WBJ Observer September 2015

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SEPTEMBER 2015

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OF REAL ESTATE N EWS

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

HEALTH CARE 2.0 HOW NEW TECHNOLOGIES ARE RESHAPING THE MEDICAL SECTOR > 35 STRONG BONDS FINANCING REAL ESTATE PROJECTS WITH BONDS AND MEZZANINE > 56

POLISH INVESTMENTS IN AFRICA

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KOLOMNIE.PL YOUR LOCAL BUSINESSES UNDER YOUR FINGERTIPS > 40 AVOIDING THE GREEK TRAGEDY WHAT POLAND SHOULD DO TO AVOID A CRISIS? > 31

TEMPTING AFRICA

SEPTEMBER 2015

Polish companies are trying to enter untapped markets ALSO IN THIS ISSUE:

• N ew s • C o m m e n ta r y • R a n k i n g • C i t y s ca p e • E ve n t s

30 PAGES 25 PAGES

SEPTEMBER 2015

Number 09 (20)

FOR DAILY NEWS VISIT US AT

wbj.pl

OF REAL ESTATE N EWS

REAL EST A NEWS TE

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

HEALTH CARE 2.0 HOW NEW TECHNOLOGIES ARE RESHAPING THE MEDICAL SECTOR > 35 STRONG BONDS FINANCING REAL ESTATE PROJECTS WITH BONDS AND MEZZANINE > 56

POLISH INVESTMENTS IN AFRICA

+

KOLOMNIE.PL YOUR LOCAL BUSINESSES UNDER YOUR FINGERTIPS > 40 AVOIDING THE GREEK TRAGEDY WHAT POLAND SHOULD DO TO AVOID A CRISIS? > 31

TEMPTING AFRICA

SEPTEMBER 2015

Polish companies are trying to enter untapped markets ALSO IN THIS ISSUE:

• N ew s • C o m m e n ta r y • R a n k i n g • C i t y s ca p e • E ve n t s

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APRIL 2015 • WBJ OBSERVER

WBJ OBSERVER • APRIL 2015

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SEPTEMBER 2015 • WBJ OBSERVER

@wbjpl

lll IN THIS ISSUE 26-30

POLISH INVESTMENTS IN AFRICA

Try these:

4

lll NEWS

4-13 In Review Latest news 14 Dateline 15 Economy

16

lll COMMENTARY 16 Law Health care 17 Real Estate Innovations 19 Defense Polish technology

20

lll INTERVIEWS 20-21 Alex Matturri 22-23 Agnieszka Rynkowska 24-25 Ajay Bisaria

31

lll FEATURES

31-34 Greek crisis Avoiding Athens’ path 35-38 Health Care Digital Age

40 49-81 LOKALE IMMOBILIA

lll ENTREPRENEURS 40-42 Kolomnie Going local

44

lll UPCOMING EVENTS 44-45 Krynica Economic Forum 46-47 EFNI

82-83 Cityscape Olsztyn 84-85 Ranking Software and hardware producers 86-87 Arabian horse days

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SEPTEMBER 2015 • WBJ OBSERVER

WBJ OBSERVER • SEPTEMBER 2015

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lll INREVIEW NEWS

News highlights of the past month

JAN KULCZYK

Jan Kulczyk was the richest man in Poland for years.

His fortune was estimated at PLN 15 billion. He made his money in a variety of sectors, from energy to real estate. His family had strong entrepreneurial traditions. Grandfather Władysław, owned a shop with agricultural products in the 1930s, his father Henryk had a number of businesses. He sold fungus and berries to Germany, but made his fortune on selling a cleaning paste. >>

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SEPTEMBER 2015 • WBJ OBSERVER

Image: Kulczyk Investments

1950-2015

NEWS

WBJ OBSERVER • SEPTEMBER 2015

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NEWS

>> Since such products were given to every factory worker at that time, the Kulczyk family made millions.

Henryk kickstarted his son’s career by giving him PLN 1 million. Jan used this money to set up Interkulpol, a company which specialized in trading with the Polish diaspora. He later joked that “the most important thing in life is to choose the right parents.” In the 80s, he imported agricultural machinery from Germany and exported produce there, among many other things. His scope of operations was so big at that time that he established a chamber of commerce dedicated to companies trading with the Polish diaspora, Inter-Polcom.

Kulczyk’s first major deal in the post-communist era was the 1991 order to deliver 3,000 cars to the police. The deal was worth PLN 150 million. Later on, he expanded his fortune by buying stakes in various state-owned enterprises and selling them for a hefty profit. For example, he bought a stake in GSM operator Era for PLN 16 million and sold it three years later for PLN 825 million. He also held shares in companies such as insurer Warta, Telekomunikacja Polska and oil refiner PKN Orlen. He also held a three percent stake in the SABMiller brewery.

Images: Shutterstock,

In recent years, he started to step away from the limelight and transfer the power to his children, Sebastian and Dominika. In January 2014, Sebastian was appointed president of the board of Kulczyk Investments and Dominika has been member of the board there since 2013.

Jan Kulczyk passed away on July 29 in a hospital in Vienna, due to complications from a surgery.

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SEPTEMBER 2015 • WBJ OBSERVER

Image: Kulczyk Investments

In 2007, Kulczyk set up his company, Kulczyk Investments, which specialized in four strategic sectors: real estate, mineral resources, infrastructure and energy. He also supported Polish culture and was willing to donate PLN 20 million to the Museum of the History of Polish Jews in Warsaw.

Image: Kulczyk Investments

NEWS

Shorts GETIN WITHDRAWS FROM RUSSIA

A

rtertesia Consulting has purchased leasing firm Carcade owned by Getin Holding for a billion rubles, which translates to some PLN 172.5 million, Puls Biznesu daily reported.

Getin decided to withdraw from the Russian market due to the “high level of economic and political risk related to the running of a business by a Polish entity in Russia,” Piotr Kaczmarek, Getin’s CEO pointed out. Kaczmarek stressed that the company is not going to leave Belarus nor Ukraine, what’s more, it is considering expansion in the CEE and Romania.

The final price will be up to the ruble exchange rate on the day of completing the transaction.

POLE IDENTIFIED AS ISIS SUICIDE BOMBER

A

28-year-old from Miastko in Zachodniopomorskie voivodship is said to be the first Pole who has carried out a suicide attack on behalf of ISIS in Iraq, according to unofficial reports from the Internal Security Agency (ABW).

TVN24 broadcaster said that before the attack, Jacek S. had lived in Germany for a few years. After he had converted to Islam in 2014, he changed his name on a social networking website to Ismail Slo and posed with an ISIS flag for photos.

The terrorist drove a vehicle filled with explosives into a refinery building in the city of Baiji in Iraq on June 13. The attack left 11 dead and 27 injured.

ABW said it is familiar with the matter, but refused to provide details.

>> DOMESTIC

Mikosz steps down as head of LOT Sebastian Mikosz has quit as the CEO of state-owned carrier LOT Polish Airlines. According to Rzeczpospolita daily, the resignation has been accepted.

Mikosz decided to step down in connection with a decision of the Ministry of the State Treasury to not conclude negotiations with investment fund Indigo Partners.

In a letter to the fund, the ministry said that due to the upcoming general elections, the issue of LOT’s privatization will be handled by the next government.

Indigo Partners was allegedly in talks with the state treasury to sign a letter of intent. What is more, it was not interested in buying existing stock, but rather about increasing the air carrier’s capital, and the involvement would amount to hundreds of millions of złotys, according to the media.

“In this situation, my mission as the CEO of LOT has come to an end,” Mikosz explained. “Without a private investor who will finance the expansion in the medium-term perspective, the company may disappear.

LOTOS TO ACQUIRE DEPOSIT IN NORWAY

rupa Lotos plans to acquire a new hydrocarbons deposit on the Norwegian Sea in order to recover some of the capital invested in the Yme project, Paweł Olechnowicz, the firm’s CEO told ISBnews.

Mariusz Machajewski, the firm’s Deputy CEO said that the group has already made a list of favored projects to acquire. Lotos decided to abandon the Yme scheme in 2013 and cash a 20 percent stake which it purchased five years earlier. Talisman Energy, the deposit’s operator and SBM, the main contractor of the platform could not reach an agreement regarding launching extraction for years. Eventually, the project was closed and SBM paid out a $470 million compensation to the shareholders, which will cover de-installation of the platform. In April, Lotos informed that it may be able to recover some $500 million from a Norwegian tax shield.

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SEPTEMBER 2015 • WBJ OBSERVER

2016 FIGURE OF THE MONTH

IS THE YEAR WHEN POCZTA POLSKA WILL ENTER THE WSE

Images: Shutterstock, LOT

G

NEWS

>> ENERGY

KGHM to build photovoltaic farms P

oland’s largest copper miner KGHM Polska Miedź is planning to spend PLN 1.5 billion on renewables, including construction of photovoltaic power stations, Adam Witek, CEO of the firm’s subsidiary KGHM Energetyka told Parkiet daily.

“We would like to have 30 percent of the total electric energy from renewables within five years,” Witek said and added that it will translate

to around 300 MW. The estimated cost of producing 1 MW is PLN 5 million, therefore the total value of the investment is to reach PLN 1.5 billion.

Witek informed that the firm is going to construct its own photovoltaic farm and it has already launched a scheme of building a 40 MW wind farm.

KGHM consumes 2.5 TWh of electric energy annually.

€69.3 MILLION is the amount that the European Commission will grant Poland to implement migration policy

34.9% is the number of Polish internet users who block ads

WBJ OBSERVER • SEPTEMBER 2015

9

NEWS

Netflix to enter Poland N

7% IS THE PERCENTAGE OF POLISH FIRMS WHO ARE CURRENTLY EMPLOYING FOREIGNERS

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SEPTEMBER 2015 • WBJ OBSERVER

Image: shutterstock,

etflix, an American provider of on-demand Internet streaming media will be entering the Polish market shortly, Puls Biznesu daily reported.

“We’ll be available in Polska soon.

Enter your email & we’ll let you know when Netflix is available,” a statement on the website read. According to the daily, similar information regards Egypt, Bulgaria and Nepal.

Netflix is present in 50 countries and provides media for over 60 million internet users. This fall, the streaming service will launch its operations in Spain, Italy and Japan among others.

The company announced earlier this year, that in 2016, it plans to be available in some 200 countries.

NEWS

Image: shutterstock,

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WBJ OBSERVER • SEPTEMBER 2015

11

NEWS

British carmaker Jaguar Land Rover, owned by Indian Tata Motors, plans to build a new vehicle factory in Slovakia. It will be the company’s first European production plant outside of the UK. JLR has signed a letter of intent with the Slovakian government to build the new £1 billion worth plant in the Slovakian city of Nitra with a manufacturing capacity of 300,000 cars per year.

According to Puls Biznesu daily, the carmarker demanded PLN 350 million in public help and access to investment grounds as soon as September. Poland was unable to resettle inhabitants in such a short period of time.

The Slovakian plant will likely begin production in 2018.

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SEPTEMBER 2015 • WBJ OBSERVER

FIRST POLISH CARGO TRAIN TO CHINESE CHENGDU LAUNCHED

P

olish goods will be transported to China via a Łódź-Chengdu railway cargo connection, the Polish Press Agency reported.

This will be the first “Polish” cargo since the route was established in April 2013.

Such products as beer, juice, mineral water, milk products and confectionery will be exported. According to Sławomir Knap, Director of Multimodal Transport at Hatrans Logistics, the connection’s operator, Polish food offers the Chinese not only competitive prices but good quality as well.

Hatrans’ CEO, Tomasz Grzelak stressed that completing the Polish cargo has been very challenging, as Polish firms had to meet many Chinese requirements.

By now, Chinese producers have sent around a million metric tons of products via the connection to Poland.

Images: shutterstock,

JAGUAR WILL BUILD ITS PLANT IN SLOVAKIA, NOT POLAND

NEWS

Images: shutterstock,

Sejm passes CHF-denominated loan conversion bill S

ejm, the Polish lower house of parliament has passed a law restructuring franc-denominated mortgages with 281 votes for, 2 against and 150 abstaining.

According to the law, the franc-denominated mortgage loans would be converted to PLN with the exchange rate of the CHF recorded on the day of the conversion.

Banks will take on 90 percent of the difference between the value of a converted mortgage loan and a corresponding PLN loan.

Those owning apartments up to 100 sqm, and houses up to 150 sqm, would be eligible, under the condition that the real estate is actively used by the borrower.

Such limitations would not apply to families with three or more children.

During the first year of the program, the first beneficiaries would be borrowers KATOWICE whose mortgage value exceeds the value of loan security by 120 percent.

12-14 października 2015 Financial watchdog KNF said that if Poland implements the bill on foreign currency conversion in the form it was voted on in the Kongres parliament, it will cost V Europejski Małych i Średnich Przedsiębiorstw banks about PLN 22 billion.

ANDRZEJ DUDA ASSUMES OFFICE Andrzej Duda was sworn in as the President of Poland before the National Assembly of lawmakers and senators. After he had taken the presidential oath, he addressed the assembly, appealing for mutual respect, which, according to him, is the key to repairing Poland.

Duda said he will uphold the pledges he made during the presidential campaign regarding raising the tax-free threshold and cutting the retirement age. Referring to foreign policy objectives, he declared that he will make efforts to increase NATO’s presence in Poland and to bolster the position of Poland in the EU. ROLLS-ROYCE AND HISPANO-SUIZA TO BUILD FACTORY IN PODKARPACKIE Aero Gearbox International a joint consortium established by RollsRoyce and Hispano-Suiza (Safran) will construct a production plant in Podkarpackie voivodship.Construction work will begin by the end of the year, first supplies of aircraft engines are expected to be delivered in 2017. Initially, 110 people will be hired.

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www.smecongress.eu WBJ OBSERVER • SEPTEMBER 2015

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NEWS / ECONOMY

CALENDAR

SEPTEMBER-OCTOBER SEPTEMBER ECONOMIC FORUM

8-10

Event: The 25th Economic Forum in Krynica will gather 3,000 representatives of various branches to discuss political, social and economic problems. This year’s motto is “Towards a Resilient Europe. Strategies for the Future.”

Location: Krynica Zdrój

SEPTEMBER WARSAW INTERNATIONAL MEDIA SUMMIT

24-25

Event:For the 8th time the summit will bring together the most important representatives of the Polish telecommunications and media market. Its aim is to discuss the latest strategies and trends on the market.

Location: MMConferences, ul. Długa 44/50, Warszawa Web: en.telekomunikacjaimedia.pl

SEPTEMBER SMART CITY FORUM

SEPTEMBER EUROPEAN FORUM FOR NEW IDEAS – EFNI OCTOBER

OCTOBER DEVELOPER DAYS

6-7

00-810 Warszawa ul. Srebrna 16

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SEPTEMBER 2015 • WBJ OBSERVER

23-24

Event: The forum offers a platform for dialogue, cooperation and exchanging experiences about developing smart cities in Poland as far as financing, investment, technology and transport are concerned.

Location: Westwing Hotel, Warsaw Web: en.smartcityforum.pl

30-2

Event: Held since 2011, EFNI creates a platform for entrepreneurs, managers and economists from all over tthe world to debate Europe’s future and its economy in a global sense.

Location: Sopot Web: efni.pl

Event: Analysts, developers, journalists, economists and MPs, will discuss cities and the investment possibilities they offer.

Location: Wrocław Web: pzfd.pl

NEWS / ECONOMY

FACTS AND FIGURES Data overview for July Data overview for July Data overview Data overview for Julyfor July

WARSAW STOCK EXCHANGE WARSAW STOCK EXCHANGE

Data overview for July

AS OFEXCHANGE JULY 2015 STOCK EXCHANGE WARSAWWARSAW STOCK AS OF JULY STOCK 2015 EXCHANGE WARSAW AS OF JULY 2015 AS OF JULY 2015 AS OF JULY 2015

476 476 476 476 476

-0.7% -0.7% -0.7% was Poland's CPI -0.7% was Poland's CPI

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

was Poland's CPI -0.7%

Number of listed companies Number of listed companies

inflation in July was Poland's CPIin July inflation inflation inCPI July was Poland's inflation in July inflation in July

3.8% 3.8% y/y3.8% industrial y/y industrial

Trade volumes Trade volumes Trade volumes Trade volumes

Trade volumes

3.3% 3.3% 3.3% 3.3%

3.8% y/y industrial output growth 3.8% output growth growth in output July y/y industrial

Shares Shares Shares

PLN 133.3 billion PLNPLN 133.3 billion Shares 133.3 billion

3.3%

Shares

GDP GROWTH IN Q2 GDP GROWTH IN Q2 GDP GROWTH IN Q2

industrial iny/y July in July

Bonds PLN 133.3 billion Bonds PLN 133.3 billion

Bonds 453 million PLN PLN 453 453 million Bonds PLN million Bonds

GDP GROWTH IN Q2 GDP GROWTH IN Q2

output growth output growth in July in July

3.5% 3.5% 3.5%

Futures PLN Futures 453 PLNmillion 453 million Futures

PLN 4.6 billion PLNPLN 4.6 billion 4.6 billion Futures

3.5% 3.5%

y/y retail sales y/y retail sales y/y retail sales growth in July growth in Julyin July growth

Futures

Growth of main index (WIG), ytd

Growth of main index (WIG), ytd PLN 4.6 billion Growth of main index (WIG), ytd PLN 4.6 billion 2.6%

2.6%2.6%

y/y retail sales y/y retail sales growth ingrowth July in July

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

2.6% 2.6%

Bridge the gap

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"If Poland and other registeredregistered unemployment unemployment central European rate in July rate in July countries constitute the real flank of NATO, then it Steadily down Poland’s registered unemployment rate, seems natural July 2014 – July 2015 to me, a logical conclusion, that bases should be placed in those countries," 11.5

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10.1% 10.1%

Aug. '14

-0.5

registered unemployment registered unemployment rate in July registered rate in Julyunemployment rate in July

12

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0

10.1% 10.1% 10.1%

12

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In the first half, Poland reported a €2.87 billion (nearly PLN 12 billion) surplus in foreign trade, compared with €970.6 million deficit in the corresponding period last year, a statement by the Central Statistical Office (GUS) showed.

Within the first six months, Polish exports grew by 6.7 percent and totaled €87.2 billion, imports increased by 1.9 percent and stood at €84.3 billion.

President Andrzej Duda for the Financial Times. (FT)

WBJ OBSERVER • SEPTEMBER 2015

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COMMENTARY / LAW

PAWEŁ HINCZ

JULIUSZ KRZYŻANOWSKI

LEGAL COUNSEL, PARTNER, HEAD OF LIFE SCIENCES PRACTICE WKB WIERCIŃSKI, KWIECIŃSKI, BAEHR

LAWYER, CO-HEAD OF LIFE SCIENCES PRACTICE WKB WIERCIŃSKI, KWIECIŃSKI, BAEHR

T

his autumn it will be two years since branches of the Polish National Health Fund (NFZ) were going to open up the provision of health care benefits in Poland to new contractors. However, two amendments to the Health Care Benefits Act enabled branches of the NFZ to extend the term of existing contracts with benefit providers that were due to expire on December 31, 2013. These amendments allowed for the existing contracts to be prolonged initially until December 31, 2014 and finally until June 30, 2016. These extensions have caused severe problems for private investors who had expected to be able to compete to provide publicly funded health care services from the beginning of 2014 and, with that in mind, had made significant investments. We expect that any further extension of the existing contracts could be the end for some private investors. For that reason, in our view, regardless of the result of October’s general election, the ruling coalition could not afford to introduce yet another amendment to the Health Care Benefits Act allowing NFZ branches to continue to freeze the market for new players.

Investing in health care in Poland has never been simple. However, putting aside the extension of the exist-

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SEPTEMBER 2015 • WBJ OBSERVER

ing contracts with benefit providers, some amendments to the Health Care Benefits Act may have a positive impact on making investment decisions. For example, prior to January 1, 2015, contracts for providing publicly funded health care benefits were generally concluded for a period of only three years. Agreements exceeding this term required the consent of the President of the NFZ. Many market participants considered that such a short period provided insufficient stability and certainty from an investment point of view. However, since January 1, 2015, agreements may generally be concluded for a period of five years without requiring consent. Moreover, contracts for inpatient services, other than hospital treatment (rehabilitation, long-term care, etc.), may be concluded for up to ten years without the consent of the NFZ president and contracts for primary care may generally be concluded for an indefinite period of time.

Despite the issues, the health care sector continues to attract interest, with increased activity of domestic and international investors being observed and a reasonable level of M&A transactions in the area. We strongly believe that the sector will not only remain attractive, but also strengthen its position among the top investment targets in the years to come. u

Images: Shutterstock

Polish health care sector in 2016 – a new opening for private investors?

COMMENTARY / REAL ESTATE

KAROL BARTOS EXECUTIVE DIRECTOR, PORTFOLIO & ASSET MANAGEMENT, TRISTAN CAPITAL PARTNERS

Is new office space always best? Not necessarily!

The

market for modern commercial space in Poland has enjoyed dynamic growth for the past 25 years, and experts predict that there will be no slowdown any time soon. Warsaw alone is on course to add more than 763,000 sqm of office space by 2017, of which almost half will be located in the city center. We have found, however, that owners of existing buildings still have plenty of trump cards to play in the increasingly fierce competition for tenants.

Our experience at the Warsaw Financial Center (WFC), a tower in the heart of the city center that helped establish the Central Business District, shows that landlords with a proactive approach to property management can hold their own against new office developments. The key is in the teams that manage existing properties, since they are able to anticipate and respond immediately to tenants’ needs thanks to the long-term relationships that they have forged with them.

Tristan Capital Partners’ joint venture with Allianz Real Estate initiated a renovation and refurbishment program shortly after acquiring the WFC in 2012 with a view to meeting the needs of the most demanding tenant. The changes encompassed improvements to the building, in the services offered and in how we communicated.

We opened a completely redecorated lobby at the WFC at the end of 2014, featuring an impressive central video wall that is the largest of its kind open to the general public. The wall features works by Polish and foreign artists. It is also used for projects involving our tenants – the most recent of which was an account of the search for the wreck of famous Polish submarine ORP Orzeł that involved a person who works at the WFC. As part of the facelift to the lobby, we installed the state-of-the-art Compass Plus elevator call system, which improves energy efficiency and speeds up access to the upper floors. Through its modernized access control system, WFC is the first office complex in Poland to have a booking system similar to those found at airports that allows visitors to pass through its access gates by using a unique QR code that can be displayed on a smartphone. Another successful initiative this year is the opening of the flagship outlet of Paul, the French chain of bakeries and restaurants. Landlords cannot afford to rest easy, especially when faced with a pipeline of new developments that will open in the coming years.

Effective property management is critical and depends on a constant hunt for improvements to differentiate a building so that it meets the needs and expectations of tenants. u

WBJ OBSERVER • SEPTEMBER 2015

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COMMENTARY / COACHING

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COMMENTARY / DEFENSE

ADAM BARTOSIEWICZ VICE PRESIDENT OF THE WB GROUP

Polish technology and industrial patriotism, the key to success on the global defense market

T

he defense industry and equipment is most often associated with heavy tanks or armored fighting vehicles from black and white films.

However, battlefield success is less and less dependent on the thickness of armor or the firing speed of a machine gun. Information, reconnaissance and the ability to communicate quickly between friendly units, are becoming the most important aspects of 20th century warfare.

Effective communications technology, advanced reconnaissance systems and information processing are the most important tools for a contemporary army. It’s difficult to imagine an army functioning without electronics, used in precision-guided gunfire or positioning of units (so-called Blue Force Tracking). Also doubtful is the functioning of an army without advanced unmanned systems, which can monitor the battlefield from the air for hours and deliver essential battlefield information to campaign headquarters in real time.

Considering the key elements of armed forces’ abilities, Poles working on unmanned systems, digital data communication or wireless communications encryption has resulted in Poland having military competences that are essential at the moment. An excellent example of Polish solutions in these fields are the systems which are designed and produced by the largest private capital group of the Polish defense industry – WB Group. The products offered by WB Group, among them FONET communications systems for armored and other vehicles (which is

successfully being used by the United States Army), TOPAZ battlefield management and artillery fire guidance system or the unmanned tactical and mini class systems, which are currently delivered to the biggest armies around the world. Likewise, WB Group is the biggest Polish exporter of military systems.

Defense contracts are strictly regulated and come under the control of government agencies that fulfill international agreements regarding the defense market. Without the proper end-user certificates, no shipment of products or servicing of military equipment is possible. Countries that have their own defense industry, strictly control the export of their technology, with regard to the variety of the equipment as well as the country of destination. It is necessary to acquire permission of a subcontractor’s government for the re-export of any given technology (e.g. tracking head).

In the case a producer has at its disposal unrestricted ownership rights for the technology and algorithms found in a given type of product, it can freely decide to whom and where it will offer its product.

Therefore, the development of our own, telecommunications, data transfer or other key technologies is crucial in achieving success on the international market. By building our own technologies we are constructing an industry for the upcoming decades.

Buying a foreign product or a foreign license, we would achieve a short-term profit, but the industrial potential for years to come – would be built by someone else – the foreign supplier. This is our most important message – we call it industrial patriotism. u

WBJ OBSERVER • SEPTEMBER 2015

19

INTERVIEW / ALEX MATTURRI

FROM TICKER TAPE TO THE DIGITAL AGE WBJ REACHED ALEX MATTURRI, CEO OF S&P DOW JONES INDICES, TO DISCUSS THE WARSAW BOURSE AND ITS GROWTH OPPORTUNITIES

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SEPTEMBER 2015 • WBJ OBSERVER

Image: Ministry of Culture Images: Jan Malinowski/WBJ

WBJ Observer: How can you, as an index provider, foster growth of the bourse?

Alex Matturri: We see indices as a way to help expand investors’ interest in the Polish market in general. There are many different ways that an index could be used to help develop the market, to bring more liquidity and more transparency. For us, it’s early in terms of exploring the potential here for growing our own business, which, by definition, will hopefully bring new products to the region, whether they will be ETFs or other index-based products. That’s our mission - to expand into this region, where we see a lot of opportunity.

What kind of opportunities do you see here?

Certainly, Eastern Europe is one of the bigger markets, and if you look at the region, you will see a lot of issues around Russia and Ukraine, so I think the Warsaw exchange is in a good position to become bigger. There is still a lot that needs to be done in the market, including improving education about the marketplace and bringing in new indices that would help foster growth. We are not product issuers, so our role is limited to providing independently governed indices that measure the markets and that can serve as the basis for product innovation.

What kind of indices is there a market for in Warsaw?

I think you already have some core indices in the local market. Where we can add value is

Image: S&P Dow Jones Indices

I N T E R V I E W B Y WOJ C I E C H R Y LU KOW S K I

Image: S&P Dow Jones Indices

INTERVIEW / ALEX MATTURRI

by bringing greater transparency to these markets through our indices, and licensing them to product issuers for the creation of index-based investment products such as ETFs, for example.

Our research globally has shown that active fund managers do not perform as well as benchmarks. Expenses are a key reason for this. Eventually, investors begin to realize that they are paying high fees for certain investment products that don’t perform as advertised and are not as transparent in their holdings and processes as one would be led to believe. By doing the research and educating the marketplace on issues such as transparency and performance, we believe that investor interest in indices will grow and will lead to more efficient product offerings.

Over the last decade, the WSE has seen an outflow of individual investors. How would you attract more individual investors to the bourse?

Individual investors have to have confidence in the market and that comes with education, as well as with transparency. To draw more investors into the marketplace, you have to have products that are easy for them to understand and that perform within their expectations. Of course, we can’t make markets go up and down, but we can bring great confidence, transparency, and integrity to markets. Once, investors are confident and feel more educated, they will be more inclined to invest.

Investors should be looking more broadly to regional and global products, because of the need to diversify. If they invest strictly in one market, they run into a lot of diversification risk. As the example of China in the last

couple of months has shown, if you don’t diversify, you can lose a lot of money.

Wouldn’t diversification cause an outflow of investors….

It doesn’t mean that the money has to flow out of Warsaw. There are ways of creating products that trade here, but also give access to foreign markets. It could be a structured product that is issued here, it could be an ETF that gives exposure to other regions, but is available locally. These are the type of things that index strategy could foster.

“WE CAN BRING GREAT CONFIDENCE, TRANSPARENCY, AND INTEGRITY TO MARKETS. Looking historically, would you compare the Warsaw bourse to any other exchange market, and what are the lessons that can be learned from the experiences of others?

What’s happening here in Warsaw is not any different than what we’ve seen in Asia in its earlier growth phase - some booms, some successes, some fallback - a normal cycle. What we’ve seen happen many times, is that newer markets, like Warsaw, tend to learn faster from the mistakes of other marketplaces.

One of the ideas for the WSE expansion was to list Chinese companies. Is this a feasible development strategy?

One reason why international investors may want to do invest in the Polish marketplace is that companies are tied to the local economy. If they’re investing in an index based on stocks here, and there are Chinese stocks, it’s not representative of the local marketplace. The exchange, as a commercial venture, needs to attract listings, but at the same time, in order to spur economic growth, the Polish marketplace needs to develop local capital. To help people raise capital, Poland would need to attract new companies to list here, make sure that Polish companies are not listing in other marketplaces and bring more liquidity to the local market.

Should the bourse be privatized ?

We’ve seen the trend globally to privatize stock exchanges. If an exchange has a profit motive which happens when you’re privatized, then you have incentives in place to make sure that the exchange is more efficient. Indirectly, I think it benefits the marketplace.

In your opinion, is it necessary for the WSE to merge with another marketplace in order to grow?

This is a strategic question for the WSE, but we can look to global precedents. Crossborder mergers are very difficult to execute properly, mainly because there’s a lot of local political interests which can prevent the merger from being effective. It is very hard to merge cross-border since you need approval from regulators in both countries. There haven’t been many that have been successful – harmonizing clearing and regulation is difficult. Consolidation has certain benefits, if it can be accomplished. u

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WBJ OBSERVER • SEPTEMBER 2015

21

INTERVIEW / AGNIESZKA RYNKOWSKA

COMPETITIVE EDGE

WBJ OBSERVER TALKED WITH AGNIESZKA RYNKOWSKA, MARKETING AND OPERATIONS DIRECTOR AT MICROSOFT POLAND ABOUT INNOVATIONS AND HOW POLAND CAN CATCH UP WITH THE WEST

I N T E R V I E W B Y JA C E K C I E S N OW S K I WBJ Observer: Microsoft Poland invested PLN 500 million in Poland last year, where exactly did you spend your money?

Agnieszka Rynkowska: As a high-tech company, our main interest is in education and entrepreneurship, two sectors where IT can bring a lot of value added in the long term, and that’s where we invest in. Last year, we spent PLN 300 million in software grants for education alone.

We also invest heavily in start-up businesses and NGOs. Being an IT giant, we endeavor to help individual entrepreneurs by educating them, equipping them with IT tools (software, etc.) so they can contribute more, in a smart way, to the country’s economy.

How come, Polish IT specialists are so highly regarded in the world, yet in Poland, most sector giants, instead of opening up R&D centers, concentrate on BPO facilities which do not require highly skilled engineers.

It seems that there is quite a lot of legacy of the past concerned with the issue you have raised. For the last 25 years, Polish competitive advantage in many sectors was built mainly around low labor costs. Now it’s high time we used our know-how skills and competence better to boost the added value of what we do in the country. And this is already happening. Many companies, both Polish and foreign, do have R&D centers in Poland.

We also had such plans, although they have changed. You need to remember, that Microsoft develops its strategic focus globally and regionally. In our case, this means that

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SEPTEMBER 2015 • WBJ OBSERVER

Poland falls into the Central and Eastern Europe cluster and makes up part of the regional strategy. Even though Microsoft did not develop a stand-alone R&D center in Poland, the company has been strongly engaged in supporting e-skills development and growth of IT potential in Poland.

