Out of time
Retail sales figures beat expectations, providing more evidence that Poland’s economy is rebounding
The infamous Techeye files his last tech review 9
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VOLUME 19, NUMBER 34 • SEPTEMBER 2-8, 2013 . z∏.12.50 (VAT 8% included) . ISSN 1233 7889 INDEX-RUCH-332-127
Since 1994 . Poland’s only business weekly in English
Making a stand Investing in Poland Warsaw Business Journal Group’s Investing in Poland 2014 guide launches this week. Inside, find more information, as well as a taste of the content the publication provides 13-15
Economic Forum What’s in focus, and what are the panels to attend at this week’s Economic Forum in Krynica-Zdrój? 16
COURTESY OF SLD
In this issue News . . . . . . . . . . . . . . . . . . . . . . .2-6 Business . . . . . . . . . . . . . . . . . . . .7-8 Finance & Economics . . . . . . . . . . .9 Interview . . . . . . . . . . . . . . . . .10-11 CSR in Focus . . . . . . . . . . . . . . . . .12 Investing in Poland . . . . . . . . .13-15 Economic Forum . . . . . . . . . . . . . .16 Lokale Immobilia . . . . . . . . . .18-21 The List . . . . . . . . . . . . . . . . . . . . . .22 Opinion & Analysis . . . . . . . . . . . .23 Markets . . . . . . . . . . . . . . . . . . . . .24 Sports . . . . . . . . . . . . . . . . . . . . . . .25 Lifestyle . . . . . . . . . . . . . . . . . . . . .26 Last Word . . . . . . . . . . . . . . . . . . . .27
Former Prime Minister Leszek Miller is convinced that activist government policies are the solution to Poland’s economic woes. WBJ ’s exclusive interview 10-11
Gowin, going, gone
Big guns
Jaros∏aw Gowin is at loggerheads with Civic Platform after causing the prime minister and his party plenty of headaches 4
Poland’s defense conglomerate PHO has landed a monster contract to deliver armored vehicles to the Indian military 7
NEWS
www.wbj.pl
Polish soldiers injured in Afghanistan The Polish military base in the province of Ghazni in Afghanistan was attacked on August 28. The Taliban claimed responsibility for the strike. According to Reuters, the attack consisted of an explosion at the base, followed by gunfire. Defense Minister Tomasz Siemoniak said that 10 Polish soldiers were wounded in the operation, one of them seriously. He also added that 10 insurgents had been “eliminated.”
ZCh Police gains extraction rights in Africa Zak∏ady Chemiczne Police (ZCh Police), part of the Grupa Azoty chemical holding, has signed an agreement to acquire 55 percent in Senegalese firm African Investment Group for $28.85 million. As a result of the deal, ZCh Police will acquire rights to the exploration and extraction of phosphorite reserves estimated at 56 million metric tons and ilmenite reserves estimated at 1.5 million tons.
PZU profit beats forecasts
Globally, stock exchanges have lost $1 trillion in traded capital since May, according to calculations made by Bloomberg. Bourses in emerging markets were especially affected. This did not apply to the Warsaw Stock Exchange however, which has seen its main WIG index gain 11% and the blue-chip WIG20 2% over the period. The WIG’s growth reflects a rebound after declines earlier in 2013, analysts said. The index rose from less than 44,000 to over 48,800 points, increasing total capitalization by almost z∏.26.4 billion. ●
Numbers in the News
Syria
Over the past week the world’s attention has been focused on Syria, where a US strike now seems inevitable after President Barack Obama confirmed that he believed the regime of Bashar al-Assad had used chemical weapons against its own people. If an attack does occur, it might be carried out by the US alone. Though a strike was supported by British Prime Minister David Cameron, the UK parliament voted against military intervention in Syria. “President Obama’s decision-making will be guided by what is in the best interests of the United States. He believes that there are core interests at stake for the United States and that countries who violate international norms regarding chemical weapons need to be
Poland’s largest insurer PZU saw its consolidated net profit fall to z∏.837.3 million in Q2 2013 from z∏.894.6 million a year earlier. However, the net profit was higher than the market consensus forecast of z∏.782.2 million. In the first half of 2013 PZU’s net profit was z∏.1.68 billion.
Warsaw bourse bucks trend
SEPTEMBER 2-8, 2013
IN THE SPOTLIGHT
1 vote
SHUTTERSTOCK
2
held accountable,” said US National Security Council spokesperson Caitlin Hayden. In response to the US’s statements, Russia, one of the Assad regime’s closest allies, has sent an anti-submarine ship and a missile cruiser to the region, a development that has heightened tensions further. Russia already has a naval base in the Syrian city of Tartus, where some 10 Russian ships are currently stationed. For its part, Warsaw has distanced itself from the conflict, with Polish Prime Minister Donald Tusk stating unequivocally that Poland would not get involved. “I spoke with [Foreign Affairs] Minister [Rados∏aw] Sikorski and I asked him to tell our partners that Poland is not planning participation in
any type of intervention in Syria,” Mr Tusk told the media last week. The prime minister explained that while he understands the motives behind a possible strike, he does not believe that such an intervention would “bring the expected results” – that is, ending the violence in the country. “Our experience from that region shows that despite having a good and justified reason to intervene there, it rarely brings peace,” he said. General Stanis∏aw Koziej, chief of Poland’s National Security Bureau, added that the Polish army doesn’t have the capabilities needed to participate in such an operation. “We don’t have aircraft carriers, we don’t have strategic bombers which are all necessary for such military activity,” he said in an interview with news station TVN24. He added that Poland could get involved in the conflict only if military operations spill into Turkish territory, since Turkey is a member of NATO.
is the current majority that the governing coalition has, after several members either left the party or had their membership in the party suspended last week.
z∏.800 million is the value of the contract that Poland’s defense conglomerate PHO is close to signing for the delivery of armored vehicles to the Indian military, according to daily Gazeta Wyborcza.
4.3% is the rate at which retail sales grew annually in July, according to statistics office GUS. The result was far better than analysts had expected.
0.8% is the rate at which Poland’s economy grew in the second quarter of the year, statistics office GUS announced. The economy is expected to grow much faster in the second half of this year.
Quote of the Week “An affable and idealistic MP like Mr Godson is perfectly aware of which door to knock on if he wants to change his address.” Law and Justice party spokesperson Adam Hofman, explaining that John Godson, who recently left the ruling Civic Platform party, would be welcome to join the opposition.
Figures in focus Data gatherers Number of requests*
Percent of requests **
11,000-12,000
79%
India
3,245
50%
United Kingdom
1,975
68%
Germany
1,886
37%
Brazil
715
33%
Comparing Syria and Kosovo
Poland
233
9%
Comparisons are being made between a possible Syria intervention and the 1999 war in Kosovo. Log on to WBJ.pl for a detailed analysis by Stratfor’s Robert Kaplan on why no two wars are the same and a look at Barack Obama’s options in Syria.
Canada
192
44%
Israel
113
50
Norway
16
31%
Czech Republic
10
60%
Russia
1
0%
Jacek Ciesnowski
On WBJ.pl
Calendar
Country United States
(Data for the first six months of 2013) * from selected governments to Facebook asking for the release of personal information ** where data was provided
September
Source: Facebook
Web:
in the Pomorskie voivodship. Present and future projects will be highlighted, and discussions on how the global restaurant has affected the region will be held. The conference will be followed by a VIP gala. Sofitel Grand Sopot Hotel, ul Powstaƒców Warszawy 12/14, Sopot prospectsinpoland.com
‘OPEN TO SCANDINAVIA’ PRESENTATION
17
INVESTING IN POLAND 2014 CONFERENCE
Event:
Web:
Authorities from the Warmiƒsko-Mazurskie voivodship will present its offer to potential investors from Scandinavia. Guests will participate in a panel discussion and afterward relax on the golf course. Sand Valley Golf & Country Club, ul. Sand Valley 23, Pas∏´k prospectsinpoland.com
12
BALTIC PEARLS CONFERENCE AND VIP GALA
Web:
The conference will mark the launch of the 2014 edition of Warsaw Business Journal Group’s Investing in Poland annual publication. It will feature panel discussions examining investment conditions and incentives, with one panel focusing on outsourcing as the major investment trend in Poland. Villa Foksal, ul. Foksal 3/5, Warsaw WBJ.pl
Event:
This conference is dedicated to investments
3-5
ECONOMIC FORUM
Event:
Web:
The 23rd annual Economic Forum is one of the most important meetings of political and economic leaders in Central and Eastern Europe. This year’s theme is: “Towards a New Deal.” Krynica, Poland forum-ekonomiczne.pl
10 Event:
Location:
Location:
Location:
Location:
Company index 3Legs Resources ........................4 Gdaƒskie Wydawnictwo
PHO ..........................................2, 7
Acxiom........................................20 OÊwiatowe ..................................20 Pittsburgh Glass Works ............13 African Investment Group ..........2 Geoban ......................................20 PKO Bank Polski..........................8 Apple ..........................................27 Goldman Sachs..........................14 AstraZeneca Pharma Poland ....13 Grupa Azoty..............................2, 8 Polski Holding NieruchomoÊci ..8 Atrium European Real Estate ..18 Henpol ........................................21 Port-Hotel ..................................18 Bank Pekao ................................13 Hewlett Packard ........................19 Pratt & Whitney ........................15 Bank Zachodni WBK................8, 9 Hilton ..........................................18 BBI Development ......................18 HSBC ..........................................19 PwC ......................................13, 14 Bluevine Consulting ....................7 IBM ............................................14 PZU ..............................................2 BorgWarner Turbosystems ......15 IMPEL ........................................13 Qatargas ......................................7 Capital Park Group ....................21 Itella............................................13 Carl Zeiss ..................................14 JEMS Architekci ........................21 Randstad ....................................13 Casio ..........................................27 Jones Lang LaSalle ..................20 Rank Progress ..........................18 CBRE ....................................13, 19 Krajowa Spó∏ka Cukrowa ............8 Robyg..........................................18 Ciech ............................................8 Kury∏owicz & Associates ..........21 Samsung ....................................27 Citi Handlowy ..............................9 Liebrecht & Wood ......................18 Colliers ................................14, 20 LPP ............................................20 Sikorsky Aircraft Corporation 15 ConocoPhilips ..............................4 McBraida ....................................15 State Street ................................19 Deniz ..........................................21 MTU Aero Engines ....................15 UTC Aerospace Systems ..........15 Dentons ......................................13 NCRE Investment Limited ........18 Deutsche EuroShop AG ............18 Noble Securities ........................24 Vac Aero ....................................15 Elsoria Polska ............................18 Omate ........................................27 Warsaw Chopin Airport..............18 Energa ..........................................8 Otto Family ................................18 Warsaw Stock Exchange2, 8, 18, 24 Erbud ..........................................21 Patron Capital Partners ............21 Estudio Lamela ..........................13 PGE ............................................24 X-Trade Brokers ....................9, 24 First Data Global Services ........20 PGNiG ..........................................7 Zak∏ady Chemiczne Police ..........2
NEWS
www.wbj.pl
Warsaw mayor recall vote in October Warsaw’s electoral commission has decided that the vote to recall Mayor Hanna Gronkiewicz-Waltz will take place on October 13. The Polish Press Agency quoted unnamed sources from the Civic Platform party (of which Ms Gronkiewicz-Waltz is deputy leader) as saying that if she is recalled, Prime Minister Donald Tusk will nominate her as interim mayor until a new one is chosen in next year’s regularly scheduled local elections.
Lane’s L´bork well producing shale gas Lane Energy Poland, coowned by ConocoPhilips and 3Legs Resources, has been extracting 8,000 cubic meters of shale gas daily since July 21 from one its Polish test wells, daily Rzeczpospolita reported. But while the amount is a record for Europe, it still does not qualify as commercial production. ●
SEPTEMBER 2-8, 2013
Domestic
Tensions in ruling party grow after leadership election The ruling party is struggling to deal with Jaros∏aw Gowin, who after losing a leadership election to Donald Tusk has continued to criticise the PM In late August, Prime Minister Donald Tusk was declared the winner of a bitterly contested leadership election in the ruling Civic Platform party, garnering 79.58 percent of the vote from party members while his rival, former Justice Minister Jaros∏aw Gowin, received 20.48 percent support. “I will do everything in my power to maintain the trust that [my party colleagues] have put in me,” Mr Tusk said after the results were announced. The prime minister then congratulated his opponent, saying his result was “not bad.” However Mr Gowin, who had strongly criticized Mr Tusk during the campaign for abandoning the party’s liberal economic principles in order to become a “social democrat,” offered a tough demeanor after the PM’s speech. Mr Gowin said he wanted to continue his campaign for change
in the government’s policies and in Civic Platform itself. “We need a revolution that brings freedom to Poland. I will discuss this with various groups including entrepreneurs,” he said at a press conference. “If the PM is ready to work with me, then we must prepare policy proposals. There is no need for me to quit Civic Platform, but there must be change,” he added. The former justice minister also pointed out that Mr Tusk in fact “only received the support of a third of Civic Platform’s members” since roughly half the party members took part in the vote. He added that the ruling party would not win another election with its current policies.
In or out? In response, the prime minister said Mr Gowin should decide if he wants to remain in
COURTESY OF KPRM/FLICKR
4
Prime Minister Donald Tusk the ruling party or not. “If he crosses his boundaries once more, and I believe he has crossed the boundaries in recent days, then he will surely be out of Civic Platform,” Mr Tusk told journalists at a press conference. “I am saying it openly. If he wants to cooperate there will be a place for him. If he does not, he should leave. If he does not leave, I will help him leave,” Mr Tusk added. Last Friday Mr Gowin announced he was temporarily
Former Justice Minister Jaros∏aw Gowin suspending his membership of PO’s parliamentary caucus in solidarity with MP Jacek ˚alek, an ally of his, who was suspended from PO for breaking party discipline. Mr Gowin himself had been fined z∏.1,000 for not towing the party line in a July vote. Mr Gowin’s political future remains unclear.
Can the PM turn things around? Although the prime minister is the first party leader to win
back-to-back parliamentary elections in post-communist Poland, Mr Tusk has seen his popularity slump in the polls in recent months while Civic Platform is now regularly outdone in voter surveys by its main rival, Law and Justice. Still, Poland’s next parliamentary elections are not set to be held until 2015, giving Mr Tusk time to turn things around. The PM is expected to carry out a cabinet reshuffle in the autumn. Remi Adekoya
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2011-08-08 09:38:47
6
NEWS
www.wbj.pl
SEPTEMBER 2-8, 2013
Politics
Poland’s first black MP quits ruling party John Godson cited “pressure” regarding social issues John Godson, Poland’s first black member of parilament, left the ruling Civic Platform party on August 27, opting to become an independent. His exit from the party has left the coalition government of Prime Minister Donald Tusk with a slim majority of just 1 MP (see story, p. 4). Mr Godson, an evangelical Christian minister, was known
as a particularly conservative member of the party and had often differed with Civic Platform’s official stance on social issues. For example, earlier this year he opposed Prime Minister Donald Tusk’s efforts to sanction civil unions, which he viewed as a prelude to legalizing gay marriage. Also, in 2012, Mr Godson joined a group of conservative MPs in voting to support legislation that aimed to make Poland’s abortion laws
stricter, something which the prime minister opposed. Announcing his resignation from the ruling party, Mr Godson said he had informed Mr Tusk of his desire to leave Civic Platform in March of last year, but that the PM had asked him to “bear with it” for a bit longer.
