Books on Poland
% of GDP
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: 085 - (01/06/04)
The Polish Prime Minister designate, Marek Belka, lost a vital confidence vote in the Polish parliament on May 14th. Belka, who was appointed premier by President Alexander Kwasniewski on May 2, needed to win to be confirmed in his position. But he had been widely expected to lose the vote, after failing to gain the support of parliamentary factions once loyal to his party, the Democratic Left Alliance. He lost by a count of 262 votes to 188.
Poland joined the European Union the day before Belka took over the premiership. It now enters a complicated period of political horse-trading that could culminate in new elections during the summer. Parliament has a fortnight to come up with an alternative candidate. If it cannot, Belka - who will remain as caretaker prime minister - may get another chance to persuade parliamentarians he is the right man to lead the largest newcomer to the European Union. Belka, a former finance minister, was until recently a senior economic advisor to the US-led administration in Iraq.
Where is Poland at?
In some ways it is not so important who heads the government in Poland. Brussels is going to call the shots, while domestically it is the central bank that counts. The Poles have a low opinion of their politicians, which is why they wanted to enter the EU for so long and why they gave the central bank independence.
There is one exception to the general contempt for the political class and that is Lech Walesa, the former leader of Solidarity. Solidarity did not prove effective in government and lost power after only one stint in office. But Walesa remains a revered figure, the liberator of his country from communism. Actually Pope John Paul II counted for a great deal too, especially in ensuring the movement remained peaceful. There was not one act of terrorism perpetrated by its supporters.
Poland has had a harsh history, being divided and occupied by Russia, Prussia and Austria in three Partitions in 1792-95. It briefly had independence between the two world wars, only to be divided again in the most infamous Partition of all under the Nazi-Soviet Pact of late August 1939, leading straight to the Second World War.
The Poles fought bravely on many fronts in that conflict; one tenth of the pilots on the British side in the Battle of Britain were Polish, while two Polish divisions fought at Cassino and other battles in the Italian campaign. All the Poles got for their pains was fifty years of subjection to the Soviet Union. Yet as Stalin himself said: "Communism fits Poland like a saddle does a cow." It stultified civil society and ruined much of the environment.
Things are taking time to right themselves, but the prospects are excellent. Poland was bold in introducing reforms in the early post-communist years. It has attracted by far the largest total of FDI in the former communist world, some US$50bn. Now in the EU it is suffering higher inflation as prices rise to EU levels and a surge in imports. But the economy is basically on the right course. Brussels and the central bank will see to that1
TBMECA Poland to invest 10m Euro in Polish plant
Japanese-French auto-parts producer TBMECA Poland will invest about 10m Euro to restructure a factory that makes plastic components for car engines, Kinga Hirao, assistant to the company's management board, said, Interfax News Agency reported.
TBMECA Poland is a joint venture formed by three companies, two of which are Japanese Toyota affiliates: Toyoda Boshoku and Denso, the world's fourth biggest automotive components supplier. The two Japanese companies share control of 50 per cent of TBMECA, and French Mecaplast, which also makes automotive parts, holds the remaining half. "We will produce original plastic parts for air filters used in Toyota engines, as well as plastic fuel lines under Mecaplast's brand name," Kinga Hirao said. "Altogether, we will produce eight different plastic components, 300,000 of each to be produced annually."
The company will invest the whole 10m Euro this year to renovate the existing plant, located in southern Poland's Legnica Special Economic Zone, and purchase new machinery, Hirao said. Production is to begin in December of this year, and grow to a three-shift system employing 100 people by the second half of 2005. The main clients will be two Toyota plants, also located in southwestern Poland, as well as the Toyota Peugeot Citroen joint venture in the Czech Republic and two Toyota plants in Great Britain and France. Client proximity helped TBMECA pick Poland over the Czech Republic and Slovakia, Hirao said. A skilled labour force was another key factor in the decision to invest in Poland. "The cost of labour is still lower than in Western Europe." Investors in Poland's special economic zones receive income tax cuts of 50-65 per cent and can also receive real-estate tax breaks and grants for employee training." Hirao said the company counts on breaking even in three years.