Microsoft cooperates actively with 49 technical universities in Poland supporting IT science clubs offering technology training to students and tools to develop their potential. Three Polish universities are regularly visited by Microsoft’s recruiters who meet candidates for internships in our corporate headquarters in Redmond in the US. Many Polish IT engineers work there.

While talking about potential and highly skilled IT professionals, let me also draw your attention to two Polish technical universities – the Silesian University of Technology and the Warsaw University of Technology. Both universities have been awarded

by Microsoft Azure for Research with an annual access to Azure cloud computing power worth $40,000 each.

Our company has always been alert and on the lookout for the biggest talents, that’s why we organize the Imagine Cup where students present their ideas and IT solutions. The winners of its past editions have been offered a job at Microsoft. In Poland, we support start-ups, NGOs and local governments to create a better environment for the IT sector for one, simple reason: Poles are creative creatures and they do know how to anticipate the future. But very often they do it abroad. We simply want to reverse this trend.

Do you also support start-ups financially?

Microsoft is not a venture capital firm. We don’t commit ourselves financially in startup businesses. However, we do help by granting them software or training their employees. Last year, we spent PLN 105 million on those activities. More than that, we also encourage others to invest in Polish startups. For the Imagine Cup competition organized by Microsoft, we invite venture capital funds and business angels. We introduce them to the most promising participants and encourage to explore financial investment opportunities. We have created a Business Acceleration program for top Imagine Cup teams, building the platform for connecting bright ideas with real business decision makers. They work on introducing their products to the market and on commercializing their solutions. The holding company ZernikeMeta Ventures has offered PLN 1 million for investment in ventures.

Still, when it comes to innovation, Poland is always way behind in various rankings Innovation is a complicated phenomena and cannot be measured only in terms of the number of new patents. It has to do with both process and the product, it is vital to the same extent for the private as well as the public sector. It is not only about input but also about output. It’s about modernizing traditional sectors of economy as well as the most advanced ones. And because of that it is crucial for public services and, for example, for telecommunications. I’m really impressed with Rafał Brzoska (founder of InPost), who has revolutionized such an

INTERVIEW / AGNIESZKA RYNKOWSKA

Image: Microsoft

established business as postal services. We, at Microsoft, have discussed, why Poland lags so much behind other countries when it comes to innovation.

Take South Korea for example, a country which produces the biggest number of patents per million citizens. Are we lagging behind, because we are part of a developed continent, which has stagnated and is struggling to make another breakthrough? Or is it lack of capital that makes innovation difficult? Or maybe the educational system is not conducive to innovation? Do we really promote creativity? Do we really give a free hand to our students, to encourage innovation? Without an innovative public sector and services, smart regulations, we will always struggle to have innovative companies.

So, even though there are many talented individuals and highly-skilled specialists, we don’t have the whole support system behind it that is badly needed.

Do you think it will change in the near future?

Most forecasts are optimistic, especially when it comes to productivity growth and fixed asset investment. These are the key factors that should influence the economy and make it more innovative. If you look throughout European history, after World War II, the economic growth was driven by innovation.

In the 1970s and 80s, the continent slowed down economically and bounced back in the 90s and 2000s due to the growth of the ICT sector and its positive impact on the entire economy as a, so called, “general purpose technology.” For example, thanks to the

“EVEN THOUGH THERE ARE MANY TALENTED INDIVIDUALS AND HIGHLY-SKILLED SPECIALISTS, WE DON’T HAVE THE WHOLE SUPPORT SYSTEM BEHIND IT THAT IS BADLY NEEDED. business solutions implemented then, for example improved communication systems amongst business entities, entire economies achieved sizable incentives. Now, Poland needs the same kind of boost that can push the country into an innovative era.

We also have to work on making smarter regulations that reflect better the rapidly changing environment of new technologies and new business models. That’s why we support NGOs, because they stimulate our intellectual and political elites and encourage better policy-making and smarter regulations that are instrumental for growth of our economy.

It looks that on the micro scale (startups), there isn’t much of a problem, if you have a good idea, you’ll get financing from all over the world. Difficulties start on the SME level, where companies very often do not want to spend money on innovative processes. Huge corporations, on the other side, don’t really make inno-

vative products. If we use South Korea as an example again, we can see that they’re designing and inventing new types of TVs, while assembly is done in Poland.

That does not make our country in the least bit innovative.

For us, the most important part of the economy are SMEs, as they employ almost 80 percent of the workforce and generate 60 percent of the GDP. Such companies can benefit most from new technologies. Using the newest solutions, such as cloud and mobility, they can save resources needed to build their own infrastructure. It brings significant cost efficiency and lowers market entry barriers. As scalable solutions they provide flexibility in adapting to the current needs of business. The most precious benefit is however the ability to respond to customer needs quickly and more effectively. By being more competitive they put the pressure on bigger companies to implement new solutions as well. That’s why, when it comes to innovation in Polish companies, I’m rather confident it will steadily grow in the years to come. We will probably see more new business solutions and modernization of established business models and processes than new product innovation. Cloud, mobility and big data will become instrumental environments and technologies for big companies as well.

We believe that every small company, can contribute to the entire economy in such a way that it will make Poland more competitive not because of cheap labor, but thanks to know-how of people working in this country and added value they can bring about. u

WBJ OBSERVER • SEPTEMBER 2015

23

INTERVIEW / AJAY BISARIA

Amicable affiliation

WBJ MET WITH AMBASSADOR AJAY BISARIA IN INDIA’S NEW EMBASSY IN WARSAW TO DISCUSS ECONOMIC AND CULTURAL BONDS BETWEEN THE TWO NATIONS

I N T E R V I E W B Y M AT T H E W C Z A J A

Ajay Bisaria: The current bilateral trade level is around $2.3 billion. Our bilateral Joint Commission that met in June has set a target of $5 billion for 2018. This means that we expect our bilateral trade to grow at more than 20 percent on an annual basis.

Currently, India’s exports to Poland are about $1.7 billion, including cotton, textiles, pharmaceuticals and appliances.

Poland exports goods worth around $550 million to India, mainly electro-mechanical appliances, mineral and chemical products.

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SEPTEMBER 2015 • WBJ OBSERVER

Our investments are also healthy. Indian investments in Poland are over $3 billion, including global Indian investors like ArcelorMittal. Polish investments in India are currently less than $1 billion, and we hope to attract significantly increased investments in the coming years.

With the dynamic initiative of Prime Minister Modi and the new Make in India program, which industry sectors are appropriate for Polish business to invest in/create joint ventures in?

Our Make in India program has achieved a great deal of traction in Poland. We launched the program here in March this year. The program aims to transform India into a major global manufacturing hub. We are delighted that Poland has responded by an announcement in April of the Go-India Program, which will facilitate and incentivize Polish companies to engage with India.

Our Joint Commission identified several areas of promise. We have working groups looking into three specific broad sectors: coal and mining; food processing and agriculture; and information technology.

Recently, a delegation from the Indian State of Punjab identified some excellent Polish technologies in fruit and vegetable processing, dairy processing and flower cultivation. Similarly, we have a great

demand for Polish environmental technologies: particularly waste water management and solid waste management, which will be of immense interest to our cities.

Defense technologies are also of great interest under our Make in India program. Several Polish companies, both in the public and private sectors, are in talks with Indian companies, to make defense products in India. We have also identified sunrise areas such as medical products and renewable energy, (solar, wind, bioenergy and bio-fuel) as areas of promise.

We hope to collaborate in research and science so that we could convert Polish technologies into products that could be used in the vast Indian market.

Is Poland an attractive investment destination for Indian business? What more can be done by the Polish side to promote and attract Indian firms?

Poland provides a gateway to Europe for Indian business and has a huge cost advantage, skilled manpower and a friendly business climate to attract our investors.

We already have companies like Indorama, Uflex in sectors like plastics and packaging, Escorts in tractors and Videocon in TV picture tubes, not to mention the global player ArcelorMittal in steel products.

Image: Matthew Czaja/WBJ, Indian Embassy in Poland

WBJ Observer: Mr. Ambassador, we’ve had quite a few news stories regarding possible new trade deals between Polish and Indian partners. What is the state of bilateral trade between India and Poland?

INTERVIEW / AJAY BISARIA

We also have some 11 Indian companies in the IT sector. Infosys has a center in Łódź, which employs 3,000 people, Wipro, based in Wrocław and Gdańsk, has recently signed a big deal with TMobile. These Indian IT companies are making use of the friendly near-shoring opportunities in Poland to cater to European markets.

Are organizations promoting trade and business between the countries active in doing their part?

We are fortunate to have three India-dedicated Chambers of Commerce in Poland.

We are closely working with all of them.

The Indo-Polish Chamber of Commerce and Industry based in Warsaw, headed by J.J. Singh, is particularly active in collaborating with the Embassy and in providing guidance both to Indian and Polish businessmen and investors. The Embassy has worked out several events with this chamber and we have a heavy agenda in the coming months for delegations going both ways.

What would you advise a Polish business which is on threshold of a decision to do business in India?

I would say that the sky is the limit for business with India. In the last year, the investment climate in India has improved dramatically. Indian States are actually competing with each other to provide friendly business conditions and opportunities for foreign business. Several Polish companies have already taken advantage of this situation.

We at the Embassy are meeting potential investors and putting them in direct contact with Indian States, authorities and potential joint-venture partners. I feel that there is a window of opportunity for Polish business to access the vast Indian market, which is the size of Europe and North America put together. The Indian adventure is now less risky, more profitable and will be more satisfying for Polish business.

Warsaw and New Delhi are over 5,000 km away from each other, but the two countries have cultural threads that link them. Will these prove to be key in establishing quality relationships?

Indeed, culture, relationships and business are all interwoven. Of course, the cultural connections you speak of create an environment that’s conducive to cooperation.

We can see that our two countries have

some meaningful commonalities. When two peoples know each other, they are more eager to work with one another. The Jagiellonian University established a Sanskrit chair in the 1890s and to this day, students in Kraków are studying at the Department of Languages and Cultures of India and South Asia.

Furthermore, when India was in its development phase, Polish engineers were present in our country, sharing relevant knowhow and helping to build up our infrastructure. Cooperation through academic institutions was in place in Warsaw, Wrocław and Kraków, among others. The mathematical prowess of Poles is appreciated in India.

On the other hand, Indian traditions are very popular in Poland today. Recently, thousands of people took part in the International Yoga Day celebration in the Pole Mokotowskie park in Warsaw, and in 21 cities all over Poland. Poles are also taking to Ayurvedic medicine.

Our independence day gift to Poland was an e-visa system that allows Polish tourists to obtain a visa online, without the need to visit the embassy. Our bilateral relationship with Poland is important for India; evidence of this is our large new embassy complex in Warsaw. u

WBJ OBSERVER • SEPTEMBER 2015

25

COVER STORY / POLISH INVESTMENTS IN AFRICA

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

Southern exposure AFRICA IS RECORDING SPECTACULAR RATES OF GROWTH AND IS ATTRACTING INVESTMENTS FROM MANY CORNERS OF THE WORLD. WILL POLISH COMPANIES JOIN THE RACE AND TAP THE CONTINENT’S POTENTIAL?

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SEPTEMBER 2015 • WBJ OBSERVER

COVER STORY / POLISH INVESTMENTS IN AFRICA

India are still trailing the UK and the United States in terms of the value of their outward FDIs, their role is rising. After Chinese involvement in the continent grew eightfold in the years 2004-2012, the country’s Prime Minister Li Keqiang announced in 2014 that China’s total stock in African investment projects will quadruple to $100 billion by 2020. A substantial part of these projects will surely flow to resource-rich sub-Saharan countries, although the times when South Africa was the top recipient of external investments are gone. Last year, it came in third with FDIs worth $4.2 billion, behind Egypt ($5.5 billion) and Mozambique ($4.9 billion). Other countries that succeed in enticing investors include Morocco, Ghana, Congo, Angola and Uganda.

Although, the bulk of the investments is in the mining sector, which accounts for some

Image: Shutterstock

E

Even though Africa saw some growth in the 1960s and 70s, its lack of technology, institutions and organizational skills caused disintegration of the young economies. A deep-rooted stereotype that conveys an image of a continent receiving international aid and exporting asylum seekers, in turn, may soon give way, as Africa is developing fast. The thriving region grew at a rate of five percent last year, beating the global average by 1.5 percentage points and is home to ten out of the 15 fastest growing economies in the world. The region attracted FDIs worth around $80 billion in 2014, with the number of new projects growing by six percent in annual terms.

The African boom, which started in the early years of the 21st century, has been attracting capital from advanced and emerging economies alike. Although China and

WBJ OBSERVER • SEPTEMBER 2015

27

COVER STORY / POLISH INVESTMENTS IN AFRICA

33 percent of the total FDI value, there is a visible shift away from oil and resources, to the services and manufacturing sectors.

Polish business in Africa The presence of Polish companies in this landscape is still modest, however, it is on the increase. According to data by the Ministry of Foreign Affairs, Polish firms invested €49.4 million in 2014, which stands for 0.8 percent of the total value of Polish outward FDIs. The small scale of investments stems from a fear of allocating capital in a region associated with unrest.

Nonetheless, the situation is slowly changing, partly due to the GoAfrica program carried out by the Polish Foreign Information and Investment Agency (PAIiIZ). The program’s objective is to increase the level of Polish investments and share of trade with Africa by organizing business missions, conferences and training sessions, as well as by promoting Poland as a business partner. Sławomir Majman, the head of the PAIiIZ, told WBJ Observer that Polish companies can successfully compete in the

construction, food, chemical, transportation and logistics sectors in Africa. Their efforts need to be supported by the government as African business is intertwined with politics. “In the initial stage, the political umbrella seems indispensable,” said Majman. Nonetheless, he deems that the main hindrance to entering this market is a lack of information. “Polish companies were doing business in Africa in the 1980s.

A lot has changed since then,” Majman asserted. That’s why one of the key activities carried out under the GoAfrica program is raising awareness among Polish companies about the continent and preparing them to venture into the region. The same applies to African partners who are invited to Poland by PAIiIZ in order to change their view of our country as a fringe European economy. Since GoAfrica’s launch in 2013, PAIiIZ has organized 40 events, including trade missions to Nigeria, South Africa, Zambia, Senegal, Ghana, Morocco and Algeria. The program proved to be successful, as Poland’s exports to Africa grew by 29 percent in 2013 and 14.5 percent in

The number of tractors

3,000

Images: Ursus

to be delivered to Ethiopia by Ursus under the $90 million contract.

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SEPTEMBER 2015 • WBJ OBSERVER

COVER STORY / POLISH INVESTMENTS IN AFRICA

THERE ARE CURRENTLY 462 COMPANIES LISTED ON THE WARSAW STOCK EXCHANGE, INCLUDING 49 FOREIGN FIRMS

Images: Ursus

2014. When It comes to outward FDIs, the agency expects that a surge in Polish investments will occur in 2016, but some notable projects are already being carried out. Polish chemical giant Azoty extracts calcium phosphate from deposits in Senegal; shipbuilding company Navimor is about to finalize the establishment of the Maritime Academy in Angola; Asseco signed a $10 million contract to deliver an IT system to Ethiopia’s Network Security Agency; Kulczyk Holding is the owner of a gold mine in Angola and Polpharma announced that it will set up a drug factory in Algeria.

Poles spearhead agricultural revolution Perhaps the most spectacular Polish success in Africa is the story of tractor producer Ursus, who won a $90 million contract for the delivery of 3,000 tractors to Ethiopia and subsequently opened a production line in the African country.

The legendary Polish brand had sold tractors to Algeria, Morocco, Tunisia, Congo or Ghana back in the 1970s and 80s. After the transformation, Ursus’ production plummeted and the ailing company was taken over by POL-MOT Warfama in 2011. The new owner’s concept was to win foreign markets where the mechanization of agriculture was still in its early stage by offering simple, reliable and cost-effective tractors based on a Massey Ferguson license. In an effort to win contracts, the company carried out a wide-ranging promotional campaign across the continent aimed at refreshing the memory of the brand. When asked by the WBJ Observ-

er why he decided to invest in Ethiopia, Karol Zarajczyk, the CEO of the company said that “the African market, like any other market with potential for agriculture, is interesting from our point of view. And Ethiopia is the political center of Africa - if you succeed there, the news spreads across the continent.” Unlike large multinationals who sell over-scaled, expensive vehicles, Ursus’ tractors come at a better price and are of better quality than those offered by its Chinese competitors. The company’s comparative advantage comes from the ability to offer a product that fits the local needs. “We offer value for money, good price, we have proper technology and we are flexible, very flexible,” Zarajczyk succinctly put it. But he added, that this is not enough. Considering fierce competition from Indian and Chinese companies, you can’t come to Africa with just an endproduct. “You have to propose extra value.

In our case, that is technology transfer and staff training,” Zarajczyk said.

What’s in it for Africa Since foreign investors bring capital, technology and management that allow the host economy to improve the effec-

“WHAT HAPPENED IN THE LAST 25 YEARS IN CHINA WILL HAPPEN IN SOME AFRICAN COUNTRIES TOO.

tiveness of the existing production process and engage in new activities, as well as to raise the country’s output, an inflow of FDIs may help lift Africa out of poverty.

It is therefore crucial that investors who come to the continent develop linkages with local suppliers, transfer technology and train local staff. Ursus’ policy corresponds with these expectations. After signing the contract, the company would send tractor parts to be assembled in a factory run by state-owned The Metals and Engineering Corporation (METEC) in Adama, 90 kilometers south-east of Addis-Ababa. In May of this year, Ursus launched its own production line within the METEC facility. The opening day was attended by prominent figures including Nobel prize laureate Lech Wałęsa and Dlamini Zuma, the chairperson of the African Union Commission.

The manufacturing site employs Ethiopians only, however, there are around ten engineers on behalf of Ursus who are tutoring local engineers. According to Zarajczyk, the cooperation is smooth with one exception. “METEC is a big company that employs around 60,000 people and we are pleased with the cooperation and the level of professionalism. Our only challenge is the high staff turnover. Managers that work on our project are highly appreciated in the company’s structure and are quickly taken to work on other projects.

We already have the third manager working with us, while the other two climbed up the corporate ladder.”

Apart from training the local staff, Ursus also wants to develop a chain of local suppliers. Currently, it is focusing on sell-

WBJ OBSERVER • SEPTEMBER 2015

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COVER STORY / POLISH INVESTMENTS IN AFRICA

“THE AFRICAN MARKET, LIKE ANY OTHER MARKET WITH POTENTIAL FOR AGRICULTURE, IS INTERESTING FROM OUR POINT OF VIEW. AND ETHIOPIA IS THE POLITICAL CENTER OF AFRICA - IF YOU SUCCEED THERE, THE NEWS SPREADS ACROSS THE CONTINENT.

ing as many tractors as possible, but ultimately its target is to develop a spare parts market, where the margins offer higher profit opportunities. The manufacturer already orders castings from domestic firms and says that nothing prevents the local companies from supplying the plant with windshields, hoods, screws and the like.

The moment is now Ursus’ presence in the African market sets an example worth following. The contract in Ethiopia gave the company a major boost since the domestic market shrunk by 70 percent y/y in 2013 due to the decision by the Agency for Restructuring and Modernisation of Agriculture (ARMiR) to curb EU subsidies for tractors, according to Zarajczyk. Ursus recorded a net loss that year, but thanks to the Ethiopian deal, it managed to bounce back. And it didn’t have to worry about funds, as the money provided to the Ethiopian party for the purchase of tractors came from an intergovernmental loan granted by Poland under the umbrella of the OECD.

Zarajczyk asserts that it is the right moment to enter the market, because the reputation of those who have been operating there for the last ten years or so is low.

He further claims that the Chinese come

fill the moment The first whisky magazine in Poland

www.whiskyquarterly.com

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SEPTEMBER 2015 • WBJ OBSERVER

with cheap credit, but their poor quality products often break before they serve long enough to cover their market value.

When the locals cannot pay back the loan, they offer natural resources as repayment, which leads to neocolonial relations. Majman agrees with the opinion, highlighting that Poland’s advantage comes from the fact that it is not identified as former colonizer. The head of the PAIiIZ claimed that Polish companies perform well in the fields in which the Chinese firms operate and have a chance to replace them. To be successful, they would have to learn how to deal with the local administration. Unlike in Poland, business has to establish and maintain good relations with the bureaucracy to prosper. Another challenge is a different approach to time – things happen slower there. But, according to Zarajczyk, the game is worth a candle. “What happened in the last 25 years in China will happen in some African countries too,” and not appreciating the market at this moment may result in barriers that will be difficult to overcome later. u

FEATURE / GREEK CRISIS

B Y S E R G I U S Z P R O K U R AT

The Greek drama.

Poland as acute spectator Greece is sinking. The Greek default is usually described in the present, not the past tense.

The agreement signed between Greece and its creditors basically boils down to money transfers in exchange for reforms. And Poles, who are observing this process, in comparison seem to be a B student, who is putting in a lot of effort and thinks he is immune to the phenomenon In 1990, Poland was one of the poorest countries in Europe. Per capita GDP was only 31.8 percent of its German equivalent, while Ukraine’s was at 33.4 percent. At the end of communism, Poland was poorer than Spain, which had been a less affluent country after the end of World War II. As was Greece.

Nevertheless, Poles are fine with hard work, so it is just a matter of time until these southern nations will look upon Poland as a rich country.

Image: Shutterstock

Race with the West In the last 25 years, we have seen a faster pace of growth than other countries in our region and our GDP has grown by 100 percent. This year, the Polish GDP per capita at PPP (purchasing power parity) will reach the level or overtake its equivalent in Greece.

WBJ OBSERVER • SEPTEMBER 2015

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FEATURE / GREEK CRISIS

“WE ALWAYS APPEAR UNDER OUR OWN BRAND AND OFFER DRUTEX WINDOWS MADE IN POLAND, ACCORDING TO THE RULE ‘IT’S GOOD BECAUSE IT’S POLISH.

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WBJ OBSERVER • SEPTEMBER 2015

The difference between Poland and Greece basically boils down to trust, which Greece has now exhausted. “As a member of the euro zone, Greece was trustworthy for many years. Its membership caused everyone to be caught off guard. However, Poland is at no risk of such a crisis,” said Aleksander Łaszek, an FOR (Forum of Citizens’ Development) economist. And before Greece’s demise, all rating agencies such, as S&P and Moody’s, said that Greece could pay. Now they don’t say that any more.

Turns out it is very easy to lose the trust of financial markets.

Comparing countries: Poland does win out Comparing basic macroeconomic parameters for both countries shows the success of Polish economic policy and a clear failure of the Greeks. In 2004, PPP GDP per capita was nearly twice as high in Greece than in Poland. Ten years later, in 2014, it was only 6 percent higher. In 2009, after the crisis started, all southern European economies started to tank. For Greece, the trough came in 2011, when it shrank by 7.1 percent. In the same time, Polish GDP kept growing – at its best, in 2007, it grew by 6.8 percent, and in the crisis year 2011 it grew by 1.6 percent. This is not the first case of catching up with old EU countries by their Central European peers. In 2004, per capita

GDP of Slovenia and the Czech Republic was at the level of Portugal. Currently, Greek indebtedness is at 170 percent of the GDP, while in Poland, it is over 50 percent. The Greeks have a much higher level of unemployment – over 20 percent of the inhabitants can’t find work. Greece, according to Aleksander Łaszek, is a less globally integrated economy, not much exposed to international competition, as is the case of Poland.

But Greece isn’t that bad Living in Greece up to now was a bit like a fairy-tale. Greeks have a life expectancy of 80 years, i.e. four years more than Poles; they enjoy life, so their quality of life is much higher than in Poland.

For years, Greeks enjoyed some of the most ridiculous work benefits, including a bonus for showing up to work on time (up to €600 per month). Such benefits were slashed during the 2010 reforms, but they’ve managed to put a strain on Greece’s public finances.

But fairy tales come to an end and Greece must now face the music, which the Greeks have yet to accept. Radical pension reforms, taxes, all benefits and removal of mass fraud committed against the state coffers, are only the first step to exiting the cycle of indebtedness. Returning to the drachma would speed up the recovery, but it would be very unpleasant for the population, and also politically

Image: Shutterstock

This is not only the achievement of Poland, which is now over twice as rich as it was at the start of its economic transformation, but also of Greece, whose GDP is 25 percent lower than it was in 2007.

We shouldn’t think that anything is possible, because some barriers are just too difficult to overcome. In order to catch up with Germany, provided their economy will grow at an average pace of three percent a year, and ours at four percent, we will need over 60 years. This is an optimistic scenario. And what about the pessimistic outcome? Can Poland end up in a Greek dead end?

The Greeks are currently saving funds for subsequent repayments to the IMF and ECB. In 2015, they have to repay €13 billion (7.25 percent of Greece’s GDP).

The situation is serious enough for them to have to sell islands and airports. Poland has to repay €18 billion in 2015, and in 2016 even 30 percent more. Over half of all liabilities are owed to foreign creditors. Loans for various years are also increased by the public sector deficit, which has reached PLN 50-60 billion in recent years. As in Greece, the only way to repay those loans is by taking out new ones. If for some reason foreign banks and funds would not want to buy Polish securities, the government would have to add over PLN 50 billion to its list of expenditures.

Such a budget gap would surely cause a significant crisis for Poland.

COMMENTARY / FMCG

Image: Shutterstock

The Supreme Audit Office (NIK) has conducted an audit, the purpose of which was the supervision of tax authorities and tax audit authorities over the accuracy of foreign capital entities’ settlements with the state budget. The conclusions arising from this audit have been documented in the NIK’s report of 17 April 2015.

Robert Nogacki The very fact that the MinFounder and Owner istry of Finance has noticed of Skarbiec Law Firm the problem of tax evasion and has made an attempt to counteract this phenomenon must be given credit. Nevertheless, the quality of the report has been overshadowed by a very serious methodological error related to the fact that the NIK’s inspectors did not differentiate between tax fraud and lawful tax optimization, displaying their suspicion and distrust towards all sorts of taxpayers’ activities aimed at paying lower taxes.

Meanwhile, we need to firmly remind that tax optimization is not a negative activity and should be distinguished from tax evasion. For tax optimization occurs within the law and leads to the increase in competitiveness and to taking advantage of the otherwise unnoticeable possibilities to improve the financial standing or performance of a company.

The lawfulness of tax optimization is also commonly affirmed by courts and tribunals. For instance, the Court of Justice of the European Union in its judgement of 12 September 2006 in the case C-196/04 Cadbury Schweppes plc, Cadbury 14

JUNE 2015 • WBJ OBSERVER

FEATURE / GREEK CRISIS

Schweppes Overseas Ltd vs Commissioners of Inland Revenue TS UE, decided that, unless tax planning involves breaking the law, its consequences resulting in the minimization of tax burden cannot be, as such, considered unlawful. Furthermore, optimization activities, even when they result in the creation of artificial structures, cannot be considered as an abuse of law if they represent real enjoyment of freedoms constituted by the Treaty on the European Community, including the freedom of establishment.

Also Polish administrative courts confirm the compliance of tax optimization with the law. In its judgement of 31 January 2002, Ref. No. I SA/ Gd 771/01, the Supreme Administrative Court reaffirmed that the essence of business activity is maximization of profits, not tax liabilities. There are no grounds whatsoever to impose on business entities (even those related personally or by equity) an obligation of performing activities leading to a decrease in income only because it would be more beneficial for the state budget from the tax revenue perspective. Similarly, the Voivodeship Administrative Court in Warsaw, in its judgment of 31 May 2006, Ref. No. III SA/WA 983/06, adjudicated that there does not exist a general rule imposing on the taxpayer an obligation to act in such a manner that a tax liability in the highest possible amount should arise.

Making an axiological assessment of tax optimization, one can cite the opinion of a judge of the US Supreme Court, Learned Hand, who stated that there is nothing immoral about arranging one’s affairs so as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right.

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FEATURE / GREEK CRISIS

it would be difficult for the European Union, so this option should only be treated as a last resort.

Watch out for manipulated statistics It is well known that Greek authorities provided false data before entering the euro zone and the crisis in 2009. Inaccuracies were mainly focused on the state of public finance.

Reconstructing the Greek statistical system should guarantee more reliable statistics both on current information, and verified historical data. The opposite is true in Poland “There is no problem with statistical data in our country,” says Łaszek.

Optimists say that Poland is a green island of economic growth and that since 1990, we have been witnessing an unprecedented economic miracle. Pessimists reply that it is quite the opposite – Greece is quickly approaching Poland in poverty. This is the most common argument against the success of 25 years of a democratic government in Poland.

Polish GDP per capita is two-thirds of the EU average. Poland still faces a long road ahead. One thing is sure; we should not base our strategy on Greece. u

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WBJ OBSERVER • SEPTEMBER 2015

€18

billion

is how much debt Poland has to repay in 2015.

In 2016 this figure will be 30 percent higher.

BRIDGING THE GAP GDP per capita in GK$ 1930 1950 1990 2010

Spain 2,65 2,189 12,055 16,797 Greece 2,258 1,915 10,015 14,691 Germany 3,973 3,881 15,929 20,661 Poland 1,994 2,447 5,113 10,762 Source: Madison database

F E AT U R E / H E A LT H

Poles’ digital health

Images: Shutterstock

B Y S E R G I U S Z P R O K U R AT

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POLES ARE CHANGING THEIR ATTITUDES TOWARDS HEALTHCARE. PATIENT EXPECTATIONS ARE EVOLVING, THANKS TO THE DEVELOPMENT OF THE INTERNET AND SOCIAL NETWORKS, LEADING TO MORE AWARENESS REGARDING PATIENTS’ RIGHTS

JUNE 2015 • WBJ OBSERVER

A

few years ago, Leszek Balcerowicz, then deputy PM in Jerzy Buzek’s, tried to convince Poles to a liberal credo: “Your health is in your hands. Everything is up to you, depending on your lifestyle, diet.” What’s interesting, 70 percent of Poles agree with this statement, steadily increasing their prophylactic testing, doing sports and taking greater care of their diet, as per the “Barometr Bayer 2014” report published by BayLab. Poles’ positive attitude towards health began to change with the fall of communism. An image of a Pole who is tired of life, with a mandatory cigarette in hand, is starting to be yesterday’s news. Poles’ awareness of the impact of an adequate health stance and diet on the proper functioning of the body is growing. Poles are eating ever more vegetables, fruit and poultry. They meet a doctor for consulation more often, commit to prophylactic tests and care for their body, going to the gym, running or swimming. And this is only the beginning, because soon, receipts will be executed with an SMS code, our sugar and heartbeat levels will be tested by a smartphone, the doctor will be chosen online, blood chemistry tests will be provided in digital form and your entire medical history will function as would an online banking account.

WBJ OBSERVER • SEPTEMBER 2015

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F E AT U R E / H E A LT H C A R E

Poles already know that your health is priceless

Looking back, we can see that in the last 20 years Poland has also seen huge changes in terms of the availability of medical services. As recently as the 1990s, patients had to have a small bureaucratic health book full of stamps and you could only get medical care in a huge and inefficient colossus, the public healthcare system, or ad hoc, privately.

Often the former and latter were combined, and you went to the doctor with a bottle of cognac in order to avoid the wait. Thanks to market reforms and the development of the private sector, this image underwent a drastic change.

“Nowadays, health is no longer a private good. Everyone gains when we become a healthier society,” said Igor Gnot, doctor and businessman, and CEO of Connectmedica, healthcare advertising and communications company, as well as founder of Activeweb, a company providing specialized internet services for doctors.

