lewandowski emphasised Europe’s uniqueness as the only continent which “has overcome the state of nature – a state of mutual hostility present on other continents – and built common institutions which do not deprive nations of their own respective identities, but rather, on the contrary, inject life into European regionalism.” Nevertheless, he also stressed that this unique status, which Europe got 20 years ago, has undergone a devaluation in the eyes

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of its citizens. “This climate from the 1990s, this pride in being part of a continent that overcame the state of nature, meeting with admiration on other continents - which speculated on whether, in some Asian or SouthAmerican way, the phenomenon of Europe could be replicated – is now completely gone. In 2011, I can’t find a single trace of this pride,” stressed Lewandowski.

The Commissioner’s thought was continued by Professor Kuźniar, who agreed that Europe is losing its regulatory powers, i.e. the power of establishing standards for international order. He insisted that the crisis in

the eurozone was ignited by Greece and by the giant debts of the countries collectively called PIGS – Portugal, Ireland, Greece, and Spain. The economic crisis, however, is the easiest to overcome. It is more difficult in the sphere of politics. Professor Kuźniar called the present crisis “a crisis of European integration as a political project,” which has been growing over the last two decades. “The last 20 years of transformation in the EU have brought a dual, paradoxical result. It’s been a time of incredible events and a winning streak which started with the change of the EEC into the EU following the Treaty of Maastricht. New ideas emerged, such as the Common Defence and Security Policy, the freetravel Schengen zone, the common currency, a unified system of justice, the Charter of Fundamental Rights, the enlargement and strengthening of the EU’s international leverage. None of these were present 20 years ago. It all happened during the years that followed, which we are unable to appreciate. Well, in Poland it is appreciated more than in many other EU countries. But the roots of this crisis lie exactly in what has happened over the last 20 years. This is about the double enlargement – horizontal-geographical, and functional-vertical.” Horizontal enlargement has radically increased the number of EU members.

Events In the 1990s, there were only 12 EU member states, while now there are 27. This process has led to a dilution of the common European political identity. “As there are so many countries, the greater part of the energy of respective members and EU institutions is consumed by mechanisms and procedures. This results in the evaporation of the ideal, of the metaphysics of European integration, because efforts are made to control this giant mechanism that we brought to life during the last 20 years,” remarked Professor Kuźniar. He sees two possible development scenarios. According to the first, the dilution of Europe will still advance because of admitting new members, particularly those which differ in civilisational terms. Another scenario anticipates that several countries will dominate in this diluted Europe. They will take care of intensifying integration, being a platform for tighter cooperation. “In my opinion these scenarios will take place in a perspective of some 15 to 20 years, but we need to discuss them today, because they are not beyond our imagination. I cannot say which of these scenarios will be better for Poland or for Europe, but now is the time for Poland to show what it can give Europe in hard times. We are about to begin our Presidency, so we should take responsibility for the integrity which gave us so many good things. Let’s try to respond to this challenge. It can be faced.

I believe that for Poland it is a time to pass the test as a nation and prove that it is able to take the responsibility for what Europe is going to look like,” said Professor Kuźniar.

A different future lies before the European Union as sees it Professor Michał Tymowski. History teaches us that the question whether a common Europe will survive has no answer.

Tymowski observed that history perceives phenomena in three temporal scales. The first of these scales is the so-called long-lasting scale. The second one is the scale of upturns and downturns. “With the crisis, we are now facing a downturn, but we have to remember that these are temporary situations which change not over centuries, but decades. We fell on a downturn, but this doesn’t mean it’s going to last long,” Tymowski pointed out optimistically. The third scale is called the event scale and refers to

Although I don’t know whether the EU will survive today’s crisis or whether it will survive at all, there’s no doubt that it will either survive ot become part of some other large entity that will be formed instead.

single events, which move forward the course of history, but do not interfere with the long-lasting cycle.

That is why Tymowski emphasised that we can imagine that the crisis will be overcome, and Europe will go through it, entering a new upturn. He pointed out, though, that among researchers, especially anthropologists, there is a concept of joining countries and creating large entities, and finally a single great global state. This concept was represented by Robert Carneiro, who predicted that about the year 2200 there will be a single global country.

“Researchers drew on several principles, two of which are the most important. The first one is the principle of competitive exclusion, which means that political entities compete with each other and exclude those which lose. The second principle states that there is a trend among political entities to become smaller. In my opinion, the EU is a part of this large, long process of forming large political entities. This is the future of the world. The peculiarity of the EU is that, as Commissioner Lewandowski said, it is not formed by force. It acts through its attractiveness, not violence. It is a unique case among all other great powers. If we look at this from the point of view of various time scales, I’d say that, although I don’t know whether the EU will survive today’s crisis or whether it will survive at all, there’s no doubt

that it will either survive or become part of some other large entity that will be formed instead,” concluded Tymowski.

Yet another point of view on the essence of Europeanness was presented by a sociologist, Professor Paweł Śpiewak. “For me, Europe’s most important achievement is the Charter of Fundamental Rights. It is the only continent of diverse countries that adopted such a Charter. It’s not just about adopting the Charter, but also about respecting it by creating appropriate legal frames and institutions of appeal, a system of controlling the observance of human rights, and equipping the European Parliament with the capability to provide opinions on individual matters concerning human rights. The sense of community and responsibility for these values becomes a carrier of European consciousness. I get the feeling that when we leave Europe, we feel that being rooted in such a legal reality seems an important element – not of legal, or of political awareness any more – but of our everyday consciousness. Something like the European Community is in the making; we are constructing a certain community of opinion, of reflection on the role of this continent as a continent that not only has its economic fundamentals, but also foundations based on a shared culture, a common tradition of thinking about itself,” said Professor Śpiewak. ::

6/2011 :: polish market :: 77

Chemical Industry

Good prospects Jerzy Bojanowicz

On June 2, PKN Orlen oil company opened a purified terephthalic acid (PTA) plant in Włocławek as part of the company’s synthetic raw-materials section. Prime Minister Donald Tusk attended the opening ceremony. “Probably not very many people know what terephthalic acid is. I do.

It’s a base product for manufacturing plastic bags. I also know that this plant will account for 20% of Europe’s terephthalic acid production,” Tusk said in Włocławek.

Jacek Krawiec, President of PKN Orlen informed that the plant was built in partnership with Japan, Italy and the United States. “This shows that Polish engineers are capable of working with the most advanced technologies to build facilities which Orlen and Poland need so badly,” Krawiec remarked.

The over EUR1 billion plant was built in a record time of three years.

Does it reflect the general condition of chemical industry in Poland?

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“Things have changed in the Polish chemical branch. Last year saw some improvement after a very bad 2009. Almost the entire branch noted incomes. This year also looks good. The current situation in agriculture, with low crops raising the demand for fertilizers worldwide, augurs very well for heavy chemistry, especially nitrogen and chemical plants in Tarnów-Mościce, Puławy and Kędzierzyn, the Anwil plant in Włocławek, Organika Sarzyna and Synthos in Oświęcim,” says Jerzy Majchrzak, head of the Polish Chamber of Chemical Industry.

The EU remains a chemical power, although second to Asia today. Germany, where chemical industry accounts for one-fourth of national industry, is the leader of European chemical industry. Germany also has close to a 25% share in the European chemical branch. In comparison, Poland’s share in European chemical industry is 2.3%,

with chemical industry accounting for 10-11% of national industry.

“This means our chemical industry is poorly-developed considering our potential. Moreover almost 50% is heavy chemistry. We have decidedly too little medium and light chemistry plants and in effect we have to import chemicals. Chemical imports constitute almost 40% of Poland’s trade deficit,” explains Majchrzak.

Synthetics, pharmaceuticals and special chemicals are mainly imported. Many of them are made exclusively in China. The medium chemistry sector is developing well but it is less visible. It produces detergents (mainly by big plants owned by huge international corporations, although overall Poland imports more detergents than it sells abroad), paints and varnishes, special products, synthetics, insulation and rubber products (including tires).

Privatization, consolidation “A rather interesting experiment is the consolidation of the chemical plant in Tarnów with ZAK. This could be a good opening for the consolidation of, say,

Chemical Industry

Puławy with Police or Police with Kędzierzyn and Tarnów, or Tarnów and Kędzierzyn with Anwil’s fertilizer section. All these variants are being considered,” says Majchrzak.

Adam Leszkiewicz, Undersecretary of State at the Ministry of Treasury, explains: “The criterion is simple: we decided that consolidation is warranted where it is commercially justified and a grassroots initiative. It won’t be up to the Treasury to say that for instance Puławy should buy Police, but the companies themselves will have to make the move if they decide it’s commercially feasible.”

This is an important statement as the Treasury holds majority shares in most chemical companies. Four of them are quoted on the stock market, but the state still holds controlling shares in them. These are: the Police Chemical Plant (Zakłady Chemiczne Police), the Tarnów-Mościce Nitrogen Plant (Zakłady Azotowe w Tarnowie-Mościcach), the Puławy Nitrogen Plant (Zakłady Azotowe Puławy, over 50%) and the Ciech company, where the state holds a 37% stake in the company but remains in control as other stockholders are dispersed. The Adipol nitrogen plant in Chorzów and the chemical plant in Rudniki are wholly-owned by the Treasury. The state also holds a 42% share in the nitrogen plant in Kędzięrzyn, where the main stockholder is the Tarnów plant. Until 2010 the Treasury also owned residue stock in Anwil (5.56%) but it was purchased by PKN Orlen. In May the Treasury sold a 25.01% share in the Alwernia Chemical Plant in exchange for shares in the Ciech SA company. In effect, the Treasury owns residue stock in only two companies of the Ciech Group–Organika-Sarzyna Chemical Plant (Zakłady Chemiczne Organika-Sarzyna) and Zachem SA in Bydgoszcz (10% in each).

June 2002 saw the publication of the Strategy for Polish Chemical Industry Until 2010, which maps out the privatization of chemical industry. However, all that has been done to date was the placement of the Police, Puławy and Tarnów plants on the stock market (Tarnów in 2008). There were also some small consolidation movements, especially in the Ciech Group, which in 2006 took over Sarzyna and Zachem. Besides these, so called “great chemical synthesis companies” investors were also offered smaller facilities like the Rudniki Chemical Company (Zakłady Chemiczne Rudniki), where bidding was opened in March, 2011, and the Adipol nitrogen plant in Chorzów, which was withdrawn from bidding in February. In mid-2010 Nafta Polska (Polish Oil) resigned from selling the Puławy Nitrogen Plant and Police Chemical Plant.

“The offers we received were below our expectations. The offered price did not reflect the plants’ true value, neither did the bidders have any real development concept for them, which would ensure stability, capital, cheap raw-materials and sales markets. So, it was in these companies’ and the Treasury’s best interest to close the privatization procedures. We resigned from selling Adipol nitrogen plant for the same reasons,” Adam Leszkiewicz said.

Subsequently these privatization processes were taken over by the Treasury, which in May 2010, tried to sell the Puławy and Police plants. Four bidders were found for Puławy, two for Police, but in both cases the offers were found to be unsatisfactory despite prolonged bidding deadlines. In effect, both procedures were closed in January 2011.

“Maybe this is just as well, because the situation in the branch has improved and chemical companies are rising in value, so perhaps quite soon we’ll be able to get more for these plants,” suggests Adam Oleszkiewicz, who headed the team which prepared the Treasury’s privatization strategy. The strategy’s main assumption is that all privatization processes are to be conducted separately. This is also contained in the Privatization Guidelines for Treasury Property in 2012, signed in April by Treasury Minister Aleksander Grad.

Having decided that the privatization of the great chemical synthesis companies should continue in 2012, the Treasury declared that it intended to take avail of all positive trends in chemical industry observed over the recent months to create new perspectives for investors. Especially important here will be raising the companies’ results as well as restructurization and consolidation procedures aimed at raising their value. The privatization of the Siarkopol SA sulphur mining and chemical company in Grzybów is planned for 2012.

As PKN Orlen President Jacek Krawiec informed, the privatization of Anwil or its part should begin in the first half of 2012 and not, as earlier planned, this autumn.

Firms from the chemical branch plan to include Kędzierzyn-Koźle in a cluster formed together with ZAK, also vying membership in the cluster are Opole Science and Technology Park, Kędzierzyn-Koźle Industrial Park, and the Opole University of Technology. The project also foresees the creation of an R&D centre to aid firms in the introduction of innovatory chemical products.

The project authors hope for EU funding for the planned cluster.

Prospects The prospects are quite promising. According to figures published by the Central Statistical

Office (GUS) chemical production in 2006, 2009 and 2010 came to respectively 111.4, 95.0 and 112.0 against the previous year (100) and rubber and synthetic production respectively 115.5, 98.1 and 115.7. Chemical fibre production (38,000 tonnes in 2010 against 39,600 in 2009 and 96,400 in 2006).

“One problem is the situation in the European Union, especially in the euro zone, which could have a negative bearing on growth in the branch. Another issue is the future of EU and global climate policy as the Kyoto protocol will expire at the close of 2012. In this situation provisions of the new agreement will have to be prepared this year in Durban, South Africa. They will have an impact on the situation in the energy sector, therefore also on the future of Polish heavy chemical industry. Energy is a basic raw-material for chemical industry, so high energy prices may lower the branch’s competitiveness. Other ETS requirements like very low SO2, NOx and other emissions will force Polish chemical plants into costly investments, which will also have a bearing on competitiveness,” says Jerzy Majchrzak.

Another uncertainty is caused by the Regulation 1907/2006 concerning the registration, evaluation and authorization of chemicals (REACH), adopted by the European Parliament and the EU Council in December 2006. So far in Poland this regulation embraces large companies producing above a thousand tonnes of toxic products. However, it is unclear how the Regulation will affect smaller companies, many of which are unable to meet its requirements.

Adam Leszkiewicz agrees with Jerzy Majchrzak and rightly maintains that the conditions in which chemical companies will come to operate in will be important for investors. Possibly the small interest in our chemical plants shown by investors in previous months is connected with their specific situation – not just regarding gas sources but also environmental issues like CO2 emissions, REACH, etc. It must also be kept in mind that Polish economy is predominantly coal-based.

“These matters are important, but this doesn’t mean we should wait – our companies can’t afford that. At the moment it’s a bull’s market, but in 2009 and the first half of 2010 we were worried that we hadn’t found investors for our companies earlier.”

In the years to come environment protection will be a problem not just for the chemical branch, therefore it will certainly lie in the Treasury’s interest. Decisions will not fall before 2013-2014, so the ministry will have to participate actively in developing adequate solutions. :: 6/2011 :: polish market :: 79

Chemical Industry

Step-by-step to succeed in chemicals The global chemical industry is anything but cohesive at the moment and it is up to individual companies to redefine their role to stay on the market. “The chemical multiverse. Preparing for quantum changes in the global chemical industry” by Deloitte Touche Tohmatsu Limited (DTTL) Global Manufacturing Industry Group is a publication aimed at helping companies find a profitable place in the industry.

economies occurs, revealing the deep dependence of the global chemical industry on the growth of developing economies, 3. Resilience, in which the world enjoys a period of moderate economic growth resulting from ht e drastic changes introduced by business in response to the recent crisis.

Megatrends Be active. But wisely DTTL’s Global Manufacturing Industry Group points out that remaining inactive is value destroying for companies. Yet taking the wrong decisions is largely what has caused chemical companies worldwide to be now facing scare and erratic flow of capital, diminishing returns on equity, a potentially smaller public investment pool, challenged investments in innovation and talent issues.

What’s more the industry has to deal with new environmentally focused regulations and take position on issues such as climate change. The first step to apply a success formula should be realistically assessing the current position.

Starting point analysis Deloitte weighted various financial and operational metrics to analyze a company’s starting point in the industry. The approach is based on two measures: availability of financial resources and quality of business. Each measure comprises multiple factors, as detailed below: Availability of financial resources (Afr) A score based on the following: :: Cash on hand :: Cash flow from operations :: Unlevered free cash flow :: Interest coverage ratio :: EBIT / depreciation :: Enterprise value – debt

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Quality of business (Qb) A score based on the sum of the following: :: R&D spend as percentage of revenue :: Cash returns :: Return on assets :: Earnings before interest :: Pre-tax return on capital :: Execution effectiveness (from the report).

Based on these indicators Deloitte names 5 categories of companies active in the chemical industry: Deep pockets (high Afr, full spectrum Qb), Strategic leaders (rather high Afr, full spectrum of Qb), Limited options (low to medium Afr, low Qb), Middle ground (low to medium Afr, medium Qb), Strong options (low to medium Afr, high Qb). The report presents a characteristic of companies falling into each category, their chances and challenges.

Three scenarios DTTL’s Global Manufacturing Industry Group outlines three possibilities of the development of the chemical industry: 1. Transition, in which economic growth shifts from the West to the East and energy efficiency is emphasised due to fears that oil production has peaked (this scenario reflects the path of the chemical industry in the years 2006-10), 2.

D islocation, in which a slowdown in developed and developing

The changes in the chemical industry are going to be driven by megatrends such as increased focus on sustainability. DTTL’s report states that only those companies which will be able to identify durable megatrends, design and execute a strategy will succeed. The report identifies the megatrends as: demographic change, quality health care, new patterns of mobility, convergence of technologies, globalization, new patterns of consumption, resource scarcity, climate changes, urbanization. In order to use these megatrends to drive growth, chemical companies should carefully analyze the nine strategic drivers discussed in detail in the publication. They are: portfolio (what combination of businesses and assets will be ideal for the company), feedstock (how should rising energy costs, volatility, and supply-demand imbalances be managed), business model (how should businesses be structured to compete in the marketplace), talent (what capabilities will be needed to shape future, how should companies obtain them), asset intelligence (is “elimination of latency” the next productivity frontier), end markets (can evolving markets support current product and assets portfolios), innovation (how can companies better self-fund capital requirements), operational excellence (is time to put the role of operational excellence in a different perspective). Indetail analysis of these driving forces as well as practical solutions are described in the report. :: Prepared by SW

Chemical Industry

The Ciech Group as a paragon of innovation The Ciech Chemical Group operates a clear and coherent system of innovation and development management, based on close cooperation with the world of science

The Council of Experts with the President of Ciech is a true bridge between science and industry. In cooperation with teams of specialists it analysed the fields of activity of the Group’s production companies and prepared recommendations for key researchand-development project directions.

