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Poland regained its independence in 1918 only to be overrun by Germany and the Soviet Union in World War II. It became a Soviet satellite country following the war, but one that was comparatively tolerant and progressive. Labour turmoil in 1980 led to the formation of the independent trade union "Solidarity" that over time became a political force and by 1990 had swept parliamentary elections and the presidency. A "shock therapy" program during the early 1990s enabled the country to transform its economy into one of the most robust in Central Europe, boosting hopes for acceptance to the EU. Poland joined the NATO alliance in 1999. 

Update No: 067 - (19/11/02)

Poland is the key country in Central Europe and in the accession process for its various ex-communist countries to join the EU. It has a population of almost 40m and was the prime mover in the 1980s in bringing down communism, along with the import of a Polish Pope.

Economy in trouble; but hopes abound
The Polish economy has been in trouble in the last few years. In the 1990s its GDP grew by five per cent or more annually. But in the 2000s growth has slowed down, GDP edging up by 1.5% over the last twelve months.
Yet, according to the latest statistics, GDP is now growing again. Indeed industrial production is rising by 6.7% on an annual basis. GDP growth for 2002 could yet be corrected upwards to 4%.
This is good news for the ex-communists now in government under Premier Leszek Miller, who cannot really claim responsibility for it. The previous government became so unpopular as a result of the economic woes that the leading party in the coalition, Solidarity, was eliminated entirely, failing to reach the 5% threshold required for parliamentary representation. A sign of their possible comeback from the grave is that the powerful mayoralty of Warsaw has gone to a Solidarity former minister with over 70% of the vote, and with achieving success in many key municipal elections in early November.

The EU beckons
Everyone's thoughts are turning to the EU, which Poland is billed to enter in 2004, along with other 'first wave' states. The Poles are bargaining hard with Brussels, aware that it is inconceivable for historical reasons that they are left out.
The extraordinary deal between Schroeder and Chirac, behind the back of Tony Blair, to block any reform of the Common Agricultural Policy (CAP) until 2009, while capping annual CAP subsides at Euro 50bn in the interim, would seem to be directed against the new entrants. Their subsidies are to be restricted to 25% of those of existing members for ten years. But CAP subsidies have a way of growing by larger than planned amounts. By 2009 neither Schroeder nor Chirac are likely to be in power, as both well know. 'Après moi la deluge' could be their joint motto.
Within a decade Poland is likely to be the third arm of a troika with Germany and France, given that the UK, with its devoted pro - US policies, is now deeply unpopular in Europe. The Warsaw-Berlin-Paris axis will be likely to come to the fore, already foreshadowed by regular annual meetings of the leaders of the three countries. 

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Toyota plan to build diesel engine factory

Toyota Motor Corp. has plans to build a diesel engine factory in southwestern Poland in a move slated to bring much-needed foreign investment to one of the country's most depressed regions. The US$161m venture will begin production of engines in early 2005, Toyota's Managing Director, Tokuichi Uranishi, said at a recent news conference. He noted that together with a gearbox factory in nearby Walbrzych, which began production in April, the new plant will comprise the Japanese giant's largest component manufacturing facility in Europe, AP reported. Polish officials eagerly approved Toyota's decision to expand within Poland and create some 350 new jobs.

Poland to make itself attractive to French PSA Peugeot Citroen

PSA Peugeot Citroen has commenced its search for a suitable site among central European countries to set up a new 700m Euro car plant - with Poland considered as a potential location, Polish Deputy Economy Minister, Ewa Freyberg, said recently. The plant will have a minimum capacity of 300,000 units annually, the French carmaker said. According to Bluebull, the location will be decided on early next year. In 2001, together with Toyota, PSA chose the Czech Republic over Poland as a location for a new car plant, dealing a bitter blow to local hopes of bigger investment and the jobs that would come with it.
However, Poland is now making a concerted effort to improve its competitiveness as an investment location and rebuild its position among foreign investors, Economy Minister Jacek Piechota explained. "We count on positive decisions of various foreign investors and there are many talks underway," he noted. 

