Investment Opportunities Poland Investment Opportunities www.budapest.trade.gov.pl

Poland – key facts Territory: 312 700 km2 – 6th place in the EU Population: 38.1 m. – 6th place in the EU Currency: PLN (1 EUR ~ 4.19 PLN) GDP in 2011: 1 525 bn PLN (ca. 370 bn. EUR ~4.12 EUR/PLN) Membership: EU, NATO, OECD, WTO, Schengen Zone

Real GDP changes in 2011 FI 2,8% SE 3,7% 2009 Poland was the only economy in the EU with positive growth 2010 Poland was the third fastest growing economy in the EU 2011 Polish economy was growing twice faster than EU average 2012 Polish growth reached 1,9% EU average is -0,3% (Europ. Commision) NO 1,2% EE 8,3% LV 5,5% DK 1,1% LT 5,9% IR 1,4% PL +4,3%* UK 0,9% NL 1,0% DE 3,0% BE 1,8% CZ 1,9% SK 3,2% FR 1,7% AT 2,7% HU 1,6% RO 2,2% IT 0,4% Opracowanie Lukasz Lesniewski, 4.04.2011 rok BG 1,7% PT -1,6% ES 0,4% TR 8,5% GR -7,1% Source: Eurostat.

Polish GDP growth

Dynamic of growth of Polish contruction industry

A lengyel külkereskedelmi forgalom 2008-ban 258. 7 milliárd EURO volt A lengyel külkereskedelmi forgalom 2008-ban 258.7 milliárd EURO volt. Gazdaságának nagysága és közelsége miatt a szomszédos Németország lett Lengyelország legfontosabb kereskedelmi partnere.

European Commission Economic Forecast Autumn 2012 Real GDP growth (%) 2012 2013 2014 EU27 -0,3 0,4 1,6 Eurozone -0,4 0,1 1,4 Germany 0,8 2,0 Poland 1,9 1,8 2,6 Czech Republic -1,3 Slovak Republic 3,0 Hungary 0,3 1,3 Bulgaria Romania 2,2 2,7 Previous growth expectations were reduced, but Poland still maintains relatively fast pace of economic growth Source: European Commission, November 2012.

Unemployment rate in 2012 Unemployment in EU27: 10.7% Eurozone: 11.8%, Poland: 10.6% Source: Eurostat, November 2012 or latest available data.

Transparency International: Poland has the lowest corruption among CEE countries Index value (higher score = less corruption). Numbers in brackets indicate position in ranking of 176 countries Source: Transparency International, 2012 Corruption Perceptions Index

Main advantages of Poland Stable economic situation Market growth Size of internal market Access to regional markets Cooperation with suppliers and business System of investment incentives Access to the regional market was the third most important criterion, mentioned by 10% of the companies. It was cited as especially important for locating in countries that could provide export bases for sales to large markets, such as Poland as a base for the markets of Western Europe. In order to complement its analysis of FDI trends in its annual World Investment Reports, UNCTAD conducts an annual survey of a sample of company executives selected among the largest non-financial transnational corporations (TNCs) Poland is among 15 most attractive investment locations in the world Effectiveness in utilizing FDI appraised as “above expectations” Source: UNCTAD, World Investment Prospects Survey 2009-2011, World Investment Report 2012. 10

EY European Attractiveness Survey Poland – the 2nd most attractive country in Europe for FDI in the next 3 years

Poland in Financial Times FDI quality in industrial processing sector Poland– 3rd place in the World, 1st in Europe Source: Financial Times/ FDI Intelligence.

One organisation may be wrong, but a few of them must be right 6th place globally in most attractive FDI destinations ranking UNCTAD 3rd place globally in quality of processing industry Financial Times 2nd place in Europe in a group of the the most attractive countries in the next 3 years Ernst & Young One organisation may be wrong, but a few of them must be right

Poland is one of the fastest developing countries: 5th in the World, 1st in Europe. Source: The Economist 2011.

3rd location worldwide for business services Poland is on the 3rd place worldwide on the shortlist destinations of companies searching for the best location for financial, accounting advisory centers. Source: The Hackett Group, April, 2012.

Strenghts: Image (VII) Source: CB Richard Ellis, September 2011.