Health is becoming one of the key parameters which define your life. Although there may be no better business than medicine and healthcare, because there is always demand for various medical services, the centrally-steered state institution, NFZ, allocates funds in the healthcare system in an inefficient way. Long lines are a typical example of the inefficient use of health funds. Private firms have taken over the role of providers of health services in Poland. Today, no one is amazed by private hospitals, clinics, where those who can afford it receive their medical care. Some services, such as dentistry, are provided mainly by private entities. Although the construction of closed private medical services was only begun at most a dozen years ago, many companies have a few hospitals in their portfolio. In the last few years, private medical companies have started developing other sectors than those epitomized by multi-specialist clinics. This trend was especially visible during this last year and will grow in strength, as stated by the latest research report by PMR. The healthcare market in recent years has been very lucrative. An increasing sense of responsibility for your own health, the greater purchasing power of Poles and societal aging mean that the market has grown much quicker in recent years than the Polish GDP. In 2015, healthcare costs worldwide were 10.5 percent of global GDP. North America managed to spend 17.4, Western Europe 10.7 percent, but only 6.6 per cent was spent in Asia and Australia. Poland comes in at about 7.5 percent. But this trend will certainly shift upwards, as by 2050 the number of people over 60 will be three times bigger and amount to two billion people globally. In Europe as much as 37 percent of people will be over 60, meanwhile in Africa – only ten. As soon as three years’ time, the percentage of people over 65 will hit 20 in Western Europe, with Japan seeing 27 percent of its population become senior citizens. According to the authors of the report “Healthcare and Life Sciences Predictions 2020: A bold future?”

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“AN INCREASING SENSE OF RESPONSIBILITY FOR YOUR OWN HEALTH, THE GREATER PURCHASING POWER OF POLES AND SOCIETAL AGING MEAN THAT THE MARKET HAS GROWN MUCH QUICKER IN RECENT YEARS THAN THE POLISH GDP.

Image: Shutterstock

Good but demanding market

3

F E AT U R E / H E A LT H

Image: Shutterstock

POLAND HAS ONE OF THE LOWEST LABOR RATES AT THE 50+ AGE RANGE IN THE ENTIRE EUROPEAN UNION.

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published by Deloitte, the development of healthcare and the future of pharmaceutical companies will still focus on emerging markets. On the other hand, this sector will soon have to face four major challenges, both local and global, i.e. the effects of population aging and increasing numbers of chronically ill people, large costs and high quality of services rendered, access to medical care in developed countries and emerging markets and also the use of medical technologies in data management processes. Specifically, population aging and increasing numbers of the chronically ill are a sustained trend which will shape demand in the next few years, both for developed and developing countries.

“Science is aiming at evermore effective treatment, but paradoxically the role of the patients in the healthcare systems will increase, because it is the attitude (towards a) treatment that will bring more improvement. The patient cannot forget about routine check ups, he cannot forget JUNE 2015 • WBJ OBSERVER

to take his medicine. He has to pressure doctors and take things into his own hands,” explained Gnot.

Digital technologies

Currently, thanks to increasing mobile internet access, many users are online 24/7, and thus the monitoring of life parameters of a patient can be conducted in real time, with decision made nearly immediately after the receipt of worrisome information. Thanks to Connectmedica apps such as Moje Leczenie (My Treatment), Zdrowy Kalendarz (Healthy Calendar), for people using smartphones, patients have greater possibilities of planning their own treatment and seeing their results. DBE (Decision-Based Education) may bring about a real revolution, as this project is aimed at the medical and pharmaceutical sector which seeks to standardize actions and enable easier decision-making based on repeatable processes with the possibility of knowledge transfer.

WBJ OBSERVER • SEPTEMBER 2015

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F E AT U R E / H E A LT H C A R E

code rather than a receipt, a doctor chosen on your computer, your blood chemistry on your laptop and a medical history account as an online bank account – Poland will soon see an e-revolution in healthcare. Public medical centers should, first of all, manage their funds better, which includes the patient’s involvement in the system and creating an order in which patients go through the system. Public healthcare also needs more transparency. Without this, it will always be a black hole sucking in public funds. u THE VALUE OF TH PRIVATE HEALTH SECTOR IN POLAND (PLN, BLN) AND ITS GROWTH (%) 2012-2017

The public system

The government is planning key reforms in the years to come. Some time ago, the eWUŚ platform was implemented, enabling quick verification of a patient’s right to treatment, which allowed better identification of people who don’t pay healthcare insurance themselves but are entitled to medical services with the NFZ. By 2017, the Polish healthcare sector is to be digitized. All medical clinics are to be hooked up to the system and no paper documentation is to be used. An SMS

value * FORECAST, SOURCE: PMR, 2015

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growth

Image: Shutterstock

A huge problem of medicine has always been an enormous amount of mistakes. After all, the ones prescribing medicine to us are also people and can make a mistake, but their lack of attention may cost someone his life. Let’s imagine a database of medical advice which ascribes the correct treatment based on a set of symptoms, or creates repeatable training modules for doctors. “Digital technologies are the future of the medical sector because thanks to them, patients receive cheaper and more personalized services with simultaneous high-quality and compatibility with legal requirements. New technology will be supported by telemetric medicine, i.e. remote services and diagnostics,” said Gnot. Technological and innovative change is hard not to notice. Deloitte experts reckon that by 2020, people will be much more aware of their genetic profile, the diseases they suffered and may suffer and the availability of healthcare. It is expected that the sale of medical technologies in 2020 will amount to $513.5 billion. As a comparison, in 2013, only $363.8 billion in sales was made.

Image: Zamek Ogrodzieniec

Let’s discover the most beautiful corners of Poland together

Rent a car from 95 PLN* per day in weekend offer Book a car at www.hertz.pl or contact us: +48 22 50 01 620, 800 1 43789 * The offer concerns pre-paid reservations on www.hertz.pl for group A and includes: unlimited kilometers, limited client liability for collision accidents and car theft, 23% VAT, standard rental conditions apply.

ENTREPRENEURS / KOLOMNIE

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ENTREPRENEURS / KOLOMNIE

Unique algorithm B Y A L I CJA C I S Z E W S K A

A Images: Kolomnie

“This is not a visionary project, but a willingness to improve the internet collectively,” Jan Gajewski

A COMPANY WITHOUT A SOLID BUSINESS MODEL IS LIKE A CAR WITHOUT WHEELS. JAN GAJEWSKI, THE FOUNDER OF KOLOMNIE.PL, DOES NOT AGREE WITH THIS PREPOSITION. MICROSOFT AND IBM HAVE PUT THEIR TRUST IN THE PROJECT. SHOULD EVERYBODY FOLLOW THEN? At first sight, Kolomnie.pl (‘next to me’) seems to be another geolocating portal, a Foursquare and Yelp look-alike. The user is able to search for a certain service provider in the nearest area, there is also an option to check-in and leave a comment about a place.

However, Gajewski stressed that the philosophy of the platform is completely different from the larger players and asserted that he and his co-workers do not want to compete with the “big brothers,” as he called them.

Kolomnie.pl accumulates the information available through the platforms (with their consent) and puts them in order thanks to “a unique algorithm,” Gajewski said, to provide the most extensive and the best quality content. The ultimate aim of the platform is to “become a phone book on steroids,” he pointed out.

Guidebook packed with data The idea of putting in order all the various data straying on the internet popped in Gajewski’s head when he was looking for a place to take a passport photo in the US, while he was a postgraduate law student.

When he typed a particular phrase, many results showed up but none of them met his needs, “I was not interested in, for instance, a modeling photo session,” he recalled laughing. He admitted that the first idea of creating a portal dedicated for businesses and providing them with tags, flopped. After many months of brainstorming with other IT specialists, the team came up with an algorithm which accumulates and classifies data from all over the internet. Such portals as Yelp, Foursquare and Facebook are the main source of information. Gajewski said that Kolomnie.pl is not meant to be another social media portal like Swarm (created

recently through a division of Foursquare) or Yelp, as “the focus is on something else.

We want service providers to realize that information about their businesses needs to be constantly updated and expanded. We want to be a place where all the data will be available, a sort of one-stop-shop.” On the other hand, the platform is to be a guide for tourists, a local man who knows everything about any place in any town. It will be a living and evolving information portal that will source new data on a continuous basis.

Kolomnie.pl gives their users the ability to add and evaluate locations. The algorithm will even find updates from other websites, hence Kolomnie.pl will show the latest information regarding a given business.

“We do not want to make a lot of money” What basically differentiates Kolomnie.pl from the “big brothers” is a business model based on the firm’s philosophy. Yelp, for instance promotes local businesses, but offers business advertising as well. Gajewski and his co-workers want to support small business, therefore new entrepreneurs will be able add their location free of charge. “Our business model is still developing. We are young and socially conscientious. We do not want to make a lot of money,” he stressed admitting that it may seem like their venture seems to be unprofitable from the get go. Nevertheless, such big brands as Starbucks, KFC, H&M, Norauto, s5 gyms, Orlen or BPH will be required to pay a PLN 150 annual fee per one location. Furthermore, posting information about paid events or promotion campaigns and sales will be worth around PLN 5, for all the clients. Fees for medium-sized businesses will be proportionately lower.

WBJ OBSERVER • SEPTEMBER 2015

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ENTREPRENEURS / KOLOMNIE

2is thekm range

Kolomnie.pl will not offer any search engine optimization (SEO) services, so the micro-fees, how Gajewski called them will be the only source of the firm’s income, “we hope that the fees will let us earn as much as big e-platforms, and simultaneously we will maintain the high quality of the information we provide,” he said.

Technology appreciated by giants “We convinced them with our technology,” Gajewski responded when asked why Microsoft and IBM decided to grant them thousands of dollars. Both IT giants decided Kolomnie.pl’s technology is legitimate and believed that it can be applied by them. IBM injected the project with a year’s use of software (for the beta-test stage), which may be extended further to a value of up to $120,000. Within the framework of the Microsoft BizSpark Plus program, Kolomnie.pl was provided with $120,000 worth of software.

As the project consumes a lot of money, the daily maintenance costs of servers totals some €170 alone, the company is running out of funds and is looking for new investors. “We would like to find an optimistic and active investor, who will have the same passion and will not dictate the terms,” Gajewski said. AIP (Academic Entrepreneurship Incubators) which

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owns a 15 percent stake in his business is supporting him in talks with potential investors.

40 countries, 15,000 cities Kolomnie.pl web portal already has some 15,000 users, Gajewski proudly informed, but a mobile app is expected to be implemented around the beginning of September, when the website will be officially launched. He will then be sending an invitation to those service providers who are already listed in the search engine, adding more information about their locations

Stats Foursquare: over 45 million users worldwide, 5 billion check-ins, 60 million venues, 1.3 business pages Yelp:142 million monthly visits, 2.1 million local businesses, 90,000 local advertisers (source: Digital Marketing Stats)

on the platform. Instead of a marketing campaign, the company is going to launch an information campaign addressed to potential users alongside service providers.

It is also planning to closely cooperate with voivodship authorities in the field of culture promotion, it has already established a partnership with Warsaw city hall.

Since data from all over the internet is continuously accumulated and sorted, Gajewski will be introducing its business to foreign markets gradually. In order for nonPolish users to become more familiar with the platform, its name is to be translated to local languages. Furthermore, the company has been testing a translator designed by IBM, which is to be more precise and less error-prone than its Google counterpart, so that the information may become available in many commonly used languages. Gajewski said that, ultimately, Kolomnie.pl is to cover 40 countries, 15,000 of the world’s largest cities and 7 million services.

Quite surprisingly, the authors of the platform want to be considered not as investors but as a common voice of “irritated” internet users. “This is not a visionary project, but a willingness to improve the internet collectively,” Gajewski pointed out. The future will show if they stay modest about their business, or become more profit-oriented like their “big brothers.” u

Image: Shutterstock

which defines the ‘next to me’ idea

WBJ Observer presents CUTTING COSTS IN THE DIGITAL AGE Your group’s main business is helping organizations decrease costs and optimize work. What usually brings companies the biggest savings?

We help companies and organizations save money and accelerate their business with advanced IT tools. We started from selling efficient, reliable Kyocera printing devices. Today, we offer complex print management systems which help cut the cost of the process by up to 50 percent.

Other companies in our group offer advanced vehicle monitoring systems which help reduce fuel costs and improve vehicle infallibility. We implement various IT tools in companies and public offices, from office suites to contact centers and advanced ERP (enterprise resource planning) systems.

When the world turns to digital solutions, so does office work. To what extent do you think the printing market is influenced by this process? Are firms still interested in printers?

Paradoxically, despite the increasing digitization of documents in organizations, the volume of printouts has not decreased. With new information systems, companies and public offices are collecting more data, thus generating more reports and statistics that facilitate the decision-making process. Therefore, the number of printed documents is growing.

We know from experience that our one-digit growth in printing device sales is steady – companies replace old, inefficient printers with modern multifunction devices, lowering the servicing costs and expenditures on consumables.

How would you describe the present stage of development at which Arcus is?

BROUGHT TO YOU BY ARCUS

We are currently at an excellent and interesting point in time. We have come a long way during the 27 years of our presence on the market – from a company selling devices of leading suppliers, to a capital group of IT companies listed on the Warsaw Stock Exchange, offering cutting-edge solutions: consulting, implementation, outsourcing and leasing, as well as software, both our own and supplied by leading global software companies. The development strategy we have implemented required investment in new competencies, but secured many years of growth.

In which areas are you expanding further? What is the next stage?

We are certainly going to develop the print systems segment: rather than buying hardware, customers tend to outsource complete print systems with software managing the entire process. This allows them to cut costs and adjust flexibly to the organization’s needs.

“WE WILL SOON OFFER CUSTOMERS THE POSSIBILITY TO MONITOR THEIR EMPLOYEES’ DRIVING STYLES AND CUSTOMIZE INSURANCE RATES BASED ON THE DRIVERS’ BEHAVIORS.” MICHAŁ CZEREDYS, CEO OF ARCUS

We are also present and growing in telematics.

Together with Link4, we will soon offer customers the possibility to monitor their employees’ driving styles and customize insurance rates based on the drivers’ behaviors. Another field of growth is the implementation and integration of various information systems – contact centers, ERP systems or cloud services. Such diverse areas of modern IT share two characteristics: they improve processes in companies or public offices and help them reduce costs.

EVENTS / ECONOMIC FORUM

GREAT MINDS TACKLE BIG ISSUES AT KRYNICA

F

ragile states, energy concerns and terrorism are only some of the hot topics to be discussed at the 25th Economic Forum. European political and business leaders will also put women’s issues and immigration under the microscope.

For the 25th time running, the most influential Europeans gather in the Polish town of Krynica Zdrój to debate the world’s concerns. Will the Economic Forum lead to strategies that will enhance and strengthen Europe’s future?

Krynica Zdrój, a small town in southern Poland is mainly known for being a health resort. Once a year, however, this idyllic place turns into the European capital of economics, when powerful persons from all over the world arrive in order to discuss issues important to the CEE region. This year, Krynica will host the 25th Economic Forum on September 8-10 under the headline: Towards a Resilient Europe. Strategies for the Future.

The forum will hold dozens of debates and will be attended by some 3,000 visitors

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EVENTS / KRYNICA ECONOMIC FORUM

from 60 countries, including not only economic and political leaders, like presidents, prime ministers and MPs, but also CEOs and representatives of multinational corporations.

Images: Institute for Eastern Studies

Threats and solutions One of the most urgent topics to be discussed are fragile states (nations that have failed to provide even basic services for their people). The Executive Director for the Fund for Peace J.J. Messner will analyze the presence of fragile states, their meaning for European countries and comment on the Fragile State Index.

This issue is particularly crucial because the number of such states is increasing, which may pose a threat not only to Europe, but the entire world.

Moreover, there will be a discussion on EU-Russia relations concerning energy. Oil prices dropping by around 50 percent and worsening relations between Russia and the EU have become a challenge for a future energy policy for both communities. Unbiased and well-thought out policies and compromises are necessary in order to prevent serious energy problems. These are hoped to be achieved by experts during the forum.

Terrorism is another point of significance that will be examined during the sessions. The threat from terrorist organizations and the tragic and often inhumane occurrences in some Islamic states, have already left an indelible mark on this century. Speakers from all around the world specializing in this area will comment on this problem as well as attempt to find solutions.

Social and money matters The next issue of debate will be the potential of women over 50 years of age and how their professional activity influences the economy. This discussion will be held by Magdalena Vášáryová, Slovakian MP who is also the chairman of Živena, the oldest association of women in her country. She will present the argument that the energy and wisdom of women over 50 are underestimated in Europe. The female side will be further addressed in another debate about women in politics and business and the question of how to break the “glass ceiling” will once again be put to discussion.

The organizers of the forum also plan to focus on the problem of immigration, a major and increasing concern for the majority of European countries. This subject is of significance as regional stability in Europe can be achieved only by a well-developed migration policy of the involved countries. Another topic of this year’s forum, which is heavily commented on by highest ranking politicians, is the common currency. Does the euro make sense, or maybe we should go back to national currencies?

These are only several of the topics from the entire list of issues that the Economic Forum organizers announced. They will be divided into general topics

and subtopics and discussed one by one in the form of debates, reports and presentations.

Being one of the region’s most important summits, the forum surely won’t lack professionalism and audience. Whether suitable solutions to the European and world issues at hand are found remains to be seen.

BIG NAMES Krynica will feature political leaders as well as representatives of major international corporations. Some of the biggest names include: CARLO D’ASARO BIONDO President of EMEA strategic relationships at Google. He studied economics in Rome, started as a CEO in a French consulting company.

PETER BLAUWHOFF Chairman of the management board of Shell.

Educated in the Netherlands, where he became a chemical engineer.

PETER TILS CEO of the CEE region at Deutsche Bank.

Studied political economics and business administration.

GORDANA COMIC Deputy Speaker of the Serbian National Assembly since 2008. Her field of expertise is women’s movements and their political network.

VANNINO CHITI Chairman of the European Affairs Committee of the Italian Senate. He studied philosophy and is particularly interested in religious issues.

LINDA LANZILLOTTA Vice-president of the Italian Senate. She is the founder of the Glocus think tank, which aims to promote innovation and economic, social and institutional modernization of Italy in the European context.

HERBERT BÖSCH Member of the Supervisory Committee of OLAF, the European Anti-Fraud Office, tasked with tackling fraud affecting the EU budget.

DANILO TÜRK Former President of Slovenia. Diplomat and professor of international law specializing in issues of human rights and the rule of law.

WBJ OBSERVER • SEPTEMBER 2015

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EVENTS / EFNI

THE CHALLENGES FACING EUROPE TODAY

BY MAŁGORZATA MIERŻYŃSKA, HEAD OF PROGRAMME AND SPEAKER RELATIONS, EUROPEAN FORUM FOR NEW IDEAS ing social inequalities, migrations, as well as radicalism. These trends may have a powerful impact on the future of Europe.

Globally, social inequality is now comparable to the situation in the early 19th century. The disproportion in income distribution is so large that it may gravely compromise economic growth. The most prominent business experts have been drawing attention to this issue, as well as to the fact that the escalation of geopolitical conflicts, including the conflict in Ukraine (particularly troubling for Poland) and the increasing activity of radical groups, in particular Islamic groups, pose serious threats to the economy and to the future of businesses. Polish entrepreneurs cannot act as if the issues important for the world today are of no concern to them. It is our intention to actively join

these debates. This is why the theme of this year’s EFNI is: Europe in the face of growing social inequality, radicalism, and geopolitical threats.

However, as organizers of EFNI, we have an interest in going beyond day-to-day problems. We want to focus on ideas and make attempts at anticipating the future.

Therefore, we are going to include issues that are still at the far-off horizon in Sopot. The sharing economy, consequences of digitization, sustainable development, philanthrocapitalism, and shared value: these are just a few of the concepts appearing on this year’s EFNI agenda. For two and half days, the most creative and involved minds in Europe will engage in debates on these issues, arranged within a theme to facilitate the sharing of ideas. Guests of honor will include: Jeffrey Sachs, one of the world’s most influential economists and a co-author of Poland’s transformation; Donald Tusk; Lech Wałęsa; Elżbieta Bieńkowska; Judy Dempsey, a renowned commentator and analyst; Lev Manovich, a world authority on new media; and Salvatore Babones, an expert on inequality from the University of Sydney. These experts, along with more than 100 other panellists and guests, will join us in discussing solutions - both those that can be applied right here, right now, and those that may be important in the future.

The European Forum for New Ideas is an international business congress.

It has been organized since 2011 by the Polish Confederation Lewiatan in cooperation with BUSINESSEUROPE, the city of Sopot, as well as Polish and international companies and organizations. Every year, EFNI draws more than 1,100 attendees from all over the world, including businesspeople and representatives of politics, culture, science, and media. This year’s edition of EFNI will be held on September 30 - October 2. For more information, please visit www.efni.pl

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Images: EFNI

At

the fifth European Forum for New Ideas in Sopot, taking place between September 30 and October 2, we are going to share ideas, opinions, and experiences. Business leaders together with representatives of politics, culture, science, and media are going to engage in more than 70 hours of in-depth reflection and interpretation of the challenges of today’s world.

Every year, in preparation for EFNI and with the assistance of our knowledge partners, we take a thorough look at the situation in Europe. We identify the hot topics and the questions that must be urgently answered to ensure that careful decisions are made not only about our shared present, but more importantly – about the future.

Today, these challenges include increas-

SELECTED PANEL DISCUSSIONS DURING EFNI 2015 End of Post-Cold War Illusions: Does Europe Need a New Order?

Partner: PZU SA Topics: How should the West react to the geopolitical turmoil in different regions of the world?

To what extent, and how, must the West reassess its current priorities, and is it possible to ‚re-order’ the world?

What institutional and political changes are needed to effectively adapt to the new reality?

1.10.2015, 10:00-11:30 European Single Market - How to Put It Right and Make It Single Indeed?

Partner: TOTALIZATOR SPORTOWY Topics: What is needed to indeed have a harmonized EU Single Market and in which areas is its implementation the most necessary?

How the TTIP might challenge the European economy?

How to enhance better cooperation between business, administration and citizens in order to balance Europe’s social economy model?

1.10.2015, 15:30-17:00

New Business Models For New Times Partner: PKN ORLEN SA Topics: Only those who will risk going too far can possibly find out how far one can go (T.S. Eliot). How to uncover new growth models in times of uncertainty?

From rivalry to cooperation: the dilemmas of competing innovators. Is there a clear-cut borderline in the world of innovations between the search for one’s own niche and the recycling of concepts?

New roles of communities. Is sustainable use of resources going to become a leading doctrine of the 21st century?

2.10.2015, 10:00-11:30 How Can Capitalism Be Fixed?

Partner: METLIFE Topics: In which areas would business be apt to self-regulate; in which areas would society agree to limit itself?

How can we restore the ethos of work and the social norms determining what is ethical?

Would the introduction of a global progressive income tax effectively limit the concentration of income, halt inequality and facilitate the climb up the social ladder?

2.10.2015, 12:00-13:30 WBJ OBSERVER • SEPTEMBER 2015

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COMMENTARY / COACHING

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J U LY / A U G U S T 2 0 1 5 • W B J O B S E R V E R

September 2015

30 pages of real estate content

section partner by

LOKALE IMMOBILIA / NEWS

>LOKALE IMMOBILIA

NEWS

Malta House was sold for €38 million

l INVESTMENTS

Skanska sells Malta House

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managed by Bluehouse Capital Advisor and two investment vehicles comprising Polish investors, managed by independent Polish fund and asset manager REINO Partners – REINO Dywidenda 2 FIZ (a closed-ended investment fund) and REINO Dywidenda Plus SA (a joint-stock company – a dividend vehicle

generating stable profits to investors).

The transaction is expected to be finalized by the end of the year.

Malta House encompasses 14,700 sqm of office space, which is fully leased.

Last year, REINO acquired one of the office buildings included in Kapelanka scheme in Kraków. u

Image: Skanska/Anna Gregorczyk

eal estate developer Skanska has sold the Malta House scheme in Poznań to a vehicle created

by REINO Partners and Bluehouse Capital Advisor, for €38 million, a press release read.

The complex was purchased by a joint venture between three companies: a fund

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NEW LANDMARK OF WARSAW Location – Corner of the Prosta and Żelazna streets.

Gross rentable area Gross rentable area of the TOWER Gross rentable area of the WEST building Number of floors in the TOWER Number of floors in the WEST building Typical rentable office floor size of the TOWER Typical rentable office floor size of the WEST building Parking spaces

63 800 m 49 600 m 14 200 m 32 9 1640-1750 m 1860 m 620 2

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2

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LEAD. MOVE. LEAVE A MARK. LET YOUR STORY BECOME THE GREATEST LEGACY. www.mennicalegacytower.pl WBJ OBSERVER

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ADVERTORIAL

Partnership for optimal solutions

The investment is executed within the formula of a Public-Private Partnership (PPP), in which the public partner is the City of Poznań, and the function of the private partner is performed

by SITA Zielona Energia, which is a part of the global SUEZ Environment group.

SITA Zielona Energia has entrusted a consortium of Hitachi Zosen Inova, HOCHTIEF Polska and HOCHTIEF Solutions with design work in relation to technology and construction work as well as completion of the project.

The Municipal Incineration Plant for the City of Poznań is: the first, and so far the biggest, Polish project in the waste management sector implemented through a PPP formula (approx. investment value: PLN 725 million); the largest investment in the sector of municipal services management in Greater Poland; the second project in terms of performance (210,000 metric tons/year) out of the six incineration plants that are currently being built in Poland and the winner of several awards, among others, Environmentallyfriendly Investment of 2014. © SITA Zielona Energia

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Dominikański scheme features 40,000 sqm

l OFFICE

Skanska delivers Dominikański scheme

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eal estate developer Skanska has delivered the last piece included in Dominikański office building complex, located in Wrocław’s city center. The B building has been granted an occupancy permit.

The scheme will offer 40,000 sqm. Currently, it is 70 percent pre-leased, with

its largest tenant being HP Global Business Center occupying 16,400 sqm.

In December last year, Skanska sold its fourth office project in Wrocław – the Dominikański complex to Union Investment, a German-based real estate investment firm. The value of the transaction has not been disclosed. u

PLN 3.6 BILLION

IS THE VALUE OF BONDS ISSUED BY REAL ESTATE DEVELOPERS IN 2014 l OFFICE

Polish office market maintains momentum – JLL In H1, the highest levels of office demand historically were recorded on the Polish market, according to international advisory company JLL. “H1 2015 was a very intense time on the Polish office market. Up to the end of June, gross demand in the country totaled 690,000 sqm, and the major markets outside Warsaw experienced another period of record-breaking demand for office space – 298,650 sqm in H1. In addition, Warsaw saw a great deal of tenant interest with Q2 setting a record in terms of demand.

Developer activity continued apace. In H1, the market expanded by approx. 345,000 sqm of new office supply, with Warsaw accounting for almost 147,000 sqm, Poznań – 50,700 sqm, and Wrocław – 43,900 sqm.

Currently, 1.4 million sqm of modern office space is under construction in Poland,” said Tomasz Czuba, Head of Office Agency at JLL.

The space leased on the Warsaw office market totaled 390,200 sqm in H1, of which 221,100 sqm was accounted for by Q2 2015's record-breaking performance.

H1 2015 saw record-breaking demand of 298,650 sqm outside Warsaw, with 35 percent of it in Kraków. A recovery has been witnessed in Poznań, with demand already exceeding the city’s volumes for the whole of 2014. The business services sector continues to be a strategic tenant on regional markets.

In H1 2015, approximately 147,000 sqm of modern office space came on stream in Warsaw, almost 88,000 sqm of which came in Q2 alone. Development activity in Warsaw remains strong, with more than 725,000 sqm under construction and some 28,000 sqm under refurbishment. It is estimated that approximately 46 percent of the 207,000 sqm of office space, planned for delivery over the course of H2 2015, is pre-leased. u

Image: Skanska

The method of waste thermal treatment with energy recovery is one of the preferred ways of waste management in accordance with the principles of sustainable development and the EU Zero Waste philosophy. As a result, the waste becomes a resource for production of both electricity and heat, which feed the relevant networks of operators. An example of an investment, in which such a solution is to be used, is the Municipal Incineration Plant for the City of Poznań.

LOKA M EM O BM I LOI BA I L/ LI A O G/ I SN TEI W CS LL OE K AI L IM

R TV E M R B•E M W B J O B S E RWVBEJR O•B S E P R A2R0C1 H 5

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l INVESTMENTS

State Street invests in Gdańsk

l C O M PA N I E S

Panattoni and Marvipol team up Panattoni Europe and Marvipol are going to establish a joint venture in order to carry out warehouse projects in the Warsaw area worth about PLN 100 million in total, propertynews.pl reported.

The first project may be launched later this year, while completion is scheduled for the last quarter of next year.

Marvipol will have a majority stake in a special vehicle company and will be responsible for financing the investment.

Panattoni will take care of the commercialization of the new units. u

l R E TA I L

Sukcesja shopping mall to open in September Shopping center Sukcesja located in Łódź will be launched on September 25, dlahandlu.pl web portal reported.

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 in the scheme. Construction work began in December 2012. The investment was partially carried out with public funds. u

Proffessionals of 12 outsourcing sectors.

Discover 12 outsourcing sectors anD more then 150 subsectors in one place

Street offices in Boston, London, Kraków or Hong Kong. This creates enormous opportunities for our employees,” said Scott Newman, managing director of State Street Bank Polska.

The company plans to hire 1,000 people, 300 of them this year. It leased 14,000 sqm in Gdańsk’s Alchemia.

State Street was founded in 1792 and is the second oldest financial institution in the United States. The company’s headquarters are in Boston and it has offices in 29 countries around the world. In 2013, the company recorded revenues of $9.88 billion. u

take part in the most important business event in polanD

400,000 IS THE ESTIMATED NUMBER OF PEOPLE EMPLOYED IN SHOPPING CENTERS IN POLAND

get free of charge professional advises in advisory zone!

take part in optimize conferences business anD inDustry processes in meetings your company

experience a rich range of innovative outsourcing services

more information and tickets: www.targioutsourcingu.pl At the exhibition invite:

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take part in networking Images: GTC, Trigranit, CBRE

State Street leased 14,000 sqm in Alchemia

NYSE-listed State Street, an American financial services provider for institutional investors, has opened its office in Gdańsk. It is the biggest investment to date in the BPO sector in the Pomorskie region.

“We especially appreciate the support of local authorities in launching our project. The new office in Gdańsk can accommodate over 1,000 employees. We plan to create jobs for both experienced professionals in the field of finances, as well as for young people – graduates of the Tri-City universities. People employed in the new office will perform the same tasks as workers from other State

LOKALE IMMOBILIA / NEWS

ADVERTORIAL

Outdoor attractions on site of a future Warsaw skyscraper

The project is valued at €85.3 mln

l FINANCING

GTC with €291 mln loan for Galeria Północna Centrum Światowida, a Globe Trade Centre (GTC) subsidiary, has signed a €291 million credit agreement with commercial lender Pekao Investment Banking for the construction of Galeria Północna commercial center in Warsaw.

Galeria Północna will have 6,400 sqm GLA and will be located in the Warsaw district of Białołęka. GTC had earlier informed that it will start construction immediately after getting permission from the mayor of Warsaw, and this was granted in June.

The GTC Group is a leading real estate company in CEE and SEE, operating in Poland, Romania, Hungary, Croatia, Serbia, Bulgaria and Slovakia. Additionally, it co-owns land in Ukraine and Russia and operates in the Czech Republic through its associates and joint ventures. The Group was established in 1994. u l C O M PA N I E S

TriGranit sold

The space between the Mennica Legacy Tower buildings will become a public square with landscape architecture and greenery. Yet, before construction begins, investors – GetHouse and Mennica Polska – opened the area up to cultural activities. For several weeks now, the area at the junction of ul. Prosta and ul. Żelazna has housed an open-air cinema and an outdoor exhibition.