No other master but God “It is unacceptable that on social issues, issues of the conscience, somebody can command us to vote a certain way.
That is a breach of the constitution. Hands off our conscience,” said Mr Godson in an interview on TOK FM the day he resigned. “The attempt to enforce party discpline on moral issues is a huge, huge mistake on the prime minister’s part. If it continues like this, Civic Platform will no longer have 25 percent support, rather, 15-18 percent will be a success,” Mr Godson added. “Some people [in Civic Platform] told me I was caus-
ing them embarrasment because of my views. When it comes to moral issues I have no other master but God,” he said.
A challenge for the party Mr Godson was born in Nigeria, moved to Poland in 1993 and in 2010 became Poland’s first black member of parliament. Civic Platform deputy leader Grzegorz Schetyna said that Mr Godson’s decision presented his party with a “challenge.”
Asked about his future, Mr Godson said it rested “in the hands of God, so I don’t have an answer for today.” Adam Hofman, the spokesperson for Poland’s biggest opposition party, Law and Justice, said Mr Godson would be welcome in its ranks. “An affable and idealistic MP like Mr Godson is perfectly aware of which door to knock on if he wants to change his address,” said Mr Hofman. Remi Adekoya
Politics
Reports that Finance Minister and Deputy PM Jacek Rostowski will soon be dismissed have persistently reappeared in Polish media in recent weeks. Reuters reported that it had three sources which said that Mr Rostowski would be dis-
missed, while Newsweek reported that he had handed in his resignation. All of these reports were dismissed by Prime Minister Donald Tusk as mere rumor and speculation. “I’m surprised that more often news is replaced with rumor,” Mr Tusk said after a debate in parliament on budget amendments which will increase this year’s deficit by z∏.16 billion – largely a result of poor forecasting by the Finance Ministry. “I did not talk with Mr
Rostowski about his dismissal. If I had held such a discussion with him, he wouldn’t be the minister anymore,” Mr Tusk added. But the speculation did not end there. Last week Puls Biznesu reported, citing sources within the ruling Civic Platform party, that Mr Rostowski wants to finish some of his projects and then leave his post in the spring at the latest. “He would like to complete this year’s budget amendment, as well as next year’s budget
proposal, then finalize the pension system reform and introduce a new budget spending rule,” the daily quoted one of its sources as saying. This could mean that Mr Rostowski will be spared in the upcoming government reshuffle, which according to Deputy Prime Minister and Economy Minister Janusz Piechociƒski, leader of the junior coalition partner the Polish People’s Party, will take place in November. Jacek Ciesnowski
On his way out?
Media patronage
€2.072 million spent during the 44th Pride of Poland auction El Saghira, a four-year-old gray mare was purchased for €500,000
COURTESY OF ROYAL PRESTIGE CLUB
Reports persist that Finance Minister Jacek Rostowski is on his way out, despite denials from the prime minister
COURTESY OF KPRM/FLICKR
Could cabinet reshuffle see Rostowski go?
The 44th annual Pride of Norma Poland auction was held on August 18 in Janów Podlaski, as part of the Arabi- Stones’ legendary drummer. an Horse Days event. Out of Ms Watts also bought the 27 mares auctioned, 22 Micha∏ów-raised Ekspulsja for were purchased, for a total €400,000 and Pietra from the sum of €2.072 million, which is Janów Podlaski stud for €700,000 more than was paid €95,000. out at last year’s auction. Horses were purchased by The average price for a buyers from Saudi Arabia, mare at the Pride of Poland Kuwait, the UAE, the US, the auction stood at €94,000 and UK, Austria, Germany, Swewas €20,000 higher than last den and France. Two mares bred in Janów Podlaski: Palatiyear’s average. El Saghira, a six-year-old na (€90,000) and Poezja gray mare bred at the (€22,000) were bought by PolMicha∏ów stud, was sold for ish horse breeders. €500,000 to a buyer from the UAE. The second-highest Norma – star of the price this year was paid for show Belgica, a 10-year-old mare Apart from the exciting aucbred in Janów Podlaski. It was tion, the guests participated in purchased for €410,000 by the Polish National Arabian Shirley Watts, the wife of Horse Show which is the most Charlie Watts, the Rolling important event in the horse
breeding business in Poland. This year’s show was organized under the honorary patronage of Polish President Bronis∏aw Komorowski. The star of this year’s show was Norma, a nine-year-old gray mare, which collected three awards, including the “Best in Show” award. The best presenter title was awarded to Pawe∏ Kozikowski from the Janów Podlaski stud, while Mariusz LiÊkiewicz from the Micha∏ów stud was named the best trainer. The director of the Micha∏ów stud, Jerzy Bia∏obok, collected three of the show’s key awards: for breeding a junior female champion – Piacolla (bay, born 2012), a senior female champion – Norma (gray, born 2004) and a senior male champion – El Omari (chestnut, born 2008). The junior male champion title was awarded to Barok (gray, born 2011) from the Janów Podlaski stud. ●
BUSINESS
SEPTEMBER 2-8, 2013
www.wbj.pl
7
Energy
Defense
Polish Defence Holding close LNG terminal in ÂwinoujÊcie faces more delays to z∏.800 million contract The postponement of construction could cause significant trouble for gas giant PGNiG
the company’s bankruptcy, because the fines for late delivery or technical problems were reportedly higher than the value of the contract itself. The Internal Security Agency investigated the matter and Polish prosecutors accused Mr Nowak of not acting in the best interests of the company and of breaking the law by not informing PHO’s supervisory board about the details of the 2011 contract. PHO includes the same 40 companies that were part of its predecessor, Bumar. In 2012 Grupa Bumar posted a z∏.32 million net profit, while in 2011 it lost z∏.120 million. Remi Adekoya
COURTESY OF HIUPPO/WIKIMEDIA COMMONS
Polish Defence Holding (PHO) is close to finalizing talks on a major contract in India worth z∏.800 million, according to sources quoted by Gazeta Wyborcza. The Polish firm is looking to secure the sale of 200 WZT-3 armoured recovery vehicles (ARVs) to the Indian army. The contract could be signed this month, the newspaper reported. PHO’s spokesperson, Stanis∏aw Wojtera, confirmed that talks are in progress. “We of course hope for a positive outcome,”
he said. If signed, the deal would be the biggest defense contract in Poland in a decade. But it would not be the first time PHO, which until this year had been known as Grupa Bumar, would deliver ARVs to India. In 1999, the company signed a deal to deliver 44 ARVs to Indian security forces. However, a contract signed in 2011 which was to involve PHO delivering 204 ARVs to India ended with the CEO of the firm Edward Nowak, resigning as the result of a scandal related to the deal. Bumar’s labor unions had accused Mr Nowak of signing a contract that could lead to
A WZT-3 armoured recovery vehicle
Media patronage
Warmia and Mazury continues promotional campaign Local authorities of the Warmia and Mazury voivodship are preparing for yet another step of their promotional campaign in Scandinavia with the aim of gaining new business partners for the region. On September 10, the authorities of the voivodship will take their opportunity to present the potential of the region at the event “Open to Scandinavia,” which will take place in Valley Golf & Country Club in Pas∏´k. “Last autumn we learned about the needs and requirements of Scandinavian companies,” said Warmia and Mazury Voivodship Marshall Jacek Protas. “We have done our homework, listened carefully and prepared an offer tailored to the needs of companies from the Nordic countries.” The invitation to discuss the cooperation of the region with Scandinavia and the expectations of investors has been accepted by the representatives of Scandina-
vian companies and embassies, the business services sector Association of Business Service Leaders in Poland (ABSL), representatives at the Warmia-Mazury Special Economic Zone, as well as Prof. Andrzej Buszko, an economist from the University of Warmia and Mazury. The talks are to be moderated by Pawe∏ Panczyj, managing director at ABSL. The export offer of the region, as well as its promotional plans for the forth-
coming years will be presented. Additionally, the meeting will aim to present the possibilities that could be interesting to Scandinavian investors. After the panel discussion, guests will have the opportunity to embark on a relaxing outing on the golf course. The event will be held under the honorary patronage of the Scandinavian-Polish Chamber of Commerce. Bluevine Consulting is the organizing partner of the event. ●
The construction of the liquified natural gas (LNG) terminal in ÂwinoujÊcie, in northern Poland, looks to have hit another snag. The terminal, seen as a key element in Poland’s drive to increase its energy independence, was originally set for completion in June next year, but that date was later pushed back to the end of 2014. Now, the Polish Radio News Agency (IAR) has reported that the terminal will be completed no earlier than 2015. Treasury Minister W∏odzimierz Karpiƒski, who commissioned a report on the progress of the construction, will officially announce the delay early this month, IAR said. Magdalena Kobos, a spokesperson at the Treasury Ministry, would not confirm the reports, but said that “an unrealistic schedule can hurt every investment. If it is modified, related investments and contracts may be secured.”
COURTESY OF KPRM
The defense company wants to sell ARVs to India
Donald Tusk opened the construction of the terminal back in 2011 The delay could become a significant setback for Poland’s gas giant PGNiG, which is under contract with Dohabased Qatargas to begin receiving deliveries of liquified gas next year. The deal envisages 1.5 billion of cubic meters of gas delivered annually. Without the terminal in ÂwinoujÊcie, PGNiG will have difficulty receiving the gas. PGNiG could move the deliveries to another terminal in Europe – the closest such terminals are located in the Netherlands and Belgium – or it could renegotiate the deal with Qatargas to postpone deliveries until
the ÂwinoujÊcie terminal is completed. When contacted by WBJ, PGNiG refused to comment on how the company plans to resolve the issue. “The contract between our company and Qatargas has a confidentiality clause, and therefore we will not comment on the situation,” PGNiG’s press office wrote in an e-mail. The decision to build the ÂwinoujÊcie LNG terminal was made back in 2006, and construction started in 2011. The terminal will have the capacity to regasify 5 billion cubic meters of LNG per year. Jacek Ciesnowski
8
BUSINESS
www.wbj.pl
SEPTEMBER 2-8, 2013
State-owned firms
Treasury still z∏.3 billion shy of privatization target Poland’s State Treasury has been having a hard time meeting its privatization revenue targets this year. Out of the planned z∏.5 billion in privatization revenue set for 2013, it has managed to raise only z∏.1.89 billion so far, through the sale of 2 percent of shares in PKO Bank Polski for z∏.860 million, 12 percent of shares in chemicals giant Grupa Azoty for z∏.630 million and 25 percent of real estate holding firm Polski Holding NieruchomoÊci (PHN) for some z∏.240 million. The Treasury could make up for a significant chunk of the funds it is missing once it floats energy giant Energa on the Warsaw Stock Exchange.
According to recent statements by Deputy Treasury Minister Pawe∏ Tamborski, Energa’s IPO prospectus should be filed with the Financial Supervisory Authority in mid-September. The value of the firm’s bourse debut is estimated at z∏.2 billion.
Hard sell But Energa’s IPO has already been pushed back – it was previously expected to take place at mid-year. And the debut presents some tough challenges. Without a law on renewable energy sources, it will be next to impossible to value the company, experts say. Despite Deputy Prime Minister Janusz Piechociƒski’s assurances that the so-called “energy threepack” legislation, which will regulate renewables, will still be adopted this year, market analysts remain skeptical. Without
Hard to offload State’s Treasury potential privatization targets Company
sector stake to be privatized
Energa
energy
34%
z∏.2 billion
Polski Hoilding NieruchomoÊci
real estate
75%
z∏.800 million
Ciech
chemicals
39%
z∏.500 million
sugar producer
80%
z∏.1.2 billion*
Krajowa Spó∏ka Cukrowa
* approximate value based on the company’s latest IPO attempt
estimated value
the Energa IPO, however, it is unclear how the Treasury would be able to avoid creating a much larger-than-expected budget deficit this year. The Treasury may be willing to sell some more of its shares in PHN, in which it holds 75 percent, a stake worth about z∏.860 million. The ministry had earlier signaled it would sell a majority stake in the firm to a strategic investor.
Digging for pennies The Treasury is, however, hard-pressed to come up with other assets for privatization. Reports suggest it may want to sell its 39 percent stake in chemicals producer Ciech this year, which experts value at z∏.500 million. However, analysts quoted by business daily Parkiet suggested that the sale would be more profitable after the company completes its restructuring. The company has been trying to focus its activity on soda-ash production by offloading unprofitable assets, such as its production plant in Romania. Finding a buyer for Ciech before it has completed its restructuring will not be easy. With soda-ash manufacturers reducing production volumes, it’s doubtful the state will find a
COURTESY OF ENERGA
The Treasury has few good options when it comes to selling stakes in state-owned firms
Energa’s IPO, valued at some z∏.2 billion, was originally scheduled for mid-2013, but has been pushed back sector investor willing to pay what the Treasury expects to receive. “Currently, the most likely choice for offloading Ciech shares is to sell it to an equity fund,” Tomasz Kasowicz, an analyst from the DM BZ WBK brokerage house, told the newspaper. Another state-owned company on the list is sugar pro-
ducer Krajowa Spó∏ka Cukrowa (KSC), which the Treasury has already tried to offload twice. The most recent attempt in April this year was canceled when the Treasury realized changes on the EU sugar market could bring the company’s value down. A new privatization proposal should be ready in late
Q3 or early Q4 2013, according to the ministry. However, it will not offer the firm’s shares on the Warsaw Stock Exchange. This option was considered in 2012, but it was not approved by the firm’s employees and sugar-beet growers, who have pre-emptive rights to KSC shares. Beata Socha
FINANCE & ECONOMICS
SEPTEMBER 2-8, 2013
Consumption
Retail sales surprise on the upside Consumers are opening up their wallets at a fasterthan-expected pace, a hopeful sign that recovery is on its way Polish consumers seem to be going back to stores, as the country’s data on retail sales offered up some hopeful figures. Retail sales in Poland grew by 4.3 percent year-onyear and by 3.8 percent month-on-month in July, according to data published by statistics office GUS at the end
of August. Economists surveyed by the Polish Press Agency had expected retail sales to grow by just 2.7 percent y/y and 2.4 percent m/m. The figures follow in a parade of good or slightly better-than-expected data recently that show Poland may be recovering after a year and a half of lethargic growth. Poland’s gross domestic product grew at a rate of just 0.5 percent in the first quarter of this year and 0.8 percent in the second quarter, according to GUS. In 2012, it grew at a rate of just 1.9 percent.
