WBJ Observer April 2016

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APRIL 2016

Number 04 (26)

OF REAL ESTATE N EWS

REAL EST A NEWS TE

PLN 24.50 (VAT 8% included) ISSN 2353-3714 INDEX-RUCH-332-127

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RUNNING INTO A WALL

WHY POLISH INSTITUTIONS ARE STUCK IN THE 20TH CENTURY > 24

MORAWIECKI PLAN

DUCKS IN A ROW TAX AUDITS WILL BECOME EVEN MORE THOROUGH WITH UNIFORM AUDIT FILES > 36

WILL MORAWIECKI’S PLAN REINVIGORATE THE POLISH ECONOMY?

Money, money, money APRIL 2016

ALSO IN THIS ISSUE:

• C o m m e n t a r y • R a n k i n g • I T • N ew s • L i fe st y le • C E E Q A

lll IN THIS ISSUE Try these:

lll NEWS 4-11 In Review Latest news 12 Dateline 13 Economy

18-23

lll COMMENTARY

MORAWIECKI PLAN

14 Law Public procurement law 16 Real Estate Luxury apartments

lll FEATURE 24-28 Bureaucracy The digitization dilemma 30-32 Metallurgy What lies ahead 60-61 Ranking Open pension funds

41-59

LOKALE IMMOBILIA

35-40

62-65 Events Made in Poland conference 66 Events Smart City Forum

lll LIFESTYLE 68-69 Gadgets 71-72 Lifestyle Warsaw museums

IT INSIGHTS

APRIL 2016 • WBJ OBSERVER

WBJ OBSERVER • APRIL 2016

Visit our site - wbj.pl For latest news, features and commentaries.

Morten Lindholm Publisher mlindholm@valkea.com Jacek Ciesnowski Editor-in-Chief, WBJ Observer jciesnowski@wbj.pl Beata Socha Managing Editor, Lokale Immobilia bsocha@wbj.pl Michael Evans Copy Editor Journalists Daria Mamont dmamont@wbj.pl Wojciech Rylukowski wrylukowski@wbj.pl Tomasz Chwinda Art Director tchwinda@valkea.com Aleksandra Szydło Junior Graphic Designer aszydlo@valkea.com Contributors Ewa Boniecka Alex Hayes Vedika Luthra Sergiusz Prokurat Kamila Wajszczuk Adam Zdrodowski

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APRIL 2016 • WBJ OBSERVER

COVER IMAGE: Shutterstock

COMMENTARY / ON INFORMATION TECHNOLOGY

DEAR READERS

}

JACEK CIESNOWSKI, EDITOR-IN-CHIEF, WARSAW BUSINESS JOURNAL GROUP

This month’s cover story concerns Finance Minister Mateusz Morawiecki’s trillion złoty plan. His initiative assumes that investment expenditure in Poland will reach PLN 1 trillion by 2020. Is this just propaganda, or does it seem like a legit scenario? Which sectors would be the pillars of such investments and where will the money come from? In other features we look at the ongoing problem with bureaucracy and institutions’ aversion to digital technologies. Why public organizations print every e-mail they get, and why you have to stand in many different queues to file one form? These and other absurdities, and what can be done to eliminate them. We also take an in-depth look at the metallurgy sector in Poland. With the country being a major producer of many metals, it has to adapt to global competition and falling commodities prices. With MIPIM behind us, we have scale down our Lokale Immobilia section a little bit. However, for those with their finger on the pulse of real estate, we have a special 16-page CEEQA report, which covers the office market specifically. Still, we’re sure

FEBRUARY 2014 • WBJ OBSERVER

there is plenty to read on the sector in this issue, as always. In our IT insights supplement we focus on how the new tax law will affect the ERP sector. With companies having to provide their financial information in a uniform file, how will this affect that realm? Be sure to check out the write-up on our annual Made in Poland conference and see what you missed. WBJ Group not only publishes this magazine and annuals, but also hosts a number of events each year. The next one will be the Book of Lists gala sometime in June, so remember to send your RSVPs when we announce the details on our social media.

lll INREVIEW NEWS

News highlights of the past month

US to step up presence in Eastern Europe The US will send three armored brigade combat teams to Eastern Europe from next year in response to “an aggressive Russia,” the US military said on March 30. “This army implementation plan continues to demonstrate our strong and balanced approach to reassuring our NATO Allies and partners in the wake of an aggressive Russia in Eastern Europe and elsewhere,” General Philip Breedlove, the top US

commander in Europe, said in a statement. It means roughly 4,500 US troops, along with 250 tanks, Bradley Fighting Vehicles, Paladin self-propelled howitzers and over 1,700 additional military vehicles will be on the ground from 2017. “There will be a division's worth of staff ready to fight if something happens,” said Deputy Secretary of Defense, Robert Work, according to The Wall Street Journal.

Poland to adopt anti-terrorism law n March 24, Mariusz Błaszczak, the Polish Minister of the Interior and Administration, officially announced the adoption of a working version of the anti-terror act. “The bill will be presented to the government at the beginning of April, and I hope, after a parliamentary debate, the law will be adopted in May 2016,” the minister confirmed. The bill gives many rights to the Internal Security Agency (ABW), which is the main player in anti-terrorism policy in Poland. Also, it will regulate cooperation between departments, clarifying the principle of the use of troops and weapons. The act permits the prohibition of assembly, when incorporated in the two highest levels of terrorist threat in the country. The project will also allow the arrest of suspected terrorists for even 14 days (with the permission of the court). “Such a law is necessary, since services must operate smoothly at the time of terrorist attacks,” added ex-Minister of Justice, Marek Biernacki.

APRIL 2016 • WBJ OBSERVER

Image: Shutterstock

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Wynajem powierzchni biurowej: 22 372-00-00 najem@hbreavis.com

NEWS

POLE AMONG VICTIMS OF BRUSSELS TERRORIST ACTS The Polish Foreign Ministry has confirmed that a Polish national was among the victims of the Brussels terrorist attack that took place in March. “In connection with the bombings in Brussels, Belgian authorities have confirmed that, following all the autopsies of the victims, a Polish national was among the victims,” the Polish Foreign Ministry informed. According to Polish radio broadcaster RMF FM, the victim was a 61-year-old woman. The information was confirmed by Brussels-based Polish NGO, SOS Bruksela. The ministry also said that three other Poles were injured in the attacks..

OVER 60% OF POLES DIDN'T READ A BOOK LAST YEAR The National Library (Biblioteka Narodowa) has announced the results of its latest readership survey, which showed that in 2015, the share of Poles who didn’t read a single book increased to 63.1 percent from 58.3 percent in 2014. As many as 27.2 percent of the respondents admitted they read between one and six books last year and only 8.4 percent replied that they read more than seven books. More than half of Poles (57 percent) said that they read books at school or university, but stopped after graduating, while 18 percent confessed they had never read any books. Only 45.6 percent of the respondents said that they had read a text longer than three pages in the month preceding the survey. The poll was conducted on a sample of 3,000 Poles aged 15 and above.

Alior Bank acquires Bank BPH

lior Bank, a unit of state-owned insurer PZU, has signed a deal to buy a A 87.23 percent stake in Bank BPH for PLN 1.22 billion. The transaction excludes the franc-denominated mortgage loans portfolio and should be

completed by the end of 2016, the banks announced. Alior will finance the takeover with a rights share issue for existing shareholders. “Signing the contract for the purchase of the core business of Bank BPH confirms the previously announced intention to actively participate in the consolidation of the banking sector. The merger of the two banks will achieve significant synergies and further increase efficiency,” said the president of Alior Bank, Wojciech Sobieraj. After the transaction is finalized, Alior Bank will be the 9th biggest Polish bank in terms of assets.

VENICE COMMISSION TO ASSESS “SURVEILLANCE” ACT IN JUNE

APRIL 2016 • WBJ OBSERVER

EIB will support Morawiecki plan

he European Investment Bank said that the institution will engage T in Poland’s development plan presented by Development Minister Mateusz Morawiecki once more details are revealed. “This year we will finance projects for roughly the same amount as last year (€5.5 billion). Much will depend on the new development plan. I’ve become familiar with Morawiecki’s presentation, but details are of key importance,” deputy head of EIB, László Baranyay told Polish daily Puls Biznesu. “Poland needs more investment, I agree with that. The development program is very interesting, but also very general. We are waiting for information about which areas the government wants to cooperate with the EIB,” Baranyay said.

Images: Shutterstock, Alior Bank

Spokesman for the Council of Europe, Panos Kakaviatos said in mid-March that the Venice Commission will hold a seating on June 10 and 11 to assess the changes Poland has introduced to step up the powers of police and special services. The spokesman also said that the Venice Commission will visit Poland, however a date has yet to be decided. The amendments to the new law give greater freedom to government workers and public services in their acquisition of data. This has attracted some controversy, with government ombudsman Adam Bodnar filing a complaint with the Constitutional Court about certain subsections of the bill.

NEWS

Polish start-up among the most valuable in Europe

PM Szydło supports full ban on abortion P

rime Minister Beata Szydło said in an interview with public broadcaster Polish Radio that she supports the citizen’s initiative to ban abortion, underlining that it’s her private opinion and not the stance of her party. “I think every (MP) will vote in line with his own conscience. At this stage I cannot talk about the bill, because this bill does not yet exist (...). As for my opinion - yes, I support this initiative,” she said. The PM added that she is well aware of “the difficulties of the debate,” saying that “it would be bad if a such a sensitive and important matter should become part of the political struggle.” Last week, the citizens’ initiative “Stop Abortion” informed the Marshall of the Sejm that it has started collecting signatures to completely ban abortion in Poland. At present, Poland’s abortion law permits the procedure only if the pregnancy is a result of rape or incest, if the mother’s life is endangered, or if the fetus is severely malformed.

A Polish early stage start-up from Poznań, Desk.Works, has become one of the most valuable in Europe. Its value has reached PLN 35 million in three months. The project (a mobile application for iOS and Android) appeared in December 2015. Currently, Desk.Works enables the reservation of desks (workspaces) around the world (Berlin, Sao Paulo, Singapore, New York etc.). Subscription amounts to $20 per day or $390 per month. “We have gained more than 3,500 customers and 250 locations in 35 countries all around the world,” emphasized Waldemar Ariel Gala, CEO at Desk.Works.

WBJ OBSERVER • APRIL 2016

NEWS

entral bank NBP said on March 15 that the 500+ child benefit program will boost GDP growth starting from Q2 this year. The NBP expects that in 2016 and 2017, growth will stand at 3.8 percent and in 2018 it will slow down to 3.4 percent. “Since the second quarter of 2016 until mid-2017, GDP growth will continue at a higher level as a result of growing household consumption related to the introduction of the

500+ program. In a further perspective, after the impact of this factor on private consumption expires, economic growth will fall to 3.4 percent y/y, below the long-term average,” the NBP said. Recently, American bank, Morgan Stanley created a GDP growth forecast of 3.6 percent per year for Poland due to increased domestic demand fueled by the 500+ child benefit program. PGNIG TO COMPLETE GAS LINK TO NORWAY BY 2022 PGNiG’s deputy CEO for corporate affairs, Janusz Kowalski said on March 21 that the company will complete construction of a link between Poland and the Norwegian gas transit system through Denmark by 2022. “Construction of the corridor for gas transport [from Norway] is possible in the neighborhood of 2020-2021, it should be realized by end-2022,” he said. Kowalski also said that the company is interested in further acquisitions of hydrocarbon upstream assets in Norway. “We are not ruling out further acquisitions in Norway: this is consistent with the project of building the Norwegian corridor,” Kowalski said. “We want to develop [PGNiG Upstream’s] activity even more.”

APRIL 2016 • WBJ OBSERVER

Images: Shutterstock

500+ program will boost GDP growth - NBP

NEWS

WBJ OBSERVER • APRIL 2016

NEWS

Second Polish restaurant awarded Michelin Star “S

enses” has become the second Polish restaurant to be granted a Michelin star. Its chef, Andrea Camastra is French-Italian and has been living in Poland for five years. He was awarded the titles of “Chef of The Year North England” and “Chef of the Future 2015” by the Gault&Millau Guide.

“The result of his life and professional experience is cosmopolitan, energetic cuisine filled with unhindered creativity. In his cooking style he crosses borders, connects, divides and conquers,” the Senses website describes the restaurant. From 2013 till today, Atelier Amaro was the only restaurant with a Michelin star in

VENICE COMMISSION CRITICIZES CHANGES TO TOP CONSTITUTIONAL COURT

KNF: presidential loan conversion law may lead to financial crisis

APRIL 2016 • WBJ OBSERVER

The Polish Financial Supervision Authority (KNF) has estimated that the presidential FX mortgage conversion law may lead to a financial crisis. The KNF carried out its analysis in two variants, each of which has four scenarios. According to a survey among banks, the burden for the Polish banking sector amounts to between PLN 44.6 billion and PLN 67.2 billion. The latter figure was deemed to be the most probable by banks, the KNF said. Furthermore, financial market regulator KNF indicated that losses would be recorded in 15 banks, including three domestic banks, with aggregate losses of PLN 58.4 billion. On January 15, Poland’s president, Andrzej Duda presented a draft legislation to convert existing mortgages denominated in Swiss francs into PLN to help borrowers saddled with bloating debt. The project envisages that the borrowers would have the opportunity to convert their FX-denominated loans into PLN-denominated credits at “a fair rate,” defined individually by an algorithm set in the legislation, and used for the remaining lifetime of the loan. Previously, central bank NBP had calculated the cost of the Presidential bill to be at least PLN 44 billion. In a separate report, the NBP declared that the FX mortgage bill would have a negative impact on the stability of the public finance sector.

Images: Shutterstock, Senses

An official opinion concerning changes to Poland’s top constitutional court, issued on March 11 by the Council of Europe’s Venice Commission, read that the changes have crippled the tribunal’s effectiveness and undermine democracy, human rights and the rule of law. The body said that amendments endanger “not only the rule of law, but also the functioning of the democratic system.” These changes include the requirement to adjudicate cases in the order they were filed, as well as the paragraph which says that a full bench comprises 13 of all 15 judges and that 2/3 of votes are needed to pass a verdict. On March 9, Poland’s constitutional court also adjudicated that PiS proposed amendments breach the constitution. The Venice Commission urged the government to publish the verdict referring to claims made by Prime Minister Beata Szydło that Poland will prevent it from coming into force.

the whole of Poland. This year’s edition includes 52 Polish restaurants - 28 from Warsaw and 24 from Kraków. The Michelin guide is the oldest European hotel and restaurant reference guide, which awards Michelin stars for excellence to a select few establishments.

NEWS

Former Deputy PM Zyta Gilowska dies aged 67 Polish economist, former Finance Minister and deputy Prime Minister Zyta Gilowska has passed away aged 67. Gilowska was born in Nowe Miasto Lubawskie in 1949. In 1972 she graduated with a degree in economics, in 1981 she received a PhD and in 2001 she became full professor at the Catholic University of Lublin. In January 2006, she was appointed deputy prime minister and finance minister in the Law and Justice government under Kazimierz Marcinkiewicz. Half a year later she was dismissed and reappointed in September by the new government led by Jarosław Kaczyński. In 2013, she resigned from being a member of the Monetary Policy Council due to health issues.

JAKUBIAK: FX MORTGAGE LOAN CONVERSION MAY INDUCE FINANCIAL CRISIS Andrzej Jakubiak, head of the financial watchdog KNF, has warned that the presidential project of the FX mortgage loan conversion may lead to a financial crisis. Jakubiak said that in the most likely scenario, six banks would have capital adequacy ratio below the legally required eight percent, and five banks would have to be closed as their own funds would fall below 50 percent as required by law in the case of mortgage loans. The value of deposits guaranteed by the Bank Guarantee Fund in these banks amounts to PLN 137.8 billion and the fund has only PLN 10 billion at its disposal. In the case of a bank going under, a chain reaction could be triggered. “We show that there is a real risk of shifting burden of some borrowers onto all others. We say that this could undermine confidence in the system and cause a financial crisis. I cannot imagine that if this is the case, the state would not have to intervene. But the question is at what cost,” Jakubiak told the Polish Press Agency (PAP). KNF said in a report, issued in mid-March, that the burden for the Polish banking sector of conversing the FX mortgage loans would likely amount to PLN 67.2 billion. Earlier, the central bank NBP calculated the cost of the Presidential bill to be at least PLN 44 billion. In a separate report the NBP declared that the FX mortgage bill would have a negative impact on the stability of the public finance sector.

Three Poles appear in Panama Papers leak N

ames of former President of Warsaw Paweł Piskorski, media mogul Mariusz Walter and entrepreneur Marek Profus appeared in a huge leak of confidential documents from Panamanian law firm Mossack Fonseca. The International Consortium of Investigative Journalists, and German newspaper Sueddeutsche Zeitung, along with 107 media organizations revealed 11 million documents covering a period of almost 40 years, from 1977 until last December, which showed how the company helped its clients launder money, dodge sanctions and evade taxes. In 2012, Paweł Piskorski acquired a Panamanian company - Stardale Management Inc, to “buy bonds of a Singapore company.” Three years later, the company was dissolved. In the meantime, Piskorski tried to open a bank account in FPB Panama bank, but there is no evidence in the data that bank accounts were actually ever opened. “If one fulfills all legal standards and is not using it for illegal business, I see nothing wrong in creating a company in such countries like Panama,” Piskorski said, explaining that “the company was never active.” Marek Profus set up a company in the Bahamas in 1993, but the firm was never active either. He explained that he “has never used tax optimization schemes.” Mariusz Walter appeared in the documents as a shareholder of two companies registered in the British Virgin Islands. “I have always been a Polish tax resident,” Walter said. As many as national leaders are among 143 politicians, their families and close associates from around the world known to have been using offshore tax havens, including Vladimir Putin - the President of Russia, Nawaz Sharif - Pakistan’s prime minister, Petro Poroshenko - the president of Ukraine, and the prime minister of Iceland - Sigmundur Davíð Gunnlaugsson.

