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The Warsaw Voice » Business » November 18, 2009
Local Perspective
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EU Funds Support Development
November 18, 2009 By A.R.     wersja polska »
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One of the biggest benefits of Poland joining the European Union is access to EU funds. These can be used to modernize the Polish economy, help Polish entrepreneurs and to build infrastructure.

Local government authorities are also reaching for EU funding more boldly, using it to finance projects that not only improve the appearance of towns and villages but also make living there more comfortable.

Poland is the biggest beneficiary of the European Union's regional policy among all 27 member states, receiving a fifth of financial support provided as part of the EU's cohesion policy. This means that Poland will receive over 67 billion euros in 2007-2013. As Prime Minister Donald Tusk says, by putting EU funds to good use Poland could become Europe's largest construction site, despite the recession.

According to the European Commission, Poland did a good job in using the regional funds that were assigned to it in the EU budget for 2000-2006. From the now concluded budget plans for 2004-2006, in terms of regional, social, fishery and rural development funds, Poland used up almost the whole amount-94.8 percent (7.847 billion euros), according to Aug. 21, 2009 data. Take-up of regional funds alone (from the European Regional Development Fund) stood at 95 percent (4.424 billion euros).

The latest data from the Ministry of Regional Development shows that Poland has managed to use up 101.3 percent of funds for 2004-2006. Exceeding 100 percent is linked to euro exchange rate fluctuations and a mechanism called over-contracting under which contracts are signed for a sum slightly above the allocated total so that the relevant institutions have room for maneuver if they manage to find savings.

EU funds have been plowed into thousands of investment projects that are changing Poland, with effects visible in almost every community. EU funds contributed to the construction or modernization of 5,000 km of roads, 636 km of railroads and over 10,000 km of sewage systems. Support was provided to over 13,000 micro-businesses, and 610,000 students took advantage of EU scholarships. Money also made its way to over 300 research laboratories, industrial parks and enterprise incubators. EU funding helped improve the standard of education (over 200,000 computer workstations in schools) and provide broader access to information and communication technology.

As for the EU's budget plans for 2007-2013, not counting agricultural funds and those for fisheries, the amount reserved for Poland is the highest of all 27 EU member states, at 67.3 billion euros. Of this, 22 billion euros is from the Cohesion Fund, 9.7 billion from the Social Fund, 34 billion from the European Regional Development Fund and over 1 billion euros is a reserve.

At present Poland is eighth in the EU in terms of using up EU funds. This position could improve, because significant progress has been made in recent weeks in utilizing European funds. According to the Ministry of Regional Development, by Oct. 11, almost 20 percent of the funds allocated for 2007-2013 had been distributed. The number of signed contracts exceeded 20,000 and these were worth zl.76.2 billion, of which the EU contribution is zl.54.7 billion. The ministry says that beneficiaries of European funds have submitted 88,400 correctly filled-out applications for total supplementary funding of zl.204.1 billion. The value of spending recognized as eligible costs in applications for funds is zl.14.2 billion, of which zl.11.1 billion will come for the EU.

Polish communes and counties are using EU funding more effectively. Money from the EU budget is used to build new roads, waste treatment plants, sewage systems but also to hold training courses upgrading local civil servants' skills. Local government authorities will be the biggest beneficiaries of EU funds. They can seek financial support for their projects through a number of programs. Some of them are nationwide, meaning they serve to support projects all over the country. Also, every province will have its individually implemented regional program. A program called "Development of Eastern Poland" is targeted specifically at five provinces (Warmia-Mazuria, Podlasie, Lublin, Podkarpacie and ¦więtokrzyskie provinces).

EU funds are a huge opportunity for towns and communes to boost existing companies and to attract new investment. More domestic and foreign investors mean potential new jobs in a given region, higher revenue from taxes and an improved standard of living for inhabitants. However, investors need incentives to invest in Polish communes.

If Poland is to become more attractive as an investment destination, local government has to receive support in preparing attractive areas for investment projects. Direct aid is offered by European funds for 2007-2013 under the Innovative Economy program and 16 regional operational programs. Creating a positive climate for investing in Poland is mainly the task of the government's economic policy. Even so, communes themselves also have an influence on where a given company decides to locate its business. Though local government does not have the same kind of investment support systems as the national government, for example in terms of tax incentives, that does not mean communes have no say in where new factories will be built, creating new jobs.

To woo an investor, communes have to have something to offer. Well-prepared land for investment projects can be a huge asset. This has to be land with a clear ownership and legal status. A local zoning plan already in place is a good idea. Another important factor is ensuring such land has water and sewage systems in place and ensuring good access to the road or railway network.

However, having developed land to offer is not enough by itself. Selling it also requires skills, the key here being a properly prepared proposal. Much depends on finding the right partners, including to help with promotion. There are numerous institutions tasked with promoting regions, creating a good climate for investment and handling investments. These include the Polish Information and Foreign Investment Agency (PAIiIZ), the Polish Agency for Enterprise Development (PARP) and the departments of promotion, commerce and investment in Polish embassies. It is also worth looking for partners among international consulting companies which are often hired by corporations to find them the most attractive locations for investment.
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