Back to the stores? Poland’s retail sales growth (% year-on-year), July 2011-July 2013 Source: Central Statistical Office
15 12 9 6 3 0 Jul Au . ’11 g Se . ’11 p. Oc ’11 t. No ’11 v De . ’11 c. Jan ’11 . Feb ’12 Ma . ’12 r. Ap ’12 r. Ma ’12 y Jun ’12 .’ Jul 12 Au . ’12 g. Se ’12 p. Oc ’12 t. No ’12 v De . ’12 c. Jan ’12 . Feb ’13 Ma . ’13 r. ’ Ap 13 r. Ma ’13 y Jun ’13 .’ Jul 13 . ’1 3
-3
The improvement in retail sales in July was driven by double-digit growth in automotive sector sales (14.4 percent), as well as higher sales of food, pharmaceuticals and cosmetics. In an e-mailed comment, economists from Bank Zachodni WBK pointed out Poland was indeed seeing a rebound in private consumption, which was confirmed by a 4.5 percent growth in retail trade turnover, a data point which unlike retail sales also includes small shops’ results. Domestic consumption was one of the biggest factors that helped Poland weather the global economic crisis without going into recession – the only EU country to have managed that feat. However, as Poland’s economy began to slow last year, consumers began to hold their wallets closed. Retail sales dropped dramatically from 14.3 percent year-on-year growth in January 2012, to -2.5 percent in December. Andrew Kureth
GDP growth remains low, but economic outlook positive y/y and imports continue to fall. The growth would be bigger if private consumption was higher, although an increase in consumption in the public sector has helped matters,” Przemys∏aw Kwiecieƒ, chief economist at X-Trade Brokers wrote in an e-mailed statement. “With production rising as well, we maintain our forecast that in H2, [Poland’s] economy will grow by 1.5 percent,” he added. A set of good macroeco-
nomic data released this month had already suggested that the economy is “gradually recovering” from a sharp slowdown, said economists at Citi Handlowy in an e-mailed statement. They maintained their forecast that Polish GDP would grow by 1.5-2 percent in the second half of this year, on the back of stronger consumption growth and an improving situation in the labor market. JC, AK
Ready for a rebound? Poland’s GDP growth rate in annual terms (%), Q1 2009-Q2 2013 Source: Central Statistical Office
5 4 3 2 1 0 Q1 2 Q2 009 20 Q3 09 2 Q4 009 20 Q1 09 2 Q2 010 20 Q3 10 2 Q4 010 20 Q1 10 2 Q2 011 2 Q3 011 20 Q4 11 2 Q1 011 20 Q2 12 2 Q3 012 20 Q4 12 20 Q1 12 20 Q2 13 20 13
Poland’s gross domestic product grew by an annualized rate of 0.8 percent in Q2, according to Poland’s statistics office GUS. The figure was in line with the flash estimate published by GUS three weeks ago. In seasonally adjusted terms, Poland’s GDP expanded by 1.1 percent y/y. In seasonally adjusted quarter-on-quarter terms, GDP grew 0.4 percent, which provided evidence that Poland’s economy is gaining momentum, experts said. The previous seasonally adjusted quarterly figures were 0.1 percent in Q4 2012 and 0.2 percent in the first quarter of this year. Economists said that exports are the driving force behind the Polish economy’s recovery, as Poland’s biggest trading partners in the euro zone begin to emerge from recession. “Exports rose by 5.1 percent
Unemployment drops to 13.1% The registered unemployment rate in July was 13.1 percent, statistics office GUS announced at the end of August. In monthon-month terms the jobless rate declined by 0.1 percentage point. The figure was in line with estimates published by the Ministry of Labor and Social Policy in early August.
As of the end of July, there were 2.93 million unemployed persons registered in Poland’s labor offices, 16,000 fewer than in June. BZ WBK economists said that the labor market situation would most likely not improve as quickly as industrial output, “but these data can be viewed
as moderately optimistic, as they show signals of reviving demand for labor. In the upcoming months the unemployment rate will probably not fall (or will fall slightly) and after a few months of stabilization will rise, in line with [the] seasonal pattern.” Kamila Wajszczuk
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10
INTERVIEW
www.wbj.pl
SEPTEMBER 2-8, 2013
Politics
Miller stakes SLD’s claim as Poland’s only true party of the left Ewa Boniecka: The government was recently forced to change Polish law in order to increase the budget deficit by another z∏.16 billion. What do you think the consequences of that move will be? Leszek Miller: The situation of the state budget is very bad and it points to the total bankruptcy of the financial strategy of Finance Minister Jacek Rostowski. He made the wrong predictions for Poland’s economic growth and created an enormous budget deficit. I call it the “Rostowski hole” which is reminiscent of the socalled “Bauc hole” of 2001 under another center-right government. Our party voted against the government’s move because we do not believe that the government will manage to develop a strategy of economic growth. Rather, it will only make fiscal moves aimed at fixing the “Rostowski hole.” We are worried that after lifting the first cautionary threshold for public debt, which is a debt-to-GDP ratio of 50 percent, they will be tempted to do away with the second threshold of 55 percent. And that would be dangerous to the entire country’s economy in the coming years. The only chance of avoid-
ing such a bleak scenario is by changing the present neoliberal economic and fiscal strategy of the government and taking steps towards reviving economic growth. In the face of the current crisis in the European Union, what alternative economic policy would you propose for Poland? In times of financial crises, the government’s involvement in economic matters should be bigger. We have presented our proposals in four main points. Firstly, in order to bring GDP growth up to at least 3 percent, the government has to reduce the barriers limiting economic activity and introduce innovative government programs that would create new jobs. Second, it has to use public and EU funds to boost investments. The third point is to undertake special protective measures to shield the people who will be hit hardest by the upcoming budget cuts. Our final proposal is to do an independent audit of the condition of the public budget, because Minister Rostowski has long been obscuring many of its elements with technical maneuvers. We believe that parliament
and the Polish people have the right to know what the budget really looks like. They need to get that information from an independent review rather than having to listen to the political explanations of the finance minister and the prime minister. It seems that all left-wing parties in Europe are currently facing the dilemma of presenting an alternative political and economic strategy to that of right-wing and liberal parties. How is SLD responding to the social and economic changes during the financial crisis? The whole European left is in trouble because some previously traditional leftist policies, mainly in the domain of social care, have already been implemented in Western countries. But the main problem is a change in the electorate of the left, due to changes in structure in the economy and industry. There are fewer industrial workers these days and more jobs in trade and services. So the European left is in the process of transformation, searching for new answers to emerging problems. SLD is participating very actively in the ongoing discussions and meetings of left-wing parties and their leaders. SLD has only 25 MPs [in the 460-member Sejm, the lower house of Poland’s parliament]. It can put forward various proposals but it doesn’t
“The neoliberal model of economics is in decline everywhere.”
COURTESY OF SLD
Leszek Miller, former Polish prime minister and current head of the Democratic Left Alliance (SLD) party, sits down with WBJ to talk about the crisis in Poland’s public finances, his party’s political and economic strategy, as well as developments in the country’s political scene
have the power to push them through. How can you get any of your ideas implemented? We probably can’t at the moment, but that could change. Over the past few years, nearly all EU governments have been adjusting their neoliberal strategies towards one with more state intervention in the economy. I think that when the financial crisis starts having increasing economic and social consequences in Poland, our government will also look for some new remedies, especially while its political support is waning. The ruling Civic Platform [PO] is becoming internally split, not only on ethical, but also on economic matters.
Do you think that the worsening economic and political situation and growing difficulties in cooperation between PO and its junior coalition partner, the Polish People’s Party, could lead to PO opting for snap parliamentary elections? I do not think there will be earlier parliamentary elections, because it is not in the interest of either of the parties [in the ruling coalition] to conduct them when their support is dropping in opinion polls. An earlier election could be forced on PO only in a situation of a huge economic and financial disaster in the country, which we do not have now and hopefully will not have in the future, either.
Nevertheless, the political consequences of the present worsening of the economic situation could occur if the crisis is not properly managed and if the majority of people lack money to spend on their basic needs. They might then begin demonstrating their anger and frustration on the streets. So, along with the alreadyannounced cuts in the amended budget for 2013, the government should design a new coherent and active economic strategy and it should make sure that the cuts do not affect social services and the poorest groups of people. I want to stress that the neoliberal model of economics is in decline everywhere. Today there are no political
INTERVIEW
parties in the EU, even among the most liberal ones, without some alternative economic programs. Still, Poland is a country where the government’s economic strategy is focused on a monetary and fiscal approach and not on a pro-development strategy. I think that this is caused by our finance minister, who believed that his was the best strategy. This has led to a very rude awakening. You are decisively rejecting participation in building a new center-left political entity called “Europe Plus,” which brings together Palikot’s Movement, the Democratic Alliance and some other leftist groups. Why? First, my decision is based on principle, as there are ideological differences between SLD and the parties forming Europe Plus. They call themselves center-left, but in fact are not leftist at all, especially when approaching social issues. We do not consider Europe Plus a leftist political force because it is difficult to see it as such when it brings together such people as the leader of the Democratic Alliance – Pawe∏ Piskorski – or Janusz Palikot, who are not and never were leftist politicians. We do not intend to join Europe Plus because I see it as our rival whose goal is to swallow SLD and make us a part of that new party’s structure. We do not intend to join any political party, we do not intend to dissolve our party and we are not going to lose our leftist identity. But I want to point out that I have nothing against Europe Plus as a liberal-democratic formation. SLD meanwhile represents the left, so all the claims that there is going to be a battle on the left are groundless. But SLD doesn’t have a lot of support from voters on its own. Many political observers believe though that if you joined Europe Plus, the new political entity could win substantial support from leftist voters and become a serious alternative for PO and the biggest opposition party Law and Justice (PiS). Don’t you agree? Europe Plus is still only in the early planning stages and even when it is established as a party, it will not become a leftwing alternative to right-wing parties. The Democratic Left Alliance is the only left-wing alternative. Our party has been active on the political scene for 14 years, we have our history of successes, but also of some failures, from which we have learned a lot. Our biggest failure was the poor result in the last parliamentary election, when we gained only eight percent of the vote, but I think that we can slowly win our
electorate back over. Now we are in third place in the political scene. We will fight PO for second place, and maybe for first place in the future. SLD spent eight years being part of various governments in Poland and so has proven that it has competent people, able to undertake even the most difficult reforms. We put a lot of effort into helping Poland join the European Union. According to sociologists, most Poles have conservative views. Professor Zygmunt Bauman (a renowned Polish sociologist) recently wrote that the “cultural war” in Poland was won by the right. How do you see it? The right is dominant in Poland because our society is mostly conservative. According to some findings, 12-15 percent of Poles have clearly defined leftist views. So conservative attitudes towards many matters prevail.
“In times of financial crises, the government’s involvement in economic matters should be bigger.” The right is indeed running a “cultural war” against the left. It creates its own language, its own vision of history and of our nation, its own heroes, and it is a problem which our party must face. But political and social views in a society constantly evolve; nothing is set in stone forever and in the longer perspective these views may change. Let’s remember that in 2001 SLD won 40 percent of the vote and created a government, but society was different back then, much more leftist than it is today. There is a political theory which posits that social views are like a pendulum swing: there is constant flow between the right and the left. I see a chance for the left, because our society’s priorities are changing. It has to respond to the growing economic inequalities in our society, the lack of opportunities for poorer groups of people, the high unemployment among young people. There is a call for social justice. Our party has to answer it and we are ready to do so. There are nationalist organizations whose young aggressive activists are demonstrating their views on the streets and even at universities, while the young left is hardly visible these days. What are you planning to do about that? Those young nationalist
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11
activists are nurtured by general right-wing ideologies and by PiS’s policies. We also have active young people, though. There is a dynamic leftist youth organization known as the Federation of Young Democrats. This summer – just as in previous years – SLD has been training young leftist leaders. But these young people are not visible in the media because they don’t carry baseball bats or masks and are not organizing riots on the streets. We are approaching the 2014 elections for the European Parliament. Then there will be local government elections and a parliamentary vote in 2015. What outcome do you expect? It will be a difficult period and one of many political confrontations. The weakened PO will fight for its future and try to come out victorious for the third time in a row. It will not be easy with all the internal splits in the party and with many of its voters turning away from it. One of the most important elements of that battle will be exploiting the fear Poles feel towards PiS. I think that the Smolensk catastrophe will be a card used often by PiS. It could increase its support, because polls show that a growing number of Poles believe that the Smolensk catastrophe was actually an assassination. However, I do not believe that PiS and Jaros∏aw Kaczyƒski will win the parliamentary elections. And even if they do – they will not be able to form a government as they have no real possibilities of establishing a coalition. SLD will fight using its alternative economic and social program, stressing the need for a secular state and for equal rights and opportunities for all Poles. I hope that we will increase our support in all the three upcoming elections and that SLD will be seen as the only alternative to the right. We will also stress our support for deeper integration within the EU and Poland’s role and responsibility in shaping the future of the European Union and opening up towards its eastern neighbors. I hope that the campaigns will concentrate on real issues such as dealing with the financial and economic crisis, but I am afraid that they will be dominated by personal fights and meaningless details. One thing is certain for me: the result of the parliamentary election will change the present balance on our political scene, but in what direction – that is for the voters to decide. If the winning party cannot establish a parliamentary majority and SLD wins a substantial number of votes, what moves would you consider?
SHUTTERSTOCK
SEPTEMBER 2-8, 2013
Mr Miller is working to regain the support his party once had Any SLD coalition with PiS is, for us, out of the question because PiS is a party whose program is based on a policy of oppression, anti-European views, and the search for conflict between Poland and its neighbors. Would you consider a coalition with PO then? That is a scenario which I
always find purely speculative and currently entirely unsubstantiated. My party is fighting for the best possible result in the parliamentary election and that is all I want. SLD has its program, PO has its program, and they are different, with only one common factor – both parties are strongly pro-European. Any coalition should be based on establishing a cer-
tain minimum program base. SLD can form an agreement only on the basis of a common program, because that is necessary for a coalition to make any sense. And in order to formulate such a minimum base both parties have to be willing to work together and have a lot of patience. Such negotiations are never easy. ●
12
CSR IN FOCUS
www.wbj.pl
SEPTEMBER 2-8, 2013
Responsible business
Poland lags behind in CSR Corporate social responsibility (CSR) is gaining ground among entrepreneurs in European economies who are increasingly aiming to combine business success with active pro-social and ecofriendly policies. At this week’s Krynica Economic Forum, a special panel will be held to discuss the importance of CSR in the activities of chosen companies in Poland as well as new development paths for CSR. There will also be a debate about whether CSR is a core aspect of companies’ strategies or simply a fad. In Poland however, CSR has still not fully caught on yet.
Last in the class The value of Polish assets invested in adherence to sustainable and responsible investment principles (SRI) stood at €5.2 billion last year,
SHUTTERSTOCK
Central Europe’s largest economy still trails the rest of Europe when it comes to practicing corporate social responsibility
according to the European SRI Study 2012 carried out by Eurosif, an NGO which promotes CSR. That put Poland in last place out of the 14 European countries surveyed. Meanwhile, the value of funds invested in SRI in Europe amounted to €6.7 trillion. SRI can involve strategies such as “exclusion” which entails avoiding investing in companies involved in particular business endeavors considered negative by many, such as cigarette and tobacco
manufacturing or gambling. Another method is “community investing,” which allows for investment directly into community-based organizations “The [SRI] report shows that the CSR concept is getting wider recognition and better understanding [in Poland], but skepticism about activities of businesses, including CSR activities, remains high,” said Mirella Panek-Owsiaƒska, president of the Responsible Business Forum (FOB), a Polish NGO which promotes CSR.
“Polish company owners should engage in a dialogue with stakeholders and consumers, and financial institutions should start promoting the idea of responsible investing. Universities and academic circles should ask themselves whether the time has come to stop teaching business, management and economics as something outside the realm of ethics or responsibility,” she added. “Finally, regulators should find a way to support responsible business. Social responsi-
bility is everyone’s responsibility,” Ms Panek-Owsiaƒska said.
CSR makes economic sense But in a time of economic crisis and belt-tightening, can Polish businesses be convinced of the necessity of CSR? Eurosif believes the crisis actually offers an “opportunity” for CSR. “As market volatility leads to higher risk premium requirements, cost of and access to capital will worsen.