WBJ OBSERVER • APRIL 2016

NEWS / ECONOMY

CALENDAR

APRIL-MAY APRIL

Event: The annual gathering for real estate companies and professionals involved in New Europe marketplace. The CEEQA Gala welcomes over 600 regional and international business leaders from more than 50 countries. Location: SOHO Factory, Warsaw Web: ceeqa.com

APRIL

III INTERNATIONAL FAMILY BUSINESS CONGRESS

APRIL

BIG DATA CONGRESS

18-19 20-21

CEEQA AWARDS

Event: A unique event for family enterprise providing a platform for the exchange of knowledge and experience. It’s a place to talk to scientists and professionals, and get first-hand accounts on how to run such a business. Location: IBB Andersia Hotel, Poznań Web: kongresfirmrodzinnych.pl

Event: The Big Data Think Big CEE Congress is a meeting of key decision-makers representing financial, telecommunications, IT, retail and other sectors. Discussions not only focus on technology, but also include the business side of exploiting new opportunities. Location: The Westin Warsaw Hotel Web: en.bigdatacongress.pl

APRIL 2016 • WBJ OBSERVER

MAY

APRIL

XXII ENERGY CONFERENCE EUROPOWER

APRIL

NATIONAL ENERGY SUMMIT

13-14

Event: The energy conference Europower is one of the largest meetings concerning the development of energy in Poland. Location: The Westin Warsaw Hotel Web: en.konferencjaeuropower.pl

20-21

12-13

Event: A summit of key representatives from the energy sector, including CEOs, politicians and economists. The focus will be on energy security in the current international climate. The subject of innovation will also be discussed. Location: MTG AmberExpo, Gdańsk Web: osegdansk.pl

M&A WORLDWIDE ACQUISITION AND INVESTMENT FORUM Event: The event will host international M&A experts and investors. They will discuss the global trends of the M&A market, as well as identify potential business projects. Additionally, the conference will present an overview of investment opportunities in Poland. Location: Location: Marriott Hotel, Warsaw Web: forum.m-a-worldwide.pl

FACTS AND FIGURES Data overview February

overview February Data Data overview February Data overview Data overviewFebruary February

WARSAW STOCK EXCHANGE WARSAW STOCK AS STOCK OFEXCHANGE MARCH 2016 WARSAW STOCK EXCHANGE WARSAW EXCHANGE AS OF MARCH 2016 WARSAW AS OF MARCH 2016 EXCHANGE AS OF MARCH 2016STOCK

484 484 484 484 484

-0.8% -0.8% was Poland's CPI -0.8% -0.8% was Poland's inflationCPI

AS OF MARCH 2016

Number of listed companies: Number of listed companies: Number listed companies: Number of listedofcompanies:

-0.8%

was was Poland's CPIPoland's CPI inflation inflation was Poland's CPI inflation inflation

Number of listed companies:

Trade volumes Trade volumes Trade volumes Trade volumes

Trade volumes

10.3% REGISTERED 10.3% 10.3% UNEMPLOYMENT RATE REGISTERED

6.7% 6.7% y/y industrial 6.7% output growth 6.7%y/y industrial

Shares Shares Shares

PLN 45.9 billion PLN 45.9 billion PLN 45.9 billion Shares

REGISTERED 10.3% UNEMPLOYMENT RATE UNEMPLOYMENT RATE 10.3%

6.7%

y/y industrial output growth y/y industrial output growth

Bonds billion PLN 45.9 Bonds PLN 45.9 billion

REGISTERED REGISTERED UNEMPLOYMENT RATE UNEMPLOYMENT RATE

y/y industrial output growth output growth

Bonds PLN 236 million PLN 236236 million PLN million Bonds

Bonds

Futures PLN 236 million Futures PLN 236 million

Futures 1.85 billion 1.85 billion Futures 1.85 billion Futures

6.2% 6.2% 6.2%

Growth of main index (WIG), ytd

Growthbillion of main index (WIG), ytd 1.85 Growth of main index (WIG), ytd 5.49% 1.85 billion

5.49% 5.49%

y/y retail sales y/y retail sales y/ygrowth retail sales growth growth

6.2%6.2%

Growth of main index (WIG), ytd Growth of main index (WIG), ytd

5.49% 5.49%

y/y retail sales Higher GDP growth y/y retail sales

The central bank NBP said that the 500+ growth growth child benefit program will boost GDP growth starting from Q2 this year. The NBP expects that in 2016 and 2017, growth will stand at 3.8 percent and in 2018 it will slow down to 3.4 percent. The general government deficit, i.e. the deficit of central and local governments and the social security funds controlled by these units, stood at PLN 921.41 billion at the end of 2015, an increase of 6.2 percent y/y, according to data compiled by the Ministry of Finance.

February February

February

Year-on-year CPI inflation in Poland, -1 February 2015 – February 2016

12 11.5 Poland’s registered unemployment rate, 11.5 February 2015 – February 2016 11.5 11 11

11 10.5

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Warsaw Stock Exchange Feb. '15

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“Poland will not rush the introduction of the retail tax as it is focused on the quality of the final solution.”

Steadily down

-0.5

February

-0.5

-1

PLN 3.1 PLN 3.1 billion billion budget deficit budget at the end of at the end of deficit

Leszek Skiba Deputy Finance Minister

Feb. '16

Deflation holds

-0.5

PLN 3.1 PLN 3.1 PLN 3.1 billion budget deficit at the end of billion billion budget deficit atFebruary the end of budget deficit at the end of

WBJ OBSERVER • APRIL 2016

COMMENTARY / LAW

JAN ROLIŃSKI,, ADVOCATE, SENIOR PARTNER, WKB WIERCIŃSKI, KWIECIŃSKI, BAEHR

PUBLIC PROCUREMENT LAW TO BE REFORMED Legislative processes have begun to overhaul the Public Procurement Law Act to ensure implementation of applicable EU law. First of all, as has been suggested for a long time, the proposed reform clearly shifts the focus from protecting competition, ensuring transparency and curbing public spending towards strengthening the drivers of development. This is, without doubt, a step in the right direction. An important change involves modifications to the tenderer capacity verification process. In particular, procurement should become smoother with the implementation of the European Single Procurement Document (ESPD). Obviously, the ESPD application procedure still needs to be fine-tuned, but it seems at the current stage of the legislative process that we can expect these to be reasonable adjustments. Another key change is designed to strengthen the role of the multi-faceted tender evaluation model. In its current form, the new draft says that contracting authorities can give the price a weight of more than 60 percent only in the case of contracts based on established quality standards. There are serious doubts that this limitation will ultimately find its way into the final version of the law, because imposing a fixed cap at that level seems controversial. Nevertheless, it signals a clear emphasis on non-price criteria that will require increased effort from contracting authorities and, clearly, the proponents of the new law are determined to ensure the Polish system is driven by the best value for money principle, (rather than simply the cheapest option), which would be a welcome change. Public procurement is also expected to become more friendly, both for contracting authorities and contractors, for example, by encouraging innovation. In addition to a new tender evaluation model, the new law will also regulate such matters as com-

APRIL 2016 • WBJ OBSERVER

mon purchasing arrangements, contract descriptions and division of contracts. An interesting new feature is the possibility of establishing so called “innovative partnerships”.

ANOTHER KEY CHANGE IS DESIGNED TO STRENGTHEN THE ROLE OF THE MULTI-FACETED TENDER EVALUATION MODEL. IN ITS CURRENT FORM, THE NEW DRAFT SAYS THAT CONTRACTING AUTHORITIES CAN GIVE THE PRICE A WEIGHT OF MORE THAN 60 PERCENT ONLY IN THE CASE OF CONTRACTS BASED ON ESTABLISHED QUALITY STANDARDS. Other changes worth noting involve contractual amendments and a new, highly controversial, regulation on “in-house” contracts. As regards contractual amendments, the proposed law would specify a list of situations in which contractual amendments are allowed and would define the notion of material change. In terms of the regulations on in-house contracting, although the regulations admittedly copy the relevant provisions of EU directives, very serious concerns have been raised during the consultation process about the impact of the in-house contracting mechanism on the Polish economy. These are important changes that will affect the operation of the public procurement market. Stakeholders should begin to prepare for the new procurement environment, which, although necessitating a change to many old ways, offers opportunities for all participants. u

COMMENTARY / LAW

WBJ OBSERVER • APRIL 2016

COMMENTARY / REAL ESTATE

MATEUSZ WODEJKO, CEO OF POWIŚLE PARK SP. Z O.O. , INVESTOR IN NA POWIŚLU APARTMENTS

WHY LUXURY MEANS LOCATION events are not as rare as seeking the help of a concierge or taking a swim in the pool. That is why the closer you live to business institutions or high-end restaurants, the better. Even in the capital city, which constitutes the biggest luxury real estate market in Poland, it is possible to find luxurious properties that not only incorporate all the features every affluent buyer expects from the prestigious property, but are also located in such a way that suits the taste of the majority of clients. It might require some effort, but one can still invest in an apartment which is close to everything that matters – the city center, business institutions such as WSE, state offices, cultural venues, luxurious boutiques, the Old Town and even municipal parks, which are in the center of Warsaw. Location is what defines luxury, especially in the Polish residential market, which is still underdeveloped when compared to its western counterparts. When investing your money in property, it is always safer to follow in the footsteps of the pragmatics and choose real estate for its features that will never go out of fashion. u

Images: Powiśle Park

Poland’s luxury residential real estate market is extremely tempting for investors – at least those who know that it is flourishing. With approximately 160-180 transactions of PLN 440-460 million (KPMG, REAS, Luxury Real Estate in Poland, 2015) it is a relatively small, but still a highly profitable sector that should be considered when managing one’s capital. Which residential projects offer the least risk? Here are some suggestions that are worth careful consideration. Location is key when discussing the luxury real estate market in Poland. Contrary to what developers usually claim, architectural design or amenities are not only of importance to prospective buyers, but also strongly linked to their taste, which is the most subjective of all factors at play (a point worth taking into account if you want to let the apartment or sell it at some point). No matter how comfortable it is to have a private gym for residents, at the end of the day it is the location of the real estate that defines one’s lifestyle. Business meetings, visits to state offices, social gatherings, theater nights, shopping – these

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COVER STORY / MORAWIECKI PLAN

B Y WOJ C I E C H R Y LU KOW S K I

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COVER STORY / MORAWIECKI PLAN

MAKING POLAND GREAT AGAIN? AFTER EIGHT YEARS OF SO-CALLED “HOT WATER IN THE TAP” ECONOMIC POLICIES, NEW DEVELOPMENT MINISTER MATEUSZ MORAWIECKI HAS PRESENTED AN AMBITIOUS, COMPLEX AND SOMEWHAT OVERWHELMING PLAN TO MODERNIZE THE POLISH ECONOMY, WITH THE STATE PLAYING AN IMPORTANT ROLE AS A GUIDE THROUGH THE TRANSFORMATION PROCESS

Image: Shutterstock

rones instead of furniture, cyber security and data centers instead of international helpdesks and innovation instead of imitation. This is the future vision of Polish specializations in the economic development plan unveiled by the ruling conservative Law and Justice (PiS) party in February. The goals of the program are very ambitious, with the aim of transforming Poland into an innovation-based, high-income country. To achieve this goal the country will have to make a considerable effort and overcome several structural obstacles. Diagnosis The author of the concept, Development Minister Mateusz Morawiecki (hence “the Morawiecki plan”), has identified five challenges that Poland is currently facing. These are: the middle-income trap, the lack of balance between Polish and foreign capital, the lack of innovative products, the demographic trap, and the weak institutions trap. Morawiecki’s diagnosis of the current situation starts with the assertion that the resources that have enabled Poland to grow rapidly over the past years, such as cheap labor, are running out. Poland needs to find new “locomotives” of growth to avoid becoming trapped in a middle-income status. The competitiveness of many Polish companies is based on the production of unsophisticated, cheap products. Only a few small and medium-sized companies are able to introduce innovation. Furthermore, the country’s development has been dependent on Foreign Direct Investments, which was beneficial to some extent as Poland received capital and technology, but the growth of domestic companies was inhibited. The ministerial plan states that foreign investors are still welcome and needed, but “healthy” economic growth requires a balance between foreign and domestic capital. Another hindrance to Poland’s growth is its ageing society. Estimates show that the working population will systematically dwindle. By 2050, as many as five million fewer Poles will be of working age. This “trap” has serious consequences, as it may lead to the insolvency of the social pension scheme, increased debt and diminished investment outlays. The program also states that Poles don’t earn enough, and GDP growth has to be matched with salary increases. At present, half of the population earn less than PLN 2,500 net, which accounts for 80 percent of the average salary. The document points to the fact that differences between regions are widening, with underdeveloped areas of eastern Poland missing out on investment opportunities. Last, but not least, Morwiecki’s diagnosis says that public finances are in bad shape, making it a drag on the country’s development.

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COVER STORY / MORAWIECKI PLAN

“POLAND WANTS TO ATTRACT FOREIGN INVESTORS BY OFFERING TAX EXEMPTIONS AND INVESTMENT OR EMPLOYMENT GRANTS IF THEY LOCATE THEIR R&D CENTERS IN POLAND AND CREATE HIGH QUALITY WORKPLACES.

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Source: mr.gov.pl

Theoretical underpinnings In order to overcome these traps, the state, according to the minister, has to be more active than it has been until now. In an interview with Polish daily Polska The Times, Morawiecki admitted that one of his inspirations is the theory of new structural economics coined by Chinese economist Justin Yifu Lin. The concept constitutes an endeavor to marry two development economic paradigms: the structuralism, which focuses on market failures and promotes import substitution policies, and the neoclassical, which centers on state failures and pushes for “neoliberal,” market-oriented reforms. In line with the theory, the state plays an important role in moving a country from one stage of the development into the next. This advancement is possible through industrial and technological upgrades, which require simultaneous improvements in education, financial and legal institutions, and infrastructure. Since private firms are not able to internalize the costs of such changes, it is the government that is responsible for doing so. In this concept, the state has a facilitating role and provides the necessary coordination to remove the barriers to the emergence of firms and their related industries, but also lets them grow and develop organically. Under the new structural economics, the market is seen as a basic mechanism for effective resource allocation, but the state needs to intervene by providing information about new industries, subsidizing activities in the process of industrial upgrades and catalyz-

ing the development of new industries. In practice, Lin advises looking for industries and sectors in which a country can specialize and which can bring high added value. Subsequently, the state has to identify strong and weak points of domestic companies operating in these sectors and their legal, infrastructural or institutional environment. The next step would be to provide support by creating a scientific or infrastructural base, building clusters and transferring resources there. In sectors with high potential, where there aren’t any domestic firms, Lin advises attracting foreign capital and technology – it will bring added value to the economy and domestic companies would learn through spillovers. The plan “The state cannot be reduced to the role of a night watchman. It should be a partner and a guide” – this statement, made by Minister Morawiecki, reflects the substance of the program. It is based on five pillars: reindustrialization, the development of innovative companies, foreign expansion, sustainable social and regional development, and increased savings. One of the key ideas of the plan is the establishment of the Polish Development

Images: Shutterstock, Wikimedia, mr.gov.pl

Poland’s chronic budget deficit leads to increased public debt, of which half is in the hands of foreign investors, constituting a significant risk to economic stability.

Images: Shutterstock, Wikimedia, mr.gov.pl

COVER STORY / MORAWIECKI PLAN

Fund, which will come from merging existing institutions, including the Export Credit Insurance Corporation (KUKE), development bank BGK, the Polish Agency for Enterprise Development (PARP), the Polish Information and Foreign Investment Agency (PAIiIZ), the Industrial Development Agency (ARP) and Polish Investments for Development (PIR). The Fund will integrate and organize the tools offered by those institutions and will propose new solutions, resulting in increased efficiency. The support will cover numerous areas – small and medium-sized enterprises, investments, infrastructure, export, promotion and innovation. The fund will obtain capital for investment on preferential terms offered by international financial institutions. In line with the theory by Justin Lin, the government has singled out strategic sectors of the economy, the so-called domestic areas of intelligent specialization, which will receive the support of the state. Presenting his plan, Morawiecki gave examples of industries which are already operating in Poland and which, with a little help and guidance, could become powerhouses of the economy, creating high added value workplaces. According to the minister, Poland could specialize in such businesses as: drone manufacturing, the shipyard industry centered on the production of passenger ferries, the IT sector (cyber security and data centers) or rail vehicle manufacturing. Companies from these sectors (and others including chemical, food, transport or armaments) would get a helping hand through special development programs. Poland also wants to launch the StartInPoland project, aimed at the commercialization of innovative solutions created by start-ups. A new bill on innovation is also planned. On top of that, the share of R&D expenditures in GDP is to be increased from 0.8 percent at present to 2 percent in 2020. The ministry is also preparing a set of tools for entrepreneurs, which includes: a new coherent legal act called the Business Constitution, less burdensome tax audits, the abolition of useless licenses, simplified taxes, more friendly public administration and so on. Poland wants to attract foreign investors by offering tax exemptions and investment or employment grants if they locate their R&D centers in Poland and create high quality workplaces. In addition, the government wants to support Polish exporters and Polish products, as well as foreign expansion of companies through a special division of the Polish Development

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COVER STORY / MORAWIECKI PLAN

BLANK SPACES

The plan stipulates that, under the national intelligent specializations, Poland will have a great program for drone manufacturing. Why would I believe that it will produce better results than previous programs of this kind, for example the construction of the Gawronclass corvette, which turned out to be a flop and a waste of money. I would like to know what will change in the financing of Polish science and the system of innovation, that the money will be used effectively. I can’t find it in the plan.

