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The Warsaw Voice » Real Estate » January 16, 2008
INVESTORS' OBSTACLE COURSE-16-17 JANUARY, 2008
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A Reformer's Work Is Never Done
January 16, 2008   
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The Investors' Obstacle Course project is 10 years old, an anniversary that calls for reflection.

The past decade has been filled with attempts to simplify the construction process in Poland. Even though many of these attempts have failed to produce the expected results, our voice has been heard, and many absurdities have been removed owing to our efforts. What is most important, we have made many people aware of the fact that barriers to investment in the construction sector not only mean greater risk and costs for the investor, but also threaten the country's economic and social development.

The awareness of this problem and its negative economic consequences is growing, yet the results of our efforts, as well as the efforts of Poland's consecutive governments and parliamentarians, are still limited. Frequent conflicts over environmental and community issues, as well as the fact that an investment project can be stopped in its tracks practically at any moment, continue to plague Poland's building industry. These problems are accompanied by many other unpleasant surprises that tend to crop up during the preparation and implementation of construction projects.

While proposals aimed at simplifying the construction process are continually being put forward, they have produced no significant effects. That is why it is essential to determine why things are not changing even though we are working hard to reform the system.

Over the past decade, each successive government in Poland, regardless of its political orientation, has promised to remove obstacles to investment in the construction sector. All these promises were politically correct, but they were not accompanied by clear-cut declarations about counteracting various group interests. In fact, no government has so far come up with the definition of "public interest," whose protection should be the basic (if not the only) reason for state intervention in the construction process.

There are several reasons why efforts to remove obstacles to construction projects have produced little result so far. First of all, most attempts to remove obstacles have involved ideas to smoothe various stages of the construction process-either by removing them completely or replacing them with other measures. This is a lot like trying to convert a Trabant into a Mercedes: no matter how hard you try to refashion the jalopy, it is still going to be the same bad old car.

Many of the legal regulations governing construction projects in Poland hark back to communist times when the state controlled everything, disrespected private ownership, and created a coherent but ineffective system. Today, 18 years after the country's transition from central planning to a market economy, the role of the state is limited and its presence in the economy is completely different in nature. That is why, in order to really change the situation in the construction industry, we have to develop a completely new system. At the moment, the process of removing obstacles to construction projects is primarily hampered by intellectual barriers.

An equally important issue is defining the role of public authorities in the construction process. In a competitive economy, the role of the state should be limited to defending public interest and protecting the interests of third parties. That does not require direct state intervention in individual construction projects. Public interest protection and government intervention concerning the rights of third parties should be handled at the stage of developing and adopting land development plans. Construction projects in Poland are supervised by people with adequate qualifications, and this sufficiently ensures that these projects are properly executed. So why should central and local authorities be involved in construction projects? All that public authorities need is effective tools to prosecute those who break the law and eliminate them from the market.

Another reason behind the inability to remove obstacles is unjustified state presence in construction projects, coupled with the weakness of the government and its inability to effectively ward off various interest groups.

Even though the results of the Investors' Obstacle Course's efforts over the past decade deserve profound reflection, this cannot replace constructive proposals. That is why during the 10th IOC conference, we will come up with concrete recommendations on how to make investors' lives easier.

Ryszard Kowalski, Chairman of the Investors' Conference Presidium
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