american investor october 2010

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It will be a while, but the globaleconomic crisis, which so far has offered

more opportunities for Polandthan threats,will reach an end.

Now Poland needs the determinationto create a business-friendlyenvironment to be able to compete

with other countries as their potentialexplodes in the post-crisis world.

The clock is ticking.

American

InvestorOCTOBER 2010

Vol. XX, No. 7 ISSN 1506-3240

American Chamber of Commerce in Poland 2010 www.amcham.com.pl

Lawyers and reforms p 20 Invest in women p 24 Senior high fliers p 28

Running

out oftime?


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Lawyers and reforms p 20 Invest in women p 24 Senior high fliers p 28

OCTOBER 2010 AMERICAN INVESTOR 1

whats on

www.amcham.com.plYur nline guide t AmCham activities

MONTHLY BREAKFAST MEETING

A lot of room for improvement With the application of high tech and modern manage-ment solutions the Polish judiciary system is on track to boost effectiveness when itcomes to the time it takes to handle routine business. Yet it is the professional atttude of

judges that determines the systems efficiency, p. 20

FOCUS

Invest in women Vital Voices brings American insight to Poland to shake up genderstereotypes and release vast human and economic potential, p. 24

Technology and crisis Monika Pilarska, AmCham Krakw Director, talks to Ramn Tanc-inco of Cisco Systems about trends in the telecom sector that have emerged as a result ofthe economic crisis, p. 25

THE EXPERTS

Where is our property now? Although the current government pledged to tackle theissue of property restitution, for the f oreseeable future, at least, former owners and theirheirs will have to rely on the Polish courts to seek justice, p. 26

Looser reins on bank outsourcing Government works to liberalize rules of outsourcingby banks, p. 27

Senior high fliers Creating a highly effective senior team is an art in itself. It requires in-vestment but it pays off, p. 28

Payment makes the world go round New regulations for payment services will open theway for different payment methods, but the new law will affect a wide range of busi-nesses, p. 29

The true colors of mobbing Managers should be aware that mobbing goes well beyondpsychological pressures,p. 30

EVENTS

Minister of Justice Krzysztof Kwiatkowski was our guest speaker at the AmCham MonthlyMeeting in September, p. 31; Oktoberfest in Wrocaw drew in the crowds, p. 32;AmChamConference in KatowiceInvesting in Silesia, p. 34;AmCham Fall Business Mixer, p. 35

DEPARTMENTS

From the Editor, p. 2; From the Chairman,p. 5; Newsline, p. 6; Agenda, p. 9; Guide to

AmCham Committees,p. 10; Content summaries in Polish, p. 36

It will be a while, but the globaleconomic crisiswhich so farhas offered more opportunitiesfor Poland than threatswillreach an end. Now Polandneeds the determination to

create a business-friendlyenvironment to be able tocompete with other countriesas their potential explodes inthe post-crisis world. Theclock is ticking,pages 12-17;

Leader of the pack: The Metropolitan Asso-ciation of Upper Silesia should be a role model for localand regional governments on how to build value forboth the community and external investors, page 18.

Other useful sites

U.S. Chamber of Commercehttp://www.uschamber.comAmerican Chamber of Commercein the European Unionhttp://www.amchameu.beEuropean Council of AmericanChambers of Commercehttp://www.amchamseurope.com

COVER STORY:

American

InvestorOCTOBER 2010 Vol. XX, No. 7

Running out of time?

Calendar

By clicking on red links in the Calen-dar you may visit photo coverage ofour past events. Blue links will takeyou to the announcements of upcom-ing events.

AmCham/KPMG report!

20 years of American Investment in

Polandis an executive survey pre-

pared by AmCham and KPMG to showthe impact of American companies on

the Polish economy. The report is

available for download at our website

in the Presentations & Reports sec-

tion, in both Polish and English.

Policy Watch

Intelligence: For AmCham position

papers, policy statements, official let-

ters to government ministers and re-

search papers, visit the Advocacy linkon the horizontal menu to download

the latest AmCham position papers.

Regions

AmCham may be closer than youthink. Apart from Warsaw, AmChamhas two regional branches which areactive all year long and offer many ex-citing opportunities to interface withregional business leaders and politi-cians. To find out more about our ac-tivities in Krakw and the region ofsouthern Poland, and Wrocaw, go toRegions in the horizontal menu bar,and pick your region of interest.

Events

AmCham Monthly Meetings are one of

the flagship events organized by the

chamber. WhileAmerican Investorcov-

ers each Monthly Meeting extensively

including full-page pictorials, you cansearch through picture archives of

past events that include never previ-

ously printed material. Just go toEvents and Activities, pick Monthly

Meetings and scroll down for links to

archived events.

AmCham online


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2 AMERICAN INVESTOR OCTOBER 2010

BOARD OFDIRECTORS

The American Chamber f Cmmerce in Pland

SPONSORS

Roman Rewald Weil, Gotshal & MangesChairman

JudithY. Gliniecki Wierzbowski EvershedsVice Chair

RichaRd lada TelestoVice Chairman

PeteRkaY KPMG PolskaSecretary

Stan PoPow FinacorpTreasurer

MEMBERS

Tony HoushAPCO Worldwide

Joseph WancerBank BPH

Paul FogoMiller Canfield

Robert L. KoskiKulczyk Investments

John LynchLynka

Mac RaczkiewiczEx off icio

AmCham Auditr:

A change of outlook

In September the largest labor unions at Enea, a state-owned utilitygroup that is to be partially privatized, made an official statement of their

preferred strategic investor. They pointed to Kulczyk Investments, whichis bidding for a majority stake in the holding company, as the best candi-

date. The two remaining bidders, EDF and GDF Suez, both owned by theFrench government, raise national security concerns, the labor unions ar-

gued. In short, they said a Polish company is better-suited to run a utility

group than a company owned by a foreign government. So this is the offi-cial line, veiled in well-intended patriotism.

There is, however, a less statist line which plays a much more importantrole in the labor unions argument.

After Kulczyk Investments acquired control over Browary Wielkopolskie,the brewery group boosted both production and employment. Labor

unions talk to labor unions, and it is clear that the unions at Enea solicited

advice from the unions at Browary Wielkopolskiethis at least is hinted atin press statements by Piotr Adamski, the leader of the Solidarity unions at

Enea. In his view, Kulczyk Investments will assure that Enea implements agood business strategy that will not require Enea to shed workers.

For a labor union to back an investor instead of going on strike to retainthe companys status quo and win a favorable benefit package from the

companys owner, the State Treasury, is remarkable indeed. But a mutualunderstanding between employer and employees of what a company

should bea profitable ventureis nothing new to AmCham-affiliated

companies, of which Kulczyk Investments is one. The global economic cri-sis was a powerful stimulus for unions to learn that apart from their conflict-

ing interests with their employer, there is one overriding concern that unitesthe two sides of the labor/management dividethat the company not be

closed or relocated to a place that offers much lower labor costs.Last year at the AmCham Manufacturers Forum, an annual conference

devoted to the problems of member manufacturing companies in southern

Poland, speakers signaled that this budding awareness was being ex-pressed by unions at their companies. It was union leaders, they said, who

carried that knowledge down the ranks of the unions organizational struc-ture, encouraging all members to cooperate more closely with manage-

ment to achieve higher work efficiency at their factory. In some caseswhere group layoffs were unavoidable, it was the unions who did research

to minimize the social impact. They identified workers whose private eco-nomic status put them most at risk if they lost their jobs, such as single

mothers or members of households with one partner already out of work.

This, beyond a doubt, is how labor unions prove their worth.Interestingly enough, some speakers stressed that new employees at

their companies, young university graduates, tend not to join labor unions,but prefer to talk to HR managers and approach their career prospects on

an individual basis. This may also signal a new trend displaying the prefer-ences of Generation Y.

Nevertheless, the Kulczyk Investments example and others like it among

AmCham-affiliated companies signal a remarkable shift in labor unions at-titude towards private employers. One may only hope that the change of

outlook will spread among the workers at state-owned companies as well.

Tomasz wiok

YOUR AMCHAM FROM THE EDITOR

A conference: Krakw, November 2010

giantsGiants for Giants

Large IT systems in big applications

More information: www.itgiants.org


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OCTOBER 2010 AMERICAN INVESTOR 5

The end of the summer vacation has brought an increase in the activities of

AmCham in Poland. Your chairman took a trip to the United States to speak atthe Polish Consulate on promotion of investment in Poland to a crowd of ap-

proximately 150 people. The appearance was made at the invitation of Polish Con-sul General Ewa Juczyk-Ziomecka, and it was well-organized by Consul HenrykSanecki and his staff in New York.

This trip also gave me a chance to stop by Washington, D.C., to meet with EricStewart, former Deputy Assistant Secretary for Europe at the U.S. Department ofCommerce and now the creator and head of the newly established US Poland

Business Council. USPB is a Washington-based organizationof multinationals who have a presence in Poland and who in-tend to further explore and deepen business relations be-tween Poland and the U.S.

At the outset, Eric and I agreed that UPBC and AmChamPoland should cooperate closely with UPBC focusing onWashington. There are clearly many fields of common interestbetween our organizations. The most obvious is the recent

main topic for the business community in Poland: promotionof Poland in the U.S. as a place for investment and as a trad-ing partner for America.

