POLAND: Useful Info

Poland is not new to challenges; the country has experienced invasion, civil unrest, economic crises. By the 1990’s, however, it began making great strides to creating a market economy. Foreign investment flowed in, and the government instituted policies that made its industries more competitive—including the introduction of world prices and expansion of private enterprise. Despite an economic slowdown in 2001 and 2002, its GDP has recovered and even accelerated to 5.4% in 2005. A dramatic growth in productivity, plus stricter government fiscal policies, also helped to bring down inflation.

Some of the problems that Poland still has to overcome unemployment (at 17.5%, it has the highest level in the EU), budget deficits, foreign debt, and government corruption. Its agricultural industry is also very inefficient, employing 28.7% of the work force yet contributing only 3.4% to its GDP. Its processing industries even have to import of wheat, feed grains, vegetable oil, and protein meals to meet domestic demand.

Economic aid and lower trade barriers will help the country’s progress even further, although trade, investment and the development of its private sector—which lie in the investors and firms rather than direct aid—will play the most important role.

QUICK FACTS

Population: 38.5 million (Source: UN, 2005)
Capital: Warsaw
Area: 312,685 sq km (120,728 sq miles)
Major language: Polish
Monetary unit: 1 zloty = 100 groszy
Main exports: Machinery and transport equipment, foodstuffs, chemicals
GNI per capita: US $6,090 (Source: World Bank, 2005)

ECONOMIC BACKGROUND

The government has created a number of incentives to attract investors and foreign businesses. Grants and reimbursements can dramatically lower operation costs and allow even small and medium sized companies to set up offices in Poland or form joint ventures with local firms.

Its Law on Financial Support for Investment provides investment grants that cover 15% to 25% of investment outlays, depending on the location of business. It also gives employment grants of up to EUR 4,000 for every job created (with a ceiling equal to the 2-year cost of labour of new employees), training grants of up to EUR 1,150 for every employee, and infrastructure development grants for any upgrades related to a new investment. The government also provides tax relief both in Special Economic Zones. Currently, there are 14 Special Economic Zones in Poland, each of them consisting of several sub-zones.

The company can also be reimbursed for 5% of any investment made on land, 40% of investment made in construction, 70% of any investment made in equipment, and 25% on cost of intangible assets.

A minimum investment of EUR 500,000 can make a firm eligible for the grants, on the condition that the company will create at least 100 jobs for 5 years and help modernize the industry or introduce new technologies.

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