Organized in cooperation with the Museum of Wola, the on-site exhibition “New Varsovians. History of social advancement in the second half of the 19th century” is devoted to people whose paths have become the basis of the city's modernization and social change.

“Cooperation with a thriving institution, that is active in the district where we, too, are involved, was a natural step for us to take,” commented Czarek Jarząbek, CEO of Golub GetHouse. The outdoor exhibition has been designed in such a way that the visitors can choose their own path. The centrally placed, glazed container houses the multimedia section, and the space in front of it is a resting area with sunbeds, pillows and greenery. The free exhibition is open daily: 10:00AM – 8:00PM.

Bonarka City Center will be among the acquired assets

Luxembourg-based investment fund TPG has announced the purchase of the real estate developer TriGranit. The value of the contract was not revealed.

“I believe that TPG Real Estate is a perfect buyer thanks to the great experience that it can contribute to TriGranit,” said Sándor Demján, the founder and the CEO of TriGranit.

The transaction is expected to be completed by the end of 2015.

Such firms as Bonarka Residential, Bonarka Offices, Bonarka City Center, Energit, Poznań Office Center, Silesia Offices and TriGranit Development Polska will be bought. Nevertheless, not all the pieces included in TriGranit’s portfolio will be acquired, for instance WestEnd City Center in Budapest is to be transfered to Gránit Management. TPG’s portfolio is worth $6 billion. u

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“I LOOK FORWARD TO A TIME IN WHICH HOUSEHOLDS WILL BE ABLE TO INVEST A PART OF THEIR SAVINGS IN CORPORATE BONDS, LIKE IN EVERY MATURE MARKET.” EREZ BONIEL, CFO OF GTC

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Image: Ghelamco

LOKALE IMMOBILIA / FINANCING

LOKALE IMMOBILIA / FINANCING

My word is my bond B Y A L E X H AY E S

ON JUNE 22, 2015, GHELAMCO’S LATEST BOND ISSUE (SERIES PPC) WORTH PLN 30 MILLION BECAME OFFICIALLY OVERSUBSCRIBED AFTER THE OFFER HAD BEEN OPEN TO THE PUBLIC FOR A TOTAL OF FIVE DAYS. DOES THIS SUCCESS SHOW A POOL OF PREVIOUSLY UNTAPPED PRIVATE INVESTORS KEEN TO LOCATE THEIR LIFE SAVINGS IN CORPORATE BONDS OR IS THERE SOME OTHER EXPLANATION?

Image: Ghelamco

E

arlier that same month, the company’s previous offering worth PLN 50 million had also sold out in just four days. Ebullient with this success, Jarosław Jukiel, chief financial officer of Ghelamco Invest, stated that, “Coming onto the market with a new issue of series PPB bonds at this time and in these conditions turned out to be a very good decision. The group’s latest commercial successes and the conditions proposed by us were so interesting to individual investors that we finished subscriptions early.”

Echo Investment, Ghelamco Invest and GTC are now the three biggest issuers of bonds among developers in Poland. Other developers that have issued bonds also include Robyg, Dom Development and LC Corp.

There are good reasons why individuals might have discovered a voracious appetite for financial instruments such as bonds. With a rapidly aging

WBJ OBSERVER • SEPTEMBER 2015

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277.4% population and doubts as to whether the government will be able to meet its pensions obligations from social security contributions, more and more people are looking for alternatives to secure their savings.

However, Erez Boniel, the chief financial officer of GTC, believes that this time has yet to come. “It is beneficial to the country’s economy that its financial system will have an efficient bond market. One of the biggest advantages of bonds is that they are a tradable instrument. In Poland, the system is not yet fully developed. This is partially because of structural reasons within the capital market.

However, Poland is definitely making strides to develop an efficient market,” he explained.

Krzysztof Cipiur, manager of capital markets at Knight Frank, also believes that demand for financial products could well grow. “The level of financial education is low and that’s a reservoir for growth,” he claimed.

Despite this, there can be little doubt that the Polish debt market is much more mature than most other markets in the CEE region.

According to statistics by the Federation of

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European Securities Exchanges (FESE), in the 2010-2014 period, the number of bonds listed on the Catalyst market rose by 277.4 percent, representing an average increase of 41.4 percent per annum. The next highest growth in the region was by the Hungarian bond market, where the average increase stood at only 16.1 percent per year. Nevertheless, according to Boniel, many bonds in Poland are illiquid and stated that, “I look forward to a time in which households will be able to invest a part of their savings in corporate bonds, like in every mature market.

Nowadays, a person who wants to invest his savings in such bonds, will typically realize that it is difficult to buy or sell them.”

Banks or bonds?

When it comes to project financing, GTC regards bank loans to be by far the most preferable form of financing. They are relatively simple to acquire and they also frequently involve third-party expertise with the bank providing its own experts and advice to safeguard the investment. “Banks also bring

added value to the project, by supervising the investment process and advising on credit issues,” explained Boniel.

The Robyg group also prefers bank loans, but does not regard them as simple: “Bank loans are a much more flexible option for obtaining money. However, they require a wider range of bureaucracy,” stated Artur Ceglarz, the chief financial officer at Robyg.

After the financial crisis of 2007, many developers looked for alternative forms of financing and bonds were touted as one possible manner of raising financing when banks became more circumspect overnight.

When asked if Ghelamco moved into bonds due to the financial crisis, Jukiel replied, “We wanted to continue to develop, acquire land and prepare projects for development. The limitations on bank financing for this stage of developing real estate projects was a signal to seek out alternative sources of funding, which for Ghelamco became bond issues.”

However, for Cipiur, bonds are unsuitable for most forms of project financing: “It’s not an alternative, it’s like a complementary

Images: GTC

is how much the bond market grew in Poland in 2010-2014, which represents an annual increase of 41.4%, according to FESE.

LOKALE IMMOBILIA / FINANCING

type of financing,” he explained. Moreover, he believes bank financing to be currently relatively easy to obtain. “It’s not difficult at all for someone who has a track record and can gain the trust of the bank,” he said.

Bank loans are comparatively less complex than bonds, quicker to arrange and have a longer term than bonds since their repayment terms are directly connected to the life span of a given project. Bonds on the other hand are tailored to meet the demands of the investor and typically mature in three to four years. Moreover, bond issues are complex and can take even up to a year to organize. “You need expertise when you consider bond issuance. Prudent companies that do not have such expertise should seek external advice when necessary,” explained Boniel. This complexity and time all entails cost and there is no guarantee that investors will want to buy your paper.

For GTC, which had its first issue in 2006, bonds provide the ready cash to react quickly to opportunities on the market. “It provided an opportunity to attract a large number of lenders in an efficient manner. Furthermore, it allowed a greater degree of flexibility to allocate the money without the restrictions that are often attached to banks’ project finance,” stated Boniel. However, Ghelamco appears to approach the financing issue differently: “We watch the market and try to use the available funding methods for the realization of our projects. At a time when the acquisition of bank financing is subject to

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“LAST YEAR, MORE THAN HALF THE ACQUISITIONS OF APARTMENTS IN POLAND WERE DONE WITH CASH.” KRZYSZTOF CIPIUR, MANAGER IN CAPITAL MARKETS AT KNIGHT FRANK

relatively difficult conditions and there is a large supply of money on the market, bond issues become attractive,” explained Jukiel. … or mezzanine?

Another possible form of financing projects is mezzanine. But this is a form of financing that has a number of drawbacks. With mezzanine, the investor can convert his debt directly into company stock if the company fails to pay back its debts. Mezzanine is typically offered by just one lender on a short term basis. It carries a high interest rate due to the extra perceived risk and is thus more expensive. This is why Boniel sees mezzanine as “pseudo equity,” good for short term emergency funding only. “It is a hybrid of debt and equity financing that is usually

subordinated to debt provided by senior lenders. Mezzanine financing is usually provided to the borrower in a swift process with little to no collateral. Hence, this type of financing is aggressively priced, with the lender seeking a high return,” he explained.

However, according to Cipiur, it has its uses. Developers might not be able to secure the necessary leasing level that would unlock the requisite loans for a particular project. So the only way a developer might be able to start building work is through mezzanine financing. Similarly, an apartment developer might need money to begin building work but will not want to mortgage the property because this might be required as collateral for a future bank loan, after work has begun.

Ghelamco taps the markets Ghelamco deliberately kept the nominal value of the bonds in its latest issue low at PLN 100 in order to make them more attractive to individual rather than institutional investors. The company claims that it began to issue bonds to individuals primarily as a manner of diversifying risk. “A few years ago, we started with bond issues and offered them to institutional investors. The next step was the approval of the prospectus in 2014 and the issuance of bonds aimed at individual investors. The main objective is to diversify sources of financing,” explained Jukiel.

However, there is little doubt that institutional investors also found the bonds attractive. The average size of the

23 -24 September 2015 The Westin Warsaw Hotel

An effective implementation of smart city solutions in Poland

PARTNERS Images: GTC

STRATEGIC PARTNERS

Contact: Aneta Pernak

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phone: +48 22 379 29 18

www.smartcityforum.pl

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placement for Ghelamco’s PPC series bonds was PLN 76,800, which suggests that much of the offer was sold to those who were investing millions. The actual number of small investors might have been rather limited. Moreover, if the bond issue had been bought mainly by small investors, this still represents only a miniscule proportion of those individuals with money to invest.

Cipiur regards the size of Ghelamco’s PPB bond offer as a mere drop in the ocean in comparison to the number of people investing in apartments. “If we assume that the average investment in an apartment in Warsaw is worth PLN 500,000 and the value of these bonds was PLN 50 million, then we are speaking about 100 apartments in Warsaw. Last year, more than half the acquisitions of apartments in Poland were done with cash,” he explained.

Whether private investors are investing in Ghelamco or not, the success of its last bond offering speaks only of the track record of the company and the trust investors place in it. u

EU-US Young Entrepreneurs Summit Katowice 2015

12-14 października 2015

during

Małych i Średnich Przedsiębiorstw

KATOWICE V Europejski Kongres

5th European Congress of Small and Medium – Size Enterprises

Nauka - Biznes - Samorząd RAZEM DLA GOSPODARKI

KATOWICE 12th-14th October 2015 V European Congress of Small and Medium - Size Enterprises

Biggest meeting of young entrepreneurs in Europe

fot. Urząd Marszałkowski Woj. Śląskiego

Science - Business - Self-government TOGETHER FOR ECONOMY

Катовице 12–14 октября 2015 V Европейский конгресс

More information and registration

малых и средних предприятий

Hаука - Бизнес - Cамоуправление BMECTE ДЛЯ ЭКОНОМИКИ

smecongress.eu

WBJ OBSERVER • SEPTEMBER 2015

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B Y A DA M Z D R O D OW S K I

Room for more THE WARSAW MARKET CAN STILL ABSORB SEVERAL NEW LARGE-SCALE SHOPPING MALL SCHEMES

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arsaw Stock Exchange-listed developer Globe Trade Centre (GTC) will soon officially launch construction on its Galeria Północna shopping center project in the Polish capital, which will deliver approximately 64,000 sqm of leasable retail space in the first half of 2017. Located in the Białołęka district of the city and valued at around €160 million, the planned scheme will be the first new retail development of this scale in Warsaw since the opening of the Złote Tarasy investment in 2007.

Over the last few years, large new shopping center projects were mostly developed in the major regional cities across Poland, but now it seems that such schemes are finally going to start coming back to the Polish capital. Warsaw has changed significantly in recent years, with the growth of new housing neighbor-

hoods in peripheral districts, including the Białołęka district in the north-eastern part of the city and the revitalization of some of the neglected central areas, having created new opportunities for retail space development.

Several investments have already been announced. GTC itself is currently also planning a large shopping center project called Galeria Wilanów which it hopes to develop in the fast-growing Miasteczko Wilanów residential area. The development, for which the company is now trying to secure a building permit, will comprise almost 80,000 sqm of GLA. GTC wants to launch construction on the scheme as soon as all the administrative hurdles have been cleared.

The city center itself will see a few major changes as well. A new mall will probably be built as part of the huge mixed-use

“Among the eight largest agglomerations in Poland, Warsaw and Szczecin feature the lowest retail space saturation rates.The retail space saturation rate in the Polish capital is lower than in such regional cities as Kielce, Lublin, Poznań and Wrocław.

Anna Hofmann, Cushman & Wakefield

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Images: Shutterstock

complex which Polish State Railways and Immofinanz Group are planning to develop on the former Warszawa Główna railway station site in the central Wola district. Negotiations regarding the joint investment are still underway.

Another shopping center development is likely to spring up on the site of the existing Tesco facility located in Kabaty, the southernmost part of Warsaw’s Ursynów district. A number of other locations across the city are now being talked of in the market.

New locations emerging

Developers and analysts argue there is still room for new large-scale shopping center projects in Warsaw. Jacek Wachowicz, management board member at GTC,

noted that as early as 2009, a JLL study pointed to Białołęka and Wilanów as two of the most promising locations. The districts are now two of the fastest-developing parts of Warsaw in terms of population growth and both are evidently suffering from modern retail space shortage, Wachowicz said.

According to Beata Kokeli, a senior director at the retail space department of CBRE, apart from Białołęka and Wilanów, there are at least three other locations in Warsaw where large-scale shopping center projects could definitely be developed in the coming years. She mentioned the Młociny neighborhood in north-western Warsaw’s Bielany district, as well as the Ursynów district which currently does not really have any large modern retail scheme

that would cater to the needs of its affluent population.

Kokeli also pointed to Praga on the right side of the Vistula River as an emerging retail location. The previously neglected area is being revitalized and the recent opening of the second subway line is expected to help attract more real estate investment there. Several major residential and commercial projects, including Centrum Praskie Koneser and Port Praski, are already under construction. Praga is another area of Warsaw which will, in the short-term perspective, become ready to accommodate a new retail investment, Kokeli said.

Anna Wysocka, head of the retail agency at JLL Poland, said that Wola also remains an attractive location. Admittedly, there are already several malls in the district but

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“Apart from Białołęka and Wilanów, there are at least three other locations in Warsaw where large-scale shopping center projects could definitely be developed in the coming years --Praga, Młociny and Ursynów. the growing Odolany and Czyste housing neighborhoods have the potential to absorb new space.

Apart from this, the eastern Wawer district, with the largest area of all the districts in Warsaw, is still under-supplied.

However, when the planned southern Warsaw ring road is completed, Wawer could become part of the catchment area of Galeria Wilanów, Wysocka said.

Low saturation rate

The Warsaw retail market has been stable in recent years, with no new major developments having challenged the position of the largest existing malls. However, despite the stagnation, the market has been diversifying of late, Kokeli said.

She pointed out that new mixed-use and specialized schemes, including Plac Unii

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Beata Kokeli, CBRE

City Shopping, which was developed by Liebrecht & wooD and BBI Development, have been delivered since 2007. Also, Warsaw’s high streets have been changing, Kokeli said.

According to CBRE data, there are currently 42 shopping centers in the Warsaw agglomeration (of which 32 are located within the city) which comprise a total of approximately 1.4 million sqm of retail space. The retail space saturation rate in the Polish capital turns out to be relatively low when one compares Warsaw with the largest regional cities in Poland, and amounts to 422 sqm per 1,000 inhabit-

ants. This is a similar level to that seen in Szczecin, Kokeli said.

Anna Hofman, a senior negotiator at the retail space department of Cushman & Wakefield, said that among the eight largest agglomerations in Poland, Warsaw and Szczecin feature the lowest retail space saturation rates. The retail space saturation rate in the Polish capital is lower than in such regional cities as Kielce, Lublin, Poznań and Wrocław. Meanwhile, when comparing the purchasing power of the inhabitants of the same cities, Warsaw is the undisputed leader. This demonstrates that there is still much room for the develop-

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A bumpy road

Why did Warsaw have to wait so long for new large-scale shopping center projects? According to Wysocka, when the Złote Tarasy scheme opened for business in 2007, both developers and tenants came to the conclusion that the market had already become saturated. Today, the situation is quite different – the dynamic growth of the city’s residential market in recent years has created substantial demand for new retail space in the Polish capital, Wysocka said.

Warsaw has been seeing its population grow and the purchasing power of Varsovians has increased. The strengthened position of the Polish capital as the business center of the CEE region has been attracting more and more business and leisure travelers to the city. Consequently, occupants, including fashion concepts, are currently looking for new locations on

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Warsaw’s retail map and are finding it difficult to secure sufficient space, especially when seeking large areas, Wysocka said.

However, other property market experts also point to complicated land ownership, administrative and legal issues as the main reasons for the fact that no largescale shopping center development was delivered in Warsaw over the past eight years. In the opinion of Kokeli, land-related issues are the main hindrance to the development of large retail investments in Warsaw. There is a limited amount of large sites in the city which have a clear legal and urban planning status, she said.

The protracted administrative procedures a developer often has to go through further aggravate the situation. The process of enacting a zoning plan which will allow for the development of a large-scale retail project can be very time-consuming, said Hofman. The process usually involves many different parties which represent conflicting interests and the public administration officials often act in an ambiguous manner. “In the case of some schemes, the investment cycle can even take more than ten years,” Hofman said.

Old and new

Nevertheless, the obstacles are not putting developers off. Attracted by new retail opportunities which have emerged

Anna Wysocka, JLL

in Warsaw in recent years or are appearing in the city right now, they continue to plan new projects of all kinds. Apart from new large-scale shopping center schemes, developers are now involved in the repositioning and extension of a number of existing Warsaw malls, as well as in the development of new local shopping center investments, including Ferio Wawer.

Andrzej Jarosz, marketing and communications director at Mayland, argued that Warsaw has the potential for the development of large retail projects in basically all kinds of locations – in the downtown area, in specific districts and in the suburbs at express road junctions. While Mayland itself is now focused on the development of the Serenada shopping center project in Kraków, it is also working on several planned retail schemes in Warsaw. The results of that work should be disclosed to the public within the next few months, Jarosz said. u

Image: GTC

ment of new retail space in the Polish capital, be it in large-scale shopping centers or in smaller retail formats including convenience centers. In the opinion of Kokeli, it is more difficult to compare Warsaw with other capital cities in Europe because in many Western European countries high streets are much more developed than in Poland and are the main shopping destinations for the inhabitants of those cities.

“The dynamic growth of the city’s residential market in recent years has created substantial demand for new retail space in the Polish capital.

COMMENTARY / DEFENSE

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Quality over quantity THERE IS NO CITY LIKE IT. WARSAW’S PATCHWORK HISTORY HAS RESULTED IN AN URBAN LANDSCAPE THAT IS DIFFERENT FROM ANY OTHER IN EUROPE. IT’S HIGH TIME TO START FOCUSING ON THE QUALITY OF THE CITY’S DESIGN 68

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A public square in the new Ursus quarter, as envisioned by CPD

Image: CPD

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ts stunning development, exemplified by savvy new high-rises, is witness to over two decades of consistent economic growth. Yet, fast development comes with a price. A general trend of urban sprawl can be witnessed and zoning plan ambiguity is disastrous for builders, the city and the citizens alike. The living quality of Varsovians depends on whether planning solutions that harmonize the city can be enacted.

We asked urban planning specialists about the present and future of Warsaw and how to give the city a human scale.

Former MP and architect Czesław Bielecki gives two objectives of urban plan-

ning: limiting urban sprawl and protection of open space. “It is the city’s responsibility to provide the framework for the market to develop harmoniously, yet freely.” Former candidate for Warsaw’s presidency, Bielecki is part of a citizens’ movement to draft a new urban planning and building code to stimulate responsible planning and enact laws that support it. “We currently have a situation where we have the coexistence of buildings that clash with one another. There is a lack of natural beauty in our urban landscape, which can be remedied by enacting good guidelines,” added Bielecki. One such guideline, might be a respect for maintaining proper ur-

ban density – with denser areas concentrated in the city and limited in the suburbs. Currently, there are many high-density projects on the city’s outskirts, which will cause quite an infrastructure and utility provision headache in the future. Urban sprawl practices are also very costly to the taxpayer in general.

One thing Warsaw boasts, is wide open (relative to other European cities) spaces in the city center. Hence, physically, a lot can be done to beautify public areas and build up the central districts. What seems to be the biggest problem, is the unclear ownership status of many land parcels. After World War II, the land in the city was nationalized and

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Industrial Targówek

reconstruction went on according to new parcels. Today, the result is a nightmare in trying to compromise between compensation of rightful owners and the granting of new building permits. Investors are scared off by the unclear status of properties, as well.

Corral that sprawl At a recent planning-development conference, “Warsaw Days,” the city’s representatives stated that they will counter suburbanization. One of the reasons being that Warsaw is loosely built up. Compared to Barcelona, for example, it has five times fewer inhabitants per square kilometer of urban space. Furthermore, the city must brace for newcomers. Kazimierz Kirejczyk, residential market expert and CEO at REAS, a residential real estate research firm, foresees the construction of over 200,000 residential units (mainly by private investors) until the year 2030. It is expected that the city will house over three million inhabitants by then.

The main tool for urban planning are the local zoning plans. Completed plans cover 35 percent of the city, with another 31 percent being currently worked on, four percent of the city is undergoing a redesign of its plan.

“Suburbanization is very much present in Warsaw. People want to buy cheap land and build a single-family home. In effect, this tends to generate disorder. The individual, small-scale investments are often built hap-

Images: Dawos Design Studio

“WARSAW LACKS THE TRADITIONAL BOULEVARD PRESENT IN OTHER EUROPEAN CITIES. OUR CITY HAS LESS ‘CITY’ IN IT. IN EFFECT, MUCH OF THE CITY SIMPLY SERVES AS A BEDROOM. THE CITY NEEDS LIVELY PUBLIC SPACES WHERE CITIZENS CAN CONGREGATE AND SOCIAL LIFE CAN BLOSSOM.” KRZYSZTOF DOMARADZKI, ARCHITECTURE PROFESSOR AT THE WARSAW UNIVERSITY OF TECHNOLOGY Plac Trzech Krzyży

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hazardly, causing urban sprawl. Infrastructure cannot catch up with such sprawl and carries with it high costs of implementation since it’s done ad hoc,” said Warsaw University of Technology architecture professor Krzysztof Domaradzki.

There have been some successes in the planning of urban space in Poland: Manufaktura in Łódź is a fantastic example of renovation of old industrial areas in order to create a new and attractive retail area. The revitalization of the Royal Way, planned by Domaradzki’s Dawos Design Studio, has also done wonders to the city’s most popular tourist pathway. Its lively cafes are the city’s most recognizable feature. After delays in the construction of the second metro line, ul. Świętokrzyska has blossomed into a pleasant boulevard with street furniture. To the chagrin of drivers, the narrow street gave way to a wide sidewalk and bike path. By no means are the above projects void of mistakes, but they’re a move in the right direction.

New Ursus The former grounds of the Ursus tractor factory are to be developed as a cohesive, integrated city quarter. A local zoning plan has been granted for the 220-hectare area dubbed as Smart City. With public squares, a central green beltway, schools, a church and a cultural center all included in the plan, this huge new quarter is going to impress. There will be walkways and paths connecting the entire neighborhood and there will be no gated areas. Not one, but two rail stations are in the vicinity and the ride from Ursus to the city center lasts … a whopping 15 minutes. A new viaduct connecting Ursus with the ring highway has been constructed and a second will lead to Bemowo. This could be exactly

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“THE CITY CAN BE A WORK OF ART …

WHERE DELIBERATE HUMAN WILL SHOULD HAVE THE DECISIVE INFLUENCE ON ITS SHAPE.” TEODOR TOEPLITZ, A FOUNDER OF THE WARSAW HOUSING COOPERATIVE (WSM) IN THE 1920S, A NEIGHBORHOOD WHICH SURVIVED WORLD WAR II AND MAKES UP A PART OF ŻOLIBORZ TODAY.

what Warsaw has been sorely missing – a well-planned, holistic design for urban space.

Developer CPD owns 60 hectares of land in Ursus and is leading the entire project. “Quality of life is not only measured by the amount of square meters one can squeeze onto a parcel of land, but rather the quality of the public space that surrounds a house,” said Michalina Wiczkowska, CEO of CPD. According to Unidevelopment, a partner on the project, Ursus is an investment that is expected to last one decade. The local zoning plan stipulates that CPD may develop 740,000 sqm of space in the new quarter, with around 450,000 sqm devoted to residential apartments, some 250,000 sqm designated for services and about 40,000 sqm for public buildings. The first stage of CPD’s investment will yield 360 residential units (1, 2 and 3-bedroom apartments) in four buildings. A preschool, kindergarten, playground and a new public primary school will also be built alongside. CPD has been listed on the Warsaw bourse since 2010.

CPD decided to pass on its right of re-compensation from the city, giving up land for public institutions for free.

“We felt this is the right thing to do as

Image: Shutterstock

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an investor that wants to provide basic amenities that increase quality of living,” said Wiczkowska. The re-compensation for land in public investments could be one of the deterrents in establishing quality urban space through zoning plans. According to the current law, the city has to “buy” land at market prices to build streets, parks or schoolyards, resulting in shortages of these amenities.

The commons The Służewiec quarter, a big business district in its own right, is almost totally devoid of public spaces. It grew from individual building permits and without a holistic zoning plan. Hence, the block bordered by ul. Cybernetyki, ul. Obrzeżna, ul. Postępu and ul. Bokserska is a 26-hectare area with new residential and office buildings, but lacking any streets or footpaths that would cut across it. A resident of an apartment on ul. Obrzeżna, for example, must walk a kilometer to reach an office building that is 400 meters away on ul. Postępu.

It is also unfair to expect that the taxpay-

er will fund new, premium infrastructure and transportation options to this densely built-up quarter.

Here, the developers need to do their homework. “The market offer is becoming more diversified. It’s not enough to just build an office building.

A developer should think of the entire support base, including transportation options and adjacent areas,” said Joanna Mroczek, director of CBRE Research & Marketing. Tenants are no longer eager to scoop up whatever is put up for sale, they are more and more picky. “Poles are evolving to the point that they’re asking themselves what they want from life, other than the basics. Oftentimes, the aura and complimentary facilities are becoming the most important factor in buying a home,” said Wiczkowska.

resemble a Mad Max movie set. An urban design competition has yielded a plan for the quarter’s development. The winning plan from Dawos includes the refurbishing of industrial buildings, smooth integration with the nearby Residential Targówek and publicly accessible green spaces. A ring road will be built nearby and a two-level rail station called Warszawa Stalowa will also be accessible to the quarter’s inhabitants.

Connection with the second metro line will be just 10 minutes away. So, it seems that another new quarter with fantastic public transportation options is going to be developed in Warsaw.

Good urban planning law is a must if Warsaw is to develop harmoniously. The city should enforce certain measures that prevent a hodgepodge development style and the pouring out of the city to the suburbs. Of course, all sides, investors, inhabitants and city hall should carry responsibility for the aesthetic appearance of the nation’s capital and a forum where these ideas can be shared is needed. u

Industrial Targówek Another area due for a revamp, the Targówek Fabryczny quarter, is a mixture of rail tracks, individual pre-war tenements, warehouses, the Wilno neighborhood and industrial sheds that

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The Tri-City makeover

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100,000 sqm of this stock set to be commissioned for use by the end of H1 2016.

Local brands

Developers are eager to build there, given the continually low vacancy rate of 10.6 percent, according to Colliers International surpassed only by Kraków (4.1 percent) and Łódź (8.1 percent), as well as solid demand figures (52,800 sqm in H1 2015, which is the second-best score among regional markets, after Kraków).

The office stock of the Tri-City has thus far been developed mainly by local players.

Olivia Business Center’s eponymous project, launched in 2010 and scheduled for completion in 2017, will offer a total of over 100,000 sqm. Thus far, the developer has added 73,000 sqm to the market within five buildings. Meanwhile, Alchemia, by another local developer Torus, will feature 80,000 sqm of office space once fully delivered in 2017. The third phase (out of a total of four stages) of the complex has recently been launched. Both projects are located within a kilometer of each other, in the Oliwa district of Gdańsk.

Images: Torus

THE LANDSCAPE OF THE TRI-CITY HAS SEEN SOME SERIOUS CHANGES OVER THE PAST FEW YEARS. AS DEVELOPERS INCREASE THE AGGLOMERATION’S OFFICE STOCK, AUTHORITIES ARE HELPING TO ATTRACT NEW INVESTORS. WILL THE TRICITY MAINTAIN ITS MOMENTUM?

eing an important seaport and trade hub, Gdańsk was, for the better part of its 1000-yearlong history, a bone of contention mainly between Polish and Prussian interests. Over the centuries, it changed hands more than a dozen times, eventually becoming the main Polish seaport and shipbuilding center after WWII. Once the shipbuilding industry closed down in the 1990s, Gdańsk, as well as its neighboring cities, Gdynia and Sopot, altogether forming the Tri-City, went through a period of uncertainty and had to look for alternative ways to develop. Over the past few years, the Tri-City has managed to establish itself as a major BPO destination and office market, overtaking several other regional cities.

Thanks to strong developer activity over the past five years, the Tri-City has risen in the ranks to become the fourth largest office market in Poland, falling behind only the well-established markets of Warsaw, Kraków and Wrocław. The total office supply in the Tri-City stands at 526,000 sqm, according to the latest JLL report. Another 130,000 sqm of office space is under construction with

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Gdańsk’s new City

With two major office investments located there, Oliwa, which for years remained largely neglected, has now become the new office hub for the Tri-City area. “Gdańsk’s Oliwa district is becoming an undisputed business center. … It is where nearly a third of the Tri-City’s total office stock is situated.

Importantly, these investments are located in an area which, despite being close to the main thoroughfare connecting Gdańsk, Gdynia and Sopot, was hardly the city’s showpiece only a few years ago,” said Edyta Korycka, director responsible for investment planning at Torus. Now, it is a bustling area with more development underway.

But does the Tri-City really need more office space, given how much stock has been delivered recently? Data would suggest it does. The market has seen a number of new tenants enter the market over the past few years, with more expected to come. “Forecasts remain optimistic, as evidenced by the recently announced investment in Gdańsk by a company called State Street, which is looking to hire some 1,200 people. It leased over 14,000 sqm of office space in the Alchemia complex, in the largest transaction the Tri-City has ever seen and one of the largest deals in Poland this year,” explained Korycka. The Gdańsk office, whose lease was announced in late July, will be the second location for the US-based State Street, a financial services firm. It already has an office in Kraków, employing 2,000 people.

Images: Torus

Three cities – one policy

One of the things that has helped establish the Tri-City as an investment destination for international BPO/SSC companies was a cohesive urban and investment policy of all the municipalities forming the agglomeration. But it wasn’t always this way.

Katarzyna Gruszecka-Spychała, the deputy mayor of Gdynia, admitted that for many years, Gdynia’s biggest competitor in attracting new investors was in fact its closest neighbor, Gdańsk.

“We’re finished with the sort of cannibalistic competition. We started an initiative ‘Invest in Pomerania.’ Now, the offer an investor gets is identical in every city [within the Tri-City area],” she explained during a conference held by Urban Land Institute back in May. She also admitted that reaching a compromise to establish a common policy for the entire Tri-City area wasn’t an easy feat. “But it works. Now, Kraków, Wrocław and Poznań are our competitors,” she added.

Not only offices

However, it is not only office space that investors, as well as Tri-City residents, need and value. In order to bring in new companies, the location needs to be attractive on all fronts, also providing convenience and comfort of living. “The supply of sports and recreation facilities is insufficient in the Tri-City, as is the case in most Polish cities. It was one of the reasons why Torus decided to build

“Gdańsk’s Oliwa district is … where nearly a third of the Tri-City’s total office stock is situated.”

Edyta Korycka, director, Investment Planning at Torus

the largest publicly accessible sports and recreation center in the Tri-City within the first stage of the Alchemia scheme. … It features swimming pools, saunas, a fitness club and a climbing wall,” said Korecka.

