WBJ Observer #22 November 2015

20 PAGES 25 PAGES

NOVEMBER 2015

Number 11 (22)

OF REAL ESTATE N EWS

REAL EST A NEWS TE

PLN 24.50 (VAT 8% included) ISSN 2353-3714 INDEX-RUCH-332-127

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PARLIAMENTARY ELECTIONS

VIRTUAL RETAILITY ENHANCING YOUR SHOPPING EXPERIENCE 46 GEARING UP THE AUTOMOTIVE SECTOR IN POLAND IS MAKING A COMEBACK 28

WINNER TAKES ALL LAW AND JUSTICE GAIN OVERWHELMING VICTORY NOVEMBER 2015

DRONE WARS THESE ARE THE DRONES THE POLISH ARMY IS LOOKING FOR 32

ALSO IN THIS ISSUE:

• N ew s • C o m m e n ta r y • R a n k i n g • L i fe st y le • E ve n t s

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APRIL 2015 • WBJ OBSERVER

lll IN THIS ISSUE Try these:

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lll NEWS 3-11 In Review Latest news 12 Dateline 13 Economy

14

22-26

lll COMMENTARY

POLAND ELECTIONS

37-60 LOKALE IMMOBILIA

14 Law Hostile takeovers 15 Automotive Leasing 16 Automotive Family cars 17 BPO Shared service centers

28

lll FEATURES 28-31 Automotive On the rebound 32-36 Defense Drones for the Polish army 62-63 Ranking General contractors 65-68 Events Investing in Poland conference 70-71 Events EFNI 72 Events Whisky live 74 Events SME Congress 75 Events Chemical industry awards

18-21

INTERVIEW WITH PAWEŁ SOLOCH

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NOVEMBER 2015 • WBJ OBSERVER

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lll LIFESTYLE 76-77 Gadgets 79-80 Warsaw bakeries

WBJ OBSERVER • NOVEMBER 2015

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Visit our site - wbj.pl For latest news, features and commentaries.

Morten Lindholm Publisher mlindholm@valkea.com Jacek Ciesnowski Editor-in-Chief, WBJ Observer jciesnowski@wbj.pl Beata Socha Managing Editor, Lokale Immobilia bsocha@wbj.pl Michael Evans Copy Editor Journalists Alicja Ciszewska aciszewska@wbj.pl Wojciech Rylukowski wrylukowski@wbj.pl Contributors Ewa Boniecka Alex Hayes Adam Zdrodowski Tomasz Chwinda Art Director tchwinda@wbj.pl Sales Director Tomasz Pawlak tpawlak@wbj.pl Marketing & Sales Magdalena Klimiuk mklimiuk@valkea.com Katarzyna Pomierna kpomierna@valkea.com Grzegorz Tarnowski gtarnowski@valkea.com

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NOVEMBER 2015 • WBJ OBSERVER

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lll INREVIEW

NEWS

News highlights of the past month

A

ccording to the final results of the general election announced by the State Electoral Commission, conservative Law and Justice (PiS) emerged victorious with 37.58 percent of the vote, which translates to

235 seats out of 460 in the Sejm. The outgoing Civic Platform came in second with 24.09 percent support and 138 seats in the lower chamber.

Kukiz’15 obtained 42 seats (8.81 percent), Nowoczesna won 28 seats (7.6

percent) and PSL secured 16 seats (5.13 percent).

When it comes to the Senat, the upper chamber of parliament, PiS won 61 seats, PO - 34, PSL - one and one seat was taken by an independent senator.

WBJ OBSERVER • NOVEMBER 2015

Image: Shutterstock

PiS wins 235 seats, will govern alone 3

Shorts

NEWS

LTE TENDER DREW PLN 9.23 BLN IN BIDS

ENEA ACQUIRES BOGDANKA State-controlled Enea, which will soon formally acquire LW Bogdanka, said it will not change the dividend policy of the private mine, the media reported. ”The owners of the rest of the holding, which amounts to 34 percent will continue to participate in profit distribution,” Dalida Gepfert, the deputy CEO of Enea said.

On October 20, Poland’s anti-monopoly watchdog UOKiK, approved Enea’s takeover of Bogdanka coal mine. The shareholders at the mine subscribed to 21.9 million papers, which accounted for a 64.6 percent stake in Bogdanka.

The offer will be finalized by the end of October, but it is now clear that Bogdanka will be included in the Enea group.

Tusk: EU presidency my last job in politics

139,000 ‘illegal’ Volkswagens in Poland

M

inister of Environment Maciej Grabowski informed that as many as 139,000 Volkswagen Group cars that might exceed emission norms have entered the Polish market. Of that figure, 66,870 were Volkswagens, 58,890 were Skodas, while Audis and Seats amounted to 12,049 and 3,694 respectively. The numbers were provided by the Volkswagen Group itself.

Grabowski said that he has already contacted other EU environment ministers and the issue of breaching emission norms by VW will be debated at the next sitting of the Environment Council. When asked if Poland plans to ban registration of Volkswagen Group cars, he said that until now this solution has not been discussed. He admitted, though, that approval can be temporarily suspended, but the decision has to be made on an EU-level.

The US revealed on September 18 that Volkswagen had programmed its turbocharged direct injection (TDI) diesel engine models for years 2009 through 2015 so that US standards nitrogen oxides (NOx) emissions were met only during laboratory emissions testing.

NOx emissions during driving were up to 35 times higher. On September 22, the company admitted that the software was also installed in vehicles sold outside the US. As many as 11 mln VW cars all over the world may have been affected by the scam.

"EVERY CITIZEN AND EVERY ENTREPRENEUR CAN NOW BE SURE THAT WE WILL NEVER EXPERIENCE GAS SHORTAGES," SAID ANDRZEJ CZERWIŃSKI, THE MINISTER OF THE TREASURY, AT THE OPENING OF THE LNG TERMINAL IN ŚWINOUJŚCIE 4

NOVEMBER 2015 • WBJ OBSERVER

At a press conference in mid-October, Donald Tusk said that his role as president of the European Council ”is probably my last political post. Therefore, I will act in line with what I think, express my opinion and the rewards will come.”

The words refer to the criticism he received from Italian Prime Minister Mateo Renzi, who was indignant that Tusk had named Italy and Hungary in the same sentence when talking about the refugee crisis. ”Observing rules will always mean sacrificing some of our interests. I would like to dedicate these words to the Hungarians and the Italians, to the Slovaks and the Greeks,” Tusk said.

The EU president also said that the main battle in the September elections would be between Civic Platform (PO) and Law and Justice (PiS). When asked if he is to blame for leaving the party at a difficult time and going to Brussels, he said that ”I am not sure whether the situation would look any different if I had remained Prime Minister.”

Images: Shutterstock, Adrian Grycuk/Wikimedia

Poland’s auction of LTE frequencies has ended, it raised PLN 9.23 billion in bids, nearly six times more than expected, informed the regulator UKE. Five 800 Mhz blocks and 14 blocks of 2.6 GHz were put up for sale, each bidder could buy up to two 800 MHz blocks and four 2.6 GHz. Orange, Deutsche Telekom, Cyfrowy Polsat and P4 were in the bidding. UKE did not reveal who won the blocks, but P4 issued a statement saying that it bought one 800 MHz block and four 2.6 GHz blocks.

The auction had stirred up controversy after Internal Minister Andrzej Halicki decided to set a deadline for the auction to close, after it dragged on for months.

P4 and Polsat Cyfrowy opposed the decision saying they might take legal action against Poland.

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NEWS

Cinkciarz.pl begins partnership with Chicago Bulls

PKO BP has green light to open branch in Germany T

he German financial watchdog Bafin has approved the launch of a branch of Poland’s largest lender PKO BP in Frankfurt, the media reported citing the Polish bank.

Following the decision, PKO BP obtained all the necessary approvals to launch the branch, which will be focused on services for corporate clients.

The Polish lender sent notification of its intent to the Polish financial watchdog KNF last year.

235 - IS THE NUMBER OF SEATS PIS WON IN THE GENERAL ELECTION, WHICH GIVE IT AN ABSOLUTE MAJORITY

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NOVEMBER 2015 • WBJ OBSERVER

Image: Shutterstock

nline currency exchange company Cinkciarz.pl announced a new, seven-year long partnership with the Chicago Bulls, the company informed in a press release. The financial terms of the agreement were not disclosed. ”This is an historic moment for Polish business. We are the first Europeanbased company to partner the Chicago Bulls. The Chicago Bulls represent American history. The team is a pop culture icon, a symbol of success and reflects the spirit of sports competition,” said Marcin Pióro, CEO, Cinkciarz.pl.

Cinkciarz.pl will serve as the Official Foreign Currency Exchange of the Chicago Bulls and also hold the title of Official Partner of the Chicago Bulls.

Two former Polish presidents, Lech Wałęsa and Bronisław Komorowski, attended a press conference on Monday, at which the deal was announced. ”I am full of praise for the achievements made by Cinkciarz.pl. (...) We have built the West in Poland, now companies such as Cinkciarz.pl are building Poland’s position in the world,” Wałęsa said.

Komorowski was asked if it is appropriate for him to attend such events, he replied that he ”always supports Polish companies.”

Last month, Cinkciarz.pl announced the opening of its first North American office, which will be located on Chicago’s famous Michigan Avenue. The office will open in 2016.

Cinkciarz.pl will introduce its services as Conotoxia on the international markets outside of the eurozone. Cinkciarz.pl and Conotoxia will function alongside each other and the visual identity will remain the same. The logo, colors, and layout are identical.

Image: Shutterstock

O

Made in Poland a guide to Polish

NEWS

EXPORTS 2015-16

THE DEFINITIVE GUIDE TO POLISH EXPORTS > THE ANNUAL EXPORT GUIDE SURVEYS INDUSTRIES, FIRMS AND ORGANIZATIONS FUELING POLISH EXPORTS.

coming soon!

WBJ OBSERVER • NOVEMBER 2015

Image: Shutterstock,

advertising/contact +48 501 791 461 or tpawlak@valkea.com

5

NEWS

LNG terminal launched in mid-October A

new LNG terminal was launched in Świnoujście on October 12 and the first cargo ship will arrive at the end of November or early December. ”The gas which arrives now, will not be burnt ... It will be gradually pumped into the distribution system,” Czerwiński was quoted as saying by the Polish Press Agency (PAP). ”The actual, automatic gas distribution will begin in the second quarter of next year,” he added. Świnoujście LNG terminal is a liquefied natural gas import terminal, which features an unloading jetty for large LNG tankers, two storage tanks and a regasification train. The terminal’s initial regasification capacity will be 5 billion cubic meters per annum.

The project is worth PLN 3.5 billion and is Poland’s flagship investment aimed at diversifying gas supplies, reducing dependence on Russia. ”The investment is very important from the point of view of Poland’s security. Our country will be 100 percent independent from the East. Not because we will have so much liquefied gas, but because the investment is a part of large-scale investments, including cross-border connections with Germany, Slovakia, the Czech Republic and Ukraine, and the construction of a gas storage system,” Czerwiński said.

P

olish tractor producer Ursus has signed a $55 million contract with Tanzanian National Service Corporation Sole (SUMA JKT) to sell 2,400 vehicles and components, a company press release. ”The contract in Tanzania is a result of Ursus’ wide expansion in Africa. Our products are highly regarded there due to the high quality of components.

In carrying out deals in Africa, we are contributing to Africa’s agriculture

mechanization and the development of the entire continent,” said Karol Zarajczyk, URSUS CEO. Under the terms of the deal, Ursus will deliver the tractors in Q1-Q3, 2016.

The Polish producer will also equip an assembly hall and service centers, owned by its Tanzanian partner.

The contract with SUMA JKT is Ursus’ third deal in Africa, after two in Ethiopia with state-owned METEC and Ethiopian Sugar Corporation.

PLN 9.23 BLN

is the value of bids in Poland's LTE frequency auction

25TH is Poland's position in this year's edition of the Doing Business report

8

NOVEMBER 2015 • WBJ OBSERVER

Images: Shutterstock

Ursus signs lucrative deal in Tanzania

NEWS

PLANNING TO INVEST IN POLISH REAL ESTATE? LOOK NO FURTHER!

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Who are you?

Most of our clients are Polish companies with foreign capital involvement and foreign entities doing business in Poland. They include: • Investment funds (open and closed ended) • Banks financing real estate investments • Other entities that invest in commercial real estate (office, retail, warehouse, hotel properties) • Companies whose assets consist of real estate.

Why chose KR Group?

Managing the finances of a property investment requires time, attention to detail, and knowledge of ever-changing accounting laws. Over the years we have also learnt that to operate successfully in Poland it is crucial to fully understand Poland’s complex regulatory and compliance reporting requirements. Doing so reduces the risk of transactions, and provides the level of transparency expected by key stakeholders.

Our property accounting professionals will manage your books so you do not have to. We ensure compliance with all local and international accounting standards. You can count on us to provide financial accuracy, timeliness and peace of mind.

What we do By combining expert knowledge with best industry practice, and extensive transactional and project experience we are able to bring real value to the investment process. Our key services include: • Book-keeping • Nominee directorship • Financial and manage- • Domiciliation ment reporting • Company secretarial • Tax advisory services • Cash management • VAT representation for • Sale of off the shelf businesses from outside companies the European Union • Payroll services We have been successful by building trustful relationships with clients and becoming a business partner in your investment ventures. We can also cut the overall cost of your business operations in Poland.

Our team is well connected with other professionals around the world and able to find solutions at every stage of the reporting process and across several locations.

In short, our aim is to ensure that you receive the highest quality services and insightful advice to help you on the road to investing success.

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WBJ OBSERVER • NOVEMBER 2015

9

NEWS

Orlen awaits spot delivery from Saudi Arabia

KN Orlen is expecting its first spot oil delivery from Saudi Arabia at the beginning of November, Jacek Krawiec, the refiner’s CEO said at a press conference.

Krawiec explained that in line with Orlen’s procedures, a spot contract is signed ahead of a long-term deal, in

POLAND AND THE BALTICS TO BUILD PIPELINE The Financial Times said that Poland, Lithuania, Latvia and Estonia are planning to sign a deal to build a strategic gas pipeline. Construction is to start next year and be completed by 2019.

The total cost of the project amounts to €558 million. Half of that sum will be provided by The European Commission and Poland is expected to provide another €120 million.

The capacity of the pipeline is initially going to be 2.5 bln cubic meters, with the potential to rise to 4 bln cubic meters. That is estimated to be sufficient to fulfill all the gas supply requirements of the Baltic states. The pipeline will be 534 km long and will run from Rembelszczyzna in Poland to Jauniunai in Lithuania.

The pipeline may be seen as support for the Baltics, which until recently, were entirely dependent on Soviet-era pipelines.

10

NOVEMBER 2015 • WBJ OBSERVER

order to conduct a trial delivery. This particular agreement was reached with Saudi Aramco, he pointed out. ”We hope that it will be the beginning of a fruitful cooperation,” Krawiec concluded.

Orlen is in the early stages of establishing a long-term tender procedure,

hence it plans to increase the number of spot contracts.

Igor Sechin, the CEO of Russia’s largest oil company Rosneft said in midOctober that Saudi Arabia had entered the Polish market with supplies via Gdańsk.

Poland advances in Doing Business ranking P

oland scored 76.45 points in the 2016 edition of the Doing Business ranking compiled by the World Bank. This puts Poland in 25th position out of 189 countries, thus our country advanced by 7 places on a yearly basis. ”Since 2009, Poland has improved most from OECD and EU countries, jumping from 76th to 25th position. We are close to achieving the best world practices.” Marcin Piątkowski, senior economist at the World Bank in Warsaw told WBJ. Singapore remained the leader of the ranking. Poland performed better than such European economic powers as France (27), Switzerland (26) and the Netherlands (28). In the CEE region, Estonia (16), Lithuania (20) and Latvia (22) ranked higher than Poland.

Improvements were in such indicators as dealing with construction permits (procedure times have been reduced), getting electricity and paying taxes (electronic VAT invoice system). Most interestingly, Poland is the world leader in trading across borders due to revised methodology, which takes into account its main trade partner (Germany) and the time needed to travel from one capital to the other.

Images: Shutterstock

P

NEWS

Andrzej Duda rejects Doha Amendment to the Kyoto Protocol P resident of Poland, Andrzej Duda has decided not to ratify the Doha Amendment, which prolongs the Kyoto Protocol until 2020.

The Chancellery of the President explained that the amendment would impose legally binding commitments regarding greenhouse gas emissions on Poland. ”Binding the Republic of Poland with the international agreement which affects the functioning of the economy and generates social costs should be preceded by a detailed analysis of the

legal and economic consequences. (...) According to the president, these consequences haven’t yet been presented,” the chancellery said in a statement.

The Kyoto Protocol was valid between 2008 and 2012, its aim was to fight global warming by reducing greenhouse gas emissions in the atmosphere to ”a level that would prevent dangerous anthropogenic interference with the climate system.”

The Doha Amendment extends the protocol until 2020.

EIB grants PGE PLN 2 billion loan The European Investment Bank (EIB) has provided two loans totaling almost PLN 2 billion to PGE Group for electricity network modernization and the construction of two cogeneration units in gas-fired, combined heat and power plants. The new units are located within the boundaries of the existing plants in Gorzów and Rzeszów and are aimed at reducing the current activity of coal-fired installations.

“The EIB, strongly promotes a competitive, diversified and secure energy supply. Thanks to the use of gas, PGE’s undertaking is also increasing the diversification of the Polish power sector, which is dominated by coal-fired plants,” said László Baranyay, EIB Vice-President who is responsible for the Bank’s operations in Poland.

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WBJ OBSERVER • NOVEMBER 2015

11

NEWS / ECONOMY

CALENDAR

NOVEMBER NOVEMBER RETAIL SHOW 2015

18-19

Event: During the two days of the show, nearly two hundred companies will present complex offers for retail chains, including: shop fittings, cash registers, scales, security and protection systems, IT systems for retail chain management, e-commerce solutions, loyalty systems, outsourcing, financial and consulting services.

Location: EXPO XXI, Warsaw Web: retailshow.pl

NOVEMBER FLEET MARKET 2015

24

Event: Car financing in small and medium sized companies is the main topic of this year's edition.

Location: EXPO XXI, Warsaw Web: fleet.com.pl/fleetmarket/

NOVEMBER IT FUTURE EXPO 2015

26

Event: This IT fair is organized at the city stadium of Wrocław is a platform where companies promote the latest solutions and technologies from the sector.

Location: City stadium in Wrocław Web: itfuture.pl/wroclaw

www.whiskyquarterly.com

12

NOVEMBER 2015 • WBJ OBSERVER

18-19

Event: The Congress successfully gathers key decision-makers of the Polish telecommunication and media markets. The Summit became a unique platform for exchanging ideas and opinions among people interested in various aspects of the market development.

Location: Westin Hotel, Warsaw Web: telekomunikacjaimedia.pl

POWER – XXII ENERGY NOVEMBER EURO CONFERENCE EUROPOWER

25-26

Event: Europower Energy Conference is the largest meeting concerning development of the energy market in Poland. Discussions held during the event relate to the most important changes in the market, analysis of new trends, common business models and pursue the most effective market strategies.