Investors are bound to pay more and more attention to factors affecting capital risks, including environmental, social and governance factors, when assessing an investment in a particular company,” Eurosif wrote. It added that companies will subsequently need to carefully manage their cost of capital and address the growing concerns of investors around their sustainability, which entails a forward-looking view about how they manage environmental, social and governance (ESG) aspects. According to Eurosif, there is a “strong body of academic evidence” to suggest healthy ESG performance is positively correlated with lower cost of capital. Also at a time when regulators are seeking ways to reconcile financial markets with “the real economy” and unlock the potential for long term investment and smart, sustainable and inclusive growth, “SRI should be seen as a complementary resource to realize that potential,” Eurosif said. Remi Adekoya
INVESTING IN POLAND
SEPTEMBER 2-8, 2013
www.wbj.pl
13
Publication and events
The fifth annual investor’s guide will be presented at the Krynica Economic Forum Warsaw Business Journal Group’s fifth annual Investing in Poland guide has been published. After the launch of the publication at the Krynica Economic Forum, it will be presented at a conference on September 17 at the Villa Foksal restaurant in Warsaw. The conference will feature two panels, moderated by Warsaw Business Journal editors. The first panel will focus on the changes in the investment landscape in Poland, and panelists include S∏awomir Majman, president of the Polish Information and Foreign Investment Agency (PAIiIZ); Jacek Socha, deputy chairman at PwC in Poland; Tomasz Sadzyƒski, president of the ¸ódê Special Economic Zone; and Tomasz Dàbrowski, partner and head of CEE at Dentons law firm. The second panel will discuss outsourcing as one of the biggest trends in investment in Poland. Panelists will examine the sector’s sustainability
and its impact on Poland’s innovativeness. Its participants will include Iwona Chojnowska-Haponik from PAIiIZ; Anna Wójt, SSC manager at PwC; Mieczys∏aw Budzik from IMPEL; Leszek Kurycyn from Randstad; and Joanna Mroczek from CBRE. Additionally, the conference will feature a case study from the city of Lublin, located in southeastern Poland, which has carried out several major investment projects – including the construction of an airport – in order to increase its investment potential.
The book The Investing in Poland publication is an annual guide for investors looking for investment opportunities in Poland. It contains an overview of each of Poland’s 16 voivodships as well as their major cities, special economic zones, and industrial and technology parks. Additionally, the publication contains a “Trendbook” section, which comprises analyses of 10 of the most prominent trends in Poland’s investment landscape. In addition to the English version, the publication will
be translated into Chinese and Spanish, meaning it will be available in all of the three most-spoken languages in the world. Altogether, 18,000 copies of the printed publication and 6,000 on CD ROM will be distributed by Polish embassies and consulates all over the world, the Network of Investors and Exporters Service Centers (COIE), 24 Polish Institutes around the world, as well as at 76 business events, including MIPIM, MAPIC, Expo Real and AIM in Dubai. The PDF version of the publication will also be available for download on WBJ.pl and various other websites. The Investing in Poland Project is organized by Warsaw Business Journal Group in cooperation with PAIiIZ, PwC, Bank Pekao and CBRE.
Investment of the Year The main aim of the Investing in Poland Project is to distinguish the most important foreign investments in Poland as well as present the country’s potential to investors. Those goals are particularly important this year, as the Polish economy muddles through its most difficult year since 2009,
COURTESY OF VILLA FOKSAL
Investing in Poland 2014 launches
This year’s conference will be organized at the Villa Foksal restaurant with GDP growth forecast to come in around 1 percent. This year’s initiative marks the second time Warsaw Business Journal Group, along with major chambers of commerce in Poland, will hand out the Investment of the Year, which this year will be awarded in three categories – small, medium-sized and large investment. Each investment will be assessed based on amount invested,
innovativeness and local impact. The winners will be selected by a jury comprising one member from each chamber, as well as highranking decision makers in Poland’s economy and government. The winners will be awarded at the gala, which will be held on October 23. Last year’s Investment of the Year award went to AstraZeneca Pharma Poland for its Research & Develop-
ment HUB. The center, which runs clinical trials of pharmaceuticals in Poland, was nominated by the British Polish Chamber of Commerce. The other nominees included Spanish Estudio Lamela’s design of the Lublin City Stadium, Finnish Itella’s financial center in Toruƒ, and the US’s Pittsburgh Glass Works’ windshield production facility in Âroda Âlàska. Beata Socha
14
INVESTING IN POLAND
www.wbj.pl
SEPTEMBER 2-8, 2013
Outsourcing – opportunity in crisis De
Beata Socha
Poland’s major outsourcing cities Employment in foreign capital SSCs in 2013
11.9% (13,100) 23.1% (25,400)
5.6% (6,200) 7.4% (8,100) 8.9% (9,800)
17.3% (19,000)
9.1% (10,000)
Kraków
Łódź
Warsaw
Katowice Agglomeration
Wrocław
Poznań
Tri-City
Other cities
SHUTTERSTOCK
16.7% (18,400)
With a harsh economic climate lingering all over Europe, Poland is reaping benefits from its cost-cutting potential, including in high-tech industries In recent years Poland has become one of Europe’s primary outsourcing destinations, partly due to the harsh economic climate in Europe forcing companies to cut costs wherever possible. Poland offers them an army of highly qualified specialists at much lower cost, not only accountants and payroll specialists, but also IT consultants and scientists. As early as in 2010 Poland ranked second in the world, just behind India, in terms of the availability of specialists and experts from the business service sector, in a survey conducted by Everest Group. “There is no other country in the world that offers the business service sector such versatile solutions. We are able to handle virtually any process in one of several dozen foreign languages,” said Marek Grodziƒski, vice president of the Association of Business Service Leaders in Poland, an organization representing 70 foreign and Polish investors from the business service sector.
Cost-cutting 101 One of Poland’s key competitive advantages lies in its stillunderpriced labor. Admittedly, there are cheaper destinations than Poland, such as Vietnam or India, where a programmer’s average salary is between $10,100 and $11,300 a year, as compared to $17,000-$18,000 in a Polish IT firm, according to Economist
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NOW!
Intelligence Unit data for 2011. “Labor costs in Poland are still 50 percent lower than in Western Europe and in the US. Such cost advantage placed Poland third in the world behind China and India in a ranking of the best outsourcing locations, according to Hackett Group,” Marcin Piàtkowski, director at the Invest in Pomerania agency told sector magazine Outsourcing & More. Despite stiff cost competition from well-established BPO heavyweights such as China or India, Poland remains the number-one destination for Western European firms, mainly due to its cultural compatibility and linguistic competence, particularly among Polish students. Over 90 percent of all students in Poland claim to speak English. The second-most popular foreign language is German, with some 43 percent of students saying they can speak it. Russian is the third-most spoken foreign language with nearly 14 percent, followed by French (9.6 percent), Spanish (6.3 percent) and Italian (3.2 percent). Poland is also experiencing a steady growth of interest in learning so-called “niche languages,” with Hungarian, Romanian and Scandinavian languages chosen most frequently. Also, Far Eastern languages, such as Mandarin Chinese, Korean, Vietnamese and Thai are gaining ground, particularly in the western Polish city of Poznaƒ, while Warsaw attracts those interested in Hungarian, Arabic or Turkish.
Europe’s go-to outsourcing destination Its high level of foreign-language competence combined with the common cultural
background makes Poland an ideal “nearshoring” destination. In fact, Poland has been Europe’s number-one outsourcing center for years, particularly in advisory and consulting services, customer service, delivery-chain management, car-fleet management, finance and accounting, financial audit, as well as human resources management, but also increasingly in IT services, marketing, research and development and tax services. The number of all outsourcing centers in Poland exceeded 400 in mid-2013, while the number of employees in such centers reached some 100,000. Out of 51 investment projects completed in 2012 with the help of the Polish Information and Foreign Investment Agency (PAIiIZ), 20 were carried out in the BSS sector, making it the leader among all outsourcing sectors. The automotive industry came in a close second, with 14 projects, while R&D, including software development, attracted five new investments. Altogether, nearly 5,000 new workplaces were created in the BPO sector, over a half of all the new jobs created through FDI. Among business processes provided by Polish outsourcing centers, finance and accounting is the most common, with nearly 60 percent of all PBO centers offering these services, followed by software development and application management (nearly 50 percent), customer services (over 40 percent), and IT infrastructure services (approximately 35 percent). Document management, including archiving, is a developing trend, with an increasing number (currently 20 percent) of outsourcing centers offering such services. R&D and legal services are
Source: ASBL
also considered emerging trends, with less than 20 percent of all BPO centers rendering such services.
IT solutions and cloud computing Among other major trends business experts name an increased outsourcing of finance and banking services, as well as IT solutions, particularly due to the “cloud computing” revolution. A recent investment from IBM, which decided to locate its second Poland-based service center in Katowice, seems to validate these projections. “This year alone, 400 people will be hired there, overall until 2015, 2,000 employees in total should be working in the center when it becomes fully operational,” said Jakub Jarzàbek, a spokesperson for Katowice city authorities. The Katowice center will be IBM’s second such facility in Poland. The first is located in Wroc∏aw, in southwestern Poland. IBM has been present in Poland for over 20 years and has centers and laboratories in Gdaƒsk and Poznaƒ as well.
Southern strength, northern potential For years now the most popular destinations for POB/SSC investments have been major cities in Poland’s south, including Wroc∏aw and Kraków, which secured the majority of investments in 2012. In
Kraków, the share of SSC companies in occupied office stock is at 40 percent. The Lower Silesia voivodship, with its capital Wroc∏aw, attracted 18 new investments worth €500 million, which created 4,100 new jobs. Kraków and the entire Ma∏opolskie voivodship secured six major investments worth €7.9 million in total, while Pomorskie attracted five new projects valued at €17 million. Almost a third of all investors located their facilities in special economic zones offering various tax and administrative incentives. However, the Tri-City area in the north and Szczecin in the northwest are gaining momentum. Other cities of interest for foreign companies looking to relocate their business processes were Poznaƒ, Bia∏ystok, Bydgoszcz and Rzeszów. During the first few months of 2013, foreign investors opened 14 new service centers in Poland and many also expanded their existing ones. Some of the major investment projects carried out in 2013 include Cisco in Kraków, Bayer in the Tri-City area, Goldman Sachs in Warsaw and Carl Zeiss in Poznaƒ.
Emerging cities PwC analyst Paul Jasniach expects emerging cities such as Bydgoszcz, Toruƒ, Lublin or Radom to attract new SSCs,
which will mean a lot of promotion from local governments. Mr Jasniach also anticipates many companies will look to grow their shared services capabilities. “This will mean new processes, new functions and a move up the services value chain toward knowledge process services,” he said in an interview with Outsourcing & More magazine. The Polish government has recently decided to extend the lifetime of Special Economic Zones to 2026 to increase the attractiveness of Poland as an outsourcing destination. Still, there are other challenges Poland will have to face, particularly increased competition from Romania and Bulgaria, as well as somewhat rigid labor laws stunting the development of BPO companies. When asked if the continued slowdown will harm the development of the outsourcing business in Poland, experts seem to agree that the prolonged recession of European economies is nothing if not a great opportunity for the BPO sector. “Outsourcing means cost reduction. Crisis means cost reduction. Hence, crisis is an opportunity for outsourcing, and outsourcing is a solution to overcoming crisis,” Mieszko Czarnecki, regional director at Colliers, told the magazine. ●
Where is the money coming from? The countries most interested in outsourcing their business processes in Poland are the US, which accounted for some 30 percent of the number of investments implemented in 2012. Japan and Germany came in second with six new projects each, and the UK and France were responsible for four new investments each. However, in terms of value, Japan was the uncontested leader, with €329.5 million
invested in Poland. German investment amounted to €253.3 million, while American investment was €230.9 million. Analysts expect American and German companies to remain the key players in the Polish BPO sector, but also see a lot of potential investment coming from Scandinavian countries, according to Marcin Piàtkowski from Invest in Pomerania. ●
Find this content and more in Investing in Poland 2014. Information and key data about all of Poland’s voivodships can be found inside. Also, find analyses of major trends moving Poland’s economy. Want more? Pick up the publication or visit WBJ.pl for more information.
INVESTING IN POLAND
SEPTEMBER 2-8, 2013
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Podkarpackie Key facts
Gorzyce
WIS¸OSAN”: 680 ha (179,75 ha available)
Voivode: Ma∏gorzata Chomycz-Âmigielska Marshall: W∏adys∏aw Ortyl Area: 17,846 sq km Population (Dec. 2012): 2,129,951 Working-age population (Dec. 2012): 1,359,605 Unemployment rate (June 2013): 15.5% Average monthly wage (June 2013): z∏.3,063.63 GDP (2010): z∏.52.51 bln, up 3.5% y/y (3.7% of national GDP) Natural resources: gypsum, limestone, mineral water, natural gas, peat, petroleum, sandstone, sulfur Number of students of higher education: 70,933 Number of institutions of higher education: 16 Major universities: Rzeszów University of Technology, School of Law and Public Administration in Rzeszów, University of Information Technology and Management, University of Rzeszów Major airport: International Airport Rzeszów-Jasionka Special Economic Zones: EURO-PARK MIELEC Special Economic Zone: 958 ha (195 ha available) Kraków Technology Park Special Economic Zone: 13.79 ha (4.2 ha available) Tarnobrzeg Special Economic Zone “EURO-PARK
Stalowa Wola
Tarnobrzeg Grębów
Nisko
Estimated investment Investment outlays (in 2011): z∏.13.42 bln (private sector: z∏.5.81 bln; public sector: z∏.7.61 bln) Of which: Industry: z∏.3.65 bln Of which: manufacturing: z∏.2.27 bln Construction: z∏.286 mln Real estate activities: z∏.1.24 bln Trade and repair of motor vehicles: z∏.743 mln Transportation and storage: z∏.4.96 bln Number of new partnerships and companies registered (2012): 1,025, up 2.6% y/y Number of new sole proprietorships registered (2012): 11,643, down 4.9% y/y Recent major investors: BorgWarner, Guangxi LiuGong Machinery, Heli-one, Husqvarna, Lear, McBraida, MTU Aero Engines, Owens Illinois, Pilkington, Pratt & Whitney, Sikorsky Aircraft Corporation, TRI, United Technologies, Valeant Pharmaceuticals International, Zelmer Sources of major foreign investment: Canada, France, Germany, UK, US
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Nowa Dęba Sarzyna Mielec Kolbuszowa Pustków
Leżajsk
Głogów Małopolski
Ocieka
Horyniec-Zdrój
Oleszyce Lubaczów
Ropczyce
Łańcut
Sędziszew Małopolski
Przeworsk Jarosław
Rzeszów Boguchwała
Radymno Strzyżów Żurawica Jasło Korczyna Jedlicze
Medyka
Przemyśl Brzozów
Krosno Równe Iwonicz Zdrój
Besko
Sanok Zagórz
Krościenko
Lesko Ustrzyki Dolne
Tarnawa Niżna
Voivodship budget
Podkarpackie voivodship Situated on the eastern border of the EU, Podkarpackie is a land of contrasts. Despite being one of the poorest regions in the country, the voivodship has come a long way. It boasts some of the most high-tech, dynamic developments in Poland and a geographic advantage with investors seeking trade with Ukraine and Slovakia. With gross salaries at 40 percent of the EU average, low labor costs are coupled with a highly educated workforce.
Investors can draw from a pool of experienced or newly trained workers, mostly from wellregarded institutions such as the University of Rzeszów and the Rzeszów University of Technology. The latter is home to the only specialized civil aviation center in Poland. EURO-PARK MIELEC and two other special economic zones provide tax exemptions, ready greenfield space, and assistance for new investments in the region.