Rover 45 car production to be moved to Poland from Great Britain

The Rover car-maker is to move the production of the Rover 45 and one of the MG models from Great Britain to Poland. The cars will be sold in Rover outlets around the world, MG Rover Deputy Chief Executive Officer Nick Stephenson said during a press conference on 6th November, PAP News Agency has reported..
Stephenson said Rover wants to reach an agreement with the Polish side on its investment in the Warsaw car factory by the end of the year.
According to his estimates production may reach some 100,000 cars.
Rover is to continue the production of Daewoo Matis and Daewoo Lanos. Future plans speak of the production of the Rover 25 MG ZA model.

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Polish premier praises air engine plant privatisation

Prime Minister Leszek Miller has said that the sale of WSK- Rzeszow aeroplane engines plant to the US "Pratt Whitney" company was a good example of privatisation, PAP News Agency has reported. On 5th November, Miller visited the privatised plant. "Some Poles believe that privatisation is something unclean, that it is tantamount to the selling out of the property or the deterioration of conditions for the workforce. Meanwhile, the Rzeszow privatisation proved that it might be different. The plant has been modernized and permanent jobs have been created," the prime minister said. "Let this privatisation be an example and an encouragement to others,"
Miller stressed after visiting a few modernized plant divisions.
On 11th March, "Pratt Whitney" bought 85 per cent of the shares in WSK-Rzeszow for US$70m. Fifteen per cent of the shares were taken over by the workforce. The investor plans to assign a successive US$70m for investments.
The firm employs almost 5,000 people who have been given a six-year job guarantee. The average pay amounts to 115-120 per cent of the average national pay. In 2001 sales value totalled 314m zlotys (US$78.5m). The employer created opportunities for more than 100 employees to start university studies and for 1,000 others to attend English language courses.
Eighty per cent of production is assigned for export, 40 per cent of which is shipped to Canada and the United States.
The Rzeszow factory is one of the most modern enterprises in Poland.

Malaysia interested in Polish helicopters, Polish embassy official says 

Poland has a good chance to sell 48 tanks to Malaysia in a US$400m deal, Polish commercial attaché in Malaysia Andrzej Gerhardt told PAP News Agency 28th October.
"The Malaysians are also interested in our Sokol helicopters, which have a good reputation here," Gerhardt added.
Also planned is cooperation in Sokol assemblies with Malaysian firms. In future Poland may also cooperate with other industries in Malaysia.
To date Poland's exports to Malaysia mainly included machines, electric motors and railway tracks, imports from Malaysia ranging from rubber and palm oil to electronics.

Gripen plane offer may include credit line

Sweden's and Britain's bid to sell Poland their jointly-produced Gripen fighters may include a credit line to finance the purchase backed by both countries' governments, the Swedish defence minister's aide Kent Harskog said on 30th October in Warsaw, PAP News Agency has reported.
"We can offer a long-term credit line covering all structural costs and with repayment starting after the planes' delivery. Its conditions will be better than any commercial bank's", Harskog told members of the Polish Sejm's defence committee. He refused to discuss further details of the loan explaining that the credit packet was still in preparation.
The credit offer came in response to a similar proposal by the US, who want to sell Poland F-16 planes.

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HSBC tipped as BRE merge talk hots up

Global banking giant, HSBC, is tipped by some market watchers as one of the potential bidders circling BRE Bank, which is at the centre of increasing takeover and merger speculation while its German strategic investor, Commerzbank, beside by troubles in its domestic market, ponders its future presence in Poland.
HSBC - Hong Kong Shanghai Banking Corporation - originally exerted most of its leverage in Europe in the United Kingdom, after acquiring a large share of the market by purchasing the former Midland Bank in 1992. It is now active in France, the USA, Brazil, Argentina, Switzerland and Luxembourg, with 7,000 offices worldwide in 81 countries and has global market listings.
The bank has a policy of "balanced growth" in both developed economies and emerging markets. Warsaw analysts believe BRE could prove tempting bait at a bargain price as the banking sector approaches a new round of consolidation.
HSBC went on the acquisition trail early in 1960s, at first in Asian markets neighbouring the then British colony. In 2000, CCF - Credit Commercial de France - became the bank's first major foothold in the Eurozone.
Merger talk also focused on other operations, including France's Societe Generale, Citibank, Deutsche Bank - which is specifically targeting Poland for expansion - and BPH PBK. A source inside BRE said it could be "just the bank for an investor who so far has a low exposure to capital market operations here."

