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The Warsaw Voice » Business » August 29, 2014
Business & Economy
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Business R&D Spending to Rise
August 29, 2014   
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The number of companies from Central and Eastern Europe that plan to increase spending on research and development in the near future is growing, according to a report by consulting firm Deloitte. However, businesses polled for the Research and Development in Poland. 2014 Report say they want changes in the system of tax incentives and less red tape when applying for subsidies.

Compared with a 2013 survey, the number of companies that plan to increase spending on research and development in the short and long term has increased, in relation to the level of expenditure in 2013. More than 47 percent of Polish companies surveyed by Deloitte said they planned to increase their R&D spending in the next two years. In the next five years, 61 percent of companies planned to do so. The average figures for Central Europe as a whole are 41 percent and 57 percent respectively. The most optimistic in this regard are businesses in Romania: nearly 80 percent of them said they planned to increase spending on research and development in the next three to five years compared with expenditures in 2013.

Of crucial importance to businesses that plan to invest in research and development is the availability of attractive incentives and qualified, experienced and cost-effective research staff. “We are seeing a change in the way research and development is perceived by businesses in Poland and throughout Central Europe,” said Magdalena Burnat-Mikosz, head of R&D and Government Incentives in Central Europe at Deloitte. “There is a visible trend towards stronger inclusion of R&D into company business models, giving it a strategic and crucial role. Research and development is ceasing to be associated with something out of the ordinary, becoming a part of day-to-day business and a way of building a competitive advantage.”

Burnat-Mikosz added, “Last year as many as 75 percent of Polish companies believed that R&D activity entailed working on major innovations. Currently, only 23.6 percent maintain this view.”

Leszek Grabarczyk, deputy director of the National Center for Research and Development (NCBiR), a Warsaw-based government agency tasked with subsidizing scientific research in Poland, said, “The data presented in the Deloitte report makes it possible to be optimistic about the future. The growing importance of R&D in the operations of Polish companies in the coming years, combined with the significant EU funds—more than 8 billion euros—set aside for this purpose, will make it possible to increase the innovativeness of our economy.”

The survey findings show that companies in Central and Eastern Europe are increasingly aware about the nature of R&D. This should translate into better identification by companies of business processes and costs that have not been seen as R&D projects so far. As a result, the level of R&D expenditure may increase. Survey respondents called for the need to clearly define R&D activities because such a uniform definition, adopted by both industry and the government, could have a significant impact on the efficiency of spending funds intended for research and development in 2014-2020.

The Polish businesses polled in the Deloitte study said they want changes in the system of tax incentives for R&D. Seventy-six percent of them said that the introduction of a tax break making it possible to reduce the income tax due would lead to an increase in spending on research and development over the next five years. In addition, respondents said the system of subsidies is too bureaucratic and complicated (nearly 39 percent of responses).

“Overall, however, the conditions for R&D in Poland are improving, as evidenced by the slowly but steadily growing expenditures in this area. Using the experience of neighboring countries and introducing effective incentive systems independent of EU funds will accelerate the process of modernizing the Polish economy,” said Burnat-Mikosz, summing up the results of the study.
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