It was a smart move on the part of the developer, one that was immediately appreciated by the city’s residents. Until recently, the agglomeration had only a handful of swimming facilities that were often inaccessible for much of the day due to schools’ occupying the premises for swimming lessons. Gdańsk’s residents who were looking to have a swim had to take a train to get to the nearest public aquapark in Sopot. “The situation improved with the construction of a fitness center with swimming pools in the Alchemia office building, but the demand

for recreation facilities remains unsatisfied,” said Urszula Sawicka, an IT professional from Gdańsk, currently working in Warsaw.

Ground to cover

Despite having undergone significant urban renewal, the Tri-City still has a number of neighborhoods in dire need of a makeover.

Even Oliwa, and particularly its older parts, has streets that make passers-by cringe at the sight. “You can see an old tram depot with boarded up windows and adjacent houses in danger of collapsing,” said Sawicka. She also pointed to Gdańsk’s outskirts, including Orunia and Chełm, where few dare to venture after dark.

Fortunately, developers are aided in their ventures by city authorities, which are well aware of the need to create a more cohesive city fabric. Recently, Gdańsk’s authorities completed the renovation of an entire district, called Dolne Miasto, a project which cost some PLN 24 million to complete over a period of two years. The city is now targeting its port area. Last year, it held a competition to select the best design for the makeover. Meanwhile, developers Immobel and Multibud have recently launched a public-private partnership with the city to redevelop the Spichrzów Island in the very heart of Gdańsk. The project has been scheduled to begin in 2017 and finish in 2023, delivering 58,700 sqm of multi-functional space and creating a new, hip location on Gdańsk’s map.

Hopefully, as developers and city authorities join forces in revamping the Tri-City, more companies will decide to locate their business in the area, bringing in more jobs and funds to make the Tri-City an even more desirable place to live and work. u

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the

Sentiment in the warehouse market continues to be highly optimistic. After great results two years in a row, who could have hoped that this year could do one better than 2014 and 2013?

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When Amazon entered Poland in 2013 with three built-to-suit facilities of 100,000 sqm each, the market was in awe as it finally saw the highest warehouse demand levels since before the 2008 crisis. Experts mused whether such great demand results could possibly be repeated in the future. Then 2014 came and managed to improve on the previous year’s results even without spectacular one-off deals. After two exceedingly good years for the market, could 2015 turn out to be another record-breaker?

Over the first six months of the year, 1.17 million sqm of warehouse and industrial space was leased, with 781,000 sqm being new contracts, according to JLL’s latest data.

According to Colliers, demand for warehouse space was 21 percent higher than the volume of transactions concluded in the corresponding period of 2014. Experts remain quite confident that the demand will continue to be strong throughout the rest of the year.

Image: Shtutterstock

Strong and getting stronger

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“Strong results in H1 as well as continued interest from tenants allows us to assume that 2015 has the chance of being another record-breaking year for the Polish market and exceed 2014’s excellent performance,” said Tomasz Mika, head of the Industrial Poland department at JLL. Green across the board Developers, too, feel very positive about the future of the market. “The segment should see unwavering interest from tenants, developers and investors over the next few years,” said Magdalena Szulc, SEGRO Business Unit Director for Central Europe.

“We expect slightly higher or comparable results to those from last year for the entire 2015. Naturally, this will be contingent on many variables, including the general macroeconomic situation, problems within the euro zone, as well as the geopolitical situation in Eastern Europe,” she added.

Indeed, vacancies have hit the lowest levels in ten years and have been single-digit across all the main markets. They stand between 1.7 percent in the Tri-City area and 9.5 percent in the Warsaw inner-city area, as per Colliers’ H1 data, and are expected to drop even further. “Taking into account the current market situation, we expect

general vacancy rates to be below double digits over the next few quarters,” said JLL’s Mika.

Speculations galore Given the promising demand and vacancy figures, developers have been building even more than in the year before. Between January and June 2015, the total warehouse stock increased by 437,000 sqm, 47 percent more than in H1 2014, according to JLL. Interestingly, nearly half of all that space was delivered in Poznań (207,000 sqm), with Warsaw suburbs coming in second, with a significantly lower result of 74,000 sqm.

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31%

of the current warehouse pipeline is located outside the five main markets.

Developers’ optimism is further evidenced by the amount of space being developed speculatively – nearly a quarter of the entire pipeline is being built without a pre-lease.

Analysts are far from alarmed, though. “Although we are recording growth in speculative projects, which now account for 23 percent of the stock under construction, the market – driven by strong demand – should absorb that space relatively quickly,” explained Mika.

Towards the end of last year, SEGRO went out on a limb and decided to build a facility in its Ożarów park that had only ten percent of its entire space covered by preleases. “Now, only 50 percent of the building remains vacant and it should be leased by the end of 2015. Such examples prove that you can be confident about finding tenants.

Especially, since we haven’t seen any weakening of demand from the most active tenants in the warehouse market over the past few years, that is logistics operators, retail chains and the automotive industry,” Szulc concluded.

Industrial hubs While the northern locations are ideal for logistics operators due to their multimodal transport opportunities, the southern and eastern regions are increasingly favored by industrial occupants. The continually improving road infrastructure has resulted in new and exciting opportunities for industrial development in eastern Lublin and south-eastern Rzeszów.

“Lublin has emerged on the warehouse map, with new logistics parks located near the S12 ring road. Completion of the next stages of the A4 highway and expressways around Rzeszów is also set to have a positive impact on development in this region,” said Agata Zając, associate director at the Industrial Poland department of JLL. The country’s capital is also about to benefit from an improved road network. “A new exit road from Warsaw towards Katowice has been opened and is planned to be extended. This may be an additional stimulus for initiating new industrial projects in the south-western part of Warsaw,” Zając added.

With strong figures and so much optimism in the market, one can’t help but wonder: could 2016 be even better for the warehouse industry? u 78

SEPTEMBER 2015 • WBJ OBSERVER

23%

of the space being built is developed on a speculative basis.

Images: Shtutterstock, Segro

North, south and east Another significant shift in the market is the increasing geographical diversification of warehouse development. “A few years ago, the share of the five major regions in net demand amounted to 80-90 percent, in H1 2015 it dropped to 74 percent,” said Jan Jakub Zombirt, associate director, Research and Consultancy at JLL. Even more space that is currently under construction is located outside the “big five” – an unprecedented 31 percent.

“Locations that were previously viewed as peripheral, such as Kraków or Szczecin, as well as those whose first commercial industrial space has only been developed recently, such as Lublin or Rzeszów, have gradually grown in importance,” he added.

The northern Tri-City, Poland’s number one transport hub, connecting sea transport with road and rail routes, is also becoming a hotspot for developers. “Apart from the main locations, that is Warsaw, Upper Silesia, Central Poland, Poznań and Wrocław, we also see potential in the Tri-City region due to its sea access and a connection with the south of the country via the A1 highway,” said Szulc. “In the first quarter of the year, we completed the construction of a modern logistics center of some 27,000 sqm for Żabka [a leading convenience store chain in Poland] within the SEGRO Logistics Park Gdańsk,” she added.

LOKALE IMMOBILIA / WAREHOUSE MARKET

“We expect slightly higher or comparable results to those from last year for the entire 2015.

Naturally, this will be contingent on many variables, including the general macroeconomic situation, problems within the euro zone, as well as the geopolitical situation in Eastern Europe.”

Magdalena Szulc, SEGRO business unit director for Central Europe

WBJ OBSERVER • SEPTEMBER 2015

79

WBJ Observer presents High, above the city WBJ Observer spoke with Karolina Kaim, president of Tacit Investment, about one of the classiest high-rises in Warsaw’s central district We are meeting in one of the most interesting apartment buildings in Europe – the Cosmopolitan in Warsaw. Glass, concrete, steel, black and white. It immediately reminds me of New York.

For me, the Cosmopolitan is an absolutely unique place in Warsaw. Indeed, it is part of a different world, a different city. But at the same time, it is a building which is historically important and connected with Warsaw. It also fits very well with the landscape of the city. I think that Warsaw’s chaos is one of its biggest assets.

The Cosmopolitan stands out on the horizon in Warsaw.

It is definitely one of the most recognizable towers in Warsaw, although if you ask the clients and residents, everyone wants to have a view of the Palace of Culture, which says a lot about recognizability. But in fact, together with the competitor building, those two skyscrapers create a completely new category in Warsaw for people who want to live high above the city, in the center of events.

The building has been designed by the prominent architect Helmut Jahn. Please tell me a bit more about this extraordinary author.

Helmut Jahn is German, but we associate him more with New York. His accomplishments can be found all around the world and they are always very characteristic, innovative and most of all very simple. I was very impressed by the sketches that he presented before delivering the Cosmopolitan. What we can see today, meets his vision 100 percent. He is a visionary who has a fantastic understanding of the urban environment and creates buildings in which people greatly enjoy an urban quality of life.

KAROLINA KAIM, PRESIDENT OF TACIT INVESTMENT

Definitely, yes. Until now, Poles didn’t live in high rises.

However, in the last ten years, we have become a part of the European trend of reurbanization, which shows that we do not dream anymore of a house with a garden in the suburbs of the city. It shows us how to use the urban environment in a smart and effective way, which means

BROUGHT TO YOU BY TACIT

Can we talk about a fashion of living in skyscrapers?

creating high buildings. We come back closer to the center, we want to ride a bicycle to work or even walk. I would call this phenomenon “the new eco.”

What distinguishes the Cosmopolitan among the numerous apartment buildings in Warsaw?

It allows everybody who wants to be a citizen of the city to use all the related privileges. And I don’t mean facilities such as: an underground garage, a gym, restaurants or a concierge, that now are a standard.

Here, the most important thing is the location, the address on Grzybowski Square – from one side, the center of events, from the other silence, peace and distance.

Who buys apartments in the Cosmopolitan? To whom is the offer addressed?

Mostly to people who have already achieved a certain stage in life. Those people seek their own prestigious place and comfort – artists and businessmen. It’s a perfect place for people who divide their lives between two different cities or continents. Our residents are very mobile, they do not have a lot of time, that is why they seek help, comfort and the fact that they have all they need at their fingertips. Many of them are delighted that there are a few restaurants open on the ground floor of the building. I can bet that most of our residents don’t cook at home.

How do you evaluate the demand for premium properties in Warsaw?

The demand on the market of the so-called luxury goods is almost constant. Regardless of what is happening with our competitors and what is the

offer of the market, interest in the Cosmopolitan hasn’t decreased, it is even increasing. Our buyers are people who are aware of money and they know perfectly which investment will guarantee them an increase on the value of invested capital. The Cosmopolitan guarantees that without a doubt.

So you can think of purchasing an apartment in the Cosmopolitan as an investment, regardless of whether we buy it in a crisis or during a period of financial prosperity?

Absolutely. We have asked EY for a report which clearly shows how the market of prestigious properties reacts in comparison with the socalled middle-market. It showed that the premium properties are much more resistant to any change in prices. It applies most of all to our building which has a unique location. We all know that there is no other place like the Grzybowski Square in Warsaw. The value of this investment will only increase.

What are your plans for the upcoming years?

Tacit Investment, which created the Cosmopolitan, is currently involved in the realization of another apartment building called Park Line located on ul.

Podchorążych, near Łazienki Park. It is another prestigious location, addressed also for demanding clients who do not need to be very close to the city.

It is close to everything but a bit more aside and surrounded by greenery. This investment will be – like Cosmo – completely finished and equipped, ready to deliver in May 2016. However, the biggest investment that we are focusing on is a fantastic hotel in Wrocław, on Ostrów Tumski: 200 rooms, five stars.

It will be an important project that is awaited with eagerness by Wrocław.

CITYSCAPE / OLSZTYN

Did you know?

Some 8 percent of the city’s territory is covered with lakes. The city has 15 of them, with the biggest being the Ukiel lake. Its surface stretches along 412 ha and its maximum depth reaches 43 m.

The tiniest one is called Modrzewiowe lake and its area equals 0,25 ha. Most ponds are situated in the western part of the city, around 40 percent of the area is covered by water there. Earlier, the lakes were spread over even a larger part of Olsztyn, however, at the end of the 19th century they were artificially dried and used as land for private plants and factories

Favorite son

All along the watchtower

For several years in the 15th and 16th centuries, Olsztyn’s citizens fought

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against the Teutonic Knights, with mixed results. In the 17th century, Olsztyn developed mainly thanks to merchants on the Kaliningrad-Warsaw trade route. Craftsmanship played a significant role in the development of the city.

In 1945, the city was occupied and burned by the Red Army. As a result, almost 40 percent of the city was destroyed. After the war, Olsztyn turned into a lively and prosperous city.

Several sectors of industry developed, e.g. rubber, timber or machine manufacturing. The famous French tire producer, Michelin, has its factory in Olsztyn. American Citi Group has set up a BPO center here as well.

Krzysztof Hołowczyc Krzysztof Hołowczyc is Poland’s most famous rally driver. He is not only a threetime Polish champion, but he has also won the European Rally Championship and took part in the most important rally events, such as the World Rally Championship or the Dakar Rally, where he finished third in the 2015 edition.

He is also a local celebrity, often appearing at various TV programs as a driving expert. He dabbled in politics, running for (and entering) the EP on a Civic Platform ticket.

Images: Shutterstock, Olsztyn City Hall

Located in the beautiful and picturesque region of the Masurian lake district, Olsztyn attracts a significant number of tourists both from Poland and abroad. First reports of the city come from 1334, when Henryk von Luter built a wooden watchtower and named it Allenstein. In the same year, in place of the watchtower, construction of a castle was started. Nineteen years later, after the city grew and gained town privileges, the name turned into Holstin and eventually Olsztyn. In the 14th century, a gothic church was built. It remains one of the most famous examples of brick gothic churches in Poland.

LONDON 1,409 KM PARIS 1,370 KM BERLIN 492 KM

MOSCOW 1,119 KM

PRAGUE 584 KM

ROME 1,451 KM

MAYOR: PIOTR GRZYMOWICZ AREA CODE: 89 AREA: 89 SQ KM

MAJOR AIRPORT OLSZTYN SZYMANY UNDER CONSTRUCTION

POPULATION (DEC. 2013) 174,675 MAJOR ROAD S7

WORKING-AGE POPULATION (DEC. 2012)

114,934

NUMBER OF UNIVERSITIES (VOIVODSHIP)

8

NUMBER OF STUDENTS (VOIVODSHIP)

32,547

NUMBER OF GRADUATES A YEAR (VOIVODSHIP)

9,177

UNEMPLOYMENT RATE (JULY 2014)

7.3%

AVERAGE PAY (DEC. 2013)

PLN 3,795.30

MAJOR INDUSTRIES: Furniture, FMCG, Automotive, Clothing

MODERN OFFICE SPACE 31,500 SQM OFFICE VACANCY RATE 13.8% PRIME HEADLINE RENTS €10.00-€11.50

SOURCE: JLL

WBJ OBSERVER • SEPTEMBER 2015

83

OBSERVER RANKING

OBSERVER TOP 10 Software & Hardware Producers RANKED BY TOTAL REVENUE (2014)

1

2

3

Total revenue (2014, mln):

Total revenue (2014, mln):

Total revenue (2014, mln):

Net profit (2014, mln): 290.3 Types of products: Computers, software, network Main products: def 3000/CB; PROMAk; AMMS; AUMS Selected clients: Aviva; PZU; Deutsche Bank; ING; ZUS; NFZ; TV; Tauron; PKO BP Top local executive: Adam Góral, President Web: www.asseco.pl

Net profit (2014, mln): WND Types of products: Software, network, audio, video, photo Main products: WND Selected clients: WND Top local executive: WND Web: www.veracomp.pl

Net profit (2014, mln): WND Types of products: Components, software, computer peripherals Main products: Oracle Database; Oracle Fusion Middleware; Oracle Fusion Applications; Oracle Exadata; Oracle Exalogic Elastic Cloud; Oracle WebLogic; Oracle JD Edwards; Oracle Siebel Selected clients: Allegro; Polpharma; Energa; NBP; PKO BP; Orange Top local executive: Piotr Witczyński, General Director Web: www.oracle.com.pl

Asseco Poland

1,321.3

Veracomp

789

Oracle Polska

700

4

Comarch Total revenue (2014, mln): Net profit (2014, mln): 73 Types of products: WND Main products: Comarch OSS; Comarch BSS; Comarch Internet Banking; Comarch Loyalty Management Selected clients: Ministry of Justice; TeleFonika; T-Mobile; BP; Metro Group Top local executive: Janusz Filipiak, President Web: www.comarch.com

(L-R) Morten Lindholm, WBJ Group Publisher; Ewa Kryj, Senior PR Specialist & Press Spokesperson, Asseco Poland; Anna Popek, Gala Host

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SEPTEMBER 2015 • WBJ OBSERVER

Images: Shutterstock, Roxana Dawid/WBJ

557

OBSERVER RANKING

5

8

Total revenue (2014, mln):

Total revenue (2014, mln):

Net profit (2014, mln): 10 Types of products: Computers, software, computer peripherals, network, consumables Main products: TP.net; NAMOS; InterWpłata; BTS Management Studio; ATM Cineo; Cash system BEETLE; Self cash POS Tower; Cineo cash dispensers Selected clients: WND Top local executive: Mirosław Janik, President Web: www.wincor-nixdorf.com/pl

Net profit (2014, mln): WND Types of products: WND Main products: SAS Visual Analytics; SAS Visual Statistics; SAS Office Analytics Selected clients: PKO BP; NBP; Bank Pekao SA; PZU; UFG; Orange; ZUS Top local executive: Alicja Wiecka, Managing Director Web: www.sas.com/poland

Wincor Nixdorf

360

SAS Institute

108.8

6

S&T Services Polska Total revenue (2014, mln):

148

Net profit (2014, mln): WND Types of products: Software, network Main products: Olcast; Scanexpress Selected clients: Ministry of Justice; Gaz System; Auchan Polska Top local executive: Piotr Staszczak, President Web: www.snt.pl

7

Asseco Business Solutions Total revenue (2014, mln):

147

Net profit (2014, mln): 28.6 Types of products: WND Main products: Mobile Touch; Asseco Softlab ERP; Asseco Softlab HR Selected clients: Mondelez International; Nestle; Dr. Oetker; Work Service; Lotte Wedel; Grupa Atlas; Orange Top local executive: Wojciech Barczentewicz, President Web: www.assecobs.pl

9

OPTeam Total revenue (2014, mln):

98

Net profit (2014, mln): 3 Types of products: Software Main products: OPTiPASS; OPTiCOMMERCE; OPTiRCM;.

OPTiBUDOWA; OPTiSRM; OPTiPRODUKCJA; OPTiCAMP;HROPTiCENTER Selected clients: PKN Orlen; PGE Dystrybucja; HS Wrocław; Regional Prosecutor’s Office in Rzeszów Top local executive: Wacław Szary, President Web: www.opteam.pl

10

Unit4 Polska Total revenue (2014, mln):

89.4

Net profit (2014, mln): WND Types of products: Software Main products: TETA ERP; TETA HR; TETA EDU; TETA WEB Selected clients: Danone; Getin Noble Bank; LG Electronics; Dozorbud Grupa Polska; Medical University of Gdansk; EuRoPol GAZ Top local executive: Artur Sawicki, CEO Web: www.unit4.pl

WND = Would Not Disclose; Data source Warsaw Business Journal Book of Lists; www.bookoflists.pl Research was conducted in May 2015.

WBJ OBSERVER • SEPTEMBER 2015

85

EVENTS / ARABIAN HORSE DAYS 2015

A GOOD TIME FOR POLISH ARABIANS

THE ARABIAN HORSE DAYS 2015 IN JANÓW PODLASKI ENCOMPASSED THREE PRESTIGIOUS EVENTS: THE 37TH POLISH NATIONAL ARABIAN HORSE SHOW, THE 46TH PRIDE OF POLAND SALE AND THE SUMMER SALE. THE TEN-YEAR-OLD MARE PEPITA, BRED BY JANÓW PODLASKI STUD, WAS SECURED BY A BUYER FROM SWITZERLAND FOR A RECORD PRICE OF €1.4 MILLION. THE SECOND RECORD WAS THE SALE’S OVERALL RESULT - 24 MARES WERE SOLD FOR ALMOST €4 MILLION

THE POLISH NATIONAL SHOW - A TICKET TO THE WORLD ELITE The Polish National Arabian Horse Show saw more than 100 horses undergo close evaluation in various age categories.

Chosen from among those that received the highest scores were Polish National Male and Female Champions: Polish National Junior Champion Mare – PUSTYNIA KAHILA (d.bay 2013, Michałów Stud) Polish National Junior Champion Stallion – PARIS (grey 2014, Janów Podlaski Stud) Polish National Senior Champion Mare – PINIATA (bay 2011, Janów Podlaski Stud) Polish National Senior Champion Stallion – CEFIR (d.bay 2011, Białka Stud) The Best in Show title went to PINIATA. The titles claimed in Janów are tickets to an international show career in European, Middle Eastern and North American arenas.

The 37th National Show took place under the honorary patronage of the President of the Republic of Poland, Andrzej Duda.

PRIDE OF POLAND - THE RECORDS Like each year, the culminating moment of the Arabian Horse Days was the Sunday Pride of Poland Sale, during which we could witness an exciting rivalry between buyers for the best horses, spurred on by the loud applause of the public. After a record price for the mare PEPITA, the second highest price was achieved by the nine-year-old Pistoria from Michałów Stud, who was sold to the United Arab Emirates for €625,000. Furthermore four more mares surpassed €200,000 thousand: Wieża Róż from Michałów Stud - €270,000, Wkra also from Michałów - €260,000, Wasa from Falborek Arabians €252,000 and Janów’s Altamira - €250,000. We will surely hear about these mares again.

This year, the sale’s clientele was made up mostly of representatives of the Middle East: Saudi Arabia, Qatar, Kuwait, United Arab Emirates and Iran. European buyers came to Janów from Switzerland, Belgium, Austria, the Czech Republic and the United Kingdom. Nobody can imagine the sale without Shirley Watts, who together with husband Charlie Watts (Rolling Stones) bid on three mares for a total of €400,000.

JANÓW ATTRACTIONS During the Arabian Horse Days the gathered public was treated to a riding show by young female riders atop Konik Polski horses from Sieraków Stud. Whereas two riders from the Janów Podlaski Riding Club performed atop the stud’s stallions, enriching the Pride of Poland program. As each year the stud’s grounds hosted a fair, where visitors could buy regional treats and culinary specialities.

WE INVITE YOU AGAIN Arabian horses are synonymous with beauty, charm and elegance, but also courage and valor, which we will soon be able to experience. On the 10th-13th of September, Janów Podlaski will host the 12th European Championships for Sport Arabians.

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Images: Royal Prestige Club

THE SUMMER SALE - EXCESSIVE PRICES The day after the Pride of Poland auction, the Summer Sale took place, where 27 horses were sold for €603,500. From among the sold mares, only four will remain in Europe, the rest will join herds of breeders from Saudi Arabia, Kuwait, Qatar and Iran. In comparison to previous years, there has been a visible increase in the demand of Polish horses, especially in the countries of the Middle East. Two Janów-bred mares, Floriana and Euzetia, albeit sold, will remain in Polish hands.

EVENTS / ARABIAN HORSE DAYS 2015

WBJ OBSERVER • SEPTEMBER 2015

87

COMMENTARY / COACHING

TERESA KAMIŃSKA President Pomeranian Special Economic Zone

EUROPE, REVISED EUROPEAN FORUM FOR NEW IDEAS. SOPOT 30 September - 2 October 2015 When will Europeans regain their sense of security? Will we overcome growing inequalities, radicalism and geopolitical threats? How can Europe regain its position as the leader of the global economy?

www.efni.pl

This autumn, Sopot will be the place of a unique international debate for the fifth time. Entrepreneurs and managers, politicians, local government activists and outstanding experts from all over the world will meet to propose a new vision of a competitive Europe and to suggest what each and every one of us can do to help.

88

ORGANISER:

IN COOPERATION WITH:

J U LY / A U G U S T 2 0 1 5 • W B J O B S E R V E R

STRATEGIC PARTNERS:

Reach high with our professional advice What sets us apart:

1st place

Accounting and Auditing Companies

2nd place

Business Process Outsourcing Companies

4th place

Tax Advisory Companies

6th place

International Law Firms * in the Book of Lists 2015/2016 ranking

Audit • BPO • Legal • Tax Consulting • Management Consulting Cracow Poznan reklama prasowa 210x280.indd 1

Gdansk Warsaw

Gliwice Wroclaw

Reach us at:

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

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APRIL 2015 • WBJ OBSERVER

WBJ OBSERVER • APRIL 2015

3

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 Matthew Czaja Copy Editor mczaja@wbj.pl Journalists Alicja Ciszewska aciszewska@wbj.pl Wojciech Rylukowski wrylukowski@wbj.pl Contributors Ewa Boniecka Alex Hayes Viktoria Prasslsberger Sergiusz Prokurat Adam Zdrodowski Tomasz Chwinda Art Director tchwinda@wbj.pl Marta Topolewska Graphic Designer

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SEPTEMBER 2015 • WBJ OBSERVER

@wbjpl

lll IN THIS ISSUE 26-30

POLISH INVESTMENTS IN AFRICA

Try these:

4

lll NEWS

4-13 In Review Latest news 14 Dateline 15 Economy

16

lll COMMENTARY 16 Law Health care 17 Real Estate Innovations 19 Defense Polish technology

20

lll INTERVIEWS 20-21 Alex Matturri 22-23 Agnieszka Rynkowska 24-25 Ajay Bisaria

31

lll FEATURES

31-34 Greek crisis Avoiding Athens’ path 35-38 Health Care Digital Age

40 49-81 LOKALE IMMOBILIA

lll ENTREPRENEURS 40-42 Kolomnie Going local

44

lll UPCOMING EVENTS 44-45 Krynica Economic Forum 46-47 EFNI

82-83 Cityscape Olsztyn 84-85 Ranking Software and hardware producers 86-87 Arabian horse days

3

SEPTEMBER 2015 • WBJ OBSERVER

WBJ OBSERVER • SEPTEMBER 2015

3

lll INREVIEW NEWS

News highlights of the past month

JAN KULCZYK

Jan Kulczyk was the richest man in Poland for years.

His fortune was estimated at PLN 15 billion. He made his money in a variety of sectors, from energy to real estate. His family had strong entrepreneurial traditions. Grandfather Władysław, owned a shop with agricultural products in the 1930s, his father Henryk had a number of businesses. He sold fungus and berries to Germany, but made his fortune on selling a cleaning paste. >>

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SEPTEMBER 2015 • WBJ OBSERVER

Image: Kulczyk Investments

1950-2015

NEWS

WBJ OBSERVER • SEPTEMBER 2015

5

NEWS

>> Since such products were given to every factory worker at that time, the Kulczyk family made millions.

Henryk kickstarted his son’s career by giving him PLN 1 million. Jan used this money to set up Interkulpol, a company which specialized in trading with the Polish diaspora. He later joked that “the most important thing in life is to choose the right parents.” In the 80s, he imported agricultural machinery from Germany and exported produce there, among many other things. His scope of operations was so big at that time that he established a chamber of commerce dedicated to companies trading with the Polish diaspora, Inter-Polcom.

Kulczyk’s first major deal in the post-communist era was the 1991 order to deliver 3,000 cars to the police. The deal was worth PLN 150 million. Later on, he expanded his fortune by buying stakes in various state-owned enterprises and selling them for a hefty profit. For example, he bought a stake in GSM operator Era for PLN 16 million and sold it three years later for PLN 825 million. He also held shares in companies such as insurer Warta, Telekomunikacja Polska and oil refiner PKN Orlen. He also held a three percent stake in the SABMiller brewery.

Images: Shutterstock,

In recent years, he started to step away from the limelight and transfer the power to his children, Sebastian and Dominika. In January 2014, Sebastian was appointed president of the board of Kulczyk Investments and Dominika has been member of the board there since 2013.

Jan Kulczyk passed away on July 29 in a hospital in Vienna, due to complications from a surgery.

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SEPTEMBER 2015 • WBJ OBSERVER

Image: Kulczyk Investments

In 2007, Kulczyk set up his company, Kulczyk Investments, which specialized in four strategic sectors: real estate, mineral resources, infrastructure and energy. He also supported Polish culture and was willing to donate PLN 20 million to the Museum of the History of Polish Jews in Warsaw.

Image: Kulczyk Investments

NEWS

Shorts GETIN WITHDRAWS FROM RUSSIA

A

rtertesia Consulting has purchased leasing firm Carcade owned by Getin Holding for a billion rubles, which translates to some PLN 172.5 million, Puls Biznesu daily reported.

Getin decided to withdraw from the Russian market due to the “high level of economic and political risk related to the running of a business by a Polish entity in Russia,” Piotr Kaczmarek, Getin’s CEO pointed out. Kaczmarek stressed that the company is not going to leave Belarus nor Ukraine, what’s more, it is considering expansion in the CEE and Romania.

The final price will be up to the ruble exchange rate on the day of completing the transaction.

POLE IDENTIFIED AS ISIS SUICIDE BOMBER

A

28-year-old from Miastko in Zachodniopomorskie voivodship is said to be the first Pole who has carried out a suicide attack on behalf of ISIS in Iraq, according to unofficial reports from the Internal Security Agency (ABW).

TVN24 broadcaster said that before the attack, Jacek S. had lived in Germany for a few years. After he had converted to Islam in 2014, he changed his name on a social networking website to Ismail Slo and posed with an ISIS flag for photos.

The terrorist drove a vehicle filled with explosives into a refinery building in the city of Baiji in Iraq on June 13. The attack left 11 dead and 27 injured.

ABW said it is familiar with the matter, but refused to provide details.

>> DOMESTIC

Mikosz steps down as head of LOT Sebastian Mikosz has quit as the CEO of state-owned carrier LOT Polish Airlines. According to Rzeczpospolita daily, the resignation has been accepted.

Mikosz decided to step down in connection with a decision of the Ministry of the State Treasury to not conclude negotiations with investment fund Indigo Partners.

In a letter to the fund, the ministry said that due to the upcoming general elections, the issue of LOT’s privatization will be handled by the next government.

Indigo Partners was allegedly in talks with the state treasury to sign a letter of intent. What is more, it was not interested in buying existing stock, but rather about increasing the air carrier’s capital, and the involvement would amount to hundreds of millions of złotys, according to the media.

“In this situation, my mission as the CEO of LOT has come to an end,” Mikosz explained. “Without a private investor who will finance the expansion in the medium-term perspective, the company may disappear.

LOTOS TO ACQUIRE DEPOSIT IN NORWAY

rupa Lotos plans to acquire a new hydrocarbons deposit on the Norwegian Sea in order to recover some of the capital invested in the Yme project, Paweł Olechnowicz, the firm’s CEO told ISBnews.

Mariusz Machajewski, the firm’s Deputy CEO said that the group has already made a list of favored projects to acquire. Lotos decided to abandon the Yme scheme in 2013 and cash a 20 percent stake which it purchased five years earlier. Talisman Energy, the deposit’s operator and SBM, the main contractor of the platform could not reach an agreement regarding launching extraction for years. Eventually, the project was closed and SBM paid out a $470 million compensation to the shareholders, which will cover de-installation of the platform. In April, Lotos informed that it may be able to recover some $500 million from a Norwegian tax shield.

8

SEPTEMBER 2015 • WBJ OBSERVER

2016 FIGURE OF THE MONTH

IS THE YEAR WHEN POCZTA POLSKA WILL ENTER THE WSE

Images: Shutterstock, LOT

G

NEWS

>> ENERGY

KGHM to build photovoltaic farms P

oland’s largest copper miner KGHM Polska Miedź is planning to spend PLN 1.5 billion on renewables, including construction of photovoltaic power stations, Adam Witek, CEO of the firm’s subsidiary KGHM Energetyka told Parkiet daily.