Some people in Warsaw who are very well acquainted withWashington D.C. ambiance maintain that promoting Poland in

the United States should be a piece of cake. I say that if this is the case, then whyit is not being done? The AmCham Board of Directors through that the creation ofthe Pro-Polska Coalition of several business organizations, has mounted a sub-stantial effort to advocate to the Polish government the need to have Polands pro-motion better-organized. Therefore, we are extremely pleased to see some Ameri-can companies effort to conduct promotion through UPBC. All in all, it looks likeour AmCham will be a staunch supporter of the activities of the new Council inWashington.

On another point, I noted with great satisfaction that the idea of creating ofbusiness organizations coalitions to pursue a common cause is spreading inPoland. The most recent is the coalition of six organizations for limiting publicspending. Theis new coalition has posted a tower clock in Warsaw, on the Ce-pelia building at the intersection of Al. Jerozolimskie and ul. Marszakowska. In ad-dition to the effective promotion of concerns about the Polish financial system, the

new coalition promotes the concept of coalitions of business organizations, whichwe support greatly.

So, as we look forward to another busy season for the American Chamber ofCommerce in Poland, we are very optimistic about the development of new instru-ments to allow business to promote important social and economic causes.

American

Investor

American Chamber f Cmmercein Pland 2010. All rights reserved.

American Investoris the official publicationof the American Chamber of Commerce inPoland. It is a voice for foreign investors andthe business community in Poland. Themagazine strives to keep our members andother readers up to date by following cham-ber news and reporting on the leadingtrends in business and policy.

lrs r should be e-mailed [email protected]

AMCHAM STAFFDorota DabrowskiExecutive Director

[email protected]

Marzena DrelaDeputy Director

[email protected]

Anita KowalskaEvents & Media Manager

[email protected]

Robert KruszynaOffice Manager

[email protected]

Barbara Pocialik-MalinowskaMembership and Committees Coordinator

[email protected]

Marta PawlakResearch and Policy [email protected]

Robert ChomikProject [email protected]

AmCham in Krakw

Monika [email protected]

AmCham in WrocawJoanna [email protected]

Printing

Q Invest Ltd+48 22 424 6600

To contact AmChamplease write or call:

ul. Emilii Plater 53, WFC00-113 Warsawtel: +48 22 520 5999fax: +48 22 520 5998e-mail: [email protected]

Coalitions rise

Roman RewaldAMCHAM CHAIRMAN

EDITOR-N-CHIEFtomaSz [email protected]

EDITOR-AT-LARGEchRiStoPheRSmith

[email protected]

Published by the American Chamber of Commerce in Poland

Were allin this

together

AmCham Member to Member

YOUR AMCHAM FROM THE CHAIRMAN


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OCTOBER 2010 AMERICAN INVESTOR 76 AMERICAN INVESTOR OCTOBER 2010

AmCham advocacyIn response to proposed changes from theMinistry of Labor and Social Policy, AmChamsent a position paper to the ministry airing thechambers concern about the ministrys pro-posal to freeze for two years the transfer ofpension contributions from the state-ownedSocial Insurance Institution to the privatelyowned open pension funds. AmCham com-mented that participation in the open fundsshould be voluntary, but their fees should belower. AmCham also said the ministry shouldreview the concept of long-term pension re-form, as drafted in 1999, which cumulates em-ployment contributions and capital-based re-tirement plans of the Social Insurance Institu-tion with contributions invested and reinvestedby the open funds. AmCham also argued thatthe security aspects of the pension system, in-cluding demographic and financial marketrisks, should be diversified through a widerrange of instruments.

AmCham events

AmCham was one of the partners at the Investin Poland conference organized by the weeklyWarsaw Business Journalin cooperation withthe Polish Information and Foreign Investment

Agency (PAIiIZ). AmCham Vice Chair Judith Y.Gliniecki (pictured above, far right, with LarsBosse from the German-Polish Chamber of In-dustry and Commerce, third from left, Adamonowski from PricewaterhouseCoopers, andRobert Seges, head of Team Services at PAI-iIZ, far left), who spoke at the discussion panelat the conference, underlined the main impedi-

ments to business development in Poland asdiagnosed by AmCham-affiliated companies.Among other items, Gliniecki noted that short-comings in the court system are a problemnow as bureaucracy slows down companies inrelatively simple enforcement of contractclaims. Gliniecki also said that the indecisiveand passive approach to business-related is-sues on the part of the Polish administration,which stems from the fear of being accused ofcorruption, should change. Other participantsin the conference included representatives ofmany foreign chambers of commerce inPoland, including the German, British, Scandi-navian, French, and Dutch chambers.

AmCham Board member Paul Fogo repre-sented our organization at a conference on In-

NewslineNews from AmCham and its members

vesting and Energy in Katowice, organized byAmCham Krakw in cooperation with the City ofKatowice and the Association of Silesian Cities.Fogo presented the impact of American compa-nies on the Polish economy in 1990-2010, withspecial attention to the intricacies of foreign di-rect investment in Poland. A huge part of PolishFDI is classified as originating in the Nether-

lands, which in truth is often merely a transitionpoint for American investors because of its fa-vorable financial regulations.

In other events, AmCham Wrocaw was one ofthe organizers of the 7th annual InternationalOktoberfest on September 16, drawing 700people from business, diplomacy and govern-ment to the Arsenal courtyard in Wrocaw. Thehigh attendance proves that this initiative by in-

ternational chambers of commerce has be-come one of the most significant businessevents of the year in the city and region. Hon-orary guests included Rafa Dutkiewic, Mayorof Wrocaw, Ilona Antonisyn-Klik, DeputyGovernor of Lower Silesia Province, and Gre-gor Roman, a board member of t he MarshalsOffice of Lower Silesia Province. As always, theevent attracted numerous members of thediplomatic corps, including Irish AmbassadorEugene Hutchinson, Bernhard Brasack, Ger-man Consul General in Wrocaw, and DavidWarner, U.S. Economic and Political Consul inKrakw. The organizers of this annual event in-clude AmCham, the British Polish Chamber ofCommerce, and the Polish-German Chamber ofIndustry and Commerce. The honorary patronis the representative of the Free State ofBavaria. This years partners included theDutch, Scandinavian, Irish, Belgian, Portugueseand Spanish chambers of commerce in Poland.The goal of the event is to bring together high

and mid-level managers from companies whoare members of chambers, along with theirclients, business partners and other congenialbusiness folk in Lower Silesia.

Also through the Wrocaw chapter, AmChamorganized a panel discussion on corporate so-cial responsibility in Poland. The main aim ofthe meeting was to consider the status of CSRand its prospects for development, with a par-ticular focus on the experience of Americancompanies, who are recognized as the worldleaders in this area. The organizers also madesure to provide participants a unique platformfor information sharing. The meeting attractedmainly managers representing American in-vestors in Wrocaw and Lower Silesia. AmCham

Executive Director Dorota Dabrowski openedthe meeting, which was hosted by Pricewater-houseCoopers at their Wrocaw office.

AmCham & the media

AmCham scored major media coverage in Sep-tember, in print and on the air. AmCham Chair-man Roman Rewald (pictured above) took partin the panel discussion at the Krynica Eco-nomic Forum 2010 devoted to the impact ofshale gas exploration on energy markets world-wide, explaining that the U.S. is furtheringtransatlantic relations by helping Poland de-velop tools for energy generation by exploringshale gas and developing its nuclear power po-tential. Rewald said that the development of en-

ergy resources is a solid foundation on which tobuild transatlantic relations today, because ofthe increasing demand for energy worldwide.He said that the significant push from the U.S.government on technology transfer to Poland istwofold, focusing on shale gas processing ca-pacity, with nuclear power to supplement it.This is in line with the views of most analysts,who say that shale gas alone will not beenough to meet Europes future energy de-mands. Other panelists included Tomas Chalfrom the Sobieski Institute, a think-tank, GuyLewis from the Gas Technology Institute in theU.S., and Brian Horsfield from the GermanEarth Sciences Institute. The panel was moder-ated by Pawe Poprawa from the Polish Geo-logical Institute.

Print exposure included two publications fea-turing Rewald, in the daily Dziennik GazetaPrawna and the business monthly Nowy Prze-

mys(spread pictured). For Dziennik GazetaPrawna Rewald contributed an opinion pieceabout the governments privatization program,one of a series of op-ed pieces contributed byPolish business leaders. Rewald said that the

FLASHBACKFrm the pages f American Investr

SEPTEMBER 2000

Civic Platform and Law & Justice could capture the political support neces-

sary to actually dare to c hange this country. The expected 60% turnout con-

firms the notion that people are ready for and want change. The question re-

mains, will they want to take the political risk?

RoBERTKoSKI AMCHAMBoARDMEMBER

government should not get involved in runningcompanies, even those with strategic impor-tance for Polands economy. Rewald noted thatin the U.S. there is an act which prevents thegovernment from taking stock in such compa-nies, yet allows it to stop transactions that itviews as a threat t o national economic security.

In a three-page interview for Nowy Przemys,

Rewald said that free-market competition is thebest agent for boosting economic efficiency.With natural impediments to economic effi-ciency across the E.U. stemming from its rela-tively low level of integration, E.U. countriesshould make their economies more restriction-free in order to compete wi th the U.S. economy.He also said that government should devise acoherent strategy for promoting Poland.

