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The Warsaw Voice » Business » June 17, 2010
Business & Economy
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Investing in Times of Crisis
June 17, 2010   
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Foreign direct investment in Poland may reach 9 billion euros this year, the Polish Information and Foreign Investment Agency (PAIiIZ) estimates.

The crisis has not seriously hit foreign investment in Poland. Preliminary estimates from the National Bank of Poland suggest that last year 8.4 billion euros of FDI flowed into Poland, or 84 percent of the total in the last pre-crisis year, 2008.

This year will, however, be a tough time for FDI, not just in Poland but worldwide. The stream of capital flowing from countries that are traditionally big investors is small, while the number of those willing to accept new investments is on the rise. “Investment capital internationally is flowing at a very slow trickle,” says Sławomir Majman, president of the board of the Polish Information and Foreign Investment Agency (PAIiIZ). “Most of the economies that supply it have not yet extricated themselves from the crisis. That’s why I believe that a small increase in the flow of capital to Poland compared to 2009 is the most realistic forecast. I think that if we see a 10-percent increase in FDI, we can open some champagne,” Majman adds.

Stable amid crisis
He believes the crisis has seen Poland’s image improve as a destination for investment. “Poland can offer foreign investors a special and very desirable product at a time of global crisis - economic stability. We are the only country in Europe that has coped with the economic crisis,” Majman says. At present PAIiIZ is handling 118 investment projects, which is over 40 more than a year earlier.

According to analyses by international institutions, the best prospects for investment seem to be offered by sectors that do not rely strongly on the business cycle, such as mining, energy (including producing energy from renewable sources) and food processing. Investors are also likely to turn their eyes towards astronautics and aeronautics, machine building and advanced business services (business process outsourcing, or BPO). “With the exception of astronautics, we have all these industries and services in Poland, or the foundations for their further development,” says Iwona Chojnowska-Haponik, PAIiIZ ‘s director for foreign investment.

Chojnowska-Haponik also points out that a few important trends are visible on the direct investment market. For example, less interest is being shown in industrial projects (where manufacturing capacity is still excessive), but if it is, then it involves the development of existing factories with good infrastructure and not greenfield investments. On the other hand, the role of BPO is growing. “While investment in industrial facilities is a major source of capital for our country, the development of services implies the creation of a large number of new jobs,” Chojnowska-Haponik says.

Ongoing investment
One example of a company that has not stopped investing in Poland despite the crisis is ArcelorMittal Poland. “Whoever does not invest, gets left behind and cannot meet the market’s challenges,” says Sanjay Samaddar, chairman of the board at ArcelorMittal Poland. “Investment worth zl.3.8 billion during five years after privatization prepared us for the tough economic conditions we have been experiencing since the end of 2008. We are confident that even in a crisis, giving up on continued development would be a step backwards. That’s why in 2009 alone, we earmarked zl.200 million for investment,” he adds.

Last year ArcelorMittal Poland completed a thorough modernization of its cold rolling mill in Cracow and opened a control and measurement unit for testing rails at the heavy section mill in D±browa Górnicza. This year, Samaddar has announced, the company will focus on improving product quality, expanding its range to include technologically more advanced products and improving production effectiveness and precision. The main investments will be a pig iron desulfurization unit at the D±browa Górnicza mill and an automatic strip surface testing system at the sheet hot rolling mill in Cracow.

Neither has the crisis scared off the Lampre Group of Italy, a European leader in the production of coated sheet metal. This spring in Kutno, part of the ŁódĽ Special Economic Zone, work will start on the construction of a production building that will house Europe’s most advanced coated steel production line. Lampre’s new Polish factory, which will cost an estimated 25 million euros to build, will become operational in mid-2011. Its planned output is 40,000 metric tons of steel, or 8 million square meters per year. The product range will include varnished and PVC-coated steel sheets, which are used for refrigerators, cold stores, doors, gates, panels and other products. The factory’s annual sales are estimated at 40 million euros. Emanuele Galbusera, chairman of the board at Lampre Polska, has said that about 40 percent of the output will be sold on the Polish market.

Entrepreneurs Appreciate Warsaw
Warsaw is the third most business-friendly city in Europe, according to the latest European Cities Entrepreneurship Ranking (ECER) survey carried out by France’s Banque Populaire. The survey covered 37 cities in 18 countries.

Warsaw came in third after Germany’s Frankfurt and Sweden’s Malmö, but ahead of London, Brussels, Barcelona, Rome, Prague and Budapest, having climbed from number 10 last year.

In the survey, 170,000 entrepreneurs were asked to assess cities they operate in according to a number of factors, including assistance while establishing and developing a company, access to private and public financing, and business surroundings, including real estate and infrastructure.

Warsaw chiefly owes its high position in the league table to easily accessible financing, which is of key importance to enterprises, especially during an economic crisis, experts say. In this respect, Warsaw beats all the other 36 cities. For example, businesses in Warsaw have good access to European Union structural funds, because Poland is the largest beneficiary of these funds. Entrepreneurs also appreciate the relatively flexible labor law and tax incentives available in Poland.
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