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The Warsaw Voice » Other » April 26, 2006
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Good Ambitions
April 26, 2006   
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Frank ter Borg, the Economic & Commercial Counselor at the Royal Dutch Embassy, talks to Ewa Hancock.

How would you describe Polish-Dutch economic relations?
The Polish-Dutch economic relations are very good indeed. Poland's accession to the European Union gave an extra impetus to bilateral trade and investment. This not only applies to trade in industrial products, but also to trade in agricultural produce and foodstuffs. The markets for these products were pretty well closed previously. Most of the Dutch companies in Poland cater to the Polish domestic market and quite a few are Polish exporters as well. All Dutch companies came to Poland to grow with the Polish market and they harbor high expectations for the future.

Is Poland an attractive destination for Dutch investors?
Poland as such is an attractive destination for Dutch investors, for a number of reasons. It is geographically close, it has a well qualified work force and it is growing at a rate that Western European countries can only dream of. On top of that, Poland is the beneficiary of an unparalleled transfer of resources-and I am referring here to the co-financing of large scale infrastructure and environmental sector investments by the European Union. For those that thought foreign investment was all about manufacturing, it might have come as a surprise that Poland also has a competitive edge in services. The opportunities were quickly perceived by Dutch companies like Philips, ABN AMRO, Ahold, Lucent Technologies and, more recently, by Shell plc, headquartered in The Hague. Shell is to open a shared services center in Cracow, the fifth of its kind that Shell operates worldwide.

From the perspective of Dutch companies what makes doing business in Poland difficult?
I would want to mention three major obstacles that stand in the way of Dutch companies and any other company (Polish or foreign) doing business in Poland. The first is the lack of proper infrastructure. Poland needs good roads and... good roads and... good roads-including railroads. Despite of all the talk, there is too little action, certainly in comparison with other new member states of the EU.

The second are the in-transparencies and bureaucratic obstacles in government procurement. The government tried to remedy the situation by amending the Public Procurement Law and at the end of the year we will see to what extent this has been effective. Public tenders often give rise to legal disputes, therefore driving up the costs for participants or discouraging them altogether. As a result, the number of competing offers will decrease and Poland will have to pay more for its procurement.

The third and-in my view-the most serious obstacle is what many people would call the lack of attention in the Polish political system for economic policy making. Poland ranks at the bottom of a great many economic scoreboards and that ought to be a cause of grave concern. The legal, regulatory and financial environment that entrepreneurs have to face leaves a lot to be desired. On top of that many entrepreneurs feel that the current government is sending out mixed signals about its economic policy stance, even up to the point that sometimes saving bankrupt vodka distillers seems to have a higher priority than creating the conditions for future economic growth by boosting R&D spending.

Be that as it may, it is clear that many of the ailments can only effectively be remedied by the Polish government itself. The World Bank annually presents a benchmark study of the business climate in each and every country; this could very well be considered as an agenda for action. If Poland could formulate an ambitious pro-business, pro-market course, it could very well once again achieve an acceleration of the type it had in the 1990s. Economic growth of 5 or 6 percent annually will then be feasible. Then and only then will Poland be capable of catching up with the EU average in, say, ten years' time-to the benefit of the Polish nation. Not only Dutch companies, but all their competitors-including the Polish ones-would thrive under such conditions.
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