Baker & McKenzieLaw firm Baker & McKenzie generated revenueof USD 2.104 billion worldwide in fiscal year2010, which ended on June 30. The resultmeans a 0.4% drop from 2009, but profit perpartner for 2010 was nearly USD 1.2 million, up13%. Our clients reaction to our value-addedservices are promising, said Baker & McKenziechairman John Conroy. We do our best soour practice and our people keep pace with thechanging needs and expectations of our

clients.

Boeing

Boeing has begun fatigue testing on the struc-tural airframe of the 787 Dreamliner at a site inEverett, Washington (pictured). Fatigue testinginvolves placing the 787 test airframe into a test

rig that simulates multiple lifecycles to test howthe airplane responds over time. Unlike statictests, where loads are applied to the airplanestructure to simulate both normal operation andextreme flight conditions, fatigue testing is amuch longer process, said Jim Ogonowski,Structures Vice President at Boeing Commer-cial Airplanes. The process simulates up tothree times the number of flight cycles an air-plane is likely to experience during a lifetime ofservice. While the structural test program hasalready validated the strength of the airframe,fatigue testing looks at long-term, continueduse. This is the natural progression of testingon a new airplane and part of the process toachieve U.S. Federal Aviation Administrationcertification.

CB Richard EllisThe Polish office markets have entered an up-ward cycle, according to CBRE Research. Thetotal volume of leasing transactions in the firsthalf of 2010 was about 223,000 sq. m., close tothe total for 2009. This i ncreasing trend hasbeen observed since the first quarter of 2009and is expected to continue into 2011, withtake-up expected to return to 2008 levels. Whilethe average size of deals is around 1,000 sq.m., the market is dominated by smaller deals.

According to CB Richard Ellis Research,prime headline rents in Warsaw have stabilizedat around EUR 23 per sq. m. per month in thecity center. In non-central locations the headlinerents for the best projects are EUR 1516. Ef-fective rents are generally 1520% lower, astenants may still count on incentives offered bylandlords. Typical incentives include rent-freeperiods and landlords contribution to fit-outand other capital costs.

Cisco SystemsIT specialist Cisco Systems will double its CiscoNetworking Academy programs to cover 201schools throughout Poland in the 2010/2011school year. The program includes workshopson IT essentials, such as hardware and soft-ware. Most of the new schools included in theprogram are in towns with a population below50,000. High-school students are in need ofworkshops using modern educational methodswhich trigger students into further educationand career planning in the information technol-ogy sector, said Anna Cacharowska-Ry-bkowska, program coordinator for Cisco Sys-tems. This is especially important to studentsin mid-sized towns where the Cisco programhelps them bridge the education gap and boosttheir chances for finding jobs after graduation.

Hewlett-PackardHP has won a prestigious 2010 Green Enter-prise IT Award from the Uptime Institute. Theawards showcase organizations pioneering en-ergy-efficiency improvements in their IT anddata center operations or providing technologythat can significantly reduce energy consump-tion.

HP was recognized as the winner in the DataCenter Design category for its Wynyard facilityin the U.K. Commissioned in September 2009,the data center uses a large quantity of fresh airsupplied by fans through high-efficiency filtersto reduce the energy required for cooling. Thebuilding features an energy-efficient and sus-tainable design that incorporates recycled ma-terials as well as harvested rainwater.

HP has a distinguished history of improvingdata center energy efficiency and providingstewardship of the environment, said Ed Ket-tler, an HP Fellow and strategist in the Green ITorganization at HP. We are honored that theUptime Institute has recognized HP for the de-sign excellence that can be found t hroughoutthe Wynyard facility.

InterContinental WarsawA recent addition to the map of Warsawshippest landmarks for elegant dining, Platter byKarol Okrasa Restaurant, opened its door onSeptember 1. Executive chefKarol Okrasabrings flavors from his childhood to the plate,combined with his food experience gained dur-

ing many culinary journeys around the world.Platter is the first Authors Cuisine project in

Members on the move

aszczuk & Partners

Justyna Szpara hasbecome the managingpartner of aszczuk &Partners law firm.Szpara began her ca-reer with aszczuk &Partners in 1999 andbecame a partner in2005. She specializesin litigation and arbitra-tion, real estate andtax law. She heads thefirms real estate practice group and, togetherwith Maciej aszczuk, co-heads the dispute reso-lution practice group. Szpara is listed as an arbi-trator by the Court of Arbitration at the Polish Con-federation of Private Employers Lewiatan. She is amember of the board of the Polish Arbitration As-sociation and vice president of the Real EstateLaw Commission of the International Associationof Young Lawyers.

AdvocateAgnieszkaWoliskahas joinedthe aszczuk & Part-ners law firm. Woliskais a 2005 graduate ofthe Faculty of Law and

Administration at MarieCurie-Skodowska Uni-versity in Lublin. Shecompleted post-gradu-ate work in Polish andEuropean corporatelaw at the WarsawSchool of Economics in 2006 and in public pro-curement at the University of Warsaw in 2009. Shewas admitted to the practice of law as an advo-cate in Warsaw in July 2010. She is also workingon a Ph.D. at the Institute of Legal Studies of thePolish Academy of Sciences.

CMS Cameron McKenna

Beata Barwiska

has joined CMSMcKennas Warsawoffice as of counsel.Barwiska is a mem-ber of the CorporateTransactions and Cor-porate Law Depart-ment, where she pro-vides legal advice toCMS clients on securi-tization transactions, capital markets and debt se-curities, as well as M&A and private equity. Herclients include major securitization funds and pri-vate equity funds, investment funds, domesticand foreign bond issuers and finance arrangers,as well as leading Polish and foreign companiesand capital groups.

Photo:MartaPawlak


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Sheraton Warsaw

The SomePlace Else restaurant at the Shera-ton Warsaw has reopened with a completelyredesigned interior (pictured) and a newsound system from Electro Voice. ChefArturGrajbek continues to serve top-quality food,including Oriental burgers, fusion sandwichesand steaks. One of the items is crocodile steakwith risotto and pepper sauce.


NewslineNews from AmCham and its members Intelligence from AmCham and its committees

Agenda

New MembersAmway Business Center Europe has joined

AmCham. The company is rep resented in Polandby Przemysaw Siuda, general manager, availableat (+48) 12 379-5517. The companys headquar-ters are in the Krakw Business Park in Zabierzw,near Krakw. The companys website iswww.amway.com.

CA Technologies, an information technology andsoftware specialist, has joined AmCham. The com-pany is based at the Warsaw Financial Center.Micha Furman, industry solutions director, is avail-able at (+48) 22 528-6741. The companys websiteis www.ca.com.

The Conference Board, Inc., a specialist in ed-ucation and training, has joined AmCham. MichaZdziarski, general director for Poland, can b e con-tacted at (+48) 22 629-4891. The companys Polishoperations are based in Warsaw. Its website iswww.conference-board.org.

Real estate agency Cushman & WakefieldPolska has joined AmCham. Its office is in theMetropolitan Building in Warsaw. Richard Petersen,managing partner, can be contacted at (+48) 22820-2020. The companys website is www.cush-manwakefield.com.

IT services specialist Direct Communication hasbecome an AmCham member. The company i sbased in Warsaw. Angelo J. Pressello, managingdirector, can be reached at (+48) 22 860-0101. Thecompanys website is www.dir.com.pl.

Marathon Petroleum Poland, an oil and gas ex-ploration company, has joined AmCham. The com-pany is based in Warsaw. Director Carl R.Hubacher may be contacted at (+48) 22 222-1650.The companys website is www.marathonoil.com.

Mattel Poland, producer and distributor of toys,including such brands as Barbie and Hot Wheels,has joined AmCham. Mattels Polish office is inWarsaw. Sanjay Luthra, country manager, may becontacted at (+48) 22 210-8000. Mattels websiteis www.mattel.com.

One size fits all

Polands Telecommunications Law hasbeen amended several times in the last

few years. The most recent changes,

which came into force in July this year, intro-duced some far-reaching consequences for

companies dealing with retail customers. Ac-

cording to Dr. Maciej Rogalski, head of the

legal department at mobile phone operator

PTC Sp. z o.o. and vice-president of the Polish

Chamber of Information Technology and

Telecommunications, who met with the Am-

Cham Telecom Committee in September, themain purpose of the amendment is to ensure

equal rights to all customers using telecom

services, whether or not they have a fixed con-

tract with the service provider. The new defini-

tion of subscriber, based on a judgment of

the European Court of Justice in January

2009, now covers prepaid users as well as

those with a fixed contract.

According to the European Commission,

Rogalski explained, to the extent that Polishregulations provided that a subscriber for

purposes of the Framework Directive may only

be an individual who concludes a written con-

tract, they do not meet the requirements of the

directive and deprive individuals who failed to

conclude a contract in such form of specific

rights conferred upon them under the Elec-tronic Communications Directive.

The impact of the new approach is huge.

Among other measures, Rogalski noted that

unlike before, telecom operators will have to

inform pre-paid users about changes in the

terms and conditions for the service. Once

properly registered with the service provider, a

prepaid user will have the right to access fea-

tures not available before, such as itemizedcharges, price lists and other pricing informa-

tion.

Implementation of the amended Telecom-munications Law is already having an impact

on various aspects of the telecom business,

including legal, marketing, sales and service.

For example, prepaid users will now be enti-

tled to be listed in the public directory of sub-

scribers and to receive non-itemized invoices.

They will have an option to disable caller ID

and reject incoming calls with a free and easy-to-use service. They will also be able to block

automatic call-forwarding by a third party to

the subscribers terminal.

