January 08, 2008 |
|Poland has dropped 17 places among global managers in terms of investment prospects.|
Current results of a survey among global managers show Poland plummeting from 5th to 22nd position in terms of prospects for international investment. Has the Polish magnet attracting foreign capital worn out?
The latest Foreign Direct Investment Confidence Index published by AT Kearney shows Poland’s downward movement by 17 places compared to ratings of 2005. Presently, Poland comes right after Mexico, Turkey and Indonesia and just ahead of Central Asia, South Korea and the Czech Republic. As in the 2005 index, China, India, the United States and the UK remain at the top in unchanged order as investor favorites.
Tomasz Teluk, president of the Foundation Globalization Institute in Gliwice, says the reasons for this deterioration in Poland's ranking are many. It is actually a combination of adverse factors:
'The Polish economy is going well, but conditions for entrepreneurs are still not good. High taxes, including the cost of work and social security. These are high in Poland. Another reason is over-regulated economy. Entrepreneurs are scared of changes in the law. It's very hard for business not to be sure what law could be expected in the next years. I think another reason is very limited access to good business environment.'
This limited access has been created by the state when Special Economic Zones were established a few years ago, paradoxically, to serve as an incentive for attracting foreign capital on preferential terms. After a period of soaring FDI figures this has backfired. SEZs have been questioned by the European Commission as violating the principles of equal business opportunities. Their existence has been only temporarily prolonged at the Polish side's request.
'Special economic areas in Poland are available only for the biggest companies. They are not for medium-sized or smaller enterprises. This is a good situation only for really big corporations interested in investing in Poland and not for other companies. This situation can hurt the Polish economy in the long term.'
Haven't Poland's poor results in the current FDI Confidence Index come as a surprise, bearing in mind the sequel of the previous record-breaking years? Tomasz Teluk says they might seem contradictory, but...
'Look at the special economic areas... they will exist only for a few years. The expected return of investment for investors there is shorter. These areas can disappear around 2015 or 2017, depending on the region. But it's still a very short term for foreign investors. If they can't make business in Poland, they will do it in China or Ukraine. On the other hand, Poland's position dropped in other rankings. In the General Globalization Index of AT Kearney or the Economic Freedom Index of the Heritage Foundation and The Wall Street Journal.'
Though the drop in Poland's FDI Confidence Index standings might appear dramatic, potential investors may rest assured. Poland still managed to retain a leading position in the Central and Eastern European region. Among investors from Europe, it placed 5th. That's some consolation, but the motto for 2008 is: regaining lost ground!