Another step was to put in order, in the form of master agreements, the rules of cooperation with seven higher schools and five research-and-development units. These actions allowed the formulation of an innovation and development strategy and a model for its implementation. “Even during the economic crisis the Ciech Group did not cease investing in innovative projects. This is evidenced by the stable level of outlays in this field, which amount to PLN100 million per year,

A new chlorine liquefaction plant in the Zachem Chemical Plant.

Piping from it leads to the production hall, which is not shown in the photograph.

The investment of replacing the chlorine liquefaction plant with a new one using another refrigeration agent (R-504 instead of R-22) constitutes the first and independent stage in the implementation of the project of changing the method of brine electrolysis from diaphragmatic to membrane, planned for the years 2012-2015, a key investment for the company.

excluding expenditure on redevelopment and reconstruction investments,” explains Ryszard Kunicki, President of the Ciech’s Management Board. The ratio of outlays to revenues from sales has in recent years amounted to about 3%, placing the Ciech Group close to the biggest chemical companies in Europe.

Via issuing new shares Among the innovative projects being implemented there are such advanced technologies as the production of epichlorohydrin from bio-glycerin in Zachem, and the construction of a production plant for MCPA and MCPP-P substances in Organika-Sarzyna (both received EU subsidies as investments with a high innovation potential). A modernisation project of chlorine complex in Zachem also deserves closer attention: a new chlorine liquefaction plant (excluding usage of R-22) and the membrane method of brine electrolysis eliminating usage of chrysotile asbestos – as well as an energy-modernisation project in the

Photo by Adam Kołacz

European-level outlays

Photo by Piotr Kuzimski

It all started when the Group ­established contacts with prominent scientists previously experienced in cooperating with the Group’s individual production companies. It was a significant step in the direction of appointing a Council of Experts with the President of Ciech, which took place in 2007. From the very beginnings it has been led by Professor Henryk Górecki from the Wrocław University of Technology, Chairman of the Science Policy Committee of the Ministry of Science and Higher Education. “The Ciech Group has implemented an innovative model of cooperation between science and industry, using both its own, experienced research units, and the potential and capabilities of Polish scientific and research centres,” says Professor Górecki.

Polish soda plants of the Ciech Group.

The funds from the public offering of new shares in Ciech, from which the company acquired PLN441.6 million, will be allocated to those investments, and several others described in the prospectus. Their implementation will translate into increased cost and energy efficiency in its production processes and higher manufacturing capacities. It will also enable the Ciech Group to improve the quality and competitiveness of its flagship products and reduce the environmental impact of its production companies. The overall investment budget for the years 2011-2015 is PLN1.2 billion. The Ciech Group’s development strategy, based on an own model of cooperation with the world of science, is yielding measurable effects in the process of strategic reorientation. It is also a significant area of the Group’s strategy for the coming years. ::

A general view of the future innovative production installation for MCPA and MCPP-P in the Organika-Sarzyna Chemical Plant.

The installation is a brownfield investment between already-existing and operating production sites. Three stages of the construction part of the investment will be carried out in 2011, and the completion of the entire project is expected in 2012.

6/2011 :: polish market :: 81

Infractructure & Construction & Green Building

Ranking of development companies 2011

Making a recovery Last year, the market of commercial real estate (office, retail and warehouse space, and hotels) was particularly affected by stagnation and a drop in the number of new projects. Last year’s financial results of most of the development companies in our ranking, which are mainly active in the housing sector, indicate that 2010 was worse than previous years for them as well. However, the data for the first quarter of this year bring some optimism for the near future. But the developers will likely have to wait some time for a return to full prosperity: the housing sector until at least 2012, and the commercial one until 2013.

Meanwhile, analysis of the condition of 25 companies, of which 23 are included in the WIG-Deweloperzy Warsaw Stock Exchange Index, proves that the majority of them, even the largest ones, were affected in 2010 by the consequences of the global financial crisis of the last years of the previous decade. This concerns both sales revenue, and the level of net profit achieved last year when compared to 2009.

Recession time Even though last year brought a rise of the Polish GDP, it was a time of recession for the construction and development sectors. Many projects initiated two or three years previously were being completed in 2009, thus bringing the good financial results of Polish developers during that year. The following year brought less started projects (in both the housing and commercial sectors) and the developers were able to profit from the rarely completed investments commenced during the prosperity period, which they were unable to complete in 2009. This matter is discussed by Jarosław Szanajca, the president of one of the leaders of our lists: “Despite the good sales results, the financial results of 2010 continue to remain under the influence of the 2008 and 2009 crisis, when we were unable to introduce any new investments into the

82 :: polish market :: 6/2011

sales offer. We will begin to commission the first apartments from the new offer, starting with those put on the market in the fourth quarter of 2009, to our clients as soon as midway through the year, which will be visible in our financial results.”

The situation was similar in the case of the Tricity company Inpro: “To us, last year was a difficult period due to the housing construction market recession in the years 20082009. The crisis period resulted in weakened demand for apartments and simultaneous restrictive credit policy. With the relatively long production cycle in the developer field, it resulted in reduced revenue only last year.

At the same time, the time of the administrative procedures concerning the acquisition of permits for using projects completed during the fourth quarter of 2010 extended. The delays in turning over the facilities moved the accounting of some revenue of the Inpro Group forward to next year, i.e. 2011,” says Piotr Stefaniak, the president of Inpro.

“During the year 2010, the value of the WIG-developers professional index dropped by over 14%. Following the 2008 crisis, the condition of the construction and developer fields is gradually stabilising, however the pricing of many of the companies in the field is still far from what was observed in 2007,” experts of Tryton Development believe.

With optimism in 2011 The forecasts of some companies provide a more optimistic vision of the situation this year. “At present, we have 4,200 apartments in all projects ready to be started. At the same time, we are intensively working on expanding the Warsaw offer by an investment in the city centre. In 2011, we aim to create an offer to allow the sales of even over 2500 apartments during the following year,” says Tomasz Panabażys, vice-president of J.W. Construction Holding. President Stefaniak (Inpro) adds: “The development construction sector has a very long and specific production cycle.

Revenue from sale is accounted approximately two years after the start of the investment, after obtaining the use permit and turning the premises over to the clients. The majority of the accounted revenue, which will visualise the effectiveness of our operations, will fall to the second half and end of this year, when we turn over significant investments, which are being currently conducted.”

Several spectacular bankruptcies?

Most of the companies presented in our ranking have a good financial position. However, to the hundreds of smaller ones, especially those operating within the local housing markets, the warnings of the REAS report for the first quarter of this year can be applied: “Currently, there are still companies on the market which operate only thanks to the banks’ delayed decisions on closing the credits received by them during the prosperity period. The patience of the financial institutions is running out, and there are many spectacular bankruptcies possible this year.”

REAS also points to the fact of the increasing diversity in the situations of individual developer companies, and forecasts the following: some will retain their sales level, while in others it will significantly drop, creating a hazard to financial liquidity.

Adjusting supply to actual demand The authors of the report also point the attention of the developers to the necessity of smart adaptation of the volume and profile of the supply to the actual financial capabilities

Infractructure & Construction & Green Building

Ranking of developers by net revenue from sales in Q1 2011 (in PLN thousands) Name of company

Name of president

JW. Construction Holding

Tomasz Panabażys***

Warimpex

Net revenue from sales in Q1 2011 (in PLN thousands)

Net revenue from sales in Q1 2010 (in PLN thousands)

Net profit in Q1 Net profit in Q1 2010 (in PLN 2011 (in PLN thousands) thousands)

Net revenue from sales in 2010 (in PLN thousands)

Net revenue from sales in 2009 (in PLN thousands)

Net profit in 2010 (in PLN thousands)

Net profit in 2009 (in PLN thousands)

Market value on May 27, 2011 (in PLN millions)

125 600

118 200

19 300

17 600

620 000

713 300

92 000

100 400

832.19

Franz Jurkowitsch

84400

81400

-12000

-2600

412700

341000

15000

-370100

507.60

Marvipol

Sławomir Horbaczewski

71 980

78739

408

12 876

344 898

406770

29 541

24 498

b.d.

Echo Investment

Piotr Gromniak

65 909

63 190

55 242

29 765

426 396

431 426

14 684

10396

2280.60

Atlas Estates

Andrew Fox

58 900

152300

-14400

28 400

403 000

b.d.

b.d.

b.d.

b.d.

LC Corp

Dariusz Niedośpiał

53 122

54 458

13 420

14 644

156 202

113 765

50 548

-43 814

680.29

BBI Development NFI

Michał Skotnicki

39 046*

na

16 825

na

67 131

990

11 962

-9 010

219.69

Robyg

Zbigniew Okoński

34 827

75 278

637

10 729

284 789

101 971

35 714

6 184

491.61

Ronson Development

Shraga Weisman

34 129

23 985

2 787

1 333

241 265

116 309

35 091

21 034

394.92

Alterco

Zbigniew Zuzelski

31 210

6 649

2 863

-1 542

94 19

85

11.87

6.722

172.01

Triton Development

Magdalena Szmagalska

28 598

218

908

-10 353

116 652

940

1 517

-6 676

139.51

Polnord

Bartosz Puzdrowski

21 456

42 542

15 720

15 298

180 264

221 282

51 562

63 634

688.96

Gant Development

Karol Antkowiak

20 928

38 886

19 575

-5 273

156 610

342 921

12 890

56 448

272.65

Dom Development

Jarosław Szanajca

20200

159 900

-12,3

11,8

513 700

704,4

40,5

80,2

1151.87

Inpro

Piotr Stefaniak

18 349

41 961

-322

5 145

124 915

162 255

17 258

28 532

280.28

Rank Progress

Jan Mroczka

14 537

13 073

34 613

-6 483

52 783

145 612

90 971

73 718

475.46

Wikana

Sylwester Bogacki

9 262

25 338

-2 391

927

109 254

121 362

20 035

11 741

201.67

ED Invest

Zofia Egerska

7 423

5 412

209

1 846

61 988

38 487

12 352

9 320

63.65

Globe Trade Centre

Piotr Kroenke**

4 988

5 385

89 568

-42 919

675 119*

676 625*

113 446

-571 193

4222.93

KCI

Kazimierz Mochol

2 305

28 678

-823

1 050

41 156

3 738

-9 601

-44 738

32.75

Reinhold Polska

Waldemar Tevnell

970

120000

na

na

122800

9400

-76000

-11300

24.15

Orco Property Group

Jean-Francois Ott

624

205700

-12484

-83900

345700

b.d.

-57500

na

525.61

Plaza Centers N.V.

Ran Shtarkman

na

na

na

na

152000

64000

56000

-260000

1390.08

Celtic Property Developments

Andrew Morrison Shepherd

na

na

na

na

46 616

62.237

81.847

109.051

727.70

TUP

Jacek Moritz

na

na

na

na

815

715

12 070

2 194

103.90

Source: companies *) operating revenue (no data on net revenue from sales) **) general director (no president of the board appointed) ***) vice-president (no president of the board appointed)

6/2011 :: polish market :: 83

Infractructure & Construction & Green Building

of the clients. They in turn are influenced by several negative factors from the market’s environment. This concerns the credit policy of the banks. On the one hand, they are tied down by more Recommendations of the Polish Financial Supervision Authority (KNF), ordering to tighten the criteria of researching creditworthiness of the clients. On the other – the continually growing percentage of “difficult”, i.e. unpaid loans in the credit portfolio of many banks, resulting from among others the temporary strengthening of the Swiss franc with the simultaneous weakening of the Polish zloty. This is significant, because most home loans in our country continue to be taken in the Swiss currency (due to the relatively low interest rate).

Other negative factors within the market’s environment include the recently increasing inflation, continuously high unemployment, a slowdown in wage growth, as well as the recently started “extinguishing” of the governmental programme: “Rodzina na swoim.” On the other hand, the discussed REAS report also points to the factors which could possibly have a positive influence on the housing demand: the successive years of the second boom are currently leaving the universities, entering the labour marker, starting families and becoming independent. Major cities continue to be an attractive place for young Poles from small towns and villages. The attractiveness of working abroad also dropped.

All this can decide about the future of housing developers. Some of them have already decided to expand the scope of their operations, simultaneously entering the commercial real estate market. Some, like JW Construction Holding, did so as early as the 1990s (the Hotels 500 network). The same was done by such companies as Echo Investment or the Globe Trade Centre.

Even less new investments in the commercial segment While the figures from Poland’s Central Statistical Office (GUS) visibly indicate the rise in undertaken housing construction during the first quarter of this year in comparison to the first quarter of last year, the commercial investment market continues its stagnation.

The office building construction situation in Warsaw can serve as an example.

According to Paweł Skałba, a partner at Colliers International, only one modern office building was put on the Warsaw market during the first quarter of this year: the Młodziejowski Palace (4,964 sq. metres) revitalised by Mermaid Properties. Currently there is almost 140,000 office buildings

84 :: polish market :: 6/2011

in construction, of which 25,000 is to be commissioned during the second quarter of this year. “If the demand continues at a level equally high to that of the first quarter, then starting from the second half of the year, the market will have to face a deficiency in modern office space. There are plans to commission 140,000 sq. metres before the end of the year, which is a 30% drop in comparison to the previous year,” says Skałba.

In turn, the Jones Lang LaSalle report on the storage building market indicates that in 2010 most developers focused on leasing the existing storage parks, which limited the number of newly constructed buildings in comparison with the investment boom period, especially during the years 2007 and 2008. JLLS calculates that by the end of 2010, there was 179,000 sq. metres of modern storage space in construction, as opposed to 1.092 million sq. metres two years earlier. “These two numbers show the market’s reaction to the economic slowdown and crisis in European Union,” comment the authors of the JLLS report.

This year’s prospects of the commercial space market look better, although developers are planning to complete the construction of shopping centres mainly outside of the country’s largest cities in the next months.

According to the data provided by director Małgorzata Trzaskowska of Colliers International: “In 2011, there are plans to commission approximately 650,000 sq. metres of commercial space. This supply is at a similar level to that of 2008. We expect the construction of more new commercial space in shopping centres to commence during the years 2012-2013.”

Our winners “Polish Market” decided to present three rankings, which we grouped according to the following criteria: :: according to the market value on the Warsaw Stock Exchange (according to the state of the end of May of this year); :: net sales revenue value in the first quarter of 2011; :: net sales revenue value in 2010.

The results of several companies with foreign capital and listing their financial results in euro, were calculated them into Polish zloty (1EUR = 4PLN).

The top spots in the category of largest market value companies was taken by Globe Trade Centre, Echo Investment and Plaza Centers N.V. The highest revenue in the first quarter of 2011 was achieved by JW Construction Holding, Warimpex and Marvipol. The highest revenue last year was achieved by

Globe Trade Centre, JW Construction Holding and Dom Development.

The top-ranked companies on our lists achieve annual revenue of hundreds of millions of złotys (during the first quarter usually in tens of thousands – besides the leader: JW Construction Holding (PLN125.6 thousand); these relatively low results are the product of the traditionally weaker pace of construction work during the winter as opposed to the rest of the year). These include companies with a majority or total Polish capital (besides JW Construction Holding, Echo Investment, Polnord, LC Corp, Inpro, Gant Development, etc.) In many of them, the majority of shares belong to individual entrepreneurs (including Mariusz Książek – Marvipol, Józef Wojciechowski – JW Construction Holding, Mariusz Sołowiow – Echo Investment, the family of Elżbieta Moritz – TUP, and Leszek Czarnecki – LC Corp). However most of the largest developers operating on the Polish market either have foreign shareholders, or are Polish branches of companies registered abroad (including Globe Trade Centre, Plaza Centres N.V., Dom Development, Celtic Property Developments, Orco Property Group, Warimpex, Robyg, Ronson Development, Atlas Estates). Some of them are companies with Israeli capital (including those officially registered in the Netherlands or Guernsey island) – Globe Trade Centre, Plaza Centres N.V., Robyg, Ronson Development, Atlas Estates, as well as Swedish (although registered in the Netherlands – Reinhold Poland), Austrian (Warimpex), Dutch (Dom Development), British (Celtic Property Developments) or Luxembourg (Orco Property Group).

The largest – already in progress or planned for the near future – investments of the companies listed in “Polish Market” rankings include the following: the almost 200-metre apartment building (David Libeskind design) in Warsaw at 44 Złota Street (Orco Property Group), the Sztynort yacht port in Masuria (Alterco), the 60-hectare residential district Miasteczko Ursus in Warsaw (Celtic Property Developments), the Platinium Business Park: five commercial buildings with over a dozen thousand square metres each in Warsaw (Globe Trade Centre), the Tenement Quarter – an apartment complex in the centre of the Gdańsk Old Town (Inpro), the Wilanów Office Park and Wilanów Gallery in Warsaw (Polnord), the Triton Kampinos – an approximately two thousand resident district next to the Kampinos Forest (Tryton Development), the Eko-Miasteczko Siewierz (TUP), the Prosta Tower commercial building with the “ruffled” facade (Stefan Kuryłowicz design - Marvipol). ::

Infractructure & Construction & Green Building

Ranking of developers by market value May 2011 (in PLN millions) Net revenue from sales in Q1 2011 (in PLN thousands)

Net revenue from sales in Q1 2010 (in PLN thousands)

Net profit in Q1 Net profit in Q1 2010 (in PLN 2011 (in PLN thousands) thousands)

Net revenue from sales in 2010 (in PLN thousands)

Net revenue from sales in 2009 (in PLN thousands)

Net profit in 2010 (in PLN thousands)

Net profit in 2009 (in PLN thousands)

Market value May 2011 (in PLN millions)

Name of company

Name of president

Globe Trade Centre

Piotr Kroenke**

4 988

5 385

89 568

-42 919

675 119*

676 625*

113 446

-571 193

4222.93

Echo Investment

Piotr Gromniak

65 909

63 190

55 242

29 765

426 396

431 426

146,84

103,96

2280.60

Plaza Centers N.V.

