Industry and consumers calling for a reduction in bureaucracy

– Leasing is often seen as a litmus test for the economy due to its customer base, mainly small entrepreneurs who tend to respond more rapidly to economic changes, said Monika Constant, president of the Polish Leasing Association (ZPL), during the discussion on ‘Economy and Climate: Challenges in Financing SMEs with a Focus on the Leasing Sector’. She noted that the industry’s financial performance, with double-digit growth, reflects the strong state of the Polish economy and offers optimism for future investments.

The debate was held at the 33rd Economic Forum in Karpacz. The event was also attended by of dr hab. Dorota Niedziółka, SGH Professor; Tomasz Bogus, President of PKO Leasing; Paweł Bojko, Vice President of the European Leasing Fund; and Ryszard Petru, MP and Head of the Parliamentary Committee on Economy and Development.

According to ZPL’s figures, the industry financed movable and immovable assets totalling PLN 54.2 billion in the first half of this year, marking a 13.5% increase compared to the previous year. The most significant growth was observed in contracts for light vehicles, which surged by 32% (PLN 29.7 billion). Machinery and equipment saw a 5% rise, reaching PLN 12.6 billion, while financing for other movables amounted to PLN 1.98 billion.

Paweł Bojko observed that small companies often act impulsively. They seize opportunities swiftly and tend to anticipate economic shifts ahead of larger firms, making them quicker to detect downturns.

He cited the construction industry as an example, noting that while it is gradually recovering, SMEs have already begun exploring financing opportunities for construction equipment. According to the Vice President of the EFL Group, once the initial interest from small companies wanes, larger firms will start to respond to market changes.

The panellists discussed the necessary changes to make the industry more responsive to market needs and to proactively shape them. They identified several key areas for improvement, including internal adjustments such as adopting new strategies and asset forms. They also emphasized the critical role of regulations, which can either foster or hinder entrepreneurial growth and, consequently, economic development.

Monika Constant recalled the decline in agricultural financing earlier this year, noting: – The reduction in funding for agricultural machinery stemmed from recent legal changes, which reclassified farmers as consumers. Legislative amendments were necessary. She also expressed concern that frequent changes in leasing regulations, coupled with the creation and abrupt discontinuation of government subsidy programs, undermine confidence in the industry.

However, the issue of bureaucracy is far more pressing. The leasing industry has long advocated for a shift from mandatory written procedures to digital alternatives. They believe that implementing e-registration for vehicles and fully digitizing the invoicing system would significantly streamline operations. While some of these measures were included in the government’s initial deregulation package, others await further proposed packages aimed at simplifying the legal framework.

Ryszard Petru advocates for digitalization, stating that any move towards digitalization is beneficial as it simplifies processes, making tasks easier and faster to accomplish. He believes that the industry’s push for digitization is not contentious and that deregulation is essential.

Leasing should be straightforward and transparent, particularly when convincing businesses of the benefits of alternative financing options. According to the politician and economist, some companies still hold outdated views from the post-PRL era, believing that credit is inherently bad. The politician and economist argued that using one’s own capital for investments is inefficient, as personal funds are often the most costly.

He quickly noted, however, that macroeconomic conditions also play a crucial role in funding. In Poland, high inflation, elevated interest rates, a substantial deficit, and an overvalued zloty deter companies from seeking external financing, with some investments currently deemed unprofitable. Ryszard Petru further suggested that the leasing industry should explore ways to shift its focus from being primarily associated with car sales to becoming a driver of innovation.

The debate participants recognized the need for change.

Tomasz Bogus observed that leasing companies are exploring avenues for greater efficiency. He pointed out that digitalization, the allocation of funds under the National Recovery Plan, and evolving business needs are driving a shift in the business model – from asset financing to asset management services.

He highlighted that businesses are increasingly favouring leasing over ownership, a trend evident in both vehicle fleets – cars and trucks – and machinery. For leasing companies, this shift means they must offer more than just financing; they also need to provide maintenance, insurance, and replacement equipment during breakdowns. – In the past five years, the rental service in heavy transport has surged from 19% to 30%, noted the President of PKO Leasing.

Prof. Dorota Niedziółka emphasized the importance of companies taking responsibility for the fate of machinery and equipment once the contract ends.

– The responsibility for expanding offerings falls on those who lease. While the increased value of electric car contracts boosts our commitment to electromobility, we also need to consider what happens to these vehicles and solar panels when the contracts end. Additionally, there’s growing discussion about the true environmental impact of electric cars, the expert explained.

The economist views these as further challenges the industry must tackle.