Poland-Ukraine Summit
Polish and Ukrainian presidents Aleksander Kwaśniewski and Viktor Yushchenko came to the Eighth Poland-Ukraine Economic Summit held June 29-30 in Gdynia.

"Polish-Ukrainian strategic cooperation and the Polish-Ukrainian reconciliation must remain above all political divisions; anyone who sits in the parliament or takes the office of the president has to look after them," said Kwaśniewski.

One of the most important effects of the summit is the purchase of 19.9 percent of shares in FSO, a Polish producer of passenger cars, by Ukraine's AvtoZAZ. "We want to produce 150,000 cars a year in Warsaw and sell them in Ukraine, Poland and Europe," said Tariel Vasadze, chairman of the supervisory board of AvtoZAZ. "We plan to produce cars under a license."

The Ukrainian investor is purchasing the FSO stock for a symbolic price practically amounting to investment commitments only. These include launching the production of a new car make and retaining current employment. The Ukrainian corporation buys 90 percent of cars produced by FSO, which tops Polish exports to Ukraine. Taking advantage of modern technologies at the Warsaw factory, AvtoZAZ will be able to compete more effectively with cars from Russia, Romania (Dacia) and the Czech Republic (Skoda) on its home market.

The summit in Gdynia also determined the acquisition of Huta Częstochowa by the Industrial Union of Donbas. Huta Częstochowa is a key Polish supplier of components for ships and thanks to the investment, Donbas will overcome the barriers with which the EU blocks access to its markets for steel. "We want to develop our operations in Poland," said Alexander A. Pilipenko, director of the Industrial Union of Donbas. "We are interested in the sector of steel structures and the coking and chemical industries."


Royal Unibrew Invests
Danish beer and drink producer Royal Unibrew wants to consolidate its position in Poland.

Royal Unibrew Polska launched its activity in April after Faxe Polska Sp. z o.o. acquired breweries in Jędrzejów and Koszalin as well as 48 percent of shares in Lublin's Perła brewery from Browary Polskie Brok Strzelec. The investment is estimated at a total value of zl.177.8 million. The firm's Polish branch is located in Cracow and employs a staff of 340.

At a press conference June 28, Royal Unibrew Polska General Director Robert Papla said that the company intended to focus on the development of regional brands and Faxe beer. The company estimates its share in the domestic market at 2 percent; however, its representatives stress that the position of individual brands in the regions is very strong. The company's product range includes Faxe, Brok, Strzelec, Kanclerz, Rybnicki, Sokół, Cooler, Crystal Ice and Red Erik. "We are going to strengthen our presence mainly on the local level," said Papla.

Royal Unibrew headquarters is located in Denmark. The group is composed of nine breweries and a soft drink factory and employs about 2,300 worldwide. Last year, the group reported 400 million euros in revenue, with plans for 2007 providing for an increase to at least 600 million euros. Gross profits last year amounted to 33.5 million euros; this year, that figure is 39-45.6 million euros. Papla has estimated sales at the firm's Polish branch this year, since the purchase in April, at zl.130-150 million.


Chemical Reactions
Big changes await the Polish chemical industry. The process of privatization of the four largest chemical companies has begun after years of preparation. Nafta Polska invited over 100 investors to make offers.

The chemical industry produces a wide range of products, from plastic flowerpots to fuels and contraceptives. Among national brand names are Dębica (tires, rubber products), Pollena Ewa (cleaning products and cosmetics), Polifarb Cieszyn (paints and varnishes), Ropczyce (fireproof ceramics), Unimil (contraceptives), PKN Orlen (liquid fuels) and BOC Gazy (industrial gases). There are also many small and medium-sized companies that use organic (coal, oil, rubber, fats) and inorganic (sulfur, phosphorite) raw materials.

The basis for the chemical industry in Poland is the bulk chemicals sector, called Great Chemical Synthesis (WSCh), which covers the following branches: organic, inorganic, fertilizers, sulfur processing and coke chemistry. The sector includes the Tarnów Nitrogen Works, Kędzierzyn Nitrogen Works, Organika of Sarzyny and Zachem of Bydgoszcz.

The stocks of these companies were recently transferred to Nafta Polska which, acting as the extension of the State Treasury in the privatization process, sent invitations to over 100 sector and financial investors to take part in the negotiations.

Nafta Polska decided to separately privatize the companies it is responsible for. In November 2004, Minister of the Treasury Jacek Socha described the product consolidation of the WSCh (an estimated cost of zl.680 million) as unnecessary. He reasoned that the directions of consolidation may not meet investor expectations and that reorganization can be carried out after privatization.

Potential foreign investors expected by the chemical industry are discouraged by two factors: over-employment and related problems as well as pollution. The heavy chemical industry is a highly capital-intensive branch of manufacturing with a long-term return period. The chemical sector also has a constant need for new technologies and research work. During the privatization process, it should be taken into account that innovation in the field is not possible without close ties to research and development units, as well as educational institutions.


Public Aid Renewed
The European Commission (EC) wants to alter available forms of public aid. Recently, the EC adopted a draft State Aid Action Plan, scheduled for implementation in 2005-09. It contains general guidelines concerning far-reaching changes in the aid policy of member states. The changes are aimed primarily at promoting sustainable economic growth of the European Union through new investments and the creation of new and better jobs, which will in turn assure social equality in global and regional terms.

The guidelines will be subject to consultation with member states and other parties concerned.

From Poland's perspective, the presented guidelines primarily entail continued opportunities to carry out individual goals using EU aid funds. Aid programs have been implemented in Poland for a few years, promoting diverse entrepreneurial activities which are included in the priorities of the aforementioned reform, such as investment in new technologies, growth of employment and staff qualifications and environmental protection.

The top priorities of the planned reform include elimination of public aid instruments that are detrimental to the competitiveness of the market; promotion of research and development; stimulation of ecological innovation and improvements aimed at environmental protection; creation of conditions that favor business growth and the promotion of investment in human capital to increase employment.