The region’s aerospace cluster, “Aviation Valley,” is home to 80 percent of the nation’s aerospace industry and has seen strong foreign investment. Most aerospace investment is located within the Podkarpackie Science and Technology Park Aeropolis, inside the EURO-PARK MIELEC zone. Sikorsky Aircraft Corporation, MTU Aero Engines and Pratt & Whitney are several examples of the big-name aviation investors
located in Podkarpackie voivodship. Besides aerospace, other important sectors in the region include electromechanical engineering, IT, chemicals and food processing. Podkarpackie also offers major opportunities in tourism, especially for nature enthusiasts. The Carpathian Mountain range and the Bieszczady Forest feature some of the country’s most ecologically diverse and unspoiled areas. ●
2012:
2013 (projected):
Revenues: z∏.871.6 mln Expenditures: z∏.891 mln Deficit: z∏.19.4 mln
Revenues: z∏.1.43 bln Expenditures: z∏.1.489 bln Deficit: z∏.59.5 mln
Key contacts Rzeszów Regional Development Agency Inward Investment Centre ul. Szopena 51 35-959 Rzeszów ☎ +48 17 852-4376 +48 17 852-4374 coi.rzeszow.pl Ma∏gorzata Zajchowska mzajchowska@rarr.rzeszow.pl Ma∏gorzata Patro-Zagaja mzagaja@rarr.rzeszow.pl Joanna Augustyn jaugustyn@rarr.rzeszow.pl Micha∏ Rzucid∏o mrzucidlo@rarr.rzeszow.pl
Major cities
Rzeszów Rzeszów is the business, educational and cultural center for southeastern Poland, and as such has seen steady population growth in recent years with some 1,500-2,000 new residents each year. This comes as no surprise given that the city is a major part of the Aviation Valley cluster of aerospace firms, with the Podkarpackie Science and Technology Park Aeropolis combining the knowledge and research capacity of the city’s five universities with the commercial capabilities of aviation companies. The list of major investors in the aviation and aerospace sector in the Rzeszów area includes MTU Aero Engines, BorgWarner Turbosystems, UTC Aerospace Systems, McBraida and Vac Aero. Appropriately enough, Rzeszów has its own international airport, located just 10 kilometers north of the city. The city is situated approximately 100 km from Slovakia and Ukraine. Its location, together with the A4 east-west highway (connecting the city with Western Europe and with Ukraine), which is soon to be completed, makes Rzeszów a great hub for logistics operators as well as a good place for retail and wholesale facilities.
PrzemyÊl The city offers investors significant tax breaks and other incentives, particularly to companies setting up in the nearby subzone of the EURO-PARK MIELEC Special Economic Zone. Mayor: Tadeusz Ferenc Area code: 17 Area: 116.36 sq km Population (Dec. 2012): 182,028 Working-age population (Dec. 2011): 119,266 Unemployment rate (June 2013): 8.3% Percentage of city covered by zoning plans: 12.67% Recent major investors: BorgWarner, Conres, Heli-One, MTU Aero Engines, Pratt & Whitney, AeroPower Rzeszów, Womak Contacts: Rzeszów Regional Development Agency Inward Investment Center coi.rzeszow.pl ul. Szopena 51 35-959 Rzeszów ☎ +48 17 852-4376 +48 17 852-4374 coi@rarr.rzeszow.pl
PrzemyÊl is one of the oldest and most picturesque cities in Poland. The soon-to-be completed A4 highway and the E30 railway line, as well as the city’s proximity to the border with Ukraine, fosters exports to eastern markets and facilitates cooperation with Ukrainian companies, making the city an ideal location for logistics and retail centers. The A4 highway connects PrzemyÊl with the Rzeszów-Jesionka international airport, which offers regular flights to and from Frankfurt. PrzemyÊl is home to a number of businesses, predominantly operating in heavy industry, such as machinery and equipment, timber (fiberboard manufacturing), railway, and construction, but also in the lighting, textile, cosmetics, manufacturing and food industries. The city’s main competitive advantage lies in its business-friendly environment and a large supply of well-educated labor. PrzemyÊl is the second-biggest city in the Podkarpackie voivodship, with a working-age population of some 40,000. Its university educates specialists in machine engineering and construction, environmental engineering and chemistry, as well as offers businesses courses tailored to their spe-
cific needs. The school is equipped with a modern R&D center. Mayor: Robert Choma Area code: 16 Area: 46.18 sq km Population (Dec. 2012): 64,276 Working-age population (Dec. 2011): 41,384 Unemployment rate (June 2013): 16.9% Percentage of city covered by zoning plans: 30.55% Recent major investors: Inglot, Fanina, Fibris, Plasmet, Sanwil, Polna Contacts: PrzemyÊl City Hall Investors Assistance Center invest.przemysl.pl ul. Rynek 1 37-700 PrzemyÊl ☎ +48 16 675-2090 +48 16 678-6449 invest@um.przemysl.pl Krzysztof Zatlonkal, representative, German speaker: invest@um.przemysl.pl ☎ +48 16 675-2090 +48 16 678-6449
Find this content and more in Investing in Poland 2014. Information and key data about all of Poland’s voivodships can be found inside. Also, find analyses of major trends moving Poland’s economy. Want more? Pick up the publication or visit WBJ.pl for more information.
AVAILABLE
NOW!
16
ECONOMIC FORUM
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SEPTEMBER 2-8, 2013
Media patronage
Discussions on a ‘new deal’ ments and their activity within European structures. The hope is that the discussion will contribute to the strengthening and improvement of local governments in Ukraine. Russia will also take center stage during the event, with several debates dedicated to relations with the EU’s eastern neighbor, including “Russia & the EU: Do They Need Each Other?” Also, the role of Russia in the group of BRICS countries will be discussed in the panel entitled “What is BRICS for Russia?”
COURTESY OF THE ECONOMIC FORUM IN KRYNICA
The new world economic order
Prime Minister Donald Tusk attended the forum in 2011
How has the global economic crisis changed EU and global governments and economic structures? This year’s Economic Forum in Krynica aims to answer those questions and more Each year some 3,000 people from all over the world attend the the Economic Forum in Krynica-Zdrój. The town, a health resort with picturesque mountain views, is situated in southern Poland, far from the main road networks. While accessibility is an issue, organizers say the location encourages decision makers to stay at the forum instead of leaving immediately after their panel discussions have finished. With the whole event taking place in a space of less than a square kilometer, the concentration of CEOs and policymakers allows for plenty of substantive discussion and deal-making. For example, at one Economic Forum some years ago, a deal was initiated in which Zygmunt Solorz-˚ak, one of Poland’s richest men, eventually took over Polish telecom giant Polkomtel.
Looking further east The forum’s theme this year, “Towards a New Deal,” refers to the economic, social and political transformations that have resulted from the global economic crisis, according to organizers. As such, Poland’s eastern neighbors will feature prominently in the panel discussions. With Ukraine expected to sign an association agreement with the EU at a summit in November, the former Soviet republic will be in particular focus. Several panels, such as one entitled “Ukraine: Democracy and Business,” will discuss the country’s future as a possible EU member, and its relationship with Russia. During the “Local Government Reforms in Ukraine” discussion, panelists will examine how Ukraine can use other CEE nations’ experience when it comes to local govern-
Guests will discuss how countries can take advantage of the new economic realities since the global financial crisis and how developing states can speed up their transition from manufacturing-based economies to service-based ones. They will also discuss how to bridge the institutional gap between developed and developing countries, and how “informatization” and digitization can be applied in the development of entrepreneurship. With Poland’s Treasury continually looking to privatize state-owned firms, or at least offload significant stakes, there remain many opportunities for investors to pick up shares in firms with an already-established presence in the market. This issue will be discussed in a panel entitled, “The New Post-Crisis Order – How to Privatize State Treasury Companies?” Guests will talk about how the financial crisis has influenced the Treasury’s privatization processes and what conclusions can be drawn from the privatizations that have been carried out in the 2008-2013 period.
Places to go, people to meet
Selected panels to be held at the Economic Forum Consolidated Markets or Local Stock Exchanges? Zsolt Katona, CEO, Budapest Stock Exchange; Petr Koblic, CEO, Prague Stock Exchange; Ivan Takev, CEO, Bulgarian Stock Exchange Financing Infrastructure – Politics or Business? Jan Krzysztof Bielecki, chairman of the Economic Council, Chancellery of the Prime Minister of the Republic of Poland, former prime minister; Mariusz Grendowicz, president of the board, Polish Investments for Development; Jakub Karnowski, president of the board, chief executive officer, PKP; Krzysztof Kilian, president of the board, PGE; Régis Monfront, deputy chief executive officer, Crédit Agricole Corporate and Investment Bank What Tax Reforms Are Desirable for Economic Growth? Jean Arthuis, member of the finance committee in the French Senate; Maciej Grabowski, deputy minister of finance for Poland; Gyorgy Matolcsy, president of the Hungarian national bank; Ivan Mikloš, former deputy prime minister and minister of economy, Slovakia; Ladislav Minãiã, deputy minister of finance of the Czech Republic; Liviu Voinea, minister delegated to the budget of Romania; Boris Vujčiç, president of the National Bank of Croatia CSR – good PR or real actions? Zhanna Balabaniuk, director general, R&C Kiev Group; Mikkel Skott Olsen, director for corporate social responsibility and public relations, Velux; Jan-Eric Sundgren, vice president, Volvo Group; Marina Donati, director for corporate social responsibility, Assicurazioni Generali Euromodernization of Ukraine: How the Reality Meets Expectations Andrii Yermolaiev, director, National Institute for Strategic Studies; Alexander Duleba, director, Slovak Foreign Policy Association; Alexander Rahr, Director of Research, German-Russian Forum; Ricardo Giucci, managing director, Berlin Economics; Dietmar Stüdemann, former ambassador, consultant, German Foreign Office Rebuilding Europe’s Competitiveness Bernd Brunke, member of the management board of Roland Berger Strategy Consultants; Jorgen Andersson, chairman, TergoPower; Piotr Che∏miƒski, member of the management board, PKN Orlen; Krzysztof Kilian, president of the board, PGE; Krzysztof Pawiƒski, president of the board, Maspex Wadowice Group; Janusz Piechociƒski, deputy prime minister, economy minister; Janusz Steinhoff, chairman of the program council, Polish Chamber of Commerce
International security The forum will also hold a series of panels dedicated to security and defense issues. Though the EU has its own diplomatic corps after establishing the European External Action Service, questions remain as to whether this is sufficient to deal with outside threats to the bloc. The panel “With One Face to the World: Does the European External Action
Service Have a Chance to Operate Effectively?” hopes to answer these questions and seek solutions. Then there is the increasing role of China in the global economy. China boasts the world’s secondlargest economy, but its GDP per capita remains well below that of
Western nations. The debate “Is Global Power Really Shifting Eastward?” will tackle this subject. Jacek Ciesnowski
This year's Economic Forum takes place from September 3-5. For updates, log on to WBJ.pl
The rapid development of Poland’s BPO sector is driving demand for office space
A non-standard approach to analyzing vacancy rates shows the CEE office market is improving
Capital Group launches a nearly 30,000-sqm office project called Royal Wilanów
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LOKALE IMMOBILIA
W a r s a w B u s i n e s s J o u r n a l ’s w e e k ly s u p p l e m e n t o n re a l e s t a t e , c o n s t r u c t i o n a n d d e v e l o p m e n t
Galeria Dominikaƒska sale finalized Atrium European Real Estate has finalized the acquisition of Galeria Dominikaƒska shopping mall in Wroc∏aw it purchased from a joint venture comprising Otto Family and Deutsche EuroShop AG for €151.7 million. The transaction had to be approved by government regulators before taking effect.
Hampton by Hilton Warsaw Airport The three-star Hampton by Hilton Warsaw Airport hotel opened in August. The 116-guestroom facility, owned and operated by Port-Hotel, is situated 800 meters from Warsaw Chopin Airport. ●
In this issue Koneser joint venture . . . . . . . .18 Osiedle Królewskie launched .18 BPO office demand . . . . . . . . . .19 Buddhist center . . . . . . . . . . . . .19 CEE office market . . . . . . . . . . .20 Olivia Business Center . . . . . . .20 Royal Wilanów . . . . . . . . . . . . . .21 Ratusz Wilanów . . . . . . . . . . . . .21
Liebrecht & Wood joins Koneser project The office-retail portion of the Koneser project is to be built by BBI Development and Liebrecht & Wood BBI Development has signed a preliminary investment agreement with Liebrecht & Wood and will join forces on the delivery of Centrum Praskie Koneser, currently under construction in Warsaw’s Praga Pó∏noc district. The scheme will comprise 22,500 sqm of retail space and 22,000 sqm of office space and is scheduled to be completed in 2017. The two companies will be responsible for the delivery of the office-retail portion of the investment, which makes up 59 percent of the total area. The remaining 41 percent, which includes the residential part of the project along with commercial space on the ground floor, will remain in the hands of BBI Development. Liebrecht & Wood will
invest some z∏.55 million in the project, whereas BBI Development will put in z∏.21.8 million plus the land on which the scheme will be developed. Bank loans will provide some 70 percent of the financing for the project. The entire value of the project is estimated at z∏.450 million. BBI Development and Liebrecht & Wood have already cooperated on another project, the Plac Unii officeretail development located on ul. Pu∏awska. One of the conditions Liebrecht & Wood posed for its involvement in the Koneser project is the prior sale of Plac Unii, which comprises 56,200 sqm and is scheduled to be delivered in October this year. As much as 90 percent of the retail and 60 percent of the office space has already been leased. Once the development is sold, Liebrecht & Wood will finalize the agreement with BBI on Koneser. Centrum Praskie Koneser is a modern mixed-use complex
The Koneser scheme will comprise 22,500 sqm of retail space and 22,000 sqm of office space comprise 330 housing units. The investors want one of the historic buildings to house a museum, possibly operating under the aegis of the National Museum in Warsaw. Since the onset of the project in 2010, BBI Development has already revitalized a historical guardhouse and an
due to be built within the next few years on the site of a former vodka distillery. The project will involve the development of a total of 70,000 sqm of usable space on a nearly fivehectare plot of land. Apart from 22,500 sqm of retail and 22,000 sqm of office space, Centrum Praskie Koneser will
administrative building, parts of the Koneser project, transforming them into modern office space. Construction on the commercial portion is due to be launched in H2 2014. The companies will select the general contractor for the project together. Karolina Kowalska
Residential
Robyg launches estate in Wilanów, eyes more land for development The new project, Osiedle Królewskie, will be a joint venture with NCRE Investment Limited Warsaw Stock Exchange-listed developer Robyg has held a cornerstone laying ceremony on its Osiedle Królewskie residential estate in the capital’s Wilanów district. Construction on the project has been progressing since June. Robyg has secured financing for the investment by selling 49 percent of Robyg Osiedle Królewskie, an SPV created for the development of the project, to NCRE
Investment Limited. Located on Al. Rzeczpospolitej, the estate will deliver 700 apartments, ranging from 30 sqm to 130 sqm, in six phases. The project was expanded by 90 units from the original 610, when Robyg purchased an additional 4,000 sqm of land adjacent to the plot where Osiedle Królewskie is being constructed. Together with the additional 4,000 sqm, which Robyg bought in April for z∏.3.5 million, the developer now has a total of four hectares of land on Al. Rzeczpospolitej in Wilanów, where the Osiedle Królewskie estate is being developed. Together
the land is valued at z∏.30 million. The first phase of the development will deliver a total of 115 apartments, some 80 percent of which have already been contracted. The sales on the second phase of the investment has been launched recently. Osiedle Królewskie will comprise several four-storey buildings. Osiedle Królewskie is the investor’s third project in Wilanów, after Nowa Rezydencja Królowej Marysieƒki and Osiedle Zdrowa. Robyg has also announced it signed a preliminary agreement for the purchase of an 11,000-sqm plot in Warsaw’s Wola district for z∏.15 million.