Location: Westin Hotel, Warsaw Web: konferencjaeuropower.pl

NOVEMBER 7TH SASMA BUSINESS SECURITY CONFERENCE

26

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WARSAW INTERNATIONAL NOVEMBER VIII MEDIA SUMMIT

Event: Annual SASMA Business Security Conference is already known as the most important event in the business security industry in Central and Eastern Europe that combines top technological minds in the security industry with business professionals, executives, senior management and industry experts providing insight into successful business practices for the security community.

Web: news.sas-ma.org/webpage/konferencje-7th-sasma -business-security-conference.html

FACTS AND FIGURES

Data Data overview overview Data overview Data overview Data overview for September for September for September for September for September

WARSAW STOCK EXCHANGE WARSAW STOCK EXCHANGE WARSAW STOCK2015 EXCHANGE WARSAW STOCK AS OF SEPTEMBER AS OF SEPTEMBER 2015 EXCHANGE AS OF SEPTEMBER 2015 WARSAW STOCK EXCHANGE AS OF SEPTEMBER 2015

476 476 476 476 476

-0.8% -0.8% -0.8% -0.8% waswas Poland's CPICPI was Poland's CPI -0.8% Poland's

AS OF SEPTEMBER 2015

Number of listed companies Number of listed companies Number of listed companies Number of listed companies Number of listed companies

was Poland's CPI inflation September wasin Poland's CPI inflation in September inflation in September inflation in September inflation in September

4.1% 4.1%4.1% y/y y/y industrial 4.1% 4.1% industrial y/y industrial output growth

Trade volumes Trade volumes Trade volumes Trade volumes Trade volumes

9.7% 9.7% 9.7% 9.7% 9.7%

Shares

SharesShares

Shares billion PLNShares 172.49

172.49 billion PLNPLN 172.49 billion PLN 172.49 billion PLN 172.49 billion

REGISTERED REGISTERED UNEMPLOYMENT REGISTERED UNEMPLOYMENT REGISTERED RATE REGISTERED IN UNEMPLOYMENT RATE IN UNEMPLOYMENT UNEMPLOYMENT RATE SEPTEMBER IN SEPTEMBER RATE ININ RATE SEPTEMBER SEPTEMBER

industrial y/yy/yindustrial output growth output growth in September outputgrowth growth inoutput September in September in September in September

Bonds Bonds Bonds Bonds

PLN 609 million

Bonds

609 million PLNPLN 609 million PLN 609609 million PLN million

SEPTEMBER

2.9% 2.9% 2.9%2.9% 2.9%

Futures Futures Futures

PLN 5.98 billion Futures PLN 5.98 billion PLN 5.98 billion PLN 5.98 billion PLN 5.98 Growth of main index (WIG), ytd billion

Futures

y/y y/y retail sales retail sales growth in September y/y retail sales y/y retail sales growth in September y/y retailin sales growth growth in September September

Growth of main index (WIG), ytd

-3.1% -3.1% -3.1%-3.1%

Growth of main index Growth of main index (WIG), ytd(WIG), ytd Growth of main index (WIG), ytd

growth in September

-3.1%

Going down

"In H1 2015, as

PLN PLN31.1 31.1 many as 376 PLN 31.1 companies went billion billion PLN 31.1 PLN 31.1 budget deficitbillion at the end of budget deficit at the end of bankrupt. This

The Economic Sentiment Indicator (ESI) for Poland, calculated by the European Commission, fell to 97.7 points in September compared with 98.4 points in August

billionbillion is the lowest

Data source: Warsaw Stock Exchange, Central Statistical Office

September 2015 September 2015 budget deficit at the end of September 2015

10

10

10 11

9.5

10.5 10

Jul. ’15

Aug. ‘15

Jun. ‘15

Apr. ‘15

May ’15

Sep. Mar. ‘15 '15

Jul. ’15 Jan. '15

Aug. Feb. ‘15 '15

Jun. Dec. ‘15 '14

Apr. Oct. ‘15 ‘14

May Nov. ’15 ’14

Feb. '15

Jan. '15

Dec. '14

Oct. ‘14

Mar. '15 Sep. ‘14

9.5 Nov. ’14

Sep. ‘15

Jul. ’15

Aug. ‘15

Jun. ‘15

Sep. ‘15

Sep. ‘14

9.5

12

10.511.5 Oct. ‘14 Sep. ‘14 Nov. ’14 Oct. ‘14 Sep. ‘14 Dec. '14 Nov. ’14 Oct. ‘14 Jan. '15 Dec. '14 Nov. ’14 Feb. '15 Jan. '15 Dec. '14 Mar. '15 Feb. '15 Jan. '15 Apr. ‘15 Mar. '15 Feb. '15 May ’15 Apr. ‘15 Mar. '15 Jun. ‘15 May ’15 Apr. ‘15 Jul. ’15 Jun. ‘15 May ’15 Aug. ‘15 Jul. ’15 Jun. ‘15 Sep. ‘15 Aug. ‘15 Jul. ’15 Sep. ‘15 Aug. ‘15

Sep. ‘15

10.5

11

9.5 Apr. ‘15

Jan. '15

Feb. '15

Dec. '14

Oct. ‘14

-2

-2 Nov. ’14

-1.5

Sep. ‘14

-1.5

-2

May ’15

-1

9.5

11

-2-0.5-1.5

11.5

11 10.5

10

11.5

0 -1

-1.5 Sep. ‘14

-1

10.5

-0.5

Oct. ‘14 May ’15

-2

0.5

Nov. ’14 Jun. ‘15 Dec. '14 Jul. ’15 Jan. '15 Aug. ‘15 Feb. '15 Sep. ‘15 Mar. '15

-1.5

-1

11

12

Sep. ‘14

-1

-0.5

12

12 Poland’s registered unemployment rate, 11.5 September 201412– September 2015 11.5

0

-0.5

Sep. ‘14 Apr. ‘15

-0.5

Steadily down

Year-on-year CPI inflation in Poland, September 2014 – September 2015 0.5 0

0

number since 2011, according to Konferencja Przedsiębiorstw Finansowych (KPF)."

Sep. ‘15

Deflation holding

0.5

Oct. ‘14 Sep. ‘14 Nov. ’14 Oct. ‘14 Sep. ‘14 Dec. '14 Nov. ’14 Oct. ‘14 Jan. '15 Dec. '14 Nov. ’14 Feb. '15 Jan. '15 Dec. '14 Mar. '15 Feb. '15 Jan. '15 Apr. ‘15 Mar. '15 Feb. '15 May ’15 Apr. ‘15 Mar. '15 Jun. ‘15 May ’15 Apr. ‘15 Jul. ’15 Jun. ‘15 May ’15 Aug. ‘15 Jul. ’15 Jun. ‘15 Sep. ‘15 Aug. ‘15 Jul. ’15 Sep. ‘15 Aug. ‘15

0

0.5

Mar. '15

0.5

budget deficit at the end of at the end of budget deficit September 2015 September 2015

WBJ OBSERVER • NOVEMBER 2015

13

COMMENTARY / LAW

TOMASZ FELISZEWSKI LEGAL COUNSEL AT WKB WIERCIŃSKI, KWIECIŃSKI, BAEHR

Poland’s new weapon against hostile takeovers

According to the Act, prior to the acquisition of shares in strategic companies (including the acquisition of proprietary interests in entities and/or their enterprises) the purchaser will need to notify the Minister of the State Treasury and get the required approval. The obligation to inform the Minister of the State Treasury is to apply to transactions involving the acquisition of at least a “material stake” in companies doing business in the sectors that are deemed strategic for the Polish economy (i.e. companies operating in the gas, power generation, chemical, petrochemical and defense sectors).

Furthermore, the Act gives the Minister of the State Treasury the opportunity to create, by way of a decree, a list of entities subject to protection under the Act. Unfortunately, no such regulation has yet been issued. It would possibly make the Polish market more predictable, considering that the Act provides for broad and general criteria for the assessment of the impact of a given acquisition on the strategic sectors of the Polish economy (“the market share of the entity in question;” “the scale of the business,” as well as the transaction’s potential to “upset public order or public security”). This means that the Minister has a large margin of discretion when deciding about the faith of the transaction.

As a rule, an objection made by the Minister of the State Treasury will block the transaction. Any acquisition performed

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against the negative decision or without notification will be null and void. Furthermore, the Act stipulates that failure to comply with the notification obligation carries a fine of up to PLN 100,000,000 (+/- €25,000,000) or a penalty of imprisonment between 6 months and 5 years (or both punishments together) for a person acting on behalf of a legal person or an organizational unit without legal personality that acquires at least a material stake without prior notification. It is worth mentioning that objection decisions will be subject to judicial review by way of a complaint to the administrative court.

It is likely that the list of entities “protected” by the Act would be welcomed by foreign investors. Nevertheless, one should keep in mind that it is a highly sensitive political issue and such a “list” would probably be subject to amendments according to the election calendar in Poland. u

Images: Shutterstock, Audi

On

September 30 2015, the Act on Control of Certain Investments (the “Act”) came into force. The Act aims to create mechanisms to protect against hostile takeovers of companies operating in key sectors of the Polish economy. However, this piece of legislation leaves a large margin of discretion for governmental authorities to give a “green” or “red” light to future investments without clear guidelines.

COMMENTARY / AUTOMOTIVE

MICHAŁ BOWSZA AUDI BRAND DIRECTOR, VOLKSWAGEN GROUP POLSKA

Perfect cars on perfect terms

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comfortable sedan, a roomy Avant or an agile city car – all Audi vehicles are perfectly formed. Moreover, methods for their financing are equally perfect.

Audi has redefined the concept of high quality, that also includes car financing services. Several financing methods are available: cash payment, car loan or leasing. The latter is particularly popular among business clients, both in the case of single-vehicle and fleet purchases.

Companies registered over 201,000 new passenger cars in 2014, out of which 115,000 were leased. The most popular scheme is leasing with a high residual value, the Audi Perfect Lease. It allows you to use a new Audi for three years and then replace it with a new model.

Pay less The basic advantage of the Audi Perfect Lease is the low cost of the monthly payments, zero down payment and a free maintenance package. The amount of the monthly payment is equally attractive in the case of a higher standard or better optional equipment. A company using an Audi Perfect Lease car for two or three years pays only a part of its value. At the end of that time the client chooses whether to make the final payment or

return the car to the dealer in exchange for a new Audi model. The right to return the car and the amount of its remaining value are guaranteed by Audi Leasing.

State-of-the-art mobility The calculation of a monthly payment in Audi Perfect Lease is simplicity itself: 1.23 percent of the car’s price within the most popular parameters, i.e. 36-month lease, 0 percent-10 percent initial payment (depending on the model) with annual mileage of 30,000 km.

Invest in your business, not in vehicles The Audi Perfect Lease is an excellent way to gain mobility (irrespective of a business’s size) with the lowest possible expenditure. With monthly payments a company has more available funds to invest in current operations or development. The monthly payments can be registered as tax deductible expenses, which opens up a brand new dimension in using a car: it is a tool, it has to be reliable and bring profits, so it has to cost as little as possible every month. Such an approach – using, instead of owning – has become the standard in Western Europe. It is now gaining in popularity in Poland as well. u

WBJ OBSERVER • OCTOBER 2015

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COMMENTARY / AUTOMOTIVE

TOMASZ FELISZEWSKI PR MANAGER AT ŠKODA

The new standard in large family cars segment

Š

cockpit is fitted with a lot of driver support functions, from the large central display to the umbrellas stored in the doors. In addition to the usual Škoda features that are practical for everyday use, there are several accessories which incorporate the most modern technology, e.g. the Park Assist automatic parking assist system, contactless boot opening, and a reversing camera. The technological elements of this top-of-the-range Škoda are most evident, however, in its active and passive safety features, which are highly commended.

Škoda has launched a product offensive in the development of the latest generation of the Superb model. This is the most elaborate and advanced vehicle in the company’s more than 100-year history. There has obviously been considerable progress. This is most evident on the exterior. The newly redesigned Škoda Superb really has been brought up to date. Every model in the Superb range guarantees maximum headroom and legroom for rear passengers, and, as is usual for Škoda, the car has a generously spacious boot – up to 625l for the liftback and 660l for the family estate car.

The Škoda Superb now offers a more styled and comfortfocused driving experience. The imaginatively designed

Technological progress has brought a lot of benefits, even when it comes to the driving experience. The Superb is the first Škoda to come with Dynamic Chassis Control (DCC). This allows the driver to choose from a variety of vehicle “personalities” – from the ecological through the comfortable to the more energetic. The Superb is equipped with a palette of high-tech drive units (including advanced petrol and diesel units) that enable it to perform accordingly in each of these roles. There is a wide choice of engines, varying in power from 125 bhp to 280 bhp, which are as notable for their low running costs as they are for their performance. u

Image: Shutterstock

koda is mainly associated with cars that are compact and pragmatic. However, those qualities that have brought significant levels success to the Fabia and Octavia models, a well-thought-out design and a competitive price-quality ratio, also guarantee further successes in higher market segments. The success of the Superb has been confirmed by the first and second generations having generated sales of almost 700,000 over the past 14 years.

This makes the Superb one of the best selling cars in the world.

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COMMENTARY / BPO

DAVID JAMES

DIRECTOR OF INTERNATIONAL DESKS AT MAZARS IN POLAND

Global BPO and Shared Service Centers in Poland

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he fact that businesses require increasingly globalized outsourcing solutions is beyond question.

These days, some companies are “born global”, others achieve globalism or have globalism thrust upon them.

The speed of information transfer, efficiency of control and economy of scale are all reasons why businesses regard the incorporation of global solutions as part of their competitive strategy.

One of the most remarkable changes in Poland over the last five years has been the tremendous investment in Poland as a center for global BPO and shared service centers (SSCs).

Poland has been able to develop this industry in a spectacular way as a result of its education system, communication infrastructure, and even the hands-on experience of Poles returning from working in the UK. All these factors accumulate to make this country a fertile ground for this new industry.

There are 470 centers and over 150,000 employees working in the sector, serving thousands of businesses from all over the world.

We can say that India has truly had to move over to make room for the Polish outsourcing tiger.

There do, however, remain certain problems and issues in the sector which is why some audit firms have developed a raft of solutions especially for the industry and its clients. The first is the problem of localizing services. After all, it is all very well having your accounts ready to trial in a foreign country but how will people sitting in Poland know about the specific requirements in the company’s country of residence?

We have the issue of language but this is usually solved by the fact that Polish centers are home to nationals from dozens of countries from around the world. A more challenging issue is

how to deal with indirect and direct taxation and how to make the accounts seem like they were produced across the street when Mr Kuiypers in the local tax office in the Netherlands looks at them?

The remaining issue is auditing – it is not easy for most international audit companies to service SSCs as the systems in most firms require teams of auditors to be flown in from all the respective countries – after all most audit firms are networks run out of the UK or US and are mostly concerned about liability therefore, each country undergoes its own processes. This adds significantly to the cost and brings in unexpected complexity.

Businesses who would like to begin a global BPO or SSC project and who are considering a choice of providers to help them, can and should obtain independent advice in order to weigh up the pros and cons of different solutions. u

WBJ OBSERVER • NOVEMBER 2015

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INTERVIEW / PAWEŁ SOLOCH

NEW MODERN ARMY

PAWEŁ SOLOCH, HEAD OF THE BUREAU OF NATIONAL SECURITY (BBN), TALKS WITH WBJ OBSERVER ABOUT THE ROLE OF THE BBN IN HELPING THE PRESIDENT TO UNDERTAKE HIS CONSTITUTIONAL TASKS IN THE FIELD OF SECURITY. HE ALSO COMMENTS ON THE COOPERATION BETWEEN THE PRESIDENT AND THE GOVERNMENT CONCERNING THE STRENGTHENING OF POLISH SECURITY AMID THE DIFFICULTIES OF THE CURRENT INTERNATIONAL SITUATION I N T E R V I E W B Y E WA B O N I E C K A

Paweł Soloch: It should be remembered that the President, as the chief of the armed forces, has clearly defined legal powers and will certainly exercise them if necessary. For example, it is important to constantly monitor activities in the field of security in order to be able to pinpoint any issues which may be of interest to the President. I would also like to stress that in his first weeks in office, the President very clearly declared that the issue of security should remain outside current political conflicts. In this respect he is counting on cooperation and dialogue with the government. This also holds true for the BBN, of which I am the head. I assess the meetings that have been held thus far with the particular ministries to have been largely successful.

Your predecessor as the head of BBN, general Stanisław Koziej came

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Image: Ministry of Culture Images: Jan Malinowski/WBJ

WBJ Observer: President Andrzej Duda has expressed his somewhat critical opinion of the present government’s activity in the area of defense, national security and procedures for the modernization and equipment procurement for the army. Therefore, under such circumstances, how do you envisage cooperation between the President, the BBN and other governmental institutions?

INTERVIEW / PAWEŁ SOLOCH

from a military establishment, you are a scholar and a former director of the Sobieski Institute think tank. Does this have any influence on the functions of the BBN and if yes, in what respect?

The Bureau of National Security is an advisory body to the president and its primary role is to support him on issues of security. This task should be performed by the Bureau regardless of who is in charge of it. However, it is obviously the President who makes the final decision on specific tasks realized by the BBN. According to his expectations the priority for the BBN right now is to perform an audit of national security. The audit should cover such issues as evaluating the execution of tasks defined in the most important strategic documents and assessing the process of technical modernization of our armed forces. Along with issues connected with strict military security, other important tasks include increasing the efficacy of the national security management system, civil defense and the mobilization of reserves in crisis situations.

Images: Shutterstock, Sobieski Institute

What steps must be taken by Poland in order to convince other NATO members to strengthen, not on paper but in practice, the security of the Eastern flank of the Alliance and what analysis will the BBN provide?

First of all I would like to stress that allied commitments in the framework of NATO do not only exist on paper. Poland has no reason to doubt their credibility. After all, no member of NATO in its history has ever been left to their own devices.

Whereas, speaking about the need for a permanent presence of allied forces in Poland we are thinking mainly about strengthening NATO’s deterrent capabilities in response to the changing conditions of security in Europe. During the last NATO summit in Wales, the allies agreed upon a plan of NATO readiness which envisages a series of actions to strengthen the security of the eastern flank of NATO. They are already being implemented. Nevertheless, this plan cannot be seen as the final aim. It is rather a successive step along the path towards an ever deeper and necessary adaptation.

We believe that at next year’s NATO summit in Warsaw we will succeed in convincing other NATO members to undertake further steps to strengthen the security of the eastern flank of the alliance. In this

shall be installed on the territory of new NATO members, so this also applies to Poland, whereas Russia has violated all international rules by claiming parts of Ukraine by force and presenting a hostile attitude towards the US, NATO and the European Union. What is your position on this?