Fund. The program will also introduce new procurement policies which abandon the lowest price criterion, provide concessions for small and medium-sized enterprises, and include points for innovation and social clauses promoting stable jobs. Under the plan, PLN 1 trillion will be spent on investments within the coming years. Half of the sum is to come from European funds, another PLN 230 billion could be sourced from Polish companies’ savings, with the potential of state-owned companies estimated at PLN 150 billion. Up to PLN 80 billion will be delivered in development programs carried out in cooperation with international institutions, such as the European Bank for Development and Reconstruction, and the World Bank. The plan sets ambitious aims. It envisages that by 2020, Poland’s GDP will stand at 79 percent of the EU average, the level of investment will reach 25 percent of GDP, the number of small and medium-sized companies will grow to 22,000 and Poland’s outward FDIs will increase by 70 percent. The devil is in the detail? The plan has attracted considerable interest, with only a handful of the most liberal economists ridiculing it through comparisons to centrally planned

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What’s your opinion of investing PLN 1 trillion in the coming years? The program is based on the assertion that Poland is faced with the middle-income trap, because there are few Polish companies that are able to foray into foreign markets. We don’t have these companies, because we don’t have capital, we don’t have capital because the level of savings is one of the lowest in Europe. I would like to know where these savings are to come from. Part of the money included in the plan would have been spent, regardless of the plan. What we are talking about is the change of priorities in spending, and not a source of “new” money. EU funds are not there to create firms, but to improve the environment in which companies operate, to improve skills, or to facilitate their development. Will the government be able to follow the plan? As of now, the short-term policies of the ruling party overlap the long-term aims of the plan. The government encourages consumption, not investment. It undermines the quality

economies and the communist-era specific five-year development plans. But this interest doesn’t equal endorsement and appraisal. The biggest concerns raised are in relation to the generality of the plan, and also its complexity as it embraces so many economic, institutional and political dimensions that it is on the verge of being implausible. Doubts pile up as we take a look at the details. The plan states that 99.8 percent of Polish companies are small and medium-sized and because of their size, they are not capable of competing in terms of innovation. However, one of the main points of the plan is state support for small and medium-sized companies and the goal is to increase their number. Another apparent contradiction is the assertion that dependency on foreign capital may shake the stability of the economy and is generally costly, while at the same time the plan stipulates attracting Foreign Direct Investments. Unlike recently, foreign investments are supposed to generate high quality jobs and Poland is to become the promised land for R&D centers. It is nonetheless, difficult to say why that would be the case, as the FDI policies are almost exactly the same as they were before (tax exemptions, investment grants, special economic zones etc.). Even though Poland has thousands of

Witold Orłowski, Rector of Vistula University of bureaucracy and worsens the investment climate. Short-term actions are heading in the opposite direction than outlined in the plan, and there is no indication that it will change soon.

bright engineers, the main factor attracting foreign investors is still cheap labor. The composition of the PLN 1 trillion investment budget provokes some questions. As much as PLN 200 billion is to come from the savings of Polish companies, but there is no guarantee that they will invest the money, as such decisions are contingent on numerous factors. “There are not many interesting investment opportunities in Poland. Poland is generally poor with the exception of Warsaw and some bigger cities. Companies’ money lays idle in bank accounts. Morawiecki’s challenge is to entice them to invest,” said professor Witold Modzelewski, a tax advisor, and one of the authors of the tax system in Poland. Additionally, Andrzej Rzońca, an economist from the liberal think-tank FOR (Forum for Civic Development), points to the interesting fact that many of the goals of the plan have already been reached. For example, for 15 out of last 20 years, industrial production has exceeded GDP growth. According to the IMF, the value of investments in Poland will reach more than PLN 2 trillion by 2020, a figure twice as large as the one set in the plan. Morawiecki wants to reindustrialize Poland, but 25 percent of the country’s GDP comes from manufacturing, compared to the 19 percent EU average.

Images: Shutterstock, AFiB Vistula

What do you think about the diagnosis and the goals of the plan? On a very general level, the diagnosis is not controversial, but there are great blank spaces when it comes to implementation tools. A strong faith in the role of the state is visible and it may invoke questions about its chances of success. The quality of Polish bureaucracy is low and the moves by the ruling party further undermine it, leading to the actual dismantling of the civil service. I can’t see a solution to the problem of how to make bureaucracy more effective.

COVER STORY / MORAWIECKI PLAN

shape. The state must have an efficient justice system and regain the trust of businesses and citizens,” he added. Even if the only positive outcome of the plan is increased efficiency of state institutions, it is worth giving it a go. Paradoxically, the biggest obstacle in executing the plan might be Morawiecki’s power base. Law and Justice (PiS) began its time in office in conflict with Poland’s top constitutional court, which resulted in the launch of the procedure of the rule of

“THE BIGGEST OBSTACLE IN EXECUTING THE PLAN MIGHT BE MORAWIECKI’S POWER BASE. LAW AND JUSTICE (PIS) BEGAN ITS TIME IN OFFICE IN CONFLICT WITH POLAND’S TOP CONSTITUTIONAL COURT, WHICH RESULTED IN THE LAUNCH OF THE PROCEDURE OF THE RULE OF LAW BY THE EUROPEAN UNION.

law by the European Union amid concerns of the party breaching the constitution. Recently, PiS refused to publish the verdict of the Constitutional Tribunal, preventing it from coming into force. Analysts warn that the situation may lead to the emergence of two separate legal orders: the first, based on governmental acts and the second, based on the constitutional court’s rulings. On top of that, in January, rating agency Standard and Poor’s lowered Poland’s credit rating for the first time in its history, saying that the system of checks and balances has been eroded. The move raised the costs of lending and undermined foreign investors’ confidence in Poland. The negative atmosphere surrounding the government may discourage highly competent professionals from joining Morawiecki’s team, and only the best bureaucrats can guarantee the success of such complex undertaking. Additionally, foreign investors may turn away from Poland and, in the longer perspective, EU funding might be at risk. This grim vision is still distant, but it would be the greatest failure of the ruling party, if its reckless policies bury the chance of a muchneeded upgrade to the Polish economy. u

Images: Shutterstock, AFiB Vistula

Direction to follow “Economic plans are usually divided into three stages, the first one is the ideological-axiological, the creation of a certain intellectual model, and we are at this point,” Modzelewski reassured. Once the plan gets to the second stage, when the concept is turned into legal acts, a much clearer vision will emerge. “At this point it is difficult to discuss the plan, assumptions are correct,” Modzelewski said, adding “the program is original.” In the last eight years, the economic policy of the previous ruling PO-PSL coalition was described as the policy of “hot water in the tap.” “The central tenet was the lack of great ideological plans, no big visions of modernization, with the role of the state reduced to guarding against possible shocks. Morawiecki’s plan comes as an interesting and necessary turnaround if Poland wants to escape its status as a semi-peripheral European economy. It is unlikely that every point of the program will be fulfilled, but the document indicates the direction to follow. Morawiecki’s success will be establishing a dialogue with businesses and convincing them to trust him,” Modzelewski said. “Polish commercial courts are in really bad

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U RRSEET O UR UNCCKRR A CF O VA T ET U R /R EEBAAAU TA A F EE A // RBBYU CCXYY

In search of the Holy Grail

THE COMMON RELUCTANCE AMONG POLES TO VISIT PUBLIC AUTHORITY OFFICES IS NO SECRET. AS IT TURNS OUT, THE REASON FOR THIS STATE OF AFFAIRS IS NOT ONLY THE TARDINESS OF OFFICIALS, BUT ABOVE ALL – THE UNWILLINGNESS OF CLERICAL ENTITIES TO EMBRACE NEW TECHNOLOGY

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“We can only manage what we are able to measure,” claimed Peter Drucker, a renowned management theoretician. Modern IT systems make it possible to count everything that, until now, has been difficult to measure. Customer satisfaction, average customer service times, or the influence of music on purchasing decisions in shops. The fact that information technology is important has been confirmed by Alvin Toffler, another famous scientist, who came up with three waves of civilizational development: agrarian, industrial and informational. According to him, the ongoing third wave is linked directly to the creation of new technology, facilitating free communication between entities through the development of services and moving away from mass production. However, the third wave seems to have passed by public authorities in Poland and informatization and digitization have become indispensable preconditions of the country’s adaptation and development. However, what is digitization and informatization? “There is

no single definition. In Poland, during the past 15 years, we have witnessed the process and challenges associated with the implementation of new technologies in public institutions,” said Jolanta Kulesza, a cyberspace expert from the University of Łódź. Paper strongholds According to one study carried out by the Polish Ministry of Administration and Digitization, in as many as one-third of all Polish public authority offices the administrative handling of cases is documented in paper form only. The worst situation is at municipal level, where as much as 37 percent of offices still keep their registers entirely in a traditional manner. How big is the gap separating Poland from other European countries? At the end of February 2016, the European Commission presented a new indicator – DESI (Digital Economy and Society Index), which helps to assess the development of EU countries on their way to becoming a digital economy and society. The rank-

ing places Poland in 23rd position out of 28 EU member states. This indicator is calculated on the basis of the quantitative assessment of five economic aspects: infrastructure and spatial development plans of a country, human capital, access to and use of the internet, integration of digital technologies, and e-services. The average DESI index of the European Union in 2016 amounted to 0.52, which is higher compared to the previous year (0.5 in 2015), which in turn indicates that the general process of digitization in the EU is progressing. In terms of the density of fixed broadband services, Poland was in last place in Europe with a score of 0.3, while the European average is 0.87. According to the report, broadband internet connections in Poland, (allowing for at least 30 Mb/s) is potentially available to less than half of all households. Furthermore, Poland’s performance is not positive in terms of buying cloud solutions (second last place) and personnel qualifications – regarding basic skills of handling digital tools (third from bot-

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tom). Taking advantage of e-administration also remains at a relatively low level. Every fifth internet user submits online forms. Unfortunately, according to the eGovernment Survey report prepared by the UN, we do even worse, as the level of Polish e-administration has been assessed as lower than in Russia and only slightly above Andorra, Montenegro and Colombia. Kulesza admitted: “Poland is not the leader of digitization in Europe. However, we have to remember that digitization is not easy to assess. If we managed to implement effective solutions, we would be able to reasonably measure the impact of digitization on the functioning and effectiveness of state institutions.” Catch 22 Poles embrace small victories, such as the fact that for several years they have been able to register a business via the internet. Nevertheless, activities that can be accomplished from A to Z over the internet are relatively scarce. They always require personal intervention – a visit to an office. The same concerns the National Court Register (KRS). Applications can be found on the institution’s website. However, they must be submitted personally, and one cannot make a mistake while marking different options on the form, because after a several-week waiting period one can receive a written letter with a request to re-submit the document. If we go to the National Court Register when clerks’ counters are open but the cash desk is closed, and it turns out that a revenue stamp is needed, we can buy it from a vending machine. Unfortunately, none of that is possible, because they are only in operation when the cash desks are open. If we only have a credit card or a payment card, we will also not be able to complete our errand, so we will not receive a stamp on our letter and will be unable to submit the document. The established law does not make the situation easier to deal with. For example, from January 1, 2016, property tax, agricultural tax, forestry tax, tax on means of transport, stamp duty, fees for municipal waste management and other such taxes cannot be paid by card in a public authority office. The amendment has transferred fees and commission costs associated with such payments onto the taxable person. Previously, offices used to bear these costs. And the implementation of such a provision requires changing POS

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software and the way of settling payment transactions with cards. Do you think you can use a mobile app? Unfortunately, not in Poland. Phones or tablets are not able to meet the requirements of the regulation on fiscal cash registers, i.e. cash registers and fiscal printers are sealed, so that there can be no access to the memory chip... and thus there is no program that could perform these functions. Polish provisions are among the most stringent in Europe. Cloning solutions When analyzing the situation in Polish public administration, the resulting conclusions do not appear to be too optimistic. It turns out that Polish authorities

“The level of Polish e-administration has been assessed as lower than in Russia and only slightly above Andorra, Montenegro and Colombia. still take advantage of solutions offered by modern technology relatively rarely – and administration should be understood as services for citizens. “A service state and digitization means getting away from a regulatory state model. It is not only about the purchase of information systems and hardware. It is also about making use of new technologies that facilitate the creation of a service state. Digital transformation is actually seen as the transformation of governmental administration. It’s about remodeling the entire philosophy of the functioning of the state, so that it is set to help its citizens – IT is a tool bound to serve the purpose of transformation,” said former Director of the Central Computing Centre (COI), Nikodem Bończa-Tomaszewski. The institution was established to streamline and ac-

celerate the process of informatization in the country. One challenge is the fact that each institution or ministry creates their own portals and systems, and so we have ePUAP, ZIP or SEKAP, which sometimes duplicate one another in terms of their functionality. Disparities between the modernity of teleinformation systems, and the backwardness of institutions that implement them, are demonstrated by excessive dedication to “paper” and a reluctance to use electronic documents. More importantly, IT departments in public administration are very often powerless units that have no influence over processes in their parent institutions. They are undervalued – personally and financially – and do not exhibit long-term plans in terms of training and professional development. Therefore, the systems do not work, or they generate problems. For example, during the implementation of the System of State Registers (SRP) and the “Źródło” application back in 2015, the implementation was delayed due to the hasty development process. Once it was finally implemented, public authorities became overwhelmed by the incomprehensible chaos. Officials are still not able to keep up with entering data into the electronic database of Civil Status Services. There have been cases in which the SRP raised the deceased and gave up living Poles for dead. Instead of seven days, provided by law, to issue a certificate, it’s common to have to wait even a few months. The law is one thing, in practice it is entirely different. “At my authority office a standard incoming letter is scanned, sent via the Proton system to the secretary or the head of department, then it is passed to the manager of the given organizational unit and the manager passes it over to the secretarial assistant, who will handle the case further. The manager not only receives the original letter and signs the list upon its receipt, but it is often the case that the letter is photocopied and only then does it reach the secretarial assistant. In this way, each digital letter is printed several times. E-mails sent to the authority office are recorded in the register, printed, and passed over to the next person in paper form. An e-mailed message has never been simply registered and forwarded without printing it,” claimed an anonymous official of a Polish office. She added: “When we see how the systems work, it is our practice

Image: Shutterstock

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that we, officials, recommend visiting us in person.” In most municipalities nothing can be settled via ePUAP. Central offices could influence this state of affairs but they do not see any special benefit in doing so. There were cases, when officials created a document in a text editor, printed it and passed it on to other officials to publish it in the Public Information Bulletin, which meant manually retyping the document all over again. Administration does not have any external motivation or pressure to be better and more userfriendly towards citizens.

which would impose certain standards on administration,” said Kulesza. Currently, the coordination is dispersed and the process of informatization and digitization is implemented by several ministries and institutions. “Each technological solution influences people in a positive and negative way, but we have to remember that digitization is only a tool in people’s hands. For exam-

ple, in a democratic society, digital tools will dynamize social dialog and the exchange of information. While in dictatorial regimes they will serve the purpose of surveillance and suppression of the opposition,” said Bończa-Tomaszewski, noting that in the case of public e-services their development must be limited. Firstly, due to the right to privacy – a former idea from the ministry of finance involving voice identification for taxable persons

Too many cooks How can Poland become a digital leader? By removing investment barriers, increasing the availability of the internet, focusing on development of e-administration, and implementing new technologically advanced systems. As it turns out, this is not enough. “It is necessary to prioritize actions concerning digitization and appropriate investments in digitization. It would also be nice to have a center of competence or a coordination center,

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FEATURE / BUREAUCRACY

Training citizens Transformation into a service state is possible. We can simply look at what our banks offer. We are not trained on how to use electronic banking systems. We open an account via the internet and we operate it because it is intuitive and customer-oriented. On the other hand, e-administration systems, even if they work and are functional, are developed in such a way that we face obstacles in the form of technical requirements, incomprehensible formulations, different instructions, small-print annotations, reference marks, etc. We have plans and projects, but their realization, coordination and implementation fail. One of the most recent failures is a giant e-health project, under which every patient was to have access to their medical history via an internet account, they would be able to receive prescriptions by SMS or receive on-line referrals to a doctor. The failure of the project means a loss of millions of euros acquired from the EU for this very purpose. Currently, there are a number of governmental documents that highlight the role of an open office, the transparency of public authorities through efficient and effective operating mechanisms which help to prepare, store and share data. It is also important to educate personnel in offices. Kulesza noted that, under the influence of digital transformation, the role of the official changes. “Sometime in the future, officials will be replaced by an IT specialist responsible for the whole process of document circulation.” However, this will not be possible to achieve unless the highest-level authorities set an example for local bodies in terms of best digital practices. u

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was considered too radical. Secondly, due to the guarantee of credibility – conducting elections in which anonymity over the internet can be totally guaranteed is now technically impossible. Thirdly, due to the real needs of citizens. We can imagine a situation in which a country wraps citizens up with a thread of e-services that not only hinder everyday life, but also start to become a threat to freedom. To avoid this, the administration can only create e-services that pursue specific, well-assessed needs of citizens and bring measurable, calculable benefits. Finally, due to the anthropology of social interaction. We can imagine, for example, a country that renders e-educational services that could replace compulsory education and personal contact with a teacher.

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Well cast metals POLAND IS KNOWN AS A MAJOR PRODUCER OF A NUMBER OF METALS, INCLUDING IRON, STEEL, COPPER AND SILVER. WITH GROWING GLOBAL COMPETITION THE INDUSTRY HAS TO PREPARE FOR TOUGH TIMES, BUT IT MAY SEE A BETTER FUTURE THANKS TO INCREASED PROCESSED METALS USED IN OTHER SECTORS

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FEATURE / METALLURGY

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cording to data from Euromonitor International, the Polish basic iron and steel market grew by 5.9 percent year-on-year in 2014 to a value of $ 19.96 bln. The basic precious and non-ferrous metals market grew by 4 percent y/y in to $ 1.52 bln in 2014. As Stefan Dzienniak, president of the board at the Polish Steel Association (HIPH) pointed out, 2015 was also a good year for the steel industry. In 2014 steel consumption in Poland grew to a record level of 12.28 mln metric tons and the following year may be another record-breaker. “Data for the first ten months of this year confirm our projections that there may be another record and consumption may have grown by some 2-3 percent y/y,” Dzienniak said. The Polish steel market stands out in Europe in terms of demand. Total demand in the markets of the European Union is now about 50 mln tons lower than it was before the economic crisis, the expert explained. However, the situation for Polish producers was not always so good. A few years ago the Polish steel market was strongly hindered by a large shadow economy, stemming from tax fraud on so-called reverse VAT, especially in the reinforcement bar sector. In August 2013 the government introduced a legal change that put things back in place, obliging the buyers, rather than the sellers, to pay the tax. According to estimates quoted by Dzienniak, some 1.5 mln tons may have been sold in the shadow economy sphere before the amendment. According to the Economic Chamber of Non-Ferrous Metals and Recycling (IGMNiR) the situation of the non-ferrous metals sector in Poland varies depending on the sector. The volume of basic metals production (electrolytic copper, primary zinc and refined lead) is expected to rise year-on-year in 2015. Growth is also projected in the copper and aluminum rolled products sector, thanks to increased demand from the wiring sector and to exports. Increases are also expected in the sectors of extruded and drawn products from copper and brass, as well as in die casting aluminum alloys used in the automotive industry. At the same time, other areas, including copper and copper alloy sheets and tapes have most likely experienced a decline. Though production increased in most areas, companies from the non-ferrous sector have been experiencing certain difficulties in financial terms due to significant price declines on the London Metal Exchange. On

the other hand, electricity costs and excise levels were lower, the IGMNiR’s analysts remarked. A challenging environment The overall good condition of the Polish metallurgy market may be largely attributed to growing demand in other sectors. The processing industries, from construction materials to household goods, are also expanding. “Demand for basic iron and steel as well as basic precious and non-ferrous metal products is driven by growing Polish construction and automotive industries. Metal industries benefit greatly from infrastructure development financed by EU funds in Poland. As long as infrastructure development projects are in the pipeline, demand for steel remains stable in Poland,” said Andrius Balsys, industry analyst at Euromonitor International. Nevertheless, Polish metals and metal products producers have to face increasing global competition, especially from China. “We have been forced to compete against imports from third-party countries, not from the EU market, but from countries such as China, India, Russia, Ukraine, Belarus and Moldova,” Dzienniak said. He explained that Chinese exports have increased significantly after a crisis on the country’s domestic market cut local demand. What is more, Polish producers have to comply with strict CO2 emission regulations, especially as power generation firms usually aim to transfer their costs to buyers. Another difficulty is high natural gas prices. Non-EU sector companies are in a completely different market environment. “The industry is also facing difficulties in relation to competitiveness in a global perspective. Polish producers are paying electricity excise in relation to carbon leakage, which is increasing costs for the steel industry. As other countries, like China, are avoiding carbon taxing, Polish producers are facing international competition based on unequal environmental requirements that distort competitiveness,” Euromonitor International analyst Andrius Balsys said. Another issue is the ongoing downward trend in metals prices on global markets. “The global metals industry is affected by declining prices of most metals, including steel. A plummet in the price of iron ore of 28 percent in 2014 due to increased supply, in addition to reduced coal prices by 17 percent, has pushed international prices of steel down. The slowing down of the Chi-

WBJ OBSERVER • APRIL 2016

FEATURE / METALLURGY

nese economy and a continued growth of the Chinese steel industry has increased supply in the world, thus adding pressure to steel products prices. Meanwhile, gold, copper and lead prices declined by 10 percent, 6 percent and 2 percent respectively, damaging non-ferrous metals industry growth,” Balsys added. Polish sector associations and the country’s government are taking action to improve the situation. Talks with the European Commission are underway. “In 2015 the activity of sector organizations in this aspect has increased,” Dzienniak said. “Following a Steel Action Plan signing at EU level, the Polish government is working on its own plan to protect and aid its domestic steel producers from unequal competition in relation to differences in environmental requirements. Initial steps to prepare such a plan were being made, though no results are yet available,” Balsys added.

