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The Warsaw Voice » Business » September 30, 2015
Business & Economy
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Business in the Zones
September 30, 2015   
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More than zl.100 billion has been invested in Poland’s special economic zones (SEZs) since these started operating 20 years ago.

Cities and regions competing for new investors are looking for ways to increase their attractiveness to business. One incentive for businesses is that they can set up shop in special economic zones that offer preferential terms and conditions, including tax breaks and exemptions. Poland’s first special economic zones were set up in the mid-1990s in an effort to attract investors to the country, increase the number of jobs and reindustrialize areas that declined economically during market reforms. In total, 15 zones had been launched by the end of the 1990s. Today, 14 are in operation.

According to the Economy Ministry, as of the end of December last year, SEZ investors had nearly 296,000 employees nationwide. “The number increased by 28,900 compared with 2013,” said Deputy Prime Minister and Economy Minister Janusz Piechociński (pictured). “New jobs created by businesses as a result of carrying out new investment projects represented more than 72 percent of that figure.”

In 2014, the cumulative value of investment in Poland’s special economic zones was nearly zl.102 billion, growing by more than zl.8.8 billion over the previous year. As in 2013, six countries, Poland, Germany, the United States, the Netherlands, Japan and Italy, accounted for more than 74 percent of all capital invested in the zones. Companies from the automotive industry were responsible for the largest chunk of the cumulative value of investment (26 percent), followed by manufacturers of rubber and plastic products (10.2 percent).

Last year a total of 436 permits were issued to do business within special economic zones. This represents 21.2 percent of the total number of valid permits. In comparison with 2013, the number of permits granted rose by 72.3 percent. The largest number of permits was granted to businesses in the following zones: Wałbrzych (64), Katowice (58), Cracow (44), Mielec (42), and Tarnobrzeg (39). In all, 2,056 permits have been issued since the launch of the zones that were still valid as of the end of 2014.

The value of investment and the number of those employed in special economic zones seems impressive enough, but some say the zones should be phased out. “Rather than create new ones, we should turn the entire country into one big economic zone, attractive and friendly to entrepreneurs who want to invest money in Poland on an equal basis for all,” said Jeremi Mordasewicz of the Lewiatan business organization, in an interview with the Money.pl online business service. He added that the idea of creating SEZs in Poland 20 years ago was the right decision, but maintaining the zones in their current form in today’s economic reality is no longer justified. “Today they are a form of unfair competition because the position of companies operating in them is better than that of those operating outside the zones. These are internal tax havens that are demolishing our market,” said Mordasewicz.

Meanwhile, Sławomir Majman, head of the Polish Information and Foreign Investment Agency, said that SEZs are a tool that makes it possible to attract investors to Poland. “This is an important and effective negotiating instrument that is driving the economy,” Majman told Money.pl. Billions of zlotys, thousands of jobs, Polish and foreign capital—this is the track record of two decades of special economic zones in Poland, Majman said.

Some of those opposing the zones say SEZs favor foreign investors. But SEZ supporters like Majman disagree. “It is a myth that state aid goes only to foreign investors,” Majman told Money.pl. “The share of Polish capital invested in the SEZs is the greatest. It’s primarily domestic companies that are expanding their business and creating new jobs in regions that previously struggled with very serious economic problems.”

Mordasewicz, meanwhile, argues that today, unlike in the 1990s, the biggest problem is not the number of jobs available in Poland, but the fact that many jobs are not perceived as attractive. Young Poles are leaving the country not because they cannot find jobs here, Mordasewicz says, but because they are unhappy with the pay and conditions on offer.

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