Books on Poland
% 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
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
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
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
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.
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.
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
"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
FOOD & DRINK
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.
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.
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
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
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
MINERALS & METALS
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
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
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."
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
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."