The new act imposes some new responsi-

bilities on subscribers as well. In order to be

listed in the public phone directory, they must

give the service provider their name, identifica-

tion number (PESEL number or ID card num-

ber) and their mailing address.

Subscribers who are not private individualswill have to provide their name, statistical reg-

istration number (REGON) or tax number

(NIP), but they can only be listed if they have

been entered in the National Court Register or

local business register in Poland, or a compa-

rable register in another E.U. member state.

They must also provide their business ad-dress.

With the new law already in force, telecom

operators will have to prepare new customer

regulations for prepaid users. They are now

under an obligation to provide public notice of

service modifications affecting prepaid sub-

scribers, and to give users an option to cancel

the service if they do not accept the new

The new Telecommunications Law seeks to give mobile pay-as-you-go con-sumers the same rights as users with a fixed subscriptionbut at the cost ofthe prepaid user s anonymity.

Telecom C ommittee

Prepaid users who come out of hiding will receive new protections

terms.A change that should sharpen competition

is free number portability between operators.

Rogalski noted that the national telecomregulator (in Poland, the Office of Electronic

Communications) can impose fines on phone

companies that fail to implement the new reg-

ulations properly. Of course, he added,

these new regulations create new costs for

telecom operators.

HOT DATE

Oct.23.10Event: AmCham 20th Anniversary "Marilyn

Monroe" Ball & AmCham Awards Ceremony

Place: Marriott Warsaw

Time: 7:00 P.M.

OCTOBER 23, 2010Time:7:00 P.M.Place: Marriott WarsawEvent: AmCham 20th anniversary "MarilynMonroe" Ball & AmCham Awards Ceremony

NOVEMBER 2010

Time: To be announcedPlace: KrakwEvent:IT Giants - AmCham Conference onIT and business; morewww.itgiants.org

NOVEMBER 3, 2010Time: 7:30 A.M.Place: InterContinental WarsawEvent: AmCham Monthly Meeting

DECEMBER 7, 2010Time: 5:30 P.M.Place: Marriott WarsawEvent: AmCham General Meeting andBoard election

For updates on our events visit:www.amcham.com.pl

Mark your calendar

Poland, where the menu will be changed sea-sonally. The restaurant is in the InterContinental

Warsaw hotel. Okrasa (pictured) is one of themost celebrated Polish chefs. Since 2001 he hasbeen the host of a cooking show on Polish televi-sion channel TVP1. He is the author ofCook withOkrasa, which features 105 of his originalrecipes. Okrasa is also a co-founder of the ChefsClub Fund, an elite organization for top Polishchefs.

Kulczyk InvestmentsKulczyk Oil Ventures, a subsidiary of Kulczyk In-vestments, announced that MENA Hydrocar-bons (Syria) has agreed to participate with Kul-czyk Oil in the exploration of Syria Block 9.

Under the terms of an agreement with LoonLatakia Ltd, a Kulczyk subsidiary, MENA will ac-quire an 30% interest in Block 9 by sharing costsand liabilities already incurred in the project andcommitting to funding part of the future costs fordrilling the first exploratory well.

Kulczyk Oil CEO Tim Elliott said, We are verypleased that a management and technical teamwith extensive experience in the region has rec-ognized the potential of Syria Block 9 andagreed to move forward in partnership with us.

MENA is a private international company witha focus on the Middle East and North Africa.

aszczuk & Partners

Law firm aszczuk & Partners has launched anEnglish version of its Internet portal devoted toarbitration. The Polish version went online earlierthis year. This comprehensive information sourceon arbitration is now available in English atwww.arbitration.pl, alongside the existing arbi-traz.laszczuk.pl. The website highlights Polish,foreign and international arbitration legislation, acollection of judicial decisions of Polish and E.U.courts, a bibliography of Polish arbitrationsources, and access to other interesting publica-

tions on arbitration. Users may also find informa-tion on upcoming conferences, publications,legal changes and other important news.

The English-language website currently fea-tures abstracts of more than 50 arbitration-re-lated rulings of the Polish Supreme Court andlower courts, as well as the European Court ofJustice, and the database is constantly being ex-

panded. The website also contains translationsof a unique collection of arbitration case law frombefore World War II.

The website offers a search engine linked to abibliography of hundreds of Polish books and ar-ticles about arbitration dating back to 1918, withtitles available in both languages. In addition to adatabase of foreign and international arbitrationlegislation, international users may also find a fullset of Polish arbitration legislation translated intoEnglish.

Panattoni

Industrial property developer Panattoni Europehas commenced construction of an additional11,400 sq. m. of warehouse space for pharma-ceutical group Neuca. The new built-to-suit ware-house is under construction at Panattoni ParkPozna (pictured). The park is a 154,000 sq. m.distribution centre with four buildings, along theS11 expressway, 13 km from the center of Poz-na. Construction of a 30,000 sq. m. warehousefor retailer H&M is also underway at the park.H&M leases a total of 84,000 sq. m. at the park.

ProLogis

ProLogis, a global provider of distribution facili-ties, has leased 15,800 sq. m. at ProLogis ParkJanki (pictured) to No Limit and Euro-net, whichalready have established operations at Janki.With these transactions, ProLogis Park Janki isnow 95% let, with only one unit of 3,500 sq. m.still available.


7/21

10 AMERICAN INVESTOR OCTOBER 2010

Agri & Foodwww.amcham.com.pl/agri_food

Mission: To provide a plat-form for discussing andsolving issues and identify-ing opportunities for com-panies in the agriculturaland food sector by creat-

ing a base for dialogue and expertise leveragedamong producers, sector professionals, experts anddecision-makers.Co-chairs: Andrzej Pawelczak,Animex; Maciej ubieski, Universal Leaf TobaccoPoland.

Healthwww.amcham.com.pl/health

Mission: To provide aunited forum for U.S. com-panies to share their ex-pertise on the healthcaresystem and exchangeknowledge and experience

with national counterparts, contribute to the positivedevelopments in the sector and promote the U.S. ex-perience and capital while establishing the best con-ditions and opportunities for investments.Co-Chairs:Elisabeth Asirifi, IBM Polska; Jolanta Chlebicka-Do-miniak, Johnson & Johnson.

Infrastructurewww.amcham.com.pl/infrastructure

Mission: To discuss is-sues of the developmentof infrastructure; to pro-mote infrastructure solu-tions for cooperation be-tween private and public

partners. Co-Chairs: Krzysztof Wierzbowski,Wierzbowski Eversheds; Andrew C. Kapusto,Raytheon Homeland Security.

Taxwww.amcham.com.pl/tax

Mission: To provide a platformfor identifying tax issues andcreate an educational forum tokeep AmCham members in-formed on current and up-coming legislation. To create a

network to share information, comments and best prac-tices. To lobby decision-makers in the government.Co-Chairs: Peter Kay, KPMG; Piotr Bartuzi, Bank BPH.

Political Discussion Forum

www.amcham.com.pl/pdfMission: To build relation-ships with key players inPolish politics, regardless ofwhether within the govern-ment or not, in small groupsand in private settings, toserve as a vehicle into the

world of Polish politics behind official cur tains. Co-chairs: Richard Knauff; Marek Matraszek, CEC Govern-ment Relations.

Corporate Social Responsibilitywww.amcham.com.pl/csr

Mission: To encourage andfacilitate responsible busi-ness practices among Am-Cham members to supportthem to improve the qualityand effectiveness of their

CSR programs. Co-Chairs: Wojciech Arszewski,UPS Polska; Anna Jawor, IBM Polska. Small & Medium-Sied Enterprises

www.amcham.com.pl/sme

Mission: To provide a forumfor exchange of ideas/bestpractices to improve the per-formance of SMEs; to iden-tify and promote solutions tofacilitate and support themanagerial and operational

efforts of SMEs through educational, networking or lob-bying efforts that leverage the resources and knowl-edge of AmCham and its membership.Co-Chairs:Alain Bobet; Cezary Krasodomski, Cisco Systems.

Employee & Labor Relationswww.amcham.com.pl/labor

Mission: To create an infor-mation exchange forum of

HR professionals and so-

cial policy experts from

multinational and local

companies to share, dis-

cuss and learn about the latest trends in HR man-

agement and collectively influence local policy and

decision-makers for modern solutions in labor leg-islation. Co-Chairs: Jolanta Jaworska, IBM Poland;Peter Strupp, United Business Development.

Consumer Productswww.amcham.com.pl/consumer

Mission: to provide aforum to share knowl-edge and exchange ex-perience in all areascommon and relevant tomanufacturers and dis-

tributors of goods. Co-Chairs: Magorzata Surdek,CMS Cameron McKenna; AgnieszkaDzigielewska-Joczyk, HP Polska.

Telecomwww.amcham.com.pl/telecom

Mission: To create a platformunder the AmCham umbrellafor the exchange of mem-bers ideas and views ontrends in the telecommunica-tions sector in Poland; to take

steps to influence decision-makers in telecommunica-tions legislation, policy and practice; to promote inno-vative trends in telecommunications; to modernizecommunications technology for business and the aver-age Polish consumer. Co-Chairs: JarosawRoszkowski, Crowley Data Poland; Krzysztof Stefano-wicz, Salans.

Real Estate Committeewww.amcham.com.pl/real_estate

Mission: To discuss issues regarding thecomplexities of the real estate market inPoland, and exchange information. To bean educational and networking forum formembers and to lobby and influence leg-islative departments of the Polish govern-

ment.Chair: Halina Wickowska, K & L Gates.