The developer wants to build a residential estate there comprising up to 300 housing units. Robyg hasn’t disclosed
the exact location of the plot, as the transaction is still in its preliminary stages. Karolina Kowalska
COURTESY OF ROBYG
Rank Progress has dissolved a preliminary agreement with Elsoria Polska for the sale of the Galeria Âwidnicka retail center in Âwidnica in Lower Silesia, but says that it is currently in advanced talks with another potential buyer for the project. The new investor has submitted a non-binding offer, which is higher than the €25 million offered by Elsoria.
Office/retail
COURTESY OF BBI
Rank Progress in talks to sell Galeria Âwidnicka
SEPTEMBER 2-8, 2013, LI 18/34
Osiedle Królewskie in Warsaw’s Wilanów district will comprise 700 housing units ranging from 30 sqm to 130 sqm
Warsaw Business Journal presents Real Estate weekly newsletter • Know about the newest projects before they’re on the market • Keep up to date on the latest tenders and auctions • Learn the latest trends in Poland’s dynamic office, residential and retail sectors • Find out who’s who in Polish real estate To subscribe: e-mail subscribe@wbj.pl or call +48 22 639 85 68, ext. 201 and sign up for free two-week no-obligation trial subscription
SEPTEMBER 2-8, 2013
LOKALE IMMOBILIA – REAL ESTATE
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Office
Redevelopment
Poland’s status as BPO powerhouse spurs office development
Warsaw warehouse to become meditation center
Poland has become the destination of choice for companies operating in the business process outsourcing sector in CEE, according to the report “BPOland Potential and Prospects” prepared by CBRE in cooperation with recruitment company Hays and the Polish Information and Foreign Investment Agency (PAIiIZ). Poland boasts over 110,000 people employed in 400 BPO centers, and the market has been growing steadily by over 20 percent annually since 2008. Over the past year Poland outpaced India in the rate of job creation and project expansions in the BPO sector. Employment in the sector has grown mainly as a result of the expansions by existing companies such as State Street, Hewlett Packard and HSBC, and also
thanks to new investors coming to Poland. “Statistics comparing the pace of BPO growth in Poland and India, where the number of new establishments is decreasing, show that companies are increasingly choosing CEE and above all Poland as the destination for their investments,” said S∏awomir Majman, president of PAIiIZ.
Top and emerging locations In May 2013 there were 25,400 jobs in the sector located in 43 centers in Kraków, Poland’s top outsourcing destination (growth of almost 31 percent since January 2012). Warsaw had 18,900 jobs (33 percent increase over the same period) in 55 centers, while Wroc∏aw had 18,400 jobs in 38 centers (46 percent increase). Wroc∏aw, located in southern Poland, is becoming increasingly popular as a BPO destination, especially with manufacturing and hightech companies establishing R&D centers there. While leading Polish region-
al cities attract the largest numbers of investors, new destinations in smaller cities are emerging as significant locations. The growing office stock in smaller cities such as Olsztyn, Bydgoszcz, Opole and Rzeszów means that over the past four years they have been able to meet BPO requirements from international companies across diverse sectors. “In 2012, both Polish and international companies, including BPO investors, leased over 600,000 sqm of office space in Warsaw and over 350,000 sqm in regional cities, not including renegotiations,” said Joanna Mroczek, head of research and consultancy at CBRE in Poland. “Currently there is over 1 million sqm [of] modern office space under construction of which 45 percent is being developed in regional cities. Readyto-use office space is essential to attract foreign investors, who once they decide upon a location, cannot wait long to move,” Ms Mroczek added. KEK
Buddhist organization Diamond Way Buddhism has been granted a construction permit for the redevelopment of a former warehouse on ul. O˝arowska in the Ko∏o area of the capital’s Wola district. The z∏.5 million investment will be used by a 500-person community, whose current headquarters are already too
small to house all its members. The warehouse, designed by Helena and Szymon Syrkus and constructed between 1946 and 1956, will be refurbished and another storey will be added. When redeveloped, the facility will be the biggest Buddhist center in Poland. Additionally, the association is planning to develop two new buildings. The first floor will house a large meditation area, while the second and the third floors will be used as residential, technical and service areas. The residential units will be
COURTESY OF DIAMOND WAY BUDDHISM
As the outsourcing sector in Poland expands, cities are looking to attract more investors with ready office space
A Buddhist association will redevelop an old warehouse in Warsaw’s Wola district
The center will cost z∏.5 million to build
occupied by the center’s staff as well as guests coming to meditate there. The construction of the facility in Warsaw’s Wola district comes after Lama Ole Nydahl, the leader and founder of Diamond Way Buddhism, said in early 2009 that such a center should be built. Diamond Way Buddhism is a lay organization within the Karma Kagyu school of Tibetan Buddhism. Until now, over 40 Diamond Way centers have been established by the association in Poland. Karolina Kowalska
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LOKALE IMMOBILIA – REAL ESTATE
SEPTEMBER 2-8, 2013
Office
Vacancy rates may not tell the whole story: there are tentative signs that occupier sentiment is turning positive While overall office vacancy has been gradually increasing across Eastern Europe in 2013, the operational vacancy rate in each market was more positive than overall vacancy rates would suggest, according to Colliers’ “Office Market Metrics, Research & Forecast Snapshot” for Eastern Europe report. The report finds that a number of older buildings which are highly vacant distort the true operational vacancy rate of the office markets. Increasingly, occupiers are looking to upgrade space to improve working conditions and productivity. This leads to pockets of vacant space in buildings and very small locations that are not competitively matched with the occupational demands of the market. By discounting these outliers from the headline vacancy rate, one can derive a more
accurate operational vacancy rate for each market. “In an established office market such as Budapest, headline vacancy is almost 20 percent, while operational vacancy is close to 16 percent,” said Damian Harrington, regional director of research for Colliers International, Eastern Europe, in the report. “Vacancy rates in the other established markets of Warsaw, Prague and Bratisla-
“There are some initial signs of improving sentiment.” va are also reduced, reaching close to 9.3 percent, 11 percent and 12 percent; this is down from a headline rate of 9.8 percent, 13 percent and 14.3 percent respectively,” Mr Harrington added. According to Jones Lang LaSalle’s “European Property Clock” report, although the recovery of the European office market is continuing, Warsaw recorded a 2 percent
decline due to high development activity. In the whole of Europe, office completions decreased further over the quarter (-11 percent) to reach a 10-year low. On the demand side, Q2 office take-up in Europe improved slightly over the quarter (+5 percent), but is down on Q2 2012 (-3 percent). Occupier activity remains impacted by ongoing uncertainty over the short-term economic outlook, as well as weak labor markets, the report said. Occupiers remain cost-sensitive and continue to examine their lease options very carefully. “There is some evidence of occupiers taking the opportunity to upgrade if clear gains in floor plate efficiency and workplace productivity and/or location can be realized,” said Dr Lee Elliott, head of EMEA research at Jones Lang LaSalle. “There are some initial signs of improving sentiment in select markets, but this will need to be sustained and extended if expansionary demand is to materialize,” Mr Elliott added. KEK
SHUTTERSTOCK
Slow but steady improvement Office development activity high in Gdaƒsk in CEE office market
Olivia Business Centre in Gdaƒsk Gdaƒsk remains the largest “construction site” in Tri-City in H1 2013, according to Jones Lang LaSalle’s experts. Office sector developer activity remains high, with 71,200 sqm under construction within the agglomeration. Tri-City is the fourth-largest office market in Poland, behind Warsaw, Kraków and Wroc∏aw, with the total supply of office space in the region at 430,250 sqm. In H1, a total volume of 52,700 sqm of office space was delivered in Gdaƒsk, Gdynia
and Sopot. In H1 2013, companies leased a total volume of 22,400 sqm of modern office space. New contracts, pre-lease agreements and relocations (net demand) accounted for 71 percent of the leased space. The main transactions in the analyzed period include Geoban (renewal and expansion, 2,800 sqm) in the ¸u˝ycka Office Park, Gdaƒskie Wydawnictwo OÊwiatowe (pre-lease of 2,500 sqm, Alchemia phase 1), Acxiom (renewal, 1,600 sqm,
Garnizon.biz), First Data Global Services (renewal, 1,200 sqm, Arkoƒska Business Park) and LPP (extension, 1,200 sqm, Artus Park). At the end of Q2, more than 56,000 sqm (13.1 percent) of Tri-City office space remained vacant. The vacancy rate is stable. At the end of Q2, headline rents remained stable at the level of €12-14. However, effective rents are lower because of incentives offered by landlords. KEK
LOKALE IMMOBILIA – REAL ESTATE
SEPTEMBER 2-8, 2013
www.wbj.pl
Construction launched on Royal Wilanów
Ratusz Wilanów to be delivered by end-2014
The investment is being touted as a highend alternative to office developments in Mokotów
The abandoned construction site is being developed again with city-owned MPRO as the investor
Developer Capital Park Group has launched construction on its Royal Wilanów office project in Warsaw. The work is expected to last 24 months. The total cost of the investment is estimated at z∏.212.5 million. Located at the intersection of ul. Klimczaka and ul. Przyczó∏kowa in Warsaw’s Wilanów district, the Royal Wilanów development will feature five floors with a total of nearly 29,800 sqm of office space and 7,000 sqm of retail-service space. A three-level underground parking will offer 931 parking spaces for tenants and 211 spaces for guests and customers. In June Erbud was selected as the general contractor of the project. It will feature a glass facade and natural greenery in common areas. The investor claims the office space is at class-A+ standard, despite its distance from the center of the city.
Work is progressing on the Ratusz Wilanów building again, 12 years after the construction was originally launched. The cost of completing the structure has been estimated at some z∏.43-47 million. The investor behind the project is MPRO, an entity owned by the city of Warsaw, which is primarily responsible for maintaining green spaces in the city and has been active as a developer since 1997. The general contractor for the project is Henpol. “The construction work is moving forward very well. ... The building is scheduled for completion in the fall of 2014,” Elwira Wiechecka, a spokesperson for the Wilanów’s district, told Lokale Immobilia. The building will serve as the new seat for the authorities of Warsaw’s Wilanów district. Its construction originally started in 2001, with Turkey-based developer Deniz behind it. The
The development will feature nearly 29,800 sqm of office space The investment was designed by the Warsaw-based JEMS Architekci studio and Capital Park is touting it as an alternative to facilities located in the capital’s Mokotów district, which lies just north of Wilanów and is becoming increasingly crowded with office developments. Wilanów is mostly known as a residential area, where a large housing development “Miasteczko Wilanów” (“Wilanów Town”) is currently under construction. The Royal Wilanów office development will “form an entrance” to
Miasteczko Wilanów, according to the developer. “Wilanów has so far lacked modern office space. Royal Wilanów changes this situation,” the development’s website reads. Capital Park plans to secure a BREEAM energy efficiency certification with a “Very Good” rating for the project. Capital Park Group has been active in the Polish property market since 2003, investing jointly with the Patron Capital Partners international private equity fund. Karolina Kowalska
COURTESY OF RATUSZ WILANÓW
Office
COURTESY OF CAPITAL PARK GROUP
Office
21
The cost of completing Ratusz Wilanów is estimated at z∏.43-47 million investor was to finance the entire project in exchange for a plot of land for development it was going to receive from the Wilanów district. A year into the construction, however, the developer ran out of cash and the scheme remained unfinished for over a decade. “The enormous delay in the construction of Ratusz Wilanów was caused by financial problems,” Ms Wiechecka said. “There was never a good time to complete the construction. At first, the district was developing rapidly and other investments had to be prioritized. Then the crisis in public finances came.” Once the Wilanów district regained ownership of the unfinished scheme, it decided
to move forward with the project. After checking the building’s structural integrity, Ratusz Wilanów hired architectural studio Kury∏owicz & Associates, the original designer of the project, to outfit the project with various green solutions. “Due to insufficient financing on our part, we’ve decided to have MPRO as the investor on the project. We will pay it back the money incrementally over the next 10 years, without any interest,” Ms Wiechecka explained. During that time district authorities will lease the space from MPRO, but once the debt is paid, the district will become the owner of the scheme. Beata Socha, Karolina Kowalska