Warsaw in the top of the European business friendly institutions Place City Country 1 London United Kingdom 2 Moscow Russia 3 Brussels Belgium 4 Warsaw Poland 5 Prague Czech Republic 6 Paris France 7 Copenhagen Denmark 8 Stockholm Sweden Source: European Cities and Regions of the Future 2012/13, fDi Intelligence

Top 10 region of the CEE region in terms of investment attractiveness Place City Country 1 Małopolska Province Poland 2 Opolskie Province 3 Central Bohemian Region Czech R. 4 Plzeň Region Czechy R. 5 Pardubice Region 6 Katowice urban area 7 Zaporizhia Oblast Ukraine 8 Stara Zagora Province Bulgaria 9 Tuapsinsky District Russia 10 Wielkopolskie Province Źródło: European Cities and Regions of the Future 2012/13, fDi Intelligence

Top 10 cities in the CEE region in terms of FDI attractiveness Place City Country 1 Katowice Poland 2 Kraków 3 Lublin 4 Lwów Ukraine 5 Brno Czech Republic 6 Warszawa 7 Ostrawa 8 Poznań 9 Cheb 10 Moskwa Russia Źródło: European Cities and Regions of the Future 2012/13, fDi Intelligence

Top 100 Destinations for Outsourcing Kraków: first in Eastern Europe, second in Europe Place City Country … 9 Dublin Ireland 10 Kraków Poland 17 Praque Czech Republic Source: Tholons Top 100 Outsourcing Destinations, January 2013

What have we reached? Examples Transportation 779 km built/reconstructed expressways 4 236 km built/reconstructed national and local roads 635 km built/reconstructed railways Ecology 13 000 km built/reconstructed sewerage, 5 700 km built/reconstructed water supply pipelines 275 built/reconstructed city water pipelines 1 729 built/reconstructed home wastewater treatment plants Development of human capital 2,7 mln people (incl. 1,6 mln women) has received supprot from ESF Entrepreneurship and innovations 2 799 of SME received support for new implemented investments 17 science parks have received support

Highway and expressway in Poland

Łódź region and its highway and expressway net

Students in given EU countries Human Resources Main university centres Students in given EU countries Tricity Szczecin Warsaw Poznan Lodz Wroclaw Cracow 20 million of talented young people, who speak foreign languages 2 mln students, over 400 000 graduates every year 87% of students speak foreign languages 50% of population is younger than 35 yrs. (in the group between 20 and 29 y.o. 1/3 studies) there is 460 of higher education institutions in Poland Źródło: EIU, Eurostat.

Strenghts: Human Resources Foreign language capability by age groups Language proficiency is one of the strongest points for Poland as a BPO center Children learn foreign languages from the age of 6 Source: CBOS Survey Foreign language capability among students English is the most popular foreign language in Poland Learning of foreign languages is obligatory in the Polish education system Source: Randstad.

Strenghts: Size of the market Markets served: Internal market of 38 mn people Unlimited access to the EU market Strong relations with CIS and Balkan states radius 1000 km 250 mln people Stable economy: GDP growth in Poland 3.9% 4.3% in 2011 Main growth factors: domestic demand and foreign trade radius 2000 km 550 mln people

State aid CIT exemption in Special Economic Zone only available in Special Economic Zone (SEZ) II. Government grants through individual negotiations individually approved and granted by the Ministry of the Economy based on the Council of Ministers’ Resolution III. Real estate tax exemption subject to negotiation with the local authorities only in case if the investor is the owner of the building (provided by the Commune Council) IV. Cash grants available through EU Funds subject to negotiation with different managing institutions depending on the investment project key parameters All above presented instruments can be combined together however the total amount of state aid cannot exceed the maximum aid intensity

Special Economic Zones 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 + many subzones Cumulative area = 20 000 hectares SEZ will operate at least until 2020 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 – a form of regional aid plot of land prepared for an investment project, available at a competitive price free assistance in dealing with formalities relating to the investment project

Tax rates Corporate Income Tax (CIT) rate: 19% Personal Income Tax (PIT) rates: 18% & 32% Value added tax (VAT) basic rate : 23% reduced rates : 8%, 5% export rate : 0% Social Security Tax paid by employer between 17.48% and 20.41% 30

FDI Investment in Poland Reinvested profits constituted 2/3 of FDI flows; 85% of FDI inflow comes from the EU, main countries are Luxemburg, Germany, Italy. At the end of 2011 FDI stock value amounted to USD 198 billion. 1990-’95: Vast internal market e.g. shopping malls, privatization ‘95-2000: Significant labour force stock, low production costs e.g. electronics, automotive >2000: Favorable quality/cost ratio e.g. outsourcing centers (BPO), infrastructure Next stage: top quality advantages... e.g. R&D centers Source: PAIiIZ, NBP 2013. Market seeking Resorce seeking Strategic capabilities

Effective incentive system including EU-Funding Why Poland? Strategic location – gateway to the EU Economic and political stability Availability of skilled human resources Effective incentive system including EU-Funding 32

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