“We would like to have 30 percent of the total electric energy from renewables within five years,” Witek said and added that it will translate

to around 300 MW. The estimated cost of producing 1 MW is PLN 5 million, therefore the total value of the investment is to reach PLN 1.5 billion.

Witek informed that the firm is going to construct its own photovoltaic farm and it has already launched a scheme of building a 40 MW wind farm.

KGHM consumes 2.5 TWh of electric energy annually.

€69.3 MILLION is the amount that the European Commission will grant Poland to implement migration policy

34.9% is the number of Polish internet users who block ads

WBJ OBSERVER • SEPTEMBER 2015

9

NEWS

Netflix to enter Poland N

7% IS THE PERCENTAGE OF POLISH FIRMS WHO ARE CURRENTLY EMPLOYING FOREIGNERS

10

SEPTEMBER 2015 • WBJ OBSERVER

Image: shutterstock,

etflix, an American provider of on-demand Internet streaming media will be entering the Polish market shortly, Puls Biznesu daily reported.

“We’ll be available in Polska soon.

Enter your email & we’ll let you know when Netflix is available,” a statement on the website read. According to the daily, similar information regards Egypt, Bulgaria and Nepal.

Netflix is present in 50 countries and provides media for over 60 million internet users. This fall, the streaming service will launch its operations in Spain, Italy and Japan among others.

The company announced earlier this year, that in 2016, it plans to be available in some 200 countries.

NEWS

Image: shutterstock,

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WBJ OBSERVER • SEPTEMBER 2015

11

NEWS

British carmaker Jaguar Land Rover, owned by Indian Tata Motors, plans to build a new vehicle factory in Slovakia. It will be the company’s first European production plant outside of the UK. JLR has signed a letter of intent with the Slovakian government to build the new £1 billion worth plant in the Slovakian city of Nitra with a manufacturing capacity of 300,000 cars per year.

According to Puls Biznesu daily, the carmarker demanded PLN 350 million in public help and access to investment grounds as soon as September. Poland was unable to resettle inhabitants in such a short period of time.

The Slovakian plant will likely begin production in 2018.

12

SEPTEMBER 2015 • WBJ OBSERVER

FIRST POLISH CARGO TRAIN TO CHINESE CHENGDU LAUNCHED

P

olish goods will be transported to China via a Łódź-Chengdu railway cargo connection, the Polish Press Agency reported.

This will be the first “Polish” cargo since the route was established in April 2013.

Such products as beer, juice, mineral water, milk products and confectionery will be exported. According to Sławomir Knap, Director of Multimodal Transport at Hatrans Logistics, the connection’s operator, Polish food offers the Chinese not only competitive prices but good quality as well.

Hatrans’ CEO, Tomasz Grzelak stressed that completing the Polish cargo has been very challenging, as Polish firms had to meet many Chinese requirements.

By now, Chinese producers have sent around a million metric tons of products via the connection to Poland.

Images: shutterstock,

JAGUAR WILL BUILD ITS PLANT IN SLOVAKIA, NOT POLAND

NEWS

Images: shutterstock,

Sejm passes CHF-denominated loan conversion bill S

ejm, the Polish lower house of parliament has passed a law restructuring franc-denominated mortgages with 281 votes for, 2 against and 150 abstaining.

According to the law, the franc-denominated mortgage loans would be converted to PLN with the exchange rate of the CHF recorded on the day of the conversion.

Banks will take on 90 percent of the difference between the value of a converted mortgage loan and a corresponding PLN loan.

Those owning apartments up to 100 sqm, and houses up to 150 sqm, would be eligible, under the condition that the real estate is actively used by the borrower.

Such limitations would not apply to families with three or more children.

During the first year of the program, the first beneficiaries would be borrowers KATOWICE whose mortgage value exceeds the value of loan security by 120 percent.

12-14 października 2015 Financial watchdog KNF said that if Poland implements the bill on foreign currency conversion in the form it was voted on in the Kongres parliament, it will cost V Europejski Małych i Średnich Przedsiębiorstw banks about PLN 22 billion.

ANDRZEJ DUDA ASSUMES OFFICE Andrzej Duda was sworn in as the President of Poland before the National Assembly of lawmakers and senators. After he had taken the presidential oath, he addressed the assembly, appealing for mutual respect, which, according to him, is the key to repairing Poland.

Duda said he will uphold the pledges he made during the presidential campaign regarding raising the tax-free threshold and cutting the retirement age. Referring to foreign policy objectives, he declared that he will make efforts to increase NATO’s presence in Poland and to bolster the position of Poland in the EU. ROLLS-ROYCE AND HISPANO-SUIZA TO BUILD FACTORY IN PODKARPACKIE Aero Gearbox International a joint consortium established by RollsRoyce and Hispano-Suiza (Safran) will construct a production plant in Podkarpackie voivodship.Construction work will begin by the end of the year, first supplies of aircraft engines are expected to be delivered in 2017. Initially, 110 people will be hired.

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www.smecongress.eu WBJ OBSERVER • SEPTEMBER 2015

13

NEWS / ECONOMY

CALENDAR

SEPTEMBER-OCTOBER SEPTEMBER ECONOMIC FORUM

8-10

Event: The 25th Economic Forum in Krynica will gather 3,000 representatives of various branches to discuss political, social and economic problems. This year’s motto is “Towards a Resilient Europe. Strategies for the Future.”

Location: Krynica Zdrój

SEPTEMBER WARSAW INTERNATIONAL MEDIA SUMMIT

24-25

Event:For the 8th time the summit will bring together the most important representatives of the Polish telecommunications and media market. Its aim is to discuss the latest strategies and trends on the market.

Location: MMConferences, ul. Długa 44/50, Warszawa Web: en.telekomunikacjaimedia.pl

SEPTEMBER SMART CITY FORUM

SEPTEMBER EUROPEAN FORUM FOR NEW IDEAS – EFNI OCTOBER

OCTOBER DEVELOPER DAYS

6-7

00-810 Warszawa ul. Srebrna 16

14

SEPTEMBER 2015 • WBJ OBSERVER

23-24

Event: The forum offers a platform for dialogue, cooperation and exchanging experiences about developing smart cities in Poland as far as financing, investment, technology and transport are concerned.

Location: Westwing Hotel, Warsaw Web: en.smartcityforum.pl

30-2

Event: Held since 2011, EFNI creates a platform for entrepreneurs, managers and economists from all over tthe world to debate Europe’s future and its economy in a global sense.

Location: Sopot Web: efni.pl

Event: Analysts, developers, journalists, economists and MPs, will discuss cities and the investment possibilities they offer.

Location: Wrocław Web: pzfd.pl

NEWS / ECONOMY

FACTS AND FIGURES Data overview for July Data overview for July Data overview Data overview for Julyfor July

WARSAW STOCK EXCHANGE WARSAW STOCK EXCHANGE

Data overview for July

AS OFEXCHANGE JULY 2015 STOCK EXCHANGE WARSAWWARSAW STOCK AS OF JULY STOCK 2015 EXCHANGE WARSAW AS OF JULY 2015 AS OF JULY 2015 AS OF JULY 2015

476 476 476 476 476

-0.7% -0.7% -0.7% was Poland's CPI -0.7% was Poland's CPI

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

was Poland's CPI -0.7%

Number of listed companies Number of listed companies

inflation in July was Poland's CPIin July inflation inflation inCPI July was Poland's inflation in July inflation in July

3.8% 3.8% y/y3.8% industrial y/y industrial

Trade volumes Trade volumes Trade volumes Trade volumes

Trade volumes

3.3% 3.3% 3.3% 3.3%

3.8% y/y industrial output growth 3.8% output growth growth in output July y/y industrial

Shares Shares Shares

PLN 133.3 billion PLNPLN 133.3 billion Shares 133.3 billion

3.3%

Shares

GDP GROWTH IN Q2 GDP GROWTH IN Q2 GDP GROWTH IN Q2

industrial iny/y July in July

Bonds PLN 133.3 billion Bonds PLN 133.3 billion

Bonds 453 million PLN PLN 453 453 million Bonds PLN million Bonds

GDP GROWTH IN Q2 GDP GROWTH IN Q2

output growth output growth in July in July

3.5% 3.5% 3.5%

Futures PLN Futures 453 PLNmillion 453 million Futures

PLN 4.6 billion PLNPLN 4.6 billion 4.6 billion Futures

3.5% 3.5%

y/y retail sales y/y retail sales y/y retail sales growth in July growth in Julyin July growth

Futures

Growth of main index (WIG), ytd

Growth of main index (WIG), ytd PLN 4.6 billion Growth of main index (WIG), ytd PLN 4.6 billion 2.6%

2.6%2.6%

y/y retail sales y/y retail sales growth ingrowth July in July

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

2.6% 2.6%

Bridge the gap

11 11.5

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"If Poland and other registeredregistered unemployment unemployment central European rate in July rate in July countries constitute the real flank of NATO, then it Steadily down Poland’s registered unemployment rate, seems natural July 2014 – July 2015 to me, a logical conclusion, that bases should be placed in those countries," 11.5

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registered unemployment registered unemployment rate in July registered rate in Julyunemployment rate in July

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10.1% 10.1% 10.1%

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In the first half, Poland reported a €2.87 billion (nearly PLN 12 billion) surplus in foreign trade, compared with €970.6 million deficit in the corresponding period last year, a statement by the Central Statistical Office (GUS) showed.

Within the first six months, Polish exports grew by 6.7 percent and totaled €87.2 billion, imports increased by 1.9 percent and stood at €84.3 billion.

President Andrzej Duda for the Financial Times. (FT)

WBJ OBSERVER • SEPTEMBER 2015

15

COMMENTARY / LAW

PAWEŁ HINCZ

JULIUSZ KRZYŻANOWSKI

LEGAL COUNSEL, PARTNER, HEAD OF LIFE SCIENCES PRACTICE WKB WIERCIŃSKI, KWIECIŃSKI, BAEHR

LAWYER, CO-HEAD OF LIFE SCIENCES PRACTICE WKB WIERCIŃSKI, KWIECIŃSKI, BAEHR

T

his autumn it will be two years since branches of the Polish National Health Fund (NFZ) were going to open up the provision of health care benefits in Poland to new contractors. However, two amendments to the Health Care Benefits Act enabled branches of the NFZ to extend the term of existing contracts with benefit providers that were due to expire on December 31, 2013. These amendments allowed for the existing contracts to be prolonged initially until December 31, 2014 and finally until June 30, 2016. These extensions have caused severe problems for private investors who had expected to be able to compete to provide publicly funded health care services from the beginning of 2014 and, with that in mind, had made significant investments. We expect that any further extension of the existing contracts could be the end for some private investors. For that reason, in our view, regardless of the result of October’s general election, the ruling coalition could not afford to introduce yet another amendment to the Health Care Benefits Act allowing NFZ branches to continue to freeze the market for new players.

Investing in health care in Poland has never been simple. However, putting aside the extension of the exist-

16

SEPTEMBER 2015 • WBJ OBSERVER

ing contracts with benefit providers, some amendments to the Health Care Benefits Act may have a positive impact on making investment decisions. For example, prior to January 1, 2015, contracts for providing publicly funded health care benefits were generally concluded for a period of only three years. Agreements exceeding this term required the consent of the President of the NFZ. Many market participants considered that such a short period provided insufficient stability and certainty from an investment point of view. However, since January 1, 2015, agreements may generally be concluded for a period of five years without requiring consent. Moreover, contracts for inpatient services, other than hospital treatment (rehabilitation, long-term care, etc.), may be concluded for up to ten years without the consent of the NFZ president and contracts for primary care may generally be concluded for an indefinite period of time.

Despite the issues, the health care sector continues to attract interest, with increased activity of domestic and international investors being observed and a reasonable level of M&A transactions in the area. We strongly believe that the sector will not only remain attractive, but also strengthen its position among the top investment targets in the years to come. u

Images: Shutterstock

Polish health care sector in 2016 – a new opening for private investors?

COMMENTARY / REAL ESTATE

KAROL BARTOS EXECUTIVE DIRECTOR, PORTFOLIO & ASSET MANAGEMENT, TRISTAN CAPITAL PARTNERS

Is new office space always best? Not necessarily!

The

market for modern commercial space in Poland has enjoyed dynamic growth for the past 25 years, and experts predict that there will be no slowdown any time soon. Warsaw alone is on course to add more than 763,000 sqm of office space by 2017, of which almost half will be located in the city center. We have found, however, that owners of existing buildings still have plenty of trump cards to play in the increasingly fierce competition for tenants.

Our experience at the Warsaw Financial Center (WFC), a tower in the heart of the city center that helped establish the Central Business District, shows that landlords with a proactive approach to property management can hold their own against new office developments. The key is in the teams that manage existing properties, since they are able to anticipate and respond immediately to tenants’ needs thanks to the long-term relationships that they have forged with them.

Tristan Capital Partners’ joint venture with Allianz Real Estate initiated a renovation and refurbishment program shortly after acquiring the WFC in 2012 with a view to meeting the needs of the most demanding tenant. The changes encompassed improvements to the building, in the services offered and in how we communicated.

We opened a completely redecorated lobby at the WFC at the end of 2014, featuring an impressive central video wall that is the largest of its kind open to the general public. The wall features works by Polish and foreign artists. It is also used for projects involving our tenants – the most recent of which was an account of the search for the wreck of famous Polish submarine ORP Orzeł that involved a person who works at the WFC. As part of the facelift to the lobby, we installed the state-of-the-art Compass Plus elevator call system, which improves energy efficiency and speeds up access to the upper floors. Through its modernized access control system, WFC is the first office complex in Poland to have a booking system similar to those found at airports that allows visitors to pass through its access gates by using a unique QR code that can be displayed on a smartphone. Another successful initiative this year is the opening of the flagship outlet of Paul, the French chain of bakeries and restaurants. Landlords cannot afford to rest easy, especially when faced with a pipeline of new developments that will open in the coming years.

Effective property management is critical and depends on a constant hunt for improvements to differentiate a building so that it meets the needs and expectations of tenants. u

WBJ OBSERVER • SEPTEMBER 2015

17

COMMENTARY / COACHING

C

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Y

M

MY

Y

MY

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COMMENTARY / DEFENSE

ADAM BARTOSIEWICZ VICE PRESIDENT OF THE WB GROUP

Polish technology and industrial patriotism, the key to success on the global defense market

T

he defense industry and equipment is most often associated with heavy tanks or armored fighting vehicles from black and white films.

However, battlefield success is less and less dependent on the thickness of armor or the firing speed of a machine gun. Information, reconnaissance and the ability to communicate quickly between friendly units, are becoming the most important aspects of 20th century warfare.

Effective communications technology, advanced reconnaissance systems and information processing are the most important tools for a contemporary army. It’s difficult to imagine an army functioning without electronics, used in precision-guided gunfire or positioning of units (so-called Blue Force Tracking). Also doubtful is the functioning of an army without advanced unmanned systems, which can monitor the battlefield from the air for hours and deliver essential battlefield information to campaign headquarters in real time.

Considering the key elements of armed forces’ abilities, Poles working on unmanned systems, digital data communication or wireless communications encryption has resulted in Poland having military competences that are essential at the moment. An excellent example of Polish solutions in these fields are the systems which are designed and produced by the largest private capital group of the Polish defense industry – WB Group. The products offered by WB Group, among them FONET communications systems for armored and other vehicles (which is

successfully being used by the United States Army), TOPAZ battlefield management and artillery fire guidance system or the unmanned tactical and mini class systems, which are currently delivered to the biggest armies around the world. Likewise, WB Group is the biggest Polish exporter of military systems.

Defense contracts are strictly regulated and come under the control of government agencies that fulfill international agreements regarding the defense market. Without the proper end-user certificates, no shipment of products or servicing of military equipment is possible. Countries that have their own defense industry, strictly control the export of their technology, with regard to the variety of the equipment as well as the country of destination. It is necessary to acquire permission of a subcontractor’s government for the re-export of any given technology (e.g. tracking head).

In the case a producer has at its disposal unrestricted ownership rights for the technology and algorithms found in a given type of product, it can freely decide to whom and where it will offer its product.

Therefore, the development of our own, telecommunications, data transfer or other key technologies is crucial in achieving success on the international market. By building our own technologies we are constructing an industry for the upcoming decades.

Buying a foreign product or a foreign license, we would achieve a short-term profit, but the industrial potential for years to come – would be built by someone else – the foreign supplier. This is our most important message – we call it industrial patriotism. u

WBJ OBSERVER • SEPTEMBER 2015

19

INTERVIEW / ALEX MATTURRI

FROM TICKER TAPE TO THE DIGITAL AGE WBJ REACHED ALEX MATTURRI, CEO OF S&P DOW JONES INDICES, TO DISCUSS THE WARSAW BOURSE AND ITS GROWTH OPPORTUNITIES

20

SEPTEMBER 2015 • WBJ OBSERVER

Image: Ministry of Culture Images: Jan Malinowski/WBJ

WBJ Observer: How can you, as an index provider, foster growth of the bourse?

Alex Matturri: We see indices as a way to help expand investors’ interest in the Polish market in general. There are many different ways that an index could be used to help develop the market, to bring more liquidity and more transparency. For us, it’s early in terms of exploring the potential here for growing our own business, which, by definition, will hopefully bring new products to the region, whether they will be ETFs or other index-based products. That’s our mission - to expand into this region, where we see a lot of opportunity.

What kind of opportunities do you see here?

Certainly, Eastern Europe is one of the bigger markets, and if you look at the region, you will see a lot of issues around Russia and Ukraine, so I think the Warsaw exchange is in a good position to become bigger. There is still a lot that needs to be done in the market, including improving education about the marketplace and bringing in new indices that would help foster growth. We are not product issuers, so our role is limited to providing independently governed indices that measure the markets and that can serve as the basis for product innovation.

What kind of indices is there a market for in Warsaw?

I think you already have some core indices in the local market. Where we can add value is

Image: S&P Dow Jones Indices

I N T E R V I E W B Y WOJ C I E C H R Y LU KOW S K I

Image: S&P Dow Jones Indices

INTERVIEW / ALEX MATTURRI

by bringing greater transparency to these markets through our indices, and licensing them to product issuers for the creation of index-based investment products such as ETFs, for example.

Our research globally has shown that active fund managers do not perform as well as benchmarks. Expenses are a key reason for this. Eventually, investors begin to realize that they are paying high fees for certain investment products that don’t perform as advertised and are not as transparent in their holdings and processes as one would be led to believe. By doing the research and educating the marketplace on issues such as transparency and performance, we believe that investor interest in indices will grow and will lead to more efficient product offerings.

Over the last decade, the WSE has seen an outflow of individual investors. How would you attract more individual investors to the bourse?

Individual investors have to have confidence in the market and that comes with education, as well as with transparency. To draw more investors into the marketplace, you have to have products that are easy for them to understand and that perform within their expectations. Of course, we can’t make markets go up and down, but we can bring great confidence, transparency, and integrity to markets. Once, investors are confident and feel more educated, they will be more inclined to invest.

Investors should be looking more broadly to regional and global products, because of the need to diversify. If they invest strictly in one market, they run into a lot of diversification risk. As the example of China in the last

couple of months has shown, if you don’t diversify, you can lose a lot of money.

Wouldn’t diversification cause an outflow of investors….

It doesn’t mean that the money has to flow out of Warsaw. There are ways of creating products that trade here, but also give access to foreign markets. It could be a structured product that is issued here, it could be an ETF that gives exposure to other regions, but is available locally. These are the type of things that index strategy could foster.

“WE CAN BRING GREAT CONFIDENCE, TRANSPARENCY, AND INTEGRITY TO MARKETS. Looking historically, would you compare the Warsaw bourse to any other exchange market, and what are the lessons that can be learned from the experiences of others?

What’s happening here in Warsaw is not any different than what we’ve seen in Asia in its earlier growth phase - some booms, some successes, some fallback - a normal cycle. What we’ve seen happen many times, is that newer markets, like Warsaw, tend to learn faster from the mistakes of other marketplaces.

One of the ideas for the WSE expansion was to list Chinese companies. Is this a feasible development strategy?

One reason why international investors may want to do invest in the Polish marketplace is that companies are tied to the local economy. If they’re investing in an index based on stocks here, and there are Chinese stocks, it’s not representative of the local marketplace. The exchange, as a commercial venture, needs to attract listings, but at the same time, in order to spur economic growth, the Polish marketplace needs to develop local capital. To help people raise capital, Poland would need to attract new companies to list here, make sure that Polish companies are not listing in other marketplaces and bring more liquidity to the local market.

Should the bourse be privatized ?

We’ve seen the trend globally to privatize stock exchanges. If an exchange has a profit motive which happens when you’re privatized, then you have incentives in place to make sure that the exchange is more efficient. Indirectly, I think it benefits the marketplace.

In your opinion, is it necessary for the WSE to merge with another marketplace in order to grow?

This is a strategic question for the WSE, but we can look to global precedents. Crossborder mergers are very difficult to execute properly, mainly because there’s a lot of local political interests which can prevent the merger from being effective. It is very hard to merge cross-border since you need approval from regulators in both countries. There haven’t been many that have been successful – harmonizing clearing and regulation is difficult. Consolidation has certain benefits, if it can be accomplished. u

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WBJ OBSERVER • SEPTEMBER 2015

21

INTERVIEW / AGNIESZKA RYNKOWSKA

COMPETITIVE EDGE

WBJ OBSERVER TALKED WITH AGNIESZKA RYNKOWSKA, MARKETING AND OPERATIONS DIRECTOR AT MICROSOFT POLAND ABOUT INNOVATIONS AND HOW POLAND CAN CATCH UP WITH THE WEST

I N T E R V I E W B Y JA C E K C I E S N OW S K I WBJ Observer: Microsoft Poland invested PLN 500 million in Poland last year, where exactly did you spend your money?

Agnieszka Rynkowska: As a high-tech company, our main interest is in education and entrepreneurship, two sectors where IT can bring a lot of value added in the long term, and that’s where we invest in. Last year, we spent PLN 300 million in software grants for education alone.

We also invest heavily in start-up businesses and NGOs. Being an IT giant, we endeavor to help individual entrepreneurs by educating them, equipping them with IT tools (software, etc.) so they can contribute more, in a smart way, to the country’s economy.

How come, Polish IT specialists are so highly regarded in the world, yet in Poland, most sector giants, instead of opening up R&D centers, concentrate on BPO facilities which do not require highly skilled engineers.

It seems that there is quite a lot of legacy of the past concerned with the issue you have raised. For the last 25 years, Polish competitive advantage in many sectors was built mainly around low labor costs. Now it’s high time we used our know-how skills and competence better to boost the added value of what we do in the country. And this is already happening. Many companies, both Polish and foreign, do have R&D centers in Poland.

We also had such plans, although they have changed. You need to remember, that Microsoft develops its strategic focus globally and regionally. In our case, this means that

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Poland falls into the Central and Eastern Europe cluster and makes up part of the regional strategy. Even though Microsoft did not develop a stand-alone R&D center in Poland, the company has been strongly engaged in supporting e-skills development and growth of IT potential in Poland.

Microsoft cooperates actively with 49 technical universities in Poland supporting IT science clubs offering technology training to students and tools to develop their potential. Three Polish universities are regularly visited by Microsoft’s recruiters who meet candidates for internships in our corporate headquarters in Redmond in the US. Many Polish IT engineers work there.

While talking about potential and highly skilled IT professionals, let me also draw your attention to two Polish technical universities – the Silesian University of Technology and the Warsaw University of Technology. Both universities have been awarded

by Microsoft Azure for Research with an annual access to Azure cloud computing power worth $40,000 each.

Our company has always been alert and on the lookout for the biggest talents, that’s why we organize the Imagine Cup where students present their ideas and IT solutions. The winners of its past editions have been offered a job at Microsoft. In Poland, we support start-ups, NGOs and local governments to create a better environment for the IT sector for one, simple reason: Poles are creative creatures and they do know how to anticipate the future. But very often they do it abroad. We simply want to reverse this trend.

Do you also support start-ups financially?

Microsoft is not a venture capital firm. We don’t commit ourselves financially in startup businesses. However, we do help by granting them software or training their employees. Last year, we spent PLN 105 million on those activities. More than that, we also encourage others to invest in Polish startups. For the Imagine Cup competition organized by Microsoft, we invite venture capital funds and business angels. We introduce them to the most promising participants and encourage to explore financial investment opportunities. We have created a Business Acceleration program for top Imagine Cup teams, building the platform for connecting bright ideas with real business decision makers. They work on introducing their products to the market and on commercializing their solutions. The holding company ZernikeMeta Ventures has offered PLN 1 million for investment in ventures.

Still, when it comes to innovation, Poland is always way behind in various rankings Innovation is a complicated phenomena and cannot be measured only in terms of the number of new patents. It has to do with both process and the product, it is vital to the same extent for the private as well as the public sector. It is not only about input but also about output. It’s about modernizing traditional sectors of economy as well as the most advanced ones. And because of that it is crucial for public services and, for example, for telecommunications. I’m really impressed with Rafał Brzoska (founder of InPost), who has revolutionized such an

INTERVIEW / AGNIESZKA RYNKOWSKA

Image: Microsoft

established business as postal services. We, at Microsoft, have discussed, why Poland lags so much behind other countries when it comes to innovation.

Take South Korea for example, a country which produces the biggest number of patents per million citizens. Are we lagging behind, because we are part of a developed continent, which has stagnated and is struggling to make another breakthrough? Or is it lack of capital that makes innovation difficult? Or maybe the educational system is not conducive to innovation? Do we really promote creativity? Do we really give a free hand to our students, to encourage innovation? Without an innovative public sector and services, smart regulations, we will always struggle to have innovative companies.

So, even though there are many talented individuals and highly-skilled specialists, we don’t have the whole support system behind it that is badly needed.

Do you think it will change in the near future?

Most forecasts are optimistic, especially when it comes to productivity growth and fixed asset investment. These are the key factors that should influence the economy and make it more innovative. If you look throughout European history, after World War II, the economic growth was driven by innovation.

In the 1970s and 80s, the continent slowed down economically and bounced back in the 90s and 2000s due to the growth of the ICT sector and its positive impact on the entire economy as a, so called, “general purpose technology.” For example, thanks to the

“EVEN THOUGH THERE ARE MANY TALENTED INDIVIDUALS AND HIGHLY-SKILLED SPECIALISTS, WE DON’T HAVE THE WHOLE SUPPORT SYSTEM BEHIND IT THAT IS BADLY NEEDED. business solutions implemented then, for example improved communication systems amongst business entities, entire economies achieved sizable incentives. Now, Poland needs the same kind of boost that can push the country into an innovative era.

We also have to work on making smarter regulations that reflect better the rapidly changing environment of new technologies and new business models. That’s why we support NGOs, because they stimulate our intellectual and political elites and encourage better policy-making and smarter regulations that are instrumental for growth of our economy.

It looks that on the micro scale (startups), there isn’t much of a problem, if you have a good idea, you’ll get financing from all over the world. Difficulties start on the SME level, where companies very often do not want to spend money on innovative processes. Huge corporations, on the other side, don’t really make inno-

vative products. If we use South Korea as an example again, we can see that they’re designing and inventing new types of TVs, while assembly is done in Poland.

That does not make our country in the least bit innovative.

For us, the most important part of the economy are SMEs, as they employ almost 80 percent of the workforce and generate 60 percent of the GDP. Such companies can benefit most from new technologies. Using the newest solutions, such as cloud and mobility, they can save resources needed to build their own infrastructure. It brings significant cost efficiency and lowers market entry barriers. As scalable solutions they provide flexibility in adapting to the current needs of business. The most precious benefit is however the ability to respond to customer needs quickly and more effectively. By being more competitive they put the pressure on bigger companies to implement new solutions as well. That’s why, when it comes to innovation in Polish companies, I’m rather confident it will steadily grow in the years to come. We will probably see more new business solutions and modernization of established business models and processes than new product innovation. Cloud, mobility and big data will become instrumental environments and technologies for big companies as well.

We believe that every small company, can contribute to the entire economy in such a way that it will make Poland more competitive not because of cheap labor, but thanks to know-how of people working in this country and added value they can bring about. u

WBJ OBSERVER • SEPTEMBER 2015

23

INTERVIEW / AJAY BISARIA

Amicable affiliation

WBJ MET WITH AMBASSADOR AJAY BISARIA IN INDIA’S NEW EMBASSY IN WARSAW TO DISCUSS ECONOMIC AND CULTURAL BONDS BETWEEN THE TWO NATIONS

I N T E R V I E W B Y M AT T H E W C Z A J A

Ajay Bisaria: The current bilateral trade level is around $2.3 billion. Our bilateral Joint Commission that met in June has set a target of $5 billion for 2018. This means that we expect our bilateral trade to grow at more than 20 percent on an annual basis.

Currently, India’s exports to Poland are about $1.7 billion, including cotton, textiles, pharmaceuticals and appliances.

Poland exports goods worth around $550 million to India, mainly electro-mechanical appliances, mineral and chemical products.

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Our investments are also healthy. Indian investments in Poland are over $3 billion, including global Indian investors like ArcelorMittal. Polish investments in India are currently less than $1 billion, and we hope to attract significantly increased investments in the coming years.

With the dynamic initiative of Prime Minister Modi and the new Make in India program, which industry sectors are appropriate for Polish business to invest in/create joint ventures in?

Our Make in India program has achieved a great deal of traction in Poland. We launched the program here in March this year. The program aims to transform India into a major global manufacturing hub. We are delighted that Poland has responded by an announcement in April of the Go-India Program, which will facilitate and incentivize Polish companies to engage with India.

Our Joint Commission identified several areas of promise. We have working groups looking into three specific broad sectors: coal and mining; food processing and agriculture; and information technology.

Recently, a delegation from the Indian State of Punjab identified some excellent Polish technologies in fruit and vegetable processing, dairy processing and flower cultivation. Similarly, we have a great

demand for Polish environmental technologies: particularly waste water management and solid waste management, which will be of immense interest to our cities.

Defense technologies are also of great interest under our Make in India program. Several Polish companies, both in the public and private sectors, are in talks with Indian companies, to make defense products in India. We have also identified sunrise areas such as medical products and renewable energy, (solar, wind, bioenergy and bio-fuel) as areas of promise.

We hope to collaborate in research and science so that we could convert Polish technologies into products that could be used in the vast Indian market.

Is Poland an attractive investment destination for Indian business? What more can be done by the Polish side to promote and attract Indian firms?

Poland provides a gateway to Europe for Indian business and has a huge cost advantage, skilled manpower and a friendly business climate to attract our investors.

We already have companies like Indorama, Uflex in sectors like plastics and packaging, Escorts in tractors and Videocon in TV picture tubes, not to mention the global player ArcelorMittal in steel products.

Image: Matthew Czaja/WBJ, Indian Embassy in Poland

WBJ Observer: Mr. Ambassador, we’ve had quite a few news stories regarding possible new trade deals between Polish and Indian partners. What is the state of bilateral trade between India and Poland?

INTERVIEW / AJAY BISARIA

We also have some 11 Indian companies in the IT sector. Infosys has a center in Łódź, which employs 3,000 people, Wipro, based in Wrocław and Gdańsk, has recently signed a big deal with TMobile. These Indian IT companies are making use of the friendly near-shoring opportunities in Poland to cater to European markets.

Are organizations promoting trade and business between the countries active in doing their part?

We are fortunate to have three India-dedicated Chambers of Commerce in Poland.

We are closely working with all of them.

The Indo-Polish Chamber of Commerce and Industry based in Warsaw, headed by J.J. Singh, is particularly active in collaborating with the Embassy and in providing guidance both to Indian and Polish businessmen and investors. The Embassy has worked out several events with this chamber and we have a heavy agenda in the coming months for delegations going both ways.

What would you advise a Polish business which is on threshold of a decision to do business in India?

