Poland is the largest of all EU countries in central and eastern Europe, and the fastest growing economy in the region. It ranks sixth in EU in terms of population (33rd in the world). In terms of GDP it ranks 9th in EU and 23rd in the world (according to the IMF World Economic Outlook Database from 2013). In the most recent World Bank Doing Business ranking for 2015, covering 189 countries Poland ranks 32nd on the ease of doing business.
In the 2014 ranking Poland took 45th place but after adjustments due to methodology changes it came 30th just after France and before Spain.
The report indicated that, among others, the transfer of capital was made easier by allowing online procedures and lowering notary fees. Cross-border trading became easier, costs of electricity went down and costs of electricity new connections were verified.
According to report’s authors setting up new business in Poland became easier, among others thanks to dropping requirements like the need to register with the National Labour Inspectorate. According to World Bank review of changes in Polish laws included in the report, in the past years many processes and procedures were simplified which made it easier for businesses to obtain construction permits.
The World Bank’s criteria for ranking countries are among others: the ease of starting new business, the ease of getting credit and investors, paying taxes, registering property and enforcing contracts.
Prime Minister Ewa Kopacz stressed at the presentation of Doing Business in Poland 2015 report that Poland has advancecd in the ranking sixth time in a row. “The climate for doing business in Poland is getting better and better, the best as far as the EU central and eastern European countries are concerned. It is worth noting that Doing Business ranking is an objective measure of conditions of conducting business and of competitiveness of Poland. The ranking is objective because it is not made by the government, the opposition, the media but by the reputed international institution which is World Bank” said PM.
The laws and regulations regarding conducting business are evaluated by entrepreneurs and not by civil servants.
The prime minister declared that in the next year’s ranking Poland should show further improvements, stressing that this year’s result “gratifies but not satisfies”. She expressed aspiration that next year Poland would come 20th in the ranking.
According to the prime minister at the end of November of 2014 it will be possible to speed up by 20 days the process of registering business by legal persons: companies, branch office of foreign companies or cooperatives. New regulations will shorten registration procedures to around seven days.
Other procedures bind natural persons. Since mid-2011 the registration of a business activity by natural persons is almost instant, free of charge, by internet through a form at the Central Registry and Information on Business (CEIDG), created by the Ministry of Economy. According to the ME 2.1 million entrepreneurs were registered at the end of 2013, with an “active” status.
In the previous edition of Doing Business report Poland ranked 116th in terms of ease of starting business. Year before that Poland was 124th.
According to the World Bank, the average time for starting a business in Poland amounted to four weeks while the average for OECD countries was eleven days. According to European Commissioner for Industry and Entrepreneurship Antonio Tajani setting up a company in the EU countries should not take more than three days.
The Ministry of Finance declared in mid-2014 that Poland will advance to the group of top twenty richest countries in 2022.
According to the Ministry of Finance until that time Poland’s GDP per capita should reach 80 pct of the EU average. “In 1995 the per capita GDP was around 6 thousand PPS (Purchasing Power Standard – a common unit adopted by the EU for international comparisons), today it is three times higher. In the western countries GDP growth is much lower. Back in 1995, Poland’s public debt represented 49 pct of its GDP while the average public debt of the euro zone countries was at 71.8 pct. While in the following 20 years Poland increased its debt by only 8 percentage points, the debt in yhe euro zone countries grew by more than 20 percentage points” notes the Ministry of Finance.
The Ministry indicated that Poland’s advancement in the international rankings is impressive.
The most recent Doing Business reports described Poland as “the fastest reforming EU economy”.
Attractive location for new investments
Poland is seen as the most attractive place for new investments in central and eastern Europe. According to the 12th edition of the “Investment Attractiveness in Europe” report, published in May 2014, 31 pct of polled regard Poland as the best new investment location in this part of Europe.
Thanks to direct foreign investments 13 thousand 862 new jobs were created in 2013, 6 pct more than in the previous year. It places Poland in third place, after France and Great Britain. The National Bank of Poland states that to date direct foreign investments amounted to 178.2 bln euro at end of 2012, growing over 13 pct year-on-year.
Poland fares well in other rankings too. According to the UNCTAD World Investment Report 2013 Poland will be fourth most attractive economy in Europe and 14th in the world in the next two years.