22
THE LIST
www.wbj.pl
SEPTEMBER 2-8, 2013
Corporate Services
Business Consulting Companies Ranked by revenue from business consulting in financial year 2012
Rank
A guide to Polish business and industry
www.bookoflists.pl
Przewodnik po polskim biznesie i gospodarce
Company name Address Tel./Fax E-mail Web page
Revenue Total revenue from business from consulting consulting (z∏. mln): (z∏. mln):
Total revenue (z∏. mln):
2012 / 2011 / 2010 / 2009
Services Business risk Analysis of Business model Consulting management / corporate analysis / CSR / Business performance / BSC / Controlling / negotiations / IT consulting / Transaction Lean Management and Dedicated advisory / Change and project Procurement structural Organizational management industry investments / culture / solutions R&D HR management
Corporate architecture / SSC / Financial applications and software / Training
Selected clients
Total number of consultants / Total number of employees / Year founded in Poland
Top local executive / Title
1
PwC Al. Armii Ludowej 14, 00-638 Warsaw 22 523-4000/22 523-4040 pwcpoland@pl.pwc.com www.pwc.com/pl
251.1 195.4 167.2 145.7
339.0 270.6 232.1 201.6
537.1 468.5 418.2 383.4
✓ ✓ ✓ ✓
✓ ✓ ✓ ✓
✓ ✓ ✓ ✓
✓ ✓ -
✓ ✓ ✓ ✓
TP; Polsat; Enea; Energa; BRE Bank; Grupa ITI; PGNiG; Ciech; T-Mobile; Orlen; PKP Energetyka; JTS; KGHM; PGE; PLL LOT; HSBC
502 1,674 1990
Olga Grygier-Siddons
2
Ernst & Young Sp z o.o. Business Advisory Sp.k.(1) Rondo ONZ 1, 00-124 Warsaw 22 557-7000/22 557-7001 ernst.young@pl.ey.com www.ey.com/pl
180.0 157.0 110.7 WND
198.5 176.0 133.7 WND
553.2 497.0 402.0 WND
✓ ✓ ✓ ✓
✓ ✓ ✓ ✓
✓ ✓ ✓ ✓
✓ ✓ ✓ ✓
✓ ✓ ✓ ✓
PGNiG; PGE; Tauron; PKN Orlen; PZU; PKO BP; Enea; Energa
373 1,728 1990
Duleep Aluwihare; Piotr Piela
Deloitte Al. Jana Paw∏a II 19, 00-854 Warsaw 22 511-0811/22 511-0813 dpoland@deloittece.com www.deloitte.com/pl
127.5 132.9 124.9 120.2
WND WND WND WND
398.4 387.5 344.6 340.3
✓ ✓ ✓ ✓
✓ ✓
✓ ✓ ✓ ✓
✓ ✓ ✓ ✓
✓ ✓ ✓ ✓
PZU; ZUS; Energa; PGNiG; PKO BP
890 1,112 1990
Marek Metrycki; Dariusz Kraszewski
4
KPMG ul. Ch∏odna 51, 00-867 Warsaw 22 528-1100/22 528-1009 kpmg@kpmg.pl www.kpmg.pl
106.1 69.3 45.5 57.1
129.1 90.8 66.5 70.7
436.5 447.2 407.0 455.0
✓ ✓ ✓ ✓
✓ ✓ ✓ ✓
✓ ✓ ✓
✓ ✓ ✓ ✓
✓ ✓ ✓ ✓
WND
225 1,311 1990
Andrzej Âcis∏owski
5
WYG International Sp. z o.o. ul. Marynarska 15, 02-674 Warsaw 22 492-7100/22 492-7113 warszawa@wyginternational.pl www.wyginternational.pl
98.6(2) WND 58.6 72.4
98.6(2) WND 58.6 72.4
137.0(2) WND 76.7 100.5
✓ ✓
✓ ✓
✓ ✓
✓ ✓ ✓ ✓
✓
PARP; Voivodship Marshalls’ Offices; local governemt units; WUP; CRZL
483 183 1999
Andrzej Dziurdzik
6
Accenture Sp. z o.o.(3) ul. Sienna 39, 00-121 Warsaw 22 464-0000/22 464-0001 pl.office@accenture.com www.accenture.pl
94.6 92.4 72.0 90.3
278.4 267.9 244.1 306.1
339.6 323.5 245.9 308.9
✓ ✓ ✓ ✓
✓ ✓ ✓ ✓
✓ ✓
✓ ✓ ✓ ✓
✓ ✓ ✓ ✓
WND
WND 1,760 1993
Jaros∏aw Kroc
7
F5 Konsulting Sp. z o.o. ul. Sk∏adowa 5, 61-897 Poznaƒ 61 856-6960/61 853-0295 konsulting@f5.pl www.f5.pl
18.4 22.4 18.3 19.9
18.4 22.4 18.3 19.9
18.4 22.4 18.3 19.9
✓ ✓
✓ ✓
-
✓ ✓ ✓ ✓
✓ ✓
Enea; PKN Orlen; Ministry of Administration and Digitization; PARP; Chancellery of the Prime Minister
100 120 1991
Marek Pankowski
8
Doradca Consultants Ltd. Sp. z o.o. ul. WolnoÊci 18A, 81-327 Gdynia 58 621-0331/58 621-9927 office@doradca.com.pl www.doradca.com.pl
5.2 9.0 8.0 5.1
5.2 9.0 8.0 5.1
5.3 9.0 8.1 5.6
✓ ✓ ✓
✓ ✓ ✓
✓ -
✓ ✓ ✓ ✓
✓ -
Energa; CRZL; TP; Orlen; Agencja Rozwoju Pomorza; local governments
32 45 1985
Jaros∏aw Zysnarski
9
Carrywater Group SA Al. Jerozolimskie 65/79, 00-697 Warsaw 22 630-6655/22 630-6656 biuro@carrywater.com www.carrywater.com
4.2 3.6 WND WND
9.9 11.7 WND WND
9.9 11.9 10.0 8.7
✓ ✓ ✓ ✓
✓ ✓ ✓ ✓
✓ ✓
✓ ✓ -
✓ ✓ ✓ -
Grupa TP; Enea Operator; HFC Systems; Inea; Energa
36 43 1996
Pawe∏ Biarda
10
DGA SA ul. Towarowa 35, 61-896 Poznaƒ 61 859-5900/61 859-5901 dgasa@dga.pl www.dga.pl
2.5 3.5 WND WND
2.5 3.5 WND WND
20.2 26.3 WND WND
✓ ✓ ✓
✓ ✓ ✓ -
✓ ✓
✓ ✓ ✓ ✓
✓ ✓ ✓
WND
WND 19 1990
Andrzej G∏owacki
11
Grupa Kapita∏owa PKF Consult ul. Orzycka 6/1B, 02-695 Warsaw 22 560-7650/22 560-7663 pkfconsult@pkfpolska.pl www.pkfpolska.pl
2.0(4) 3.0(4) 5.2 WND
2.0(4) 3.0(4) 5.2 WND
19.1(4) 21.1(4) 36.0 WND
✓ ✓ ✓ ✓
✓ ✓ ✓ ✓
✓ ✓
✓ ✓ ✓ -
✓ ✓ ✓
Ministry of Treasury; PARP; Industrial Development Agency; Grupa Bumar; PKP; EP Serwis
9 155 1993
Ewa Jakubczyk-Ca∏y
12
FIRMA 2000 Sp. z o.o. ul. Królowej Marysieƒki 90, 02-954 Warsaw 22 642-5872/22 642-5873 mail@firma2000.pl www.firma2000.pl
1.7 1.3 1.1 0.8
2.0 1.5 1.1 0.8
11.6 10.7 12.5 5.4
✓ ✓
✓ ✓
✓ -
✓
-
PARP; Echo Investment; Rovese; Warszawski Instytut BankowoÊci
4 21 1999
Marcin Opas
13
House of Skills (Konsorcjum doradczo-szkoleniowe SA) ul. Flisa 4, 02-247 Warsaw 22 577-4040/22 577-4047 office@weknowhow.pl www.weknowhow.pl
1.4 2.0 2.4 1.9
1.9 2.0 2.4 1.9
23.4 28.3 27.6 22.3
✓ ✓
✓
✓
✓ ✓ ✓
✓
WND
28 33 2004
Aleksander Drzewiecki
14
Carnelian Partners Sp.z o.o. ul. Rac∏awicka 146, 02-117 Warsaw 22 572-5660/22 572-5669 carnelian@carnelian.pl www.carnelian.pl
0.9 0.7 1.0 0.4
0.9 0.7 1.0 0.4
1.7 1.9 2.2 1.1
✓ ✓ ✓
✓ ✓ ✓ -
✓ -
✓ ✓ ✓ -
✓ -
WND
7 8 2006
Edyta Skoczyƒska
15
Centrum Doradztwa Biznesowego Sp. z o.o. ul. Mariensztat 8, 00-302 Warsaw 22 538-9117/22 828-7566 office@cdb.pl www.cdb.pl
0.3 0.3 WND WND
0.4 0.4 WND WND
2.1 2.1 WND WND
-
✓ ✓ -
✓ -
✓ ✓ -
✓ -
WND
6 25 2003
3
Notes: Notes: BSC = Balanced Scorecard, NR = Not Ranked, R&D = Research and Development, SSC = Shared Services Center, WND = Would Not Disclose. Research for The List was conducted in March 2013. Number of employees is as of March 2013. All information pertains to the companies' activities in Poland. Only ranked companies are listed. The entire List is available at www.bookoflists.pl. Footnotes: (1) Financial year: July 1 - June 30; (2) Financial year: July 1, 2010 - March 31, 2012; (3) Financial year: September 1 - August 31; (4) Financial year: October 1 - September 30.
President
Managing Partners
Managing Partners
Senior Partner
President
President
President
President
Prezes
President
President of PKF Consult
President
President
President
Robert Rogala Partner; Board Member
To the best of WBJ ’s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Corrections or additions to The List should be sent, on official letterhead, to Warsaw Business Journal, attn. Monika Brysiak, ul. Elblàska 15/17, 01-747 Warsaw, via fax to +48 22 257-7500, or via e-mail to online@bookoflists.pl. Copyright 2013, Valkea Media SA. The List may not be reprinted or reproduced in whole or in part without prior written permission of the publisher. Reprints are available.
OPINION & ANALYSIS
SEPTEMBER 2-8, 2013
www.wbj.pl
23
The post-crisis global economy in three words
Jean Pisani-Ferry
Well-timed response Another reason for the rebound was the well-timed response engineered in 2009 by the G20. For the first time, emerging and developing countries participated in a coordinated reflation effort, and, alongside their advanced-country counterparts, promised to resist trade protectionism. The recovery soon demonstrated that the global economy had more than one engine. This gave the US economy time to heal, and even made it possible for Europe to experience its own crisis without triggering a generalized downturn. The second word that character-
izes the last five years is acceleration. In 2008, everyone knew that the rise of emerging and developing countries was redrawing the global economic map. But this was thought to be a gradual, long-term trend. In reality, what was supposed to take one or two decades took just five years. A simple statistic illustrates the point: in 2007, the advanced coun-
countries and 42 percent for lowincome countries. Of course, such statistics can be misleading. The US and Europe still enjoy the services of a vast capital
Saudi Arabia and other Gulf states could be
SHUTTERSTOCK
F
ive years have passed since the collapse of the American investment bank Lehman Brothers triggered financial mayhem and marked the onset of the Great Recession. Though the dust may not have fully settled, three catchwords sum up what we have learned so far – and what remains to be done. The first word that comes to mind is resilience. Five years ago, many feared a repetition of the Great Depression of the 1930s. Indeed, as Barry Eichengreen and Kevin O’Rourke have shown, the collapse of world industrial production in 2008-2009 initially tracked that of 1929-1930 very well. The fall in world trade volume and equity indices was even faster. Fortunately, the historical paths subsequently diverged. Five years after the 1929 crash, the world was still in depression and trade had contracted sharply. Today, the United States is still going through its worst employment recession since World War II, and Europe’s GDP has not returned to pre-crisis levels, but global output has grown 15 percent since 2008, and world trade is up more than 12 percent. The world avoided a Great Depression II mainly because there was no global financial crisis this time. What occurred in 2008 was a US crisis that contaminated Europe, because the two financial systems were almost completely integrated. The rest of the world, however, was largely immune. China and other emerging countries were hit by a severe demand shock that affected their exports, but not by the financial turmoil. On the contrary, the value of US government bonds that China and others held rose in response to the drop in interest rates.
tries accounted for almost three-quarters of the G20’s combined GDP. By 2012, their share had fallen to 63 percent. The combination of growth differentials and high oil and raw-materials prices has resulted in a massive shift in the distribution of world income. Furthermore, all advanced countries have experienced rapid deterioration in their public finances.
“The global middle class is expected to grow by another 1.3 billion over the next 10 years.” Whereas 10 years ago public-debt crises were considered a plague that afflicts developing countries, the malady is now the advanced economies’ curse. According to the International Monetary Fund, the average debt-toGDP ratio at the end of 2012 was 110 percent in the advanced countries, but just 35 percent for emerging
stock – machines, buildings, and public infrastructure built over decades or even centuries. Furthermore, immaterial capital increasingly matters, too: US authorities recently revised GDP upward by $400 billion after recognizing that research and development spending should be categorized as investment. Emerging countries may be growing faster, but their per capita capital stock still does not match that of advanced countries (in fact, this is precisely what development is largely about). Nonetheless, global politics is one field in which relative income changes and the poor state of rich countries’ public finances matter. When the US and Europe threatened to withdraw financial support from Egypt in order to influence the behavior of the country’s military leadership, they soon realized that
m u c h more convincing, because they had much deeper pockets.
Globalization 2.0 This leads to the third catchword of the last five years: rebalancing. Globalization 1.0 was built around US consumers and Chinese producers. The next phase should be built around consumers and producers the world over. According to projections by Homi Kharas and Geoffrey Gertz of the Brookings Institution, there now are 700 million more people with $10-100 per day to spend than there were in 2003. Moreover, what they call the global middle class is expected to
grow by another 1.3 billion over the next 10 years. So there is obvious potential for a major rebalancing toward consumption-led growth in the emerging and developing world. This new phase of globalization portends major benefits for the global economy. Instead of the somewhat one-sided trade pattern of the last two decades, it means greater wellbeing for households in developing countries and opportunities for more producers in the advanced economies. At the same time, consumption habits will need to change everywhere: the middle class cannot triple in size and continue to rely on the same energy- and carbon-intensive spending patterns. But we are not there yet. Partly owing to government stimulus measures, China’s growth since 2008 has been driven more by investment than by consumption, which has impeded the economy’s much-needed demand rebalancing. Economic performance has been sustained by a partly artificial investment boom, which is now petering out – raising concerns about China’s ability to maintain sufficiently rapid growth. And demand is still much too energy- and carbon-intensive. So a transition remains to be managed, and recent foreignexchange turmoil in several emerging countries indicates that it is bound to be a delicate one. The resilience that the world economy has shown since 2008 provides reason to rejoice, and the acceleration of changes in the global balance of economic and financial strength is reason to reflect. But the remaining challenge of rebalancing demand (in both quantitative and qualitative terms) remains a major one. Until progress toward meeting it is further advanced, it will be too early to claim victory. ● Jean Pisani-Ferry is professor of economics at Université ParisDauphine and currently serves as director of economic policy planning for the Prime Minister of France. Copyright: Project Syndicate, 2013. Project-syndicate.org
Editorials are the opinions of WBJ’s editorial board. Other opinions are those of the authors alone. Comments, opinions and letters should be sent to editor@wbj.pl. Please include a name and contact information and clearly indicate if they are to be considered for publication.