Ran Shtarkman

na

na

na

na

38 000 (euro)

16 000 (euro)

14 000 (euro)

-65 000 (euro)

1390.08

Dom Development

Jarosław Szanajca

20,2

159,9

-12,3

11,8

513 700

704,4

40,5

80,2

1151.87

JW. Construction Holding

Tomasz Panabażys***

125 600

118 200

19 300

17 600

620 000

713 300

92 000

100 400

832.19

Celtic Property Developments

Andrew Morrison Shepherd

na

na

na

na

46 616

62.237

81.847

109.051

727.70

Polnord

Bartosz Puzdrowski

21 456

42 542

15 720

15 298

180 264

221 282

51 562

63 634

688.96

LC Corp

Dariusz Niedośpiał

53 122

54 458

13 420

14 644

156 202

113 765

50 548

-43 814

680.29

Orco Property Group

Jean-Francois Ott

39 146 (euro)

51 184 (euro)

-3 121 (euro)

-20 965 (euro)

86 417 (euro)

na

-14 372 (euro)

na

525.61

Warimpex

Franz Jurkowitsch

21 091 (euro)

20 351 (euro)

-3 007 (euro)

-656 (euro) 103 164 (euro)

85 258 (euro)

3 747 (euro)

-92 667 (euro)

507.60

Robyg

Zbigniew Okoński

34 827

75 278

637

10 729

284 789

101 971

35 714

6 184

491.61

Rank Progress

Jan Mroczka

14 537

13 073

34 613

-6 483

52 783

145 612

90 971

73 718

475.46

Ronson Development

Shraga Weisman

34 129

23 985

2 787

1 333

241 265

116 309

35 091

21 034

394.92

Inpro

Piotr Stefaniak

18 349

41 961

-322

5 145

124 915

162 255

17 258

28 532

280.28

Gant Development

Karol Antkowiak

20 928

38 886

19 575

-5 273

156 610

342 921

12 890

56 448

272.65

BBI Development NFI

Michał Skotnicki

39 046*

na

16 825

na

67 131

990

11 962

-9 010

219.69

Wikana

Sylwester Bogacki

9 262

25 338

-2 391

927

109 254

121 362

20 035

11 741

201.67

Alterco

Zbigniew Zuzelski

31 210

6 649

2 863

-1 542

94 19

85

11.87

6.722

172.01

Triton Development

Magdalena Szmagalska

28 598

218

908

-10 353

116 652

940

1 517

-6 676

139.51

TUP

Jacek Moritz

na

na

na

na

815

715

12 070

2 194

103.90

ED Invest

Zofia Egerska

7 423

5 412

209

1 846

61 988

38 487

12 352

9 320

63.65

KCI

Kazimierz Mochol

2 305

28 678

-823

1 050

41 156

3 738

-9 601

-44 738

32.75

Reinhold Polska

Waldemar Tevnell

243 (euro)

29 899 (euro)

na

na

30 762 (euro)

2 362 (euro)

-18 976 (euro)

-2 847 (euro)

24.15

Source: companies *) operating revenue (no data on net revenue from sales) **) general director (no president of the board appointed) ***) vice-president (no president of the board appointed)

6/2011 :: polish market :: 85

Infractructure & Construction & Green Building

Beautiful, modern and ecological Today, Polish tiles producers rank 4th in Europe. It is also one of the most innovative production sectors in Poland. Yet, the new regulations related to the enhancement and expansion of the EU Emission Trading Scheme will hit the power-consuming industries, including the tile industry.

Piotr Tokarski, President of Grupa Paradyż, producer of Poland’s most beautiful tiles talks about the prospects of his company.

Piotr Tokarski President of the Board

A n innovative machine park, modern patterns or huge investments – what is it that makes Grupa Paradyż a successful and leading Polish producer of tiles? What are the main goals of the company and in what way has the development of the company been influenced by 20 years of experience?

Grupa Paradyż consists of two companies – Ceramika Paradyż Sp. z o.o. and Paradyż Sp. z o.o. Our current potential lies in five modern production plants, located in Tomaszów

86 :: polish market :: 6/2011

Mazowiecki, Opoczno and Wola Wielka, a staff of 1800 employees, and the brand – the synonym of beautiful design and high-quality workmanship – today valued at PLN144 million. All these are components of the achieved results, and consequently, the position, which Grupa Paradyż holds on the Polish tile market. In the context of success, also worth mentioning is the bold vision and consistency in actions of the two owners – private persons – who over 20 years ago started the process of making their dreams

come true by creating this company from square one, and today with their experience and knowledge they support the board of companies on their way to further growth.

In the history of Grupa Paradyż there have been many products successful on the market. This stems from taking great care of the Research & Development area on many levels – the product range of Grupa Paradyż meets both the criteria which result from the applicable ISO standards and the harsh regimes of internal quality-management systems. Thanks to the application of innovative technologies, systematic market research, and the continuous search for new solutions, we are able to manufacture tiles which combine the best quality with an attractive price. While creating our range we go for design variety in order to meet, as far as possible, the expectations of our vast group of customers – so that each and every client can find something interesting. On the Polish market we are a pioneer when it comes to the implementation of innovative technological solutions – it is in our production plants where, among others, the first glazed frost-resistant tiles, rectified tiles and tiles with the biggest dimensions came to existence.

And we are one of the few producers in Europe who decorate our collections with the use of digital printing.

Currently – with the great involvement of financial resources – we are implementing investments in two of five production plants, which have already triggered the introduction of new products onto the market. For the time being it is our priority – a 4-year investment plan. In total, within the framework of this plan, Grupa Paradyż will designate PLN250 million for the modernisation of the

Infractructure & Construction & Green Building

production plants in Wielka Wola, Tomaszów Mazowiecki and Opoczno. The modernisation of the plant in Wielka Wola was undertaken as the first one.

In May of this year the first stage was completed – within the framework of which a new section of the plant was started – and this stage consumed PLN136 million from the budget estimated at PLN185 million. The present application of modern technologies in Wielka Wola allows us to broaden our selection, adding highly-processed glazed floor tiles, as well as to extend the range of our premium brand. The next 3 stages of the modernisation will have been finished by 2013.

Around 30% of your production is for export – what are your strategic directions, and what does the competitiveness of Paradyż brand on the foreign markets consist of?

The most important customers, from our point of view, are at present our Eastern neighbours, that is Russia and Ukraine – countries which are slowly but gradually overcoming the crisis, and whose buying potential is significantly higher than the demand forecast for the domestic market. Very important are also the Baltic countries – Lithuania, Latvia, and Estonia – as well as, traditionally, the markets of our Southern neighbours, that is the Czech Republic and Slovakia.

Among the most interesting Western markets, worth mentioning are Germany, Austria, France and the Benelux countries, where each month we complete more and more orders. According to our foreign contractors the competitiveness of the Paradyż brand is set by the design, which can make us, Poles, proud. Other strengths are high quality and attractive prices. We are doing our best to enrich our basic

repertoire with added value. When it comes to the overall package with the Paradyż trademark it is the service – timely deliveries and our own interior design software.

In Europe Polish producers of tiles take 4th place in terms of production. Will it be possible to maintain this position after the new climate and energy package, and the proposed CO2 emission levels, come into force?

I would not directly link the position of the Polish tile industry in the world, which is based on the combined production potential of the leading producer, with the aftermath of the introduction of regulations regarding CO2 emission levels. Of course this correlation is highly essential within the context of future financial burdens and the question of the way additional costs will affect the competitiveness of our business. It is a topic for today and I admit that the moods and forecasts are not optimistic.

The new regulations related to the enhancement and expansion of the EU Emission Trading Scheme will hit the power-consuming industries – the heating, paper, cement and chemical industries – and also the tile industry.

The Polish energy industry diverges with its level from the levels in Germany and France, and adjusting to EU requirements means for our country a cost of a few billion. The Directive provides for an auction as the basic method for the division of emission credits.

In the third settlement period, which falls in the years 2013–2020, all credits which have not been assigned free of charge will have to be sold at an auction. This obligation can lead to a significant increase in production costs, and the price disproportions between

producers from the European Union and producers outside the Community – which are not covered by such limitations – can lead to the loss of competitiveness of some of the industry sectors in the European Union. Such a situation might be the reason for replacing production in the European Union with imports from third countries, or relocating production outside the European Union.

The European Commission is considering the so-called benchmark (an indicator of CO2 emissions per tonne of a product) which will constitute the threshold value for a given activity. In the case of exceeding this value a given plant will have to buy more emission credits in the auction system. Therefore the amount of credits free of charge might turn out in the successive years to be insufficient.

Adjusting to and reaching this limit might be very difficult to achieve for our industry. I am afraid that this might mean serious problems for the whole industry.

On the other hand – not waiting for new regulations – as a company which cares for the environment, and which at the same time looks for feasible savings in everyday operations – on our own we have introduced into our actions a multitude of initiatives related to the issue. In the modernised production plant of Ceramika Paradyż Sp. z o. o. in Wielka Wola energy-saving technologies have been introduced.

Additionally – in all plants – we carry out actions aimed at decreasing power consumption by the recovery of incineration heat from furnaces to other devices, the optimisation of vertical dryers and the adjustment of electric energy measurement systems to the requirements of energy purchase on the free market. ::

Ceramika Paradyż Production Plant

6/2011 :: polish market :: 87

Infrastructure & Construction & Green Building

Significant energy and emissions savings over the life cycle According to the IPCC, (Intergovernmental Panel on Climate Change) human activity is contributing to climate change.

As the World’s population increases and more countries develop economically, so does energy consumption and the subsequent greenhouse gas emissions. This has potentially disastrous consequences for our planet, making climate protection activities a top priority.

Anna Kozera-Szałkowska, PlasticsEurope Polska There are many materials which play a crucial role in meeting the needs of modern society, including plas­ tics. Traditionally, the main priori­ ties when choosing a material were to look at efficiency, durability and in­ teraction with other components, all in a cost effective way. However, in­ creased awareness around the dan­ gers of greenhouse gas emissions to the climate means that the environmen­ tal properties of materials must now also be considered. More and more, sustainability is becoming a key part of governmental policy, making it imperative that the environmental impact of materials is carefully con­ sidered during selection. Otherwise the EU will be unable to honour its

Reductions in GHG emissions The use of plastics decreases greenhouse gas emissions: :: Current savings of 124 million tonnes per annum are comparable with one third of aprox CO2 emissions of Poland in a year time :: T hese savings currently represent 39% of the EU15’s original Kyoto CO2 reduction target – or approximately 16% of the EU27’s target for 2020 of 780 million tonnes :: If plastics were not used, the EU would be unable to meet its Kyoto greenhouse gas emissions reduction targets.

88 :: polish market :: 6/2011

commitment of reducing greenhouse gas emissions to 20% below the 1990 level by 2020.

The results of research done by Denkstatt in 2010 clearly shows that, right now, plastics have an impor­ tant role to play in the journey to­ wards sustainability. The study found that if plastics, where feasible, were substituted by traditional materials in the EU, they would generate 61% more greenhouse gas emissions and lead to a 57% increase in energy con­ sumption. This is proof that plastics are already positively helping climate protection.

Additionally, if plastics were sub­ stituted with alternative materi­ als, this would almost quadruple the weight of products and applications by creating 3.7 times more mass. Not only would this impact transporta­ tion emissions but it would have a huge effect on waste management. There would be a lot more materials to dis­ pose off into landfill sites at the end of a product’s life, or to recover into more useful products. The report highlight­ ed the importance of considering these greenhouse gas emissions and energy savings across the entire lifecycle of a product – and not just in one area.

However, the research acknowledged that the production and use phases generate the most significant savings.

Some plastic products deliver ex­ ceptional life cycle climate change benefits. For example, plastics insu­

Capturing the wind Towing kites made from high-strength, weather-resistant plastic fabrics are being used to reduce a vessel’s fuel consumption by up to 50%

lation uses a tiny amount of energy in its production com­ pared to the savings made over its life cycle. Over its com­ plete life time, 290 million tonnes of CO2 were saved through the plastic insulation installed in the EU in 2004 – with only 1% of CO2 created during production. The production energy required to make one insulation panel is recovered after four months of use in a house.

Another example is car and aviation emissions. On av­ erage 15-20% of materials used in the construction of a car are plastics. However, the weight of each car is not increas­ ing as much as if alternative materials were used in place of plastics. This saves around 5% in emissions. For aviation, 22% of the Airbus A380 are made of plastics, helping to re­ duce fuel consumption by 15% over its life cycle.

Plastic packaging helps preserve food for longer – thus minimising waste – and reduces weight compared to tra­ ditional packaging. Compare the weight of traditional ma­ terial packaging which represents 36% of overall prod­ uct weight to similar plastic pouches that only contribute 3.6% to the total product weight. This significantly reduc­ es transport emissions. If plastic packaging was not used to preserve food and drink, retailers would make at least 50% more truck journeys within the EU. As these examples show, the deployment of plastics en­ ables greenhouse gas emissions reductions and energy sav­ ings across a wide range of modern applications. ::

Plastics save natural resources...

Calorific value of plastics waste

Fuel from plastics waste

45

P L A STICS

15 16

PA P E R

28 43

...and protect climate

48

WO O D

COA L HE AT ING O IL NAT UR A L G A S

H ea t i ng va lu e ( G J/ t )

Significant reductions of CO2 emissions over the whole life cycle of plastics products

www.plasticseurope.org

Infractructure & Construction & Green Building

SwedeCenter’s green Business Garden Project Green building, a concept recently appearing in Poland, refers to developing buildings whose impact on natural environment and human health is minimised by efficient use of energy, water and other resources, reducing waste, pollution and protecting occupant health. One of the most interesting concepts it involves is the life cycle assessment (LCA). Owing to the evaluation of all stages of a process from cradle-to-grave (i.e., from extraction of raw materials through materials processing, manufacture, distribution, use, repair and maintenance, and disposal or recycling) the negative impacts can be prevented.

One of the companies specialised in green developments on the Polish market is SwedeCenter. Its recent project – 3 Business Gardens – is unique due to its environment-friendly nature featuring big amount of green areas (i.e. 60% in Business Garden Warsaw). It will provide sustainable design solutions such as: innovative water, lighting and energy saving systems, openable windows with sun protection system and a rain water recovery system. Business Garden will ensure optimal daylight access, waste separation and environmental friendly materials. The project will also provide bicycle parking spaces for tenants and visitors.

The cornerstone ceremony for the first of 3 similar “green” business parks Business Garden Warsaw tookplace on June 2. The two other centres will be developed in Poznań and Wrocław. All Business Garden projects are focused on a green and healthy working environment in which all services and amenities are being provided to the tenants.

The Business Garden Warsaw is a project consisting of 7 buildings. Ultimately, the project at Żwirki i Wi­ gury Street will feature more than 90,000 m2 of rentable office space combined with retail, hotel, conference

90 :: polish market :: 6/2011

space and additional amenities for the office occupiers. The exceptional nature of the project and its exclusive nature are determined by a small building density, low rise buildings, unique interior garden and energy saving systems.

The project follows the rules set out

by LEED in order to obtain the certificate – Leadership in Energy and Environmental Design. This prestigious certificate proves that energy saving technologies have been applied which ensure maximum recovery of energy and that environmental friendly materials have been used.

Business Garden Warsaw is ideally located, adjacent to the new fast urban railway (SKM) from the airport leading to Warsaw Central Station.

SwedeCenter points out that the adjacent infrastructure will be further expanded to ensure convenient access, both from the centre and from the Warsaw Chopin Airport which is 15 minutes’ drive away.

The construction process will be carried on by the general contractor – Hochtief Polska. Cushman and Wakefield was appointed as the leasing agent for the project.

Business Garden forms part of a larger new development concept for Poland comprising business parks in Poznań and in Wrocław, all carrying the same name and concept. Following the market needs, the changing market demand and the necessity to provide tenants with a more convenient and effective working environment with a good access by private and public transport in environmental friendly surroundings. The Poznań (80,000 m2) project is to be completed in 2013, and Wrocław (120,000 m 2) in 2014.

Business Garden Poznań, is the biggest business park in Poznań, located at a 6-hectare plot at the intersection of Marcelińska and Bułgarska Streets. The project consists of 9 office

buildings featuring ca. 80,000 m 2 of office and service space set in a green and friendly environment.

SwedeCenter is a real estate investment and development company active on the Polish commercial real estate market. SwedeCenter has operated in Poland since the early 1990s along with its parent company Polprop Holding of the Inter-IKEA group. The company has already completed a number of projects, notably: SwedeCenter, University Business Centre I and II, N21 and Cracovia Business Center in Kraków. SwedeCenter projects are distinguished by their prime location combined with flexible space arrangement. In its new projects, Swede­Center focuses on environment-friendly solutions and sustainable property development. Innovative projects of the company are intended to create the best working environment, while providing building running and maintenance cost savings. The company is currently involved in several real estate investment and development projects in several major Polish cities. For more information, please see the company’s website: www.swedecenter.pl

Infractructure & Construction & Green Building

Globe Trade Centre: ecology-driven business Interview with Piotr Kroenke, General Manager of GTC

What is Globe Trade Centre’s strategy and in what ways is it pursued?