I would say that the sky is the limit for business with India. In the last year, the investment climate in India has improved dramatically. Indian States are actually competing with each other to provide friendly business conditions and opportunities for foreign business. Several Polish companies have already taken advantage of this situation.

We at the Embassy are meeting potential investors and putting them in direct contact with Indian States, authorities and potential joint-venture partners. I feel that there is a window of opportunity for Polish business to access the vast Indian market, which is the size of Europe and North America put together. The Indian adventure is now less risky, more profitable and will be more satisfying for Polish business.

Warsaw and New Delhi are over 5,000 km away from each other, but the two countries have cultural threads that link them. Will these prove to be key in establishing quality relationships?

Indeed, culture, relationships and business are all interwoven. Of course, the cultural connections you speak of create an environment that’s conducive to cooperation.

We can see that our two countries have

some meaningful commonalities. When two peoples know each other, they are more eager to work with one another. The Jagiellonian University established a Sanskrit chair in the 1890s and to this day, students in Kraków are studying at the Department of Languages and Cultures of India and South Asia.

Furthermore, when India was in its development phase, Polish engineers were present in our country, sharing relevant knowhow and helping to build up our infrastructure. Cooperation through academic institutions was in place in Warsaw, Wrocław and Kraków, among others. The mathematical prowess of Poles is appreciated in India.

On the other hand, Indian traditions are very popular in Poland today. Recently, thousands of people took part in the International Yoga Day celebration in the Pole Mokotowskie park in Warsaw, and in 21 cities all over Poland. Poles are also taking to Ayurvedic medicine.

Our independence day gift to Poland was an e-visa system that allows Polish tourists to obtain a visa online, without the need to visit the embassy. Our bilateral relationship with Poland is important for India; evidence of this is our large new embassy complex in Warsaw. u

WBJ OBSERVER • SEPTEMBER 2015

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COVER STORY / POLISH INVESTMENTS IN AFRICA

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

Southern exposure AFRICA IS RECORDING SPECTACULAR RATES OF GROWTH AND IS ATTRACTING INVESTMENTS FROM MANY CORNERS OF THE WORLD. WILL POLISH COMPANIES JOIN THE RACE AND TAP THE CONTINENT’S POTENTIAL?

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COVER STORY / POLISH INVESTMENTS IN AFRICA

India are still trailing the UK and the United States in terms of the value of their outward FDIs, their role is rising. After Chinese involvement in the continent grew eightfold in the years 2004-2012, the country’s Prime Minister Li Keqiang announced in 2014 that China’s total stock in African investment projects will quadruple to $100 billion by 2020. A substantial part of these projects will surely flow to resource-rich sub-Saharan countries, although the times when South Africa was the top recipient of external investments are gone. Last year, it came in third with FDIs worth $4.2 billion, behind Egypt ($5.5 billion) and Mozambique ($4.9 billion). Other countries that succeed in enticing investors include Morocco, Ghana, Congo, Angola and Uganda.

Although, the bulk of the investments is in the mining sector, which accounts for some

Image: Shutterstock

E

Even though Africa saw some growth in the 1960s and 70s, its lack of technology, institutions and organizational skills caused disintegration of the young economies. A deep-rooted stereotype that conveys an image of a continent receiving international aid and exporting asylum seekers, in turn, may soon give way, as Africa is developing fast. The thriving region grew at a rate of five percent last year, beating the global average by 1.5 percentage points and is home to ten out of the 15 fastest growing economies in the world. The region attracted FDIs worth around $80 billion in 2014, with the number of new projects growing by six percent in annual terms.

The African boom, which started in the early years of the 21st century, has been attracting capital from advanced and emerging economies alike. Although China and

WBJ OBSERVER • SEPTEMBER 2015

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COVER STORY / POLISH INVESTMENTS IN AFRICA

33 percent of the total FDI value, there is a visible shift away from oil and resources, to the services and manufacturing sectors.

Polish business in Africa The presence of Polish companies in this landscape is still modest, however, it is on the increase. According to data by the Ministry of Foreign Affairs, Polish firms invested €49.4 million in 2014, which stands for 0.8 percent of the total value of Polish outward FDIs. The small scale of investments stems from a fear of allocating capital in a region associated with unrest.

Nonetheless, the situation is slowly changing, partly due to the GoAfrica program carried out by the Polish Foreign Information and Investment Agency (PAIiIZ). The program’s objective is to increase the level of Polish investments and share of trade with Africa by organizing business missions, conferences and training sessions, as well as by promoting Poland as a business partner. Sławomir Majman, the head of the PAIiIZ, told WBJ Observer that Polish companies can successfully compete in the

construction, food, chemical, transportation and logistics sectors in Africa. Their efforts need to be supported by the government as African business is intertwined with politics. “In the initial stage, the political umbrella seems indispensable,” said Majman. Nonetheless, he deems that the main hindrance to entering this market is a lack of information. “Polish companies were doing business in Africa in the 1980s.

A lot has changed since then,” Majman asserted. That’s why one of the key activities carried out under the GoAfrica program is raising awareness among Polish companies about the continent and preparing them to venture into the region. The same applies to African partners who are invited to Poland by PAIiIZ in order to change their view of our country as a fringe European economy. Since GoAfrica’s launch in 2013, PAIiIZ has organized 40 events, including trade missions to Nigeria, South Africa, Zambia, Senegal, Ghana, Morocco and Algeria. The program proved to be successful, as Poland’s exports to Africa grew by 29 percent in 2013 and 14.5 percent in

The number of tractors

3,000

Images: Ursus

to be delivered to Ethiopia by Ursus under the $90 million contract.

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COVER STORY / POLISH INVESTMENTS IN AFRICA

THERE ARE CURRENTLY 462 COMPANIES LISTED ON THE WARSAW STOCK EXCHANGE, INCLUDING 49 FOREIGN FIRMS

Images: Ursus

2014. When It comes to outward FDIs, the agency expects that a surge in Polish investments will occur in 2016, but some notable projects are already being carried out. Polish chemical giant Azoty extracts calcium phosphate from deposits in Senegal; shipbuilding company Navimor is about to finalize the establishment of the Maritime Academy in Angola; Asseco signed a $10 million contract to deliver an IT system to Ethiopia’s Network Security Agency; Kulczyk Holding is the owner of a gold mine in Angola and Polpharma announced that it will set up a drug factory in Algeria.

Poles spearhead agricultural revolution Perhaps the most spectacular Polish success in Africa is the story of tractor producer Ursus, who won a $90 million contract for the delivery of 3,000 tractors to Ethiopia and subsequently opened a production line in the African country.

The legendary Polish brand had sold tractors to Algeria, Morocco, Tunisia, Congo or Ghana back in the 1970s and 80s. After the transformation, Ursus’ production plummeted and the ailing company was taken over by POL-MOT Warfama in 2011. The new owner’s concept was to win foreign markets where the mechanization of agriculture was still in its early stage by offering simple, reliable and cost-effective tractors based on a Massey Ferguson license. In an effort to win contracts, the company carried out a wide-ranging promotional campaign across the continent aimed at refreshing the memory of the brand. When asked by the WBJ Observ-

er why he decided to invest in Ethiopia, Karol Zarajczyk, the CEO of the company said that “the African market, like any other market with potential for agriculture, is interesting from our point of view. And Ethiopia is the political center of Africa - if you succeed there, the news spreads across the continent.” Unlike large multinationals who sell over-scaled, expensive vehicles, Ursus’ tractors come at a better price and are of better quality than those offered by its Chinese competitors. The company’s comparative advantage comes from the ability to offer a product that fits the local needs. “We offer value for money, good price, we have proper technology and we are flexible, very flexible,” Zarajczyk succinctly put it. But he added, that this is not enough. Considering fierce competition from Indian and Chinese companies, you can’t come to Africa with just an endproduct. “You have to propose extra value.

In our case, that is technology transfer and staff training,” Zarajczyk said.

What’s in it for Africa Since foreign investors bring capital, technology and management that allow the host economy to improve the effec-

“WHAT HAPPENED IN THE LAST 25 YEARS IN CHINA WILL HAPPEN IN SOME AFRICAN COUNTRIES TOO.

tiveness of the existing production process and engage in new activities, as well as to raise the country’s output, an inflow of FDIs may help lift Africa out of poverty.

It is therefore crucial that investors who come to the continent develop linkages with local suppliers, transfer technology and train local staff. Ursus’ policy corresponds with these expectations. After signing the contract, the company would send tractor parts to be assembled in a factory run by state-owned The Metals and Engineering Corporation (METEC) in Adama, 90 kilometers south-east of Addis-Ababa. In May of this year, Ursus launched its own production line within the METEC facility. The opening day was attended by prominent figures including Nobel prize laureate Lech Wałęsa and Dlamini Zuma, the chairperson of the African Union Commission.

The manufacturing site employs Ethiopians only, however, there are around ten engineers on behalf of Ursus who are tutoring local engineers. According to Zarajczyk, the cooperation is smooth with one exception. “METEC is a big company that employs around 60,000 people and we are pleased with the cooperation and the level of professionalism. Our only challenge is the high staff turnover. Managers that work on our project are highly appreciated in the company’s structure and are quickly taken to work on other projects.

We already have the third manager working with us, while the other two climbed up the corporate ladder.”

Apart from training the local staff, Ursus also wants to develop a chain of local suppliers. Currently, it is focusing on sell-

WBJ OBSERVER • SEPTEMBER 2015

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COVER STORY / POLISH INVESTMENTS IN AFRICA

“THE AFRICAN MARKET, LIKE ANY OTHER MARKET WITH POTENTIAL FOR AGRICULTURE, IS INTERESTING FROM OUR POINT OF VIEW. AND ETHIOPIA IS THE POLITICAL CENTER OF AFRICA - IF YOU SUCCEED THERE, THE NEWS SPREADS ACROSS THE CONTINENT.

ing as many tractors as possible, but ultimately its target is to develop a spare parts market, where the margins offer higher profit opportunities. The manufacturer already orders castings from domestic firms and says that nothing prevents the local companies from supplying the plant with windshields, hoods, screws and the like.

The moment is now Ursus’ presence in the African market sets an example worth following. The contract in Ethiopia gave the company a major boost since the domestic market shrunk by 70 percent y/y in 2013 due to the decision by the Agency for Restructuring and Modernisation of Agriculture (ARMiR) to curb EU subsidies for tractors, according to Zarajczyk. Ursus recorded a net loss that year, but thanks to the Ethiopian deal, it managed to bounce back. And it didn’t have to worry about funds, as the money provided to the Ethiopian party for the purchase of tractors came from an intergovernmental loan granted by Poland under the umbrella of the OECD.

Zarajczyk asserts that it is the right moment to enter the market, because the reputation of those who have been operating there for the last ten years or so is low.

He further claims that the Chinese come

fill the moment The first whisky magazine in Poland

www.whiskyquarterly.com

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SEPTEMBER 2015 • WBJ OBSERVER

with cheap credit, but their poor quality products often break before they serve long enough to cover their market value.

When the locals cannot pay back the loan, they offer natural resources as repayment, which leads to neocolonial relations. Majman agrees with the opinion, highlighting that Poland’s advantage comes from the fact that it is not identified as former colonizer. The head of the PAIiIZ claimed that Polish companies perform well in the fields in which the Chinese firms operate and have a chance to replace them. To be successful, they would have to learn how to deal with the local administration. Unlike in Poland, business has to establish and maintain good relations with the bureaucracy to prosper. Another challenge is a different approach to time – things happen slower there. But, according to Zarajczyk, the game is worth a candle. “What happened in the last 25 years in China will happen in some African countries too,” and not appreciating the market at this moment may result in barriers that will be difficult to overcome later. u

FEATURE / GREEK CRISIS

B Y S E R G I U S Z P R O K U R AT

The Greek drama.

Poland as acute spectator Greece is sinking. The Greek default is usually described in the present, not the past tense.

The agreement signed between Greece and its creditors basically boils down to money transfers in exchange for reforms. And Poles, who are observing this process, in comparison seem to be a B student, who is putting in a lot of effort and thinks he is immune to the phenomenon In 1990, Poland was one of the poorest countries in Europe. Per capita GDP was only 31.8 percent of its German equivalent, while Ukraine’s was at 33.4 percent. At the end of communism, Poland was poorer than Spain, which had been a less affluent country after the end of World War II. As was Greece.

Nevertheless, Poles are fine with hard work, so it is just a matter of time until these southern nations will look upon Poland as a rich country.

Image: Shutterstock

Race with the West In the last 25 years, we have seen a faster pace of growth than other countries in our region and our GDP has grown by 100 percent. This year, the Polish GDP per capita at PPP (purchasing power parity) will reach the level or overtake its equivalent in Greece.

WBJ OBSERVER • SEPTEMBER 2015

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FEATURE / GREEK CRISIS

“WE ALWAYS APPEAR UNDER OUR OWN BRAND AND OFFER DRUTEX WINDOWS MADE IN POLAND, ACCORDING TO THE RULE ‘IT’S GOOD BECAUSE IT’S POLISH.

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WBJ OBSERVER • SEPTEMBER 2015

The difference between Poland and Greece basically boils down to trust, which Greece has now exhausted. “As a member of the euro zone, Greece was trustworthy for many years. Its membership caused everyone to be caught off guard. However, Poland is at no risk of such a crisis,” said Aleksander Łaszek, an FOR (Forum of Citizens’ Development) economist. And before Greece’s demise, all rating agencies such, as S&P and Moody’s, said that Greece could pay. Now they don’t say that any more.

Turns out it is very easy to lose the trust of financial markets.

Comparing countries: Poland does win out Comparing basic macroeconomic parameters for both countries shows the success of Polish economic policy and a clear failure of the Greeks. In 2004, PPP GDP per capita was nearly twice as high in Greece than in Poland. Ten years later, in 2014, it was only 6 percent higher. In 2009, after the crisis started, all southern European economies started to tank. For Greece, the trough came in 2011, when it shrank by 7.1 percent. In the same time, Polish GDP kept growing – at its best, in 2007, it grew by 6.8 percent, and in the crisis year 2011 it grew by 1.6 percent. This is not the first case of catching up with old EU countries by their Central European peers. In 2004, per capita

GDP of Slovenia and the Czech Republic was at the level of Portugal. Currently, Greek indebtedness is at 170 percent of the GDP, while in Poland, it is over 50 percent. The Greeks have a much higher level of unemployment – over 20 percent of the inhabitants can’t find work. Greece, according to Aleksander Łaszek, is a less globally integrated economy, not much exposed to international competition, as is the case of Poland.

But Greece isn’t that bad Living in Greece up to now was a bit like a fairy-tale. Greeks have a life expectancy of 80 years, i.e. four years more than Poles; they enjoy life, so their quality of life is much higher than in Poland.

For years, Greeks enjoyed some of the most ridiculous work benefits, including a bonus for showing up to work on time (up to €600 per month). Such benefits were slashed during the 2010 reforms, but they’ve managed to put a strain on Greece’s public finances.

But fairy tales come to an end and Greece must now face the music, which the Greeks have yet to accept. Radical pension reforms, taxes, all benefits and removal of mass fraud committed against the state coffers, are only the first step to exiting the cycle of indebtedness. Returning to the drachma would speed up the recovery, but it would be very unpleasant for the population, and also politically

Image: Shutterstock

This is not only the achievement of Poland, which is now over twice as rich as it was at the start of its economic transformation, but also of Greece, whose GDP is 25 percent lower than it was in 2007.

We shouldn’t think that anything is possible, because some barriers are just too difficult to overcome. In order to catch up with Germany, provided their economy will grow at an average pace of three percent a year, and ours at four percent, we will need over 60 years. This is an optimistic scenario. And what about the pessimistic outcome? Can Poland end up in a Greek dead end?

The Greeks are currently saving funds for subsequent repayments to the IMF and ECB. In 2015, they have to repay €13 billion (7.25 percent of Greece’s GDP).

The situation is serious enough for them to have to sell islands and airports. Poland has to repay €18 billion in 2015, and in 2016 even 30 percent more. Over half of all liabilities are owed to foreign creditors. Loans for various years are also increased by the public sector deficit, which has reached PLN 50-60 billion in recent years. As in Greece, the only way to repay those loans is by taking out new ones. If for some reason foreign banks and funds would not want to buy Polish securities, the government would have to add over PLN 50 billion to its list of expenditures.

Such a budget gap would surely cause a significant crisis for Poland.

COMMENTARY / FMCG

Image: Shutterstock

The Supreme Audit Office (NIK) has conducted an audit, the purpose of which was the supervision of tax authorities and tax audit authorities over the accuracy of foreign capital entities’ settlements with the state budget. The conclusions arising from this audit have been documented in the NIK’s report of 17 April 2015.

Robert Nogacki The very fact that the MinFounder and Owner istry of Finance has noticed of Skarbiec Law Firm the problem of tax evasion and has made an attempt to counteract this phenomenon must be given credit. Nevertheless, the quality of the report has been overshadowed by a very serious methodological error related to the fact that the NIK’s inspectors did not differentiate between tax fraud and lawful tax optimization, displaying their suspicion and distrust towards all sorts of taxpayers’ activities aimed at paying lower taxes.

Meanwhile, we need to firmly remind that tax optimization is not a negative activity and should be distinguished from tax evasion. For tax optimization occurs within the law and leads to the increase in competitiveness and to taking advantage of the otherwise unnoticeable possibilities to improve the financial standing or performance of a company.

The lawfulness of tax optimization is also commonly affirmed by courts and tribunals. For instance, the Court of Justice of the European Union in its judgement of 12 September 2006 in the case C-196/04 Cadbury Schweppes plc, Cadbury 14

JUNE 2015 • WBJ OBSERVER

FEATURE / GREEK CRISIS

Schweppes Overseas Ltd vs Commissioners of Inland Revenue TS UE, decided that, unless tax planning involves breaking the law, its consequences resulting in the minimization of tax burden cannot be, as such, considered unlawful. Furthermore, optimization activities, even when they result in the creation of artificial structures, cannot be considered as an abuse of law if they represent real enjoyment of freedoms constituted by the Treaty on the European Community, including the freedom of establishment.

Also Polish administrative courts confirm the compliance of tax optimization with the law. In its judgement of 31 January 2002, Ref. No. I SA/ Gd 771/01, the Supreme Administrative Court reaffirmed that the essence of business activity is maximization of profits, not tax liabilities. There are no grounds whatsoever to impose on business entities (even those related personally or by equity) an obligation of performing activities leading to a decrease in income only because it would be more beneficial for the state budget from the tax revenue perspective. Similarly, the Voivodeship Administrative Court in Warsaw, in its judgment of 31 May 2006, Ref. No. III SA/WA 983/06, adjudicated that there does not exist a general rule imposing on the taxpayer an obligation to act in such a manner that a tax liability in the highest possible amount should arise.

Making an axiological assessment of tax optimization, one can cite the opinion of a judge of the US Supreme Court, Learned Hand, who stated that there is nothing immoral about arranging one’s affairs so as to keep taxes as low as possible. Everybody does so, rich or poor; and all do right.

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FEATURE / GREEK CRISIS

€18

it would be difficult for the European Union, so this option should only be treated as a last resort.

Watch out for manipulated statistics It is well known that Greek authorities provided false data before entering the euro zone and the crisis in 2009. Inaccuracies were mainly focused on the state of public finance.

Reconstructing the Greek statistical system should guarantee more reliable statistics both on current information, and verified historical data. The opposite is true in Poland “There is no problem with statistical data in our country,” says Łaszek.

Optimists say that Poland is a green island of economic growth and that since 1990, we have been witnessing an unprecedented economic miracle. Pessimists reply that it is quite the opposite – Greece is quickly approaching Poland in poverty. This is the most common argument against the success of 25 years of a democratic government in Poland.

Polish GDP per capita is two-thirds of the EU average. Poland still faces a long road ahead. One thing is sure; we should not base our strategy on Greece. u

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WBJ OBSERVER • SEPTEMBER 2015

billion

is how much debt Poland has to repay in 2015.

In 2016 this figure will be 30 percent higher.

BRIDGING THE GAP GDP per capita in GK$ Spain Greece Germany Poland

1930

1950

1990

2010

2,65 2,258 3,973 1,994

2,189 1,915 3,881 2,447

12,055 10,015 15,929 5,113

16,797 14,691 20,661 10,762

Source: Madison database

F E AT U R E / H E A LT H

Poles’ digital health

Images: Shutterstock

B Y S E R G I U S Z P R O K U R AT

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POLES ARE CHANGING THEIR ATTITUDES TOWARDS HEALTHCARE. PATIENT EXPECTATIONS ARE EVOLVING, THANKS TO THE DEVELOPMENT OF THE INTERNET AND SOCIAL NETWORKS, LEADING TO MORE AWARENESS REGARDING PATIENTS’ RIGHTS

JUNE 2015 • WBJ OBSERVER

A

few years ago, Leszek Balcerowicz, then deputy PM in Jerzy Buzek’s, tried to convince Poles to a liberal credo: “Your health is in your hands. Everything is up to you, depending on your lifestyle, diet.” What’s interesting, 70 percent of Poles agree with this statement, steadily increasing their prophylactic testing, doing sports and taking greater care of their diet, as per the “Barometr Bayer 2014” report published by BayLab. Poles’ positive attitude towards health began to change with the fall of communism. An image of a Pole who is tired of life, with a mandatory cigarette in hand, is starting to be yesterday’s news. Poles’ awareness of the impact of an adequate health stance and diet on the proper functioning of the body is growing. Poles are eating ever more vegetables, fruit and poultry. They meet a doctor for consulation more often, commit to prophylactic tests and care for their body, going to the gym, running or swimming. And this is only the beginning, because soon, receipts will be executed with an SMS code, our sugar and heartbeat levels will be tested by a smartphone, the doctor will be chosen online, blood chemistry tests will be provided in digital form and your entire medical history will function as would an online banking account.

WBJ OBSERVER • SEPTEMBER 2015

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F E AT U R E / H E A LT H C A R E

Poles already know that your health is priceless

Looking back, we can see that in the last 20 years Poland has also seen huge changes in terms of the availability of medical services. As recently as the 1990s, patients had to have a small bureaucratic health book full of stamps and you could only get medical care in a huge and inefficient colossus, the public healthcare system, or ad hoc, privately.

Often the former and latter were combined, and you went to the doctor with a bottle of cognac in order to avoid the wait. Thanks to market reforms and the development of the private sector, this image underwent a drastic change.

“Nowadays, health is no longer a private good. Everyone gains when we become a healthier society,” said Igor Gnot, doctor and businessman, and CEO of Connectmedica, healthcare advertising and communications company, as well as founder of Activeweb, a company providing specialized internet services for doctors.

Health is becoming one of the key parameters which define your life. Although there may be no better business than medicine and healthcare, because there is always demand for various medical services, the centrally-steered state institution, NFZ, allocates funds in the healthcare system in an inefficient way. Long lines are a typical example of the inefficient use of health funds. Private firms have taken over the role of providers of health services in Poland. Today, no one is amazed by private hospitals, clinics, where those who can afford it receive their medical care. Some services, such as dentistry, are provided mainly by private entities. Although the construction of closed private medical services was only begun at most a dozen years ago, many companies have a few hospitals in their portfolio. In the last few years, private medical companies have started developing other sectors than those epitomized by multi-specialist clinics. This trend was especially visible during this last year and will grow in strength, as stated by the latest research report by PMR. The healthcare market in recent years has been very lucrative. An increasing sense of responsibility for your own health, the greater purchasing power of Poles and societal aging mean that the market has grown much quicker in recent years than the Polish GDP. In 2015, healthcare costs worldwide were 10.5 percent of global GDP. North America managed to spend 17.4, Western Europe 10.7 percent, but only 6.6 per cent was spent in Asia and Australia. Poland comes in at about 7.5 percent. But this trend will certainly shift upwards, as by 2050 the number of people over 60 will be three times bigger and amount to two billion people globally. In Europe as much as 37 percent of people will be over 60, meanwhile in Africa – only ten. As soon as three years’ time, the percentage of people over 65 will hit 20 in Western Europe, with Japan seeing 27 percent of its population become senior citizens. According to the authors of the report “Healthcare and Life Sciences Predictions 2020: A bold future?”

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“AN INCREASING SENSE OF RESPONSIBILITY FOR YOUR OWN HEALTH, THE GREATER PURCHASING POWER OF POLES AND SOCIETAL AGING MEAN THAT THE MARKET HAS GROWN MUCH QUICKER IN RECENT YEARS THAN THE POLISH GDP.

Image: Shutterstock

Good but demanding market

3

F E AT U R E / H E A LT H

Image: Shutterstock

POLAND HAS ONE OF THE LOWEST LABOR RATES AT THE 50+ AGE RANGE IN THE ENTIRE EUROPEAN UNION.

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published by Deloitte, the development of healthcare and the future of pharmaceutical companies will still focus on emerging markets. On the other hand, this sector will soon have to face four major challenges, both local and global, i.e. the effects of population aging and increasing numbers of chronically ill people, large costs and high quality of services rendered, access to medical care in developed countries and emerging markets and also the use of medical technologies in data management processes. Specifically, population aging and increasing numbers of the chronically ill are a sustained trend which will shape demand in the next few years, both for developed and developing countries.

“Science is aiming at evermore effective treatment, but paradoxically the role of the patients in the healthcare systems will increase, because it is the attitude (towards a) treatment that will bring more improvement. The patient cannot forget about routine check ups, he cannot forget JUNE 2015 • WBJ OBSERVER

to take his medicine. He has to pressure doctors and take things into his own hands,” explained Gnot.

Digital technologies

Currently, thanks to increasing mobile internet access, many users are online 24/7, and thus the monitoring of life parameters of a patient can be conducted in real time, with decision made nearly immediately after the receipt of worrisome information. Thanks to Connectmedica apps such as Moje Leczenie (My Treatment), Zdrowy Kalendarz (Healthy Calendar), for people using smartphones, patients have greater possibilities of planning their own treatment and seeing their results. DBE (Decision-Based Education) may bring about a real revolution, as this project is aimed at the medical and pharmaceutical sector which seeks to standardize actions and enable easier decision-making based on repeatable processes with the possibility of knowledge transfer.

WBJ OBSERVER • SEPTEMBER 2015

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F E AT U R E / H E A LT H C A R E

code rather than a receipt, a doctor chosen on your computer, your blood chemistry on your laptop and a medical history account as an online bank account – Poland will soon see an e-revolution in healthcare. Public medical centers should, first of all, manage their funds better, which includes the patient’s involvement in the system and creating an order in which patients go through the system. Public healthcare also needs more transparency. Without this, it will always be a black hole sucking in public funds. u THE VALUE OF TH PRIVATE HEALTH SECTOR IN POLAND (PLN, BLN) AND ITS GROWTH (%) 2012-2017

The public system

The government is planning key reforms in the years to come. Some time ago, the eWUŚ platform was implemented, enabling quick verification of a patient’s right to treatment, which allowed better identification of people who don’t pay healthcare insurance themselves but are entitled to medical services with the NFZ. By 2017, the Polish healthcare sector is to be digitized. All medical clinics are to be hooked up to the system and no paper documentation is to be used. An SMS

value * FORECAST, SOURCE: PMR, 2015

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growth

Image: Shutterstock

A huge problem of medicine has always been an enormous amount of mistakes. After all, the ones prescribing medicine to us are also people and can make a mistake, but their lack of attention may cost someone his life. Let’s imagine a database of medical advice which ascribes the correct treatment based on a set of symptoms, or creates repeatable training modules for doctors. “Digital technologies are the future of the medical sector because thanks to them, patients receive cheaper and more personalized services with simultaneous high-quality and compatibility with legal requirements. New technology will be supported by telemetric medicine, i.e. remote services and diagnostics,” said Gnot. Technological and innovative change is hard not to notice. Deloitte experts reckon that by 2020, people will be much more aware of their genetic profile, the diseases they suffered and may suffer and the availability of healthcare. It is expected that the sale of medical technologies in 2020 will amount to $513.5 billion. As a comparison, in 2013, only $363.8 billion in sales was made.

Image: Zamek Ogrodzieniec

Let’s discover the most beautiful corners of Poland together

Rent a car from 95 PLN* per day in weekend offer Book a car at www.hertz.pl or contact us: +48 22 50 01 620, 800 1 43789 * The offer concerns pre-paid reservations on www.hertz.pl for group A and includes: unlimited kilometers, limited client liability for collision accidents and car theft, 23% VAT, standard rental conditions apply.

ENTREPRENEURS / KOLOMNIE

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ENTREPRENEURS / KOLOMNIE

Unique algorithm B Y A L I CJA C I S Z E W S K A

A Images: Kolomnie

“This is not a visionary project, but a willingness to improve the internet collectively,” Jan Gajewski

A COMPANY WITHOUT A SOLID BUSINESS MODEL IS LIKE A CAR WITHOUT WHEELS. JAN GAJEWSKI, THE FOUNDER OF KOLOMNIE.PL, DOES NOT AGREE WITH THIS PREPOSITION. MICROSOFT AND IBM HAVE PUT THEIR TRUST IN THE PROJECT. SHOULD EVERYBODY FOLLOW THEN? At first sight, Kolomnie.pl (‘next to me’) seems to be another geolocating portal, a Foursquare and Yelp look-alike. The user is able to search for a certain service provider in the nearest area, there is also an option to check-in and leave a comment about a place.

However, Gajewski stressed that the philosophy of the platform is completely different from the larger players and asserted that he and his co-workers do not want to compete with the “big brothers,” as he called them.

Kolomnie.pl accumulates the information available through the platforms (with their consent) and puts them in order thanks to “a unique algorithm,” Gajewski said, to provide the most extensive and the best quality content. The ultimate aim of the platform is to “become a phone book on steroids,” he pointed out.

Guidebook packed with data The idea of putting in order all the various data straying on the internet popped in Gajewski’s head when he was looking for a place to take a passport photo in the US, while he was a postgraduate law student.

When he typed a particular phrase, many results showed up but none of them met his needs, “I was not interested in, for instance, a modeling photo session,” he recalled laughing. He admitted that the first idea of creating a portal dedicated for businesses and providing them with tags, flopped. After many months of brainstorming with other IT specialists, the team came up with an algorithm which accumulates and classifies data from all over the internet. Such portals as Yelp, Foursquare and Facebook are the main source of information. Gajewski said that Kolomnie.pl is not meant to be another social media portal like Swarm (created

recently through a division of Foursquare) or Yelp, as “the focus is on something else.

We want service providers to realize that information about their businesses needs to be constantly updated and expanded. We want to be a place where all the data will be available, a sort of one-stop-shop.” On the other hand, the platform is to be a guide for tourists, a local man who knows everything about any place in any town. It will be a living and evolving information portal that will source new data on a continuous basis.

Kolomnie.pl gives their users the ability to add and evaluate locations. The algorithm will even find updates from other websites, hence Kolomnie.pl will show the latest information regarding a given business.

“We do not want to make a lot of money” What basically differentiates Kolomnie.pl from the “big brothers” is a business model based on the firm’s philosophy. Yelp, for instance promotes local businesses, but offers business advertising as well. Gajewski and his co-workers want to support small business, therefore new entrepreneurs will be able add their location free of charge. “Our business model is still developing. We are young and socially conscientious. We do not want to make a lot of money,” he stressed admitting that it may seem like their venture seems to be unprofitable from the get go. Nevertheless, such big brands as Starbucks, KFC, H&M, Norauto, s5 gyms, Orlen or BPH will be required to pay a PLN 150 annual fee per one location. Furthermore, posting information about paid events or promotion campaigns and sales will be worth around PLN 5, for all the clients. Fees for medium-sized businesses will be proportionately lower.