APRIL 2016 • WBJ OBSERVER

Exports of metallurgical products from Poland 2012-2015 (in € bln) Year Value 2012 16.80 2013 16.94 2014 17.51 H1 2015 9.08 Source: Ministry of Economy

widely renowned and sell their products globally. According to Balsys, “Polish exports of basic iron and steel, as well as basic precious and non-ferrous metals, will be troubled by increasing competition in international markets, especially from China.” Nevertheless, fabricated metal products or custom products are expected to sustain demand growth in Polish export markets as competition is less tense in these sectors. In the Polish non-ferrous metals sector, exports stand for more than 70 percent of total sales value. “The 11 percent depreciation of the PLN against the US dollar was favorable for exporters,” the IGMNiR’s analysts said. Dzienniak was optimistic about the future of the industry. “Steel processing is going

strong in Poland. We are no. 2 in the EU in steel structure production volume and this year we might be no. 1,” he said. He also pointed to the growing demand for processed steel, resulting from a growing number of uses for the material. The IGMNiR is in consensus. “Polish nonferrous metals sector companies compete with foreign firms thanks to lower production costs, resulting from lower remuneration costs. It is worth noting that products of the industry comply with international standards,” its analysts said. Balsys believes that major challenges faced by Polish metallurgy will include declining prices in world markets, carbon pricing and EU environmental policy compliance, as well as high gas and electricity prices in comparison to neighboring countries. u

Image: Shutterstock

Reaching further Since domestic demand is high, exports are not an obvious solution for Polish metallurgy firms. According to data from the Ministry of Economy, in 2014 Poland recorded a trade deficit of €190 mln in metallurgy products, compared to a surplus of €650 mln a year earlier. The industry’s exports grew by 3.3 percent y/y to €17.5 bln in 2014, while imports increased by 8.7 percent in the same period. The fastest-growing segments in terms of exports were aluminum and aluminum products (up by 11.8 percent to €2.1 bln) and cast iron and steel products (up by 8.8 percent to €5.6 bln). Exports of iron and steel fell by 5.5 percent to €3.5 bln and exports of copper and copper products declined by 9.8 percent to €3.1 bln. Exports to the EU in 2014 stood for nearly €14 bln (up by 5.3 percent y/y), or 10.9 percent of total Polish metallurgy exports. Within that volume, exports of aluminum and aluminum products grew by 15.3 percent y/y to €1.8 bln and exports of processed cast iron and steel products grew by 11.1 percent y/y to €4.5 bln. Other important segments were copper and copper products (€2.3 bln, down by 10.3 percent y/y) and iron, cast iron and steel (€3.1 bln, down by 5.4 percent y/y). “Players in every EU country are fighting for presence on the local market,” Dzienniak said. He stressed that in Poland’s case, demand is higher than domestic production. However, a number of companies are

FEATURE / METALLURGY

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• G e r m a n v e r s i o n : w w w. p o le n a m m o rg e n . p l WBJ OBSERVER • APRIL 2016

COMMENTARY / REAL ESTATE

APRIL 2016 • WBJ OBSERVER

IT INSIGHTS

IT / BODY LEASING

section partner WBJ OBSERVER • MARCH 2016

IT / ERP SYSTEMS

By Beata Socha

UNDER THE MICROSCOPE

COMPANIES WILL SOON HAVE TO PROVIDE TAX AUDITORS WITH ALL FINANCIAL DATA IN A UNIFORM FILE FORMAT. IS THE BUSINESS READY FOR THE ERP REVOLUTION?

Starting in July, all large companies (employing 250 employees or more,

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and with annual revenues of €50 million and above/balance sheet total of €43 million or more) will have to prepare a Uniform Audit File (Polish: Jednolity Plik Kontrolny – JPK). They will have to submit the file upon request from a tax office. Small and mediumsized firms have two more years before they have to comply with the new regulation. A uniform file sounds fairly innocuous – but is it really? A fine toothed comb “It’s the most serious tax revolution since the VAT increase in 2010. It will be a widespread, and highly detailed,

process, encompassing a lot of companies. Even unit prices in warehouses will be scrutinized,” said Piotr Ciski, managing director of Sage in Poland. The initiative is by no means an ad hoc measure. Tax offices have been preparing for the revolution for two years now, spending as much as PLN 55 million on new equipment, software and employee training. Not a small sum, but the prize could be 200 times bigger. “We believe that introducing JPK in Poland could result in a 13 percent increase in tax collection rates within three years. That would mean entrepreneurs will transfer a whop-

Images: Shutterstock

The

Polish government’s propensity for increasing social spending has been widely discussed over the past few months, as has the question of where the money will come from. One of the principal methods the government has of bringing in extra cash to the state budget is to improve tax collection rates, particularly from entrepreneurs. That requires more efficient auditing, a task that is best performed with the use of computers.

IT / ERP SYSTEMS

ping PLN 15 billion extra into state coffers,” added Ciski. Not a new thing A uniform audit file itself is not a novelty: similar measures have been introduced in Portugal, France, Luxembourg, the Netherlands and Lithuania. “Our implementation will most resemble the one undertaken in Luxembourg,” explained Ciski, and added that “Portugal introduced a similar solution in 2012. In 2013, VAT revenue increased by 13 percent.” There is no doubt that the change will greatly increase the efficiency of Polish tax offices. “The use of electronic measures will definitely increase scrutiny and the scope of data that will be audited. Tax offices will be able to detect irregularities by comparing

companies within the same industry,” explained Tomasz Ożdziński, executive director at EY’s Tax Division. He added that one of the challenges tax payers will have to face is “selecting the necessary data to meet their legal obligation on the one hand, but not disclosing all their trade secrets on the other. Companies may need consulting not only on the technical aspects, but also on the formal details,” he concluded.

[

“TAX OFFICES WILL BE ABLE TO DETECT IRREGULARITIES BY COMPARING COMPANIES WITHIN THE SAME INDUSTRY.

But even the technical hurdles themselves may not be that easy to overcome. According to Ciski, “generating an XML file is a simple enough task. However, searching through all the company’s systems for the required data could be a programming challenge,” he said, and added that ensuring data compatibility between different modules within one company

WBJ OBSERVER • APRIL 2016

IT / ERP SYSTEMS

IS HOW MUCH MORE MONEY WILL COME IN CORPORATE TAXES WITHIN TWO YEARS AFTER THE UNIFORM AUDIT FILE IS IMPLEMENTED.

(warehouse management, invoicing, accounting etc.) will be particularly difficult, especially if a company uses different providers. Ticking clock The biggest challenge, however, will be racing against time. Large companies have less than four months to implement the necessary changes. “The latest version was published on March 11, and that’s when the clock started for software producers. The scope of the reported data is relatively broad, and depending on how complicated the system is, adjusting it could take even several months,” explained Tomasz Tekieli, ERP system architect at Comarch, one of Poland’s top IT powerhouses. The cost of implementing the changes will depend on what kind of software a company relies on. “Depending on the producer, software version and the number of modules the company uses, the update of the financial and accounting software could cost be-

APRIL 2016 • WBJ OBSERVER

tween PLN 3,000 and PLN 6,000 and if an upgrade is necessary – up to PLN 20,000,” said Ciski. The cloud advantage Those who use cloud-based software are lucky, because their updates will be made automatically. “Perhaps they will need to change their document registration processes, if the information they upload turns out to be insufficient to generate a JPK,” added Tekieli. Software as a Service (SaaS) has been slowly taking over the consumer-facing software market over the past few years (raise your hand if you use Office 365, a subscription-based office suite). It is now taking over the businessfacing side as well. They are very competitive: cloud-based solutions are accessible 24/7 from any place with internet access, and they don’t require costly servers. “They also offer unlimited scalability, which is particularly important for rapidly growing companies,” said Tekieli.

Images: Shutterstock

PLN 15 bln

“In our economic environment, regulations change relatively often, which forces companies to pay for updated software versions. Cloud users don’t have to worry about it,” he added. Beware of hackers There is, however, one more aspect to consider, and perhaps even the most important of all: data security. Year on year, Polish companies have been spending more on improving their cybersecurity. In 2014, the market exceeded $300 million, according to IDC. But what’s the use of spending a small fortune on protecting your data from hackers if the tax offices that handle it are less diligent? There have been many high-profile data hacks involving banks and public institutions over the past few years, exposing their numerous weaknesses. According to PwC, the number of cybersecurity breaches in Poland increased by 46 percent last year.

Customization and social media The ERP market is witnessing a trend of increasing customization and specialization to meet companies’ very specific needs. Integration using enterprise data buses is the answer for companies looking for software customization that will support their business and give them a competitive advantage. This approach ensures data exchange standardization, efficient management-level reporting and punctual data delivery. Being specifically tailored to company’s needs means the individual processes are handled in an optimal way. The latest technological solutions for companies are also used to build communities within corporations in response to the needs of the younger generation of employees who are accustomed to this form of communication. Increasingly, companies allow employees to work together using their own communication networks, giving them access to important data via desktops, mobile devices and multimedia screens installed in the workplace. Solutions implemented by S&T support internal communication and make decision-making easier by providing the most relevant and up-to-date information.

Brought to you by S&T Services Polska

IT / ERP SYSTEMS

Radosław Zacharewicz, Consulting Manager, S&T Services Polska

Once the Uniform Audit File is introduced, the number will go up even more. Handling so much sensitive data from so many market players, all in a uniform standard, will inevitably put an even larger target on tax institutions’ backs. u

WBJ OBSERVER • APRIL 2016

COMMENTARY / IT

MARCIN GABRYSZAK PAŁUCKI TRUSIŃSKI PRAWO I PODATKI SP.J. TRAINEE ADVOCATE IT LAW SPECIALIST

EU REGULATION ON PERSONAL DATA PROCESSING – NEW OBLIGATIONS Undoubtedly, 2016 is the year of an important turning point with respect to obligations concerning personal data processing. A new EU regulation is to replace Directive 95/46/EC. Due to the wide scope of the planned changes, uniform provisions of law will not be in effect in all European Union countries until 2018. Even though, due to its nature, the regulation will be directly applicable, it is already obvious that the legislator will have to put a lot of work into reviewing and changing a number of legal acts that continue to function in their current form.

member states. This will allow for the strengthening of cooperation, which is currently significantly limited. This synergy should also result in better personal data protection and facilitate making use of the experience of inspectors from individual European Union countries. The introduction of a uniform system will also allow for filing a complaint with any GIODO, irrespective of the country of the breaching entity. In other words, we will have the right to complain to the German GIODO about a Polish company.

The main aim of the introduction of uniform regulations within the European community is to increase the already high level of personal data protection. Another important aim of the regulation is to eliminate costs and reduce the administrative load by simplifying the regulatory environment as fully as possible. This aim is to be achieved at the expense of significantly increased responsibility for data controllers and entities that process personal data. In particular, personal data controllers will be obliged to select and then implement solutions which will protect personal data in the most complete manner possible.

Data controllers will also be obliged to use the simplest and most easily understandable language possible when communicating the manner and purpose of data collection, as well as when providing information on who the data controller is. The regulation is also to ensure that citizens have better access to information on how their data is processed. In addition, the procedure of personal data transfer to other entities (providers), including foreign ones, will be easier.

Moreover, personal data controllers will be obliged to inform the Inspector General for Personal Data Protection (GIODO) about a personal data protection breach in the company no later than 72 hours after the event. The only exception will be the situation in which the breach does not result in negative consequences with respect to the rights or freedoms of the person in question. Legal sanctions imposed on personal data controllers will definitely be more severe. The GIODO will have the right to impose administrative fines of up to EUR 20,000,000, or 4 percent of a company’s annual turnover, whichever is higher. Furthermore, a cooperation procedure will be introduced concerning the collaboration of inspectors for personal data protection from each of the 28 European Union

APRIL 2016 • WBJ OBSERVER

The ability to use modern marketing techniques, especially profiling, will be limited. According to the regulation, each citizen will have the right to give consent with respect to the use of a fully automated data processing system if such processing is to produce legal effects or otherwise influence the situation of a given citizen. Moreover, profiling will be allowed only when the controller has the legal basis for such actions; generally, this will require the explicit consent of the person whom the data concerns. Clearly, a number of changes are ahead of us and we should be well prepared for them. The new regulations will require increased involvement of entrepreneurs in personal data protection. It is obvious that the implementation of this regulation will start a new chapter in personal data processing inspections, which may intensify. Consequently, one should follow the legislative processes and adjust current activity to the new reality. u

April 2016

CEEQA REPORT 2016

20 pages of real estate content

LOKALE IMMOBILIA / NEWS

>LOKALE IMMOBILIA

NEWS

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Hana Group to take over Amazon logistics center Luxembourg-based GLL Hana Private Real Estate has filed a motion with antimonopoly watchdog UOKiK to take over the Amazon logistics center in Poznań. The company wants to acquire a 100 percent stake in Amazon fulfillment, the owner of the facility. GLL Hana Private Real Estate is part of Hana Financial Group, one of the largest bank holding companies in Korea. In February, e-commerce giant Amazon sold its Wrocław-Bielany logistics center to GLL Real Estate Partners for €70 million. Amazon runs three facilities of this kind in Poland with a total space of 300,000 sqm. It employs 4,500 workers and is still recruiting. u

ALCHEMIA II OFFICE COMPLEX

l INVESTMENTS

Torus sells Alchemia II office complex for €60.6 mln of leasable space. In August, the company sold Alchemia I to a joint venture of Bluehouse Capital Advisor Ltd and REINO Dywidenda Plus (managed by REINO Partners). Earlier, in July, Torus signed a ten-year lease agreement with State Street for over 14,000 sqm of office space in Alchemia II. It was one of the largest transactions in Poland that year. u

Atal may sell 2,000 units in 2016 Real estate developer Atal is planning to sell 2,000 apartments in 2016 and complete between 1,500 and 2,000 units. In 2015, it sold 1,690 apartments and handed over 628.“We said we planned to sell 1,600-1,800 units. Looking at the results for Q1 (509 apartments sold) we should exceed 2,000 units sold,” said Zbigniew Juroszek, the CEO of the company. The board also recommended paying out dividends of 50 percent of its net profits. In 2016, the company will introduce 17 projects with total space of 144,000 sqm. u l LOGISTICS

l RESIDENTIAL/OFFICE

i2 Development to build 1,250 apartments

MLP to build 70,000-sqm logistics center

esidential and office space developer i2 Development has launched 14 new projects in Wrocław in 2016, with a total of 1,250 apartments in the premium segment across 180 buildings, the company stated. The 14 planned projects consist of seven independent investments and another seven projects in Bulwar

MLP Group is set to launch construction on a 70,000-sqm logistics center in the Łódź district of Widzew. The project will be built on a 15-hectare plot, the company said. “The Łódź region is one of the leading logistics markets in Poland. Tenants locate their operations here due to the central location and very good road infrastructure,” said Radosław T. Krochta, CEO of MLP Group. MLP Group specializes in built-to suit projects, it has been listed on the WSE since 2013. u

l RESIDENTIAL

APRIL 2016 • WBJ OBSERVER

Staromiejski. The Group is currently working on 12 development schemes with a total of 441 apartments (including 169 sold) and 79 commercial premises. i2 Development is a group of companies which implements commercial and residential projects in Wrocław. It has been operating on the market since 2012. u

Images: Cushman&Wakefield, i2 Development, Atal, Mennica Polska, Skanska

olish office developer Torus has signed a sales agreement with PHN SPV 33 for the second phase of Alchemia office complex in Gdańsk. PHN SPV 33 is a subsidiary of the Polski Holding Nieruchomości (PHN) Group. The value of the transaction is €60.6 million. The scheme was completed in October 2015 and features 25,000 sqm

