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Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 209,563 187,670 176,300 24
GNI per capita
 US $ 5,270 4,570 4,230 71
Ranking is given out of 208 nations - (data from the World Bank)

Books on Poland


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Private sector 
% of GDP 

Update No: 097 - (26/05/05)

No nostalgia for communism
The Hungarians are experiencing a certain nostalgia for the days of 'goulash communism.' The Russians are prone to be nostalgic for the great days of Stalin. Not so the Poles.
The Poles have just made clear that they have no time for the 60th anniversary of the end of the war in 1945. "We cannot pretend that May 9th was a day of liberty and independence for Poland." It was of course the date of the onset of their subjection to just another sort of totalitarian tyranny, that of the Soviets." President Kwasniewski was notable by his absence from the Moscow celebrations of the same.

The EU miracle
But things are now looking up for Poland. Poland is in the EU; and has been for a year or more. The 38-million strong nation was by far the largest among the 10 mostly ex-communist states to have joined the EU in last May's big bag enlargement. Its entry is proving to be a huge success. 
Poland is benefiting massively from incoming foreign direct investment (FDI), which in the fourteen years, 1990-2003, totalled no less than $73bn, by far the largest amount into any former communist country and higher in per capita terms than that going into China. FDI in 2004 was $6.42bn. Foreign investors knew for years of course that EU entry impended and invested accordingly.
GDP in 2003-04 grew by 5.4%, while inflation was only about 3%, whereas in the 1990s it was consistently in double figures.

Poland emerges as EU's up-and-coming bread-basket
With food exports booming one year after Poland's accession to the European Union, dooms-day predictions that its large and traditional farm sector would become Europe's greatest rural basket case have proven groundless.
Instead of an agricultural disaster, the country could well become the bloc's up-and-coming bread-basket, some observers say.
The Polish Agriculture Ministry boasted a 51.3% increase in food exports to the bloc's older 15 states during Poland's first six months as EU member compared to the same period in 2003.
Poland's food sector ranks sixth in the EU, behind France, Germany, Italy, Great Britain and Spain, according to ministry figures. Overall annual production for 2004 was valued at more than 55bn Euro, accounting for some 8% of the bloc's total.
Poland is the bloc's top potato grower, ranks third for sugar and beer production and fourth for pork production. Milk and creamery sales to the old EU have soared more than 300%, beef up 250 in the second half of 2004 compared to the same period in 2003.
Lower Polish prices, the removal of tariff barriers on Polish produce and improved consumer confidence among western Europeans regarding eastern food in the wake of EU quality controls contributed to the sales surge, analysts observed.
Although set for further growth, Poland's competitive edge is somewhat dulled this year, however, by the soaring value of the Polish zloty against the Euro. The Euro was valued at 4.65 zloty on EU accession day last May, but has since dropped to 4.00 zloty.
Dariusz Sapinski, head of Poland's successful Mlekovita dairy cooperative complains the trend has led to a 20 per cent slump in business: "I certainly don't subscribe to EU euphoria, the competition for Polish goods on the EU market remains very tough."
The 5,000-member strong cooperative in Wysokie Mazowieckie is among Poland's most competitive, with an increase of sales from 600m zloty in 2001 (about 146m Euro) to more than one billion in 2004. Nonetheless, Mlekovita member Janusz Mystkowski says surging tractor fuel, fertiliser and pesticide prices are gobbling up his new found income from sales and direct EU subsidies for his 25-hectare farm in the central Polish village of Mystki.
The price hikes have worried especially smallholders - the majority among Poland's 1.5m farmers, that they won't have money left to invest into the future development of their farms.
However, while 90% of Poles complained about the price surges on basic consumer and farm-related goods after last May's RU entry, nearly 60% also said they still backed accession. Only 10% were opposed and 29% remained indifferent.
Polish farmers are expected to invest two billion zlotys (488m Euro) over the next three years form structural investment funds made available by the EU, according to a recent report in Poland's establishment Rzeczpospolita daily.
Fruit and berry producers also did juicy business on western markets since Poland's EU debut. For anyone in Europe biting into an apple there is at least a 20% chance it comes from Poland.
Over one fifth of the estimated 11 million tonnes of apples sold across the 25-member bloc last year grew in Polish orchards. The statistic places Poland as Europe's leading apple titan, outpacing traditional apple giants Germany and France.
With the price of Polish apples averaging a third less than those in Western Europe, producers also expect sales to blossom in the coming season. 
"Our market advantage is good quality, great taste at a lower price," boasts Marcin Staszik of SunSad, a leading Polish apple growers group located in the "Apple Belt" near Grojec, central Poland, where some 35% of the country's apples grow.
Over the last year, the coop has enjoyed heavy demand from large EU buyers, especially from Sweden, Finland and Denmark.
"The fact we no longer have to fill out endless reams of paperwork for customs duties and there are no more tariff barriers is a big plus to business," Staszik notes.
Currently selling 20% of its product to older EU states, the company plans to boost exports there to 50% of its production in the coming years.
With Poland coming under the EU's overall tariff regime for exports beyond the bloc, most export duties on food sold to non-EU states fell by 9-15%, while some were completely eliminated thus also fuelling exports to countries beyond the blocs borders.
However, the lower Euro and fierce competition from larger producers groups in the west mean that Polish coops will have also to consolidate into larger regional marketing structures to keep their competitive edge.