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24
MARKETS
www.wbj.pl
SEPTEMBER 2-8, 2013
Stocks report
world stock indices DJIA
NASDAQ
14,840.95 (Aug 29 close)
S&P500
3,620.30 (Aug 29 close)
-0.82% (for the week)
FTSE100
1,638.17 (Aug 29 close)
-0.51% (for the week)
DAX
6,412.93 (Aug 30 close)
-1.13% (for the week)
-1.22% (for the week)
Optimism shortage
NIKKEI 8,103.15 (Aug 30 close)
13,388.86 (Aug 30 close)
-3.73% (for the week)
-1.99% (for the week)
CHANGE: 10.65% (year to Aug 29)
CHANGE: 16.32% (year to Aug 29)
CHANGE: 12.02% (year to Aug 29)
CHANGE: 6.40% (year to Aug 30)
CHANGE: 4.17% (year to Aug 30)
CHANGE: 25.27% (year to Aug 30)
52-week high: 15,658.43
52-week high: 3,694.19
52-week high: 1,709.67
52-week high: 6,875.60
52-week high: 8,553.74
52-week high: 15,942.60
52-week low: 12,471.49
52-week low: 2,810.80
52-week low: 1,343.35
52-week low: 5,605.60
52-week low: 6,889.79
52-week low: 8,488.14
Omar Arnaout Noble Securities SA After noting a significant increase from the end of June, the Warsaw Stock Exchange has been in corrective movement for two consecutive weeks now. While two weeks ago the decrease was minimal, investors could not have been optimistic last week, seeing the WIG20 Futures drop from the level of 2,416 to as low as 2,318. Optimism, or a lack thereof, has been the decider during the week, with the situation in Syria one of the main drivers of this situation. The lack of optimism and the presence of risk aversion could be seen on the US stock exchange, as well as in the depreciating value of the z∏oty. As to the WIG20 Futures, from the technical point of view the market has broken significant support levels signaling the possibili-
Major indices WIG
48,871.98 (August 30 close)
WIG20
2,384.22 (August 30 close)
30.08
29.08
28.08
27.08
26.08
23.08
22.08
21.08
20.08
19.08
16.08
14.08
13.08
30.08
29.08
28.08
27.08
26.08
23.08
22.08
21.08
20.08
2,300
19.08
47,000
16.08
2,340
14.08
47,800
13.08
2,380
12.08
48,600
09.08
2,420
08.08
49,400
07.08
2,460
06.08
50,200
05.08
2,500
02.08
51,000
12.08
52-week low: 2,177.02
09.08
Change year to August 30: -9.21%
08.08
52-week low: 41,077.44
07.08
52-week high: 2,628.36
Change year to August 30: 1.59%
06.08
Change for the week: -1.37%
05.08
52-week high: 50,223.95
02.08
Change for the week: -2.05%
Top 5 GLOBALNRG IQP ERG SOPHARMA KANIA
Closing 1.77 1.20 0.52 6.50 3.67
% change (week) 52-week high 40.48 2.16 34.83 2.05 30.00 0.55 30.00 6.60 27.43 3.67
52-week low 0.55 0.66 0.31 3.40 1.34
Top 5 PGE LOTOS ASSECOPOL BOGDANKA PGNIG
Closing 16.99 38.09 45.77 113.55 6.18
% change (week) 9.47 2.61 2.51 2.21 1.15
52-week high 19.54 45.45 47.50 143.00 6.76
52-week low 14.05 25.90 36.84 97.20 3.78
Bottom 5 SFINKS PETROLINV TFONE KSGAGRO MAKARONPL
Closing 1.68 0.21 2.66 10.36 3.67
% change (week) -25.33 -25.00 -21.76 -15.43 -14.85
52-week low 0.82 0.20 1.13 7.89 1.95
Bottom 5 HANDLOWY EUROCASH JSW KGHM BRE
Closing 102.30 51.90 67.93 122.60 442.00
% change (week) -12.34 -7.65 -5.52 -5.03 -4.12
52-week high 123.60 66.56 97.13 179.15 475.00
52-week low 72.82 36.48 57.70 106.90 282.79
52-week high 2.40 2.58 3.67 16.42 4.47
Currency report
Z∏oty takes a hit
Other indices sWIG80
12,801.04 (August 30 close)
NewConnect
312.56 (August 30 close)
52-week high: 13,056.86
WIG-Banki
7,394.25 (August 30 close)
SOURCE: WSE
30.08
29.08
28.08
27.08
26.08
23.08
22.08
21.08
20.08
19.08
16.08
14.08
13.08
30.08
29.08
28.08
27.08
26.08
23.08
22.08
21.08
20.08
19.08
7,200
16.08
304
14.08
7,320
13.08
306
12.08
7,440
09.08
308
08.08
7,560
07.08
310
06.08
7,680
05.08
312
02.08
7,800
12.08
52-week low: 5,943.43
09.08
Change year to August 30: 9.98%
08.08
52-week low: 296.29
07.08
52-week high: 7,754.29
Change year to August 30: -5.91%
06.08
Change for the week: -3.17%
05.08
52-week high: 353.60
02.08
Change for the week: 0.32%
314
Adam Narczewski X-Trade Brokers DM SA
30.08
29.08
28.08
27.08
26.08
23.08
22.08
21.08
20.08
19.08
52-week low: 9,283.99
13.08
12.08
09.08
30.08
29.08
28.08
27.08
26.08
23.08
22.08
21.08
20.08
12,000 19.08
3,000
16.08
12,220
14.08
3,060
13.08
12,440
12.08
3,120
09.08
12,660
08.08
3,180
07.08
12,880
06.08
3,240
05.08
13,100
02.08
3,300
08.08
Change year to August 30: 21.55%
07.08
52-week low: 2,211.09
06.08
Change year to August 30: 20.19%
05.08
Change for the week: -1.91%
02.08
52-week high: 3,253.52
16.08
3,087.13 (August 30 close)
Change for the week: -4.47%
14.08
mWIG40
ty of the correction extending even below the psychological support level of 2,300. Optimism may return to the market, however, with this week’s macroeconomic readings, particularly with the US unemployment rate. Even though stock markets were not the place to be, investors could have been satisfied with the performance of PGE last week, which noted an increase from the level of z∏.15.36 to as high as z∏.16.99. The market broke significant levels of resistance based on the 38.2 percent and 41.4 percent retracement levels of the fall initiated on June 2. This is a strong indication that the market is likely targeting the level of z∏.16.78. If this level is broken, then the next probable target will be z∏.17.19. ●
The last couple of weeks have been a tough time for emerging market currencies. The biggest losers include the Indian rupee and the Turkish lira. The z∏oty is surprisingly stable compared to these currencies, but chances for appreciation are marginal. Local macroeconomic data is being ignored by investors and the main factors affecting the market are the situation in Syria and the possibility of the US Federal Reserve limiting its QE policy as early as this month. Uncertainty about another possible war in the Middle East, as well as the possibility of huge capital outflows from emerging markets, is the main driver for decision making. The decision usually involves moving funds to safer financial instruments. In Poland politicians are
still debating whether to increase the budget deficit (which the government has already approved), but this is being ignored by market participants. The unemployment rate remains at 13.1 percent, while retail sales increased by 4.3 percent in July. The data were also ignored since, as we like to joke, Poland’s Monetary Policy Council introduced its own idea of “forward guidance” by stating interest rates will not change until the end of the year. The EUR/PLN broke from the z∏.4.22-z∏.4.25 range, reaching a monthly high of z∏.4.2960. The USD/PLN advanced from z∏.3.17 all the way to z∏.3.22. The upcoming weeks will be difficult for the z∏oty and I do not see any signs that could reverse this depreciation trend. ●
currency rates 3.2839 30.08
SOURCE: NBP
3.2894 29.08
3.2661 28.08
3.2519 27.08
26.08
3.2042 23.08
0.0972
0.0969 30.08
3.2
3.2147
100JPY/PLN
3.3
29.08
0.0960 28.08
0.0960 27.08
26.08
0.0959 23.08
3.4799
3.4632 30.08
0.09
0.0960
RUB/PLN
0.10
29.08
3.4626 28.08
3.4522 27.08
26.08
3.4278 23.08
5.0070
4.9899 30.08
3.3
3.4274
CHF/PLN
3.5
29.08
4.9333 28.08
4.9393 27.08
26.08
4.9486 23.08
3.2269
3.2209 30.08
4.8
4.9304
GBP/PLN
5.1
29.08
3.1840
3.1849 27.08
26.08
23.08
3.1
28.08
3.1673
4.2654 30.08
4.2812
3.1658
USD/PLN
3.3
29.08
4.2555 28.08
27.08
26.08
4.2
23.08
4.2473
4.2323
4.2320
EUR/PLN
4.3
SPORTS
SEPTEMBER 2-8, 2013
Soccer
SHUTERSTOCK
Legia falls one goal short of Champions League group stage
Legia fans were in a sour mood last week
Legia Warszawa failed to advance despite not losing a single game in the qualifying phase
After a 1-1 draw in the first away game against Romanian side Steaua Bucarest, Legia needed either a goalless draw or a win at their stadium. But those hopes quickly faded after Steaua scored two goals in the 7th and 9th minute. Legia quickly went on the offensive, doing whatever they could to produce goals as quickly as possible. The plan initialy worked, with Miroslav Radovic scoring on a header in the 27th minute. The attacks continued throughout the first half, but none were successful. In the second half, Legia controlled the game, but did not pose much of a threat to
It’s been 17 years since a Polish club successfully passed through the elimination stages of the Champions League. At times, Polish teams have been just minutes away from advancing to the group stage. That happened in 2005, when Wis∏a Kraków lost in overtime to Greece’s Panathinaikos Athens. This year Legia, champions of Poland’s T-Mobile Ekstraklasa league, also came up short, needing one more goal to reach what Polish fans see as the promised land.
Steaua’s defense, mostly getting held up in the middle of the pitch. Legia’s second goal came too late to turn the tide – Jakub Rzeêniczak scored in the 93rd minute – and the Warsaw side was left a goal short of reaching the Champions League group stage. With two wins and four draws in the qualifying games, Legia is left with the consolation prize of playing in the group stage of the Europa League. The Warsaw side will play in Group J, alongside Italy’s Lazio, Turkey’s Trabzonspor and Apollon Limassol of Cyprus. Jacek Ciesnowski
Rally
Robert Kubica returns to the spotlight
Polish driver Robert Kubica’s last Formula 1 race was back in 2010. In 2011, he suffered several serious injuries – including a partially severed right arm and compound fractures to his leg and shoulder – in a rally before the F1 season started. It was unclear then if Mr Kubica would ever drive again. After a long recovery, Mr Kubica drove in a few low-profile races last year. This year, he has continued the rally driving, but now on a bigger stage. He is competing in the WRC2, a companion circuit to the more prestigious World Rally Championship series. Mr Kubica immediately made an impact, winning three of his first five starts, with the most recent win in Germany last week. He now occupies
SHUTTERSTOCK
After years of rehabilitation and occasional races, the former F1 driver looks to revive his career in rally competition
Robert Kubica the top spot in the overall standings, an impressive feat considering he missed four of this season’s WRC-2 events. “Winning the WRC-2 championship is not my goal. My goal is to gain as much experience as possible. Maybe I will stick to rallies in the next season, but if not, I’ll spend this year doing what I like,” said Mr Kubica after his win in Germany. The future is still uncertain for Mr Kubica. With his arm still not fully mobile, his F1
career is in question. There is a high likelihood that after such a showing in the WRC-2 series, next season he could compete in the World Rally Championship and go toe-totoe with the best rally drivers in the world. That would be a tremendous accomplishment for Mr Kubica, who had followed rally driving closely since his youth, even competing in driving simulator competitions when he was a teenager. Jacek Ciesnowski
www.wbj.pl
25
26
LIFESTYLE
www.wbj.pl
SEPTEMBER 2-8, 2013
Concert
Music festival
Dynamic duo
Experimental contemporary
The Pet Shop Boys Pet Shop Boys September 5 Ergo Arena Gdaƒsk British duo Neil Tennant and Chris Lowe, otherwise known as the Pet Shop Boys, will play a concert in Gdaƒsk this week. The band claims to have sold 50 million albums worldwide, and are in the Guinness World Records reference book as the most successful duo in UK music history. The concert will be the band’s third ever in Poland. The first was held in Gliwice in
2000 and drew an audience of some 200,000, while the second was held during the Summer of Music Festival in Warsaw six years later. This time Polish fans will be able to enjoy the sounds of the Pet Shop Boys in a more intimate setting – Ergo Arena holds 15,000. Although the band’s most significant success came in the 1980s when they were at the front lines of the synthpop wave with hits like “Always on My Mind” and “West End Girls,” the 1990s saw arguably their biggest hit: their version
of the Village People’s “Go West.” The song became a stadium anthem, regularly played and chanted (although with different lyrics) at sporting events. Currently, the Pet Shop Boys are promoting their 12th studio album, “Electric,” which was released in July. The record debuted at number three on the UK charts, and at 26 in the US, making it their highest-charting album since 1993’s “Very.” Jacek Ciesnowski
Ticket prices start at z∏.120
Sacrum Profanum is a unique event on Poland’s cultural landscape. Organizers attempt to blur the lines between art and entertainment, inviting musicians from both the contemporary and alternative music scenes. The festival prides itself on bringing together the most ambitious, experimental alternative acts and combining them with icons of contemporary music. This year, music written by artists such as Frank Zappa, Brian Eno and Aphex Twin will be reinvented by others. One example of the festival’s formula will be a concert called “Polish Icons,” in which artists from cuttingedge electronic-music labels including Ninja Tune and Warp will perform unique arrangements of music written by Polish composer Witold Lutos∏awski. Other notable concerts include the Frankfurt-based Ensemble Modern contemporary music chamber group, which will re-imagine Frank Zappa’s compositions, and the New York-based Alarm Will Sound chamber orches-
COURTESY OF SACRUM PROFANUM
SHUTTERSTOCK
Sacrum Profanum September 15-22 Various locations Kraków
tra playing the heavy electronic sounds of Aphex Twin on live instruments. Also, Italian ensemble Sentieri selvaggi, directed by charismatic conductor Carlo Boccadoro, will present a program entitled “Americana,” in which it will play standards from US composers Philip Glass, Steve Reich, Laurie Anderson and Michael Daugherty. The festival was first held
in 2003 and in its short history has gained worldwide recognition. It has been hailed by such publications as The Wall Street Journal and BBC Music Magazine as a must-see. In 2011, Steve Reich and Krzysztof Penderecki performed in New York’s Lincoln Center in an “international edition” of the event. Jacek Ciesnowski
Ticket prices start at z∏.66
LAST WORD
SEPTEMBER 2-8, 2013
www.wbj.pl
27
Tech Eye
The TrueSmart watch
COURTESY OF OMATE
There comes a time in the life of every flabby, middle-aged tech columnist when he or she steps back, surveys the landscape, and asks him or herself two simple questions. The first is: “WTF?” And the second, which follows about three martinis later, is: “OMG WTF?” As you may have guessed, Techeye recently experienced this moment of existential crisis. After pausing to review our life to date, we immediately logged on to Craigslist in the hope of swapping it for a new one.
An ad caught our attention. It read, “Wanted: fierce, bear-like nerd to serve as Chief Virtue Defender for the harem of the Sultan of Hairymanistan.” It seemed legit, so we applied and, following a brief Skype interview, the Sultan’s Grand Vizier offered us the job. It’s seven figures a year plus medical and dental benefits; all we have to do is fly to Yemen and the Grand Vizier will take care of the rest. Long story short, Techeye has purchased a one-way ticket to Yemen, making this our last column ever.
There may be another Techeye someday – after all, we inherited the mantle from a mad Irishman who had become obsessed with licking his own back – but it’s none of our concern. We’re going to be busy defending the virtue of a whole harem. Giggle. Just for old time’s sake, let’s look at a couple of gadgets. Smartwatches, as you may have noticed, are the new hotness in consumer technology. For example, you’ll probably hear about Samsung’s new Gear smartwatch this week; Apple’s long-rumored iWatch might make an appearance in the near-ish future as well. Those are just two examples though. There are plenty of other smartwatches to salivate over, such as Omate’s conveniently saliva-resistant TrueSmart watch. TrueSmart’s value prop can be summarized in two phrases: “standalone” and “water-resistant.” The first part means the device is smart on its own, without relying on a smartphone. That’s something we didn’t see in first-gen smartwatches, which were a rather co-dependent lot. You can pair TrueSmart with a smartphone, and this provides greater functionality, but you’re not forced to do so.
COURTESY OF CASIO
Time for a change
The G-Shock watch with Bluetooth (GB-6900B) The water-resistance aspect isn’t quite as exciting. You can take TrueSmart in water of up to a meter deep, but the touchscreen doesn’t work when wet. Still, consumers with drooling problems (a criminally underserved market segment) may rejoice. TrueSmart uses Android OS, has a dual-core processor and lots of features, including a phone, camera, GPS, SOS device, etc. Expected retail price: $299.
Meanwhile, Casio’s G-Shock watch with Bluetooth (GB-6900B) is not as versatile as the TrueSmart, but what it lacks in smarts it makes up for with rubbery, shock-absorbing goodness. The GB-6900B displays call and text-message notifications from Android phones (iPhone owners should seek out the GB-5600A). It can also remotely control music playback, has a not-insignificant two-year battery life and is water resistant up to 200m. Oh, and it has all the usual G-Shock stuff, like alarms, a stopwatch and world time options. We think the GB-6900B costs about $200, but as of press time it had mysteriously disappeared from Casio’s website and Techeye was too busy to investigate, as our new employer had sent us to get a “Columbian wax,” which is like the Brazilian kind, except the beauty technician is a brutal ex-FARC soldier and he adds hair instead of removing it. This is very fashionable, we’re told. And with that highly personal revelation we come to the end. So long, Dear Readers, and thanks for all the good times. ●
Ever known the pillowed delights of a Hairymanistani harem? Let us know: techeye.wbj@gmail.com