GTC’s primary goal is to pursue sustainable growth through developing and managing of income-producing, high quality properties in prime locations. We operate in three segments: office buildings, shopping centres, and housing. We are successful thanks to highly experienced management teams combining local markets knowledge and international expertise.

GTC’s basic strategy is to listen to our customers and to respond to their needs. We began with office projects and although we’ve built quite a few to date, they all look different. This is because one of our basic rules says that every new building must be even better than the previous one. Every time we start a new project we look at what can be improved.

GTC does not sell buildings immediately after completion. We build our customer ties over years. They are very important to us because our customers are a source of knowledge which, in turn, helps us adjust our offer. We learn from our leaseholders about their ever changing requirements and this allows us to create more and more sophisticated buildings.

GTC was founded in 1994 in Warsaw, today the company is present in ten CentralEastern European countries. Why did you expand there?

We have been on the Polish market for 17 years. We expanded to gain fresh experience and raise value of the company. The Polish market is growing and similar growth trends may well appear in Romania, Bulgaria and other countries of the region. Our customers’ expectations on foreign markets are not different than in Poland. Our construction projects are always top-standard regardless of where we build them.

It’s said that GTC-built offices are userfriendly. Can you explain?

Office facilities provided by GTC are the genuine pride of our company. As early as when purchasing land for a project we ask ourselves whom we will be building for, and try to design the building according to specific client needs. Our entire design and construction process is geared to customer needs. Office buildings of GTC stand for convenient space, flexible interior and full work comfort. Occupants of our buildings are happy with the optimum number of floors which allows locating the office space on one storey and creates a possibility for company development within one facility thanks to effective and functional division of the rental area. Work comfort is also influenced by excellent access to natural light and attractive arrangement of common space.

Can you tell us about GTC’s social responsibility strategy?

GTC takes heed to the principles as set out by the OECD, such as cooperating with local communities, creating employment opportunities and setting and integrating good corporate governance principles. In the history of its operations GTC has been a pioneer in the revitalization of post-industrial sites, turning them into sustainable real estate. GTC investments stimulated the development of entire neighborhoods, turning once industrial areas into booming business and residential districts.

Many of our CSR projects are addressed to employees. We want to show them that a workplace is more than just a building where they have to spend so and so many hours.

GTC is an environment-friendly company.

Does your ecological awareness play a role in your construction projects?

Ecological construction is a must at GTC and we are very demanding of ourselves in this respect. GTC has applied for the LEED Gold International Certificate. Its requirements embrace not just special environmental installations but the entire construction process.

Great weight is laid on the right construction materials and minimum pollution. The leaseholders who use our buildings also see the sense of environmental protection. From our very outset we were intent on building ecological objects.

You’ve received many prizes. In 2010 GTC won an Office Developer of the Decade title from “Eurobuild” magazine. Are such awards motivating?

Wining this title was very important for us. All the prizes we have received make us happy and motivate us. Moreover, such distinctions make us work harder and more effectively on successive projects. We are also quite proud when we are distinguished as we know well that many companies on the market build just as well as we do. Awards are a sign that our work is worthwhile.

Interviewer: Ewelina Janczylik 6/2011 :: polish market :: 91

Podkarpacie Region

2nd Innovation Forum in Rzeszów The 2nd Innovation Forum which took place on 24 and 25 May in Rzeszów gathered over 200 leaders of business, science, and politics. The participants discussed the innovation capabilities of the Polish economy and the use of our ideas by the biggest global companies. The subject that dominated the Forum was the future of the energy, aviation and automotive industries.

Waldemar Pawlak, Deputy Prime Minister, Minister of the Economy We are standing at a turning point, in which technology has reached a very advanced level. However, resources are being depleted, prices are becoming excessive, and maintaining profitable prices at the level of USD100 for a barrel of oil gives reasons to modernise the system. I believe that this Forum is an occasion to inspire our energy sector and for engineering companies to investigate this area. The analyses of the International Energy Agency show that China may soon become the leader in the production of electric vehicles. It is worth trying to achieve a similar status for Poland in Europe.

Today, when a longer time span is considered, I would put more confidence in consortia of energy companies. We should think about developing intelligent networks, which distribute energy, but are also capable of receiving it. Obviously we can do this by building more power plants or by creating a mechanism for energy storage, and provision in the high season.

The latter seems a more rational solution.

For example, the use of wind power here is quite a challenge, as cars with an alternative drive may operate in places in which wind power is accumulated, when it cannot be otherwise used or stored. Such a horizontal view of combining these aspects, when we consider energy and transportation, can in many places reveal interesting synergies. The most convincing seems to be the actual transport costs. Today 100 km on petrol costs PLN50, while only PLN5-10 would be needed to cover the same distance in an electric car. ::

92 :: polish market :: 6/2011

From left: Leszek Woźniak, Prorector of Rzeszów University of Technology, Marek Panek, Vice-president of Asseco Poland S.A., Paweł Ciesielski, Plenipotentary of the Board for Investments, Asseco Poland S.A.

Krystyna Woźniak-Trzosek, President of Rynek Polski Publishers Co. Ltd.

Zygmunt Berdychowski, Chairman of the Programme Council, Foundation Institute for Eastern Studies

Janusz Homa, President of Software Mind

Podkarpacie Region

Ranking of companies in Podkarpackie region according to revenue in 2010 (in PLN thousands) Company name

Based in

Sales revenue

Net profit/loss

Gross profit/loss

Operating income

Employment

1

ASSECO POLAND SA GK

Adam Góral

Rzeszów

3,237,733

562,091

107,6749

568,963

2

ORLEN PETROTANK SP. Z O.O.

Andrzej Niedbalski

Widełka

2,319,786

6,439

8,602

6,867

83

3

FIRMA OPONIARSKA DĘBICA SA

Jacek Pryczek

Dębica

1,793,351

81,686

101,848

110,320

2,819

13,638

4

BAĆ POL GK

Leszek Bać

Rzeszów

926,481

6,994

9,293

13,057

1,040

5

ZELMER SA

Janusz Płocica

Rzeszów

640,022

37,781

47,544

49,205

1,902

6

ŚNIEŻKA SA GK

Piotr Mikrut

Lubzina

531,699

47,516

58,669

62,226

1,367

7

ICN POLFA RZESZÓW SA

Mariusz Gajowniczek

Rzeszów

478,160

115,181

140,622

130,226

826

8

STOMIS SANOK SA

Marek Łęcki

Sanok

470,861

27,167

37,454

39,645

2,309

9

ZM ROPCZYCE SA

Józef Siwiec

Ropczyce

265,363

-12,345

-6,537

-8,660

756

GAMRAT SA

Krzysztof Moska

Jasło

218,153

2,184

2,903

4,752

846

10

photo by Ryszard Świątoniowski

Head of company

11

ENESTA SP. Z O.O.

Tomasz Strusiński

Stalowa Wola

191,741

919

1,158

-615

124

12

AUTOPART SA

Monika Bąk

Mielec

182,136

1,972

2,416

4,231

70

13

MAKARONY POLSKIE SA GK

Paweł Nowakowski

Rzeszów

149,969

-4,971

3,170

2,628

na

14

ZWSE RZESZÓW SP. Z O.O.

Marcin Pasternak

Rzeszów

125,569

1,820

2,286

3,217

243

15

TROPICANA SP. Z O.O.

Marek Winiarski

Krosno

106,244

1,455

1,774

1,774

114

16

BALTIC WOOD SA

Edward Nitka

Jasło

95,200

na

na

na

311

17

OPTEAM SA GK

Janusz Bober

Tajęcina near Rzeszów

60,099

2,074

2,355

2,646

154 151

18

RESBUD SA

Genowefa Łagowska

Rzeszów

50,312

-324

-452

-564

19

ZAKŁADY MIĘSNE HERMAN SA

Tadeusz Frączek

Tyczyn

47,337

-1,816

-1,735

-1,477

na

20

SANFARM SP. Z O.O.

Ryszard Latawiec

Nowa Dęba

45,415

4,656

4,718

4,102

233

21

IGLOOCAR

Wiesław Barłowski, Krystyna Jaskowska

Dębica

40,858

280

424

2,153

205

22

ZAKŁADY AUTOMATYKI POLNA SA

Miroslav Kozlovski

Przemyśl

28,000

752

846

618

203

Panorama of the city 6/2011 :: polish market :: 93

Podkarpacie Region

Thoughts on the Innovations Forum in Rzeszów The participation of the Erdmann-consultancy firm in the 2nd Innovation Forum in Rzeszów was neither a coincidence nor an act of curiosity. It was the outcome of a rational management of time and experience in order to achieve the desired result, which was “organoleptically” checking the condition of the B2B and B2C markets and their “climate” in order to attain business goals.

Artur Erdmann between Poland, Germany, Switzerland, and Austria.

A particular focus of our activities is the joint implementation of the state-of-the-art technologies of the Polish, German, Austrian, and Swiss markets which allow the optimal operation of the process of market information flow.

After all, as J.W. Goethe wrote, “it is human intellect that gives life to technology.”

The agenda of the conference and my afterthoughts confirmed that participation was a good decision.

As a graduate of the Faculty of Law and Administration at the University of Wrocław, and of Trade, Industry and IT school in Germany, and having spent 23 years outside Poland, I have actively participated, as Erdmannconsultancy, in the transformation of the European market, which, in turn, determines the process of reshaping the business interrelations

94 :: polish market :: 6/2011

My long-term market activity, which was shaped by acquainting myself with the Theory of State and Law (University of Wrocław), is based on an intrinsic obligation to obey the systemic, educational, and thought imponderables in the process of transformation, and related analyses of market solution implementation, including innovative solutions.

I am thinking not just of the transformation process and its progress in Poland, but also of the economic and social-business transformation in Europe in connection with the evolution of business methodology a period economically and mentally described as the “times of economic crisis.”

The conference once again made us aware, in my view, of the existence of the only possible methodology of gaining a market.

Spontaneity, the will to create and implement innovative market proposals, through “start-ups” supported by and confronted with experienced and wealthy market players, are subject to

objective, but not always foreseeable, economic rules of current market environment.

Only the result of the interaction of two forces – the desire for success based on an innovative idea in a specific business environment and the sword of the economy – determines the course of a specific “business occurrence” and its outcome.

The latter is limited to two scenarios only, in market terms - transformation leading to the development of entities, or convergence and the resulting isolation and degradation of the growth potential.

I wish to emphasise that the high importance and fine organisation of the Conference confirmed the purposefulness of my close, very intensive, multi-year connection with the Podkarpackie province, particularly Rzeszów, an extremely dynamic city which is favourable to business activity.

Participation in an excellently-organised conference allowed a fruitful interaction with very interesting individuals.

The contacts established will favour the refinement of my activities, which, I hope, will bring a positive contribution to the broadly-understood process of market development, and the methodology of the functioning of its entities. ::

Podkarpacie Region

The retail Premises Market in the Podkarpackie region Katarzyna Michnikowska Rzeszów, the major city of the Podkarpackie province, boasts the biggest number of retail spaces. The retail market in Rzeszów, which is one of the smallest cities among those with a population of over 150,000, has been growing very dynamically since early 1990’s. The city is located in the southeast of Poland and plays a significant role as the major administrative, trade, service, academic, and cultural centre for most of the residents of the Podkarpackie province. Its central location in the region with a fast-growing leisure and tourism market is an asset too.

Transportation facilities have been improved thanks to the regular modernisation of the international airport in Jasionka, as well as carefullyplanned and implemented road and transport investments such as the A4 motorway between Dresden and Kiev and the S19 Polish expressway. The development of the city is clearly connected with the high-tech, pharmaceutical, and airborne industries. The last of these is centred in the Podkarpackie Science and Technology Park.

The production of household appliances and radio/video devices, as well as food, clothes, construction, furniture, and telecommunication industries also bloom in Rzeszów.

In January 2010, the city increased its municipal area to 116.36 sq. kilometres, and its population reached 178,000. The already-existing transport and functional connections with the suburban areas mean the retail market in Rzeszów includes around 730,000 potential customers from all over the Rzeszów Metropolitan Area.

Taking into account its location (about 100 km from the eastern and southern country borders) it constitutes a significant retail, service, and exhibition centre in this part of Europe. Rzeszów is a young city with a positive population growth rate, a positive migration

rate, higher than average purchasing power, and a relatively low unemployment rate. Each year the trade market in the city is also supported by a group of 60,000 young consumers – the students of 10 Rzeszów higher edu­cation schools.

Supply Senior analyst, Valuation and Counselling Department of Cushman & Wakefield

Supply of modern retail space in Rzeszów in 2005–2012* (in sq. m.) * prognosis

Compared to other cities with a similar population, Rzeszów is very well equipped with modern retail space.

Several retail buildings appeared in the 1990’s, however, the real boom for the development of such facilities started in 2001 when Tesco and E. Leclerc opened. During the last 10 years, more than ten shopping centres have appeared in Rzeszów – each year 18,800 sq. m of gross leasable area (GLA) went onto the market. The biggest supply wave was observed in 2006 when over 60,000 sq. m of GLA were put into use in the form of modern retail space. Towards the end of the first quarter of 2011 the supply rate was at the level of 188,000 sq. m of GLA, and the biggest facility was the Auchan Krasne suburban shopping centre, with an area of 37,900 sq. m of GLA put into use in 2006. It consists of a hypermarket, Leroy Merlin construction

accessories, the Vogele clothes shop, and a small number of shopping galleries and service points. The biggest range of clothes products is in the Galeria Graffica shopping centre, where you can find H&M, Royal Collection, and New Yorker stores.

Modern retail space is mainly located in the southern part of the city, especially in the vicinity of Armii Krajowej, Sikorskiego, Rejtana and Powstańców Warszawy streets.

All major shopping centres such as Rzeszów Plaza, E. Leclerc, Lazur Gallery, Media Markt, Castorama, Komfort, and Jysk, as well as the Rejtan shopping centre, the Helios multiplex, and the Galaktyka bowling alley, are situated there. Retail space in the city centre is located along the 3 Maja, Grunwaldzka, Kopernika, and Matejki streets. The area is characterised by increased pedestrian traffic, a high number of local retail and services (including financial services) outlets, and a relatively small number of chain stores.

The biggest shopping centres in the city are Pasaż Agora and Galeria Graffica. The retail map of Rzeszów also includes such entities as Ameryka, Europa II, Reduta, Relax, Paniaga,

300 000 250 000 200 000 150 000 100 000 50 000 0 2005

2006

2007

2008

2009

2010

2011

2012*

Source: Valuation and Advisory, C&W, March 2011

6/2011 :: polish market :: 95

Podkarpacie Region

96 :: polish market :: 6 /2011

Rents for retail premises vary according to the size of the premises, their location and technical condition. The most expensive are the premises situated in the main streets, and small service spaces (30–50 sq. m) in shopping centres. The highest rents for premises of 100–150 sq. m are to be found in

Rents for modern retail premises (EUR / sq. m / month)

50 45 40 35 30 25 20 15 10 5

small stores (30-50 sq. m)

small stores (100-150 sq. m)

medium-sized stores (300-500 sq. m)

0 large stores (1000-3000 sq. m)

The demand for retail areas in Rzeszów remains at a substantial level. Lessees are interested both in the premises situated in major shopping areas and in shopping centres. The market is still effectively absorbing newly-created facilities, however, the most significant players from the clothes sector continue to wait for a venue that will dominate the market and provide an opportunity for the residents of Rzeszów and suburban areas to spend their free time and do shopping.

The demand on Rzeszów’s property market is expected to increase once the Millennium Hall and the City Centre investments are commissioned.

The retail space offered by these two locations should temporarily (in the middle-term perspective) satisfy the needs of chain retailers for premises in Rzeszów. Further shopping malls will also open the way to the market for new brands of entertainment and catering sectors.

As of 2001, the amount of space to let in the shopping areas of Rzeszów was low. The situation changed

Rents

major “anchor” lesses (over 3000 sq. m)

Demand and vacancies

unexpectedly in 2009 when the number of vacancies reached the level of 3.4%due to the opening and commercialisation of the Nowy Świat shopping centre, which coincided with the global financial crisis. The facility started to operate with 20-25% vacant premises. A lack of tenants affected also older buildings constructed by local entrepreneurs in the 1990’s without either international know-how or competition on the side of professional domestic and international developers.

These facilities will have to change their profile (from retail to office) in order to survive the times of increasing competition on the market.

commercial streets (100-150 sq. m)

Merkury malls, as well as supermarkets and discount grocery stores scattered all over the city.

853 sq. m of Rzeszów’s GLA is available per thousand residents, but quantity does not always equal quality in this case. At present, various entities operate on the Rzeszów trade market. There are supermarkets and grocery discount stores, stand-alone large-format grocery and non-grocery stores, and city-centre and suburban shopping complexes. Although 64% of these locations may be called shopping centres, Rzeszów still lacks a space offering a wide range of fashion, entertainment, and catering products – i.e. a place to spend your free time.

This gap is to be filled by two now-under construction shopping and entertainment centres - the Millennium Hall and the City Centre.

Another big supply wave on the Rzeszów’s trade market may be expected between 2011 and 2012 when a further 80,000 sq. m of GLA will be put into use. The construction of yet more commercial spaces such as Bella Dolina by Mayland, being now at a very early planning stage, is to be finished between 2013 and 2015.

Source: Valuation and Advisory, C&W, March 2011

shopping centres and they maintain a level of EUR36 sq. m/ month.

Trends In 2010-2012 a significant increase in retail space in Rzeszów is to be expected. We believe that modern shopping spaces will gradually displace those of the older type. The latter will eventually lose their value and will have to rely on far less affluent consumers their target group, or will have to change their profile. Such a trend may well further strenghten after 2012 when the biggest of the currently-planned retail projects enter the market.

