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The Warsaw Voice » Business » March 1, 2013
Business & Economy
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Supporting Investment Abroad
March 1, 2013   
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The government plans to launch a swathe of new projects to support the development of exports and the expansion of Polish businesses on foreign markets.

“Polish businesses are increasingly successful competing on foreign markets with global corporations,” Janusz Piechociński, deputy prime minister and minister of the economy, said while launching the Global Company project in mid-January. “Their efforts are reflected in the growing value of their foreign trade and direct investment.”

However, the eurozone crisis is forcing Polish businesses to look for new markets for investment, and in some countries it is difficult to gain a foothold without state aid, according to Piechociński. “After wide-ranging consultations, we have selected five countries as promising markets where we will pursue a very intensive and long-term promotion of the Polish economy,” Piechociński said. “These markets are Canada, Brazil, Algeria, Kazakhstan and Turkey.”

The Go Africa program, in turn, is designed to support Polish firms in dropping an anchor in Sub-Saharan Africa—Angola, Kenya, Mozambique, Nigeria and South Africa.

Małgorzata Starczewska, chief economist at the PKPP Lewiatan organization, which brings together employers, said, “Emerging markets are markets where political representation is needed. Politicians have to be active there, otherwise the markets will not become accessible to Polish firms. Perhaps it is also worthwhile consolidating the activity of state institutions, which would promote Poland abroad.”

Starczewska added that insufficient knowledge about the specific features of individual foreign markets and an inability to access reliable information about these countries’ tax systems and regulations was a barrier to the expansion of Polish businesses on foreign markets.

Economists believe that support for exporters and the expansion of Polish firms on foreign markets are key to Poland’s ability to maintain its economic growth in a time of crisis and that such support should become a vital part of the country’s economic strategy. What’s more, support for businesses in their efforts to conquer foreign markets is not only an economic priority, but also one of the most important political priorities for the fastest developing countries. China, Turkey, Germany and Brazil are the examples of countries that firmly support their businesses abroad, economists say.

According to Piechociński, providing support to Polish firms abroad and supporting their investment strategies is a form of “economic patriotism.” The same goes for buying Polish products and supporting Polish businesses to ensure there is demand for their products. “The question of supporting the expansion and internationalization of Polish businesses is and will continue to be one of the most important tasks of the government,” Piechociński said.

Meanwhile, the Economy Ministry is pressing ahead with another project called Promotion of the Polish Economy on International Markets. “We want to improve the image of our businesses among international partners and make it easier for them to access information about Poland and opportunities for establishing business relations with our entrepreneurs,” Piechociński said. “As part of the project, promotional programs have been developed for individual sectors to help forge Polish export specialties. Among the sectors to receive support are furniture, yacht and recreational boat production, construction, cosmetics, defense and food processing.

It is estimated that the cumulative value of direct investment by Polish firms abroad exceeds $50 billion. As a foreign investor, Poland is the undisputed leader in the region. The cumulative investment by Hungary, which ranks second, is worth $23.7 billion. However, in the global league table, Poland is in 44th place in terms of outward investment. Research conducted by the Faculty of Economic Sciences and Management at the Nicolaus Copernicus University in Toruń shows that Polish firms have carried out almost 78 percent of their investment in European Union markets, most of which are demanding and highly competitive. Luxembourg, a “transit country,” has attracted 30.6 percent of Poland’s cumulative FDI, ranking ahead of Britain with 14.2 percent and two other nations perceived as transit countries for investment: Cyprus with 8.5 percent and the Netherlands with 7.8 percent. Lithuania with 6.4 percent, the Czech Republic with 6.4 percent, and Germany with 5.4 percent, are further down the list.

The breakdown of investment by Polish businesses is similar to that of global FDI, with services accounting for 53.4 percent of the total, manufacturing for 34.6 percent, construction for 4.2 percent, and electricity and gas generation and supply for 2.5 percent. Greenfield projects are the most popular way of entering foreign markets, accounting for 48.2 percent of the total. Other popular methods are acquiring a stake in a foreign company (34.5 percent), and taking full ownership (17.3 percent).
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