Pharmaceuticalwww.amcham.com.pl/pharmaceutical

Mission: To discuss andidentify common interestsand exchange information re-garding Polands pharmaceu-tical market; to act as a repre-sentative body and collective

voice of pharmaceutical companies before governmen-tal institutions. Co-Chairs:Peter Koetsier, Bristol-MyersSquibb Polska; Roberto Servi, Eli Lilly Polska.

Outsourcing/High Techwww.amcham.com.pl/outsourcing

Mission: To provide a plat-form for discussing, identi-fying and addressing com-mon SSC/BPO issues re-lated to high tech opera-tions; to maintain contact

with local authorities, educational and governmentalinstitutions to present a unified business perspectiveand to suggest ways of possible cooperation. Toidentify the possibilities/areas of state assistance, toshare experience and leverage knowledge. Co-Chairs: Ramn A. Tancinco II, Cisco SystemsPoland; Jacek Stryczyski, Lionbridge.

Intellectual Property Rightswww.amcham.com.pl/ipr

Mission: To advocate forIPR protection and provideleadership that will bringtogether interested part-ners; to share informationwith decision-makers and

law enforcement. The police, judiciary, prosecu-tors, customs officials, legislators and journalistsare among the target groups, while the curriculumof law schools should have more emphasis on IPR.

Co-Chairs: Agnieszka Wyszyska-Szulc, Philip Mor-ris; Anna Lasocka, aszczuk & Partners.

European Union Affairswww.amcham.com.pl/eu

Mission: To providemembers with relevantinformation on E.U. re-lated issues, includingE.U. funds, and to repre-sent American investors

before the Commission and the Polish govern-ment. Co-Chairs: Magdalena Burnat Mikosz, De-loitte; Jerzy Thieme.

Defense & Securitywww.amcham.com.pl/defense

Mission: To serve as a plat-form for defense industry is-sues and exchange relevantinformation. The committeecreates a networking forumand fosters a positive work-

ing relationship with the government and people ofPoland. Co-Chairs: Leda Zilinskas, Raytheon Inter-national; Paul Zalucky.

Financial Serviceswww.amcham.com.pl/financial

Mission: The FinancialServices Committee aimsto identify and promote is-sues related to and in sup-port of the financial serv-ices sector, as well as to

provide a forum for dialogue among sector profes-sionals and decision-makers in government. Co-Chairs: Andrew Hope; Adam Michon, MetLife.

Environment & Energywww.amcham.com.pl/environmental

Mission: To help membersdevelop their environmentaland renewable energy busi-ness and help learn about,identify and overcome anydifficulties connected with

environmental laws, and develop a discussion forumamong members about environmental issues andmaintain contacts with Polish authorities responsiblefor making and implementing environmental policies.Co-Chairs: Adam de Sola Pool, Jerzy Chlebowski, Mit-subishi.

For the most recent information about the work of AmCham Committees, and upcoming events: www.amcham.com.pl

AMCHAM: Guide to Committees


8/21OCTOBER 2010 AMERICAN INVESTOR 13

COVER STORY: Polands competitive edge for business

Running out

of time?

It will be a while, but the global eco-nomic crisiswhich so far has offered

more opportunities for Poland than

threatswill reach an end. NowPoland needs the determination to

create a business-friendly environmentto be able to compete with other

countries as their potential explodesin the post-crisis world.

The clock is ticking.

Thanks to the global economic crisisPoland cut its distance behind themost developed countries in termsof their attractiveness to investors, accord-ing to the Global Competitiveness Report2010/2011 issued by the World EconomicForum this year.

Poland made what may be viewed as aspectacular jump, from 46th in the previ-ous edition of the report (2009/2010) to39th in the current one. It was the secondconsecutive time that Poland made a jumpof 7 positions, something no other countryfrom Central & Eastern Europe has man-aged to achieve. This remarkable and ro-bust performance in the ranking under-lines Polands resistance to the negative ef-fects of the global economic crisis, say theauthors of the report.

The report measures countries per-formance in 111 categories, such as thelevel of public charges, including variousdifferent taxes that companies are subjectto in each countr y, through infrastructuraldevelopment, to such social aspects as thecrime rate and life expectancy.

The report reveals that when it comes tobusiness attractiveness, the largest leapPoland made since 2009 was in the cate-gory of infrastructureup over 50 posi-tions. There was nearly as great a jump forPolands financial markets. When it comesto the overall macroeconomic environment,Poland improved its 2009 standing bynearly 20 positions. Poland was the onlyEuropean economy to register positivegrowth in 2009, the authors wrote. Thecountry displays fairly even performanceacross all 12 pillars of competitiveness. No-table strengths include its large marketsize (21st) and high educational standards,in particular its high enrollment rates(18th). The financial sector is well devel-oped (32nd), and the increased confidencein the banking sector (18th) has con-tributed to Polands very good performanceover the past years.

The downsides of Polands attractive-ness to investors were not glossed over:Maintaining its improved position will ne-cessitate significant upgrading of transportinfrastructure, which lags behind interna-tional standards by a significant ma rgin,ranked 108th. The quality of roads inPoland is particularly poor. And althoughits institutional framework has improvedsignificantly this year, the business sectorremains very critical of the efficiency of thegovernment (103rd). As Poland transitionsto the innovation-driven stage of develop-ment, it will have to focus more strongly ondeveloping capacities in innovation andbusiness sophistication. Stronger clusters,more R&D orientation of companies, andintensified collaboration between universi-ties and the private sector would help thecountry to move toward a more future-ori-ented development path.

Iovveess o res?Innovativeness, or the lack thereof in drivingPolands economy forward, was on theagenda at a panel discussion devoted to bestworld practices in promoting innovativethinking in the economy, organized as part ofthe Krynica Economic Forum 2010. Thepanelists, whose discussion was facilitated byMagdalena Burnat-Mikosz, a partner at con-sulting company Deloitte, not only diagnosedthe problems but proposed solutions.

According to Prof. Micha Kleiber, presi-

dent of the Polish Academy of Sciences, therewill not be any boost in innovativeness unlessthe law encourages and rewards businessesfor developing innovative solutions and ap-plying them.

The need for change is reflected in thecultural attitude to innovation as such. Seniorcitizens tend to disregard the benefits of in-novative technology in their lives. Not onlycompanies but our society should learn howto appreciate innovativeness, Kleiber said. Idream of a snobbery for innovation. I dreamof tech-savvy people of all ages standing inlong lines to lay their hands on the newestgadgets. Kleiber added that at present, notknowing how to use a mobile phone is re-garded almost as a virtue among some sen-iors.

Another panelist, Finnish AmbassadorVesa Himanen, agreed, and mentioned someof the Finnish experiences in this respect. He

said that Finland focused so much on the im-portance of innovation in boosting the qualityof life that a civic movement emerged to sup-port innovative thinking in every aspect oflife. The Finns are still not happy abouttheir achievements, however, Himanen said.The speed with which innovative solutionsare implemented is for them too slow.

A disregard for innovation is shared byPolands government and lawmakers. Thecountry has no strategy for promoting inno-vation in the economy and it lack one centralagency to coordinate it. Polish law, in turn,does not provide room for innovative develop-ment. Bills that are passed neither addressinnovations nor support it, Kleiber said,noting that the laws are written in Poland asif innovativeness did not exist.

Kleiber noted that the system of govern-ment grants and other forms of public aid forR&D and innovation has not delivered in

Poland. No major innovation that would finda wide commercial application has emergedunder the system here. According to Kleiber,instead of grants, the government shouldoffer tax incentives that entrepreneurs cantap into when investing in the production ofinnovative products, instead of waiting forstate aid which may come many years afterthe investment process has been accom-plished.

Another panelist, David Cobb, a Deloittepartner in the U.K. and Global Leader forR&D and Government Incentives, said thatthere is no single golden rule for how to han-dle investment in innovation by the state sothat it is optimally calibrated for success.


9/21


Cobb did say, however, that there are sometools government can use to stimulate thegrowth of an innovation-based economywhich have proven effective in real life. Asystem of tax incentives aimed at stimulatingthe growth of innovativeness should paybonuses to those who invest in innovative re-search on the one hand, and on the otherhand, encourage investors to invest in theproduction of innovative products, Cobbsaid. He noted that in the U.K., a countrywith a long history of legislation aimed at en-

couraging innovation, no suit-all solution hasbeen developed. Poland, however, should bewilling to resort to such solutions that workin other countries.

According to Ambassador Himanen, theFinnish successes in implementing innova-tion into the economy were possible thanksto tight cooperation within the triangle of thestate, business and science. Himanen saidthat if a study of innovation is aimed at boost-ing work efficiency in a given sector of theeconomy, the state should support it becauseit is in the vital public interest.

Concluding the panel, all speakers agreedthat in order for Poland to enhance its busi-ness environment around an innovation-based economy, the government should re-place grants with tax incentives for investorsin innovative technologies, formulate publicprocurement to boost the innovative econ-omy, and establish one government agency in

charge of supporting the innovative economy.Poland, they said, should also implement so-lutions for boosting the innovative economydeveloped by other countries. With this, thestate should encourage tighter cooperationbetween business and academia.

te forWith a dilapidated road system (as noted bythe WEF report) and no proper laws or stateinfrastructure to support an innovative ap-proach to the economy, it seems that thedriving force behind Polands economic de-velopment is the unprecedented determina-tion of entrepreneurs in their quest for busi-ness success, whether the actual conditionssuch as regulations and practices are busi-ness-friendly or not. Deprived of a structural

base, this drive comes in waves, but so far thetide has been riding high.

