1

POLISH INFORMATION AND FOREIGN INVESTMENT AGENCY

Doing business in Poland – new perspectives for German companies-

Artur Terlecki

Chief Project Manager

Foreign Investment Department

PAIiIZ S.A.

-10,0

-5,0

0,0

5,0

10,0

15,0

20,0

2004200520062007200820092010201120122013

FDI Flows to Poland 2004-2013(in billion EUR )

63,6

76,8

95,6

121,3

116,6

128,5

161,4

157,2

178,3 183,0

0,0

20,0

40,0

60,0

80,0

100,0

120,0

140,0

160,0

180,0

200,0

2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

FDI Stock in Poland 2004-2013(in billion EUR )

FDI Stock and Flow to Poland 2004-2013:EU membership as FDI accelerator

Since EU accession FDI Stock in Poland

grew 3-fold

Source: NBP 2014

FDI in Poland 2004-2013: facts an figures

EU accession became credibility guarantyfor foreign investors

EU accession became credibility guarantyfor foreign investors

FDI Stock grew over 2004-2013 period 3-fold: from 63,6 billion EUR to 183 billion EUR

FDI Stock grew over 2004-2013 period 3-fold: from 63,6 billion EUR to 183 billion EUR

Share of foreign sector in the economygrew 2-fold to almost 50%

Share of foreign sector in the economygrew 2-fold to almost 50%

EU allowed for the rapid growth of Polish companieseffectiveness, however foreign companies remainstill 2 times more effective

EU allowed for the rapid growth of Polish companieseffectiveness, however foreign companies remainstill 2 times more effective

EU Funds became an additional incientivewith a overall pool of money reaching 5% of GDP annually, enlarging funds for incientivesby at least 50% annually

EU Funds became an additional incientivewith a overall pool of money reaching 5% of GDP annually, enlarging funds for incientivesby at least 50% annually

FDI to Poland by sectors: trends

In 90’ 50% of FDIs to Poland went to industry, just 30% to services. Since beginning of new century, and especially after EU accession the trend reversed. Now ca 60% of FDI go to services, 30% to industry

It is a challenge for PAIiIZ – FDI in service sector involve 3,5 time less capital and 2 times more new jobs

In 2004 PAIiIZ supported mainly projects in automotive, electronics’ and white goods’ sectors. Since EU accession FDI in services grew in strength. Today our specialties are: still automotive sector, but also BPO and R&D.

Over the decade Most jobs were created in: electronics, logistics and BPO Most capital went to: electronics, automotive and food

sectors

FDI to Poland with PAIiIZ 2004-2013:sources of capital

Over 2004-2013 period PAIiIZ supported:

465 projects worth 11,2 billion EUR

creating 135 thousand new jobs

No of projects

Value(EUR, bn)

New jobs(thousands)

107 2 39

45 1.3 9.7

43 1.5 13.1

33 1 10.5

32 1.2 17.5Source: PAIiIZ, 2013

No of projects

Value(EUR, bn)

New jobs(thousands)

BPO 112 0,2 34.3

Automotive 85 3.3 21.3

Electronics 45 2 32.6

R&D 37 0.14 4.4

Food Sector 20 1 5.6

Source: PAIiIZ, 2013

FDI to Poland with PAIiIZ 2004-2013:investment projects by sector

Source: IMF, UNCTAD 2014

Poland’s 10 years in EU

5

7

9

11

13

15

GDP per capita (USD thousands)

0

5

10

15

20

Unemployement rate(%)

0

50

100

150

200

250

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Exports (USD bn)50

100

150

200

250

300

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

FDI Stock (USD bn)

Since EU accession:

• Poland’s per capita GDP grew 2-fold

• Umemployementrate fellfrom 19% in 2004 to 10,2% in 2013

• Polish exportsgrew 2,5 times

• FDI stock in Poland grew 3-fold

Wages

Source: Central Statistical Office, May 2014

Productivity and wages growth(avarage) Gross wages (EUR)