The demand for modern retail premises in Rzeszów is clearly connected with the availability of modern shopping centres situated in attractive areas. The potential of Rzeszów’s consumer market allows to believe that the expected demand for retail space during 2010-2012 will maintain satisfactory levels. It should, however, be remembered that the tendency of retail chains to limit their expansion plans may well last for the next several years.

The number of vacancies on Rzeszów’s market should remain at the level of 1-3%. A slight and temporary rise in the amount of space to let may be caused by the expected increase in supply. A considerable uptick in the vacant premises rate may be anticipated in the long-term perspective and may be caused by the entrance onto the market of several large retail investments planned for the years 2013-2015 (like Bella Dolina, IKEA). Rents for attractive retail premises in Rzeszów may fall slightly as the number of premises of the new type goes up (especially major tenants may expect additional incentives in their rental packages).

Other smaller cities of the Podkarpackie province, compared to Rzeszów, can now boast only a few retail investments (Galeria Sanowa Mall in Przemyśl, Galeria Debicka Mall in Dębica). Developers are expected to take interest, during the next five years, in smaller cities (withless than 100,000 residents), which will also result in new retail investments in the Podkarpackie province, in such towns as Jarosław, Mielec, and Stalowa Wola. ::

Podkarpacie Region

Rzeszów

– a place worth visiting Founded in 1354, Rzeszów is nowadays the capital city of the Podkarpackie province. It is considered the largest industrial, commercial, academic, and cultural centre in south-eastern Poland.

Ewelina Janczylik

photo by Ryszard Świątoniowski

Panorama of the city

The city is located at the crossing of important communication routes, near the southern and eastern borders of Poland. As a significant transport hub, Rzeszów’s business, commerce, and tourism are flourishing.

The most recognisable landmark in Rzeszów is the Lubomirski Castle. By the end of the 18th century, the last of the Lubomirski family sold it to the

Austrian authorities in a pitiful state. It was in ruins, and a decision was made to demolish and reconstruct it. Besides the original defensive walls, with ramparts and a castle tower, rebuilt on the basis of the initial design, the castle in it’s present form was created in 1906.

Currently, it houses the District Court.

The most splendid building in the market square is the 16th-century City Hall.

According to recent studies, fragments of old walls and vaults, as well as basements were discovered in the city hall’s underground. Based on this discovery, it can be concluded that the City Hall was originally in a different shape and was redeveloped in the 18th century classicist style, and in this form survived until the 19th century. Between 1897 and 1898, the building was renovated once again for the purposes of the City Council. The second floor, a staircase, and two towers were added, while the building was extended towards the east with an arcaded section, and a large sessions-chamber was organised. The buildings surrounding the Market Square are a great attraction. The Underground Tourist Route “Rzeszów Cellars” below the buildings and the Market Square are of particular interest. It took years to build the underground corridors. Initially, in the Middle Ages, they were used for storage by the so-called “earth shops.”

During the war, they also served defensive functions, providing shelter for residents of Rzeszów. It was here that Jews who escaped from the city’s ghetto sought refuge during World War II. The reconstruction of the cellars was completed in 2007. They are 369 metres long, they count 15 corridors and 25 cellars.

You can explore the city using six tourist trails, including the route “around Rzeszów,” which is 100 km long. The Bieszczady mountain range, just a few kilometres from the city, is the most interesting holiday destination in the region. It features Lake Solina, which boasts wonderful conditions for water sports and is the biggest artificial water reservoir in Poland. The region’s crystal-clear water and clean air, picturesque landscapes, along with its historical and cultural diversity, represent the greatest assets of the region.

Rzeszów is a city rich in culture, with numerous sports and entertainment events. The Music Festival in (nearby) Łańcut, organised by the 6/2011 :: polish market :: 97

98 :: polish market :: 6/2011

In your spare time in Rzeszów, you can also stroll along the Nature Route of the Wisłok River, running alongside the “Lisia Góra” reserve, which is a unique natural environment featuring several-hundred-year-old oaks.

Numerous tennis courts, spa centres, and a nearby golf course await tourists. Horse-back riding centres, which

enjoy considerable popularity, provide riding courses and hippotherapy activities. Winter also attracts tourists here – with local ski runs – both downhill and racing and an artificial ice rink.

Younger children will find plenty of playgrounds and entertainment centres. ::

Underground Tourist Route

Cieplińskiego Street

photo City Office archives

Podkarpackie Philharmonic, as well as the Polish Diaspora Folk Bands Festival, held every three years and connecting the region with the Polish community all over the world, have won public acclaim. The Podkarpackie Philharmonic Symphony Orchestra is considered one of the best in the country, and the concert hall of the Philharmonic is recognised as one with the best acoustics. It is also worth participating in cyclical events, such as the Rzeszów Days, The Night of the Museums, the Multi-Cultural Galicia Festival, and the Rzeszów Student Festival.

Tourists may spend their time in restaurants, pubs, cafés, and discos.

In your spare time you can watch exhibitions organised by the museums, galleries and culture centres. The most interesting of these is the Franciszek Kotula Ethnographical Museum , which has one of the richest collections in the country, the Museum of Rzeszów’s History, and the only Bedtime Show Collection in Poland, opened in March 2009.

The city’s authorities attach a lot of importance to the development of sports and recreation facilities. Ev­ ery resident of and tourist in Rzeszów can take advantage of the city’s bicycle system, the first one in Poland. It is based on Internet registration, and after paying a small fee, you can rent a bicycle in twenty stations around the city. There are one hundred bicycles available at the moment. The programme was launched last autumn.

Unfortunately, due to bad weather, it was not as popular as expected, and there were only three stations. Nevertheless, the city authorities are hoping to break the losing streak and more bicycle stations are being built to achieve the planned number of 20. You need a special card to borrow a bicycle. Each Roweres station will have a card reader.

Swiping the card will unlock the bicycle, which will then be considered borrowed. Each card use will be registered in the system, thanks to which the card will carry information on the user’s account. Cycling enthusiasts have 70 km of cycling routes at their disposal. Further information can be found on www.roweres.pl.

photo by Bogdan Szczupaj

Podkarpacie Region

Cultural Monitor

A successful fair The 2nd Warsaw Book Fair (WTK) took place between 12 and 15 May 2011 in the Palace of Culture and Science in Warsaw. Honorary patronage over the event was held by Bronisław Komorowski, President of Poland, and Bogdan Zdrojewski, Minister of Culture and National Heritage.

Maciej Proliński This year, the Warsaw Book Fair attracted over 600 exhibitors from 14 countries, including Australia, Germany, Russia, Sweden, Great Britain, and Poland. There were over 650 events – meetings with authors, seminars, and conferences. A number of prestigious nominations and prizes were awarded, and exhibitions organised.

The fair was visited by over 35,000 people. Attractions for children were also very popular. Parents appreciated the kindergarten room, which was open all day round, while entire families flocked around the studio of Radio Bajka and famous writers.

This year’s edition took place in the shadow of a dispute between the Warsaw Book Fair and the International Book Fair, and the eventual cancellation of the latter. “The idea of organising a new fair – WTK – originated from the feeling of the shared identity and historical memory of the major Polish publishing houses. We should not forget that Ars Polona is not the only holder of the fair’s legacy. Tradition is one thing, but brand-new market experience is another. Catholic book fairs and historical book fairs, which are organised by publishing houses acting in agreement, show that when it is difficult to reach a consensus, when we want to fulfil our own expectations, when we are starting to become the object and not the subject of the event, we want to do it by ourselves. This is, in my opinion, the right of self determination,” says Rafał Skąpski, President of the Supervisory Board of “Targi Książki” Company, and President of the Polish Publishers’ Association (PTWK).

It was the second time that “Targi Książki” – an innovative project entity set up as a result of an agreement between publishers and the fair company, aimed at professional and effective cooperation of the publishing market with the fair industry – organised the Warsaw Book Fair. The company was established on 9 March 2010 on the initiative of a group of Polish publishers, e.g. Wydawnictwo BELLONA, Firma Księgarska Jacek Olesiejuk, and Wydawnictwo BOSZ. For the second time, the executive organiser of the WBF was Murator EXPO Sp. z o. o. ::

6/2011 :: polish market :: 99

Cultural Monitor Inaugural concerts On the occasion of Poland’s presidency in the EU, a series of cultural events is scheduled to take place in Poland. The central Warsaw programme, based on British promenade concerts, is planned as an all-day-long musical performance.

It will take place on 1 July on four specially-constructed stages. Each stage is going to represent a different musical genre, such as classical, ethnic, and jazz. The nearby cultural institutions will be open late on that day. In the most frequented spots of the city there will be big screens transmitting selected concerts. The National Philharmonic will present the première of a composition by one of the most celebrated Polish contemporary composers – Paweł Mykietyn – exclusively prepared for the inauguration. The Grand-Theatre-National Opera will feature a première of “King Roger,” an opera by Karol Szymanowski, directed by David Pountney. ::

A life-affirming festival

100 :: polish market :: 6/2011

Compiled

by Maciej Proliński

Great jazz in a great place On 2 July in Warsaw starts the 17th International Jazz at the Old Town Square Festival. As traditionally, it will last 2 months, on every Saturday of July and August on the Old Town Square. The festivals will feature a con­ stellation of Polish, European, and American stars. The organiser and producer of the events is IKA ART Woj­ ciechowscy, a concert and advertising agency. This year we can listen to the Tord Gustavsen Ensemble, the Gary Guthman Quartet, and the Omar Puente Sextet. ::

“Amazing! You just have to see it with your own eyes,” exclaimed a world-famous photographer Ryszard Horowitz, looking at the multi-national crowd of thousands of people pulsating to the sounds of music. It all happened during the Jewish Culture Festival in Kraków – one of the most important and biggest events of its type in the world. The festival, the majority of whose events takes place in the synagogues, galleries and streets of Kazimierz, a Jewish district of Kraków, exudes a unique atmosphere of the celebration of Jewish culture. This year’s 21st festival will take place between 24 June and 3 July. One of the greatest music stars will be the American band The Sway Machinery, which, after visiting the Timbuktu Festival Au Desert, invited Mali singer Khaira Arby. Polish musicians will also be featured, including the excellent guitarist and composer Raphael Rogiński with his Hasidic-free jazz band Shofar, and the Bester Quartet, which is the only Polish band with a long-term contract with John Zorn’s celebrated studio Tzadik. This year’s final concert may come as a surprise. Szeroka Street will be filled with the music of the widely-recognised Israeli band Yemen Blues, and David Krakauer with his new project Abraham Inc., with which, besides the clarinet master, we will see the trombonist who once played with James Brown – Fred Wesley – and DJ Socalled. Apart from music events, the festival will feature numerous workshops on Jewish culture, cuisine tasting and a course in preparing kosher meals, meetings, and discussions, exhibitions and film screenings. ::

Open Sopot In the rays of July sunshine the Open Culture Spa will show the new face of Sopot.

The Open Culture Spa is a concept which relates to the artistic and cultural traditions of Sopot. This is where Polish jazz flourished, where in the famous Forest Opera the Wagner festival was born during the interwar period and later the international song festival. Open Culture Spa 2011 is intending to form a shared creative space for artistes and their audience. Within the scope of the project the following events will take place, among others, the International Conference “Więcej Kultury - we are more!” (2830 July), the Festival of World Cultures “Trans Borders / Poprzez granice” (8-10 July), and the Sopot Film Festival (23-30 July). ::

Cultural Monitor

“Behind the mask” During the 7th Brave Festival (2-8 July) in Wrocław, we will witness an outstanding theatrical show.

Actors from India will undergo a total transformation to present Kathakali – a Hindu tradition of theatrical expression situated somewhere on the boundary of drama and dance. The incredibly colourful and expressive make-up of the performers also introduces the main slogan of this year’s Brave - “the Mask.”

Kathakali will be one of the major events of this year’s Brave Festival, which, in its rich and event-packed artistic schedule of music, film and theatre, will present traditions and rituals from the whole world. What else hides “behind the mask” of the festival?

One of the festival nights will be greeted by the Mask of the Moon – a band from Burkina Faso – which will perform a dance of the masks in the moonlight. Another guest will be Blind Note, a band composed of musicians from Armenia,

Mexico, Senegal, Turkey, Belgium and Madagascar, playing traditional regional instruments.

Wrocław’s Brave Festival, supporting banished cultures, will also feature the 3rd Brave Kids edition, during which children from Uganda, Ruanda, Norway, and Wrocław, along with refugees from Chechnya and Ingushetia, and Gypsies from the Czech Republic, will join forces to prepare a spectacular finale. ::

Discovering Estonia’s Art

Portishead

Music and exclusion The Malta Festival, Poznań’s biggest summer cultural event, will take place between 4 and 9 July. Since 2010, its programme programme has been focused on the events included as part of “Idiom.” While the leading theme of last year’s festival was Flemish theatre, this year’s one is exclusion – a phenomenon largely idiomatic to Western culture that can become the lot of each one of us. By watching performances and listening to music, we will find out how this problem is approached by great and recognised artistes, and some of the most interesting creators of European theatre. Who knows?

Perhaps it will be the music that will become the main attraction of this year’s festival. On the second day, by the Malta Lake in Poznań, there will be a charity open-air concert of Manu Chao La Ventura.

This sole show in Poland of the phenomenal artist renowned for his social involvement, is a joint undertaking of the festival’s organisers and the Polish Humanitarian Action. On 6 July there will be a concert by the British rock band Portishead! ::

Setting the door ajar for the Belarusians…

Exhibition ”Opening the door? Belaru­ sian art today” is available for view­ ing at the Zachęta National Gallery of Art in Warsaw until 21 August. It pre­ sents the works of artists living and working in Belarus and abroad. One of the aims of the exhibition is to let the Belarusians be seen from the out­ sider’s perspective, without the com­ monly-accepted taboos. “Most of the works presented relate in one way or another to the problems of Belarusian

Until 3 July, in the Warsaw National Museum, visitors can see “Es­ tonian Art – Taming modernism.” This is the first comprehensive presentation of the achievements of Estonian artists in post-war Poland. The exhibition features the works of the most prominent Estonian artists, who performed from the turn of the 20th centu­ ry to the 1940s (Taming modernism) and from the early 1970s to contemporary times (Provocations and confrontations). The ex­ hibition was prepared by the Kumu Art Museum in Tallin. The works presented come from the collection of the Estonian Art Museum and the Art Museum in Tartu. “It is a review of various faces of Estonian art – symbolism, national saga illustrations, impres­ sionist and postimpressionist landscapes, the avant-garde works of the 1920s, and the varieties of realism and colourism from the inter-war period until the present day. The complex picture of Estonian art includes painting, sculpture, graphic design, photog­ raphy, and video art – the disciplines developing in relation with the biggest art cen­ tres,” said the curator of the exhibition Tiina Abel of the Kumu Art Museum in Tallin. ::

The 10th Open’er Festival For the 10th time already, in the 72 hectare area of the Babie Doły Airport in Gdynia, the unparalleled Open’er Festival will take place. In 2011 the event will last four days – from 30 June to 3 July. The greatest stars of this year’s festival will be the British rock band Coldplay, and the famous American composer, guitarist and vocalist Prince.

These will be their first appearances in Poland. Among our artistes we will listen to the talented and charming vocalist Monika Brodka, and the outstanding jazz combo the Wojtek Mazolewski Quintet. The Open’er Festival is a music event which has inscribed itself permanently

society, but only a few courageously itemise the issues which are normally not discussed.

The project has a chance to open new ways of communication for Belarusian art, rela­ tively separated and unknown to the inter­ national audience. In other words, we’ll be able to speak of success if we manage to set the door ajar at least a little bit,” declares

on the European calendar of the most important summer festivals of contemporary popular music. This is a unique place on the map of Poland, a place where the best international music reigns, and where fans from several dozen countries meet.

This year, as previously, several stages are being put up: the Main Stage, Tent Stage, World Stage, Young Talents Stage, Alter Space and two electronic stages. ::

the event’s curator, Kęstutis Kuizinas. The exhibition is accompanied by a catalogue in English, Russian, Lithuanian and an insert in Polish, as well as a series of events, within the scope of which Belarusian artists and researchers are going to present the wid­ er context of the modern art and culture of this country. :: 6/2011 :: polish market :: 101

Cultural Monitor

The secret of Roger On 1 July 2011, the Grand Theatre–National Opera will inaugurate the Polish EU Presidency with the premiere of “King Roger,” with the music of Karol Szymanowski and libretto of Jarosław Iwaszkiewicz, directed by David Pountney.

“The best Polish opera, whose main theme is Europe, opens the Polish EU Presidency. It would be hard to find a more appropriate symbol – an emblem for the challenges faced today by the European Union and Poland,” says Waldemar Dąbrowski, the director of the Warsaw Opera House.

Maciej Proliński The drama of King Roger takes place during the 12th century in Sicily. It is a story of a powerful ruler, respected by his subjects, who is going through an extreme experience.

The result is the entire hierarchy and order of the world falling apart and transforming. The action begins with the appearance of a mysterious shepherd in Roger’s country, who “teaches strangely and sings strange songs honouring an unknown God.” Musically, “King Roger” is not a classical opera. It borders on opera, musical drama and oration. It is also an absorbing “melting pot,” containing refined sounds of impressionistic echo and elements of Orthodox Church and highlander music.

The music of Karol Szymanowski is distinguished by a unique charm, which is very attractive to contemporary music fans. Szymanowski (born on 6 Oct. 1882 in Tymoszówka – died on 29 Mar.