A recent Employment Outlook Survey byHR specialist Manpower seems to supportthis view. It indicates that although the hiringpace is slowing, Polish employers still indi-cate confidence and forecast opportunitiesfor job seekers in the fourth quarter of 2010.

According to the current edition of thequarterly survey, 19% of Polish employers an-ticipate adding to their workforce in 4Q 2010and 8% plan to reduce their workforce, while

71% of employers predict no change. As ex-plained by Iwona Janas, country manager forManpower Poland, The Manpower Employ-ment Outlook Survey reveals a slight slow-down of the local labor market in the fourthquarter of 2010. Employers in two industrysectors in particularpublic & social andmanufacturingreport considerablystronger optimism in comparison to last year.In fact, the forecast for the public & socialsector is the most optimistic reported by em-ployers since the survey started.

Janas added that optimism among Polishemployers remains strong in comparisonwith the 17 other countries surveyed in Eu-rope.

Polish employers in all 10 industry sectorsforecast positive headcount growth in thefourth quarter of 2010. The most active hir-ing pace is anticipated in the public & socialsector, where employers report a net employ-

ment outlook of +30%. Job seekers in themanufacturing sector are expected to enjoy apositive hiring climate, with employers re-porting an outlook of +20%. Steady head-count growth is also expected in the con-struction sector, where the outlook is +11%.The most cautious hiring intentions are re-ported in the restaurants & hotels sector,where the outlook is +4%.

When compared with 4Q 2009, employersin four industry sectors report stronger hir-ing intentions. The most notable improve-ment, up 29 percentage points, is reported byemployers in the manufacturing sector. Inthe public & social sector the outlook im-proved by 20 pp. Employers in three sectorsreport weaker hiring intentions, includingthe mining & quarrying sector, where the

outlook declined by 4 pp.This optimism is confirmed by the Global

Business Outlook report on business confi-dence around the world issued by KPMG inJuly this year. Its key findings give some in-sight into why Polands businesses are soconfident: the production outlook is the mostpositive since July 2007, while net balancesfor business revenues and new orders areboth at their highest since January 2008. Thereport concludes that despite higher inputprices, profits are forecast to rise. In turn,

this reflects stronger net balances for endprices, capacity utilization and revenues.Added to this, the net employment balanceremains positive for the third straight outlookperiod.

According to Leszek Wroski, head ofKPMG Advisory in Poland, across the coun-try there seems to be an upswing in senti-ment, providing a feeling that we are headingin the right direction. Poland had a good re-cession, Wroski said, if such a thing ispossible. GDP was maintained while fortu-itous timing saw our currency devalued justin time to boost exports as the financial crisishit.

Wroski continued: That confidence canbe seen in the fact that more businesses arenow thinking about recruitment again. Thisis not businesses simply re-hiring staff theylaid off during the crisis either. Nothing re-ally happened during the crisis to prompt

massive job layoffs, and, in fact, Polish em-ployers did everything they couldandwaited as long as they couldbefore makingany redundancies. Therefore, any jobs beingcreated now are indicative of a return to agrowth agenda.

Wroski added that nonetheless a form ofnational pessimism still crept in over the pastyear or so: Manufacturing slowed down, andthere was uncertainty over the economictribulations of Germany, our key tradingpartner. That pessimism and uncertaintycombined to suppress domestic demand.Thankfully, we seem to be emerging fromthat now. Polish confidence has returned,consumers are spending, and the airports arefull of holidaying Poles again. There is awidely held belief that Germany is recover-

ing, and as our economy tends to lag behindthe German economy by six months, thatprovides further grounds for optimism.

hppy fi vesorsWhile manufacturers may look at Germany inhope of seeing the end of the economic crisisthere, companies in Poland have been eyedwith interest by financial investors, anotherreason for Polish businesses to cheer. In lightof a report on mergers and acquisitions inPoland and Central & Eastern Europe com-

piled by KPMG and Deal Watch for the firsthalf of 2010, the scale of the long-anticipatedrevival of the market took market analysts bysurprise. In 1H 2010, there were 283 majorM&A transactions, worth a total of over EUR5.1 billion. In the number of deals, year-on-year growth was 16%, and in value terms(pegged to euro) growth was 44%. In Janu-ary-June 2010, there were 869 major M&Atransactions in Central & Eastern Europe,with a value over EUR 10 billion. This meansthat Polands share in the CEE market was33% in the number of deals and 50% of theoverall value in the region.

Krzysztof Klamut, a partner and head ofthe M&A department at KPMG, said,Poland has become the leader of the M&Asector not only in Central & Eastern Europebut also in relation to the economies of West-ern Europe, where the drop of market activityin M&A has stopped but the market has not

recovered significantly yet.Jakub Siekierzyski, head of the M&A re-search department at DealWatch, noted thatthe Polish State Treasury has contributedsignificantly to the market revival by offeringshares in state-owned companies. The gov-ernment privatization program has generatedPLN 12 billion so far, out of the PLN 25 bil-lion scheduled for 2010, Siekierzyski said.

Indeed, the largest M&A transactions com-menced in 1H 2010 in Poland involved the ac-quisition of a 15% stake in energy group PGEEnergia and PGE Grnictwo i Energetyka, f orover EUR 800 million, by PGE. The second-largest deal was the sale of over a 16% stakein utility group Energa for over EUR 280 mil-lion to institutional investors. In both casesthe seller was the State Treasury.

The largest deal not involving state-ownedassets was the full acquisition of EuropolisInvest by CA Immo International for EUR272 million. The seller was Volksbank Inter-national.

Although the two utility privatizations werespectacular indeed, privatizations as such didnot dominate the market in 1H 2010 when itcomes to the type of transaction. In terms ofthe number of deals, acquisitions were themost popular, with 174 transactions worthover PLN 3 billion, which reflected 59% of

the value all transactions in which the valueswere disclosed. The acquisition of m inoritystakes was the second most popular type oftransaction, comprising nearly 80% of alltransactions in terms of qua ntity. In turn, 17deals were privatizations, and they amountedto only 1% of all M&As in terms of aggre-gated value. (The Polish State Treasury has astrong preference for privatizing by floatingshares on the Warsaw Stock Exchange, risingEUR 2.6 billion there is 1H 2010.)

When it comes to the value of individualdeals, mergers proved the most impressive,with the total value of all 10 mergers reachingnearly EUR 900 million17% of the dis-closed value of all deals.

The largest number of transactions tookplace in the construction and real estate sec-tor, with 48 transactions worth EUR 948 mil-lion in total. This figure marks a significantrise from 33 deals worth EUR 261 million in

1H 2009.The second most popular transactionalsector was industrial production, with 46deals amounting to EUR 411 million. Again,there was a significant rise from 29 transac-tions valued at EUR 139 million in 1H 2009.The third most popular sector was commu-nications, media & entertainment, with 40transactions worth a total of EUR 257 mil-lion. In 2008-2009 the sector generated 44transactions valued at EUR 188 million.

When it comes to the value of individualtransactions, the sector of energy, fuels &minerals was the undisputed leader, with thetotal value of transactions surpassing EUR1.5 billion.

According to market analysts, the resultsfor the first half of 2010 significantly sur-

passed earlier market expectations forPoland, which ranged around 10% growth fornumbers of transactions and 25-30% forgrowth by value. In fact 16% and 44% growthwas achieved, respectively.

This is good news f or investors. Accordingto Krzysztof Klamut, private equity and ven-ture capital funds had already managed togenerate EUR 1.5 billion in turnover in thefirst half of 2010, while the result for 2010 asa whole had been forecast at EUR 2.5 billion.

But in spite of the big numbers the Polish

M&A market is dominated by small transac-tions. 40% of all transactions are transac-tions below EUR 10 million, Klamut said.

Groog for seMany conclusions can be drawn from thefacts and figures describing the M&A marketin 2010. Beyond any doubt it is a sector thatis not powered by state privatizations. Itsbedrock is the private sector, mainly smalland medium-sized companies.

One conclusion, however, which may notbreak through the numbers, concerns thequalitative change in the motives for individ-uals to establish companies. While in the pastcompanies were established by entrepre-neurs who felt compelled to do so because oftheir education, work experience or familytraditions, today companies are set up by in-dividuals equipped with corporate manage-ment expertise and experience who know

how to commercialize an idea, make it feasi-ble economically in a company form, and sellit on to an investor.

According to Monika Nachya, a partner atEnterprise Investors, the largest venture cap-ital fund in Central & Eastern Europe, Moreand more often companies are set up bybusinesspeople who have found a marketniche that offers good prospects f or growthand return on investment. Those managerscreate companies that right from the begin-ning are meant to be effectively functioningbusiness ventures.

Nachya said such companies are designedand managed to achieve the growth neededto sell the company on in the mid-term orlong-term perspective. The positive aspect ofthis approach to company creation is that the

M&A: Big dealsTransactions by value in EUR million. Numbers next to the color field repre-

sent the number of transactions in the given category.

SoURCE: KPMG

M&A: Types of dealsTransactions by type. Numbers next to the color fields represent the number oftransactions in the given category.

M&A: Active sectorsNumber of transactions announced in H1 2010 by sector. Numbers next tothe color fields represent the number of transactions in given sector.