1 000 >

800 – 999

799 <

Warszawa1115

Bialystok758

Lublin837

Rzeszow764Krakow

816

Katowice1030

Opole826

Wroclaw968

ZielonaGora763

Kielce791

Lodz882

Poznan860

Olsztyn729

Gdansk909

Torun782

Szczecin828

0

20

40

60

80

100

120th. PLN

Productivity per capita (in PLN th.)Annual average wage in th. PLN

Minimum gross wage (year 2014): 1.680 PLN ≈ 400 EUR

Average gross wage (eneterprise sector) in March 2014: 4.017 PLN ≈ 956 EUR

Population by age classes in Poland (%)

Population by age classes CEE countries (mn)Population of CEE countries (%)

• 6th largest country in the EU

• 1st in CEE in terms of population

• >59% of population is younger than 49 years old

• 11,4 mn Poles are less than 25 years old

• Number of students 1 764 000 (2011/2012)

Source: Eurostat 2013, Central Statistical Office 2014

Demographic structure

Poland

0%10%20%30%40%50%60%70%

18-24 25-34 35-44 45-54 55-64

English German Russian French

Foreign language capabilities

Source: Hays 2014

by age group

among students

Learning of foreign languagesis obligatory in the Polisheducation system

Children learn foreignlanguages from the age of 6

English is the most popularforeign language in Poland

Language proficiency is one ofthe strongest points for Polandas a BSS hub

90.2%

43.2%

13.7% 9.6% 6.3% 3.2%0,0%

10,0%20,0%30,0%40,0%50,0%60,0%70,0%80,0%90,0%

100,0%

EnglishGerman

RussianFrench

SpanishItalian

Road infrastructure and distance to Leipzig/Munich

Net cost of 40’ container transport by truck

Source: GDDKiA, Ministry of Transport, 2014

City Leipzig Munich

Wroclaw 373 km (3,45h) 720 km (7h)

Poznan 435 km (4,50h) 830 km (8,15h)

Katowice 549 km (5,15h) 842 km (8,15h)

Krakow 626 km (6h) 919 km (9h)

Lodz 627 km (6,45h) 929 km (10,15h)

Warsaw 743 km (7,43h) 1138 km (11,15h)

Gdansk 722 km (8,40h) 1117 km (12,20h)

City Frankfurt amMain Amsterdam

Gdansk WarsawKatowice

2 150 EUR 2 450 EUR

Distance and timing (km and h)

Wrocław

AUTOMOTIVEAUTOMOTIVE

Source: PAIiIZ compilation, 2014

ELECTRONICSELECTRONICS

Gliwice, Tychy Wrocław, Jelcz Laskowice, Wałbrzych Poznań

Other Manufactures

Gorzów Wielkopolski Tczew, Kwidzyn

Other Manufactures

HOUSEHOLD APPLIANCESHOUSEHOLD APPLIANCESŁódź, Radomsko Wrocław, Kobierzyce

Other Manufactures

Wronki

Services and Manufacturing Hubs in Poland (1)

BSSBSS

Wrocław

AEROSPACEAEROSPACE

R&DR&D

Rzeszów, Mielec, Świdnik Kalisz

Other Manufactures

Kraków

Other Centers

Wrocław Warszawa

Other Centers

Source: PAIiIZ compilation, 2014

Wrocław Łódź

Services and Manufacturing Hubs in Poland (2)

German Investors in Poland

AUTOMOBILBRANCHEAUTOMOBILBRANCHE

BPO + R&DBPO + R&D

ANDERE SEKTORENANDERE SEKTOREN

RUSSIA

TURKEY

-18%

-1%

+5%

IRELAND-21%

UK

GERMANY

-8%

-47%

NETHERLANDS-22%

POLAND

ROMANIA-23%

FRANCE-12%

SPAIN+5%

TOP 10 DESTINATIONS COUNTRIES IN EUROPE IN 2012

Country Number of projects

UK 812

Germany 410

Spain 278

Russia 265

France 244

Poland 237Ireland 147

Netherlands 145

Romania 138

Turkey 133

Other 1 082

Total 3 891

Source: The FDI Report 2013

The percentage change of FDI (2011-2012)

Investment attractiveness among CEE countries (2013)

Scale: 1 - 6 (very attractive)

94% of respondents would decide to locate an investment in Poland

Poland ranked as the most appealing country in the CEE

Source: AHK, conjunctural survey, 2014

Poland is characterised by: large domestic market, well-qualified and productive workforce, stable macroeconomic situation, relatively low level of public debt comparing to Western European countries, transparent

tax and legal systems, favorable conditions both for manufacturing and services investments.