“OUR POSITION IS THAT THE FOUNDING ACT BETWEEN NATO AND RUSSIA ON MUTUAL RELATIONS, COOPERATION AND SECURITY FROM 1997 SHOULD NOT TIE OUR HANDS UNILATERALLY, BECAUSE IT IS RUSSIA, NOT NATO, WHOSE ACTIVITY HAS UNDERMINED ITS PROVISIONS.

context the President is putting forward proposals for further action. He has been engaging in dialog with Western European heads of state. He is also striving to consolidate the position of other countries in the region. This will be one of the goals of the summit for the leaders of nine Central and Eastern European states that will take place at the beginning of November in Bucharest.

Of course the BBN provides analytical support to the President in that field. We are also in contact with foreign partners and we cooperate with the Polish Ministry of National Defense which is directly responsible for organizing the NATO summit in Warsaw.

Western powers still respect the 1997 agreement between NATO and Russia which stipulates that no NATO base

Our position is that the Founding Act between NATO and Russia on Mutual Relations, Cooperation and Security from 1997 should not tie our hands unilaterally, because it is Russia, not NATO, whose activity has undermined its provisions. There is a maxim in Roman law - conventio omnis intelligitur rebus sic stantibus, meaning that every agreement is treated as obligatory only in precisely set conditions. And the conditions, in which that act was signed, have changed fundamentally due to the actions of Russia. Russia has shown aggression to Ukraine and previously to Georgia.

Russia has illegally annexed Crimea. It is Russia which withdrew from the Treaty on Conventional Armed Forces in Europe.

It is Russia which conducts large military exercises in a non transparent way which creates conflict with NATO. Finally, it is Russia which has dramatically increased armed forces expenditure and which conducts covert armament programs. We cannot turn a blind eye to these facts. The defense activity of our Alliance cannot be restricted by agreements which were established under completely different strategic circumstances.

The current concept of security includes not only the military capacity of each country, but also energy security, crisis management, the protection of society and economic security. What is your view the BBN’s involvement in those fields?

Indeed, we treat contemporary national security in a much broader sense than military issues. Nowadays, the BBN receives detailed information and monitors problems connected to public security, the activities of special services, energy security, social and economic security, the protection of citizens and crisis management. The BBN analyzes and interprets the legal issues associated with the broad aspects of national security and participates in the creation of new strategic documents.

Of course the BBN assesses all aspects and issues of security on a daily basis and prepares relevant materials for the president.

WBJ OBSERVER • NOVEMBER 2015

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INTERVIEW / PAWEŁ SOLOCH

Currently, there is an ongoing debate in Poland about the level of military spending, which this year stands at PLN 8 billion and in the next decade will reach PLN 140 billion. But some analysts, also from the military field, point out that buying military equipment from abroad does not correspond with the development of Polish military production and innovation. What steps should be taken to change this situation so as to develop our military industry?

How do you assess the current development of civil defense groups in Poland in which thousands of people participate? What could the role of such organizations be in the case of attack?

In our country the training and development of around 10,000 marksmen is underway. 35,000 youths attend military classes and there are thousands of other citizens who are willing and able to obtain the necessary skills and knowledge in order to assist with national defense operations.

That potential should be exploited. First of all in relation to securing the safety of our citizens and proper functionality of our country in the face of various threats. They should be part of educating society and preparing for defense in the case of war. Certain activities in that field have already been completed. Under the ministry of defense the federation of defense organizations was established. It is a good prognosis for the future. One has to remember, however, that it is necessary to provide a pro-defense civic movement not a temporary solution, but a comprehensive, long term and formalized structure. Only then will it become part of

Images: Shutterstock, NATO

First of all, I want to stress that just because the Polish military industry cannot now compete with the biggest players on the global market does not release us from the obligation to develop, strengthen and modernize it. It is one of the pillars of our country’s security and also an important element of the country’s economy.

Talking about strengthening the defense industry, it seems that the first task is related to technology, in which our military industry can play a leading role and in which the state should invest. It is linked, among other things, to the development of future projects with a view to participation in long term plans for the modernization of our armed forces. It is also very important to create a system, in which Polish firms would be obliged to search for foreign partners with technological potential.

Such cooperation would allow the transfer of technology and experience and hence lead to the modernization of our country’s military sector. I also point to other things,

such as keeping the most talented engineers in the country and providing them with the opportunity to build a career in the military sector. Additionally, the effective role of the state, particularly the government, must be enhanced in promoting the Polish military industry in terms of international contacts.

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INTERVIEW / PAWEŁ SOLOCH

Images: Shutterstock, NATO

the general system of national security and it will be strengthened.

Poland’s historical experiences have taught us that the security of the country can never be permanently assured. Do you think that Poles feel the same way now, as we are a member of the most powerful military organization in the world – NATO. What steps should be taken to strengthen Poles’ feeling of security in the long term?

It is true, a fact very well understood by Poles, that since 1999 our country has been part of NATO, the most powerful defense alliance in the world based upon principles of collective defense, as expressed in article five of the Washington Treaty. But I want to point out that also included in that treaty is

“NATO MEMBERSHIP DOES NOT RELEASE US FROM THE OBLIGATION TO STRENGTHEN OUR OWN DEFENSE CAPABILITIES BUT PLAINLY REQUIRES US TO DO IT.

article three, which stresses the obligation of each member state to look after their own defense responsibilities. NATO membership does not release us from the obligation to strengthen our own defense capabilities but plainly requires us to do it. To that end we are constantly developing and modernizing our armed forces and in that spirit we strive for the appropriate adaptation of international alliances to deal with present threats.

We have to exploit the potential of the deeprooted patriotism of Poles. The dynamic development of pro-defense movements, about which I have mentioned, should be incorporated into the inherent system of national security. There is no doubt nowadays, that the capital cities of each country are well prepared to defend themselves and conscious of the possible threats to society. u

WBJ OBSERVER • NOVEMBER 2015

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COVER STORY / ELECTIONS

Welcome to t

B Y J AC E K C I E S N OW S K I

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COVER STORY / ELECTIONS

the new Poland

May you live in interesting times is an alleged Chinese proverb.

It looks like during the next four years this wish will come true

image: Jerzy Dudek/Forum

A

fter eight years of Civic Platform (PO) rule, Poles have said enough and turned right. The scene was set two months earlier, PiS-backed Andrzej Duda beat the incumbent Bronisław Komorowski. After that, a Law and Justice victory was a sure thing, the only remaining question was if they would be able to rule on their own, without requiring a coalition partner. The answer was yes. For the first time since the fall of communism a single party will be able to govern without having to make compromises with a junior coalition partner.

The reasons behind PO's defeat are the same as for the Komorowski loss in the presidential elections. After eight years of Civic Platform in power people became weary.

That’s why the majority of young Poles voted right-wing (Law and Justice, Korwin and Kukiz), the young are always anti establishment and Civic Platform was the only establishment they had known during their adolescence. Even though economic indicators were working in PO’s favor – unemployment was shrinking, GDP was on the rise, for many this was either not noticeable or not enough. People always want more and the gap between Poland and the rest of the EU is still significant and will be for many years to come. That’s why this campaign was focused on who could promise more to the electorate.

WBJ OBSERVER • NOVEMBER 2015

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COVER STORY / ELECTIONS

PiS went all the way with such obligations – lowering retirement age to its previous level of 60 for women and 65 for men, a PLN 500 per month subsidy for every second and subsequent child, a PLN 1.4 trillion investment program and taxes on banks and large corporations are only a few of their election promises. The question is, will they be able to keep them. Rating agency Standard and Poor’s said the outcome of the vote had no immediate impact on Poland’s A-rating with a positive outlook but it added that policy measures could dampen investor confidence.

The other question remains who the next Prime Minister will be. During the election campaign Beata Szydło was presented as the future PM. The divisive Kaczyński decided to take a step back. However, as soon as the results were announced he was the one who took to the podium to thank his constituents.

Backing down from this election promise so early on could be a major blow to the party’s support.

Caught on tape The wiretap scandal, in which many highprofile PO politicians and businesspeople were taped discussing national affairs, did not help the former ruling party at all. Even

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This campaign was focused on who could promise more to the electorate. though, technically no one was breaking any laws during those conversations, the language used and the fact they were discussing important matters such as simple household affairs did not go unnoticed by many.

The manner in which the scandal was handed also did not do them any favors.

Kopacz only dismissed the politicians in question after the transcripts made their way to the newspapers, showing that either she did not know about what was said, or she knew and failed to take action immediately.

Both versions make her seem incompetent.

After this apparent failure, there was no one who could step into her place. Donald Tusk, to avoid creating a potential threat within the party ranks made sure to eliminate everyone who could have stood in his way.

Then it was too late and he made his move to Brussels. Kaczyński acted in the same way, though his actions are even more transparent. The difference between them is, that Kaczyński has remained party leader, pulled all the strings and created both Duda and Szydło, while Tusk was absent and his candidate for succession (Kopacz) failed at her job.

The policy of inviting politicians who have fallen out of favor in their parties into the mix has not helped either. While on paper it seemed like a good idea, showing the public that they are open to other ideas and people from the other side of the spectrum seriously backfired. During this election, PO supported former EU-sceptic and right-wing politician Roman Giertych on their ticket (he did not get into the Senate), Lech Kaczyński's former spokesman Michał Kamiński (did get into the Sejm) and the former close political ally of the Kaczyński twins (often dubbed the third twin), Ludwik Dorn (he did not get into the Sejm) among many others. Many voters thought that endorsing former political enemies was ludicrous and strayed away from the party. Maybe if they stuck with politicians who had at least never gone up against the party, they would get a few more MPs in parliament.

Images: Shutterstock, Flickr/Ewelina Lach, Flickr/MInistry of Foreing Affairs

Paweł Kukiz (right) has become third political power in the parliament

COVER STORY / ELECTIONS

The most pressing question now, is who will lead PO in the coming years and to what extent Tusk will be involved in the process.

Sure, Tusk has more pressing things on his mind and is fully occupied with his duties in Brussels, but saying that he won’t be involved in dictating new PO leadership is like saying that Kaczyński is not involved with the decision-making of President Duda and the future (at the time of going to press) PM Szydło. It is especially interesting that one of the few names still big enough to lead PO is Grzegorz Schetyna. Tusk's former righthand man fell from grace when his mentor felt that Schetyna was trying to take over control of PO. In Tusk's absence, Schetyna took over the ministry of foreign affairs and was one of the few not to be taped in the wiretap scandal. This makes Schetyna one of the frontrunners to replace Kopacz. Others include Defense Minister Tomasz Siemoniak and former MEP and Digitization Minister Rafał Trzaskowski. The former is seen as an efficient expert in his field, but more as a manager than a politician. Trzaskowski is close to Tusk, he is still considered young (he will be 44 in January) but experienced and was also untainted by the wiretap scandal (just like Siemoniak).

While Kopacz might retain her leadership during the upcoming party convention, few expect her to remain the leader when the current parliamentary term runs out.

Never Mind the Bollocks, Here’s Kukiz While many have been assigned the moniker 'maverick,' Paweł Kukiz is the most deserving of recipients. A punk rock musician famous for his stint as the lead singer of Piersi (Breasts) for whom he wrote a number of profanity-laden hits and also a self-declared alcoholic. Despite all that he is actually very conservative. Allegedly, he decided to make this foray into politics when his close friend Schetyna, told him that Civic Platform had decided to abandon the idea of single manMost of the PSL leadership did not get into Sejm

Ewa Kopacz is now facing a tough battle for PO leadership

Kopacz might retain her leadership during the upcoming party convention but few expect her to remain the leader when the current parliamentary term runs out. date constituencies (of which Kukiz was a big supporter and is basically the only fixture of his non-existent political program) because “it would help communists win.” Fed up with this, he created his own movement and ran in a flawed, yet relatively successful,

presidential campaign in which he got 20 percent of the votes. Even though during the next five months his support halved, mostly due to him being non-existent during the campaign, having relatively unknown people on his ticket and not having any political program at all. Despite all this he has become the third political power in Poland.

During the campaign, he supported PiS, showing up at a miner's rally with Szydło and later saying that he would give a PiS government his vote of confidence, though he would not become a part of it. This may pose some problems as after claiming that his main objective (besides single mandate constituencies) is to “destroy the system” he will actually become part of it. Plus, the people that he brought into the Sejm are quite a bunch. On the one hand you have farright nationalists, whose future speeches will most likely put the likes of Korwin-Mikke in the European Parliament to shame. On the other hand you have people like Liroy, Poland's first rap superstar, whose political viewpoints still remain a mystery, yet you could imagine that his porn-star wife and his alleged ties to the adult industry will not gain him any fans among far-right members of the Kukiz grouping. One could easily see this faction split into smaller groups and eventually join other more established parties, with PiS being the top contender to take in Kukiz MPs. Left behind For the first time in democratic Poland, the left side of the political spectrum will not be represented in the Sejm. Both Zjednoczona Lewica (a coalition of Left Wing Alliance – SLD, Your Movement – Twój Ruch and a few smaller parties) and the recently formed Razem (Together) grouping got 7.55 and 3.62 percent respectively. The downfall of the left has been an ongoing process since 2005

WBJ OBSERVER • NOVEMBER 2015

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COVER STORY / ELECTIONS

when SLD got only 11 percent in the parliamentary elections compared to 41 in 2001.

The Left Wing Alliance has been plagued by internal conflicts and its leaders have been in politics since the communist era. There were attempts to replace them with younger leaders, but both Wojciech Olejniczak and Grzegorz Napieralski who led the party between 2005-2011 have been marginalized and were eventually ousted from the party (Napieralski was voted into the Senat this year running on the PO ticket). Miller, who still leads the party, tried to bring some fresh faces into the spotlight. However, just as Magdalena Ogórek was a failure in the last presidential campaign, Barbara Nowacka, the daughter of Izabela Jaruga-Nowacka who died in the Smoleńsk plane crash, lead the left coalition and did not fare any better.

In the end, she was too unknown to succeed, plus, the left side was marginalized during the last term, especially by Civic Platform

which passed (state-funded in vitro fertilization) or at least tried to pass (civil unions) regulations usually associated with the left. With Law and Justice being far bigger and more vocal opposition than SLD and TR combined, they simply got lost in the shuffle.

Now they have four years to regroup and hope for a better result in 2019. They will need a new leader though, as Miller is tainted politically and Palikot might be done with politics after this loss and head back to the world of business. Robert Biedroń might be the man for the job. The former Your Movement MP is currently the mayor of Słupsk and has been garnering a lot of praise in the job so far. That said, he will have to do what no one else has done before, unite all the left groupings.

Shift in power The Polish People's Party is facing an intriguing dilemma. The now former junior coalition partner barely got into parliament

An overwhelming majority of the Polish youth voted right

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with 5.13 percent of the votes but its leaders did not get a seat. Both the party leader and former Deputy PM Janusz Piechociński and his predecessor in party structures, Waldemar Pawlak lost in their constituencies. This means that the party will most likely have to completely change its leadership. Luckily for them the only possible candidate for this role, former Labor Minister Władysław Kosiniak-Kamysz, was voted into the Sejm and is the only logical contender to take over PSL. He's young and during his run as a minister, unemployment dropped to singlenumber figures for the first time since 1989.

PSL's problems lie deeper than that. As a representative of rural Poland they were always strongly-supported in local elections. On a national scale, in presidential elections, they always failed, never having succeeded in getting a candidate into the second round. In parliament they often supported those who needed support. PSL was a junior coalition member in SLD and PO-led governments.

With many PSL politicians being close to PiS at least on social issues, many were sure that if Jarosław Kaczyński needed a coalition partner, he could find it in the Polish People's Party. This shows that the political backbone of the party is very weak and with Polish rural demographics changing (many people are moving to cities and those who decide to stay have different viewpoints than the generation before them), PSL might have more trouble getting into parliament in 2019.

It's fascinating that every four years many experts point out that the country's political scene is moving towards becoming a more established democracy and in future elections fewer parties will get into parliament, leaving only two major oppositions. But, every four years, while someone drops out never to be seen again, others emerge to replace them. With so many new and unknown faces it's impossible to tell what the political landscape will look like when the elections come around. All this is what makes the next four years so compelling. u

Images: Shutterstock

Grzegorz Schetyna (second from right) was once a close ally of Tusk

COMMENTARY / FMCG

Foundation, trust, testament vs. estate succession 18 percent of Polish enterprises are family-run businesses. They offer employment to 24 percent of all employed. They also make over 21 percent of investments. Their founders and owners would like to know how their power, knowledge and estate will be transferred one day. Usually, they are responsible for the enterprise growth and the implementation of its vision.

Robert Nogacki Succession concerns just any Founder and Owner kind of estate. Actions being its of Skarbiec Law Firm components – meant to last a few years – constitute an indispensable condition of enterprise stability.

To avoid unwanted and undesirable events, from the perspective of family wellbeing and their interests, a plan of estate succession should be properly devised, i.e. the process of estate transfer between generations should be well planned. It is advisable to do it within one’s lifetime, taking appropriate steps in advance.

Thanks to the testament we can manage our estate efficiently after our death as, apart from pointing out the persons to whom we would like to transfer certain items of our assets, we can also take advantage of the system of legacies and instructions, by means of which we will arrange the moment when the given person may take over the indicated goods from us.

Things will go differently, should the estate be deposited in a family foundation or a trust.

In Poland, there is a possibility to establish a foundation only to execute socially and economically viable goals. On the other hand, the institution of a trust is completely un14

JUNE 2015 • WBJ OBSERVER

known. However, it is common practice worldwide, more and more often used by Polish residents, to establish a foundation in a country where it has been customary for many years, e.g. in Liechtenstein, Austria or Panama.

A foundation plays a role as far as private estate management is concerned and is related to company succession. What characterizes it is the protection of the estate from operational risk connected with current commercial activity – an estate deposited in a foundation is protected from the risk of being collected by private and public creditors. Moreover, it safeguards enterprises against being fragmented between heirs, as it is the foundation that becomes the owner of the whole estate having one decision-making centre. It also ensures protection from the inheritance and donations tax because the estate accumulated in the foundation is not part of the total estate – the foundation remains the owner of the estate. Additionally, the foundation ensures smooth passage of generations in company management.

Trust, on the other hand, is an institution analogical to a private foundation. This solution is, however, used commonly in countries operating on an common law system basis, such as England, Cyprus, The Bahamas, the United States or Singapore. Establishing a trust which is supposed to protect the donator’s estate efficiently must involve estate ownership transfer, hence the choice of a trustworthy person (the trustee) and drafting an appropriate trust agreement are of vital importance.

To sum up, this way or another, succession, especially estate succession, will eventually take place. It is certain.

Important is that it should happen on our conditions.

Skarbiec Law Firm – we have been advising entrepreneurs on effective VAT refund for ten years already.

OUT OF THE AUTOMOTIVE DESERT

FEATURE / AUTOMOTIVE

B Y WOJ C I E C H R Y LU KOW S K I

W

hen the first Warszawa rolled off the assembly line in 1951, the FSO manufacturer’s newsletter wrote that it is a “great victory over the dark forces of imperialism … a great victory facilitated by the Genius of Our Era – Joseph Stalin”. Two years earlier, Poland had been forced by the Soviet Union to withdraw from a contract agreement with Italy’s Fiat for the production of the 1100 model. As a reward, Stalin handed over a license to produce a car based on the obsolete Soviet Pobieda. The Warszawa was the first car made in Poland after the second World War, but it was the Polski Fiat 125p, dubbed maluch (the small one) that “motorized” Poland in the 1970s. This small vehicle, manufactured on license from the Italian company, served for most Poles as a family car, in which up to four people would go on holiday squeezed in between their baggage.