M&A: Where the money goes toValue of transactions in H1 2010 across different sectors. Numbers next to the color

fields represent the total value of all transactions in given sector, in EUR million.

Over 100Acquisition

Trade, distribution Trade, distributionServices, education, administration Services, education, administrationBanking, insurance, financial Banking, insurance, financial

Building, real estate Building, real estate

Transportation, logistics Transportation, logistics

IT, media, telecom, entertainment IT, media, telecom, entertainment

Healthcare services Healthcare services

Energy, fuels, minerals Energy, fuels, minerals

Consumer goods Consumer goods

Industrial production Industrial production

Merger

Privatization

Purchase of minority stake

In-holding org realignment

Between 50 and 100

Between 10 and 50

Below 10

Not revealed



10/21


owner of the company can divest from it atthe right time, which is when the company isapproached by an investor. In the past, theprevailing attitude of company owners was tolook for investors to provide capital necessaryto help them survive a rainy day, but other-wise the owners identification with the com-pany prevented them from even contemplat-ing a time when the company would be runby somebody else.

Nachya said that over half of all invest-ment proposals submitted to Enterprise In-

vestors for consideration are made by indi-viduals who have groomed their companiesfor sale. In her opinion, the standardizationof procedures which has taken place is an en-couraging factor. Also, more and more com-pany owners are learning to appreciate theprofessional input of managers appointed totheir boards by private equity and venturecapital investors. We no longer have to edu-cate business owners about why they shouldconsider selling their businesses, Nachyasaid.

In her view there are an increasing numberof companies who prefer to approach profes-sional investment funds instead of applyingfor European Union funds. Market knowhowis appreciating in value and is viewed asbeing just as important as cash.

a ook over e feePolands attractiveness to investors, as re-

vealed by different opinion polls and studiessuch as the Global Competitiveness Reportfrom the World Economic Forum, the Em-ployment Outlook Survey from Manpower,and the numerical analysis of the M&A mar-ket by KPMG/DealWatch, cannot be ab-sorbed in full without a look at the problemsinvestors and the business community ingeneral face in other countries. An excellentopportunity for comparison was recently of-fered by the American Chamber of Com-merce in Denmark, a country ranked 9th inthe Global Competitiveness Report2010/2011 (a slip from 5th in the previousedition).

AmCham Denmarks Business Barometeris an annual survey of AmCham membersgauging the current business climate and fu-ture trends in Denmarks international busi-ness community. These executives haveshared their practices, perceptions and ex-

pectations on the topics of foreign invest-ment climate, framework conditions for ef-fective operations, and future needs.

The most recent survey, conducted be-tween August 24 and September 13, 2010, in-dicated that overall, companies have contin-ued and will continue to invest to the samedegree or to a greater degree than previousyears. Additionally, AmCham member com-panies in Denmark increased their employeebase in 2009-2010 and plan to do so to aneven greater degree in 2011. However, analarmingly high number of companies (44%)report that they have considered or are con-sidering moving investments and jobs out ofDenmark, the report says. Furthermore,

85% of the respondents pointed to the highcost of doing business as a factor in their de-cision. Breaking this down, the most com-mon responses were cost of labor (salariesand wages) and personal taxation, which canbe linked (high taxes push wages higher).Other responses included, in order of f re-quency: VAT on services, labor laws/regula-tions, raw material/production costs, and in-ternational school capacity.

More than half of the survey respondentssaid that their companys decisions to invest

in Denmark would be negatively affectedtoday.The executives also stated their opinion

for the reasons behind this low productivitygrowth. The most frequent responses werehigh taxes, a large and underproductive pub-lic sector, education (quality and quantity),lack of vision and political initiative, shortworking hours, a shortage of talent, flexicu-rity and collective bargaining agreements,high salaries, and a lack of innovation and fi-nancing.

According to the report, It is interestingthat the vast majority feel that Denmark isopen to foreign companies. Unfortunately,the responses from the international busi-ness community indicate a reality that worksagainst this belief: 85% of survey respon-dents believe that Denmarks policies are Av-erage to Very Low in helping to attract andretain global companies.

As the report concludes, The shortage oftalent has been an issue and will continue tobe an issue into the coming years. Accordingto the Business Barometer, 96% of the busi-ness community agrees.

The authors of the report said that theLabor Union Business Council in Denmarksupports this result with numbers that fore-cast that by 2019, there will be a shortage of105,000 staff in Denmark with bachelor-leveldegrees up to doctorates.

The authors said that 97% of respondentsrated Denmark average to very poor inits ability to attract and retain this talent fromabroad. This issue is inextricably linked toinvestments flowing into Denmark, accord-ing to the report, as 44% of the companieswho have considered moving investmentsand/or jobs out of Denmark state that the in-ability to attract and shortage of highly quali-fied workers has played or will play into their

decision.

Rekg PoAt a conference launching the latest editionof Investing in Poland, a report prepared bythe weeklyWarsaw Business Journal in co-operation with the Polish Information andForeign Investment Agency, editor BlakeBerry said, In last years edition we came tothe conclusion that Poland had come to acrossroads. One year on, we can see thatPoland is on the right path.

At the Investing in Poland conference, LarsBosse from the German-Polish Chamber ofIndustry and Commerce and Judith Glinieckifrom AmCham noted that the results of sur-

veys carried out among their members indi-cate that 92% of German and 98% of Ameri-can businesses would invest in Poland again ifthey had the chance. Participants in the dis-cussion, including representatives of thelargest chambers of commerce in Poland(American, British, Dutch, French, Germanand Scandinavian) also emphasized that a sig-nificant portion of new foreign direct invest-ment in Poland is re-investment, proving thatbusinesses that have become familiar withPoland are happy to remain in the business

environment here.According to the panel, the most importantfactors in Polands investment attractivenessinclude macroeconomic stability, a relativelylow labor-costs-to-efficiency ratio, as well asaccess to E.U. funds, which allow for rapiddevelopment of infrastructure.

Peter Tr Nielsen of the ScandinavianChamber of Commerce (himself from Den-mark) said that the chamber did some re-search and found that the general impres-sion is that both trade and investments inPoland are on a good track.

Martin Oxley, CEO of the British PolishChamber of Commerce, said that Britishcompanies in Poland are expanding. Butthere are a lot of people who come to thechamber who are positively surprised aboutPoland, which means that there is a lot ofpromo work that needs to be done in the U.K.Perhaps the promo is not optimized. Also

there is a risk in it: ever ybody is saying it isabsolutely fantastic to come here, but in factwe become complacent. We tend to forgethow competitive Europe is, and Poland has alot to do in terms of actually physically gettingto that level of competitiveness.

Oxley added that making a country com-petitive is about anticipating the future andwhat future markets are going to be like.One problem is to have the right people forthe right jobs, he said. With all that callcenter investment, is it sustainable to fill itwith graduates who work in call centers forfive to ten years going forward? The experi-ence from the U.K. is that it is not.

For Oxley, another lesson from call centersin the U.K. is that it is a type of investmentthat tends to flee, because it is so cost-sensi-tive.

Another example is logistics centers. Theyare everywhere around Poland, Oxley said.

We have a few members who are in thatbusiness and are very happy. But roads are aproblem. If we cant get these lorries in andout it is going to be a problem.

The most important barriers to foreign in-vestments include Polands notoriously poorinfrastructure, its complicated, opaque taxsystem, frequent changes in law, the low qual-ity of the judiciary system, and its high levelof bureaucracy.

Lars Bosse, from the German chamber,also indicated the need to improve trainingfor blue-collar workers. If everyone in Polandwants to study at the university level, he said,we will have a problem.

Remco van der Kroft from the Nether-

lands-Polish Chamber of Commerce saidthat many local authorities are scared to talkwith businesspeople. But that is a problemon a much higher level, he said. If theDutch Prime Minister goes on a trip, awhole bunch of businesspeople travel in hiswake. If Prime Minister Tusk goes to India,not a single businessperson accompanieshim. There is an enormous fear of beingaccused of corruption. Corruption has beena big issue, and efforts have been made inPoland to fight corruption, but I think that

now things have turned the other way. Thelegal system should allow local authoritiesand national authorities to engage in directdiscussions with business.

iovo gAnother panelist at the I nvesting in Polandlaunch, Adam onowski from Pricewater-houseCoopers, said that when it comes tocompetitiveness he was not sure whetherPoland would have been able to imp rove itsstanding were it not for the aid from theEuropean Union. All E.U. countries are

going to improve their competitiveness, espe-cially vis--vis the U.S. and China,onowski said. Poland will have to fit in thedirection established and driven by the E.U.

onowski noted that Poland has a lot ofroom for improvement when it comes tomerging innovativeness with the countryscompetitive edge: With the support fromthe E.U., Poland will be able to reform theeducation system and to adjust it to businessneeds, which is not the case at the moment.He said Poland needs structural guidance

and support from the E.U.is ere beer y?onowskis remarks only show that Poland,as a member of the E.U., is tied to the unionin the pursuit of economic advantages andsustainable development. For a countrywhich needs basic help that is a good thing.For a country which aspires to catch up withthe most developed economies in the E.U.,such as the U.K., Germany and France, thismay not be the best-case scenario. Grindingforward with its economic development only

as fast as the best economies in the E.U. domay not be fast enough to cut the distance inthe foreseeable future.

The structural guidance from the E.U.which onowski mentioned may be easiersaid than done. It seems viable that alongwith adopting E.U. standards for economicgrowth, Poland needs an extra boost.