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Norwegian Air enters Poland

Norwegian no-frills airline Norwegian Air Shuttle finally made its maiden flight from Krakow to Oslo and from Warsaw to Oslo, New Europe reported recently. The company claims that the Polish market has huge prospects. "We launch these flights having in mind Poles looking for a job in Norway. This will be an alternative to taking the ferry," said Anne Grete Ellingsen, spokeswoman of Norwegian Air. The company is also hoping to attract Norwegian tourists. The airline is not afraid of the competition, due to the fact that Poland's national carrier only caters for connections with Norway, LOT. The company might consider further expansion of its flight network if it achieves a 75% booking level. However the company will have to face a new competitor, as Air Lithuania also plans to offer flights from Gdansk and Oslo.

Polish airline orders planes from Brazil

Brazilian plane maker Embraer will sell four Embraer 175 jets to LOT Polish Airlines, the airline said recently, PAP News Agency reported
Deliveries will start in the second quarter of next year. LOT will be the first air carrier to introduce the plane to Europe. LOT now has 10 Embraer 170 planes and 14 smaller models, Embraer 145.

Wroclaw Airport to expand

Wroclaw Airport authority got the necessary approval to move forward with the airport's expansion plan, Warsaw Business Journal reported recently. 
President Andrez Barski and Vice President, Leszek Karwowski, from Wroclaw Airport discussed the airport's development. There is a need for the expansion because passengers are increasing every year, they said. The new terminal will allow the airport to double its capacity to 1.2m passengers annually with the option of further expansion to 7m passengers. Airport management is also considering the possibility of constructing an additional runway. Shareholders of Wroclaw Airport accepted a plan to expand the airport by constructing a new runway and terminal.

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Belachatow extends bidding deadline

Poland's Belchatow power plant announced it has extended the deadline for the placing of binding offers in a tender to co-finance the 800 million Euro construction of a new energy-block for the plant, PAP News Agency reported.
The extension was made at the request of financing institutions taking part in the bid and replaces the previous deadline for submitting binding offers, which was April 5th. In mid-February Belchatow power plant invited 35 of the original 36 bidding financial institutions, including both Polish and foreign banks, to the second stage of the tender. A financing agreement should be signed by the end of August 2005. The Belchatow power plant in late December 2004 contracted French engineering company Alstom to build the 833 MW energy producing unit, which is scheduled for completion in 2008.

Poland backs Polish-Lithuanian power bridge

The Polish government fully supports a power bridge linking Poland and Lithuania that will have a major impact on the energy security of the Baltic states and make them independent of energy supplies from outside the EU, said a statement from the Ministry of Economy and Labour, PAP News Agency reported. 
The bridge will come into effect in 2009, the statement suggests. It will enhance Poland's role as a transit country and build up Polish-Lithuanian cooperation. 
"Being aware of the fact that Lithuania is under the obligation to switch off the Ignalin nuclear power station by 2009, both sides have been making every effort in order to implement the power bridge project by that date," the statement also reads. 
It says that another step leading to the implementation of the project are the talks between government officials, power grid operators and the EU authorities held last March. 
The project got support from the EU commissioner in charge of energy, Andris Piebalgs.

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Browary members welcome results

The members of Polish beer sector association Browary Polskie saw their beer sales grow 4.4% to 5.66m hectolitres (hl) in the first quarter of 2005, from 5.42m hl in the first quarter of 2004, Danuta Gut from Browary Polskie said recently, Interfax News Agency reported.
Browary Polskie groups the three largest breweries operating in Poland: Kompania Piwowarska, owned by the major worldwide brewer SAB Miller; Zywiec, owned by the Dutch group Heineken; and listed Polish brewer Carlsberg Okocim. The three companies have a total market share of 90%. The current leader in the Polish beer sector, Kompania Piwowarska, increased its beer sales by 19.8% to 2.05m hl in the first quarter of 2005, from 1.7m hl in first quarter 2004.

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Visiting Iranian businessmen in trade talks with Polish counterparts

A group of representatives of Iranian companies met with Polish businessmen in Warsaw recently to exchange information of their trade offers and establish new contacts, PAP News Agency reported.
Polish-Iranian 2004 turnover exceeded of US$65m. During the first two months of 2005 Polish exports to Iran jumped to US$35m, Andrzej Swiezaczynski of the Economy Ministry said during the meeting.
Iranian businessmen arrived in Poland on an economic mission organized by the Qazvin Chamber of Commerce, Industry and Mines. Qazvin province [west of Tehran] has a developed industry but also numerous tourist attractions.