102 :: polish market :: 5/2011

1937 in Lausanne) was the most famous Polish composer of the first half of the 20th century. While travelling through Europe and visiting Berlin, Vienna, Paris and London, he became inspired by the music of Richard Strauss and Claude Debussy, and and created his own, lyrical style of music, based on innovative orchestration. He also filled his music with themes of Polish folklore, including that of the Polish Tatra Highlands, which was mainly influenced by his frequent stays in Zakopane. The wall of the Zakopane villa “Atma” bears a plaque informing that there lived and worked the author of “Harnasie,” Karol Szymanowski. This description stuck to Szymanowski so hard that it almost became a synonym of his name, which many people associate exclusively with one composition, often considered as the flagship work of the composer, who is also referred to as the second, after Chopin. Szymanowski’s ties with the region and culture of

the Polish Tatra Highlands were long and diverse, and had greatly influenced his personal and artistic life. But the famous “Harnasie” ballet (“Harnasie,” Op. 55) is not unique to represent the highland trend in the works of Szymanowski. It also includes 2 operas, 4 symphonies, 2 violin concerts, oratorio and cantata compositions, and chamber pieces. Over a dozen items in total, which include many continually remaining in the repertoire of worldrenowned musicians.

The current, already famous performance of “King Roger” directed by David Pountney, created for the Bregenzer Festspiele in 2009, is interestingly placed between contemporary times and the distant future. One of today’s most famous directors does not attempt to engage the viewer into interpretative convolutions. He also does not trivialise anything, and leaves the audience with Roger’s secret. In Warsaw, the role of King Roger will be performed by Scott Hendricks, Roxanna will be played by Olga Pasiecznik. The National Opera Orchestra and Choir will be conducted by Jacek Kaspszyk.

For many years, David Pountney (born in 1947) was associated with British theatres, mainly as the head of the Scottish Opera (1975–1980) and the English National Opera (1982–1993), but he also worked elsewhere in Europe, in America and Japan. Since 2003, he is the head of a significant summer festival in Bregenz. He enjoys artistic challenges, and eagerly produces Slavic operas, which are rarely performed in the West. His favourite composers include Szymanowski, and he had wanted to stage “King Roger” for years. Last year at the Bregenz festival, and later in the Warsaw Opera House, he conducted a moving performance of “The Passenger” – a 20th century Polish opera with music by Mieczysław Weinberg, based on the novel by Zofia Posmysz. The same novel was the canvas for the excellent Andrzej Munk film in the 1960s. ::

KASPSZYK / POUNTNEY | PrEmiErE: 1 JUlY 2011 NExT PErfOrmANcES: 3, 5/07/2011 Sponsor of the premiere

Partner

Media patronage:

Project coorganized by the Adam Mickiewicz Institute, as part of the International Cultural Programme of the Polish Presidency of the EU Council

Events

A collection for Pajacyk On 22 May, Polish fashion designers united to counteract child malnutrition and hunger as part of the PAH (Polish Humanitarian Action) campaign “World without hunger.”

The greatest interest was stirred up by Janina Ochojska’s African Pajacyk, whose final price was PLN 4.400 An additional attraction was the participation of famous Polish models in the showing of Pajacyks at auction: (from the left): Ewa Wachowicz, Bogna Sworowska, Lidia Popiel and Małgorzata Niemen

104 :: polish market :: 6/2011

Within the framework of the programme combating hunger and malnutrition among children, whose symbol is Pajacyk (a puppet), the biggest Polish fashion designers dressed Pajacyks in outfits of their own design for the third time. All puppets went under the hammer during the charity auction at the Cybernetics Centre in Warsaw. Pajacyks have been auctioned for a total amount of PLN33.000. The greatest interest was stirred up by Janina Ochojska’s African Pajacyk, whose final price reached PLN4.400. All proceeds from the auction were spent the programme combating hunger and malnutrition among children. The auction was hosted by the Pajacyk Ambassadors – actors Agnieszka Dygant and Tomasz Kot. The auction was followed by a performance by Mika Urbaniak.

This year, the outfits for Pajacyk were designed by: Gosia Baczyńska, Dorota Wróblewska, Eva Minge, Peggy Pawlowski, Teresa Rosati, Natalia Jaroszewska, Jerzy Antkowiak, Marcin Paprocki, Mariusz Brzozowski, Antonina Turnau, Krystyna Zachwatowicz and Janina Ochojska. Participants could also bid on Pajacyks decorated by the First Lady Anna Komorowska and the former First Lady Jolanta Kwaśniewska, who were honorary patrons of this year’s auction. ::

Economic Monitor

Economic Monitor April 2011

Key economic trends

producer prices year on year. The rise in operating costs hampers business profits and investment plans.

Source: www.biec.org.

In 2011Q1 growth strengthened in many sectors of the economy. Industrial and construction output grew at a faster pace than in 2010Q4 as did sales of transport and communications services. Growth in retail sales was slightly slower. Employment in the corporate sector continued to increase gradually and a seasonal drop in unemployment was recorded in 2011M3. As inflation was on the rise, growth in the purchasing power of average monthly wages in the corporate sector and in old-age and disability pensions was weaker than in the last quarter of 2010.

Source: Informacja o sytuacji społecznogospodarczej kraju. I kwartał 2011; www. stat.gov.pl.

The Economic Sentiment Indicator (ESI) for European Union countries and the euro-zone decreased in 2011M4, but stayed above the average for recent years. The sharp drop in the indicator was noted across the EU (down by 2.3 points to 105.1 points). The decrease for the euro-zone was slightly smaller (down by 1.1 points to 106.2 points). It was a second month in succession to see a drop in the indicator. The two indicators dropped as business climate deteriorated in all sectors except for construction. Construction recorded growth, which was helped by favourable weather conditions, but the reading of the indicator for this sector was still low. The indicator for the EU worsened because of a sharp deterioration of the economic sentiment indicator for the United Kingdom, especially for its retail and service sector. But ESI dropped in 2011M4 for most EU economies. Among the seven largest EU economies, economic sentiment deteriorated the most in the United Kingdom (down by 5.1 points), Netherlands (down by 2 points) and Poland (down by 1.3 points). Smaller declines were noted in Italy (down by 1 point), Germany (down by 0.9 points), Spain (down by 0.9 points) and France (down by 0.8 points). ESI

The BIEC Leading Index (WWK), which indicates future economic trends, fell in 2011M4 to 0.6 points. Signals posing a threat to a continued fast economic growth rate in 2011 are increasingly strong. The growing prices of consumer goods threaten internal demand.

Price hikes in countries which are our main trading partners in the European Union, combined with a policy to cut on spending so as to narrow budget deficits, dampens demand for Polish exports. Additionally, domestic businesses have to contend with rising production costs, as indicated by a 9.3% increase in 16% 14% 12% 10% 8% 6% 4%

8.5

9.0

9.4

9.4

2010 M1

2010 M2

2010 M3

2010 M4

10.1 10.6 10.4 10.4 10.7

9.6

9.7

9.8

10.3 10.1

9.2

2010 M5

2010 M10

2010 M11

2010 M12

2011 M1

2011 M3

2% 0% -2% -4%

in cumulative terms

2010 M6

2010 M7

2010 M8

2010 M9

in non-cumulative terms

Fig. 1. Change in industrial output, Mt/Mt-12

2011 M2

Source: Central Statistical Office (GUS)

still stays at high levels in Germany, France and the Netherlands.

Source: Business and Consumer Survey Results, April 2011; ec.europa.eu.

Industry In 2011M3 the pace of growth in industrial output slowed significantly and was the lowest since the beginning of 2010, though positive in year-on-year terms. This was largely due to the statistical effect. The inflow of new orders also slowed, although the number of orders was the highest since 2008M9.

In 2011M3 industrial output rose by 7% year on year. The increase was slower compared to the 10.7% recorded a month earlier. The seasonally adjusted output increased by 5.3% year on year compared to a rise of 9.4% in 2011M2. Output decreased by 0.4% month on month (seasonally adjusted data). Since the beginning of 2010 industrial output was growing at a stable rate of around 10% year on year. 2011M3 was the first month in which the pace of growth slowed significantly but remained positive. As a result, in cumulative terms, in 2011M1-3 the rate of change in industrial output diminished slightly compared to the rate of change for 2011M1-2 and amounted to 9.2% year on year. However, the statistical effect caused by a one-off sharp increase in output in 2010M3 contributed largely to this slowdown. The slowdown in industrial output growth was noted in all sectors of industry: in manufacturing (down to 7.5% from 11.3%), mining and quarrying (down to -0.3% from 6.9%), the supply of electricity, gas, heat and hot water (down to 3.7% from 6.7%), water supply, sewage and waste management and land reclamation (down to 6.5% from 8.5%).

In 2011M1-3 labour productivity in the industrial sector measured by sales per employee was by 6.1% higher than in 2010M1-3.

Source: Informacja o sytuacji społecznogospodarczej kraju. I kwartał 2011; www. stat.gov.pl.

6/2011 :: Polish Market :: I

19.9 19.7 15.4

13.2 12.7 10.8 9.6 9.3 8.1 1.1 0.4 computers, electronic and optical products beverages

food products

electrical equipment

chemicals and chemical products wearing apparel

paper and paper products

textiles

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

leather and related products

other transport equipment

motor vehicles, trailers and semitrailers

rubber and plastic products

metal products

furniture

metals

other non-metallic mineral products

4.3 3.5

tobacco products

21.9 21.2

machinery and equipment

28.2

pharmaceutical products

30.8 29.9

coke and refined petroleum products

Economic Monitor

-2.5 -5.6 -8.6 -16.1

Source: Central Statistical Office (GUS) Fig. 2. Change in output in selected manufacturing sectors, 2011M1-3, Mt/Mt-12

March was a successive month with slower growth in labour productivity. In 2011M1-2 productivity was higher by 7.1% compared to a year earlier.

In 2010M3-2011M3 growth in the number of new orders in the industrial sector slowed from 12.9% in the previous month to 6.7%.

Despite that, the number of new orders was high compared to the situation in the past two years. In 2011M3 the number of new orders was the highest since 2008M9. The number of foreign orders is also growing consistently, however the pace of increase is slowing. In 2011M3 the number of new orders was higher by 3.1% year on year, which represented the smallest increase since the beginning of this year. In 2010M12 the number of new orders increased by 21.7% year on year.

Among commodity groups in key industrial sectors, the production of intermediate goods is growing the fastest. However, the pace of growth has been slowing since the beginning of the year. In 2011M3 the seasonally adjusted production of intermediate goods rose by 12.3% year on year against an increase of 15.4% a month earlier. The yearon-year growth in the output of investment goods also slowed – from 14.9% in 2011M2 to 7.8%. The output of durable consumer goods increased slightly year on year (by 0.7%). It is worth noting that in the previous three months growth in output was negative. The II :: Polish Market :: 6/2011

output of non-durable consumer goods decreased in 2011M3. It was lower by 2% than a year earlier. In mid-2010 growth in this output was the highest. Later, it slowed to around 5% year on year. The production of energyrelated goods dropped in 2011M3 by 1.2% year on year. The drops continued since 2010M10 except for 2011M2 when a temporary increase in production was recorded.

In 2011M1-3 output increased in year-onyear terms in 25, out of 34, segments of the industrial sector, including the production of metals (up by 30.8%, including crude steel, ferroalloys, cast iron and steel and metallurgical products – up by 31.3%), “other nonmetallic mineral products” (up by 29.9%, including products made of concrete, cement and plaster – up by 46.3%), furniture (up by 28.2%), metal products (up by 21.9%, including metal structural components – up by 31.0%), rubber and plastic products (up by 21.2%, with the output of rubber products – up by 24.2%), motor vehicles, trailers and semi-trailers (up by 19.9%, including parts and accessories for vehicles with engines – up by 23.2%), wood, cork, straw and wicker products (up by 10.8%, including sawmill products – up by 16.3%), chemicals and chemical products (up by 9.3%, including basic chemicals, fertilizers and nitrogen compounds, plastics and synthetic rubber in basic forms – up by 11.7%). The output of

foodstuffs, which accounts for around 15% of the total industrial output, was by 3.5% higher than in 2010Q1.

Source: Informacja o sytuacji społecznogospodarczej kraju. I kwartał 2011; www. stat.gov.pl).

The business climate indicator in manufacturing stays at a low, though positive, level, which indicates that manufacturers are moderately optimistic. Expectations for output, order books and the general economic situation in the next three or four months are also optimistic.

The seasonally adjusted general business climate indicator in manufacturing dropped slightly in 2011M4 below the average for the past year and amounted to 2.1 points. However, the general trend did not change – there was still weak optimism in the surveyed managers’ assessments of the business situation of industrial companies. The business climate indicator was negatively influenced by weak pessimism in industrial managers’ assessments of the current business situation in the sector. Additionally, this pessimism was strengthening for two months – the indicator was -3.4 points. But projections for the next three or four months were optimistic, with the indicator at 8.1 points. Among the individual components of the indicator describing the current situation in the sector, the assessments of production and order books were favourable, although the readings of the two indicators have been slowly but steadily declining in value. The assessments of financial liabilities were negative for another month in succession. No major changes compared to 2011M3 were recorded in individual components of the indicator describing changes in the situation in the next months. The assessments of expected changes in production, order books and the general economic situation were optimistic. As regards financial liabilities, the percentage of pessimistic views was the same as optimistic ones. There was pessimism in employment projections.

Construction The performance of the construction sector is increasingly strong. In 2011M3 construction and assembly output grew faster than in the previous month. After a long period

Economic Monitor

Despite production growth, business sentiment in the construction sector was negative.

But projections were optimistic and indicated that the situation in the sector was expected to improve.

25 20 15 10 5 0 -5

2010 M1

2010 M2

2010 M3

2010 M4

2010 M5

general business climate

2010 M6

2010 M7

output

2010 M8

2010 M9

2010 M10

2010 M11

2010 M12

2011 M1

2011 M2

2011 2011 M3 M4

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

Fig. 3. Business climate indicators in the manufacturing sector

* The projection is for the next three months

25% 20% 15%

2010 M5

2010 M6

2010 M7

3.5%

18.8%

-5.7%

2010 M4

17.6%

-6.1%

2010 M3

11.2%

-8.7%

2010 M2

2011 M1

2011 M2

2011 M3

-1.5%

-11.5%

2010 M1

-3.4%

-15.2%

-5%

-20.9%

0%

0.2%

5%

2.3%

10%

-15.3%

of decline, output in the residential building sector went up. The construction of civil engineering facilities, especially motorways and other roads, is now the main force driving construction growth.

In 2011M3 construction and assembly output rose by 24.2% year on year. The situation in the sector has been consistently improving for a year now. The seasonally adjusted increase was 15.2% year on year against 14.8% in 2011M2. In month-on-month terms, the seasonally adjusted increase in 2011M3 was 3.1% against 1.6% in the previous month. In cumulative terms, in 2011M1-3, the non-seasonally adjusted output rose by 18.8% year on year against 17.6% in 2011M1-2. Output increased the fastest in specialised construction work (up by 30.7%). Growth in this output is increasingly fast. Businesses dealing with the construction of civil engineering facilities and the construction of buildings also recorded strong increases in output – by respectively 26.7% and 8.3%.

In 2011Q1 construction and assembly output rose in all types of construction. The output of civil engineering facilities was up by 26.1% year on year while the output of buildings was up by 12.9%, with the output of residential buildings being higher by 4.6% year on year, after a long period of decline. A drop was only noted in the output of single-family homes – by 1.8% year on year – however, it was smaller than in previous months. The highest increase – by 18% - was in the output of multiple occupancy homes. The output of non-residential buildings was higher by 17% than a year earlier, with the output of transport and communications buildings going up by 46%, industrial and distribution buildings up by 28.8% and office buildings up by 25.7%.

The output of civil engineering facilities accounts now for the largest share of the total construction and assembly output. The output of airport roads grew the fastest (up by 167.6% year on year). Spending on the construction of motorways, expressways, streets and other roads, which accounts for the largest share of all expenditure on the construction of civil engineering facilities, grew by 42% year on year.

-10% -15% -20% -25% -30%

in cumulative terms

2010 M8

2010 M9

in non-cumulative terms

2010 M10

2010 M11

2010 M12

Source: Central Statistical Office (GUS)

Fig. 4. Change in construction output, Mt/Mt-12

In 2011M4 the seasonally adjusted business climate indicator in construction amounted to -4.4 points. It was slightly higher than a month earlier but the indicator still did not show a clear upward trend. It remained in the range of pessimistic assessments. Despite a significant increase in construction output, it was still assessed negatively as were books of orders. The outlook on the current financial situation in the sector was the most pessimistic and deteriorated compared to the previous two months. Projections for the next months were more optimistic. The assessments of fu-

ture production and order books were optimistic. As regards employment and financial situation, the percentage of pessimistic assessments was higher than optimistic ones.

Trade In 2011M3 retail sales grew at a slower pace than in the previous month. In 2011Q1 sales increased in most retail sectors. Wholesale sales also grew at a slower pace than in January and February last year.

6/2011 :: Polish Market :: III

Economic Monitor

20 10 0 -10 -20 -30 2010 M1

2010 M2

2010 M3

2010 M4

2010 M5

general business climate

2010 M6

2010 M7

2010 M8

output

2010 M9

2010 M10

2010 M11

2010 M12

2011 M1

2011 M2

2011 2011 M3 M4

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

Fig. 5. Business climate indicators in the construction sector

* The projection is for the next three months.

10% 8% 6% 4% 2%

0.7

0.3

0.2

0.8

0% -2% -1.1 -4% 2010 M1

-0.5

-0.1

2010 M4

2010 M5

1.5

1.9

2.2

3.1

2.1

6.1

6.0

2010 M9

2010 M10

2010 M11

2010 M12

2011 M1

2011 M2

2011 M3

-1.6 2010 M2

2010 M3

in cumulative terms

2010 M6

2010 M7

2010 M8

in non-cumulative terms

Source: Central Statistical Office (GUS)

was a drop in non-specialised sales (down by 9.4%) and beverage sales (down by 1.1%).

Compared to the previous months, the decline in non-specialised sales slowed while a drop in beverage sales was recorded for the first time this year.