The potential of the entrepreneurial spiritremains uncharted. That was the spiritPoland put to use when it learned the mostand advanced the furthest during the global

economic slump. But that spirit may be putto even better economic advantage if Polandchooses to liberalize its economy followingthe U.S. pattern. An unf ettered entrepre-neurial spirit seems to provide a better recipefor sustained economic growth than the over-regulated business environment of the E.U.It has been a good crisis for Poland, but itwont last much longer. The next crisis maynot be so kind.


Tomasz wiok


11/21

Leaderof the pack

The Metropolitan Association ofUpper Silesia should be a role modelfor local and regional governments onhow to build value for both the com-munity and external investors

Spread over a huge area, once Polandsleading centers of heavy industry, Ka-towice and its 13 neighboring citiesseemed to be doomed under the heavy loadof social and economic problems in the mid-1990s, when heavy industry ceased to be thedriving economic force. With the help ofcentral government, the region imple-mented vast structural reforms, closed manymoney-burning coal mines and steel mills,modernized its power stations, and laid thefoundations for an ambitious programaimed at making the most densely urban-ized region of Poland an appealing place tolive for its inhabitants and an attractiveplace to invest for businesses.

zoe offesveOne of the milestones in the regions libera-tion from its dependence on heavy industrywas establishment of the Katowice SpecialEconomic Zone in 1996. This joint ventureof the State Treasury and 10 municipalitieshas so far managed to sell half of its total1,920 hectares of land to investors. Whilethe Katowice zone has drawn companiesrepresenting nearlyall types of industries(so long as they qual-ify for the benefits of

investing in a specialeconomic zone inPoland), a significantbulk of them are ac-tive in the automotiveindustry. In 2008 thezone approved 37 newinvestment projects,but only 4 in 2009.The negative impact of the world economiccrisis has subsided somewhat in 2010, andby September the zone had issued permitsfor 17 projects. Most of those projects arere-investments, said Andrzej Pasek, vicepresident of the Katowice Special EconomicZone, who was one of the speakers at the

Silesian Metropolis Investment and En-ergy Conference in Katowice in Septem-ber.

To boost the economic efficiency ofbusinesses registered there, the zoneplans to facilitate cooperation betweenfirms located in different subzones. It alsoplans to create clusters of companiesalong sector lines, such as medical tech-

nology.Syrog o goveresOne of the most challenging issues was tosynchronize cooperation between 14 dif-ferent cities, as the Polish law governingmunicipalities does not offer many solu-tions in this respect. Synchronization washighly important to Katowice, the city atthe heart of the group of surroundingcities with which it had to coordinate vari-ous types of investment projects, such asroads and public transit infrastructure.Soon it became clear to all of the citiesthat they would have to exploit the syner-gies among themselves in order to becomea magnet for major outside investors who

would create sustainable new jobs.In 2007 the 14 cities established an or-

ganization to do just that. The Metropoli-tan Association of Upper Silesia, whichcomprises 14 independent cities, is thelargest such organization in Poland. Itsboard of seven, led by Katowice Mayor

Piotr Uszok, has a say in social and busi-ness issues effecting an area inhabited by2.5 million people, home to 30 institutionsof higher learning delivering education to11% of all of Polands university-level stu-dents. The metropolitan area contributes67% of the GDP of Upper Silesia Provinceand 8.6% of the GDP of the entire coun-try, and is home to nearly 200,000 compa-nies. The associations main focus is ondeveloping growth strategies for the re-gion and tapping effectively into E.U.funds, along with international coopera-

tion and promotion.As Mayor Uszok said at the investmentconference organized in Katowice by Am-Cham Krakw, in cooperation with theMetropolitan Association and the City ofKatowice, It is important for all the citiesthat we promote our potential together.Nonetheless, Uszok said, from the per-spective of foreign investors, the region isnot approached as one, but individualcities are at the forefront.

drg o roWith all its vision of modernity and inno-vation, the region does not look back inanger at its industrial past. In fact, someof the developments of that era, such asthe high-voltage power grid, are now anasset for the region. The concentrationof the high-voltage grid in our region isunprecedented, save for the Krakw area,

Uszok said. This is an important assetwhen energy shortages and blackouts arebecoming the menace of many cities inPoland and Europe.

But for a region sitting on Europeslargest deposits of coal, the mining indus-try is still a vital part of the regional iden-tity. With three major coal mining groupsstill operating in Upper Silesia, employingthousands of people, coal and new tech-nologies for burning it are, in fact, the fu-ture. According to Krzysztof Wilgus, vicepresident of the Katowice RegionalChamber of Commerce, who spoke at theAmCham conference in September,Coal-based power generation will remainan important element of our energy mix

for some years to go.He noted that alongwith coal mines,Upper Silesia is home

to many companiesthat develop coal-min-ing machinery andequipment. They sellto coal companies allaround the world.

Wilgus added thatseveral research pro-

grams to develop more efficient and envi-ronment-friendly ways of burning coal areunderway at the Silesian University ofTechnology.

Pkg prve brsOne of the aims of the promotional

strategy for the metropolitan area is to up-date its image. This was one of the findingsof the IBM Executive Service Corps, twoteams of IBM leaders from different regionsof the world who were sent to Upper Silesiathis year to help the area diagnose problemsthat were holding back its development. Weknow what the cities want to be, saidJolanta Jaworska, CEE Government Pro-grams Executive at IBM, who was one of thespeakers at the Investment and Energy con-ference. We know their developmentstrategies. Their aspirations will come true

when they are able to solve their problems.Economic developmentmust go hand in hand withthe development of thequality of life for the entirepopulation.

IBM helped find thebest way to develop the re-gion in three spheres: cul-ture and business, func-tionality, and innovation.When it comes to culture,IBM helped Silesia pre-pare a more cohesive marketing strategy. Inthe area of urban functionality, IBM devel-oped a set of recommendations for theurban traffic control system. To boost inno-vations in the region, IBM focused on devel-oping schemes for cooperation between aca-demia, business and local government inUpper Silesia.

The project, which lasted for six weeks,was carried out by IBM on a pro bono basis.Katowice and Upper Silesia are creatingambitious plans for growth, Jaworska said.We want to be a part of this process, whichhas a strategic importance for the future ofthe region. And we were able to contributethanks to the openness of Mayor Uszok andthe entire Katowice City Hall.

Qes for qy of feApart from cooperating with the private sec-tor, Mayor Uszok is steering the cityandthe region as president of Metropolitan As-sociationto use public funds, includingfunds from the European Union, to makethe region a better place to live, includingentertainment, recreation and overall enjoy-ment.

To boost the regions standing as a goodplace to live, the Metropolitan Association

has embarked on three programs. The Sile-sian Public Services Card is an integratedpayment system that will allow cardholdersto pay for municipal services such as accessto libraries, parking, and public transit. The

project, estimated at over PLN 120million, will be open for bidders nextyear.

Another PLN 500 million is ear-marked for upgrading the public tran-sit system in the metropolitan area.Bidding for contractors starts in thesecond half of 2011.

Upper Silesia is also betting on pub-lic-private partnership ventures. Thegovernment plans to find a private in-vestor in 2011 who would receive aconcession for 24 years to operate a

solid waste collection system and waste

treatment facility. Because of the sizeof the Upper Silesia population, MayorUszok believes this is a good, sustain-able business.

Upper Silesia can already boast ofsuccessful creation of the regionsimage to the outside world. It is viewedas having the most advanced healthcare

system in Poland, and it was here thatelectronic ID cards for patients werefirst introduced. Today, thanks to itspopulation and growing affluence, theregion has become one of the most de-sirable locations for private clinics.

Katowice itself has rolled out manyinfrastructure projects aimed at im-

proving living standards. It has earmarkedPLN 300 million for modernization of themunicipal water and sewage system. Amajor urban revitalization project for thecity center, estimated at PLN 300 million,is due to start next year. The city alsoplans to add a new convention center, es-timated at EUR 50 million, next toSpodek, its landmark flying saucersports and concert arena.

One of the most original investmentprojects in Katowice is the new home forthe Polish National Radio Symphony Or-

chestra, a concert hall seating 1,800 onthe site of theold Katowicecoal mine,which wasclosed a longtime ago. A1:10 scalemodel of theconcert hallhas alreadybeen createdby Nagata

Acoustics for sound research before theactual building plan is approved.

Gliwice, one of the other cities in theMetropolitan Association, plans to investPLN 350 million in a sports area. TheCity of Bytom has also taken steps tobuild a sports arena and is now lookingfor a private partner for the venture.

Bytom will soon have a new retail and of-fice center, a new residential district, anda golf course. With such ambitious proj-ects in the pipeline, it is only a matter oftime before the region presents its new,forward-looking face. It is a face not onlyan investor could love.

The concentration of the high-voltage grid inour region is unprecedented. This is an impor-tant asset for investors when energy shortagesand blackouts are becoming the menace of manycities in Poland and Europe.

Piotr UszokKatowice Mayor

Katowice and Upper Silesia are creating ambi-tious plans for growth. We want to be a part ofthis process, which has a strategic importancefor the future of the region.

Jolanta JaworskaCEE Government Programs Executive, IBM

Public-private parnership?Katowice Mayor Piotr Uszokwith Jolanta Jaworska, CEEGovernment Programs Execu-tive at IBM

Tomasz wiok


american investor october 2010

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