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Ster-Projekt to dump Prokom Investments shares

Publicly listed IT sector company Ster-Projekt is to sell all its shares in Prokom Investments (PI) by June 2006, the group said in a statement, the Warsaw Business Journal reported. 
Prokom Software provides information technology (IT) services including hardware and software reselling and implementation, systems design and construction, and software design.
Prokom Software is the largest IT integrator in Poland with revenues of 1.15bn zlotys (300m Euro) reported in 2002. The company has been very successful in recent years in the provision of services to the public sector and large state-owned institutions. In 2002 the Prokom group employed approximately 2,600 people.
Ster-Projekt SA is the third largest IT integration company in Poland, with 2002 revenues totalling 322m zlotys (84m Euro), up 23% year-on-year. Over the same period, the company almost doubled its net profit that amounted to 6m zlotys (1.5m Euro) in 2002. At the end of 2002 Ster-Projekt had around 250 employees. Many clients come from the services industry, as well as public institutions including the Polish Post and the Polish Social Security Authority.
Company President Tyszard Krauze himself owns about two thirds of the company. He is paying 16m zlotys for the stake. According to an initial agreement that has already been signed, PI is to repurchase the stake for the same amount - 16m zlotys plus interest - amounting to around 8% on an annual basis. In March 2004 Ster-Projekt purchased a 1.6% stake in property developer Prokom Investments. Financial Director Karol Cieslak of Ster-Projekt said, "That is much more than we could make on a bank deposit or by investing in securities." The company was strongly criticised by investors and market analysts when it purchased shares in a company not connected with its core activities, and this also lead to a significant drop in the company's share price on the Warsaw Stock Exchange.

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Ukrainian firm wins right to negotiate privatisation of Polish steelmill

The Donbas Industrial Union (DIU) of Ukraine has won exclusive rights to negotiate the privatization of Huta Czestochowa steelworks [Poland's largest steelworks]. The talks were due to start in Warsaw on 16 May, DIU said, PAP News Agency reported. 
The state treasury minister, Jacek Socha, told newsmen that DIU "had until 19 May to correct its offer and until mid-June to negotiate the social package and appropriate guarantees concerning financial security of investments in Huta Czestochowa."
Asked what will happen if DIU's offer proves unsatisfactory, Minister Jacek Socha said that "a return to Mittal Steel is possible." He added that "if we wind up without any strategic investor for the steelmill it may prove necessary to look for another privatisation method."

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Polpharma aims for investment

Polish drugmaker, Polpharma, announced it will double its income within the next five years, WBJ reported recently.
This will happen mostly through foreign acquisitions, said Janusz Starak, the head of the supervisory board and the main shareholder. Starak dismissed reports about a possible sale of the company and stressed that Polpharma will continue investing in production. Polpharma has invested 120m zlotys for the fiscal year 2005, which includes finalising the revamp of its capsules production line. Until now, the company has invested 527m zlotys in fixed assets. Its two latest projects are the creation of an R&D centre at a cost of 32m zlotys and injection medicines department at 49m zlotys.

Alltracel whets appetite for Polish PHF takeover

Irish company Alltracel presented to the Polish Treasury Ministry its plans as regards the full takeover of Poland's Pharmaceutical Holding (PHF), Warsaw Business Journal reported.
Polish Deputy Treasury Minister, Stanislaw Speczik, said, "We will not change the programme accepted for the holding. Alltracel declared its will to cooperate with PHF, as well as announcing its intentions to take part in the ownership structure change scheduled after 2006."
PHF will be floated on the Warsaw Stock Exchange (WSE) in 2006. The group was formed last year after the merger of 3 state-owned drug companies and is valued at about 1bn zlotys. It controls 6% of the drugs market. Contrary to initial announcements, the investor is interested in privatising the entire holding rather than one of its parts, Polfa Tarchomin.
Poland is identified as an initial market and manufacturing base for the "New Era" brand proposition, value conscious, European drugs company. Discussions opened with PHF executives and supervisory board members for sales, marketing and production cooperation. The treasury has stressed that there is no possibility of dissolving the group consisting of three Polfa plants, which combined sales of 770m zlotys. The cooperation would be related to fields like sales and marketing.
Speczik assured that Alltracel has very good contacts in the United States and the United Kingdom. PHF President Andrez Kleszczewski said: "We have decided that we will meet in a few weeks time to learn the proposal of Alltracel. Each offer has to be analysed. Their business profile is not different from ours."

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Sami Swoi, Polkomtel forge JV

Polkomtel, operator of mobile phone brands Plus GSM, has entered into an agreement with Sami Swoi, Warsaw Business Journal reported recently.
So far, after 7 months of operations, the service, which is largely aimed at the residents of villages and small towns, has just 370,000 subscribers. The head of Sami Swoi business unit, Monika Warska said: "We have significantly widened our target group. The only limitation will be age. It will be directed at those above the age of 25 years. In the month of June, Sami Swoi will offer international roaming, while 2 months later it will offer SIM cards with access to information and positioning services. The offer is mainly directed at customers interested in cheap voice services."

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