Indonesian military plan to buy more planes from Poland
Indonesia plans to buy, from Poland, 11 Skytruck planes for its naval forces, Indonesian Defence Minister Air Marshal Suprihadi said after talks with his Polish counterpart, Jerzy Szmajdzinski, in Warsaw recently, PAP News Agency reported.
Szmajdzinski said that the Polish export credits for Indonesia to buy equipment from the Polish aviation sector total US$75m. So far, Indonesia has bought 11 Mi-2 helicopters and four Skytruck planes from Poland.
Szmajdzinski announced visits of experts who will prepare details of cooperation. He also proposed that Indonesian soldiers could be trained in Polish Defence and Navy Academies.
Suprihadi said his country was interested in joint undertakings including participation in research and development work on armoured personnel carriers, crewless space ship and between shipyard sectors.
BRE Bank swings to Q1 profit
BRE Bank, the Polish unit of Germany's Commerzbank, finished the first quarter of 2004 with a consolidated net profit of 39.91m zlotys, up from a 2003 fourth-quarter net loss of 63.1m zlotys, as retails losses narrowed, the bank said in a preliminary announcement, Interfax News Agency reported.
The bank recorded a gross profit of 55.92m zlotys, up from a fourth-quarter gross loss of 25.2m zlotys. In the first quarter of 2003, the bank recorded a 33.8m zloty consolidated net profit and a gross profit of 46.3m zlotys. The figures failed to surprise analysts or markets, but drew praise for indications that BRE's multi-year efforts to catch up in the retail banking business were beginning to pay off. "I suspect that these numbers are healthy in terms of the bottom line but what I like even more is the information about gains in retail banking," CA IB banking analyst, Jakub Korczak, said.
Orlen to take over Unipetrol as sole bidder
PKN Orlen, the Polish oil group, is set to acquire Unipetrol, its Czech counterpart, strengthening its claims to lead the consolidation of the central European refining and petrochemicals industry, the Financial Times reported.
Orlen submitted the sole binding bid of Kc13.05bn (US$479m) at the privatisation tender deadline recently.
The other two shortlisted bidders, royal Dutch/Shell and Mol, the Hungarian oil and gas company, did not submit offers. Both said they were only interested in Unipetrol's oil assets, not its petrochemical or chemical units.
"Overall I am not very happy with the fact that we only had one bid," said Pavel Kuta, deputy head of the Czech privatisation agency. "However, the one bid we have is a very reasonable price."
Orlen made an unconditional offer of Kc11.3bn for the state's 63 per cent stake in Unipetrol, plus Kc1.7bn for state-held receivables with a nominal value of Kc3.9bn.
The bid for the equity is slightly lower than the 361m offered by Agrofert, the Czech agro-chemicals group, in the failed privatisation tender two years ago.
However, at Kc99 per share, it still represents a 51 per cent premium to Unipetrol's six-month weighted share price average of Kc65.30.
If as expected Orlen's bid is accepted by the government, it will then have to wait to see if a consortium of Shell, ConocoPhillips of the US, and Eni of Italy exercise their pre-emption right to Unipetrol's 51 per cent shareholding in Ceska Rafinerska, the group's refining subsidiary.
Orlen will then be free to divide up Unipetrol with its partners Agrofert, and ConocoPhillips.
Shell's withdrawal from the tender was expected, but Mol's failure to submit a bid was a surprise both to the government and to Orlen, which is in protracted merger negotiations with the Hungarian oil and gas group.
Mol said it had rejected Unipetrol "due to the complexity of the group and the risk associated with the disposal of the subsidiaries assets, which are not core to our strategic objectives."