Pillar of the Polish economy Dependency on foreign licenses or investment has remained a hallmark of Poland’s automotive sector. After the fall of communism, the industry became integrated into European production networks and received more than $10 billion of foreign investment in the years 1990-2005. The inflow of foreign capital was stable until 2008, but in subsequent years, due to the global financial crisis it began to be more volatile and twice resulted in negative annual net returns. Despite decreased output and employment in recent years and lower total FDI stock in 2013 than in the previous year, amounting to €7.2 million, the industry remains one of the most important for the Polish economy in terms of employment, production value, and share of exports.

The Central Statistical Office (GUS) said that there were 407,200 people employed in

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OVER THE LAST 25 YEARS, THE AUTOMOTIVE SECTOR HAS BECOME ONE OF THE MOST IMPORTANT INDUSTRIES FOR THE POLISH ECONOMY. ALTHOUGH LARGELY FDI DEPENDENT, DOMESTIC COMPANIES ARE TAKING ADVANTAGE OF KNOWLEDGE TRANSFER AND ARE BEGINNING TO DIP THEIR TOES INTO THE BUSINESS

Image: Shutterstock

FEATURE / AUTOMOTIVE

WWBBJJ OOBBSSEERRVVEERR •• NNOOVVEEMMBBEERR 22001155

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FEATURE / AUTOMOTIVE

this part of the economy in 2013, 40 percent of which were in manufacturing, which accounts for 6.7 percent of workplaces in the Polish industry. Only the food sector and metal equipment manufacturing hire more people. Since Poland’s automotive sector is heavily export-oriented, its condition is dependent on the situation on the Western markets, which was visible in the post-2008 depression. Luckily, with the recovery of the European economy, the sector showed signs of revival. Sales grew by 5.1 percent y/y in 2014 and amounted to PLN 113.2 billion, while exports of automotive products increased by 3 percent y/y totaling €25.3 billion, according to the Automotive Industry Yearbook 2015 issued by consultancy KPMG and the Polish Automotive Industry Association. However, despite the business being vital to its economy, Poland ranks only third from CEE countries in terms of output.

With 473,000 passenger cars and 120,900 commercial vehicles produced in 2014.

Poland is outranked by the Czech Republic (1.245 million in total) and Slovakia (993,000 passenger cars solely).

Dariusz Balcerzyk, an expert from market researcher Samar, said that gone are the times when we were the leader in the region. In his opinion, the situation is caused by the fact that there hasn’t been a long-term automotive sector development plan outlined by any government. Poland has recently painfully realized that it is not the region’s biggest player and first choice country for foreign investors. Although Minister of the Economy

30

“THE CONCEPT OF ATTRACTING FDI IS TO CREATE WORKPLACES, TRANSFER KNOWLEDGE TO DOMESTIC COMPANIES AND BOOST THE SIZE AND SCALE OF OPERATIONS OF LOCAL SUPPLIERS.

Janusz Piechociński announced in July that “[Poland] was in talks with a partner from the automotive sector regarding a £1.7 billion car manufacturing plant,” Jaguar Land Rover “after robust analysis”, decided to locate its factory in Slovakia. The company has never revealed why it chose our Southern neighbor, but rumors were that its demands regarding the amount of state aid were exaggerated.

Even though we don’t know any details as negotiations were secret, Balcerzyk points out that Slovakia has better road infrastructure, it has adopted laws that allow for the quick resettlement of people and last, but not least, it was the Prime Minister of Slovakia, not the minister of the economy who announced the decision. It symbolizes how important the investment was for them. Whatever the

cause, Poland lost a project worth £1 billion, which was to create around 6,000 jobs.

Three major producers This is not say that Poland is not an attractive destination for foreign investors. There are currently three major car manufacturers in the country: Fiat, Volkswagen and General Motors and all of them have launched production of new models at their Polish plants or have announced the construction of new factories in recent months.

Since 2014, the German producer has been involved in one of the biggest greenfield automotive investments in Europe in the 21st century, a new factory in Września. The value of the project stands at €800 million.

The new plant, which will produce a light commercial vehicle, the VW Crafter, will be finished in 2016 and upon its completion will employ some 3,000 people. As the investment has been recognized as a project vital to the economy, it has received PLN 62.5 million in public aid. The state expects that the venture will result in an increase of orders from suppliers, create four to seven jobs at cooperators for each new job created at the plant and will entice new investment projects from company’s sub-suppliers. Volkswagen, the second biggest car manufacturer in Poland, produced 175,500 cars in 2014 and the company wants to maintain those figures in 2015. Since the Poznań plant is the company’s sole factory which assembles the Caddy model, as much as 89 percent of this year’s production will be the third and

Images: Shutterstock

FEATURE / AUTOMOTIVE

fourth generation of the car. The remaining 11 percent is the T5 model.

In July 2015 the largest car producer in Poland, Fiat Auto Poland, launched production of a new model of the Fiat 500. Last year, the corporation made 314,000 vehicles in total, 6 percent more than in 2013. It was the first increase recorded in five years, as Fiat had moved production of the Panda model to Italy due to political pressures. Sergio Marchionne, head of Fiat, said then that the decision made no economic sense, but constituted a repayment of debt, which the company owes to Italy. Recently, however, rumors have emerged that the company will return production of the car to Poland. As of now, no decisions have been made. The other two car models manufactured at the plant are Lancia Ypsilon and Ford Ka. Finally, General Motors, the third biggest of Poland’s car manufacturer’s, started production of the new, fifth generation of the Astra model in September 2015. The company hopes to produce 170,000 vehicles this year and sustain the annual sales volume next year. The arrangements for the launch of production took two years and cost around €150 million. The company, which has been present in Poland since 1994 and had an 18.9 percent share in the market in 2013, currently employs some 3,900 people in Poland. Apart from those three major manufacturers , Poland is home to notable bus producers, including MAN, Volvo and Polish Solaris. In 2014, they made 4,117 busses with GVWR over eight tons.

Network of Suppliers The second branch of the Polish automotive sector is a network of more than 1,300 automotive parts suppliers. Around 80 percent of auto parts are delivered by them and only 20 percent is made by car manufacturers themselves. The estimated value of this production was around USD 60 billion in 2013, and half of it was exported. Although the biggest suppliers are foreign owned, including TRW Steering Systems, GNK Driveline, Brembo and Gates, domestic companies are also present. Lumag, Asmet and GG Profits are notable examples. Although Poland is the region’s leader in terms of the value of trade and repair, one has to bear in mind that “the scale of operation of these companies is incomparably lower than that of car manufacturers. It is therefore easier for them to move their production elsewhere,” Balcerzyk reminded.

The concept of attracting FDIs is to create workplaces, transfer knowledge to domestic companies and boost the size and scale of operations of local suppliers. In 2009, research conducted by Bolesław Domański and Krzysztof Gwosdz on knowledge transfer between foreign affiliates and Polish domestic companies confirms that foreign owned enterprises with a high level of autonomy related to picking suppliers tend to transfer knowledge to local companies and this knowledge is likely to improve the performance of domestic suppliers. Since the inception of inflow of automotive FDI, local Polish producers have increased significantly in terms of quality, productivity and technology. However, the scale of the non-productive functions are still very limited in relation to the scale of production. Polish producers are underrepresented as direct suppliers, because they lack the competence to design and develop products by themselves as it involves costly human and capital investment.

Similarly, R&D activities in Central Europe are usually routine and more advanced re-

search is undertaken in the company’s native country. According to Balcerzyk, the three major car manufacturers have significantly developed their technological complexity and improved access to their knowledge. “Of course, this is still not the level that we dream about, but we need to remember that twenty years ago Poland was an automotive desert.

What’s important is that we don’t stand still, but we must keep developing along with the rest of the world,” he said.

Growth prospects Further development of the sector is the responsibility of the government, which should develop a comprehensive strategy on how to expand it, particularly in the R&D sector. The state also ought to make an effort to boost sales of new cars as only around 300,000 of them find new owners each year.

The market potential, however, is bigger as an additional 700,000 used cars are sold annually. According to Balcerzyk, the government should make an effort to reverse the proportions by offering some incentives. Considering that the majority (more than 70 percent) of new cars are procured by companies, it would be reasonable to introduce full VAT tax deduction. As firms usually buy their cars from a Polish dealer and sell them after three or four years, an increase in reliable cars from a known source would supply the secondary market, thus reducing used cars imported from the West.

Even though Europe is suffering from the overproduction of cars, it could be a chance for Poland, as investors may want to cut costs and relocate production to low-cost countries. Having a skilled and relatively cheap workforce, good location and institutional stability, Poland is an attractive market for them. The automotive sector generates lots of jobs and improves technical skills, hence the benefits are mutual. With the state’s input and a bit of luck, the industry may become a major boost for the economy. u

WBJ OBSERVER • NOVEMBER 2015

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}

FEATURE / DEFENSE

POLISH DRONES TO BE FOREIGN OR HOMEGROWN? B Y A L I CJ A C I S Z E W S K A

POLAND WANTS TO SPEND PLN BILLIONS TO PROVIDE THE ARMY WITH MONITORING AND COMBAT DRONES. THE DOMESTIC INDUSTRY HAS AN UNRIVALED OPPORTUNITY TO GARNER LUCRATIVE CONTRACTS IN THREE OUT OF FOUR TENDERS. YET, AMERICAN, ISRAELI AND SPANISH COMPANIES MAY PLAY A SIGNIFICANT PART IN ALL OF THEM

The

Polish Ministry of Defense has earmarked the substantial amount of PLN 3 billion for the purchase of new unmanned aerial vehicles (UAVs), also known as drones. This will represent a threefold expansion of the Polish Army fleet within four years. Currently, the Polish Army has some 100 airframes at its disposal. The procurement plan regarding the UAVs, which is an element of the armed forces modernization plan for the period between 2013 and 2022, assumes that more than 80 UAV sets, in a variety of types, are to be acquired. The Polish Army will purchase four systems comprising medium-altitude long-endurance (MALE, which would be capable of conducting long flights and carrying armaments), tactical, mini and micro (UAVs). The government stressed that the main task of the system will be Polish territorial protection, but requirements for the MALE UAVs include the possibility of installing satellite communications gear. The MoD will acquire 15 sets of UAVs, dubbed “Wizjer” (designed to be “the eyes” of battalion commanders) and 12 sets of “Orlik” short range UAVs (which will gather exploratory data for brigade staff) are to be procured, along with a training and logistics bundle. Further equipment may be delivered by 2027. The MoD will also order four sets of “Zefir” (Zephyr) units and 12 sets of “Gryf” (Griffin) combat drones.

Polish industry given a chance to shine The procedure regarding the Wizjer and Orlik units is being carried out outside the regulations of public procurement law (“BP” procedure), due to the fact that the Polish

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MoD is eager to protect Polish national security interests. The ministry has decided that Polish producers will also deliver tactical medium range UAVs within the scope of the Griffin program. “The proceedings will be conducted in a competitive manner. The Armament Inspectorate will invite those Polish companies which belong to the group of high economic-defense priority,” lieutenant colonel Jacek Sońta, the MON spokesman told the media in late August. When it comes to the Zefir program which relates to the purchase of MALE systems, the decision will be made later, Sońta added. So far, talks are intergovernmental.

Currently, The Armament Inspectorate (IU) is negotiating with three entities who have met the technical requirements and made preliminary bidding offers regarding supplies for the short range tactical UAVs (Orlik) and mini UAVs (Wizjer). These entities are: a consortium comprising: Polska Grupa Zbrojeniowa [Polish Defense Group], which is the leader of the group, along with Warsaw-based PIT-RADWAR, Bydgoszczbased Wojskowe Zakłady Lotnicze Nr 2 [Military Aviation Works No.2], and the Warsawbased Instytut Techniczny Wojsk Lotniczych [Air Force Technical Institute]. The other two in the running are Warsaw-based EADS PZL “Warszawa-Okęcie” and WB Electronics, Poland’s largest private armament producer.

The Ministry of Defense expects talks to be concluded by the end of October, the next step will be an invitation to submit final offers, making final offers and selecting a contractor. According to Małgorzata Ossoilińska, the inspectorate’s spokeswoman, a contract is to be signed in the first quarter of 2016.

Initially, the IU received five offers, but two

} entities, Zielonka-based Wojskowy Instytut Techniczny Uzbrojenia [Military Armament Technical Institute] and Zegrze-based Wojskowy Instytut Łączności [Military Institute of Communication] withdrew from the tender. In the case of the Griffin program, the deadline to submit offers was extended until October 5 at the request of PGZ who wanted to settle the conditions of their cooperation with their Israeli partner, Elbit. The agreement with a contractor is expected to be signed by the end of 2016.

Throughout the proceedings, the MoD will analyze communication algorithms, steering algorithms, the security systems of data transfer, and the quality of the data.

Since the technical requirements for Orlik drones feature a range of some 100 kilometers and from 30 km to 40 km for Wizjer vehicles, they are “so basic that all of the machines will undoubtedly meet them,” Wilewski claimed. However, he stressed, the devil is in the details and the details determine the army’s expectations regarding the type of data gathered by the drones (such as video and image quality as well as the specifications of connection systems).

“IF PGZ WINS THE TENDER FOR THE GRIFFIN SYSTEM, UP TO 1000 PEOPLE MAY BE HIRED AT PRODUCTION PLANTS.

>

Images: Tom Tschida/NASA/Wikimedia Commons, Richard Seymour/Thales

FEATURE / DEFENSE

A rather unexpected marriage PGZ informed that the E-310, designed with Polish company Eurotech will be its candidate for the Orlik program and the Orbiter IIB, which would be manufactured with Israel’s Aeronautics Defense Systems’ license will be one of the competitors in the tender for the Wizjer program. The Israeli partner declared, that the technology transfer assumes that the mini-UAV is going to be manufactured at the WZL No. 2 facility in Bydgoszcz, where the Center For Maintenance, Modernization and Design Management regarding the UAV Systems will also be established. It has to be noted, that Aeronauticus was supposed to deliver some UAVs, but it did not do so and consequently the Polish MoD terminated the deal in September 2012. Thus, presenting the Israeli company’s product as a candidate to secure the tender may be considered rather controversial. Nevertheless, PGZ claims that in the event that the consortium chooses the Orbiter, which has already been used by the Polish army, there should be no doubts related to its offer. General Waldemar Skrzypczak, the former deputy defense minister, strongly

WBJ OBSERVER • NOVEMBER 2015

33

condemned PGZ for teaming up with a firm who had previously failed to uphold its commitments. “I am surprised that the Polish Defense Holding is risking losing credibility by cooperating with a company such as Aeronautics,” Skrzypczak told Dziennik Gazeta Prawna daily.

PLN 135.5 BLN TECHNICAL MODERNIZATION (27.8 PERCENT OF THE TOTAL DEFENSE BUDGET): PLN 37.8 BLN DEFENSE EXPENDITURE IN YEARS 2017-2022: PLN 273.2 BLN TECHNICAL MODERNIZATION (37.3 PERCENT OF THE TOTAL DEFENSE BUDGET): PLN 102.1 BLN TOTAL SPENDING IN YEARS 2013-2022: PLN 408.7 BLN

>

WB has a lot to gain In July, WB Electronics signed a partnership agreement with UK Thales and announced that it will offer the WK450 Watchkeeper, designed by the British producer and used by the British Army, within the Griffin program. Under the agreement, Thales UK will be responsible for manufacturing the aircraft, system integration, flight management, engineering development and supply chain management, while WB Electronics will deliver the datalink, mission computer, encryption hardware and software, as well as C4ISR integration and some aerial reconnaissance and surveillance systems. Juliusz Sabak from defence24.pl web portal said that the British company is not only interested in teaming up with WB for this particular venture, it also wants to engage the Polish partner regarding other international contracts.

Gliwice-based Flytronic, part of the WB Group, has already delivered 16 systems and 62 “FlyEye” UAVs to the Polish artillery and Special Forces, which have been used during missions in Afghanistan. “The WB Group, specifically Flytronic as one its members, will offer FlyEye and Manta systems. Nearly 100 sets of our FlyEye are already at the disposal of the MoD,” said Grzegorz Krupa, one of

DEFENSE EXPENDITURE IN YEARS 2013-2016:

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NOVEMBER 2015 • WBJ OBSERVER

the company’s founders. Sobak claimed that Manta vehicles could also “meet the MoD’s requirements.”

On September 22, PGZ Wojskowe Zakłady Lotnicze Nr 2, PIT-Radwar, MESKO and Wojskowe Zakłady Elektroniczne signed an agreement establishing a consortium. A week earlier, the state-controlled company reached a deal with Elbit. If PGZ wins the tender for the Griffin system, withh the Hermes 450 vehicles offered, up to 1000 people may be hired at production plants in Poland, Elbit claimed. The Israeli company declared that it will transfer technology to the Polish industry and the entire manufacturing process will be located in our country.

Wilewski did not want to comment on Elbit’s plan, and the Ministry said that it does not comment on any intentions of defense companies. Sobak stressed that it is not the number of new jobs that matters but innovation.

Krzysztof Wilewski, a journalist at Polska Zbrojna pointed out that there is little knowledge concerning the offer by EADS PZL Okęcie, “the company decided to reveal that machines Acy 5 and Acy 150 will be manufactured in Poland with a foreign license, stressing that they will not be one of Airbus’ products.” In the case of Griffin drones, the company will also offer combat drones, called Atlante designed by Spanish EADS CASA. Wilewski believed that EADS PZL, which has been delivering PZL 130 Orlik trainer and servicing CASA C295 aircrafts for the Polish Army has a lot to gain if it

Image: Lt. Col. Leslie Pratt/U.S. Air Force Photo/Wikimedia Commons

FEATURE / DEFENSE

2

APRIL 2015 • WBJ OBSERVER

wins one of the tenders, as it may expand its portfolio of products dedicated to Poland’s air force. In the journalist’s opinion, the possible contract would also be important to the WB Group, which has been delivering FlyEye UAVs to the army. Wilewski stressed that, in the case of these types of drones, the company offers its own technology, and victory in the tender may boost its foreign expansion. “Every army asks if your country has purchased the equipment you are offering,” he explained.

Sobak agreed on that. PGZ has the advantage of being a state-controlled entity, but Wilewski claimed that the tender for drones may not be among its high priority transactions due to the value and amount of other contracts it is able to obtain in the following months.

Zephyr to be imported Zephyr and Griffin drones are to be used by the Polish Navy and its Coastal Missile Squadron with Kongsberg NSM missiles.