1st place in the CEE region the most competitive country in the region

1st place in the CEE in terms of number of the investment projects

3rd place in the whole Europe in terms of 13 111 jobs created (after UK and Russia)

3rd place in Europe in terms of jobs created per 1 project

Poland – a leader of growth in Europe

Source: E&Y Attractiveness Survey, 2014

Tax rates

Corporate Income Tax (CIT) 19%

Personal Income Tax (PIT) 18%, 32%

Value added tax (VAT)basic: 23%reduced: 8%, 5%export: 0%

Social Security Tax paid by employer

between:19.48% and 22.67%

Source: PAIiIZ compilation

Effective incentives system

Tax breaks

• CIT exemption in Special Economic Zone

• CIT relief for acquisition of new technology

• Real estate tax exemption

• Government grants

• Cash grants available through EU Funds

Cash support

The EU budget: present and future financial perspective2007-2013

Total: 975 bn EURPoland: 69 bn EUR (7%)

2014-2020

Total: 960 bn EURPoland: 72.9 bn EUR (7.6%)

35% 35%

35%

35%

20%

Warsaw

Warsaw:

- until 31.12.2017 – 15%

- as of 1.01.2018 – 10%

35%

35%

50%35%

50%

50%

50%

35%35%

35%

35%

35%

25%

25%

25%

Regional state aid map –Maximum intensity in years 2014-2020

* map will be valid starting from 1.07.2014

• Special Economic Zone (SEZ) is an especially dedicated area where investors receive special benefits

• Major purpose of SEZ is to support local growth

• There are 14 SEZ + subzones

• Cumulative area = 20 000 ha

• SEZ will operate at least until 2026• Permits to conduct activities in SEZ are issued by

the authorities of each SEZ• Minimum investment: EUR 100 000• Possibility of including the land selected by an

investor into SEZ

Benefits from obtaining a permit to conduct activities in SEZ:• eligibility for income tax exemption

• plot of land prepared for an investment project, available at a competitive price• free assistance in dealing with formalities relating to the investment project

Special Economic Zones

Priority sectors

Production

• automotive• electronics• aviation• biotechnology• „big investment” in other sectors

Modern services

• ICT• SSC• BPO• R&D activity (e.g. software development)

Program of support of investments of considerable importance for Polish economy

State aid in PolandGovernment support system – cash grant

32

27,5

31

1148,6

4,4

2,7

2,22,1

Agriculture Business and science

Infrastructure

Regions

Eastern Poland

Digitisation

Human capital

Other

Allocation of EU funds 2014-2020

Source: PAIiIZ own compilation, 2014

bn EUR

0

10

20

30

40

50

60

70

80

Poland Ita

lySpa

in

Roman

ia

Hunga

ry

Czech

Rep

ublic

Portug

al

German

y

France

Slovak

ia

Greece UK

72.9 bn EUR

EU Cohesion Fund (2014-2020)

Considering of investment

Long list of countries

Short list

INVESTMENT DECISION

•Marketing campaigns, investment seminars, work-shops, study tours•Cooperation with Polish Embassies

•Project Managers assistance•Location advisory•Site visits

•Assistance in obtaining financial support from the state government•Cooperation with SEZs, data base of agencies (real estate,HR, legal), business partners and suppliers

•Post-investment services•Ombudsman for foreign investors

Long-term investment process!

Agency’s offer –full spectrum of business location advisory

As of (mid) May 2014, PAIIIZ is assisting in 152 potential FDI projects:

• Total value of investment: EUR 3.34 bn• Total number of new workplaces: 31.7 thous.

Active projects serviced by PAIiIZ (May 2014)

Main sectors: Major countries – investors:BSS + ICT (36)Automotive (30)

R&D (11) Aviation (10)

USA (39)Germany (29)

Great Britain (10)France, Japan (9)

Why Poland – Summary

Availability of skilled human resources

Economic and political stability

Strategic location – gateway to the EU

Effective incentives system

Thank you for your attention

00-585 Warszawa, ul. Bagatela 12tel. (+48 22) 334 98 00, fax (+48 22) 334 99 99

e-mail: post@paiz.gov.pl