Mol, which has expanded aggressively in recent years, also admitted that another factor was the estimated "significant" minimum capital requirement of 1bn for the Unipetrol deal. This includes the assumption of Kc23bn of Unipetrol group debt and the obligatory buy-out offer to minority shareholders, which for Orlen, will cost about Kc5.6bn.
The Czech government was advised by McKinsey, WestLB of Germany and EEIP, a local consultancy. Orlen was advised by CSFB.
Poland, Belarus talk heat and power
Poland is negotiating the construction of the heat and power plant in Belarus for a total cost estimated at US$100m, Deputy Economy Minister, Jacek Piechota, said recently. "The heat and power plant, with a capacity of 100 MW, that would be built by Alstom, would be powered by Polish coal, probably from the Bogdanka coal mine." Long-term coal supplies are being negotiated, he added. French engineering company Alstom's Polish arm heads a consortium of Polish companies that could participate in the project. "We are lending the consortium and now we are waiting for a tender to be announced," Dorota Jansuszkiewicz, director of the office of the Poland-based Alstom unit's board said, Interfax News Agency reported.
FOOD & DRINK
Animex eyes bigger output
Polish meat producer Animex, owned by the world's largest meat producer, Smithfield Foods, will invest US$20m this year to upgrade production lines in four of its nine plants, Animex Managing Director, Morten Jensen, said recently, Interfax News Agency reported.
"This year, we are planning the biggest investments in the history of Animex," Jensen said. "Our investment plans for this year reach US$20m." Animex spent US$6m on investments last year to build a new production line at its Szezecin-based plant, similar investments are currently being carried out at a meat-packing plant in the northeastern Polish city of Elk. The company is gearing up to boost exports as Poland has joined the European Union, where it wants to introduce meat products into the British and German markets. Animex also plans to enter the Japanese market, as well as sell more meat products in the United States.
Saint-Gobain to invest in Poland
French industrial giant Saint-Gobain said it plans to invest 60m in Poland and double the revenue generated by its Polish units to 760m over the next five years, Jean Laronze, head of the company's Polish operations, said recently, Interfax News Agency reported.
The French company will invest 50m in its Polish flat-glass production operations and 10m into abrasive operations by 2008, he said. Revenue from its Polish operations totalled 380m in 2003. "The increase of revenue is our main target," Laronze said. "Our global policy is 1 of revenue per each Euro of investment." Flat-glass operations in Poland generated 165m of revenue for the French company in 2003, construction-materials distribution generated 77m, and other activities generated 102m of revenue. Saint-Gobain said it plans to grow its Polish operations both organically and through takeovers, which could include glass-bottle makers and construction materials distributors.
Money for mine closures
The World Bank will loan Poland 160m Euro for 10 years to ease the social impact of mine closure under Polish government plans to slash jobs in the heavily indebted state-owned coal sector, New Europe reported.
World Bank official Roger Grawe and Polish Finance Minister, Andrzej Raczko, signed the loan agreement in the Polish capital Warsaw recently. Under a government plan, some 28,000 mining jobs are to be slashed by 2006. The World Bank loan is intended to cover the expense of severance packages, job training and creation for redundant miners. Joining the European Union on May 1st puts Poland under pressure to cut public spending on the indebted state-owned coal sector.
6m clients for Centertel
Poland's second largest mobile operator Centerel, controlled by Poland's telecom incumbent TPSA and France Telecom, strategic investor, reached a six million client count by the end of the first quarter, Centerel President, Slawomir Skrodzki, said recently, New Europe reported.
"Earlier we said we will reach a 6m client count by end-March, and we are a company that keeps its promises," Skrodzki said. Centerel became Poland's second biggest of three operators during 2003, as it raised its client count to 5.702m at the end of 2003 versus 4.480m a year earlier. That gave the company 33.0 per cent of the market, up from 32.2 per cent the year before. Though the company previously announced that it would quadruple earnings to close 2004 with a net profit of about 100m zlotys, Centerel officials are now loosely discussing a net "well in excess" of 100m zlotys.
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