Both of them will be armed with guided and non-guided missiles, weighing a few hundred kilograms. Orlik, Wizjer and Griffin units are being offered to the domestic Pol-

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NOVEMBER 2015 • WBJ OBSERVER

ish industry, however, regarding the Zephyr program, the Polish MoD has turned to government-to-government procedure, since “it is equipment of special importance,” Czesław Mroczek, the deputy defense minister said. American General Atomics and Israeli Elbit and IAI have already approached the MoD. “So far, Washington has only approved the sale of this kind of equipment to the UK. The decision to export it to Poland is proof of the trust towards our country,” deputy minister Mroczek said. Sobak said that General Atomics is likely to offer its MQ-9 Reaper, used by the American Forces.

Elbit will offer the Hermes 900.

Mariusz Cielma, the Editor-in-Chief at dziennikzbrojny.pl web portal claimed that the Polish industry is incapable of producing heavily armed drones, therefore foreign companies will complete the order. “Unmanned combat aerial vehicles are manufactured by only two countries: the United States and Israel,” Janusz Walczak from the press office at the MoD told Polska The Times. He explained that French and British producers benefit from the achievements of

others, and in his opinion, the Polish industry should do the same. Wilewski asked if a new government established after parliamentary elections would include the Zephyr program into BP procedure, he said that “it may offer corrections in the modernization programs within law frameworks.”

Taking everything into consideration, there are two serious players in the game. Israeli Elbit has promised to create a lot of jobs for Polish employees, yet experts have pointed out that its partner, PGZ may not be overly interested in the tender for UAVs. Furthermore, the cooperation of PGZ with another Israeli company, Aeronauticus seems quite controversial, due to the fact that it failed to deliver drones to the Polish Army a few years ago. Additionally, it must be noted that the WB Group has gained more experience and recorded greater success in the drone market than any of the companies included in PGZ, Sobak stressed. Obviously, the tenders are not necessarily there to be won by the same entity, but it seems to be a favorable choice for the Polish MoD, the WB Group appears to be a strong contender. u

Image: Grzegorz Krzyżewski/WB Electronics

FEATURE / DEFENSE

November 2015

20 pages of real estate content

section partner by

LOKALE IMMOBILIA / NEWS

>LOKALE IMMOBILIA

NEWS

XCity's investment will feature 60,000 sqm of GLA

l INVESTMENT

X

City Investment, a real estate developer and part of PKP, is to construct a new retail and office building on Aleje Jerozolimskie, in the proximity of the West Station, the company informed.

The value of the project is estimated at €134 million. It will feature 60,000 sqm of GLA.

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NOVEMBER 2015 • WBJ OBSERVER

Currently, the headquarters of PKP Informatyka is located on the site, but due to the relocation of offices, the real estate will be ready for development at the beginning of 2017, the web portal informed. Completion is scheduled for 2021.

XCity Investment has announced 15 office, retail, hotel and residential

projects, valued at €618 billion in total, the media reported. The investments will be completed in Warsaw, Katowice and smaller cities such as Elbląg, Kłodzko, Koło, Koszalin, Kutno, Łowicz, Oleśnica, Chorzów, Bielsko-Biała and Skarżysko-Kamienna. Proceedings to select investors will be launched within a few weeks. u

Image: XCity Investment

PKP to develop new scheme in Warsaw

LOKALE IMMOBILIA / NEWS

Postępu 14 is a modern office building located in the very heart of the Mokotow business district providing its tenants with the perfect environment for work and growth.

Office space to let: +48 22 372-00-00 najem@hbreavis.com WBJ OBSERVER • NOVEMBER 2015

39

LOKALE IMMOBILIA / NEWS

The Stary Browar deal may reach PLN 1 billion

l R E TA I L

Deutsche Bank to acquire Stary Browar mall l WAREHOUSE

l OFFICE

Swedish Pierce AB leases over 11,000 sqm in Panattoni park Szczecin

Fujitsu leases 6,000 sqm in University Business Park Łódź

Sweden's largest online retailer of motorcycle parts, equipment and clothing, Pierce AB has signed a lease for over 11,000 sqm in Panattoni Park Szczecin, a press release read.

According to Panattoni, nearly 10,200 sqm is to serve as warehouse space, and more than 800 sqm will be organized into offices.

"The choice of Panattoni Park Szczecin will enable the company to distribute its products quickly and reliably throughout Scandinavia, Germany, as well as Poland, where its stores also operate," the press release read.

Panattoni Park Szczecin is to feature 35,500 sqm in two buildings, which could be extended by a further 35,000 sqm. u

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NOVEMBER 2015 • WBJ OBSERVER

R

eal estate developer Global Trade Center (GTC) has signed a lease agreement for 6,000 sqm with Fujitsu, a leading international ICT company, a press release read.

"The lease of space by Fujitsu Polska is the first transaction in the second stage of the University Business Park complex. Now that the first stage of the University Business Park is completed and leased and the second stage will become operational soon, I am convinced that the complex will

become even more significant on the business map of Łódź," Krzysztof Misiak, Partner and Regional Cities Manager in the Office Department of Cushman & Wakefield said.

The University Business Park features a restaurant, café and other amenities, it also provides four convenient car entries, parking space for taxis and guests and a separate delivery zone. Phase B will offer a total of 19,400 sqm of rentable space. The entire scheme will be completed by April 2016. u

Images: Shutterstock, Hines

I

nvestment GmbH, a subsidiary of Deutsche Bank has applied to acquire part of the assets of Fortis Nowy Stary Browar shopping center located in Poznań. Consequently, the company is to purchase a 130,000 sqm mall, owned by Grażyna Kulczyk, the ex-wife of the late Jan Kulczyk. The value of the deal may reach PLN 1 billion. u

LOKALE IMMOBILIA / NEWS

l C O M PA N I E S

Orco Property Group to leave WSE Orco Property Group is planning to delist its shares from the Warsaw Stock Exchange (WSE), ISBnews reported citing the company.

"The intention is to withdraw shares traded on the Warsaw bourse, which is determined by the legal requirements and the final decision of launching the process of delisting," the group informed.

Orco Property has been present on the WSE since 2007. u l WAREHOUSE

Euro-net leases more space at Prologis Park Janki

The Graffit building is due to be completed by 2017

l OFFICE

Hines to develop office scheme in Mokotﾃｳw

H

ines, the international real estate firm, has obtained full planning permission for its office building, Graffit located in Warsaw, a press release read.

The building will be constructed on Domaniewska Street in the Warsaw district of Mokotﾃｳw. It will provide tenants with 18,500 sqm of Class A office space over

Euro-net, the owner of RTV EURO AGD, a network of consumer electronic and home appliance retail stores, has expanded their site at Prologis Park Janki after signing a lease agreement for a further 15,000 sqm, a press release read. u

seven stories, including some 1,900 sqm of retail space. It stands out for its large floor area, a staggering 2,800 meters.

Currently, the investor is organizing a tender to choose a general contractor by the end of this year.

Project close out is scheduled for the second half of 2017. u

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WBJ OBSERVER 窶｢ NOVEMBER 2015

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LOKALE IMMOBILIA / NEWS

l INVESTMENT

Catholic Church to build skyscraper in Warsaw

T

he Warsaw curia has received the Vatican's approval to make a transfer of land to a joint-venture established with real estate developer BBI Development in order to build a 170-meter high skyscraper in Warsaw's city center, to be named Roma Tower.

BBI's contribution in cash amounts to PLN 21 million, while the value of the land is estimated at PLN 34.6 million. The Church will have a 55 percent stake in the entity and BBI Development the remaining 45 percent. The building's architectural designs have been approved by the city council. u

Panattoni Business Center Łódź II open Panattoni Europe has launched 33,000 sqm Panattoni Business Center Łódź II, the company reported.The center consists of two buildings - offering 17,000 sqm and 16,000 sqm of GLA. Construction work began just seven months ago. The tenants include: Hutchinson, DSV, Farutex Bidvest Polska , Pekaes and DS Smith.

"We are very pleased about the fact that

Panattoni has put their money into Łódź and is developing their business in our city. The opening of Panattoni Business Center Łódź II proves that Łódź is worth investing in (...)," said Hanna Zdanowska, the mayor of Łódź during the official opening ceremony.

The portfolio of facilities carried out by Panattoni Europe in Central Poland includes five distribution centers in total. u

Sukcesja lfeatures 160 stores

l R E TA I L

Sukcesja shopping mall open Łódź-based Fabryka Biznesu has launched its Sukcesja shopping mall in Łódź. The entire complex features over 128,000 sqm of usable area and some 45,000 sqm of GLA, with 160 stores, restaurants and other units as well as Helios multiplex. Łódź-based Fabryka Biznesu is the investor of the scheme, CBRE is responsible for facility management.

Construction work began in December 2012. The investment was partially carried out using public funds. u l WAREHOUSE

MLP Group sells logistics parks A subsidiary included in industrial space developer MLP Group has signed a deal with WestInvest Gesellschaft für Investmentfonds to sell logistics park MLP Bieruń for nearly €16.8 million (roughly PLN 71.4 million), the company reported. Earlier, MLP signed a preliminary contract with a view to selling MLP Tychy for €62.6 million.

MLP Group has been listed on the Warsaw bourse since 2013. It specializes in built-to-suit schemes. u

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25TH LARGEST

WARSAW IS EUROPE'S INVESTMENT MARKET IN REAL ESTATE – C&W

Images: BBI Development, Panattoni, Fabryka Biznesu

l INVESTMENT

LOKALE IMMOBILIA / NEWS

WBJ OBSERVER • NOVEMBER 2015

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LOKALE IMMOBILIA / NEWS

l WAREHOUSE

7R Logistic sells logistics park worth €30 mln 7R Logistic has sold three pieces of real estate composing a logistics park near Gdańsk to Leesburg Investment, a joint venture of the company and its business partner, HE Dutch B.V., propertynews.pl reported.

The value of the transaction stood at €30 million, €21 million will be financed from a loan.

The 60,000 sqm scheme has already been fully commercialized. u

l OFFICE

Skanska sells four office buildings

S

kanska Commercial Development Europe has sold a portfolio of four office buildings in two Polish regional cities, a press release read.

A fund managed by the Swedish fund manager Niam has purchased two investments in Kraków: Kapelanka 42 A and Axis, as well as buildings A and B at the Silesia Business Park complex in Katowice. This is the largest sales transaction conducted this year in the CEE office market and the largest transaction in the history of Skanska's activity in this region, the press release also read. However, the value of the transaction has not been disclosed. The entire portfolio encompasses 63,000 sqm of GLA. "Regional cities continue to strengthen their position on the CEE investment map, especially in Poland, where almost 60 percent of transactions in the first half of 2015 were concluded outside of the capital.

Investors are increasingly aware of the economic potential of these locations," Skanska stressed.u

l OFFICE

TVP will have new headquarters The new headquarters of the Polish public television station TVP was designed by Mąka Sojka Architekci, the studio which won a competition held by the board of managers at TVP, the media reported.

The building will consist of two simple constructions, one of which will be a 50 meter high tower. It will be developed on the site of the former A building on ul. Woronicza, which has already been demolished. u l H O S P I TA L I T Y

l R E TA I L

Karuzela shopping mall to be developed in Piaseczno Karuzela shopping center will be constructed in Piaseczno, near Warsaw, a press release read. Previously, a similar retail project was developed in Września.

The investor behind the scheme is Warsaw-based Globex. Karuzela will feature 9,000 sqm of GLA, it will include a grocery store and 11 other outlets. Construction work will begin in the first quarter of next year, the shopping mall is to be delivered at the turn of 2016 and 2017. u 44

NOVEMBER 2015 • WBJ OBSERVER

UBM Development will develop a new Intercontinental hotel in the city center of Warsaw, under the Holiday Inn brand. The investment is to reach a value of €25 million, propertynews.pl reported.

The Holiday Inn Warszawa-City Center scheme will be built on ul. Twarda and will feature 254 rooms. Construction work is due to begin in the first quarter of next year and will last some 22 months.u

Images: UBM Development, Globex, Mąka Sojka Architekci

Intercontinental to build new hotel in Warsaw

reklama_OBSERWER_10-2015_v1_krzywe.indd 1

2015-10-28 10:39:48

LOKALE IMMOBILIA / VR IN RETAIL

The age of the virtual shopper RETAILERS ARE CURRENTLY EXPERIMENTING WITH ALL KINDS OF POSSIBLE USES FOR VIRTUAL REALITY, BUT THIS TECHNOLOGY IS ONLY JUST BEGINNING TO MATURE

B Y A L E X H AY E S

Spreading the word Even affordability is no guarantee of success. (Most of us do not watch 3D televisions, even though the technology has been on sale to the public since 2010 and even the number of 3D video games and DVDs on offer remains paltry) Since virtual reality is becoming almost affordable, people are only now beginning to wonder just how it might be used. Almost every industry is experimenting with the technology and this is also true of the real estate industry.

Building Information Modeling (BIM), a British standard whereby everything that can be known about a building or future building is collated, modeled and stored on the internet, lends itself to such virtual rendering. When a building is already fully digitally modeled, it is not such a great leap to reproduce it in the virtual world. Although BIM has yet to be widely adopted across the real estate industry, firms such as the US company Arch Virtual are already promoting the use of the technology in this way and of course they are very effusive about selling it: Jon Brouchoud, the owner of Arch Virtual, talked of how most people would reach out to touch the virtual walls when first they put on the Oculus Rift headset. “It’s an almost involuntary reaction, which I think says a lot about how immersed they are. They really do feel as if they’re occupying a completely different place,” he said. However, according to Joanna Kłusek, Director of Property Management (retail properties), Cushman & Wakefield, the adoption of BIM standards is not likely to immediately lead to the widespread use of virtual

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reality across the real estate sector: Information collated and shared by BIM standards “can further create simulated environments in VR and AR [Augmented Reality] and as such develop a holistic vision. All of these concepts are still in the research and development phase, and beta tests of their integration are being performed,” she stated.

Kick like Pelé When it comes to the use of virtual reality in the retail industry, we are most clearly still at the experimental stage with big retailers still unsure of how the technology may be best used. Last year, Tesco decided to use the technology to allow people to explore an eerily empty grocery store, filled with ads (for what are presumably soccer balls) saying “Kick like Pelé”.

This virtual tour of a supermarket ends rather anomalously in a soccer stadium. The British grocer is also experimenting with so-called augmented reality using Google’s much-touted Google Glass, which allows digital information to be superimposed over whatever the user sees in the real world. In a video posted on Vimeo by the company, a woman - on discovering that she is low on milk while making herself a coffee in the kitchen - uses Google Glass to scan the milk bottle’s barcode and adds the milk to her online order. In the video (at least) the milk is then delivered in seconds to her doorstep. However, when it comes to rolling out augmented reality for the masses, IKEA appears to be a little ahead of the game. Already, even in Poland, you can download the company’s latest catalog onto a tablet or smartphone, pick out the couch of your fancy and see how it would look opposite your television set. All you need do is point the device’s camera where you wish and the app will superimpose your chosen piece of furniture to scale onto the picture of the room.

Tesco is not the only British company to be experimenting.

In April last year, Westfield, in a partnership with the technology company Inition, used a Virtual Reality installation in one of their Stratford City Malls in London to market their upcoming fashion trends. The public was let loose in three 3D virtual worlds that were built up around the themes of the fashion trends that Westfield was promoting, with each immersive

Images: Shutterstock

V

irtual reality is a term that has been in popular parlance since the 1980s. It describes complete sensorial immersion into a digitally simulated world and the term was first popularized by Jaron Lanier and his company VPL Research, which held many of the early patents in the field including those for data gloves. However, development within the field has been held back by the perceived costs. Only now is the price of equipment moving out of the virtual world, with the official price of the Oculus Rift VR system set at USD 350.

This still appears somewhat extravagant for what most people assume will mainly be used as a computer gaming platform.

LOKALE IMMOBILIA / VR IN RETAIL

WBJ OBSERVER • NOVEMBER 2015

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LOKALE IMMOBILIA / VR IN RETAIL

Virtually seeing the future The short answer is yes. It is already here. Not only is IKEA busily marketing carpets and coffee tables with augmented reality but APSYS Polska, which is currently developing the Centrum Posnania mall, has offered future retailers the chance to view their stores through the use of virtual reality (once again with Oculus headgear). According to Kłusek, it is the first mall to go completely virtual. Indeed APSYS is so pleased with the results of this trial that it is considering applying it to many more projects. “We have received very positive feedback from our tenants and observed growing interest in Posnania among potential partners and more than a year before the grand opening, 83 percent of GLA is leased. This shows that our project has turned out to be successful, which is why we are looking to showcase more of our retail schemes in VR technology,” explained Marek Błędowski the commercial director and board member of Apsys Poland. APSYS is not just limiting the use of this technology to its retail partners. “We will be providing our shoppers with the possibility of taking virtual tours around Posnania.” he explained. He certainly does not view Virtual Reality as a mere gimmick or marketing tool and believes that the technology will develop much further before it finally matures: “VR technology has immense capabilities and is still developing.

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Images: Shutterstock

experience lasting three minutes. The company also created three interactive video walls with Microsoft Kinect motion tracking technology, which were again themed around the promoted fashion trends. This was not the only virtual reality project focused on fashion that Inition had worked on. They had also created a virtual catwalk fashion show for the retailer, Topshop. More recently it was reported that Tommy Hilfiger, similarly to Topshop and Inition, also filmed its fashion show which can be viewed using Oculus headsets in the company’s flagship store on Fifth Avenue in New York. But is this technology being adopted by Poland’s retailers?

LOKALE IMMOBILIA / VR IN RETAIL

“VR TECHNOLOGY HAS IMMENSE CAPABILITIES AND IS STILL DEVELOPING. IN THE YEARS AHEAD, WE WILL LIKELY SEE BETTER RESOLUTION AND NEW FUNCTIONALITIES ALLOWING USERS TO TOUCH VIRTUAL OBJECTS OR LITERALLY “FEEL” THE RECREATED ENVIRONMENT.

Images: Shutterstock

In the years ahead, we will likely see better resolution and new functionalities allowing users to touch virtual objects or literally “feel” the recreated environment,” he stated.

A plethora of technologies VR is not, however, the only digital technology that retailers are now looking to implement. For example ECE is currently experimenting with so-called iBeacons that actively integrate with shoppers’ smartphones. According to ECE, “The beacons installed can localize app users within the mall if customers wish it to be so. ECE has currently installed approximately 1,000 beacons in its two ʻFuture Labs’ shopping centers in Hamburg and Essen for testing purposes.” The ECE app helps shoppers navigate through its malls and will even help them to find their cars. ECE’s approach to new technology is simple. “We follow an experimental approach based on trial and error. Ideas that are well-received by our customers will be further developed and implemented at other shopping malls. Services which do not appeal to the customers will be replaced by new ones,” stated the company.