LOKALE IMMOBILIA / NEWS

COMPANIES

PLN 63.5 MLN

LC CORP, A POLISH REAL ESTATE DEVELOPER, HAS SIGNED A CREDIT AGREEMENT WITH PKO BP FOR PLN 63.5 MILLION. THIS SUM IS A PART OF THE MONEY ALLOTTED TO FINANCE THE SECOND STAGE OF THE SILESIA STAR PROJECT. SILESIA STAR IS LOCATED IN KATOWICE. THE PROJECT IS DIVIDED INTO TWO STAGES. THE FIRST ONE HAS ALREADY BEEN COMPLETED AND CONSISTS OF AN EIGHT-STOREY OFFICE BUILDING WITH UNDERGROUND PARKING AS WELL AS A SERVICE/RETAIL AREA OF14,000 SQM. THE SECOND PHASE FEATURES 13,500 SQM. THE FIRST TENANTS MOVED INTO THE NEW OFFICES IN JANUARY 2015.

l OFFICE

Skanska invests €48 mln in Kraków office scheme

kanska has invested €48 million in the first phase of an office project in Kraków. The first phase, consisting of two office buildings, will offer a total leasable area of around 23,000 sqm. The complex will

comprise five office buildings with GLA of around 70,000 sqm. Construction of the first phase was launched in March 2016 and is scheduled for completion in the fourth quarter of 2017. u l RESIDENTIAL

Mint of Poland introduces 188 units in Mennica Residence The Mint of Poland (Mennica Polska), Poland and Europe’s leading coin producer, has just introduced 188 apartments in the first stage of the Mennica Residence. In total, the company plans to deliver 470 apartments by the end of 2017. All design works are being carried out by Brzozowski Grabowiecki Architekci. “It is a complex of modern residential buildings, located in the quarter of ul. Grzybowska, ul. Żelazna, ul. Pereca and ul. Waliców. The tallest buildings of the complex will feature 15 floors. The top floors have been reserved for one or two-level penthouses with winter gardens and terraces. The company is also planning to implement the second phase of the project, consisting of other residential buildings,” the Mint of Poland wrote on their website. u

WBJ OBSERVER • APRIL 2016

LOKALE IMMOBILIA / NEWS

l C O M PA N I E S

l OFFICE

BlackRock to exit real estate business in Poland

Business services sector leases 380,000 sqm of office space outside Warsaw

BlackRock, the world’s largest asset manager, said it has sold all its investments in the real estate business in Poland and will close its Warsaw office as of May 31, according to Reuters. The company will continue to monitor the Polish market using resources within Europe, and the exit will not affect its mutual retail funds business in Poland, a BlackRock spokesman told Reuters. The company offloaded its last office investment in Warsaw’s flagship Rondo 1 tower for around €300 million. u

FRANCUSKA PARK

l RESIDENTIAL

Atal sells 104 apartments in Francuska Park Real estate developer Atal has begun the sale of 104 apartments in Francuska Park, Katowice, the company reported. The company has just obtained a permit for three buildings with 269 apartments

APRIL 2016 • WBJ OBSERVER

in total. Currently, Atal has 234 units on offer (out of 507 in Francuska Park). The Francuska Park complex consists of six buildings over eight floors, prices range between PLN 5,400 and PLN 5,600 per sqm.

Atal specializes in the construction of residential, multi-family buildings and single-family houses, located within the largest cities in Poland. The company has been listed on the WSE since June 2015. u

Images: Atal, BlackRock, BBI Development, Shutterstock

In 2015, companies from the industry leased 380,000 sqm of office space, which accounted for 56 percent of overall demand on major markets outside Warsaw, advisory company JLL informed. “The largest amount of office space – ca. 155,000 sqm – was leased last year by the business services sector in Kraków, followed by Wrocław with 92,000 sqm. The sector’s share in overall demand in selected cities was led by Wrocław with 72 percent, followed by Kraków with 68 percent and the Tri-City – 57 percent,” said Mateusz Polkowski, Associate Director, Research and Consulting at JLL. According to ABSL, business services centers with foreign capital employ ca. 150,000 people in Poland and this number continues to grow. Kraków occupies the leading position in terms of employment in the sector (35,700 specialists), followed by Warsaw (27,000), Wrocław (23,700), the Tri-City (13,700), Łódź (13,100), the Katowice Agglomeration (11,200) and Poznań (9,000).u

LOKALE IMMOBILIA / NEWS

l INVESTMENTS

Commercial real estate market valued at €4 bln The value of transactions on the Polish commercial real estate market is expected to reach some €4 billion, a result similar to 2015, real estate consultancy CBRE said in a press statement. “The expected stream of transactions [in 2016] indicates a similar value of transactions to the level reached in 2015,” CBRE said. “What is more, we can expect further activity of investors in the field of acquisitions in the real estate sector.” The banking tax and the retail tax will have no effect on the market, the statement also said. In 2015, the value of transactions reached €4 billion, including €2.4 billion in the fourth quarter. u

l INVESTMENTS

Doraco lands PLN 83.53 mln deal

BI Development’s Nowy Sezam has signed a PLN 83.53 million contract with Doraco Construction Corporation for the construction of the Centrum Marszałkowska building. Centrum Marszałkowska is a mixed-use project located on the corner of ul. Marszałkowska and ul. Świętokrzyska. The building enjoys a unique location at the intersection of two metro lines, making it an attractive investment opportunity. Office space is planned to make up 12,000 sqm, whereas retail space is 4,800 sqm. The date of commencement of construction work is the day of signing the contract. The expected date of completion is January 26, 2018, BBI Development reported. u

WBJ OBSERVER • APRIL 2016

LOKALE IMMOBILIA / NEWS

l RESIDENTIAL

BGK’s 2016 “Apartments for the Youth” fund limit reached Bank Gospodarstwa Krajowego (BGK) has stopped accepting applications for the mortgage subsidy program – “Apartments for the Youth” (Mieszkanie dla Młodych), as 95 percent of the funds for 2016 have been reserved. “This year’s budget limit was PLN 730 million, of which 95 percent is already reserved. In accordance with the rules of the statutory scheme, the remaining 5 percent of the funds planned in the budget will be used to provide funding as additional financial support for beneficiaries of the program, who have had, or adopted a third or subsequent child,” the bank explained. However, it is possible to submit an application for 2017 (with a PLN 746 million budget) or 2018 (PLN 762 million). The “Apartments for the Youth” program was launched in 2014 and replaced the “Family on its Own” mortgage subsidy program, which expired at the end of 2012. u

More than 900 apartments in Bemowo by Robyg Robyg has launched its fourth phase of estates in Warsaw’s Bemowo district. “The fourth stage of the residential complex in Jelonki will consist of a four-storey building. Within the next phase of the project, Robyg’s customers will have the choice of apartments from 41 sqm to 91 sqm,” officials said.

APRIL 2016 • WBJ OBSERVER

Construction of the fourth stage is planned for the first quarter of 2016, and completion is scheduled for the third quarter of 2017. Robyg is a real estate developer operating mainly in Warsaw and Gdańsk. It has been listed on the WSE since November 2010. u

Images: Shutterstock, Robyg

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LOKALE IMMOBILIA / NEWS

WBJ OBSERVER • APRIL 2016

LOKALE IMMOBILIA / RESIDENTIAL

Boom or bust B Y A L E X H AY E S

APRIL 2016 • WBJ OBSERVER

LOKALE IMMOBILIA / RESIDENTIAL

THE RESIDENTIAL MARKET IS CURRENTLY BOOMING IN MANY PARTS OF POLAND. EXPERTS FEEL CONFIDENT THAT THE MARKET WILL REMAIN STABLE FOR AROUND TWO YEARS. HOWEVER, THERE ARE SOME LARGE BLACK CLOUDS ON THE HORIZON

Image: RED Real Estate Development

or some years now apartment prices in Poland have remained stable. Across Poland apartment sales are high, with 51,800 units sold in 2015. This is compared to a figure of around 43,000 units sold in 2014. The number of apartments on sale dropped, indicating that demand is currently stronger than supply. But, when Kazimierz Kirejczyk, managing partner of REAS, was asked if now was a good time to buy an apartment, he was cautious. “If you need to, yes, you have a wide choice, prices are stable, they will not go down by 20 percent in five years unless there is an economic or political catastrophe, so if you need to, it is probably a good moment to do so.” However, despite his short-term optimism, he makes a number of provisos. At the present time interest rates are low, and since all mortgages in Poland are currently variable interest rate mortgages, if one wishes to borrow money, one has take into account that sooner or later interest rates will rise. When it comes to buying apartments in order to rent them out as an investment, he seems far from certain that now is the right time to invest. “If you are an investor, I would suggest waiting until the government announces exactly what it is going to do.” In the short term, the price stability that has reigned so long on the market looks set to continue. Kirejczyk describes the market as, “stable this year, slight decline in 2017 and probably a decline again in 2018.” But beyond 2018, he feels that there are too many uncertainties to make confident predictions. He’s not the only one predicting price stability in the immediate future. It seems that this trend will be maintained for the next one or two years, “Of course as long as there are no surprises that are completely beyond our control, which at this moment cannot be foreseen,” stated Katarzyna Lubaś, Business Development Coordinator at EY.

According to Lubaś, the price of an apartment is always an amalgam of many different factors. However, one of the most important is the price of the land, which is most often reflected in the price of the unit when it is sold. In her opinion, each segment of the market should be considered individually and she points out that, although stable prices can be

“If you are an investor, I would suggest waiting until the government announces exactly what it is going to do. Kazimierz Kirejczyk, managing partner, REAS

observed throughout most segments of the market, prices in the luxury segment have clearly begun to rise. “The luxury segment is always something that is separate from the rest of the market,” she claimed. Gimme money, yeah that’s what I want

What is it that is propping up this demand? One of the main suspects is the government’s MdM program, otherwise known

as “Apartments for the Young”With this program, the government subsidizes the mortgages of young couples for apartments that fall within a certain price range. In Warsaw this price limit will only allow people to buy the cheapest of apartments, but in other less expensive cities, the price is set high enough to buy a fairly reasonable property. According to Kirejczyk, it is possible to find a good standard apartment eligible for an MdM subsidy in Poznań and Gdańsk whereas in Wrocław and Kraków it is not. It is clear that the market has adapted to the MdM program, with many developers choosing to develop apartments that are specifically designed to fill its criteria. But, there is no obligation to take out an MdM loan. Lubaś points out that developers try, from a marketing perspective, to place their offer in the range of the MdM program, and that this is one of the factors that have shaped the current residential property market. The program also appears to be quite popular. “BGK bank announced that the money designated for 2016 has been fully allocated,” Kirejczyk explained. The program has now been in operation for two years and has reached full speed. “The positive impact of the MdM program will decrease slightly in 2017, and in 2018 it will decrease again and there will be no positive impact of the program in the second half of 2018, and then the program stops.” Negative selection

The effect the MdM program has on the popular segment of the market is clear, but opinions vary as to whether it has had any impact on apartments that are above MdM price ceilings, such as the premium segment. “The MdM program has no influence on that market segment because their target buyers are two completely separate groups. There is no room for competition,” asserted Natalia Sawicka, sales and marketing director at Angel River, a new investment in Wrocław by Angel Poland, which offers apartments priced at PLN 6,700-12,000 per sqm. By comparison, the MdM price ceiling for Wrocław stands at around PLN 5,200 per sqm. Ewa Skibińska, marketing manager of Nowa Papiernia, a new development by RED Real Estate Development, with prices starting from PLN 7,100 per sqm, also stated that the premium and the MdM markets are completely separate. However, Kirejczyk was less convinced and said that the impact of the MdM on the upper segment was rather negative. He explained that buyers who might have been in-

WBJ OBSERVER • APRIL 2016

LOKALE IMMOBILIA / RESIDENTIAL

“The National Bank of Poland has been unable to make a proper inflation forecast for the past two years. terested in buying a better quality apartment were being drawn into the lower segment by the government, especially in the cities where the subsidy was the highest, allowing potential buyers to choose a slightly better apartment. On the other hand, Ron Ben Shahar, CEO and partner at Angel Poland, considers price as “a secondary consideration in the premium segment. It is location and additional services that are essential,” he stated. He also believes that prices in the premium segment will remain stable over the next few years. Safe as houses

A large percentage of the demand for apartments comes from those people who see an apartment as a safe investment. Current low interest rates are encouraging people to take their savings out of the bank and invest in the property market. According to Kirejczyk, this accounts for around 20 percent of

APRIL 2016 • WBJ OBSERVER

the market. “Buy-to-let schemes are popular because the interest rate is so low. People take their deposits out of the bank and invest them in residential units. The return can be 4-5 percent depending on the scheme.” Lubaś also talks of the stable economic situation. “For a long time now we have had record-low interests rates,” which has been reflected in the price of bank loans. With regard to how long interest rates will remain so attractively low, Kirejczyk pointed out that the National Bank of Poland has been unable to make a proper inflation forecast for the past two years. “They still believe that in a two-year period, inflation will return to a level of 2 percent.” This was the exact same prediction that they made two years ago. Sooner or later, he believes interest rates will rise, including interest on deposits. The attractiveness of investing in residential property will decrease, while more and more newly completed apartments purchased by such investment buyers will enter the rental

market. “We can imagine that around 2018, rents will go down or vacancies will go up.” He pointed out that such investments still incur both risk and some work from the investor, so with higher interest rates such purchases will be far less attractive. To be continued

In MdM and investment demand, Kirejczyk sees two drivers that are both waning, and one of them, the MdM program, is set to disappear entirely. Or will it? MdM was a replacement for another government scheme dubbed “Family on its Own” (Rodzina na Swoim) that also subsidized the purchase of apartments. Therefore, can we not expect another such scheme when the MdM program expires? Kirejczyk thinks it’s probable, but the current government has not yet declared its intentions. Rather he suspects that the government will be looking to increase the supply of social housing, thus benefiting a much poorer segment of society.

LOKALE IMMOBILIA / RESIDENTIAL

However, if the government vastly increases the supply of social housing with subsidized rents, this will clearly be a big blow to those who have invested in the residential property market when they find that their rents are being undercut by the government. But, until the government declares its intentions, this will remain, just like the question of when interest rates will rise, a huge uncertainty. “As you know, one of our tasks is making forecasts, and we’ve never before had such difficulties with agreeing as far as the premises for the forecast are concerned. How can you make forecasts if you cannot rely on your basic premises, one of which is the new government housing policy?” The current uncertainty on the market could be both detrimental and beneficial.

Images: RED Real Estate Development, Angel Poland Group

“How can you make forecasts if you cannot rely on your basic premises, one of which is the new government housing policy? According to the latest REAS report, “Some potential buyers may have a sense of uncertainty, and in the current situation they prefer to refrain from deciding to draw a loan. However, there may also be those who consider investing in a flat as a good solution in times of rising uncertainty.” Will we see another 2009 crash in residential prices, or will the market find its equilibrium peacefully once all outside drivers are gone? Although things appear set for the next couple of years, it seems that the unknowns are about to start multiplying. u

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LOKALE IMMOBILIA / INTERVIEW

Regional markets still offering a lot of development potential WBJ Observer spoke with Rafał Mazurczak, office and hotel department director at Echo Investment, about the current situation in, and prospects for, the office property markets in Warsaw and the largest regional cities across Poland I N T E R V I E W B Y A D A M Z D R O D OW S K I

Which locations in Warsaw are the most sought-after at the moment? Are developers predominantly focusing on Wola and Śródmieście, or will the interest in Mokotów be retained? A considerable number of projects are in the pipeline in Warsaw and I think that some developers are still not certain whether they should be starting schemes right now, while others are still in talks

APRIL 2016 • WBJ OBSERVER

with lending institutions. The market is in flux – companies are moving from the downtown to Mokotów and from Mokotów to the downtown. Wola is gaining in popularity. Some tenants are looking for two locations because they want to divide their office space so that the headquarters are in the downtown and the back office is in Mokotów, or even outside Warsaw. The regional markets continue to grow in significance, with the BPO/SSC sector now generating the most demand for space in cities including Kraków and Wrocław. How large is the risk of shared services centers moving from Poland to cheaper locations? Our market analyses show that these locations still have significant potential. That is why we want to be active in Kraków, Wrocław, Katowice, Gdańsk and Łódź, consistently developing projects in those locations. This year, we are planning to launch a total of five schemes in the largest cities in Poland, including two located in the capital of Lower Silesia. Last year, 50 percent of the office space leased by us was located in investments outside Warsaw. I think that this year the figure may even be higher, so for the time being, I do not see any risk of shared services centers moving away from Poland. Łódź has been stricken with demographic problems for many years – the number of its inhabitants has been steadily decreasing. How does this affect the prospects for

further development of the office market in the city? We are happy with our investment in Łódź – Symetris Business Park. In my opinion, Łódź is already over the hump – last year, one could clearly see the symptoms of revival in the local market, which translated into increased investor interest. Our decision to launch construction on Symetris Business Park was based on analyses that allow us to be optimistic about the Łódź market. Poznań saw a threefold increase in tenant activity in 2015. What is the reason for the trend, and can we expect more growth in the market in the near future? Poznań is a mature market, which does not suffer from a lack of investor and developer interest. There is no shortage of modern office space in the city. However, in our opinion, there is still potential for new projects there. This is why we are now continuing work on a new office investment in the capital of the Wielkopolska region – we have already secured the land for it and would like to start the development soon. We know the Poznań office market very well – we developed the phased Malta Office Park scheme there that has been very well received by our tenants. Also, the Tri-City has witnessed an office boom of late – can we say that the agglomeration has already become one of the most important regional office markets in Poland?

Image: Echo Investment

WBJ Observer: A record amount of office space was leased in Warsaw last year and despite the large supply, the vacancy rate in the city fell to 12.3 percent. Will this encourage developers to launch even more projects, or can we expect a slowdown in the near future? Rafał Mazurczak: Undoubtedly, Warsaw is the most active, but also a more and more saturated office market. In such a well-developed market, the offer is very diversified. One can clearly see that it is taking owners more time than they expected to lease space in particular projects, but developers who have schemes in the best locations do not need to worry. The Warsaw market continues to mature, with developers and funds tempting tenants with both [attractive] rents, and interesting ideas and solutions that are in line with tenant expectations. New projects will continue to be launched, so we can expect the vacancy rate to show an upward trend. However, as I said, quality office projects in exquisite locations will still attract tenant interest.

