Andrzej Stec: According to Financial Times, in 2016, Poland was one of the top European destinations in terms of the value of foreign direct investment. The 74% growth, to $9.9 billion, is particularly impressive. How does Poland attract foreign investors? What are our main assets? Cheap labor, or maybe something else?
Mateusz Morawiecki: Financial Times’ ranking and Poland’s place in the ranking are the best proofs that the change in the economic model proposed by the government 18 months ago as a part of the Responsible Development Plan, delivers better and better results.
That’s why we started to implement the new social and economic policy which, on one hand, fixes the mistakes the previous transformation made, and - on the other hand – allows us to take active part in the industrial revolution 4.0. Under the Polish Development Fund’s program and in line with the global benchmarks, we have consolidated dispersed development institutions; we have adopted new evaluation criteria for foreign investment flowing into Poland. We have also stopped talking about innovations, but instead created specific tools with positive impact on truly innovative economy. And because of that, we have stopped being just cheap labor supplier. Poles have solid – sometimes very rare – competencies that might appeal to the investors from IT, automotive, aircraft, household suppliers, financial, R&D and business services industries. I am sure the investors appreciate the improved transparency of the public tender law, successful fight against unemployment and economic crime as well as better conditions for research and development.
Has Deputy Prime Minister Morawiecki played a role in the outcome?
For sure, the steps taken by our government serve Poland’s economy very well. I will be totally honest – when I see today’s results in fighting until-recently-unsanctioned tax and VAT criminals, the more clear I notice to what extend the previous state’s power was purely theoretical. I see huge potential in Polish entrepreneurship that expects from the state a kind of azimuth - a long-term development strategy. And effective and responsible state is a strong signal both for domestic and serious foreign investors. The fact that today key financial and The upward revision of macroeconomic forecasts for Poland by European institutions is not a result of some economic boom in Europe, because there is no boom, but stems from everything what is going on in our economy.
Because of these upwardly revised economic forecasts, do you hope for even faster inflow of foreign investments to Poland?
Apart from how much of the capital flows into Poland, equally important is what accompanies the inflow. Such tools, like refreshed activity of the Special Economic Zones or a program to support investments of key importance for the economy, allow to attract to Poland the investments, which, through new technologies, R&D centers and unique products will not compete with Polish businesses, but will take domestic subcontractors to the higher level and will create high quality jobs. LG Chem, a modern electric car batteries plant, Mercedes and Toyota engine plants, Rolls-Royce aircraft engine plant as well as many other greenfield investments are the best examples.
What kind of investments does Poland try to woo right now?
The re-industrialization strategy assumes consolidation in some selected sectors. The industries with high value added, where Poland’s competencies are already high, and their importance for global economy will increase. These are, for instance, air and space industry, transport means manufacturing, high quality electronics. We want to use Industry 4.0 trends in order to increase Polish companies’ innovation in modern industries, integrate industrial manufacturing with the use of specialized IT technologies. At present, we are trying to attract investors from advanced technology and service sectors.
On the other hand, a research among foreign companies already present in Poland shows that a majority of them is afraid of political risk in our country, especially violent, sometimes hastily launched legislative changes that make running their businesses more difficult. What would you say? Has political life been more quiet, had the legal changes been launched with due diligence, maybe the economic growth would be even faster?
Poland has a stable government, stable parliamentary majority and the best citizen and entrepreneur sentiment regarding their financial situation and development prospects. Most Western countries could envy Poland such an accumulation of optimism and stability. One should also understand the reasons for the legal changes. When I think about the Business Constitution or the 100 changes in the business package, I feel there is no time to loose. The changes should have been launched ten years ago. We see the new, better and more consistent legal architecture for business activity in Poland emerging in a front of us. In many cases the solutions we implement make whole areas of running economic activity more civilized. The legal certainty clause, the presumption of entrepreneur’s integrity, the principle that “what’s not legally prohibited is allowed” – yes, all of them are legal changes, but changes that introduce into relations between a company and administration Western regulations while eliminating Eastern ones.
When talking to so many foreign investors, do you come across questions and concerns related to unpredictability of Polish policy?
Serious and large foreign investors are rather immune to the opposition’s rhetoric, because they know how democracy works. The fact that Poland’s investment position gets better and better is the best example; it proves that we have become one of Brexit’s beneficiaries – those who had invested in the UK, when looking for new headquarters for their businesses very often choose Poland. This way we have already attracted investments that today provide between 30,000 to 40,000 highly paid jobs for Polish specialists. And the exodus from London to Poland will continue.
Broadly speaking, the investment trends in Europe as a whole are negative. In 2016, the total investment value declined by about 10%. What one has to do to encourage companies to invest more?
The question shows European context of the problem. The fall in foreign investment in Europe for another year in a row mainly results from uncertainty caused by tensions within the EU as well as unsolved structural problems of many economies, especially Southern ones. Against this background, Poland looks really good. We are one of the most dynamic countries in the EU. The fact is supported by the most recent data released on Friday: according to Eurostat, the dynamics of Poland’s industrial output is three times higher than the EU average. And, according to GUS (Poland’s statistical office), in the first quarter Poland’s exports sales rose by almost 10%. I am not concerned about significant, event high domestic investment growth this year and beyond. This is not only a question of a very good contracting of the EU funds, but also implementation of incentives for domestic businesses. The main goal of the government’s Strategy for Responsible Development is to increase the investment spending as a GDP share to over 25% in 2025. Structural policy activities aimed at improving the investment climate for domestic and foreign investors, stable macroeconomic and legal environment, capital market development and strengthening will make this ambitious goal achievable.