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Defence ministry extends deadline for armoured carrier tender

The tender for an armoured transporter contract for the Polish army will be prolonged by one week to 12th November, PAP News Agency reported, Defence Minister Jerzy Szmajdzinski announced 4th November.
"We decided to make things easier for the bidders," Szmajdzinski told reporters. He refused to say which of the tenderers had pressed for a new deadline.
The original tender deadline was set at 5th November. Bidding for the contract are Mowag from Switzerland with its 8-wheeler Piranha III, Austria's Steyr (Pandur) and Patria from Finland (AMV).
In all Poland plans to buy 1,000 transporters for a total US$1bn.

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Small refinery sets sights on major investment plans

Rafineris Czechowice (RCZ) wants to spend US$200m on the erection of a new petrochemical complex that would be completed by the end of 2005. The venture also envisages transformation of the small oil refinery, based in southern Poland with a capacity of 500-600 tonnes annually, into an important producer of chemical products. The development plan, proposed by Lurgi Bipronaft, which belongs to Lurgi Oel Gas Chemic, a leading global firm that designs chemical plants, comprises the construction of a PET facility for producing petrochemicals. 
According to Bluebull News Agency, RCZ President, Henryk males, noted that while talks have already been held with several potential foreign investors, nothing concrete has arisen yet. Males said there would be no problems in finding the investment capital, but noted that the names of potential creditors and investors are confidential. State energy sector privatisation agency Nafta Polska, remains the dominant shareholder with a 75 percent stake in RCZ, which over the past two years has undergone deep restructuring. 

PGNiG focusing on 2004 IPO to reduce debt

A government committee has announced that 49 per cent of the shares in Polish Oil and Gas (PGNiG) are to be listed on the Warsaw Stock Exchange in 2004. The company sees the IPO as a way to reduce debt, which at the end of last year amounted to 162.6m zlotys, down from 415.6m zlotys the previous year. By the end of 2002, 23 gas sector company owned by PGNiG will be transformed into six distribution companies that will deal with retails sales and the development of medium and low gas pressure gas networks, Bluebull reported.
This forms part of a governmental strategy to increase sufficient gas supplies to some 200 towns and cities. The oil and gas concern is now focusing efforts on doubling oil production and as a result has not made any moves related to analytical work on a tie-up with the Gdansk Refinery or Petrobaltic.

After Stoen fears mount over G-8 privatisation

Power sector observers began to fret recently that the planned sale of a stake in the G-8 group of power distribution companies may be hit by the political backwash from the Stoen affair. It is already on hold until 2003, the Warsaw Business Journal has reported.
The ink is drying on an 85% stake in Warsw energy distributor Stoen to German firm, RWE Plus for €370m. But the Catholic League and the Lepper faction in the Sejm are opposed to more sales in the power sector, and support from the SLD's minority coalition partner, the PSL, may be uncertain. Key members of the Peasant Party caucus are complaining that the sale of such a "jewel in the crown" breached an informal agreement with the SLD.
Warsaw power sector analysts say the political ructions around Stoen are probably a source of private satisfaction to Treasury Minister, Wieslaw Kaczmarek.
"Kaczmarek wants to postpone and delay further privatisation as much as possible," said Arkadiusz Wicik, an analyst at Fitch Ratings. 
Wicik said progress on restructuring and privatising the energy sector was in any case more or less becalmed, with no sign of the promised policy blueprint emerging from the long-running joint discussions between the Economy and Treasury Ministries.
"The have a different approach from each other. It is not clear who is driving the strategy," he said. "But after the elections, it is possible things might calm down and some progress could be made with G-8. But it will probably be a very long process to go through."