LOKALE IMMOBILIA / INTERVIEW

The Tri-City has undoubtedly already become one of the leading office markets in Poland. Our experience with Tryton Business House – our Gdańsk investment, which obtained an occupancy permit at the beginning of this year – confirms this. There are many companies in the Tri-City, especially in the new technologies sector, that are looking for prime office space in the best locations. No wonder then that developers are trying to meet that demand. What are the prospects for the other growing office market in northern Poland – Szczecin? Who leases office space in the city? We have an office project there – Oxygen. For some time, there was a vacant floor in the building, but a tenant from the SSC sector has leased the space. We are also very happy to see the growth of our current tenants from the IT industry. Will the so-called emerging office markets, including Lublin, Rzeszów and Bydgoszcz, continue to grow in the near future? We are currently focused on the largest cities in Poland and are mainly directing our attention there. Such cities as Lublin, Rzeszów and Bydgoszcz are developing at their own pace, and due to the availability of young skilled employees, the outsourcing services sector will grow there too. Last year, for the first time in the history of the Polish investment market, regional cities accounted for a larger share of the total transaction volume than Warsaw. Is there a chance this result will be repeated this year? I think that this year we will witness a similar situation. While last year, half of the office space leased by us was located in the regional cities, I expect the figure to be even higher in 2016. This shows that the regional markets are going to play an equally significant role this year. Is Echo Investment planning to enter any office market in Poland in which it is not yet present? We aim to deliver a total of 120,000150,000 sqm of office space in Warsaw and the other large cities in Poland every year. We are constantly looking for interesting sites in regional cities. However, we still want to concentrate on Warsaw, as well as Kraków, Wrocław, Katowice, Gdańsk, Łódź and Poznań. u

WBJ OBSERVER • APRIL 2016

LOKALE IMMOBILIA / LOGISTICS

The age of co-bots and autodocks B Y B E ATA S O C H A

Image: Shutterstock

AS E-COMMERCE GIANTS STRIVE TO PUSH UNIT COSTS DOWN AND RETAILERS INCREASINGLY OUTSOURCE THEIR LOGISTICS TO 3PLS, THE SECTOR IS GOING THROUGH A MAJOR TECHNOLOGICAL REVOLUTION

6 • WBJ OBSERVER APRIL 2015

Images: Shutterstock

Image: Shutterstock

L O KL A MM OM B IOLBI IAL I/ A R /E SL IODGEI N AS L OL K EA LI E IM STIC

Cedet

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he e-commerce business is growing steadily at a double-digit pace, but it’s also becoming a very competitive market. Zalando, which took the Polish online fashion market by storm a few years back already has several direct competitors, including Answear and Sarenza (footwear retailer). Even a small-time retailer has to have an online store these days. While the setup may be relatively easy, many a retailer has learned that running an e-commerce business means more than just signing a deal with a courier company. Especially when storage and delivery costs begin to soar. “The e-commerce battle will be won by the player with the lowest handling costs per order,” said Walther Ploos van Amstel, professor of City Logistics at the Amsterdam University of Applied Sciences. “The consumer wants more delivery options. Amazon plans to have a total of 90 distribution centers across Europe in order to be close enough to consumers. Handling and transport make up just over half of Amazon’s costs. That’s around seven euros per order,” he added.

Expensive toys

It’s hard to find a retailer that has invested more in automation than Amazon. Stories are told about drones flying around Amazon’s fulfillment centers while robots wrap and unwrap bulk par-

“THE HIGH COST OF AUTOMATION, COUPLED WITH THE VOLATILITY OF ONLINE BUSINESSES, RESULTS IN MOST ONLINE PLAYERS BEING MORE PRONE TO INVEST IN FLEXIBLE STAFF. … INVESTMENT IN WAREHOUSE AUTOMATION IS THEREFORE USUALLY THE CASE FOR LARGE E-COMMERCE PURE PLAYERS. cels. The efficiency boost can be staggering. “An order picker can be trained for the job in just 30 seconds,” Ploos van Amstel explained. Just like car manufacturing, today’s

warehousing is becoming increasingly sci-fi like: from Cartesian depalletizers, which require little or no human interaction, through automatic wrapping and labeling modules to automated docking systems. “Amid the increasing use of robots in warehouses, a new generation of robots has been introduced to the market. These machines, called ‘co-bots’ are designed to work together with people. They are equipped with sensors that detect people working nearby and are programmed to optimize and standardize simple repetitive manipulation tasks and to significantly reduce employees’ musculoskeletal disorders,” FM Logistic said. “After having equipped the module with a speech synthesizer, the Automation Department of FM Logistic will soon also give it sight through a special app,” the firm added. Even manual order handling can become more efficient through the application of Augmented Reality tools, such as Google Glass. Tests performed by Dutch e-commerce firm Active Ants show that Google Glass can increase order-picking speeds by 15 percent and reduce errors by 12 percent, according to research cited by Martijn Lofvers and Marieke Lenstra. Drones, robots and AR tools are not cheap toys, mind you, and only the largest players can afford the cutting-edge technology. For the majority of e-commerce firms, these costs are just too steep. “Importantly, the high cost of automation, coupled with the volatility of online businesses, results in most online players being more prone to invest in flexible staff, which can handle increased numbers of operations during sales peaks. Investment in warehouse automation is therefore usually the case for large ecommerce pure players,” said Jan Jakub Zombirt, associate director, Research and Consulting, JLL. But there are also simpler ways of boosting productivity in the warehouse. “Automation and WMS [Warehouse Management Systems] enable a more efficient inventory and delivery management that includes e.g. parcel tracking, which is highly appreciated by customers, and enhances their shopping experience. It also facilitates warehouse operations and helps to reduce the number of staff,” Zombirt explained.

APRIL 2016 • WBJ OBSERVER

Image: Shutterstock

Who can afford it?

LOKALE IMMOBILIA / LOGISTICS

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LOKALE IMMOBILIA / LOGISTICS

While e-commerce giants gear up, smaller retailers, including those who are only dipping their toes in the e-commerce ocean, are realizing the best response cost-wise is to outsource their warehousing and deliveries to third-party logistics firms (3PLs). The same goes for manufacturers who decide to offload their internal logistics onto outside providers. “Outsourcing these days is not only about saving money. The financial aspect is important but it can also be achieved by technological upgrades and modern management systems. Today, outsourcing is about allowing the company to grow,” said Tomasz Kur, director of Customer Operations, at Seito. As a company grows, so does its client base and order numbers. While more orders is good news to almost any retailer,

“THE E-COMMERCE BATTLE WILL BE WON BY THE PLAYER WITH THE LOWEST HANDLING COSTS PER ORDER. it also means more complex logistics. The two biggest challenges logistics operators are facing are same-day deliveries (100 percent of those polled) and return logistics (60 percent), according to a study by JLL and Prologis. Cross-border sales came in third with 40 percent of those surveyed pointing to it as a major challenge. Getting closer

The challenges and pressure to reduce costs have an impact not only on the way warehouses are equipped, but also on where they are located. “Whereas today, same-day delivery can be a unique selling point, it will become the standard in the near future. In order to keep up with customers’ expectations, 3PLs should be seeking locations which are in close proximity to end customers, and pursue further efficiencies within their supply chains and warehouse activities,” Zombirt concluded. Who knows, maybe in a couple of years our orders will be picked, wrapped and labeled by robots in fully automated warehouses located just outside the city and then delivered to our doorstep by drones. Amazon has promised its first drone deliveries in 2017! u

APRIL 2016 • WBJ OBSERVER

Ergonomics is key in logistics

Tomasz Kur, Director of Customer Operations, Seito Polska The interest in logistics outsourcing is growing. These days, outsourcing is not only about saving money. The financial aspect is important, but success can also be achieved by technological upgrades and modern management systems. Outsourcing nowadays is about allowing the company to grow. In Seito, we deal with highly specialized areas of manufacturing and internal logistics. If you don’t follow the trends and introduce new solutions, your competition will catch up with you rather quickly. That’s why managers choose to tap into our know-how. We take over the responsibility for logistics processes and the company can focus on its core activity. At the beginning of cooperation we always perform an audit at the site, during which we observe the process, measure the timing of activities as well as evaluate the use of resources. On the basis of the audit we carry out an analysis and come up with new solutions; most often they concern the improvement of the process, the reduction, or changes in the resources. Most important, however, is the fact that optimization is a continuous process in which our employees play an active role by means of, among others, Kaizen initiatives or OPL. Warehouse Management Systems have been developing rapidly in recent years. They allow the operator to track products – see their history, where and when they were stored etc. Seito’s own software is designed to improve ergonomics – both in terms of the working conditions for our employees and the movement of goods within the warehouse. You can also see advancements in the hardware we use. Forklifts are still the primary tool for warehouse operations. However, their capabilities are changing as they become more specialized. Image: Shutterstock

Third-party option

WBJ Observer presents

SPACE FOR DREAMS On March 9 you received the Gazela Biznesu, 2015 Award for the most dynamically developing SME. Is it time to recapitulate? It’s still too early for recapitulations. We feel that we are just beginning, and that there are many interesting projects ahead. Whilst being proud of the fact that we, as a team, have received the award in the most dynamically developing company category, our focus is on ensuring that our company continues to be an established, reliable business partner on the market we’ve successfully operated on for the last five years. We appreciate the award and our entire team is grateful for it. However, we are far from being complacent and intend to pursue our strategy. What factors have helped you succeed? Let me quote: “From the moment they wake they devote themselves to the perfection of whatever they pursue. I have never seen such discipline.” The application of this quote in everyday life, whether in developing a company or building good relationships, always brings long-term results.

Is there space for creativity in your sector, considering that “you’ve seen it all?” We’re very far from saying “we’ve seen it all.” A growing number of factors influence trends, solutions and technologies. Our customers’ expectations are growing. The strong trend to excel in very narrow specializations promotes creativity, but in narrower scopes. Space design budgets are the only limitation for the market on which we operate. Our partners – outstanding architects and designers – are open to the most daring ideas, as long as they improve functionality and tenants’ comfort. What factors determine the choice of your project realization partners? Complexity of services? Flexible prices? It depends on the people engaged in specific processes. Sometimes it’s the price, sometimes the references,

ARTUR WINNICKI, MRICS; PARTNER AT REESCO; MANAGEMENT BOARD MEMBER AT RICS POLAND

management, resource allocation, or simply trust. The construction works involved in the arrangement or rearrangement of commercial spaces make an intricate process. Not as spectacular as erecting new buildings, but due to the intricacy of the space arrangement process alone, nearly all customers appreciate complex services and value them as a highly important factor. Our business philosophy concentrates on complex services and a limited number of subcontractors. About 80-90 percent of works are performed by the Reesco team and other companies in our group, transferring the trust we enjoy to our dependent companies. You received another award this year, Forbes Diamond, 2016. Is there still space for dreams? The award has not been the dream of the management that shapes our company’s strategy, but we value it highly. Our dream is that, 20 years from now, our employees remember us, the company and its entire team, as a fascinating, important stage in their careers. We want every team member to become a person of success, but also a person with high values. We share the opinion that “if you are not making someone else’s life better, then you are wasting your time.”

WBJ OBSERVER • APRIL 2016

BROUGHT TO YOU BY REESCO

What are the human factors that are important in the fit-out process? People are all-important. Our world is a very intricate structure. Although we introduce many tools that aid everyday actions, it is people who make them work. Consider the fit-out process and building a standard wall: without a satisfied tenant’s employee, we wouldn’t receive a positive opinion, which depends on whether our employees have drawn from their experience to build that wall and paint it well. The collaboration and interaction of many people make the simplest element in this process. We should value their commitment and skill. Teamwork is of the greatest value in this world.

Future office

CEEQA report 2016 More is less?

GREEN, COMFORTABLE AND FUN - OFFICE SPACE IS BECOMING A TALENT MAGNET FOR COMPANIES. BUT AS FIRMS REVAMP THEIR OFFICES, THEIR SPACE REQUIREMENTS ARE SHRINKING. COULD IT SPELL TROUBLE FOR DEVELOPERS?

CEEQA REPORT INTRODUCTION

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Musical chairs G

one are the days of endless corridors with gray walls and even grayer carpets. As companies fight tooth and nail to attract and retain talent, they increasingly find it is office space that can tip the scales in their favor.

Developers are striving to outdo one another in designing their offices of the future. Not only are they making office space fun and entertaining, they are also helping companies to reevaluate their needs and increase office efficiency. Desk sharing is no longer just for interns, as even CEOs can be seen setting up their workspace each morning at a different desk. Meanwhile, teleworking is making a comeback in a big way as younger generations are beginning to gain leverage in dictating working arrangements, all of which inevitably leads to companies reducing their space requirements. The trend is already starting to show in Warsaw – the region’s biggest market. A wave of companies consolidating their offices is fueling demand for the time being, but whether that will be enough to fill all the space coming out of the pipeline was the subject of a heated debate at the CEEQA Insight Summit, held in Cannes in March at MIPIM – the biggest international trade fair for the real estate industry.

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Richard Hallward is the founder and managing director of CEEQA

CEEQA is renowned for making accurate and often staggering predictions for the real estate industry. Founded in 2004, its goal has been to increase transparency in the CEE real estate market by provoking debate, showcasing talent, honoring the best projects and companies, all the while making real estate get-togethers fun and exhilarating events that are talked about long after the music stops. u

An office with a view

From open plan offices, to cubicles, back to open space – office space has evolved tremendously over recent decades. The design and multi-functionality of the space is now seen as an important talent magnet in the increasingly fierce competition for gifted employees. Could it spell trouble for office developers, though?

video game console with a hires projector, a comfortable red couch, a basketball hoop, exotic plants on the walls, streams of daylight pouring in through floor-to-ceiling windows. It’s not a five-star hotel suite, it’s a modern corporate office in the city center. You can see them popping up in all major cities across CEE: Prague, Budapest, Bucharest, Poland’s regional cities such as Kraków and Gdańsk, as well as Warsaw. They are all green-certified and armed to the teeth with high-tech building solutions. “Long gone are the days when tenants were impressed by openable windows, raised floors or BMS systems. The high stan-

dard of finishing in common areas, or even the additional infrastructure, such as bicycle stands, showers for cyclists and charging points for electric vehicles no longer create the ‘wow’ effect, either,” said Stanislav Frnka, CEO of HB Reavis Polska. Work-life blend The office metamorphosis is largely the product of generational changes in the workplace. While the X generation was all about work-life balance: striving to keep their work separate from their private life and spend their free time in a creative and stimulating way, the younger “Selfie generation,” as the Millennials are often referred to, tend to lean

more towards a “work-life blend,” where they want to feel equally creative, relaxed and fulfilled whether they are in the office, or kicking back on their living room sofa. The “at-home” feel of their offices goes a long way to ensuring that. “The blurring between work and personal life is happening, and I think these kinds of spaces are designed to meet these expectations,” said Pavel Trenka, CEO of HB Reavis, during the annual CEEQA@ Mipim Insight Summit held in March. Talent magnets Attracting talent is becoming the no. 1 issue for most employers these days. Accord-

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CEEQA REPORT FUTURE OFFICE

ing to Manpower Group, an HR consulting firm, 41 percent of employers in Poland find it difficult to locate people with the right skill set for the job. A company car, a social package and private healthcare just don’t cut it anymore. For an increasing number of Millennials, or Gen-Y’s, the conditions they work in are more important than the salary itself. A third of them would rather have a flexible work environment and access to social media than a bigger paycheck. They are, after all, the most “connected” and sociable of all generations currently in the workforce. “Last year we did a complete survey of business service companies, asking them what amenities they wanted to have in their office. Fully available wi-fi and bicycle racks took the two top spots [with 75 percent and 78 percent respectively],” explained Tomasz Trzósło, managing director & head of Capital Markets Poland, JLL.

“THE SHRINKING NUMBER OF WORKINGAGE ADULTS ... WILL ERODE THE DEMAND FOR DESK SPACE WITHIN A TRADITIONAL OFFICE ENVIRONMENT. Stanislav Frnka, CEO of HB Reavis Polska

Come and CEE Stabilised and diverse. Mature and with growth prospects. Witaj, vítejte, bun venit, добродошли, üdvözlet, vitajte! Welcome to Central and Eastern Europe. We are here. We are JLL. Let’s talk about the real estate investment opportunities in CEE.

eu.jll/cee

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Sharing is everything The social and co-working needs of the younger generation are fueling another change in the workplace: assigning workers to specific desks is becoming a thing of the past. Some of the largest corporations, such as EY, CBRE and Skanska have already switched to a desk-sharing model. “We’ve had hot-desking in our office for the past 12 months. Initially there was a lot of rejection to it. … But we’ve found that there is an incredible increase in efficiency when people manage to clear what is on their desks in a day,” said Sean Doyle, head of Capital Markets Poland at CBRE. The discomfort some employees, particularly the Gen X and Baby Boomers, might get from giving up their own desk is easily offset by the option of working from home. And even more so by all the extracurricular activities they can indulge in while at work.