Implementing EU directives
European Commission report from end of February 2014 states that Poland is making up delays in implementing directives regarding single market.
Within six months, by implementing four lagging directives on single market Poland reached European Commission’s goal (1 percent of transposition deficit) and came close to EU average (0.7 pct). “This is the best result for Poland since 2006” says report. Transposition deficit is a goal set by EU countries heads of states in 2007, which assumes that the level of non implementation of single market directives does not exceed 1 percent.
Poland adjusts faster, the number of unsettled cases before the Court of Justice of the European Union is diminishing.
There is on average 15 months lapse between European Court of Justice ruling and respective Polish law adjustment. This means that cases can be closed three months faster than the EU average (18 months) – underlines the EC report. This is accompanied by diminishing number of unsettled cases before the European Court of Justice regarding rules violation.
While in the first half of 2013 there were 44 unsettled cases regarding the single European market, this number fell to 41 by February 2014. Compared to countries like Italy (73 cases), Greece (65), Spain (60), France (59) or Belgium (50) Poland’s result, although not lower than EU average (30), is much better.
An EC report from the beginning of February 2014, the first report on corruption that presented the scope of this problem in 28 EU member countries, indicated that in the recent years Poland introduced measures and worked out policies regarding fighting corruption. This is supported by statistics on corruption crimes detection. Also, the corruption awareness of general public has changed.
The report indicated that 82 pct of Poles agrees that corruption is widespread in their country and 15 pct experienced an attempt of bribe or in some other way witnessed corruption in the past year. This was most often related to healthcare.
Thirty two percent of entrepreneurs quote corruption as a barrier in conducting business in Poland while 92 pct regards bribes as one of the easiest ways to obtain services in the public sector.
Supreme Audit Office and Ombudsman’s Office appreciated
The European Commission pointed activities of Supreme Audit Office (NIK) and Ombudsman’s Office (RPO) as positive examples of fighting corruption. It noted that NIK enjoys an opinion of independently and professionally run institution playing an important role in fighting corruption, though it has limited powers of enforcing its decisions. Similarly, the RPO earned an opinion of being independent. It helped to improve public sector standards “though it is not one of its priorities”: stated the EC.
The report states that the Central Anticorruption Bureau “has made progress in enforcing anticorruption regulations, which should prevent corruption crimes and influence civil servants’ and politicians’ conduct”.
The report underlined that “better general co-ordination” and “a more strategic approach and closer cooperation to translate provisional changes and activities into more comprehensive solutions” are needed.
Next EC corruption report is expected in 2016.
Excessive bureaucracy is seen as the main obstacle on the road to industry competitiveness and economy’s growth. Seventy-four pct of Europeans are of an opinion that the EU generates too much of bureaucracy. According to the EUobserver portal, which quotes the EC reports, more than 90pct od EU bureaucracy is generated by tax and commercial legislation.
Poland is building its electronic tax administration system and starting 2015 tax offices could be burdened with tax settlements. New rules will contribute to limiting errors in tax forms.
According to economists, the Polish tax system is complicated and not friendly to entrepreneurs and needs to be simplified. Similar evaluation is included in the World Bank, IFC and PwC report from 2012. The report, titled “Paying Taxes 2013”, evaluating tax systems in 185 countries, ranked Poland 114th. This was an upgrade from 127th place in earlier ranking.
Good practices in 18 towns
The findings of next World Bank report are to be published in the spring 2015. This report, created at regional level, will be an extension of Doing Business global report and will focus on selected Polish towns in terms of ease of doing business from the perspective of small and medium size Polish enterprises. Created by request of the Ministry of Infrastructure and Development and the Bank Gospodarstwa Krajowego, it will regard issues like business registration, construction permits, registering of property and enforcing contracts.
“For each of these areas the report authors will identify good practices in 18 towns from all 16 voivodeships. At the same time they will present suggestions of reforms based on examples from Poland and 188 countries analysed within the framework of Doing Business global report”: declared the World Bank.
The government was able to achieve much in this area in the past years: among others public online database on spacial information, electronic services platform for Social Insurance Institution (ZUS), “e-deklaracje” system, which allows for online tax declarations, eWUŚ, where one can confirm online the right to healthcare services, and also various facilitations for entrepreneurs.
