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The Warsaw Voice » Business » March 31, 2011
From the Business Editor
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Japan Quake: Polish Economy Safe
March 31, 2011   
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The massive earthquake and tsunami in Japan should have little direct impact on the Polish economy. But indirectly the disaster in Japan may affect the government’s plans to build nuclear power plants in Poland.

Although former President Lech Wałęsa once dreamed of building a “second Japan” in Poland, economic relations between the two countries have remained low-key. Japan, the world’s third largest economy, is not even Poland’s leading business partner in Asia. It is overshadowed by China and South Korea in terms of trade with Poland. A major part of Japanese imports to Poland and Polish exports to Japan are handled by Polish subsidiaries of Japanese companies. There are 268 Japanese-owned companies in Poland. Between them, they have invested more than $1 billion in this country.

According to analysts with credit insurance company Euler Hermes, the latest tragic developments in Japan will not affect business operations in Poland. First, as media reports suggest, Japan’s key industrial areas have avoided much of the damage. Second, because of the long distance, companies importing components from Japan rarely apply a just-in-time strategy. Instead, they tend to keep large inventories, a strategy that enables them to make adjustments on an ongoing basis if there are any logistics problems. And the companies do not import any components from Japan if their manufacturing operations have been relocated to Europe.

However, in the long run, the inflow of Japanese investment to Poland may slow down. Initially, Japanese companies chiefly invested in electronics and the automotive industry in Poland; later they focused on the agri-food processing, energy, chemicals and financial sectors. As huge outlays will be needed to rebuild infrastructure in Japan, the inflow of investment to Poland’s energy sector and other industries is expected to be smaller in the coming years. On the other hand, a major part of Japanese investment in Europe is handled by European subsidiaries of Japanese companies, which generate and reinvest their profits in Europe. For this reason Euler Hermes analysts believe there will be only slight delays in newly planned investment projects.

But the disaster in Japan may have a major impact on Poland’s plans for its own energy sector. The leak of radioactive material from a quake-damaged Japanese nuclear power plant has triggered a global debate on nuclear safety. Poland is part of this debate. The minister-president of Brandenburg, a German federal state bordering on Poland, and Berlin city officials suggested that, following the nuclear problem in Japan, the Polish government should rethink its decision to build its first nuclear power plant. Prime Minister Donald Tusk said that while Poland will not backpedal on its plans to launch a nuclear power program, it cannot be ruled out that additional analyses will be needed for safety reasons. The Economy Ministry had assumed that work to build Poland’s first power plant would get under way in 2016 and that the plant would start generating electricity in 2020.
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