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“Having been brought up in the information technology era, with easy access to the internet and mobile devices, the representatives of Generation Y don’t want to be tied to a desk and work on their own. Instead, they prefer to stay mobile and work in tandem with others, even when at the office. And of course, they expect the physical space and the office technology to facilitate such a work style,” concurred Frnka. The new water cooler One could ask, what kind of impact providing so many “fun distractions” has on employee productivity. Employees already spend less than half their time at work actually doing their jobs. Wasteful meetings and excessive e-mail communication are the two chief culprits responsible for keeping people away from getting things done, according to a study by software firm AtTask and market researcher Harris Interactive. Is giving your employees games and rec rooms a good idea? Won’t that make them even bigger procrastinators? No, if you consider that one of the best ways of exchanging valuable intel between workers is through informal, ad hoc meetings, as research suggests. So why not combine knowledge dissemination with workers’ downtime? In the past, a lot of important decisions were made during cigarette breaks or around the proverbial water cooler. Now, you can hear employees talk shop while playing Ping-Pong or shooting zombies. Go flexible Another way of ensuring better productivity is optimizing the way space is used: why have a 50-seat board room if only about 10 people usually come to a

(L-R) Daniel Harris, managing director CEE, Tristan Capital Partners; Pavel Trenka, Group CEO, HB Reavis; Hadley Dean, CEO EMEA, (MRICS) Compass Offices; Sean Doyle, head of Capital Markets Poland, CBRE at CEEQA@Mipim Insight Summit in Cannes

meeting? Some meetings have no more than three or four participants, so small meeting rooms or interview rooms are far more suitable. Have you ever been on the phone with a client strolling down the hallway or in the stairwell in search of some privacy? That’s where office phone booths come in handy. All this change and reshaping of the workspace has one more side effect: companies need less space. “When you go from a ‘normal’ office to an office that is well thought-through and well prepared and where everything is open plan and no one has their own desk, you save about 30 percent in space. Take half of those savings and put it back into fun social areas. So usually, companies take 15 percent less – more people are working from home, flexible working hours are becoming acceptable,” explained Hadley Dean, CEO for EMEA of Compass Offices. And that can have a much bigger impact on the office market than a temporary oversupply, or green certificates

might have in the long run. Fully automatic Also, in the long term, ever-increasing automation may further limit the need for office space. Already, 45 percent of employees are afraid that automation, intelligent machines and AI will replace people in their jobs, at least those that can be automated, according to a study by ADP, an HR services provider. Developers are well aware of the long-term consequences. “The shrinking number of working-age adults, combined with the growing trend among Gen Y employees towards remote working, will erode the demand for desk space within a traditional office environment,” summarized Frnka. If the trend continues, the record-high tenant demand seen in some of CEE’s major markets, including Warsaw, might turn out to be a momentary blip, while in the long run, landlords may have to face even stiffer competition. u

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CEEQA REPORT FUTURE OFFICE

A balancing act

Despite a vast office supply in Warsaw, market forces seem to be working to create an equilibrium

EE’s largest office market, Warsaw, has been on the hot spot for a few years, with a huge pipeline of office space creating market imbalances. Developers seem unfazed by the onslaught of new office space. “In 2016 we expect around 30 new office projects to be completed in Warsaw, and if developers approach their clients properly, by preparing tailor-made offers, they shouldn’t have big problems with lease levels,” said Stanislav Frnka, CEO of HB Reavis Polska. Data seems to corroborate developers’ optimism. In 2015, a record 830,000 sqm of office space was leased (up by 36 percent year-on-year), with net take-up of 550,000 sqm (a 29 percent increase on 2014), according to JLL data. In recent years, one of the main demand drivers was companies consolidating their locations, switching to newer office towers

with better views, more advanced HVAC systems and more reliable server rooms. One of the biggest deals of 2015 was Samsung moving from three different locations into one – the 100,000-sqm Warsaw Spire, set to be delivered in May 2016. As is the case with other major deals, it means increasing take-up of the new space coming out of the pipeline, but also increased vacancies in older office buildings that may have a hard time competing for tenants with newer and more “digital” buildings. Already, 20 percent of Warsaw’s 4.6 million-sqm of office stock is over 15 years old. Market forces Growing vacancies, especially in older stock, have put downward pressure on rents in Warsaw, particularly in effective rent rates. “Effective rents are up to 30 percent lower than headline rents in the case of anchor

tenants,” said Anna Kicińska, partner and head of the Real Estate Advisory Group at EY. Naturally, falling rent rates have had a positive impact on demand. A lot of BPO/ SSC firms, whose space requirements are usually quite significant, are now looking at Warsaw, which until recently was simply too expensive, with a more favorable eye. “We’re seeing a lot of companies that have so far, developed primarily in regional cities: Kraków, Wrocław, as well as other CEE capitals, like Budapest, we see more of them shifting towards Warsaw. For instance, Goldman Sachs is locating its global center in Warsaw,” said Tomasz Trzósło, managing director & head of Capital Markets Poland, JLL. Investors’ view Still, there is no denying the fact that the massive pipeline of new office space

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in Warsaw has created an imbalance in the region’s biggest market. “From an investor’s point of view, Warsaw is a challenge to invest in. Sometimes the supply-demand balance gets a little out of whack. It is out of whack in Warsaw right now and has been for the past 12 months,” said Daniel Harris, managing director for CEE at Tristan Capital Partners. He did, however, admit that the surge in demand was offsetting the excess supply coming online. Indeed, 2015 saw fewer office deals in Poland’s capital compared to previous years: only €477 million, compared to €1.36 billion a year earlier and €913 million a year before that. But market analysts think last year’s downturn was a momentary blip. “Investor appetite remains strong in Warsaw, and following a year of very few opportunities being offered in Warsaw, we expect 2016 to be a strong year, with new, international capital sources coming into the Warsaw market,” said Soren Rodian Olsen, partner and head of Office & Industrial Investments at Cushman & Wakefield.

€2.3B 2015 Transaction Volume

Real Estate Advisory

“WARSAW IS A CHALLENGE TO INVEST IN.

Daniel Harris, managing director for CEE at Tristan Capital Partners

A broader perspective Indeed, Warsaw continues to top the investment attractiveness rankings among CEE countries. According to CBRE, Poland was named the 6th most attractive EMEA country for real estate purchases in 2016, following Germany, the UK, Spain, the Netherlands and France. Warsaw also took sixth spot among EMEA cities, falling behind London, Madrid, Paris, Berlin and Amsterdam. From other CEE markets, Budapest was ranked the highest (8th overall), closely followed by Prague (9th) and Bucharest (13th). “Prague remains a focus for international investors, although we still see limited availability of core offices in core locations. Our recent investor meetings have also revealed investor interest returning to Budapest, which is a good sign for the Hungarian market, although we do expect core and core+ investors to be very selective in terms of assets and locations,” commented Olsen. u

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CEEQA REPORT INTERVIEW

Two heads are better than one

The CEE warehouse market has arguably seen the most change over recent years. It continues to attract a lot of investor interest, with the e-commerce boom in CEE countries fueling and reshaping the logistics landscape. Where is CEE’s warehouse market compared to the rest of Europe? We asked two experts in the field, both of whom have emerged from local CEE markets to head the European divisions of their respective firms How long have you been involved in CEE warehouse markets? Ben Bannatyne: I joined the Warsaw office of Jones Lang Wooton (now JLL) in 1997, and one of the first projects I worked on was Diamond Business Park Janki developed by AIG/Lincoln. Shortly after, I advised Whirlpool on setting up a rail served distribution center for Poland. We ended up pre-leasing a building at Prologis Park Teresin, the first rail served distribution park in Central Europe. Robert Dobrzycki: I gained my first experience in the field of industrial real estate in 1999 at Menard Doswell & Co., an industrial estate construction and management company. Whereas, my adventure with CEE warehouse markets began when Panattoni decided to open its office in Europe. In 2005, which is already over a decade ago, we opened the Polish office, in 2007 we launched an office in the Czech Republic, and in 2016 – in Romania – a CEE market we strongly believe in.

How have these markets changed since then? Ben Bannatyne: Central Europe has matured tremendously over the last 15 years. Today, Poland is considered one of the “big four” European markets alongside the UK, France and Germany. Obviously, improved infrastructure and the growing retail sector, fueled by increasing spending power, have driven a huge amount of development in the warehouse and logistics sector across the region. In addition, Central European countries have attracted significant foreign direct investment, driven by lower labor costs and proximity to Western Europe. A great example of this is the automotive sector in the Czech Republic and Slovakia. I believe there is still huge opportunity for growth, both in CEE and across the rest of Europe. The UK is the most mature European market and yet we are still able to develop our business there. Ongoing supply chain reconfiguration, the growth of the re-

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tail sector and the fast growing e-commerce sector all provide huge opportunity for growth. Prologis will continue to play to our strategy, focusing on core markets close to dense population centers. Robert Dobrzycki: In Poland, we have witnessed tremendous change over the years in the warehouse industry. Initially, they were influenced by the country’s accesDomaniewska Office Hub

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sion to the EU in 2004. That’s when road infrastructure started to improve thanks to EU financing, providing strong growth impulse to the entire logistics industry, as well as warehouse and industrial real estate. As a result of all these transformations, the Polish warehouse market became multiregional. In 2008, Poland’s warehouse space supply reached 5 million sqm and that was when Lehman Brothers declared bankruptcy, followed by a global financial crisis. That slowed the growth of the warehouse sector in Poland somewhat. At the same time, Panattoni created a new company within its structures – the BTS Group. The following years saw a significant increase in built-tosuit facilities, including industrial real estate built in Special Economic Zones. Today, the warehouse stock in Poland is close to 10 million sqm and in the Czech Republic is over 5 million sqm. That constitutes a majority of the total modern warehouse stock in CEE (Poland, the Czech Republic, Romania and Slovakia) which now stands at nearly 20 million sqm. Developer activity is now driven not only by companies consolidating or relocating, but it is also fueled by the e-commerce sector as well as the manufacturing industry, which is still going strong. You both started in the Polish market and are now in charge of European operations of your companies. Is such a transition challenging? Ben Bannatyne: I think that seven years’ experience “in the field” is a great benefit when managing an entire European business. Central Europe has grown quickly in a competitive environment and is now very popular with many of our European and Global customers. Numerous initiatives implemented here can be exported across

Ben Bannatyne, president of Prologis Europe

Europe and the rest of the world. With a 16.5 million-sqm portfolio, spanning 13 different countries, I am able to cherry-pick the best practices from each and implement them across the entire European platform. Robert Dobrzycki: Ever since my appointment, we have been developing our business in Germany, and most recently, we also ventured into Romania. Such expansion brings a lot of challenges, both with respect to company management as well as in implementing business strategies. Each country

is different, equally in terms of the legal framework for doing business and in terms of industry development. Poland, the Czech Republic and Germany are similar markets in terms of client portfolio, contractors and investors, but each of them is completely different in terms of the market size. Germany is the European leader and also a far more mature and saturated market. Poland is slowly becoming Germany’s support base, whereas the Czech Republic has a more moderate need for warehouse space. u

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Planning ahead

Monika Rajska-Wolińska is the managing partner at Colliers International WBJ Observer: How long have you been with Colliers International? How much has the company changed since you joined? Monika Rajska-Wolińska: I have been with Colliers since 1999. When I started out, the commercial real estate market was in its infancy. We only had a handful of office buildings in Warsaw. Colliers International was a global player but there were only seven people on its Polish team. Today, the company employs over 250 people and continues to expand. The biggest changes have taken place over the past 5-6 years. We have increased employment by nearly 60 percent and the company’s revenue has grown by 35 percent. The range of our services has expanded, as has our geographic scope. We opened four new departments and five offices in regional cities. We’ve also shifted towards a much more personal approach towards our clients. You became the managing partner for Poland in 2011. What was it like becoming the head of a top-tier real estate corporation? The early days of my work as a managing partner weren’t easy. I was the first Pole to head the Polish office of Colliers International. Added to that, I was a woman, which was all the more challenging in a male-dominated environment. The support I got from the other partners and the entire Colliers team proved invaluable. Together we were able to plan, and then implement, a lot of changes in our organization. Naturally, not all ideas met with immediate acceptance, particularly since my growth strategy for the company was significantly different from that of the previous head of Colliers in Poland. It took time and fortitude to get to where we are now.

radar right now? The invitation to join the board was an honor and it offers a wider perspective, an overview of the entire region rather than just the Polish market. Germany, the UK and France are still the top three EMEA markets for investors. However, CEE countries, and Poland in particular, are gaining strength. We have seen an influx of capital from Asian funds (Hong Kong, Singapore, South Korea, China) and from South Africa, and we expect to see more this year. Which CEE markets, other than Poland, are growing in importance? Romania is undoubtedly an interesting market for investors looking for new opportunities. The BPO/SSC sector has named Romania as one of the most attractive markets for investment, second only to Poland. The supply of investment product in Poland is shrinking and funds are beginning to look elsewhere. I don’t think Romania will overtake Poland, though. These are two very different markets. Investment in Romania is centered around its capital, while Poland is a mature market, where not only Warsaw, but also regional cities attract capital. u

What do you like most about your job? People – I love talking to them, exchanging views, listening to their ideas, seeing them advance within the firm. I find my working relations inspiring and invigorating. I also like meeting our clients: listening to what they need, what bothers them and what pleases them, and what they’d rather do differently. It’s fascinating to be at the forefront of change, introducing novel ideas and planning ahead. In business, I always look at least five years ahead. What aspects of your job do you find the most challenging? Being in charge of a corporation has its dark sides. Even though you are surrounded by friends at work, being their boss means, at the end of the day, you are on your own with certain problems and dilemmas. This loneliness can be tough. Just as when people fail to see the opportunities they are being offered. You are not only responsible for Colliers International’s Polish operations. Last year you became a member of the Colliers EMEA Board, which means you have a say on the company’s strategy in Europe, the Middle East and Africa. Which markets are on investors’

WBJ OBSERVER • CEEQA REPORT 2016

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CEEQA REPORT ENTERTAINMENT

Holding out for CEEQA Gala

This year’s live concert by pop legend Bonnie Tyler on April 12 may well eclipse all the previous performances It’s tradition that CEEQA events, and particularly the Awards Gala, offer not only a lavish spread of gourmet dishes and great company, but also big-league entertainers. This year, Bonnie Tyler will headline the ceremony. Tyler began her career in the 1970s and gained worldwide recognition with hit singles such as “Lost in France,” “More than a Lover,” and “It’s a Heartache.” Her greatest success came in 1983 with “Total Eclipse of the Heart” topping music charts in several countries, including the UK and the Billboard Hot 100. Her list of hit numbers also includes “Holding Out for a Hero” recorded for the soundtrack to the 1984 film “Footloose.” Tyler has joined a long list of music legends who have added splendor to CEEQA events, which includes: Kim Wilde, Hot Chocolate, Boney M, Bananarama, Sister Sledge, and Gloria Gaynor. The 13th CEEQA Gala is to be held, for the fourth year running, at the Soho Factory, a refurbished industrial building in Warsaw’s Praga district.

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CEEQA REPORT ENTERTAINMENT

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Cannes reunion More than 200 guests, who visited this year’s CEEQA@ MIPIM event in Cannes on March 12, were also treated to some top-notch entertainment. The event featured a one-off reunion concert by Cock Robin duo Peter Kingsbery and Anna LaCazio, followed by a lounge session by Milan-based DJ/producer and YouTube sensation Gioli Lipari. Both events are hosted by Monika Zamachowska, the wellknown Polish TV reporter, who has been the face of CEEQA for nine years. u

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CEEQA REPORT 2016 • WBJ OBSERVER APRIL 2016 • WBJ OBSERVER

CEEQA REPORT • APRIL 2016

OBSERVER RANKING

OBSERVER TOP 10

Open Pension Funds RANKED BY AMOUNT OF NET ASSETS (IN PLN, AS OF END 2015)

1NATIONALE-NEDERLANDEN 3 POWSZECHNE

POWSZECHNE TOWARZYSTWO TOWARZYSTWO EMERYTALNE EMERYTALNE S.A. PZU S.A.

NATIONALE-NEDERLANDEN OTWARTY FUNDUSZ EMERYTALNY OTWARTY FUNDUSZ EMERYTALNY PZU "ZŁOTA JESIEŃ" TOTAL AMOUNT OF NET ASSETS

34,265,790,419.5

18,501,712,112.8

Number of members (as of end 2015) 3,077,790 Shareholders: 100% - NN Continental Europe Holdings B.V.

Number of members (as of end 2015) 2,208,375 Shareholders: 100% - PZU Życie

Address: ul. Topiel 12, 00-342 Warsaw www.nn.pl

Address: Al. Jana Pawła II 24, 00-133 Warsaw www.pzu.pl

2 AVIVA POWSZECHNE

4 METLIFE POWSZECHNE

TOWARZYSTWO EMERYTALNE AVIVA BZ WBK S.A.

TOWARZYSTWO EMERYTALNE S.A.

AVIVA OTWARTY FUNDUSZ EMERYTALNY AVIVA BZ WBK

METLIFE OTWARTY FUNDUSZ EMERYTALNY

TOTAL AMOUNT OF NET ASSETS

30,935,638,333.2

11,228,210,141.9

Number of members (as of end 2015) 2,649,332 Shareholders: 90% - Aviva Towarzystwo Ubezpieczeń na Życie, 10.00% - BZ WBK

Number of members (as of end 2015) 1,591,605 Shareholders: 50% - MetLife TUnŻiR, 50% - MetLife EU Holding Company Limited

Address: ul. Domaniewska 44, 02-67 Warsaw www.aviva.pl

Address: ul. Przemysłowa 26, 00-450 Warsaw www.metlife.pl

DATA PROVIDED BY

TOTAL AMOUNT OF NET ASSETS

APRIL 2016 • WBJ OBSERVER

OBSERVER RANKING

5 AXA POWSZECHNE

TOWARZYSTWO EMERYTALNE S.A. AXA OTWARTY FUNDUSZ EMERYTALNY TOTAL AMOUNT OF NET ASSETS

9,072,035,962.58

8 PKO BP BANKOWY POWSZECHNE TOWARZYSTWO EMERYTALNE S.A.

PKO BP BANKOWY OTWARTY FUNDUSZ EMERYTALNY TOTAL AMOUNT OF NET ASSETS

6,344,478,335.91

Number of members (as of end 2015) 1,152,169 Shareholders: 100% - Société Beaujon

Number of members (as of end 2015) 943.153 Shareholders: 100% - PKO Bank Polski

Address: ul. Chłodna 51, 00-867 Warsaw www.axaofe.pl

Address: ul. Chłodna 52, 00-872 Warsaw www.pkopte.pl

6 GENERALI POWSZECHNE 9POWSZECHNE TOWARZYSTWO EMERYTALNE S.A.

GENERALI OTWARTY FUNDUSZ EMERYTALNY TOTAL AMOUNT OF NET ASSETS

6,905,153,057.76

ALLIANZ POLSKA OTWARTY FUNDUSZ EMERYTALNY TOTAL AMOUNT OF NET ASSETS

6,343,807,012.65

Number of members (as of end 2015) 1,000,455 Shareholders: 100% - Generali T.U.

Number of members (as of end 2015) 1,076,996 Shareholders: 64.98% - TUiR Allianz Polska, 35.02% - Allianz SE

Address: ul. Postępu 15B, 02-676 Warsaw www.generali.pl

Address: ul. Rodziny Hiszpańskich 1, 02-685 Warsaw www.all.pl

7NORDEA POWSZECHNE

10AEGON POWSZECHNE

TOWARZYSTWO EMERYTALNE S.A.

NORDEA OTWARTY FUNDUSZ EMERYTALNY TOTAL AMOUNT OF NET ASSETS Image: Shutterstock

TOWARZYSTWO EMERYTALNE ALLIANZ POLSKA S.A.

6,435,167,373.13

TOWARZYSTWO EMERYTALNE S.A.

AEGON OTWARTY FUNDUSZ EMERYTALNY TOTAL AMOUNT OF NET ASSETS

5,812,548,444.2

Number of members (as of end 2015) 989.883 Shareholders: 100% - Nordea Life Holding AB

Number of members (as of end 2015) 921.408 Shareholders: 100% - AEGON Poland/Romania Holding B. V.