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Wroclaw to spend 600m zlotys on water, waste management

Wroclaw has plans to spend more than 600m zlotys on the development of the city infrastructure by 2006. The investments, PMR reported, will be mainly realised through the ISPA programme, which covers two projects: improvement of water quality and municipal waste management. The ISPA programme will donate around 190m zlotys, with other resources coming from the municipal budget and loans from the European Bank for Reconstruction and Development.

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Economy Ministry report shows growth in exports to Russia 

Poland's export to Russia grew by 28.5 per cent in the first eight months of the year compared to the same period of 2001, according to data released by the Economy Ministry on 28th October, PAP News Agency has reported.
According to the ministry, Polish companies will export to Russia goods worth US$1.4bn. This will be 65 per cent of the value of export before the Russian crisis when in 1997 Poland sold to Russia goods worth US$2.2bn.
Analysts say the growth is an effect of increased demand in Russia for imported products as well as broader offer of Polish exporters.
Due to the fall of the average prices of oil and natural gas Poland managed to reduce the total value of imports from that direction. Its value fell by US$321m or 10.9 per cent during the first eight months of 2002 compared to 2001.
Poland's 2001 trade deficit fell to US$3.4bn from US$3.8bn in 2000. The ministry forecasts that Poland will close this year with a deficit reaching US$2.7bn.
This year, Poland increased its export of all types of transportation means and spare parts, machines and mechanical equipment, farm products, paper and paper products as well as products of the steel and chemical industries.

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Malta interested in boosting cooperation with Poland in shipbuilding, tourism 

Malta is interested in boosting cooperation with Poland in tourism and shipbuilding, it was stated during the meeting of Maltese President Guido de Marco and that country's delegation with Polish entrepreneurs. The president and the delegation were the guests of honour at the general meeting of the Union of Polish Industry, Commerce and Finances at the Polish Chamber of Commerce, PAP News Agency has reported.
The Maltese delegation including the country's Economic Services Minister Josef Bonnici presented a report on Malta's economic situation to Polish businessmen as well as the cooperation offer.
According to the Economy Ministry, in 2001 Poland recorded a US$2.6m deficit in turnover with Malta. Trade turnover amounted to US$45.6m with export amounting to US$21.5m and imports accounting for US$24.1m.

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Foreign investment totals US$3.23bn in H1

In the first six months of this year, foreign direct investment (FDI) inflows to Poland totalled US$3.23bn against US$3.26bn a year earlier. According to the Polish Foreign Investment Agency (PAIZ), the first half total boosted the total amount of FDI in Poland to US$61.6bn since political and economic transformations.
"The figures indicate that Central and European Europe remains the most attractive place for investors, particularly in light of approaching integration with the EU, and Poland is the main receiver of FDI in this region. 
Poland receives US$3 out of every US$10 invested in the region," PAIZ President, Antoni Stryczula, stated, Bluebull reported. More than 31% of investments went to the production sector over the review period, while almost 27% went to financial services and 20% went to trade and services. New foreign investments were made through takeovers, which accounted for 70% of Poland's total FDI in the first half, the Agency said.

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Prokom Preparing to finalise Softbank takeover

Prokom Software is due to finalise a takeover of a controlling stake in its rival Softbank. The IT-systems integrator has signed a deal worth some 70m zlotys with the Chairman and main shareholder of Softbank, Alexander Lesz, in an agreement that will increase its control over the firm to 43 per cent from 10 per cent. 
After Hewlett-Packard, Prokom is now slated to become the second biggest player on the national market, with the distance between the two shrinking to a mere 100m zlotys in revenues, Bluebull reported. 
Analysts believe the takeover will lead to the creation of a group that will have the means of assuming large projects, especially in the lucrative banking sector. The deal allows Prokom to buy Softbank's shares at a price 20 per cent higher than the market value, but not more than 13 zlotys per share. 