In 2011M4 the assessment of the business climate in the trade and repair of motor vehicles deteriorated slightly again and stood at the “neutral” level. Forecasts for the general economic situation made on the basis of retailers’ expectations were slightly pessimistic.

In 2011M4 the seasonally adjusted business climate indicator amounted to 0 points and did not change much compared to the previous month. This means that the share of positive and negative assessments of the business climate was equal. The general economic situation was assessed as “neutral”, with the indicator at 0.1 points. But managers had a negative view of financial obligations and sales.

As regards forecasts for the next months, the indicator describing the general economic situation stood at -1.5 points, which means that pessimistic views slightly outdistanced optimistic ones. The assessments of future demand and sales were slightly optimistic while the assessments of financial obligations and employment were pessimistic.

Consumer sentiment

Fig. 6. Change in retail sales, Mt/Mt-12

In 2011M3 retail sales in constant prices increased by 5.1% year on year versus 8.6% in the previous month. In cumulative terms, in 2011M1-3, sales grew by 6.0% year on year against 6.1% in 2011M1-2. After strong sales increases recorded since mid-2010, year-onyear growth in retail sales slowed from 13.6% in 2011M2 to 6.1% in 2011M3. Compared to 2011M2, sales dropped by 1.9% but were still at a much higher level than at the beginning of 2010. The temporary slowdown does not mean a reversal in the upward trend in retail sales. Wholesale sales in current prices rose in 2011M3 by 18%. Growth in wholesale sales has been slowing since the beginning of the year.

In 2011M1-3 the highest growth in sales in constant prices was recorded by retailers dealing with “other sales in non-specialised stores” (up by 28.9%). In March the pace of this growth slowed from 33.6% to 24.6% but IV :: Polish Market :: 6/2011

was still fast. Sales of motor vehicles, motorcycles and parts also grew relatively fast in the first quarter compared to a year earlier (up by 10.2%). Additionally, in March growth in these sales was higher than in the previous two months. In 2011M1-3 growth in the sales of solid, liquid and gaseous fuels slowed to 4.7% year on year. But in 2011M3 growth in these sales was stronger. Sales of food, beverages and tobacco products dropped by 4.5% year on year in 2011M1-3 and by 9% year on year in 2011M3.

Wholesale sales in current prices rose in 2010M3-2011M3 in most of the nine segments of the wholesale market, except for two of them. The highest increase – of as much as 93.6% - was in the sales of IT and communication tools, machines and equipment. Sales on commission grew by 47.3%.

The pace of growth in the two types of sales additionally accelerated in March. There

The reading of the GUS and IPSOS consumer sentiment indices slightly increased in 2011M4 but were still at very low levels after sharp drops in previous months. The BIEC Economic Welfare Indicator fell for the first time this year. Consumer sentiment is still negatively influenced by such factors as high inflation, unemployment and poor assessments of the economic situation. But prospects for the next 12 months are less pessimistic than assessments of the current situation.

The Current Consumer Confidence Index (BWUK), which describes current trends in individual consumption, improved in 2011M4 by 2.2 pct. points compared to the previous month and reached -26.8 pct. points. However, the index was by 12.1 pct. points lower than in April last year. (Source: Koniunktura konsumencka. Kwiecień 2011; www. stat.gov.pl). The reading of BWUK increased thanks to improved assessments of changes in the financial situation of households and the

motor vehicles, motorcycles and parts

4.7

food, beverages, tobacco products

5.4

solid, liquid and gaseous fuels

9.7

furniture, radio and TV equipment, household appliances

10.2

other

16.5 textiles, clothing, footwear

17.6 pharmaceuticals, cosmetics, orthopaedic equipment

28.9 other retail sales in non-specialised stores

general economic situation of Poland in the last 12 months and changes expected in the next 12 months. Assessments of households’ current potential to buy deteriorated slightly.

The Leading Consumer Confidence Index (WWUK), which describes trends in individual consumption expected in the next months, improved by 4.3 pct. points compared to the previous month and amounted to -29.8 pct. points. The reading was lower than a year earlier by 9.3 pct. points. (Source: Koniunktura konsumencka. Kwiecień 2011; www.stat.gov.pl). All components of the indicator contributed to its improvement. Assessments of the unemployment situation improved significantly (from -41 pct. points to -32.9 pct. points). The improvement in assessments of households’ potential to save was not as big, with the reading going up from -38 pct. points to -37.5 pct. points.

Following the largest in two years decline in consumer confidence in 2011M3, April saw an improvement. The Ipsos Consumer Confidence Index rose by 3 points to 79.1 points.

Nevertheless, it was still 8 points lower than in February and it is still too early to say that the long-term downward trend has been stopped. (Source: www.ipsos.pl).

The BIEC Economic Welfare Indicator, which reflects the economic condition of the population, fell in 2011M4 by 0.9 points.

It was the first major drop in the indicator since October 2009. In April all components of the indicator contributed to its decrease, with growing inflation, especially a rise in food prices, having the strongest impact on the indicator. The weakened wage growth and slower growth in employment in the corporate sector in recent months also had a strong negative influence on the indicator. (Source: www.biec.org).

newspapers, books and other sales in specialised stores

Economic Monitor

-0.9

-4.5

Source: Central Statistical Office (GUS)

Fig. 7. Change in retail sales of selected products in 2011M1-3, Mt/Mt-12 10 5 0 -5 -10 -15 2010 M1

2010 M2

2010 M3

2010 M4

2010 M5

general business climate

2010 M6

2010 M7

sales

2010 M8

2010 M9

2010 M10

demand (projection)

2010 M11

2010 M12

2011 M1

2011 M2

2011 2011 M3 M4

Source: Central Statistical Office (GUS)

Fig. 8. Business climate indicators in the trade and repair of motor vehicles

8.1%

7.7%

7.7%

7.2%

6.9%

6.3%

6.3%

4.5%

Slovenia

Belgium

Sweden

Cyprus

Czech Republic

Germany

Malta

Luxembourg

8.8%

8.2%

Finland

United States

8.3%

Italy

9.5%

9.5%

France

European Union

9.8%

Poland

9.9%

11.1%

Portugal

Euro Area

11.4%

Bulgaria

4.3%

11.9%

Hungary

4.2%

13.9%

Slovakia

Austria

14.7%

Ireland

Netherlands

20.7%

In the final months of 2010 investment spending declined at a much slower pace than at the beginning of the year. In the transport sector, investment was on the rise. Prospects for 2011 are optimistic, with investment expected to increase. Only building sector managers have a pessimistic view of investment.

Spain

Investment

Source: Eurostat

Fig. 9. Harmonised Unemployment Rate in selected countries in 2011M3, seasonally adjusted

6/2011 :: Polish Market :: V

Economic Monitor

In 2010, investment spending in current prices was by 5.1% lower than a year earlier. Investment was falling in the industrial, building and retail sectors. Transport was the only sector where investment was on the increase. However, the situation was improving from quarter to quarter. Investment spending should grow in 2011 if this trend persists. In 2010, investment in the retail sector dropped by 14.8% year on year compared to a drop of 21.1% in the first quarter of that year. In the industrial sector investment decreased in 2010 by 6.6% and in construction by 6.1%. Spending on fixed assets in current prices was increasing since the beginning of the year in the transport sector. Spending on buildings and structures fell by 3.6% against a drop of 13.5% in 2010Q1-3. Spending on machines, technical equipment and tools went down by 12.1% against a drop of 18.1% in 2010Q1-3.

Data for 2010Q4 in current prices confirm these trends. The pace of decline in investment slowed significantly in the last quarter of 2010. Investment was down by 3.2% year on year in 2010Q4 compared to a drop of 11.3% in 2010Q3. The decline in spending on machines, technical equipment, tools and means of transport was slower – it decreased by 2.9% year on year compared to a drop of 9.6% in 2010Q3. The decline in spending on buildings and structures was faster – 3.5% year on year against 13.6% in 2010Q3.

Business climate research conducted by GUS indicates that industrial sector managers expect that investment in the sector will rise by 38.2% this year. Compared to the previous survey, business sentiment improved in this respect. In construction, a further drop in investment by 31.1% compared to 2010 is

expected, which means a deterioration of assessments compared to the previous survey and expectations for a sharper decrease in investment than last year. As regards investment in the retail sector and services in the next months, managers are optimistic. In the retail sector, optimism is higher than in 2010.

In the service sector, businesses conducting operations associated with culture, entertainment and recreation and with financial and insurance are the most optimistic, with the percentage of businesses planning a rise in investment in the near future being much higher than the percentage of those who plan to cut on investment. In the education sector, the difference between optimists and pessimists is the smallest.

Labour market March was another month in succession to see no major change in the seasonally adjusted unemployment rate in Poland. The number of newly registered unemployed dropped slightly but the composition of the unemployed population deteriorated, with a rise in the share of the long-term unemployed.

In 2011M3 the seasonally adjusted harmonised unemployment rate (HUR) for Poland did not change from the previous month and stayed at 9.8%. Since 2010M4 the HUR indicator for Poland increased by 0.2 pct. points.

No major changes in the EU unemployment rate were noted over the last year either – it was 9.5% in 2011M3 and 9.6% in 2010M4. The euro-zone unemployment rate was 9.9%. The downward trend in unemployment has per-

13.5 13.0 12.5 12.0 11.5 11.0 10.5

non-seasonally adjusted

Fig. 10. Registered unemployment rate, %

VI :: Polish Market :: 6/2011

seasonally adjusted

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

sisted in the United States. The country’s unemployment rate was 8.8% in 2011M3, 8.9% in 2011M2 and 9.8% in 2010M4.

Among the EU countries for which data for 2011M3 were available, the highest unemployment rate was noted in Spain, Ireland and Slovakia, while the lowest was in the Netherlands, Austria and Luxemburg1.

In most EU countries, there was no significant change in the HUR in 2011M2-2011M3.

But the unemployment rates in Austria and Hungary dropped more than elsewhere – by 0.4 pct. points and 0.2 pct. points respectively. None of the countries for which data were available saw their unemployment rate rise by more than 0.1 pct. points.

To sum up trends in the period from 2010M4 to 2011M3, the sharpest drop in the unemployment rate was in Sweden (down by 1.3 pct. points) while the sharpest increase was in Bulgaria (up by 1.5 pct. points) and Greece (up by 1.4 pct. points). Changes on the labour markets of Belgium, Germany, Malta, Slovakia and the Czech Republic were more favourable than changes in the EU average; in Spain, Slovenia and Hungary, they were less favourable.

In Poland, the registered unemployment rate amounted in 2011M3 to 13.1% and was by 0.1 pct. points lower than in 2011M2 but by 0.1 pct. points higher than a year earlier. Seasonal factors still have a negative impact on the labour market, pushing the unemployment rate up. However, their impact will ease in coming months and since June they will be pushing the unemployment rate down. The seasonally adjusted unemployment rate dropped by 0.1 pct. points compared to 2011M2. As a result, the rate was close to the level noted in 2011M1.

In 2011M3 the number of unemployed registered with employment agencies amounted to 2,133,900 and was by 2.8% higher than a year earlier. In 2011M2 it was higher by 2.3%.

Around 218,900 newly unemployed people were registered with employment agencies in 2011M3, which represented a relatively large drop of 9.8% compared to a year earlier. The number of unemployed who were taken off the official register also decreased 1 T he most recent HUR data for the countries for which unemployment data for 2011M3 were unavailable: Denmark – 7.9% (2011M2), Estonia – 14.3% (2010M12), Greece – 14.1% (2010M12), Lithuania – 17.3% (2010M12), Latvia – 17.2% (2010M12), Romania – 7.4% (2010M12) and United Kingdom – 7.7% (2011M1).

Economic Monitor

3,650

4%

3,600

3%

3,550

2%

3,500 3,450

1%

3,400

0%

3,350

-1%

3,300

-2%

3,250 3,200

-3%

3,150

-4% 2009 2009 2009 2009 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 M9 M10 M11 M12 M1 M2 M3 M4 M5 M6 M7 M8 M9 M10 M11 M12 M1 M2 M3

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:

Turkey 4.0%

Croatia 2.5%

Switzerland 1.0%

Iceland 2.3%

Norway 0.9%

European Union 3.1%

Ireland 1.2%

Euro area 2.7%

Sweden 1.4%

Czech Republic 1.9%

France 2.2%

Netherlands 2.0%

Slovenia 2.4%

Germany 2.3%

Denmark 2.5%

Italy 2.8%

Malta 2.8%

Cyprus 3.2%

Spain 3.3%

Austria 3.3%

Finland 3.5%

Belgium 3.5%

Slovakia 3.8%

Lithuania 3.7%

Portugal 3.9%

Poland 4.0%

United Kingdom 4.0%

Latvia 4.1%

Luxembourg 4.0%

Greece 4.3%

Hungary 4.6%

Estonia 5.1%

Bulgaria 4.6%

Fig. 11. Wages in the corporate sector

Romania 8.0%

– it was down by 12.1% compared to a year earlier against a drop of 17.8% in 2010M22011M2. The number of newly registered unemployed who have lost their jobs for reasons on the employer’s side is steadily decreasing.

The total number of unemployed who were in employment before registering with employment agencies is growing, however at a slower pace than in the previous year. The number of people re-registered with labour agencies is decreasing. The number of unemployed who were not in employment before registering, including graduates, grew faster than in previous months.

Seasonally adjusted data indicate that the number of unemployed who were taken off the official register decreased after two years of hovering near the same levels. However, for the time being it was a one-off drop and needs to be confirmed in the next months. The number of unemployed taken every month off the register because they have found a job have remained stable for a year.

Compared to a year earlier, the share of unemployed not eligible for unemployment benefits and unemployed graduates increased respectively by 3.5 pct. points to 83.6% and by 0.6 pct. points to 6.7%.

Among the unemployed being in a special situation on the labour market, the share of long-term unemployed rose year on year by 6.2 pct. points to 46.8%. The long-term unemployed are the largest group among the unemployed registered with employment agencies. The share of unemployed without job qualifications also increased (up by 2.3 pct. points to 29.6%) as did the percentage of unemployed aged over 50 (up by 0.7 pct. points to 21.3%), the percentage of unemployed parents with at least one child aged under 18 (up by 0.7 pct. points to 8.1%), the percentage of unemployed university graduates aged under 27 (up by 0.3 pct. points to 1.8%) and the percentage of unemployed aged 25 or under (up by 0.2 pct. points to 22.0%). The percentage of disabled unemployed people was at a level similar to last year’s (5.0%). The number of unemployed in all the categories mentioned above rose in year-on-year terms, with the highest increase recorded in the number of university graduates aged under 27 (up by 21.8%) and long-term unemployed (up by 18.2%).

Source: Informacja o sytuacji społecznogospodarczej kraju. I kwartał 2011; www. stat.gov.pl.

Source: Eurostat

Fig. 12. Harmonised Index of Consumer Prices in selected countries, 2011M3, Mt/Mt-12

The BIEC Future Unemployment Rate Index (WRP), which provides data on expected changes in unemployment, has shown a slight upward trend since 2010M11. But in 2011M4 the index grew slightly less than in 2011M3. (Source: www.biec.org). This shows that there is no strong factor that would push unemployment down. It may be expected that unemployment will remain unchanged or even go up a little.

Despite a rise in the number of on-line job offers, growth in employment slowed. Real wages dropped slightly.

For the first time in many months growth in average employment in the corporate sector slightly slowed. In 2011M3 the number of people employed in this sector was 5,509,000 and was higher by 4.1% than a year earlier compared to a rise of 4.2% in 2011M2. After seasonal adjustments, em-

ployment in the sector was higher by 0.1% than in 2011M2, which represented a rise in the number of employed by around 3,500.

The increase was four times smaller than in the previous month.

Employment increased in most sectors, including administration and supporting activities (up by 10.7%), accommodation and restaurant services (9.5%), real estate services (9.1%), construction (8.4%) and professional, research and technical activities (8.0%). Compared to the same period last year, in 2011Q1 average employment increased in most sectors with a major share in total employment.

The highest increase was noted in businesses dealing with the construction of civil engineering facilities (up by 13.1%), specialist construction works (12.0%), wholesale and retail trade in motor vehicles and their repair (8.0%), furniture production (7.1%) and the production of metal products (6.2%). As in successive months of 2010, average employ6/2011 :: Polish Market :: VII

Economic Monitor

Table 1. Selected labour market data 2010M3

2010M6

2010M9

2010M12

2011M1

2011M2

2011M3

Average employment in the corporate sector, in thousands

5 294

5 336

5 364

5 379

5 501

5 513

5 509

Change in average employment, year on year, %

-0,6%

1,1%

1,9%

2,4%

3,8%

4,2%

4,1%

3 493,42

3 403,65

3 403,68

3 847,91

3 391,59

3 422,14

3 633,54

2,1%

1,3%

1,3%

2,3%

1,5%

0,7%

-0,1%

13,0%

11,7%

11,5%

12,3%

13,0%

13,2%

13,1%

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, %

25,2%

15,1%

12,6%

8,2%

-22,8%

-38,2%

-29,4%

Employment rate according to LFS (BAEL) *

49,4%

50,4%

51,1%

50,6%

-

-

-

Unemployment rate according to LFS (BAEL) *

10,6%

9,5%

9,1%

9,3%

-

-

-

Economic activity rate according to LFS (BAEL)

55,2%

55,7%

56,2%

55,8%

-

-

-

* Quarterly data

ment was lower in the production of clothes (down by 2.3%) and wholesale trade (1.3%).

Source: Informacja o sytuacji społecznogospodarczej kraju. I kwartał 2011; www. stat.gov.pl).