It sometimes appears that we are on the brink of a possible digital retail revolution. According to Kłusek, “Both shopping malls and retailers are definitely facing the advent of digitization.” She pointed out that shoppers are already a different creature to what they once were and that changes are still ongoing. Moreover, she explained that “consumer behaviors have so fundamentally changed in recent years that issues such as enriching customer experience, showrooming and future retail technology are front of mind for many recognized brands and shopping centers.” Most importantly, when she was asked which technologies retailers were most likely to implement, she replied that, “they are the solutions that help retailers bridge the gap between the digital and the bricks-and-mortar world in order to enhance the shopping experience and take full advantage of omnichannel commerce.” It is clear that we have entered an age of digital experimentation and that Virtual Reality is one of the most eye-catching of a host of new digital technologies that will eventually transform the way we shop. u

WBJ OBSERVER • NOVEMBER 2015

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LOKALE IMMOBILIA / INTERVIEW

I N T E R V I E W B Y A D A M Z D R O D OW S K I

NEW INFRASTRUCTURE BOOSTING GROWTH IN THE TRI-CITY OFFICE MARKET WBJ OBSERVER TALKS TO SERGIUSZ GNIADECKI, PRESIDENT OF THE MANAGEMENT BOARD AT GDYNIA-BASED COMMERCIAL SPACE DEVELOPER ALLCON INVESTMENT, ABOUT THE OFFICE MARKET IN THE TRI-CITY AND THE COMPANY’S PLANS IN THE SECTOR 50

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LOKALE IMMOBILIA / INTERVIEW

WBJ Observer: According to agency data, the Tri-City is now the third largest regional office market in Poland, after Kraków and Wrocław. Does the market have the potential to grow even further and potentially outperform its regional rivals in the coming years?

Sergiusz Gniadecki: The delivery of a sufficient amount of highquality space is not a problem for companies such as general contractor Allcon Budownictwo which is part of the Allcon Group.

However, further development of the local market will largely depend on making sure that there are enough students at Tri-City universities. This will give investors access to potential employees and thus, motivate the further development of the office market.

Which office locations in the Tri-City are currently the most attractive for developers and tenants? Are there any new hot spots emerging on the office map at the moment?

Because of the linear spatial layout of the Tri-City, it is difficult to speak of one specific area in which business would be concentrated. The most attractive locations are along the fast metropolitan railway lines – SKM and PKM. The strongest locations include the university campus area in Gdańsk-Oliwa, and the ul. Łużycka and Pomorski Park Naukowo-Technologiczny areas in Gdynia.

In Gdańsk, the most promising locations include the Plac Trzech Krzyży and Młode Miasto areas.

Is the recent delivery of the Pomeranian Metropolitan Railway (Pomorska Kolej Metropolitarna – PKM) going to have major impact on the further development of the office market in the Tri-City?

For the last few years, we have been monitoring the development of such a major projects as the PKM very closely, especially since both of our office parks – Łużycka Office Park and ALLCON@park are located just next to the railway line. The new railway link will make it much easier for a considerable number of inhabitants of the so-called Górny Taras area of the Tri-City, and of such cities as Kartuzy, Kościerzyna and Bytów, to commute to work. The safe, quick railway connection with the airport is another asset of the locations along the PKM. The railway was commissioned over a month ago, by the end of next year the last stops, including two in Gdynia, will have been completed.

From the perspective of a tenant, what are the main assets of the Tri-City at the moment?

Apart from the availability of existing and planned office space, excellent location in terms of international air connections and access to a well-qualified workforce, the charm of the Tri-City and the surrounding area also undoubtedly plays a role. For example, Gdynia has, in recent years, ranked first in many surveys that show the satisfaction of inhabitants. This encourages people to stay longer and is an important argument for employees relocating to Gdynia from elsewhere. Those employees often happen to be foreigners.

In the summer, one does not need to leave the Tri-City as the agglomeration offers innumerable opportunities when it comes to relaxation and entertainment. Gdańsk, Sopot and Gdynia compete with each other in relation to the organization of quality cultural and sports events, not only in the summer season. The hotel and conference infrastructure is developing. The assets of the agglomeration, the increasing number of air and express train (including Pendolino) connections, and the A1 motorway are now

translating into an increase in the number of people who visit Pomerania, not only for tourists, but also frequently for business purposes.

What are the advantages and disadvantages of leasing office space in the Tri-City, as opposed to Warsaw?

The advantages include the above-mentioned attractions of the TriCity in terms of access to employees, and the relatively low office rents.

When it comes to disadvantages, one can mention the relatively small amount of space that is available at the moment for tenants who would potentially like to relocate within the Tri-City.

Which sectors are now generating the most demand for office space in the Tri-City?

There are not many classic BPO tenants in the Tri-City, it is rather the IT and SSC sectors that dominate. According to the latest Invest in Pomerania data, the IT, SSC/BPO and R&D sectors are now respectively represented by 57, 35 and 5 companies. INTEL from the R&D/ IT sector, which currently occupies more than 24,000 sqm of space at our ALLCON@park complex near Gdańsk airport, is an excellent example of a tenant who has been generating the most demand for office space in the Tri-City in recent years. Securing its stable growth, INTEL has renewed its existing agreements and signed new lease deals, it has also made huge investments in the specialized equipment of its buildings.

Are there any major differences in tenant preferences when it comes to the size of lease agreements, the standard of the leased space and the type of the selected buildings when we compare the Tri-City with other large office markets in Poland?

I cannot see any major differences between the large office markets.

However, we stand out from the crowd when it comes to the standard of our buildings and the quality of the service that we offer to tenants.

Our office complex in Gdynia – Łużycka Office Park – was voted by tenants the Best Office Building in Poland in 2014 (an independent survey commissioned by Eurobuild and conducted by Millward Brown).

What does the investment market in Tri-City look like at the moment – do developers find it easy to sell ready office product?

Large international investment funds have until recently not been overly interested in the regional markets but now this is changing. Of course, this new trend requires office building owners to pay attention to every possible detail during the development process.

How is the Tri-City market perceived by financial institutions?

Are there any difficulties in securing bank financing for new office projects in the Tri-City?

A credible developer should not have any difficulty in getting such financing, irrespective of the location, be it in Warsaw or in a regional city.

What are your plans in the office market in the Tri-City for the coming years? Have you already secured any plots of land for your future office schemes in the agglomeration?

We are not planning any speculative projects in the coming years but we are ready to develop built-to-suit schemes, we have such developments in the pipeline. We are not planning to step up our activity in the office market, we are looking very closely at the other sectors in which we could make use of the 25 years of our experience in the industry. u

WBJ OBSERVER • NOVEMBER 2015

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LOKALE IMMOBILIA / BPO

Nowy Świat 2.0

B Y B E ATA S O C H A

Strength in numbers POLAND HAS BEEN THE LOCATION OF CHOICE FOR COMPANIES FROM THE BUSINESS PROCESS OUTSOURCING INDUSTRY FOR OVER A DECADE. ITS ATTRACTIVENESS LIES IN THE LARGE NUMBER OF SECOND-TIER CITIES THAT HAVE BEEN COMPETING FOR BPO INVESTORS. NOW, THIRD-TIER CITIES HAVE JOINED IN AND ARE MAKING HEADWAY IN ATTRACTING BOTH BASIC AND MORE ADVANCED BUSINESS PROCESSES 52

NOVEMBER 2015 • WBJ OBSERVER

LOKALE IMMOBILIA / BPO

“BPO investments have been the driving force of the economy over the past decade and some even claim that it may well have been the reason Poland didn’t fall into recession after the 2008 crash.

All images: Shutterstock

P

oland is a clear leader among CEE countries when it comes to the size of the BPO sector, accounting for 42 percent of the total CEE workforce employed in the business services industry. BPO investments have been the driving force of the economy over the past decade and some even claim that it may well have been the reason Poland didn’t fall into recession after the 2008 crash.

The BPO industry has seen double-digit growth for years and is still growing at a remarkable rate. In fact, the majority of foreign investment projects currently underway in Poland come from the BPO sector, according to the Polish Information and Foreign Investment Agency PAIiIZ. There are 37 BPO schemes in the works, worth a total of €33.47 million, which will create some 6,050 new jobs.

One of the reasons why Poland has been attracting so much BPO business is the fact that it has a number of second-tier cities with

far lower labor and office space costs than in the capital. Also, at the same time, there is a steady supply of qualified workers thanks to several regional universities operating in those cities. The top seven BPO cities in Poland are: Warsaw, Kraków, Wrocław, the Tri-City, Poznań, the Katowice agglomeration and Łódź.

Competitive advantage

Naturally, each of the markets attracts new companies with their unique selling points.

Kraków, for instance, can boast a remarkable university base: it is home to the Jagiellonian University, which has consistently been among the top three universities in Poland, according to the Perspektywy University Ranking (the university occupied 2nd spot in

2014). It also features one of the best Polish technical schools: the AGH University of Science and Technology (6th spot in 2014). In total there are 21 universities in the city which churn out nearly 50,000 graduates a year from a variety of faculties. Nearly 85 percent of them speak sound English (B1 level or above) and over 10 percent speak German, according to a survey carried out by Advisory Group TEST Human Resources in 2014.

Wrocław is similar to Kraków as far as the BPO market is concerned. It also has a highly reputable technical university: the Wrocław University of Technology (5th across all Polish universities), which is renowned for its computer science department. That is why Wrocław is particularly alluring to IT companies. The likes of Google, IBM and Hewlett

WBJ OBSERVER • NOVEMBER 2015

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LOKALE IMMOBILIA / BPO

Packard, all have offices in the city.

The Tri-City is the largest office market in northern Poland which makes it the go-to destination for northern European countries.

Its students can also boast the best language skills among Polish cities, with 91 percent having a good command of English and over 40 percent speak good German. “The TriCity is home to companies from the IT, financial and accounting, logistics, automotive and air traffic sectors. There are many investments and entrepreneurs from Scandinavian countries, Germany, the United Kingdom and the United States,” said Łukasz Koszczoł, Operations Director Adecco Poland.

The Katowice agglomeration, once a secondary location for BPO centers, is now an established business location, with a number of international investors looking to invest there.

Its biggest advantage is probably its size: over 2 million people live in the agglomeration. Its business services centers “are more dispersed in comparison to other regions, which on the one hand means greater access to a larger number of potential employees, but on the other hand involves the risk of lower mobility,” said analysts from Colliers International.

Poznań and Łódź have come a long way in shedding the stigma of “call center” hubs.

Instead, they have been attracting an increasing number of advanced processes, including financial and IT services. Łódź, for instance, has become the location for the IT centers of Accenture, Fujitsu, Microsoft and SAP, as well as Nordea’s financial services center.

Meanwhile, Szczecin and Lublin have been on the rise among BPO destinations over the past few years. Now, they are no longer listed as emerging or developing BPO locations, but have joined the group of established markets in most market reports and analysis. They are still relatively young office markets, but the pace at which they have been developing is astounding. In Szczecin, over 60 percent of the entire supply of office space (68,000 sqm out of a total of 110,900 sqm) was completed between 2012 and H1 2015, as per data provided by Colliers International.

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Emerging locations

While the top eight BPO markets have been looking to attract more complex and advanced business processes, there have been a number of new emerging locations eager to take over shared services and HR centers.

Several smaller, third-tier cities have already marked their presence on the BPO map.

The northern part of Poland has a number of cities that have been more frequently chosen as locations for call centers and back-up crisis centers for major firms. The list of emerging business service locations in northern Poland includes Bydgoszcz, Toruń, Olsztyn and Białystok. Their greatest advantage are, naturally, the lower labor costs than in major regional markets. “From an investors point of view, the strengths of Białystok include: labor costs 10 percent lower on average than the national average, well-developed academic institutions, the availability of qualified staff, continuous improvement of transport infrastructure and developed technical resources,” said Marcin Giebień, regional sales manager at Adecco Poland, an HR consultancy. Bydgoszcz, Toruń and Białystok have been targeted as ITO locations, a smart choice

Regional leader There are 335,000 specialists employed in a thousand foreign capital business service centers in Central and Eastern Europe (CEE), according to the “Business Services in Central & Eastern Europe 2015” report, compiled by the Association of Business Service Leaders ABSL. Polish workers account for some 42 percent of the total number. Poland, with 150,000 employees, occupies the top position, followed by Romania with some 51,000 and Hungary with a workforce of 45,000.

The business services sector in the CEE region is developing at twice the rate of the corresponding sector in India and forecasts for the upcoming decade are more than promising. According to McKinsey & Company, the business services sector in the CEE region may well employ from 850,000 up to 1,000,000 specialists.

As much as 86 percent of BPO investors in the region expect to increase employment by the end of 2016. +++

LOKALE IMMOBILIA / BUSINESS PROCESS OUTSOURCING

“The northern part of Poland has a number of cities that have been more frequently chosen as locations for call centers and backup crisis centers for major firms.

WBJ OBSERVER • NOVEMBER 2015

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LOKALE IMMOBILIA / BPO

considering that the average pay of a manager in an ITO firm is 20-30 percent lower than in the Tri-City or Szczecin, according to Advisory Group TEST Human Resources.

Olsztyn, on the other hand, is often seen as a good choice for lower-level business services, mainly because of the fact that the labor market in the region is clearly an employer’s market, with the unemployment rate for the entire voivodship approaching 20 percent.

Rzeszów and Kielce, in the southern part of the country, have similar labor markets to that of Olsztyn, with unemployment rates for each of the voivodships at 16.5 percent.

Kielce has been targeted by many companies, including Inter Galactica and Medicover, as a call center destination. “Recently, Kielce has done a lot to become an attractive location for both external and local investors.

Thanks to the effective use of EU funds, the city has carried out a number of investments, including the revitalization of the city center, the upgrading of road infrastructure and improved conditions for the development of local universities,” said Łukasz Żelezik, associate director at the Office Agency at Colliers International.

Meanwhile, Rzeszów is home to a variety of BPO companies, from call centers, through finance and accounting centers to ITO firms. Both Rzeszów and Kielce are young office markets, with only approximately 50,000 sqm of office space in each of them, but are developing rapidly. In Q2 2014, both cities had over 30,000 sqm of office space in the pipeline scheduled to be delivered by end-2016.

The list of emerging and aspiring BPO markets could go on, with Opole, Legnica, Bielsko-Biała and Zielona Góra to name but a few. “Locating BPO centers in smaller cities such as Rzeszów, Lublin and Bydgoszcz, has become the norm. … However, investors’ shortlists now also include cities like Częstochowa, Radom and Piła,” said Kornelia Łukaszewska, leasing manager at Echo Investment, a commercial real estate developer.

While critics would argue that working in call centers is probably not what young university graduates aspire to, it is a sure-fire way of curbing unemployment in the poorer regions of Poland. And as for working in a call center, it is probably not the worst way of gaining that all-important first work experience and thus, a solid springboard for a future career. u

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No. 1 BPO destination Kraków is the city of choice for BPO firms looking for a new location. In H1 2014, BPO, SSC and R&D companies accounted for 70 percent of the entire demand for office space, according to Colliers International. It is the leader not only in Poland but it also dominates across Europe. In the 2015 edition of Tholons’ “Top 100 outsourcing destinations” report it was the highest ranking European city (ninth overall, following eight Asian cities), three spots above the next European BPO center – Dublin. The two other Polish cities included in the Tholons ranking were Warsaw (30th) and Wrocław (62nd).

Despite significantly higher labor costs, Warsaw, due to its sheer size, is an even bigger BPO market than Kraków. In 2014, it was home to 168 BPO companies, according to Colliers International, a real estate advisory, while Kraków had 80 BPO firms among all office tenants. The Katowice agglomeration had 59, Łódź – 55, Poznań – 52, Wrocław – 51, and the Tri-City – 46. The two developing markets on the BPO map – Szczecin and Lublin – had 18 and 17 BPO tenants respectively.

A far as the number of workplaces is concerned, Kraków is once again on top with 35,700 jobs, followed by Warsaw (27,000) and Wrocław (23,700), according to data by the Association of Business Services Leaders (ABSL). The Tri-City (13,700), Łódź (13,100), the Katowice agglomeration (11,200) and Poznań (9,000) come in further down the line. +++

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• Useful source of information for foreign investors, C-suite executives, marketing departments • New list: Family Companies • Additional market analysis in sector introductions • All listed companies were verified by the Economic Information Bureau (KRD)

2015 2016 E D I T I O N

To order contact: mbrysiak@valkea.com WBJ OBSERVER • APRIL 2015

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LOKALE IMMOBILIA / INTERVIEW

Tenant relocations driving demand for new office space in Warsaw WBJ Observer sat down with Czarek Jarząbek, founder and CEO at developer Golub GetHouse, to talk about the current situation in the office market in Warsaw and the plans of the company in the sector

WBJ Observer: There are recurrent worries about the large amount of new office space which is now under construction and in the pipeline in Warsaw. Do you agree with those claiming that the market is overloaded?

Czarek Jarząbek: I agree that there are many new office projects in the pipeline, most of which will be delivered in the

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NOVEMBER 2015 • WBJ OBSERVER

years 2016-2017. Will the market absorb the space? The leasing activity in Warsaw is still at a high level – a total of approximately 600,000 sqm of space is taken up in the city every year. On the other hand, not all of the planned schemes will be developed – this is a business that requires a lot of capital. As for those developments which will be completed, I think that new,

well-designed office investments in good locations will find tenants.

It is mostly the owners of the existing buildings that are going to have leasing problems as we are now clearly witnessing a trend of tenants relocating from old office buildings to new ones. This is not only because new buildings tend to be technically better than old buildings, but also because the developers of new buildings are usually able to offer tenants better lease conditions than the owners of existing facilities. Besides, a number of tenants in Warsaw are now going through consolidation processes and need large amounts of office space that can only be found in new projects. Raiffeisen Polbank, which will occupy all of the space available at our Prime Corporate Center scheme, is a good example.

Real estate is a cyclical business. I can already see that there are not so many new office schemes in the pipeline, which are scheduled for completion in the years 2018-2019. It usually takes approximately five years to develop a new office investment in Warsaw, from buying the land to delivering the building. With many investors now increasingly cautious about launching new office developments in the city, there are going to be far less new

Images: Golub

I N T E R V I E W B Y A D A M Z D R O D OW S K I

LOKALE IMMOBILIA / INTERVIEW

Is Wola going to remain the hot spot on the office map of Warsaw in the coming years?

I think that Wola has already become a very attractive location for office developers and tenants alike and that many of the tenants who are now in Mokotów, where there are many office buildings but insufficient transport infrastructure, will in the future, move to Wola. Those tenants will probably have to pay slightly higher rents than in Mokotów, but in return for this they will get much better infrastructure, a new subway line, several bus and tram lines and easy access to downtown Warsaw. The process has already started and will continue in the near future.

“THE LEASING ACTIVITY IN WARSAW IS STILL AT A HIGH LEVEL – A TOTAL OF APPROXIMATELY 600,000 SQM OF SPACE IS TAKEN UP IN THE CITY EVERY YEAR. I THINK THAT NEW, WELL-DESIGNED OFFICE INVESTMENTS IN GOOD LOCATIONS WILL FIND TENANTS. Czarek Jarząbek, CEO of Golub GetHouse

schemes in the pipeline in a few years than there are now.

Many of the office projects in Warsaw that are planned and under-construction are located in the Wola district. Are you not concerned about the leasing prospects for your upcoming Mennica Legacy Tower scheme which will also be located in Wola?

Mennica Legacy Tower will, technically speaking, be located in Wola but the site

lies so close to Rondo ONZ that both we and the potential tenants perceive it as part of the downtown, the area around Rondo ONZ. We are definitely talking about a completely different sub-market than that of the Rondo Daszyńskiego area where many of the new office projects are located.