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Treasury minister outlines privatisation plans for energy industry 

Electricity consumers will be able to choose an electricity supplier after 2005, Treasury Minister, Wieslaw Kaczmarek, told the Sejm [lower house of parliament] on 30th October, adding that this rule will also be true for the gas market, PAP News Agency has reported.
In an almost two-hour address devoted to the sale of Stoen, Warsaw's electricity distributor, to a German company and the privatisation of Poland's power sector, Kaczmarek stressed that distributors will have to be competitive saying that at present there are over 200 enterprises registered willing to deal in electricity turnover.
Speaking on the causes behind the privatisation of the power sector, Kaczmarek explained that government's prime task is to find financial and technical possibilities for the sector. According to him the sale to foreign investors will gain new technologies and funds for development.
The minister announced that part of shares in the Poludniowy Koncern Energetyczny (Southern Electricity Concern) will be floated on the Warsaw Stock Exchange in 2003. The concern is to be strengthened by several production companies but Kaczmarek did not mention any names.
He explained the government decided to set up two or three groups of electricity makers. The southern group would be made up of Silesian energy companies, the second northern concern would include Belchatow, Opole and Turow companies. The latter one is to be the state's strategic reserve.
Referring to the sale of Stoen, Kaczmarek said that the financial situation of the Warsaw company is not the best in the country. "It places 24th among all 33 electricity distributors."
Commenting on concerns as to the future levels of electricity prices, Kaczmarek said that in the present legal situation and uncontrolled price increase is impossible stressing the state has adequate mechanisms to control electricity prices.

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Gdynia Shipyard suppliers getting impatient

Indicating the looming possibility that the Gdynia Shipyard, like the Szczecin shipyard, may go under, computer firm Pretor has filed a petition for SG's bankruptcy with the Gdansk regional court. While SG has over the past six months been fighting off a tide of claims threatening to drown it, the shipyard is confident it has nothing to fear, while its main contractors admit nobody would benefit in the event SG was declared bankrupt. Shipyard Chairman, Janusz Szlanta sees the move as a psychological tactic, stating: "I don't know anything about the issue. I am not sure whether this company is our supplier. I can only assume it is a form of putting pressure on us in our current difficult situation." However, Alstom, one of SG's largest suppliers, believes other petitions may appear as contractors become increasingly impatient.

Polish government guarantees shipyard loan 

The government has guaranteed the repayment of a 170m zlotys loan to be granted to the Stocznia Szczecinska Nowa shipyard by Bank Handlowy SA, Economy Minister Jacek Piechota said on 29th October, PAP News Agency has reported. Shipyard Chief Executive Officer Andrzej Stachura said the yard still needed government guarantees for building of five ships to resume full production. He did not want to disclose the amount of needed credit guarantees. According to Stachura, production would be profitable for the yard if 10-12 ships were built annually.
Stocznia Szczecinska Nowa Sp. z o.o. was formed from the ASS company, one of the 30 companies owned by Stocznia Szczecinska Porta Holding SA, that had been declared bankrupt in July. The SSN is a State Treasury-owned company. It leases assets necessary for production from Szczecin Shipyard's receiver in bankruptcy.
05/11/2002 Polish shipyard receives 15m dollars from government agency

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Krakow-Wroclaw highway link slated for 2004 completion

The section of the A-4 highway linking Krakow, Katowice and Wroclaw will be completed by the end of 2004. There are still four sections to be completed on the Krakow to Wroclaw route, PMR reported. Meanwhile, the Lublin Board for Road Border Crossings has announced plans to build a new border crossing between Poland and Ukraine in Hrebenne in an investment worth some 100m zlotys. 75% of this amount is to be financed by the EU and the remainder by the state budget. The crossing point will cover an area of 10 hectares and be able to clear more than 5,000 cars daily.

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