According to data presented by deputy Minister of Administration and Digitalisation Roman Dmowski to the Sejm (lower house) a year ago, although most Polish government institutions are already digitalised, some 30 pct of local governments and 8 pct of state administration are using solely printed documentation. Most institutions (60 pct) are using a mixed system where printed documents are supported by a computer system.
Almost all institutions have access to the Internet with speed at least 2 MB. Almost all state administration employees (95 pct) have unique email accounts whereas only 68 pct of local government employees have their own email accounts.
State administration offices also have an obligation to create electronic inboxes where clients may submit their business. Currently, 98 pct of institutions fulfil this requirement.
An official evaluation of the digitalisation process in local government offices shows that more often than not it has caused an increase of cost of services and also an increase in workload and the number of printed documents. According to Minister Dmowski this is mostly related to employees’ insufficient computer skills of, lack of equipment and sometimes insufficient understanding of digitalisation by offices’ management.
Gender gap closes
In a report published by the World Economic Forum in October 2014 on inequalities between men and women, in which the most egalitarian countries turned out to be Nordic countries, Poland ranked 57th.
In last year’s report on employment and social development the European Commission noted a drop in households’ income in two thirds of the member countries, the highest unemployment in 20 years and growing threat of poverty, including poverty of the employed. But in Poland, like in Germany, France and the Nordic countries, the income of households grew. Between 2009 and 2011 income of families in Poland increased by 1.5 pct, with labour market flexibility and social care system considered as cause for growth.
Culture, art and innovations
According to World Economic Forum report on global competitiveness from August 2013, countries and regions where sectors of culture, art and knowledge play important role turned out to be more resilient to crisis and slowdown of economy. These sectors, being development catalysts, influence dynamics and profitability of other economy sectors, from tourism to fashion to advanced technologies to renewable energy. The strength of these sectors determines the ability of countries – including Poland – to compete globally.
In global ranking of high-tech markets Poland was 21st in 2000. In 2013, it was 14th. An increase of the importance of science in Poland’s economic growth and Polish innovative technologies’ share in foreign markets in coming years are to contribute to further creation of stable and better quality jobs.
A new EC strategy presented in document titled “Promoting Culture and Art Sectors for Economy and Employment Growth in EU” regards increasing chances of creating new revenues from EU culture and art and related industries, global competitive advantage and access to new markets. An increase in financing, among others through 1.8 bln euro funds of Creative Europe program for 2014-2020, and through Cohesion funds, is to help countries and regions to invest in these economy branches.
Knowledge sector and related services create new jobs and this trend is intensifying since 2013.
High-end products and creative input
In one of its reports the European Commission underlines that high-end products are of great importance for European economy. These products are to great degree dependent on their creators’ input. Now they are not only technologically advanced devices – as old definition stated – but all best, most expensive and most sophisticated goods (including fashion, jewellery or yachts) in which Poland does not lack expertise.
In many regions and on local level investment in culture, art, artists, festivals or design give “spectacular results”, often bringing substantial profits and sometimes multifold returns on investment. This, according to the EC report, powers other sectors’ dynamics.
Art and innovation sectors are areas of activity of architects, designers, artists, craftsmen, visual arts and computer games creators, publishers of books and other publications. They embrace areas like music, arts festivals, radio programs or even libraries and archives. These sectors, being innovation catalysts, provide ideas and content to high-tech products (from projects to computer games scripts). Companies that spend more than twice the market average on “creative input” have a 25 pct higher chance to implement innovative products – says the EC document.
Eastern Poland has large potential in the area of luxury goods (or high-end) which require intensive labour input and high skills. In the framework of government program of promoting economy of this macroregion companies can receive support that enables them to find business partners. Manufactured in eastern Poland bone china from Cmielow (since 1790), often hand painted, high quality classical yachts or modern aircraft trainer or general aviation aircraft can compete successfully on international markets.
According to analysts Lubelskie, Podkarpackie, Podlaskie, Swietokrzyskie and Warminsko-Mazurskie macroregions are ideal locations for investments in sectors like BPO, aviation, renewable energy and tourism, because of national border proximity, special economic zones, low labour costs and large pool of labour reserves. (PAP)