Now, taking into consideration the fact that Mennica Legacy Tower is scheduled to be delivered in 2018, there are not many office projects in downtown Warsaw that will present direct competition.

Some experts argue that Wola needs more public investments and the development of the office market there needs to be controlled better in order to avoid the mistakes made in Mokotów…

When it comes to infrastructure, the most fundamental elements – good roads that provide easy access to the downtown and the airport and a new subway line – are already there. The rest will come in due time. As for the worries that too much office space will be concentrated in Wola, I am definitely in favour of providing for other functions there too – I really hope that new residential and retail projects will appear in Wola and that the district will thus remain a lively place after working hours.

Which other locations in Warsaw will be gaining in significance in the coming years?

I believe in locations along the subway lines and in locations close to the Vistula River. I think that the Powiśle and Stara Praga neighbourhoods are currently becoming more and more attractive as office locations. Of course, also the precise downtown of Warsaw will always remain attractive for office developers. I believe in locations with considerable concentration of business activity – it is always easier to do business when there are many other businesses around you.

Which sectors are now driving demand for new office space in Warsaw?

The biggest tenants tend to hail from the financial, banking, insurance, IT and consumer goods sectors. Interestingly,

WBJ OBSERVER •NOVEMBER 2015

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LOKALE IMMOBILIA / INTERVIEW

major tenants are now signing lease agreements for longer periods of time than before – often these are seven or even ten, rather than five years. This is because tenants today are better informed, have good advisors and have realized that longer deals are not only favourable for developers, but also for them – they give tenants stability and put them in a better negotiating position.

Has the situation with regard to the availability of bank financing changed in any significant way in recent months?

The situation has not changed much of late, but of course it is much better than in the years after the outbreak of the global financial crisis. Banks in Poland today have enough capital to finance real estate projects, but they remain selective as to which projects they want to finance. Like in every other business, developers with good track records and good projects are good partners for banks. Well-designed office schemes in good locations do not have problems with getting bank financing.

When are you going to launch construction on the Mennica Legacy Tower scheme which will be developed in cooperation with Mennica Polska?

We want to launch construction at the beginning of next year – we are now in the process of selecting a general

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contractor for the project. The development will stand out due to the very efficient and flexible space arrangement possibilities for tenants – the typical office floor will comprise 2,000 sqm of gross area and will be characterized by a very low add-on factor. This efficiency and flexibility in arranging space for tenants will translate into less space required by each individual tenant for the same amount of people it employs and therefore will result in direct cost savings on total rent costs.

We believe that Mennica Legacy Tower will be both a landmark building from an architectural standpoint, with a full

set of amenities, high-end finishes and technological features, but also a highly efficient and flexible building for tenants.

Are you currently planning any other office projects in Warsaw?

We are actively looking for sites for new office projects in Warsaw. Our next scheme will most probably be located either in the central downtown of the city or just east of it, alongside the subway line. We are interested in the development of office projects offering between approximately 10,000 sqm and around 50,000 sqm of leasable space. u

Image: Golub

What about the investment market in Warsaw – do you still see investor demand for office product in the city?

Yes, definitely. There is a lot of cash in the global markets at the moment, the markets are very liquid. A considerable portion of the available capital has already been allocated in the most developed markets – in the United States and in Western Europe. Now the capital is coming to Poland which is perceived as a stable market that brings good returns. We have seen a number of major transactions in the largest regional cities, but of course Warsaw also remains highly attractive for international investors. We are now putting our own Prime Corporate Center project in Warsaw up for sale, which is scheduled to be completed in February and is now fully leased. We expect to receive the initial bids in the coming days.

LO A LI EM M I MO M E T IACI L LOK AK LE BO I LBI IAL I/ AL O/ GRI S S

WBJ OBW S EBRJ V OE B R S•E R O VCET R O B• E M R A2R0C1 H 5

55 69

OBSERVER RANKING

OBSERVER TOP 10

General Contractors

RANKED BY REVENUE FROM GENERAL CONTRACTING (2014)

3 ERBUD

Revenue from general contracting (PLN mln): 2014

1,194.6

Total revenue including export (PLN mln): 2014: 1,222 Services for foreign markets (countries): Belgium; Germany Services other than general contracting: WND Major projects completed : Eurocentrum Office Complex in Warsaw; Adria III residential complex in Warsaw; headquarters of Marshal Office and Wielkopolskie Voivodeship Regional Council in Poznań; Jaworzno Industrial-Technological Park; Sports Hall in Szczecin; Major projects under construction: Hala Koszyki in Warsaw; Eurocentrum Office Complex in Warsaw; Royal Wilanów office complex in Warsaw; Thermal Plant of Municipal Waste

1BUDIMEX

(1)

Revenue from general contracting (PLN mln): 2014

4,717

Total revenue including export (PLN mln): 2014: 4,950 Services for foreign markets (countries): Germany Services other than general contracting: Developer Major projects completed : ICE Congress Centre in Kraków; Powiśle Park in Warsaw; access road to Dąbrowica - Lublin ring road Major projects under construction: Pomeranian Metropolitan Railway - 1st phase; S5 express road Mielno Gniezno; construction and assembly works in Turów Power Plant

2 STRABAG

Revenue from general contracting (PLN mln): 2014

2,611

Total revenue including export (PLN mln): 2014: 2,698 Services for foreign markets (countries): WND Services other than general contracting: Production of bituminous mixtures; subcontracting; equipment rental Major projects completed : S8 express road Walichnowy-Wroclaw; S3 express road Gorzów Wielkopolski Międzyrzecz Północ; Atrium Felicity shopping center in Lublin Major projects under construction: Zielone Arkady shopping and entertainment center in Bydgoszcz; Astoria Commercial and Office center in Warsaw; S8 express road Opacz-Paszków; A4 motorway Rzeszów - Jarosław

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NOVEMBER 2015 • WBJ OBSERVER

4 WARBUD

Revenue from general contracting (PLN mln): 2014

1,050

Total revenue including export (PLN mln): 2014: 1,050 Services for foreign markets (countries): WND Services other than general contracting: WND Major projects completed : Polish National Radio Symphony Orchestra headquarters in Katowice; Pacific in Warsaw; Szczecin Philharmonic Major projects under construction: Prime in Warsaw; World War II Museum in Gdańsk; CH Forum Radunia in Gdańsk

5 HOCHTIEF POLSKA

Revenue from general contracting (PLN mln): 2014

579.3

Total revenue including export (PLN mln): 2014: WND Services for foreign markets (countries): NA Services other than general contracting: Organisation of the investment process for residential buildings development Major projects completed : Construction of the Physics, Astronomy and Applied IT building at the Jagielloński University; VOSS Automotive Poland production plant in Nowa Wieś Legnicka; Sopem factory in Niepołomicka Investment Zone; Major projects under construction: World War II Museum in Gdańsk; Business Garden Warsaw; Volkswagen factory in Września; project and construction of Thermal Instalation of Waste Treatment in Poznań

OBSERVER RANKING

6 ALDESA POLSKA (GROUP) 8 MEGA SA (2)

Revenue from general contracting (PLN mln): 2014

Revenue from general contracting(PLN mln): 2014

Total revenue including export (PLN mln): 2014: 358.8 Services for foreign markets (countries): Spain; Romania; US; Mexico; India; Guatemala; Peru Services other than general contracting: Organization of the investment process; after sales services Major projects completed : Revitalisation of Łódź University of Technology; construction of the Faculty of History at Adam Mickiewicz University in Poznań; construction of two multi-storey car parks in Tychy; construction of GPZ Pruszcz Gdański electrical substation Major projects under construction: Reconstruction of the railway station complex in Gliwice; Gestamp factory expansion in Września; construction of double circuit 400kV Ostrołęka-Olsztyn Mątki, 400kV Gdańsk Przyjaźń-Żydowo Kierzkowo, 220kV Glinki-Recław overhead power line; construction of broadband networks in Lubelskie and Podlaskie Voivodships

Total revenue including export (PLN mln): 2014: WND Services for foreign markets (countries): NA Services other than general contracting: Transport; electrical services; lease Major projects completed : WND Major projects under construction: WND

358.8

7PRZEDSIĘBIORSTWO BUDOWLANE DOMBUD

(3)

Revenue from general contracting (PLN mln): 2014

189

Images: Shutterstock, Budimex

Total revenue including export (PLN mln): 2014: 189 Services for foreign markets (countries): NA Services other than general contracting: Developer; TBS; installation Major projects completed : ZUS inspectorate service hall in Katowice; educational building at ul. Konarskiego in Gliwice; recreational installations at the indoor swimming pool in Bieruń Stary; building adaptation for the 1st Police Station in Ruda Śląska Major projects under construction: Municipal hospital in Piekary Śląskie; elementary school no. 2 gymnasium in Siewierz; apartment building on ul. Chorzowska 2 in Katowice; apartment complex at ul.

Wańkowicza in Kraków

155.8

9PROCHEM

Revenue from general contracting (PLN mln): 2014

91

Total revenue including export (PLN mln): 2014: 177.7 Services for foreign markets (countries): Belarus Services other than general contracting: Design; substitution investing; investment supervision; delivery completion; cost estimates; tender management Major projects completed : Installation for the production of amorphous precipitated silica for Solvay Advanced Silicas Poland in Włocławek Major projects under construction: Facilities for storage of crude oil caverns for IKS Solino in Inowrocław; paraffin wax, oil and grease production facilities along with extension of energy complex for Mineral Wax Plant in Svislach (Belarus); Astrum Business Park in Warsaw

10 MOSTOSTAL PUŁAWY Revenue from general contracting (PLN mln): 2014

40

Total revenue including export (PLN mln): 2014: 279 Services for foreign markets (countries): UK; Sweden; Finland; Germany; Denmark; France Services other than general contracting: WND Major projects completed : Waste Management Plant in Dębowiec; installation of boilers in Ridham Dick and Leeds (United Kingdom); installation of boilers in Jonkoping (Sweden) Major projects under construction: Installation of pipelines and equipment in Oświęcim; installation of recovery boiler in Świecie; installation of boilers in Severnside (United Kingdom)

Notes: NA = Not Applicable, WND = Would Not Disclose. Research for the list was conducted in February - May 2015. Number of employees is as of the day of the survey. All information pertains to the companies’ activities in Poland. Companies that participated in the previous editions but not responding to our survey are listed NR. Footnotes: (1) Budimex SA, Budimex Nieruchomości, Mostostal Kraków; (2) Aldesa Polska Services Sp. z o.o., Aldesa Nowa EnergiaSp. z o.o., Aldesa Construcciones SA Oddział w Polsce, Aeronaval de Construcciones Polska Sp. z o.o., Aldesa Polska Diamante Plaza Sp. z o.o.;(3) Prochem Inwestycje Sp. z o.o., Prochem RPI Sp. z o.o., Iryd Sp. z o.o., Pro-Inhut Sp. z o.o., Prochem Serwis Sp. z o.o., Atutor IC Sp. z o.o., Elpro Sp. z o.o., PKI Predom Sp. z o.o., Elmont Inwestycje Sp. z o.o., Pro-Organika Sp. z o.o., Elektromontaż Kraków SA, Prochem-Zachód Sp. z o.o., Irydion Sp. z o.o., Itel Sp. z o.o.

WBJ OBSERVER • NOVEMBER 2015

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APRIL 2015 • WBJ OBSERVER

THE HARDEST WORK IS DONE, BUT PROGRESS REQUIRES MORE Innovation, fewer bureaucratic procedures and enhanced cooperation between universities and business are among some of the factors that make Poland more attractive to foreign investors. This is according to the panelists of the Investing in Poland conference. A hard-working and welleducated labor force continues to be the strongest asset of the Polish economy, on the other hand, as the panel concluded, the lack of predictability regarding the banking system is the biggest threat to foreign capital. For the seventh year running, the journalists at the Warsaw Business Journal Group have been researching Poland's investment climate in the Investing in Poland annual which was presented during the event

The

conference took place on October 23, with over 100 experts and businesspeople gathering from all over the country. Editor-in-Chief of Warsaw Business Journal Group, Jacek Ciesnowski alongside four panelists: Ewa Fudali-Bondel, Head of the City Development, the City Hall of Dąbrowa Górnicza; Maciej Górski, Adviser to the President of the Board of Managers at PAIiIZ; Michael Dembiński, Chief Advisor, British-Polish Chamber of Commerce and Thomas Urbańczyk, Head of the Legal Department, German Polish Chamber of Industry and Commerce (AHK) came together to discuss investment opportunities in Poland.

Images: Marcin Cieśluk/WBJ

Firstly, the panelists compared the investment climate in Poland's early days after economic transition with the present situation. All of them agreed that the country has made huge progress and it has ceased to be considered as the 'Wild East,' as Urbańczyk pointed out. However, there is still much room for improvement regarding infrastructure.

When it comes to significant barriers for foreign investors, the numerous strict bureaucratic procedures tend to deter international companies from entering the Polish market more than anything else. “If Poland wants to attract more investors from other countries, it needs to fight bureaucracy. Regulations need to be reformed,” Dembiński said, stressing that time, not money is

(L-R) DAGMARA PRYSTACKA, VOLKSWAGEN POLSKA SPOKESWOMAN; MORTEN LINDHOLM, PUBLISHER WBJ GROUP; MONIKA BRYSIAK BOOK OF LISTS PROJECT MANAGER;

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EVENTS / INVESTING IN POLAND 2016 CONFERENCE

All four debaters acknowledged the foreign languages skills of Polish graduates and professionals. German firms are particularly impressed by their technical skills, Urbańczyk pointed out. Yet, again, the representative of the BritishPolish Chamber of Commerce was the most skeptical, especially about higher education regarding humanities. In addition, the expert from the AHK identified inadequate cooperation between academic centers and the Polish business sector as a weak point.

Furthermore, Dembiński posed a very important question concerning the nature of the Polish economy. He expressed doubt about whether it is becoming “a perfect example of an operational

economy,” instead of a strategic one, as the constant lack of innovation hinders the development of Poland.

The last issue up for discussion was related to the possibility of the Polish government repealing the idea of special economic zones in the future.

The panelists concluded that it is very unlikely to happen, but if it does, “Poland will remain to be a great location for foreign firms, and not only those which are Europe-based,” Górski pointed out, mentioning that Samsung consistently invests in its production plant in Wronki and deems Polish employees as a ideal for Korean companies. The representatives of the chambers of commerce along with Fudali-Bondel from Dąbrowa Górnicza claimed that there are numerous factors, besides tax exemptions available in the SEZs that attract investors. Górski summed up that in the long-term, Poland should be considering new interesting business partners, such as emerging Third World economies.

The audience asked about the mood of foreign investors in relation to upcoming political changes in Poland. Dembiński from the British-Polish Chamber of Commerce stressed that the unpredictability of the future in the banking sector poses the biggest threat for international investors and their capital.

Górski tried to calm British anxieties and asserted that he “cannot see any threat

or cause for nervousness,” regardless of which political party rules the country, as investments are needed anyway.

Urbańczyk followed up on his statement by saying that Polish-German cooperation is to be continued. Another question touched upon the issue that such investments and BPO centers are relatively easy to withdraw than production projects and the repercussions of what that means to employees. Dembiński replied that it is not necessarily the truth, because Polish centers offer a labor force with excellent language skills. Górski added that possible threats affect both sectors and it is quite easy to lower production output, and thus, employment.

After the debate, the Investment of the Year awards, and two other distinctions were presented.

Volkswagen Polska was awarded with the Big Investment of the Year, for the construction of the Białożyce production plant, near Września (Wielkopolskie voivodship), worth €800 million. The award was accepted by the company's spokeswoman, Dagmara Prystacka.

The Medium Investment was presented to Michelin Polska, for the expansion of its factory in Oświęcim (małopolskie voivodship), valued at €100 million. The award was received by Ewa Czarnecka, Director of Public Affairs at Michelin Central North Europe. Samsung Polska was honored with the Small Investment

(L-R) EWA CZARNECKA, DIRECTOR OF PUBLIC AFFAIRS AT MICHELIN; MORTEN (L-R) MARTA DIOP, LINDHOLM PUBLISHER WBJ SALES DIRECTOR GROUP; MONIKA BRYSIAK, SODEXO POLSKA; BOOK OF LISTS PROJECT KATARZYNA SKIPOR, MANAGER MARKETING DIRECTOR OF SODEXO POLSKA

(L-R) PIOTR OSTASZEWSKI, PRESIDENT OF ENERGIA DLA FIRM; MAGDALENA SAWICKA, MARKETING AND COMMUNICATIXONS MANAGER ACCENTURE; TOMASZ BARAŃCZYK, PARTNER AT PWC

Images: Marcin Cieśluk/WBJ

vital when an investor decides to start a business. Górski from PAIiIZ was more optimistic about the Polish legal system and pointed out that political, economic and currency stability are at the forefront of foreign investors' interests. FudaliBondel supported Górski's point of view, saying that local offices treat every investor with due care and attention and provide them with detailed information.

She concluded that “if companies feel comfortable in a particular place, they will invest in other sectors,” no matter what procedures they have to deal with, as ArcelorMittal did in Dąbrowa Górnicza, for example, when launching its shared service center.

Images: Marcin Cieśluk/WBJ

BELOW (L-R) LEE YOUNGMIN, CEO OF SAMSUNG R&D EUROPE; ANNA KISIEL, MARKETING DEPARTMENT ASSISTANT AT GHELAMCO; MORTEN LINDHOLM, PUBLISHER WBJ GROUP; MICHAŁ CZEREDYS, CEO AT ARCUS GROUP

EVENTS / INVESTING IN POLAND 2016 CONFERENCE

of the Year award for establishing the R&D center in Kraków, which came in at €2 million. It was received by Lee Youngmin, CEO of Samsung R&D Europe.

Images: Marcin Cieśluk/WBJ

Warsaw Business Journal Group also presented two distinctions. The first of which was given to Grupa Arcus, for product innovation in IT solutions in the business sector. The second was presented to Ghelamco Poland for the responsible investor creating the urban landscape of Warsaw. On behalf of Arcus the distinction was received by CEO, Michał Czeredys.

Anna Kisiel, Marketing Department Assistant accepted it for Ghelamco Poland.

(L-R) JACEK CIESNOWSKI, EDITOR -IN-CHIEF WBJ GROUP; ANNA AUGUSTYNIAK-HOFFMAN, PR AND MARKETING MANAGER VALKEA MEDIA; MAGDA GAJEWSKA EVENT DIRECTOR VALKEA MEDIA; TOMASZ PAWLAK, SALES DIRECTOR AT WBJ GROUP

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magazyn czasu wolnego wiosna 2015 elektrodeskorolki, tatuaże domowej r o b o t y, d z i w a c z n e s a m o c h o d y, d o n u t y

aki C h ło p h ea d s z c u r ly a jà d o p o w ia h o s w o ic ch a tk p o cz à nr 15, wiosna 2015 egzemplarz promocyjny

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#s n e a k e r o n

FOR CLIENTS ONLY

APRIL 2015 • WBJ OBSERVER

www.cp.valkea.com

EVENTS / EF CN O IN O M I C F O R U M I N K R Y N I C A

IDEAS ON HOW TO COMPREHEND THE MODERN WORLD

Once again Sopot hosted a meeting of eminent guests from the world of politics, media, and science. They searched for ideas which may prove the most valuable in the constantly changing reality

T

he European Forum for New Ideas has attracted the greatest names ever since its first edition in 2011. The central objective of the attendees, over the course of these few debate-filled days in Sopot, is to find solutions to the most urgent problems of today’s world.