At the end of March the number of group lay-offs planned was lower than in February and in March last year, with 355 workplaces declaring they planned to make 35,900 workers redundant, including 25,100 persons employed in the public sector. At the end of February 325 workplaces planned to lay off 38,400 workers, including 28,400 in the public sector while at the end of March last year the respective figures were as follows: 286 workplaces, 41,000 workers, including 24,800 in the public sector. In the first quarter of this year 180,500 job offers were submitted to employment agencies, that is 30.6% less than a year earlier. Offers from the public sector accounted for 23.6% of all offers compared to 37.7% a year earlier.

Their number dropped significantly year on year (down by 56.6%). In the private sector, the number of offers was lower by 14.9%. At the end of March job offers not used for longer than one month accounted for 19.8% of all offers against 22.4% a month earlier and 16.0% a year earlier. 10.3% of all offers were intended for trainees, 5.9% for the disabled and 0.3% for graduates.

Source: Informacja o sytuacji społecznogospodarczej kraju. I kwartał 2011; www. stat.gov.pl.

The upward trend in on-line job offers, witnessed for quite some time, persisted in 2011M4. The year-on-year growth in on-line offers has stayed at an almost unchanged level VIII :: Polish Market :: 6/2011

Source: GUS and authors’ calculations

for a year now, which indicates that job prospects are consistently improving. In 2011M4 many offers came from the building sector, where activity has been accelerating after a seasonal and cyclical slowdown. More and more new investment projects are started, providing a boost to the sector, which was in a poor condition since the beginning of the crisis. Demand for sellers and economists also traditionally increases at this time of the year.

There are now slightly more offers for them than a year earlier. Meanwhile, demand for trainees and public administration workers is on the decrease. Demand for workers with engineering degrees, especially IT specialists, has been growing the fastest since the beginning of the year. There are no major differences in the number of job offers for people with degrees and those without degrees.

In 2011M3 average nominal wage in the corporate sector amounted to PLN3,633.54, up by 4.0% year on year. It was a third month in succession with a slowdown in nominal wage growth. After seasonal adjustments, nominal wages increased by 2% compared to the previous month. Real wages decreased by 0.1% year on year after increases had been recorded for 12 months.

Prices In 2011M2-2011M3 Poland was one of the EU countries where inflationary tendencies intensified the most. Producer prices, especially prices of energy-related goods and intermediate goods, grew at a fast pace, influencing consumer prices. After a few months of sharp increases, inflationary expectations of private individuals diminished.

In 2011M3 the harmonised index of consumer prices (HICP) for Poland increased significantly – it stood at 4%, compared to 3.3% in 2011M2, and was higher than the EU average, which went up from 2.4% to 2.7%. The European Commission projects that in 2011M4 the EU’s HICP will rise to 2.8%. Growth in consumer prices was much faster than the EU average in Romania and much slower in Ireland, Sweden and the Czech Republic. In 2011M2-2011M3, HICP decreased only in Estonia, the United Kingdom, and only slightly in Denmark and Spain. Inflationary tendencies intensified the most in Poland, Lithuania and Italy.

According to the methodology applied by GUS, in 2011M3 CPI inflation was 4.3% compared to 3.6% in the previous month. Transport prices and prices of food and non-alcoholic beverages grew the fastest. Prices of clothing, footwear and communications decreased.

The inflationary expectations of private individuals diminished in 2011M4. The inflation rate expected in the next 12 months stood at 4% versus 4.6% a month earlier. The survey conducted in 2011M3 showed that the percentage of people expecting that price growth would accelerate rose significantly – from 24.9% to 36.5%. The percentage of respondents who expected that prices would be growing at the same pace was the highest - 45% against 51% compared to the previous survey. The percentage of those who expected that price growth would decelerate was 10.1% against 14.4% in 2011M2. The share of those who expected that prices would stay at an unchanged level or would be lower was 1.5%, two times less that in the previous month.

5.6%

4.0%

3.6%

3.2%

3.1%

2.7%

1.8%

0.6%

food and non-alcoholic beverages

cost of housing (rent and utilities)

restaurants and hotels

health

other goods and services

alcoholic beverages and tobacco products

education

home furnishings

recreation and culture

clothing and footwear

6.8%

communications

7.3% transport

Economic Monitor

-0.8%

-1.8%

Source: Central Statistical Office (GUS) Fig. 13. Change in prices of selected consumer goods and services in 2011M3, Mt/Mt-12

The BIEC Future Inflation Index, which provides data on consumer goods and service prices several months in advance, rose again in 2011M4. Inflationary pressure in the economy was still heightened, although the impact of factors associated with producers’ expectations for further price increases eased. A rise in the inflationary expectations of consumers usually follows inflation growth and is a consequence of price hikes felt by households. However, inflation may increase as a result of the higher inflationary expectations of consumers only if wages and social benefits go up. For the time being, this factor poses no major threat but an

election campaign period, which is forthcoming, is a time when wage demands intensify and are met.

Source: www.biec.org.

Producer prices, especially in industry, are growing at an increasingly fast pace. In the construction and transport sector, price growth is slower than in industry but its pace is still faster than in previous months.

In 2011M2, the pace of growth in producer prices accelerated quite sharply compared to 2011M1. Producer prices increased by 7.5% year on year compared to 6.2% a month ear-

Central bank and monetary policy

10%

At a meeting on April 4-5, 2011 the Monetary Policy Council decided to raise central bank interest rates by 0.25 pct. points, with the reference rate going up to 4.00%, the Lombard rate 5.50%, the deposit rate 2.50%, and the rediscount rate 4.25%.

8% 6% 4% 2% 0% -2% -4%

lier. Prices accelerated in most segments of the industrial sector. As in previous months since the beginning of 2010, the fastest growth was in mining and quarrying (up by 24% year on year). In manufacturing, the largest segment of the industrial sector in terms of employment and output, prices increased by 7% year on year against an increase of 5.3% in the previous month. The increase in prices in the water supply, sewage and waste management and land reclamation sector amounted to 6.9%. Prices in the electricity, gas, heat and hot water sector grew at a slower pace – 3.7% year on year. Growth in prices of energy-related goods was the fastest – they were higher by 16% that a year earlier. As production was growing at a fast pace, prices of intermediate goods were also going up increasingly fast (up by 10.6% year on year). Prices of investment goods increased after a fall noted almost throughout 2010.

In 2011M2 average construction and assembly prices rose by 0.4% in year-on-year terms versus an increase of 0.3% a month earlier. This was due to a rise in prices in the sector of civil engineering facilities and specialist construction work – they went up by 0.7% - and a slight increase in the building construction sector (up by 0.1%). Transport and warehousing prices grew by 2.2% year on year. The increase was slightly faster than in the three preceding months but still slower than in 2010Q1-3. In the telecommunications sector, prices decreased year on year.

2010 M1

2010 M2

inflation

2010 M3

2010 M4

2010 M5

2010 M6

industrial prices

2010 M7

2010 M8

2010 M9

2010 M10

construction prices

2010 M11

2010 M12

2011 M1

2011 M2

2011 M3

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

As statistics indicate that growth trends in the global economy are strengthening, the volume of Polish foreign trade is likely to improve and consequently boost the country’s economy. However, the main factor determining the RPP’s [Monetary Policy Council] decision is inflation, which still remains at a high level. The increases in the NBP [central bank] interest rates are supposed to prevent a rise in inflation above the inflation target in the

Fig. 14. Producer and consumer prices in Poland

6/2011 :: Polish Market :: IX

Economic Monitor

actual figure for 2011M1-3 expenditure

actual figure for 2011M1-2 revenue

273,144.4

313,344.4

41,970.7

56,391.3

62,715.5

80,036.9

account compared to 2011M1 and compared to a year earlier. The capital account balance and financial account balance both went up in 2010M2-2011M2.

2011 budget law target Source: Ministry of Finance

Fig. 15. Government revenue and expenditure, in PLN millions

medium term. By doing so, the RPP continues “a round of monetary policy tightening.”

Source: www.nbp.pl.

Favourable data on future GDP growth in Poland were among the factors behind the decision to raise interest rates. The data indicate that the performance of the Polish economy is consistently improving. The Council’s documents point to the stabilisation in the situation of households and measures taken by the Council to prevent a rapid increase in loans denominated in foreign currencies (…).

Source: www.nbp.pl.

The Polish economy will still feel the impact of the global downswing, especially through the continued high fiscal imbalance in many developed countries and the consequences of expansionary monetary policies pursued by the central banks of developed countries. Investment activity still remaining at a low level, coupled with a high level of unemployment, is a factor with a major impact on the present situation of the Polish economy.

In 2011M3 the M3 money supply was PLN800.2 billion, which represented a rise by 3.3% compared to 2011M2 and by 10.9% compared to a year earlier.

Source: www.nbp.pl.

WIG-BANKI at 7,249.52. Compared to 2011M3, the three indices rose respectively by 3.41%, 2.62% and 2.22%. Among the companies listed on the main market, 197 recorded a positive rate of return.

Source: www.gpw.pl.

In 2011M4 the WSE celebrated its 20th anniversary. At the same time, the WSE started another edition of the RESPECT Index project.

Its objective is to examine companies in terms of their disclosure obligations, the quality of investor relations and corporate governance.

In the first stage, companies with the highest liquidity are selected. The companies are included in the WIG20, mWIG40 and sWIG80 indices. In the next stage, 140 companies are evaluated by the WSE Issuers Department and the Polish Association of Listed Companies in terms of their quality of reporting, investor relations and corporate governance. The WSE completed the first two stages of the RESPECT research by the end of 2011M4. As a result, a group of companies was selected which may fill in a questionnaire and enter the final evaluation process to be conducted by Deloitte, the project’s partner. The WSE will start the final RESPECT audits in 2011M5. The composition of the RESPECT Index will be revised in 2011M7, which means that the index in its new form will be calculated since August 1, 2011.

Source: www.gpw.pl.

Trends on the Warsaw Stock Exchange 2011M4 saw 15 new companies debuting on the NewConnect market of the Warsaw Stock Exchange (WSE). At the end of the month, the WIG20 blue-chip index stood at 2,913.13, the WIG broad-market index at 50,008.98 and X :: Polish Market :: 6/2011

Balance of payments Preliminary data from the National Bank of Poland (NBP) indicate that in 2011M2 there was an increase on the balance of payments

In 2011M1 the current account balance stood at EUR-1,334 million, compared to EUR-685 million in 2011M2. The balance on goods was EUR-163 million, which represented a drop by 6% compared to a year earlier. In 2010M2 the balance on goods stood at EUR154 million.

In 2011M2 the balance on services amounted to EUR237 million, up by 46% compared to 2010M2. The balance on services improved thanks to a 22% increase year on year in revenue and a smaller increase in expenditure (19%). In 2011M2 the balance on income fell to EUR-1,314 million compared to a year earlier – reflecting an 11% increase in revenue year on year and a 69% increase in expenditure while in 2010M2 it was higher by EUR654 million and stood at EUR-660 million.

The capital account balance grew by 153% year on year. In 2010M2 it amounted to EUR552 million and in 2011M2 EUR1,397 million, reflecting a 149% increase in revenue year on year and a 14% drop in expenditure. The increase looks especially impressive when compared to the capital account balance of EUR159 million in 2011M1.

The financial account balance improved and in 2011M2 stood at EUR3,863 million, which represented an increase by 164% compared to a year earlier. In 2010M2 the financial account balance was EUR1,466 million. The balance on Polish direct investment abroad was negative at EUR-605 million compared to EUR-154 million in 2010M2 and EUR-917 million in 2011M1. Foreign direct investment in Poland amounted in 2011M2 to EUR938 million, and was down by 21% compared to 2010M2. The deficit on the account of portfolio investment assets amounted to EUR181 million compared to a surplus of EUR83 million in 2010M2. On the account of portfolio investment liabilities, there was a drop from EUR1,602 million in 2010M2 to EUR389 million in 2011M2.

The account of the remaining investment assets stood at EUR-24 million compared to EUR-1,401 million in 2010M2 and EUR840 million in 2011M1. On the side of liabilities, the account stood at EUR3,957 million compared to EUR247 million in 2010M2 and EUR 1,457 million in 2011M1. There was also a sharp rise on the account of other financial instru-

Economic Monitor

EU budget grew especially fast in that period while spending on subsidies for the Social Insurance Fund and domestic debt service fell the most.

Table 2. Selected components of the balance of payments, in PLN millions 2010M2

2011M1

2011M2

512

-1 334

-685

Balance on goods

-154

-67

-163

Balance on services

162

213

237

Balance on income

-660

-1 318

-1 314

1 164

-162

555

552

159

1 397

1 466

3 906

3 863

-154

-917

-605

1 192

1 425

938

83

19

-181

Portfolio investment - liabilities

1 602

1 206

-389

Other investment - assets

-1 401

840

-24

Other investment – liabilities

247

1 457

3 957

Derivative financial instruments

-103

-124

167

-1 001

-1 246

-4 678

Current account

Balance on current transfers Capital account Financial account Polish direct investment abroad Foreign direct investment in Poland Portfolio investment - assets

Official reserve assets

Public debt is still increasing but the pace of this growth is slowing. At the end of 2010 public debt stood at PLN748.5 billion against PLN746.2 billion at the end of 2010M9. At the end of 2010M12 public debt was by 11.7% higher than a year earlier, down from 13.1% at the end of 2010M9.

Source: National Bank of Poland (NBP)

ments – to EUR167 million in 2011M2 from EUR-103 million in 2010M2.

The value of the balance of payments rose by 367.3% compared to a year earlier – from EUR1,001 million in 2010M2 to EUR4,678 in 2011M2.

National budget At the end of 2011M3 the national budget deficit amounted to PLN13.3 billion, widening by PLN2.9 billion compared to the end of February. The deficit reached 43.1% of the amount planned for 2011 as a whole.

In 2011M1-3 national budget revenue amounted to PLN61.7 billion and expenditure amounted to PLN80 billion. In 2011M3 budget revenue rose by PLN20.7 billion and expenditure by PLN23.6 billion. Budget revenue reached 23% of the total amount planned for 2011 under the budget law (up from 15.4% a month earlier) while budget expenditure reached 25.5% of the total amount (up from 18%). Compared to a year earlier, in 2011M1-3 budget revenue was higher by 0.1 pct. points than planned and budget expenditure lower by 0.9 pct. points than planned.

In 2011M1-3 the year-on-year growth in revenue accelerated while growth in expenditure slowed compared to the figures for

2011M1-2/2010M1-2. The budget deficit rose to PLN17.3 billion from PLN14.4 billion at the end of February, or to 43.1% of the amount planned for the whole year from 35.9%. Compared to a year earlier, the implementation of the budget deficit plan was by 0.4 pct. points less advanced.

Among various types of receipts for the national budget, receipts from taxes increased the most in 2011M2-2011M3, including receipts from corporate income tax (CIT) and excise tax. Payments to local government units and subsidies for the Social Insurance Fund were the largest expenditure items.

Among the main budget income items in 2011M1-3, receipts from corporate income tax (CIT) and customs duties rose sharply year on year while receipts from excise tax and non-tax income decreased. As regards expenditure, spending on foreign debt service and Poland’s own contribution to the

Central government debt, called State Treasury debt, which is the main part of public debt amounted at the end of last year to PLN692.7 billion and was higher by 11.3% than a year earlier compared to a year-onyear increase of 11.7% in 20010M9. Local government debt amounted to PLN50.6 billion and was higher by 39.1% than at the end of 2009. The debt of the social insurance sector decreased to PLN1.1 billion, or by as much as 83.5% in year-on-year terms. At the end of 2010 domestic debt guaranteed by the Polish government amounted to PLN25.1 billion and was higher by 37.3% than a year earlier while foreign debt guaranteed by the Polish government stood at PLN48.1 billion, up by 57.2% year on year.

At the end of 2011M2 domestic debt amounted to PLN526.8 billion and was higher by 9.8% than a year earlier versus a rise of 9.6% at the end of 2010M12. Long-term domestic debt increased by 29.5% compared to 2010M2, medium-term debt diminished by 1.7% and short-term debt decreased by 32.9%. In a breakdown by creditors, debt to foreign investors grew the fastest (49.8% year on year). At the end of 2011M2 it amounted to PLN142.4 billion. Debt to domestic investors other than banks grew at a slower pace (5.4% year on year), though nominally it is higher (PLN 248.3 at the end of 2011M2). Debt owed to domestic commercial banks totalled

Table 3. Government revenue and expenditure in 2011 according to preliminary data In PLN billions

% of annual target

2011 budget law

2011M1-2

2011M1-3

2011M1-2

2011M1-3

Revenue

273.1

42.0

62.7

15.4

23.0

Expenditure

313.3

56.4

80.0

18.0

25.5

Deficit (–) / Surplus (+)

-40.2

-14.4

-17.3

35.9

43.1

Source: Ministry of Finance, April 15, 2011

6/2011 :: Polish Market :: XI

Economic Monitor

PLN136 billion at the end of 2011M2 and was lower by 8.8% than a year earlier.

At the end of 2011M2 foreign debt amounted to PLN199.4 billion and was higher by 12.1% than a year earlier. Its growth slowed compared to December 2010. Both medium-term and long-term debt increased year on year but in the last two months medium-term debt fell below its end-2010 value. The main part of foreign debt – that is debt in Treasury bonds – rose in 2011M2 by 8.2% year on year, against an increase of 16% in 2010M12, and amounted to PLN156.1 billion. Debt in loans amounted to PLN43.4 billion and was higher than a year earlier by 29.1%. The increase was faster than in the previous months. A rise in debt owed by Poland to the European Investment Bank – by 31% year on year - contributed the most to this increase.

XII :: Polish Market :: 6/2011

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.

2011M3 – March 2011 2011Q1 – first quarter of 2011 2010H2 – second half of 2010 2011M1-3 – cumulative data for the JanuaryMarch 2011 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 in conjunction with Tomasz Soliński, PhD Institute of Economics University of Information Technology and Management in Rzeszów www.ig.wsiz.pl

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