Address: Al. Jana Pawła II 27 (Atrium Centrum), 00-867 Warsaw www.nordeapolska.pl

Address: ul. Wołoska 5, 02-675 Warsaw www.aegon.pl

WBJ OBSERVER • APRIL 2016

EVENTS / MADE IN POLAND

(L-R) Beata Socha, Managing Editor, WBJ Group; Aleksander Libera, Advisor to the Board for Polish Information and Foreign Investment Agency; Nadia Bouacid, Head of Business Development Unit, The Polish-French Chamber of Industry and Commerce; Jacek Sosnowski, president, The Polish-Iranian Business Council; Tomasz Sobol, marketing director, Beyond.pl; Monika Żochowska, president, Phenicoptere

MADE IN POLAND 2016 BRANDING, GOOGLE TRANSLATE AND (THE LACK OF) INSTITUTIONALIZED SUPPORT WERE AMONG MANY TOPICS DISCUSSED DURING THE ANNUAL MADE IN POLAND CONFERENCE. EXPORTERS AND EXPERTS DEBATED ON HOW TO IMPROVE EXPORT FIGURES, WHAT MISTAKES POLISH ENTREPRENEURS ARE MAKING WHEN ENTERING FOREIGN MARKETS AND THE STATUS OF THE MADE IN POLAND BRAND

he annual Made in Poland conference was divided into two panels. During the first, hosted by WBJ Group editor-in-chief, Jacek Ciesnowski, panelists discussed the export potential of Polish companies. “We have products, but we need to boast about them. We need to go to international fairs, exhibitions, take part in governmental delegations,” said Andrzej Czernek, vice president of the Polish Promotional

APRIL 2016 • WBJ OBSERVER

Program Foundation “Teraz Polska,” which promotes Polish products, both domestically and abroad. The subject of Made in Poland as a brand was heavily discussed. Should Polish companies use it to describe their products, or are they better off using the less precise Made in EU moniker? “We always present ourselves as a Polish company, wherever we go. I asked one of our clients from Algeria why he had chosen us. And he said that our country is synonymous with

EVENTS / MADE IN POLAND

high quality,” said Michał Wilczyński, sales manager at Nowy Styl Group, a furniture maker. Wilczyński added however, that they also have a different approach, they acquire local companies with a strong following and sell their products under that brand on local markets. That trend, while still strong, is not as significant as in the past. “Some 15-20 years ago, Polish companies usually entered the German market by purchasing local companies. These days however, most SMEs enter the market using their own brands. The perception of Polish producers is getting better each year,” explained Katarzyna Soszka-Ogrodnik, spokeswoman of the Polish-German Chamber of Industry and Commerce, adding that Germany is often the first step for Polish firms abroad on their path to further foreign expansion. Obviously, with so many different sectors, it’s impossible to pick one good export strategy for everyone. “Our business is closely connected to

pl;

love to see more of is an active approach from the Polish government to promoting Polish products abroad, not only in terms of military merchandise. Marek Foryński, managing director of BTS Group at Panattoni Europe, spoke in a similar vein, saying that “The Made in Poland brand is not a strong

Images: Karolina Gmurczyk/WBJ

(L-R) Jacek Ciesnowski, Editor-in-Chief, WBJ Group; Michał Wilczyński, sales manager, Nowy Styl Group; Marzena Mażewska, president, Polish Business and Innovation Centers Association in Poland; Marek Foryński, Managing Director, BTS Group at Panattoni Europe; Andrzej Czernek, vice president,The Polish Promotional Programme Foundation “Teraz Polska”; Katarzyna Soszka-Ogrodnik, spokesperson, The Polish-German Chamber of Industry and Commerce; Tomasz Badowski, spokesman at WB Group

politics, defense companies are tied to the activities of the country they come from. That’s why we often use government delegations to promote our products,” said Tomasz Badowski, WB Group spokesman, a producer of military communication systems and drones. He added that what he would

WBJ OBSERVER • APRIL 2016

one, not a successful one,” advocating not only stronger, but more coordinated support from the government and many of its agencies and institutions, which could help in promoting Polish exports. “We all know that Polish apples are the best, because we were told that after the Russian embargo. But do we know that we’re also a prominent exporters of cosmetics, shoes, yachts and other products?” Foryński added. As it turns out, for some companies, foreign markets are not only a priority, but the only source of income. “About 45 percent of companies present in technology parks are innovative, and many of them, as their first steps in business, sell their goods internationally, as domestically there is not a market for their products,” said Marzena Mażewska, president of

APRIL 2016 • WBJ OBSERVER

the Polish Business and Innovation Centers Association in Poland. Attention to details

The second panel, moderated by managing editor of WBJ Group Beata Socha, concerned promoting Polish exports. One of the main conclusions from the discussion was the lack of resources spent on marketing, which is often crucial in getting a foothold abroad. “They often try to enter foreign markets without spending a dime. It’s impossible to achieve success this way,” claimed Nadia Bouacid, head of Business Development Unit at the French Chamber of Industry and Commerce in Poland. Other panelists offered some practical solutions: “Pay attention to details. We have only one product but seven different packages

worldwide. Our customers in France have different priorities than German clients for example, so they need different packaging,” explained Monika Żochowska, president of Phenicoptere. She also offered her opinion on the topic of government support, which was discussed in the first debate. “It’s really crucial. We’ve been going to various fairs and exhibitions for three years, and when potential business partners see that we have serious backing from an institution such as the ministry of economy, they know we are reliable.” When the discussion switched to the subject of the internet and if it can be a powerful promotional tool or a determent, Tomasz Sobol, marketing director at Beyond.pl, suggested using it with caution. “You can spend money on marketing, but you need to know if it brings any effect. Your activities should be measurable. Use tools that can bring you desired effects. Social media are fine when it comes to B2C, but with B2B I’d use other services.” “The internet is important, so is online marketing. But you will never stay away from old-school networking. You have to remember that it can vary from country to country, even in such culturally similar regions as the EU,” added Aleksander Libera, advisor to the board for Polish Information and Foreign Investment Agency. A common plea to everyone was not to use Google translate as a marketing tool,

Images: Karolina Gmurczyk/WBJ

EVENTS / MADE IN POLAND

Italy is. In many aspects, we will never be seen as number one. We need to remember that Polish companies are very often subcontractors for other foreign firms and it can also be something to be proud of. We need to promote things that we are good at, our specialties, not necessarily the end product. ” You can watch both panel discussions in full (in Polish) on our YouTube channel at youtube.com/WBJdotPL

Images: Karolina Gmurczyk/WBJ

and not to rely exclusively on translators, but to use native speakers as well. Jacek Sosnowski, president of the Polish-Iranian Business Council, dampened exporter’s enthusiasm a little bit. “We are one of many countries that export their products. We’ll never be as strong as France in Iran, because Paris has a long-standing connection there, dating back hundreds of years. We won’t be seen as pioneers of design like

WBJ OBSERVER • APRIL 2016

EVENTS / GALA BOOK OF LISTS

Smart City Forum

The

3rd Smart City Forum – the largest meeting in Poland concerning intelligent cities – took place at the Sheraton Hotel in Warsaw on March 15-16, 2016. More than 700 guests took part in the conference, including mayors of Polish cities and towns, representatives of marshal offices, local administration and business. The ceremony was opened by Mariusz Gaca (Chairman of the Advisory Board, Smart City Forum/Vice-chairman of the Management Board, Orange Polska) and Jarosław Jóźwiak (Vice mayor of Warsaw). The main guests of honor were Robert Biedroń (Mayor of Słupsk), Tadeusz Truskolaski (Mayor of Białystok), Krzysztof Żuk (Mayor of Lublin). The speakers were i.a. Tadeusz Krzakoowski (Mayor of Legnica), Maciej Bluj (Vice mayor of Wrocław), Bartosz Bartoszewicz (Vice mayor of Gdynia), Michał Zaleski (Mayor of Toruń) and Ewa Weber (Secretary of Zabrze).

The first day of the Smart City Forum focused on the idea of building intelligent cities and the thorough analysis of strategies on how to govern cities. Speakers discussed methods of how to create and implement plans for intelligent cities with special focus on how to involve the city’s inhabitants. A very important aspect of the Forum was the discussion concerning possible solutions for more effective security data management in cities. The final discussion of the first day concerned the future of public transport in Smart Cities. Leszek Hołda (Chairman of the Management Board, Integrated Solutions), Maciej Blut (Vice mayor of Wrocław), Marcin Wojdat (Secretary of Warsaw), Ronald Binkofski (CEO, Microsoft in Poland) and Norbert Biedrzycki (CEO, Atos Polska) played an active role in discussions.

CMY

APRIL 2016 • WBJ OBSERVER

Images: MCC Polska

The issues discussed on the second day of the event included the integrated management of urban space in a way that would make it friendly, healthy, comfortable and productive for its inhabitants. Other discussions touched upon many different topics such as financing of investments, advantages and benefits of electronic payment systems, social and senior policies and the phenomenon of telemedicine within smart cities. The discussions were attended by Artur Pollak (CEO, Apa Group), Sylwia Bilska (Commercial Director PayU, Central Europe), Sebastian Christow (Director of the Commercial Economy Department, Ministry of Development), Adrian Kurowski (Director of Visa Europe in Poland), Andrzej Sadowski (President of the Adam Smith Centre), Mariusz Szczubiał (Deputy Treasurer of Toruń) and Andrzej Rybicki (Director of the Consulting Centre, Comarch Healthcare).

EVENTS / XXXXXXXXXXXX

WBJ OBSERVER • FEBRUARY 2016

GADGETS TECHNOLOGY TO MAKE YOUR LIFE EASIER

WE LIVE IN AN AGE OF GADGETS: some are useful, but most are just a waste of time and money. We sift through the latest available tech to pick those that we believe will help you live your life more comfortably and confidently.

Remidi

Price: $349

Nowadays, thanks to the internet of things, everything is connected – even your babies. The Mimo onesie monitors your child’s sleep activity, body position and even temperature. The monitor also sends you alerts if your child wakes up, or if some unusual activity is detected. It also works as a baby monitor and streams audio straight to your phone. Price: $199

Mimobaby.com

APRIL 2016 • WBJ OBSERVER

Mimo

remidi-pro.com

Berry Breeze

This sounds like a first-world problem, but food waste is a serious issue. Berry Breeze is a refrigerator freshener which claims to keep food fresh by up to two or three times longer than usual. It uses ozone to neutralize bacteria, mold, odor and pollutants. Despite its name, Berry Breeze works with all food. Simply put it in the fridge. Price: $40

berrybreeze.com

Images: Mimo, Berry Breeze, Remidi, Bitdefender Box, Kuvée, Waterpik Water Flosser, The Power Pet Door

According to its inventors, Remidi is the world’s first wearable instrument. The glove, thanks to sensors in the fingers and palm, can play custom sounds, while the wrist-controller regulates effects such as reverb, echo and many more. It works on every surface, so you can play a tune on your desk or a wall. It looks a bit like a Nintendo Power Glove, if you remember that piece of gadgetry synonymous with the failure of the gaming business in the late 1980s/early 90s. Let’s hope it won’t follow the video game controller’s path.

The Power Pet Door

Since we surround ourselves with smart TVs, fridges, houses etc. a smart pet door will come as no surprise to you. The notso-smart pet doors we all know and don’t use had a number of drawbacks. It was basically an open gate for stray pets and very small criminals directly into your house. It was also not really practical in harsh weather – when it is raining or windy, having a flap on your door is not the best idea. The Power Pet Door promises to solve all that. The door is paired with a collar so it will open only when such a collar is nearby. It slides up and is airtight and completely weatherproof when closed. Price: $299

hitecpet.com

Waterpik Water Flosser

Brushing your teeth, flossing and using mouthwash might not be enough to keep your teeth and gums healthy. The Waterpik Water Flosser promises to help you avoid trips to the dentist by removing up to 99.9 percent of plaque and being up to 50 percent more effective for improving gum health than regular floss. It’s portable and waterproof so you can use it in the shower. You don’t even have to plug it into a water source, just fill the tank and floss away.

Price: $45

waterpik.com

Kuvée

Kuvée wants to change the way you drink wine. It’s a combination of a decanter and special wine bottle which, as the producer claims, will keep your wine fresh and ready to drink for 30 days after opening. Thanks to this you can drink as little wine as you want and keep the rest for later. For now the device is no more than a gadget. It’s only available in the US (the producers are working on making it available worldwide) and you can only use it with selected wines, which are sold in special Kuvée bottles. But, if the range of wines increases and functionality improves (we’re thinking of bottles you could fill yourself with your own wine) it might become very useful.

Price: $199

Kuvee.com

Bitdefender Box

With so many smart devices, including those described in this very column, you have to ensure that they’re secure. Internet-connected TVs, fridges and other appliances can also be hacked. While a scenario in which hackers change your TV channels, or lock your fridge is unlikely, these devices are a very easy target for stealing your private information or installing malware etc. With the Bitdefender Box you can control all your devices through a smartphone or a tablet, remotely install updates and browse the internet securely, even using public hotspots. Price: $199 (including a one year subscription)

bitdefender.com

WBJ OBSERVER • APRIL 2016

COMMENTARY / REAL ESTATE

APRIL 2016 • WBJ OBSERVER

LIFESTYLE / MUSEUMS

MUSEUM BEST Poland’s turbulent history tends to be emphasized, many times overshadowing its rich cultural heritage. And while it is important to recognize and pay tribute to Poland’s role in both World Wars, it is also important to appreciate the art, music and culture that also bind the nation together. Warsaw is home to some of Poland’s most celebrated museums. The Uprising Museum welcomes visitors from across the world. But I thought I would feature museums that have a little less to do with that period in time, and instead, focus on displays that showcase a brighter side of a country that has quite a bit to offer

Images: Shutterstock, Copernicus Science Centre

THE NATIONAL MUSEUM IN WARSAW

ZACHĘTA CONTEMPORARY ART GALLERY

One of the oldest art museums in Poland, the National Museum in Warsaw claims to house a total of 830,000 pieces. An exciting addition to their repertoire is the “Anything Goes” Museum, an exhibition created by Agnieszka Morawińska and curated by children. Items from all spectrums of the museum have been juxtaposed into one central exhibition that reveals the artistic preferences and tastes of the children who were involved in putting it together. Because of the enthusiasm and interest with which the exhibition was synthesized, the overall museum experience is far from passive – so if you’re looking to get your children interested in art, this is a great place to start.

If you’re a self-proclaimed art and culture enthusiast and you live in Warsaw, it is imperative that you take a trip to Zachęta – Warsaw’s National Gallery of Art. Rather than showcasing a single core exhibition, Zachęta features an array of temporary displays that change with each season and there’s always something fresh and exciting on show. Currently, the museum is featuring Polish poster artist, Wojciech Zamecznik’s “Photo-Graphics.” Zamecznik was active during the communist period in Poland and most of his work was executed in secret. Among the showpieces are films, photographs and models of graphic objects.

For more information visit

zacheta.art.pl/en

For more information visit

mnw.art.pl/en

COPERNICUS SCIENCE CENTRE

Museums aren’t for everyone. But this one is an exception. Whether you are one or one hundred, there is something at the Copernicus Science Center to please – a synthesis that combines traditional learning with a fresh, interactive experience. Like most of my acquaintances, I share the view that the Copernicus Science Centre is the highlight of Warsaw. Apart from their main exhibits (which include a “High Voltage Theatre” show and a planetarium), on temporary display is “Mirrors: All Eyes On Me,” where you can take a closer look at your reflection through a kaleidoscope and a mirror maze. If you are interested in attending this particular showcase, make sure to do so before its closing date on June 12. For more information visit kopernik.org.pl/en

WBJ OBSERVER • APRIL 2016

LIFESTYLE / MUSEUMS

MUSEUM OF CARICATURE AND CARTOON ART IN WARSAW

Situated in Warsaw’s Old Town, The Eryk Lipiński Museum of Caricature welcomes an array of visitors each year. Their collections amount to 20,000 pieces by both local and foreign artists. More recently, the museum has been involved in experimenting with multimedia in order to bring its pieces to life. Currently on display is “The Guardian of Secrets” by Marcin Bondarowicz, who is highly distinguished for his use of caricature in satire. Amongst various publications, Bondarowicz has contributed to National Geographic and Newsweek.

POLIN MUSEUM OF THE HISTORY OF POLISH JEWS

Images:Polin Museum of the History of Polish Jews, The National Museum of Ethnography

Inaugurated only a few years ago, POLIN has become one of Warsaw’s key tourist (and local) attractions. The core exhibit features the ups and downs of not only Jewish history (including art – such as the intricate replica of the Gwoździec Synagogue – and historical artifacts), but of Polish history as a whole. Aside from the main exposition, the museum is also renowned for its temporary exhibitions. This month, “Frank Stella and the Synagogues of Historic Poland” is on display. The creations can be attributed to Frank Stella, a prominent American painter. Stella was inspired by wooden synagogues in Poland that were demolished by the Nazis during the Second World War.

For more information visit muzeumkarykatury.pl

MUSEUMS IN THE PALACE OF CULTURE

For more information visit:

Warsaw’s Museum of Technology and Industry is a tribute to all things technological and can be found at the Palace of Culture and Science, where it has been located since the mid 1950s. Amongst its various pieces on display are cars that date back to the early 1900s, along with motorcycles and an entire planetarium. It should be noted that an Evolution museum is also located in the Palace of Culture featuring reconstructed dinosaur fragments amongst other artifacts. Both museums run temporary exhibitions, although it seems the main displays are what people tend to be drawn towards.

polin.pl/en

For more information visit: pkin.pl

THE NATIONAL MUSEUM OF ETHNOGRAPHY

Museums in Poland tend to be classified into two categories: Polish history, dedicated to war, or those concerning art and painting. Both varieties are, of course necessary, especially in terms of getting a feel of what Polish culture is all about. But if you’re looking for something a little more traditional and a little more artsy, the National Museum of Ethnography is a must. You’ll be able to view folk art not only from Poland, but also from the rest of Europe, Africa, Asia and Australia. On temporary exhibition is “Szukam Raju” - a cutout display by Monika Krajewska, who specializes in Jewish tombstone art, obviously inspired by her Jewish heritage. For more information visit ethnomuseum.pl

APRIL 2016 • WBJ OBSERVER

FEATURE / BUREAUCRACY

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