Since both the previous and the current year have provided for much excitement, many strong words were heard.

While moderating the panel devoted to the future of the global economy, Andrzej Olechowski remarked with a sneer that we are witnessing the onset of the time of madmen. He blamed the financial crisis for upsetting the balance of the global economy and the world of politics for being incapable of dealing with the Islamic State and the war within European borders. Henryka Bochniarz, president of the Polish Confederation Lewiatan, stated outright during the Opening Gala that she could not understand her own country. Statistics tell us that we are experiencing rapid economic growth, that we managed to escape recession, that the inequalities are diminishing and that the poor are becoming rich faster than the rich. And yet, we keep hearing that Poland is in decay. ”We are becoming a nation of frustrated and excluded people,” added Bochniarz in her conclusion on the condition of the Polish economy. Leszek Jażdżewski, editor-in-chief of Liberté!, sounded even more pessimistic. The entire Forum ought to be held in

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Images: EFNI

a solemn atmosphere, because the ‘game is over’, said Jażdżewski referring to the modern world. Magdalena Środa devoted her speech to economic growth, comparing it to an addictive drug in a world that is undergoing modernization.

Progress renders us dependent, therefore it must be subject to limitations.

They have to be wise, humane, and tailor-made for current social needs.

Jażdżewski recalled the words of Marek Góra who said that Father Christmas is dead and we are going to face a breakdown of the financial system.

One of the key themes of this year’s EFNI was China. The condition of the Chinese economy and the forecasts for the near future were debated ad infinitum.

The conclusion was paradoxical: not long ago it was feared that the Middle Kingdom would overshadow world markets; today it is the recent collapse of the Chinese stock exchange that generates anxiety. Bochniarz therefore appealed for more reservation regarding forecasts and statistics. The plenary sessions were also dedicated to new business models, improvement of capitalism, and European-Russian relations.

Another subject raised in Sopot was the establishment of the energy union, strongly promoted by Poland at the European forum. Bronisław Komorowski, the former Polish president, attended the panel discussion devoted to the EU’s relations with Russia. He criticized the inability of the West to develop a com-

mon stance towards Moscow when it comes to the Ukrainian conflict. The Forum was also an opportunity to listen to Jeffrey Sachs, an economist who garners praise and criticism in equal measure. It was his advice that Leszek Balcerowicz followed when designing the reforms of the Polish economy. Today Sachs promotes lifting countries out of poverty with the use of financial assistance and appeals to the wealthier states to take an active part in improving the condition of the poorer ones. During the Closing Gala Sachs recalled the year 1991, when Jacek Kuroń asked him to design an economic plan for Poland. Sachs was allowed to put in anything he wished, but the first sentence had to be: ‘This is a plan for Poland’s return to Europe.’ ‘No one could have imagined a united Europe back then, and today here I am, saying that we can unite the world,’ Sachs added.

WBJ OBSERVER • NOVEMBER 2015

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E EV VE EN NT TS S // W WH H II S SK K YY L L II V VE E

WHISKY COMES ALIVE

T

he second whisky festival in Warsaw was held under the Whisky Live series banner.

This international event travels the globe just like a rock band on a world tour.

The name change did not, however, overly affect the event. Most of the exhibitors from last year were present this year, the formula was the same, even the display stands were the same as in 2014.

With the success of last year it was only natural that the exhibitor list would be longer this time around. Whiskies from Iceland, Norway, Wales, Australia, Taiwan, Japan, Finland, Sweden, Ireland, India and France were on display, obviously as well as Scottish whisky. Other

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spirits were also on show, bourbons, rums, gins, liquors and even moonshine were available.

With the increased number of stands it was nearly impossible to taste everything during the two days of the exhibition and you had to pace yourself to be able to taste everything without getting too sloshed.

The selection was certainly impressive.

You could taste all the entry-level spirits as part of the basic ticket price. More expensive and rare spirits were available in exchange for vouchers.

The whole event, just like the Whisky Live franchise, is aimed at the casual whisky fan with enough knowledge to differentiate between a blended whisky and a single malt. They can sample brands

that they already know and can easily buy in stores and maybe learn about some others.

Hardcore aficionados may have been disappointed that they couldn’t find more exclusive spirits, but one has to remember that this is a mass event which is only able to survive through ticket sales. If the festival was geared toward such fans it would simply not be profitable. But as an event which promotes whisky and the most popular brands, this was just as successful as last year’s event.

All in all, Poland has now two major annual whisky events (besides Whisky Live, there is one in Jastrzębia Góra) and it still might not be enough to quench Poland’s growing taste for whisky. u

Images: Whisky Live

A NEW NAME, NEW SPIRITS AND NEW LOCATION. YET THIS YEAR'S EDITION OF WHISKY LIVE FESTIVAL HAD A VERY FAMILIAR FEELING

EVENTS / SME CONGRESS

Ministers from home and abroad, ambassadors and consuls, dozens of MPs, MEPs, senators and thousands of representatives from the scientific, business and self-government communities – this is a summary of the one of the biggest meetings of the SME sector in Europe, which took place between October 12-14, for the first time in the newly-opened International Congress Center in Katowice.

The Chamber of Commerce and Industry in Katowice, in cooperation with Co-Organizers and Co-Hosts, once again prepared an event which provides answers to many questions that affect not only young, but also experienced business people from the SME sector.

Six diverse thematic concepts The program of each edition consists of a few thematic concepts, which are discussed during each individual session and event.

This time was the same. The first of those concepts was named “Innovative Company, Smart City, Competitive Region” and dealt with, among other things, improving competitiveness through innovation and seeking financing for unique ideas and solutions. Another concept, “Optimization in business” was planned to allow experts and guests to exchange ideas and experiences on increasing business effectiveness, strategic management, security in business and new technologies.

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The thematic concepts were also concerned with international economic cooperation between businesses and the question of strategy, leadership and dialogue.

The European Congress of Small and Medium-Sized Enterprises is dedicated not only to experienced but also young entrepreneurs, who are in the process of taking their first steps in business. That is why the program included information on the issues of education, start-ups and the role of students in shaping modern business as part of the EU-US Young Entrepreneurs Summit Katowice 2015 and Future Entrepreneurs 2015.

The ”Many Faces of Entrepreneurship” section was address towards answering questions concerning the running of a family business, creative entrepreneurship and the position of disabled people on the job market.

Moreover, during the Congress a number of supplementary events took place, such as the presentation of prizes in the ”Self-government that supports SME” nation-wide program, the Silesian Investment, Construction and Real Estate Forum and the Biznes Expo Fair. Additional attractions also awaited the participants, among them a sightseeing tour of the historic districts of Katowice - Giszowiec and Nikiszowiec and an evening live music show with dance performances hosted by Cuban musician, Jose Torres.

Images: Executive Club, Szymon Antoni Jędrys/Wojciech Nowak

A SUMMARY OF THE 5TH EUROPEAN CONGRESS OF SME IN KATOWICE

EVENTS / CHEMICAL INDUSTRY GALA

CHEMISTRY IN FOCUS This year’s edition of the “Chemical Industry Summit & Awards Gala” was opened with a speech on the future of the European chemical industry by Alexis Brouhns, the Director General of Solvay Europe. He spoke about the challenges facing Europe in the context of the growing strength of Asian markets. The conclusions of that speech set the tone for the remainder of the debate. The inaugural panel discussion entitled “Global chemistry – is solidarity the key to success?” was moderated by Deputy Chairman of PwC Poland, Jacek Socha, who also served as host for the “Polish Chemistry Diamonds” Gala. Jacek Socha questioned speakers regarding their predictions on a common industrial policy in the face of changing laws and regulations. Paweł Jarczewski, President of the Board at Grupa Azoty, emphasized the strong position of the company in the fertilizer and gas industry and mentioned the measurable results due to Polish chemical market liberalization. Michał Sołowow, owner of Synthos, Rovese and Barlinek Komfort, who won the Personality of the Year award in this year’s “Polish Chemistry Diamonds” competition, emphasized the need to improve conditions in coal mining. Robert Stankiewicz, CEO of DOW Poland and Baltic countries expressed a positive attitude towards TTIP agreements on behalf of his company. Piotr M. Szelenbaum (law firm White & Case) commented on the impact of environmental regulations and tariffs in the US, Asia and Europe on equal opportunities for competition. Karl Foerster, Executive Director of Plastics Europe argued that the economy is not only about using all the resources, but also ensuring their optimal use through the implementation of recycling.

Another panel during the conference was devoted to the condition of Polish industry in the face of European challenges. The discussion was moderated by Marcin Jędrzejewski, Director at the

Warsaw office of The Boston Consulting Group. Speakers debated on raising capital for new investments in the chemical industry and the integration of the Polish chemical market and its impact on the growing importance of Polish chemistry in Europe. The discussion concerning became rather animated thanks to a heated exchange of views from two banking sector representatives – Michał Dymicki (BGK) and Artur Kucia (PKO BP).

The final panel entitled “Innovation as a source of competitiveness in the European chemistry industry” was preceded by a speech from An Nuyttens, President of Silica Global Business Unit, Solvay, who spoke about the climate challenges facing the European chemical industry. The moderator of the third panel debate of “Chemical Industry Summit & Awards Gala” was Adam Leszkiewicz, President of the Management Board of Grupa Azoty of Zakłady Azotowe Kędzierzyń, who asked participants about the importance of innovation in reference to the motivation for its implementation.

Grzegorz Czul, CEO of Fluor, stated that the main inspiration for the implementation of innovation is the desire to maintain market position and to be responsible for future of the company. He also added that he takes his employees ideas into consideration and is willing to take risks. Marek Jagieła from BASF Poland spoke about innovation as a necessary condition for maintaining competitive advantage, and Patrycja Zielinska, Vice President of the Industrial Development Agency (ARP), announced significant investment in innovation. Michał Grochowski put forward the thesis that as far as ERBUD Industry is concerned it is the customer who can evaluate innovation. Michał Bieniek, President of Apeiron Synthesis, argued that passion and striving for positive change is the basis for innovation.

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GADGETS TECHNOLOGY TO MAKE YOUR LIFE EASIER

WE LIVE IN AN AGE OF GADGETS: some are useful, but most are just a waste of time and money. We sift through the latest available tech to pick those that we believe will help you live your life more comfortably and confidently.

EVAPOLAR

Arguing about room temperature is one of the more ridiculous situations we face in the modern world, yet it has become a fixture of everyday discussions in the office or at home. He who controls the thermostat, rules the world (or at least the room). The Evapolar portable air conditioner might be the solution. This Russian-made device can apparently reduce temperatures down to 17 ° C (the average drop is around 6-8° C). It can also humidify the air. The only drawback is that it cannot act as a heater.

SAMSUNG VR

VR headsets were supposed to be the next big thing with the Oculus Rift as the leader of the movement. So far it looks more like a fad, as the Rift is still not widely available and it will cost over $350. For people who don’t want to spend that much, Samsung VR is a good option while we wait for the VR phenomenon to truly take off. It will allow users to watch 3D movies, play games or enjoy so-called VR Experiences. All of that on the screen of your phone (as long as it’s a 2015 Samsung model).

Samsung.com Price: $99

Images: Evapolar, Samsung, Invizbox, Thetileapp, Thatinventions, Xiaomi Ninebot

Evapolar.com Price: $60

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TILE

Losing things can be annoying. Especially if it’s your wallet or keys and you’re already ten minutes late. Why can’t they always be in the same spot? To avoid such stressful situations you can invest in the Tile system. It’s a combination of app and Bluetooth trackers which you can attach to your device. If you can’t find it and it’s within a 100-foot range of your phone it will play a loud tune. If it’s further away than that it will show you it’s last known location on the map. thetileapp.com Price: $25

XIAOMI NINEBOT MINI

The Segway, the invention that was supposed to revolutionize “everything” but failed miserably and ended up as a banana peel-like comedy device (Arrested Development or Paul Blart Mall Cop). Chinese company Ninebot, which bought Segway earlier this year, is trying to breathe new life into the device and in cooperation with another Chinese giant, Xiaomi they are releasing the Xiaomi Ninebot mini. It doesn’t have any handles and is steered using your knees. It can move at a speed up to 16 km/h and cover 22 km on a single charge. ninebot.com Price: $315

SPREADTHAT BUTTER KNIFE

This innocent looking device is not a pregnancy test. It’s a knife. But not your standard looking blade with a handle. Of course it has that too. But most importantly, the SpreadThat butter knife warms your butter using your own body heat. It’s made from thermal conductive titanium, which transmits heat from your hand to the blade of the knife. We don’t know if it makes your toast extra delicious, but the preparation is way more cool. thatinventions.com Price: $20

INVIZIBOX GO

It happens all the time. You’re sitting in some public space, like a restaurant or a shopping mall, bored out of your mind. You pull out your mobile device, see that there’s public Wi-Fi in your location and then the question arises? Can I log in to my social networks using free public Wi-Fi? Is it safe? Well, worry no more, because with the Invizibox Go device you can connect to any network using a virtual private network (VPN) or Tor, making the connection extremely secure. It’s worth remembering though, that on top of the price of the device there is the monthly subscription fee of €4 to pay (the first year is free). invizbox.io Price: $99

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COMMENTARY / LEGAL

TO ADVERTISE: TOMASZ PAWLAK, TPAWLAK@WBJ.PL, +48 501 791 461 78

A P R I L 2 0 1 5 • W B JSUBSCRIPTION: OBSERVER

MONIKA BRYSIAK, MBRYSIAK@VALKEA.COM, +48 22 257-7500 ext. 119 WBJ OBSERVER • JUNE 2014

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LIFESTYLE / BAKERIES

B Y V E D I K A LU T H R A

BAKERIES IN WARSAW

Image: Shutterstock

Poland isn’t just good for vodka. It’s also good for it’s vast array of baked goods, ranging from freshly baked sourdough bread to sugar-dusted doughnuts. With à la mode dining on the rise, it appears as if multicultural patisserie has begun to dominate the bakery scene in Warsaw. A positive contribution, no doubt: Bakeries are scattered all across the city, some serving the flakiest croissants, some the most elaborate cakes, and others are keeping Polish heritage alive with traditional baked goods. Here are our favorites, a mix of this and that, and everything in between

CUKIERNIA NENETTE Ul. Chmielna 2 Ul. Wąwozowa 6 Ul. Świętokrzyska 32

is both gluten and sugar free, though it is impossible to tell between the mouthfuls of sheer goodness.

The Gluten-free diet, like the vegan and the Paleo diet, has become a worldwide phenomenon. Cukiernia Nenette, a bakery that adheres to this type of lifestyle, is a rather modest venue, sans elaborate décor or interior frills. But there is a display of freshly baked (wouldn’t have it any other way) gluten-free breads and confectionary.

Amongst the exquisite chocolate cakes and muffins is their carrot cake, which

CUKIERNIA PAWŁOWICZ Ul. Chmielna 3 A good bakery isn’t assessed on the basis of size, presentation, or selection of goods. A good bakery is assessed by the line of people that wait impatiently outside for their bag of warm doughnuts, sticky from the sugared glaze. Cukiernia Pawłowicz does not have tables or chairs to lure

in hungry pedestrians, nor does it have an elaborate menu. But it does have doughnuts. The best I’ve ever had. And waiting with the crowd outside is so worth it.

PIJALNIE CZEKOLADY WEDEL Various locations including Złote Tarasy and Wilanów One of Poland’s oldest chocolate companies is Wedel, established in 1851. Probably the most popular of “bucket-list” cafés for tourists, Wedel branches showcase a variety

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of different desserts made from the popular Polish chocolate brand. On a chilly day in November, the warmth of the store atmosphere paired with a cup of Wedel hot chocolate puts you right at ease.

PETIT APPÉTIT ul. Nowy Świat 27 ul. Mokotowska 45

Rakowiecka 41A ul. Senatorska 28 Despite new, modern eateries springing up in all corners of Warsaw, Galeria Wpieków still tends to be a popular bakery among locals. This chain is modest and very traditional when it comes to its array of goods, but I am still partial to it. Their Senatorska branch was the first bakery we were introduced to when moving to Poland in 2004. I remember my father bringing a brown paper bag from Galeria Wpieków on his way home from work. Their rich chocolate muffins, studded with bits of chocolate, are to die for.

front are always last-minute additions to a customer’s order. Today, Vincent can be found in various locations.

However, my favorite is its Nowy Świat shop, the cozy interior puts me at ease, as do the trays of unbaked loaves ready to go into the oven, to be served warm to eager clients.

ODETTE Ul. Wojciecha Górskiego 6 Patisserie Odette sells sugared creations at their finest. Verrines, macaroons, pralines, stylish cakes and tarts are all available on display. It’s possible that Odette is one of Warsaw’s trendiest new cafés, where every item looks far too good to eat. Though with cakes made of chocolate mousse and hazelnut dacquoise, it is impossible to resist.

Petit Appétit attempts to bring an aspect of French culture to Poland. Édith Piaf plays in the background while customers work silently on their laptops, enjoy Eggs Benedict or pancakes and meet with friends. The display of baked goods is impressive, and the sandwiches would make for a very satisfying lunch. However, to me, part of what makes a good venue is the decent service and an animated ambiance. This café has both.

SŁODKI SŁONY Ul. Mokotowska 45

GALERIA WPIEKÓW Locations all over Warsaw including Ul. Nowy Świat 48

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VINCENT Nowy Świat 64 Chmielna 21 Jana Pawła II 82 (Arkadia mall) Aleja Wojska Polskiego 3 (Stara Papiernia second floor) Among the shops and stalls tucked away on Nowy Świat, is Vincent, a rustic French boulangerie and patisserie.

While most seek the crusty loaves of bread that wait in baskets behind the counter, the madeleines, cinnamon rolls and buttery croissants stacked in

PAUL Ul. Emilii Plater 53 On my first visit to Paris, I was introduced to Paul. The patisserie chain, that is. Paul recently opened their first Polish branch on Emilii Plater. While the recipes are French, the bread is freshly baked on the premises and good bread means good sandwiches: I always look forward to indulging in their Croque Monsieur.

Images: Vedika Luthra

Few have not heard of Magda Gessler, Poland’s female version of Gordon Ramsay. Among her restaurants and patisseries is Słodki Słony. Flowery patterns and ornate picture frames decorate the walls, somewhat resembling a 19th century Victorian parlor. While the décor might be a little over the top for me, I do enjoy their over-the-top desserts. The Mazurek Kajmakowy, a decadent layer of short crust pastry topped with chocolate ganache and Polish caramel, is my favorite, Easter or not.

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www.roedl.com/pl 2015-08-20 10:59:11