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The Warsaw Voice » Real Estate » January 16, 2008
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Euro 2012: Investment Challenge
January 16, 2008   
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The annual Investors' Obstacle Course conference aims to identify the administrative and legal barriers facing businessmen and investors in Poland every day. It is directed at firms, organizations and institutions that plan and carry out building projects. The conference is also a forum at which the business world can meet with civil servants and politicians.

The initiative is now 10 years old and is organized this year jointly by The Warsaw Voice, the Investors' Conference Presidium, the Pro Linea Infrastructure Development Association, the Polish Developers' Association, Techmex, and the Polish-British Chamber of Commerce. The conference is held on Jan. 16-17 in Warsaw at the Okęcie Airport Hotel, 24, 17-ego Stycznia St.

The conference's main goal, as always, is to diagnose the key problems facing investors in Poland today. But the conference would not be worthwhile if the participants themselves did not search for suitable solutions to their problems and did not lobby for what they want.

The conference is an excellent opportunity to meet with members of Prime Minister Donald Tusk's new government and discuss issues with members of the Parliamentary Infrastructure Committee. All politicians attending the conference will be available to talk about key issues during panel discussions and working lunches.

One of the key issues will be the joint hosting of the Euro 2012 soccer championships by Poland and Ukraine. 2012 is fast approaching and people are skeptical as to whether the two countries can meet the challenges that face them in time. Poland has no stadiums, roads, railway lines or hotels to meet the demands of Euro 2012. Moreover, it lacks the kind of legal framework needed. The government and investors alike repeatedly say that investment in Poland is picking up. There is no doubt, though, that just two or three wisely drafted bills would do much to improve the situation.

Organizing the championships is a huge opportunity for Poland, but also poses a huge challenge with regard to the modernization of the country's transport network. The most spectacular buildings will be the new stadiums but adequate roads, railway lines and airports are most important. Polish cities that want to host championship matches can already barely cope with volumes of road traffic, never mind the expected increase in road use in 2012.

The cost to Poland of organizing the games, taking into account stadium building and infrastructure improvements, is likely to be as much as 27 billion euros, according to rating agency Fitch.

What Poland must do to prepare itself thoroughly for the Euro 2012 soccer championships makes for a paradoxically short list. Poland must build roads, railway lines, airports, hotels, restaurants and stadiums. It must ensure people's safety during the games and, of course, it must promote the championships.

The Fitch agency is keeping track of Poland's preparations for Euro 2012 and has noticed that a special bill recently passed by the government designed to ensure that Euro 2012 target dates are met for the completion of public building works, stadiums in particular, does not apply to the public-transport sector. Regulations governing this sector remain unchanged.

Fitch's Nicolas Painvin is concerned about this omission and says that without accelerated development, Poland's transport infrastructure, essential for hosting the championships, may not be ready in time. Fitch also notes that in the past the Polish government was criticized for its slow absorption of EU funding.

Poland's Euro 2012 projects need huge funding. The planned four big stadiums are likely to cost some zl.3 billion. Warsaw's National Sports Center, on the site of the current Dziesięciolecia Stadium, will cost the most, some zl.1.25 billion. Stadium-building tenders went out near the end of 2007 and in all probability Poland will be able to keep to all the deadlines set by the Union of European Football Associations (UEFA). The National Sports Center will be funded from the state budget and thus its construction is not at risk. The other cities that will host championship matches are in a different situation. Their budgets cannot support the cost of building the stadiums. Thus officials in Cracow, Poznań, Wrocław and Gdańsk have decided to work closely together and also with Euro 2012 organizers in Warsaw and Chorzów to present the government with a concrete proposal for its help in financing stadium building. Poznań mayor Ryszard Grobelny says that the national budget should cover 50 percent of the cost of the stadiums. Another important issue for these match-hosting cities is public transport. They say that without government subsidies they have no hope of improving their infrastructure to the standards required for the event.

Local governments are also counting on state subsidies to help with safety measures and tourism.

According to Wrocław deputy mayor Jarosław Obremski, soccer fans should be encouraged to see the attractions of a given city and not travel there just for the match.

The slow rate at which Poland is building roads is the subject of many jokes. The Euro 2012 soccer championships afford Poland an opportunity to build and modernize its freeway and expressway networks. The government has already announced that it will bring road-building plans forward by two years to finish work in 2012 as opposed to 2014. The plans foresee 964 kilometers of freeways built within the next five years at a cost of almost zl.5.8 billion.

Roads linking cities that will host championship matches, such as Warsaw, Gdańsk, Chorzów, Cracow and Wrocław, have the highest priority, as do those crossing the country from west to east. The total cost of Poland's road program for 2007-2015, including preparatory work such as land purchase and building projects, repairs to existing roads and road maintenance, is likely to be some zl.164 billion. Of this sum, zl.22.5 billion is earmarked for additional road-transport requirements resulting from Poland's hosting of the Euro 2012 soccer championships. The estimated total cost of building new roads and rebuilding existing roads is some zl.131.5 billion. That of all road repairs and maintenance is zl.32.5 billion.

The main hurdles to overcome before these plans can come to fruition could be time-consuming legal requirements and a lack of people to do the work. The most urgent reform that is required is the simplification of the overcomplicated procedures to purchase land, enter into public contracts and conform to European Union environmental protection standards. Funding is available but is not being used.

The lack of people to build roads is a serious problem. Polish builders, particularly the best, left Poland a long time ago. London is hosting the Olympic Games in 2012 and it is to be expected that tens of thousands more Polish workers will decamp to British building sites. So where to get workers for Polish roads? The idea to import builders for Polish roads from China, Russia or even Iran surprises no one.

But it is not just a lack of road builders that is a problem. There could be a lack of road-building materials. This was apparent in mid-2007. All it took was one warm winter during which road building continued without a break to exhaust supplies of bricks, cement and sand.

The situation with Poland's airports remains optimistic. Investment in Polish airports by 2013 is likely to be over zl.7 billion, according to research firm PMR's latest report, "Airport Building in Poland in 2007: Development Forecasts for 2008-2013." Of this sum, almost a third is earmarked for the building of new regional airports. Poland and Ukraine are collaborating to modify existing air-traffic regulations between the two countries.

However, further strong growth in Poland's air transport system relies on the development of airport infrastructure and more efficient use of the country's airspace. Of Poland's existing airports, those in Cracow, Katowice, Gdańsk, Warsaw and Wrocław have the biggest investment plans.

With regards to new airports, it is almost a certainty that Modlin, Lublin and Białystok will get their own airports. There are plans for smaller, regional airports for Opole and Koszalin. All these airport projects will most probably get funding from the European Union.

However, EU funding for the building of a new airport in Obice near Kielce continues to be uncertain. Other cities such as Radom, Sochaczew, Mińsk Mazowiecki and Gdynia that want to build regional airports will need to find funding from private investors.

Additional plans exist for the building of several local airports to serve tourists and businessmen in Szczecin, Gorzów Wielkopolski, Toruń, Grudziądz, Olsztyn, Suwałki, Katowice, Częstochowa, Nowy Targ and Stary Sącz, among other Polish cities.
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