WBJ OBSERVER • SEPTEMBER 2015

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ENTREPRENEURS / KOLOMNIE

2is thekm range

Kolomnie.pl will not offer any search engine optimization (SEO) services, so the micro-fees, how Gajewski called them will be the only source of the firm’s income, “we hope that the fees will let us earn as much as big e-platforms, and simultaneously we will maintain the high quality of the information we provide,” he said.

Technology appreciated by giants “We convinced them with our technology,” Gajewski responded when asked why Microsoft and IBM decided to grant them thousands of dollars. Both IT giants decided Kolomnie.pl’s technology is legitimate and believed that it can be applied by them. IBM injected the project with a year’s use of software (for the beta-test stage), which may be extended further to a value of up to $120,000. Within the framework of the Microsoft BizSpark Plus program, Kolomnie.pl was provided with $120,000 worth of software.

As the project consumes a lot of money, the daily maintenance costs of servers totals some €170 alone, the company is running out of funds and is looking for new investors. “We would like to find an optimistic and active investor, who will have the same passion and will not dictate the terms,” Gajewski said. AIP (Academic Entrepreneurship Incubators) which

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owns a 15 percent stake in his business is supporting him in talks with potential investors.

40 countries, 15,000 cities Kolomnie.pl web portal already has some 15,000 users, Gajewski proudly informed, but a mobile app is expected to be implemented around the beginning of September, when the website will be officially launched. He will then be sending an invitation to those service providers who are already listed in the search engine, adding more information about their locations

Stats Foursquare: over 45 million users worldwide, 5 billion check-ins, 60 million venues, 1.3 business pages Yelp:142 million monthly visits, 2.1 million local businesses, 90,000 local advertisers (source: Digital Marketing Stats)

on the platform. Instead of a marketing campaign, the company is going to launch an information campaign addressed to potential users alongside service providers.

It is also planning to closely cooperate with voivodship authorities in the field of culture promotion, it has already established a partnership with Warsaw city hall.

Since data from all over the internet is continuously accumulated and sorted, Gajewski will be introducing its business to foreign markets gradually. In order for nonPolish users to become more familiar with the platform, its name is to be translated to local languages. Furthermore, the company has been testing a translator designed by IBM, which is to be more precise and less error-prone than its Google counterpart, so that the information may become available in many commonly used languages. Gajewski said that, ultimately, Kolomnie.pl is to cover 40 countries, 15,000 of the world’s largest cities and 7 million services.

Quite surprisingly, the authors of the platform want to be considered not as investors but as a common voice of “irritated” internet users. “This is not a visionary project, but a willingness to improve the internet collectively,” Gajewski pointed out. The future will show if they stay modest about their business, or become more profit-oriented like their “big brothers.” u

Image: Shutterstock

which defines the ‘next to me’ idea

WBJ Observer presents CUTTING COSTS IN THE DIGITAL AGE Your group’s main business is helping organizations decrease costs and optimize work. What usually brings companies the biggest savings?

We help companies and organizations save money and accelerate their business with advanced IT tools. We started from selling efficient, reliable Kyocera printing devices. Today, we offer complex print management systems which help cut the cost of the process by up to 50 percent.

Other companies in our group offer advanced vehicle monitoring systems which help reduce fuel costs and improve vehicle infallibility. We implement various IT tools in companies and public offices, from office suites to contact centers and advanced ERP (enterprise resource planning) systems.

When the world turns to digital solutions, so does office work. To what extent do you think the printing market is influenced by this process? Are firms still interested in printers?

Paradoxically, despite the increasing digitization of documents in organizations, the volume of printouts has not decreased. With new information systems, companies and public offices are collecting more data, thus generating more reports and statistics that facilitate the decision-making process. Therefore, the number of printed documents is growing.

We know from experience that our one-digit growth in printing device sales is steady – companies replace old, inefficient printers with modern multifunction devices, lowering the servicing costs and expenditures on consumables.

How would you describe the present stage of development at which Arcus is?

BROUGHT TO YOU BY ARCUS

We are currently at an excellent and interesting point in time. We have come a long way during the 27 years of our presence on the market – from a company selling devices of leading suppliers, to a capital group of IT companies listed on the Warsaw Stock Exchange, offering cutting-edge solutions: consulting, implementation, outsourcing and leasing, as well as software, both our own and supplied by leading global software companies. The development strategy we have implemented required investment in new competencies, but secured many years of growth.

In which areas are you expanding further? What is the next stage?

We are certainly going to develop the print systems segment: rather than buying hardware, customers tend to outsource complete print systems with software managing the entire process. This allows them to cut costs and adjust flexibly to the organization’s needs.

“WE WILL SOON OFFER CUSTOMERS THE POSSIBILITY TO MONITOR THEIR EMPLOYEES’ DRIVING STYLES AND CUSTOMIZE INSURANCE RATES BASED ON THE DRIVERS’ BEHAVIORS.” MICHAŁ CZEREDYS, CEO OF ARCUS

We are also present and growing in telematics.

Together with Link4, we will soon offer customers the possibility to monitor their employees’ driving styles and customize insurance rates based on the drivers’ behaviors. Another field of growth is the implementation and integration of various information systems – contact centers, ERP systems or cloud services. Such diverse areas of modern IT share two characteristics: they improve processes in companies or public offices and help them reduce costs.

EVENTS / ECONOMIC FORUM

GREAT MINDS TACKLE BIG ISSUES AT KRYNICA

F

ragile states, energy concerns and terrorism are only some of the hot topics to be discussed at the 25th Economic Forum. European political and business leaders will also put women’s issues and immigration under the microscope.

For the 25th time running, the most influential Europeans gather in the Polish town of Krynica Zdrój to debate the world’s concerns. Will the Economic Forum lead to strategies that will enhance and strengthen Europe’s future?

Krynica Zdrój, a small town in southern Poland is mainly known for being a health resort. Once a year, however, this idyllic place turns into the European capital of economics, when powerful persons from all over the world arrive in order to discuss issues important to the CEE region. This year, Krynica will host the 25th Economic Forum on September 8-10 under the headline: Towards a Resilient Europe. Strategies for the Future.

The forum will hold dozens of debates and will be attended by some 3,000 visitors

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EVENTS / KRYNICA ECONOMIC FORUM

from 60 countries, including not only economic and political leaders, like presidents, prime ministers and MPs, but also CEOs and representatives of multinational corporations.

Images: Institute for Eastern Studies

Threats and solutions One of the most urgent topics to be discussed are fragile states (nations that have failed to provide even basic services for their people). The Executive Director for the Fund for Peace J.J. Messner will analyze the presence of fragile states, their meaning for European countries and comment on the Fragile State Index.

This issue is particularly crucial because the number of such states is increasing, which may pose a threat not only to Europe, but the entire world.

Moreover, there will be a discussion on EU-Russia relations concerning energy. Oil prices dropping by around 50 percent and worsening relations between Russia and the EU have become a challenge for a future energy policy for both communities. Unbiased and well-thought out policies and compromises are necessary in order to prevent serious energy problems. These are hoped to be achieved by experts during the forum.

Terrorism is another point of significance that will be examined during the sessions. The threat from terrorist organizations and the tragic and often inhumane occurrences in some Islamic states, have already left an indelible mark on this century. Speakers from all around the world specializing in this area will comment on this problem as well as attempt to find solutions.

Social and money matters The next issue of debate will be the potential of women over 50 years of age and how their professional activity influences the economy. This discussion will be held by Magdalena Vášáryová, Slovakian MP who is also the chairman of Živena, the oldest association of women in her country. She will present the argument that the energy and wisdom of women over 50 are underestimated in Europe. The female side will be further addressed in another debate about women in politics and business and the question of how to break the “glass ceiling” will once again be put to discussion.

The organizers of the forum also plan to focus on the problem of immigration, a major and increasing concern for the majority of European countries. This subject is of significance as regional stability in Europe can be achieved only by a well-developed migration policy of the involved countries. Another topic of this year’s forum, which is heavily commented on by highest ranking politicians, is the common currency. Does the euro make sense, or maybe we should go back to national currencies?

These are only several of the topics from the entire list of issues that the Economic Forum organizers announced. They will be divided into general topics

and subtopics and discussed one by one in the form of debates, reports and presentations.

Being one of the region’s most important summits, the forum surely won’t lack professionalism and audience. Whether suitable solutions to the European and world issues at hand are found remains to be seen.

BIG NAMES Krynica will feature political leaders as well as representatives of major international corporations. Some of the biggest names include: CARLO D’ASARO BIONDO President of EMEA strategic relationships at Google. He studied economics in Rome, started as a CEO in a French consulting company.

PETER BLAUWHOFF Chairman of the management board of Shell.

Educated in the Netherlands, where he became a chemical engineer.

PETER TILS CEO of the CEE region at Deutsche Bank.

Studied political economics and business administration.

GORDANA COMIC Deputy Speaker of the Serbian National Assembly since 2008. Her field of expertise is women’s movements and their political network.

VANNINO CHITI Chairman of the European Affairs Committee of the Italian Senate. He studied philosophy and is particularly interested in religious issues.

LINDA LANZILLOTTA Vice-president of the Italian Senate. She is the founder of the Glocus think tank, which aims to promote innovation and economic, social and institutional modernization of Italy in the European context.

HERBERT BÖSCH Member of the Supervisory Committee of OLAF, the European Anti-Fraud Office, tasked with tackling fraud affecting the EU budget.

DANILO TÜRK Former President of Slovenia. Diplomat and professor of international law specializing in issues of human rights and the rule of law.

WBJ OBSERVER • SEPTEMBER 2015

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EVENTS / EFNI

THE CHALLENGES FACING EUROPE TODAY

BY MAŁGORZATA MIERŻYŃSKA, HEAD OF PROGRAMME AND SPEAKER RELATIONS, EUROPEAN FORUM FOR NEW IDEAS ing social inequalities, migrations, as well as radicalism. These trends may have a powerful impact on the future of Europe.

Globally, social inequality is now comparable to the situation in the early 19th century. The disproportion in income distribution is so large that it may gravely compromise economic growth. The most prominent business experts have been drawing attention to this issue, as well as to the fact that the escalation of geopolitical conflicts, including the conflict in Ukraine (particularly troubling for Poland) and the increasing activity of radical groups, in particular Islamic groups, pose serious threats to the economy and to the future of businesses. Polish entrepreneurs cannot act as if the issues important for the world today are of no concern to them. It is our intention to actively join

these debates. This is why the theme of this year’s EFNI is: Europe in the face of growing social inequality, radicalism, and geopolitical threats.

However, as organizers of EFNI, we have an interest in going beyond day-to-day problems. We want to focus on ideas and make attempts at anticipating the future.

Therefore, we are going to include issues that are still at the far-off horizon in Sopot. The sharing economy, consequences of digitization, sustainable development, philanthrocapitalism, and shared value: these are just a few of the concepts appearing on this year’s EFNI agenda. For two and half days, the most creative and involved minds in Europe will engage in debates on these issues, arranged within a theme to facilitate the sharing of ideas. Guests of honor will include: Jeffrey Sachs, one of the world’s most influential economists and a co-author of Poland’s transformation; Donald Tusk; Lech Wałęsa; Elżbieta Bieńkowska; Judy Dempsey, a renowned commentator and analyst; Lev Manovich, a world authority on new media; and Salvatore Babones, an expert on inequality from the University of Sydney. These experts, along with more than 100 other panellists and guests, will join us in discussing solutions - both those that can be applied right here, right now, and those that may be important in the future.

The European Forum for New Ideas is an international business congress.

It has been organized since 2011 by the Polish Confederation Lewiatan in cooperation with BUSINESSEUROPE, the city of Sopot, as well as Polish and international companies and organizations. Every year, EFNI draws more than 1,100 attendees from all over the world, including businesspeople and representatives of politics, culture, science, and media. This year’s edition of EFNI will be held on September 30 - October 2. For more information, please visit www.efni.pl

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Images: EFNI

At

the fifth European Forum for New Ideas in Sopot, taking place between September 30 and October 2, we are going to share ideas, opinions, and experiences. Business leaders together with representatives of politics, culture, science, and media are going to engage in more than 70 hours of in-depth reflection and interpretation of the challenges of today’s world.

Every year, in preparation for EFNI and with the assistance of our knowledge partners, we take a thorough look at the situation in Europe. We identify the hot topics and the questions that must be urgently answered to ensure that careful decisions are made not only about our shared present, but more importantly – about the future.

Today, these challenges include increas-

SELECTED PANEL DISCUSSIONS DURING EFNI 2015 End of Post-Cold War Illusions: Does Europe Need a New Order?

Partner: PZU SA Topics: How should the West react to the geopolitical turmoil in different regions of the world?

To what extent, and how, must the West reassess its current priorities, and is it possible to ‚re-order’ the world?

What institutional and political changes are needed to effectively adapt to the new reality?

1.10.2015, 10:00-11:30 European Single Market - How to Put It Right and Make It Single Indeed?

Partner: TOTALIZATOR SPORTOWY Topics: What is needed to indeed have a harmonized EU Single Market and in which areas is its implementation the most necessary?

How the TTIP might challenge the European economy?

How to enhance better cooperation between business, administration and citizens in order to balance Europe’s social economy model?

1.10.2015, 15:30-17:00

New Business Models For New Times Partner: PKN ORLEN SA Topics: Only those who will risk going too far can possibly find out how far one can go (T.S. Eliot). How to uncover new growth models in times of uncertainty?

From rivalry to cooperation: the dilemmas of competing innovators. Is there a clear-cut borderline in the world of innovations between the search for one’s own niche and the recycling of concepts?

New roles of communities. Is sustainable use of resources going to become a leading doctrine of the 21st century?

2.10.2015, 10:00-11:30 How Can Capitalism Be Fixed?

Partner: METLIFE Topics: In which areas would business be apt to self-regulate; in which areas would society agree to limit itself?

How can we restore the ethos of work and the social norms determining what is ethical?

Would the introduction of a global progressive income tax effectively limit the concentration of income, halt inequality and facilitate the climb up the social ladder?

2.10.2015, 12:00-13:30 WBJ OBSERVER • SEPTEMBER 2015

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COMMENTARY / COACHING

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J U LY / A U G U S T 2 0 1 5 • W B J O B S E R V E R

September 2015

30 pages of real estate content

section partner by

LOKALE IMMOBILIA / NEWS

>LOKALE IMMOBILIA

NEWS

Malta House was sold for €38 million

l INVESTMENTS

Skanska sells Malta House

R

managed by Bluehouse Capital Advisor and two investment vehicles comprising Polish investors, managed by independent Polish fund and asset manager REINO Partners – REINO Dywidenda 2 FIZ (a closed-ended investment fund) and REINO Dywidenda Plus SA (a joint-stock company – a dividend vehicle

generating stable profits to investors).

The transaction is expected to be finalized by the end of the year.

Malta House encompasses 14,700 sqm of office space, which is fully leased.

Last year, REINO acquired one of the office buildings included in Kapelanka scheme in Kraków. u

Image: Skanska/Anna Gregorczyk

eal estate developer Skanska has sold the Malta House scheme in Poznań to a vehicle created

by REINO Partners and Bluehouse Capital Advisor, for €38 million, a press release read.

The complex was purchased by a joint venture between three companies: a fund

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2-21-

LOKALE IMMOBILIA / NEWS

NEW LANDMARK OF WARSAW Location – Corner of the Prosta and Żelazna streets.

Gross rentable area Gross rentable area of the TOWER Gross rentable area of the WEST building Number of floors in the TOWER Number of floors in the WEST building Typical rentable office floor size of the TOWER Typical rentable office floor size of the WEST building Parking spaces

63 800 m 49 600 m 14 200 m 32 9 1640-1750 m 1860 m 620 2

2

2

2

2

LEAD. MOVE. LEAVE A MARK. LET YOUR STORY BECOME THE GREATEST LEGACY. www.mennicalegacytower.pl WBJ OBSERVER

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LOKALE IMMOBILIA / NEWS

ADVERTORIAL

Partnership for optimal solutions

The investment is executed within the formula of a Public-Private Partnership (PPP), in which the public partner is the City of Poznań, and the function of the private partner is performed

by SITA Zielona Energia, which is a part of the global SUEZ Environment group.

SITA Zielona Energia has entrusted a consortium of Hitachi Zosen Inova, HOCHTIEF Polska and HOCHTIEF Solutions with design work in relation to technology and construction work as well as completion of the project.

The Municipal Incineration Plant for the City of Poznań is: the first, and so far the biggest, Polish project in the waste management sector implemented through a PPP formula (approx. investment value: PLN 725 million); the largest investment in the sector of municipal services management in Greater Poland; the second project in terms of performance (210,000 metric tons/year) out of the six incineration plants that are currently being built in Poland and the winner of several awards, among others, Environmentallyfriendly Investment of 2014. © SITA Zielona Energia

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Dominikański scheme features 40,000 sqm

l OFFICE

Skanska delivers Dominikański scheme

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eal estate developer Skanska has delivered the last piece included in Dominikański office building complex, located in Wrocław’s city center. The B building has been granted an occupancy permit.

The scheme will offer 40,000 sqm. Currently, it is 70 percent pre-leased, with

its largest tenant being HP Global Business Center occupying 16,400 sqm.

In December last year, Skanska sold its fourth office project in Wrocław – the Dominikański complex to Union Investment, a German-based real estate investment firm. The value of the transaction has not been disclosed. u

PLN 3.6 BILLION

IS THE VALUE OF BONDS ISSUED BY REAL ESTATE DEVELOPERS IN 2014 l OFFICE

Polish office market maintains momentum – JLL In H1, the highest levels of office demand historically were recorded on the Polish market, according to international advisory company JLL. “H1 2015 was a very intense time on the Polish office market. Up to the end of June, gross demand in the country totaled 690,000 sqm, and the major markets outside Warsaw experienced another period of record-breaking demand for office space – 298,650 sqm in H1. In addition, Warsaw saw a great deal of tenant interest with Q2 setting a record in terms of demand.

Developer activity continued apace. In H1, the market expanded by approx. 345,000 sqm of new office supply, with Warsaw accounting for almost 147,000 sqm, Poznań – 50,700 sqm, and Wrocław – 43,900 sqm.

Currently, 1.4 million sqm of modern office space is under construction in Poland,” said Tomasz Czuba, Head of Office Agency at JLL.

The space leased on the Warsaw office market totaled 390,200 sqm in H1, of which 221,100 sqm was accounted for by Q2 2015's record-breaking performance.

H1 2015 saw record-breaking demand of 298,650 sqm outside Warsaw, with 35 percent of it in Kraków. A recovery has been witnessed in Poznań, with demand already exceeding the city’s volumes for the whole of 2014. The business services sector continues to be a strategic tenant on regional markets.

In H1 2015, approximately 147,000 sqm of modern office space came on stream in Warsaw, almost 88,000 sqm of which came in Q2 alone. Development activity in Warsaw remains strong, with more than 725,000 sqm under construction and some 28,000 sqm under refurbishment. It is estimated that approximately 46 percent of the 207,000 sqm of office space, planned for delivery over the course of H2 2015, is pre-leased. u

Image: Skanska

The method of waste thermal treatment with energy recovery is one of the preferred ways of waste management in accordance with the principles of sustainable development and the EU Zero Waste philosophy. As a result, the waste becomes a resource for production of both electricity and heat, which feed the relevant networks of operators. An example of an investment, in which such a solution is to be used, is the Municipal Incineration Plant for the City of Poznań.

LOKA M EM O BM I LOI BA I L/ LI A O G/ I SN TEI W CS LL OE K AI L IM

R TV E M R B•E M W B J O B S E RWVBEJR O•B S E P R A2R0C1 H 5

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l INVESTMENTS

State Street invests in Gdańsk

l C O M PA N I E S

Panattoni and Marvipol team up Panattoni Europe and Marvipol are going to establish a joint venture in order to carry out warehouse projects in the Warsaw area worth about PLN 100 million in total, propertynews.pl reported.

The first project may be launched later this year, while completion is scheduled for the last quarter of next year.

Marvipol will have a majority stake in a special vehicle company and will be responsible for financing the investment.

Panattoni will take care of the commercialization of the new units. u

l R E TA I L

Sukcesja shopping mall to open in September Shopping center Sukcesja located in Łódź will be launched on September 25, dlahandlu.pl web portal reported.

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 in the scheme. Construction work began in December 2012. The investment was partially carried out with public funds. u

Proffessionals of 12 outsourcing sectors.

DISCOVER 12 OUTSOURCING SECTORS AND MORE THEN 150 SUBSECTORS IN ONE PLACE

Street offices in Boston, London, Kraków or Hong Kong. This creates enormous opportunities for our employees,” said Scott Newman, managing director of State Street Bank Polska.

The company plans to hire 1,000 people, 300 of them this year. It leased 14,000 sqm in Gdańsk’s Alchemia.

State Street was founded in 1792 and is the second oldest financial institution in the United States. The company’s headquarters are in Boston and it has offices in 29 countries around the world. In 2013, the company recorded revenues of $9.88 billion. u

TAKE PART IN THE MOST IMPORTANT BUSINESS EVENT IN POLAND

400,000 IS THE ESTIMATED NUMBER OF PEOPLE EMPLOYED IN SHOPPING CENTERS IN POLAND

Get free of charge professional advises in advisory zone!

TAKE PART IN OPTIMIZE CONFERENCES BUSINESS AND INDUSTRY PROCESSES IN MEETINGS YOUR COMPANY

EXPERIENCE A RICH RANGE OF INNOVATIVE OUTSOURCING SERVICES

More information and tickets: www.targioutsourcingu.pl AT THE EXHIBITION INVITE:

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TAKE PART IN NETWORKING Images: GTC, Trigranit, CBRE

State Street leased 14,000 sqm in Alchemia

NYSE-listed State Street, an American financial services provider for institutional investors, has opened its office in Gdańsk. It is the biggest investment to date in the BPO sector in the Pomorskie region.

“We especially appreciate the support of local authorities in launching our project. The new office in Gdańsk can accommodate over 1,000 employees. We plan to create jobs for both experienced professionals in the field of finances, as well as for young people – graduates of the Tri-City universities. People employed in the new office will perform the same tasks as workers from other State

LOKALE IMMOBILIA / NEWS

ADVERTORIAL

Outdoor attractions on site of a future Warsaw skyscraper

The project is valued at €85.3 mln

l FINANCING

GTC with €291 mln loan for Galeria Północna Centrum Światowida, a Globe Trade Centre (GTC) subsidiary, has signed a €291 million credit agreement with commercial lender Pekao Investment Banking for the construction of Galeria Północna commercial center in Warsaw.

Galeria Północna will have 6,400 sqm GLA and will be located in the Warsaw district of Białołęka. GTC had earlier informed that it will start construction immediately after getting permission from the mayor of Warsaw, and this was granted in June.

The GTC Group is a leading real estate company in CEE and SEE, operating in Poland, Romania, Hungary, Croatia, Serbia, Bulgaria and Slovakia. Additionally, it co-owns land in Ukraine and Russia and operates in the Czech Republic through its associates and joint ventures. The Group was established in 1994. u l C O M PA N I E S

TriGranit sold

The space between the Mennica Legacy Tower buildings will become a public square with landscape architecture and greenery. Yet, before construction begins, investors – GetHouse and Mennica Polska – opened the area up to cultural activities. For several weeks now, the area at the junction of ul. Prosta and ul. Żelazna has housed an open-air cinema and an outdoor exhibition.

Organized in cooperation with the Museum of Wola, the on-site exhibition “New Varsovians. History of social advancement in the second half of the 19th century” is devoted to people whose paths have become the basis of the city's modernization and social change.

“Cooperation with a thriving institution, that is active in the district where we, too, are involved, was a natural step for us to take,” commented Czarek Jarząbek, CEO of Golub GetHouse. The outdoor exhibition has been designed in such a way that the visitors can choose their own path. The centrally placed, glazed container houses the multimedia section, and the space in front of it is a resting area with sunbeds, pillows and greenery. The free exhibition is open daily: 10:00AM – 8:00PM.

Bonarka City Center will be among the acquired assets

Luxembourg-based investment fund TPG has announced the purchase of the real estate developer TriGranit. The value of the contract was not revealed.

“I believe that TPG Real Estate is a perfect buyer thanks to the great experience that it can contribute to TriGranit,” said Sándor Demján, the founder and the CEO of TriGranit.

The transaction is expected to be completed by the end of 2015.

Such firms as Bonarka Residential, Bonarka Offices, Bonarka City Center, Energit, Poznań Office Center, Silesia Offices and TriGranit Development Polska will be bought. Nevertheless, not all the pieces included in TriGranit’s portfolio will be acquired, for instance WestEnd City Center in Budapest is to be transfered to Gránit Management. TPG’s portfolio is worth $6 billion. u

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“I LOOK FORWARD TO A TIME IN WHICH HOUSEHOLDS WILL BE ABLE TO INVEST A PART OF THEIR SAVINGS IN CORPORATE BONDS, LIKE IN EVERY MATURE MARKET.” EREZ BONIEL, CFO OF GTC

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Image: Ghelamco

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My word is my bond B Y A L E X H AY E S

ON JUNE 22, 2015, GHELAMCO’S LATEST BOND ISSUE (SERIES PPC) WORTH PLN 30 MILLION BECAME OFFICIALLY OVERSUBSCRIBED AFTER THE OFFER HAD BEEN OPEN TO THE PUBLIC FOR A TOTAL OF FIVE DAYS. DOES THIS SUCCESS SHOW A POOL OF PREVIOUSLY UNTAPPED PRIVATE INVESTORS KEEN TO LOCATE THEIR LIFE SAVINGS IN CORPORATE BONDS OR IS THERE SOME OTHER EXPLANATION?

Image: Ghelamco

E

arlier that same month, the company’s previous offering worth PLN 50 million had also sold out in just four days. Ebullient with this success, Jarosław Jukiel, chief financial officer of Ghelamco Invest, stated that, “Coming onto the market with a new issue of series PPB bonds at this time and in these conditions turned out to be a very good decision. The group’s latest commercial successes and the conditions proposed by us were so interesting to individual investors that we finished subscriptions early.”

Echo Investment, Ghelamco Invest and GTC are now the three biggest issuers of bonds among developers in Poland. Other developers that have issued bonds also include Robyg, Dom Development and LC Corp.

There are good reasons why individuals might have discovered a voracious appetite for financial instruments such as bonds. With a rapidly aging

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277.4% population and doubts as to whether the government will be able to meet its pensions obligations from social security contributions, more and more people are looking for alternatives to secure their savings.

However, Erez Boniel, the chief financial officer of GTC, believes that this time has yet to come. “It is beneficial to the country’s economy that its financial system will have an efficient bond market. One of the biggest advantages of bonds is that they are a tradable instrument. In Poland, the system is not yet fully developed. This is partially because of structural reasons within the capital market.

However, Poland is definitely making strides to develop an efficient market,” he explained.

Krzysztof Cipiur, manager of capital markets at Knight Frank, also believes that demand for financial products could well grow. “The level of financial education is low and that’s a reservoir for growth,” he claimed.

Despite this, there can be little doubt that the Polish debt market is much more mature than most other markets in the CEE region.

According to statistics by the Federation of

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European Securities Exchanges (FESE), in the 2010-2014 period, the number of bonds listed on the Catalyst market rose by 277.4 percent, representing an average increase of 41.4 percent per annum. The next highest growth in the region was by the Hungarian bond market, where the average increase stood at only 16.1 percent per year. Nevertheless, according to Boniel, many bonds in Poland are illiquid and stated that, “I look forward to a time in which households will be able to invest a part of their savings in corporate bonds, like in every mature market.

Nowadays, a person who wants to invest his savings in such bonds, will typically realize that it is difficult to buy or sell them.”

Banks or bonds?

When it comes to project financing, GTC regards bank loans to be by far the most preferable form of financing. They are relatively simple to acquire and they also frequently involve third-party expertise with the bank providing its own experts and advice to safeguard the investment. “Banks also bring

added value to the project, by supervising the investment process and advising on credit issues,” explained Boniel.

The Robyg group also prefers bank loans, but does not regard them as simple: “Bank loans are a much more flexible option for obtaining money. However, they require a wider range of bureaucracy,” stated Artur Ceglarz, the chief financial officer at Robyg.

After the financial crisis of 2007, many developers looked for alternative forms of financing and bonds were touted as one possible manner of raising financing when banks became more circumspect overnight.

When asked if Ghelamco moved into bonds due to the financial crisis, Jukiel replied, “We wanted to continue to develop, acquire land and prepare projects for development. The limitations on bank financing for this stage of developing real estate projects was a signal to seek out alternative sources of funding, which for Ghelamco became bond issues.”

However, for Cipiur, bonds are unsuitable for most forms of project financing: “It’s not an alternative, it’s like a complementary

Images: GTC

is how much the bond market grew in Poland in 2010-2014, which represents an annual increase of 41.4%, according to FESE.

LOKALE IMMOBILIA / FINANCING

type of financing,” he explained. Moreover, he believes bank financing to be currently relatively easy to obtain. “It’s not difficult at all for someone who has a track record and can gain the trust of the bank,” he said.

Bank loans are comparatively less complex than bonds, quicker to arrange and have a longer term than bonds since their repayment terms are directly connected to the life span of a given project. Bonds on the other hand are tailored to meet the demands of the investor and typically mature in three to four years. Moreover, bond issues are complex and can take even up to a year to organize. “You need expertise when you consider bond issuance. Prudent companies that do not have such expertise should seek external advice when necessary,” explained Boniel. This complexity and time all entails cost and there is no guarantee that investors will want to buy your paper.

For GTC, which had its first issue in 2006, bonds provide the ready cash to react quickly to opportunities on the market. “It provided an opportunity to attract a large number of lenders in an efficient manner. Furthermore, it allowed a greater degree of flexibility to allocate the money without the restrictions that are often attached to banks’ project finance,” stated Boniel. However, Ghelamco appears to approach the financing issue differently: “We watch the market and try to use the available funding methods for the realization of our projects. At a time when the acquisition of bank financing is subject to

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“LAST YEAR, MORE THAN HALF THE ACQUISITIONS OF APARTMENTS IN POLAND WERE DONE WITH CASH.” KRZYSZTOF CIPIUR, MANAGER IN CAPITAL MARKETS AT KNIGHT FRANK

relatively difficult conditions and there is a large supply of money on the market, bond issues become attractive,” explained Jukiel. … or mezzanine?

Another possible form of financing projects is mezzanine. But this is a form of financing that has a number of drawbacks. With mezzanine, the investor can convert his debt directly into company stock if the company fails to pay back its debts. Mezzanine is typically offered by just one lender on a short term basis. It carries a high interest rate due to the extra perceived risk and is thus more expensive. This is why Boniel sees mezzanine as “pseudo equity,” good for short term emergency funding only. “It is a hybrid of debt and equity financing that is usually

subordinated to debt provided by senior lenders. Mezzanine financing is usually provided to the borrower in a swift process with little to no collateral. Hence, this type of financing is aggressively priced, with the lender seeking a high return,” he explained.

However, according to Cipiur, it has its uses. Developers might not be able to secure the necessary leasing level that would unlock the requisite loans for a particular project. So the only way a developer might be able to start building work is through mezzanine financing. Similarly, an apartment developer might need money to begin building work but will not want to mortgage the property because this might be required as collateral for a future bank loan, after work has begun.

Ghelamco taps the markets Ghelamco deliberately kept the nominal value of the bonds in its latest issue low at PLN 100 in order to make them more attractive to individual rather than institutional investors. The company claims that it began to issue bonds to individuals primarily as a manner of diversifying risk. “A few years ago, we started with bond issues and offered them to institutional investors. The next step was the approval of the prospectus in 2014 and the issuance of bonds aimed at individual investors. The main objective is to diversify sources of financing,” explained Jukiel.

However, there is little doubt that institutional investors also found the bonds attractive. The average size of the

23 -24 September 2015 The Westin Warsaw Hotel

An effective implementation of smart city solutions in Poland

PARTNERS Images: GTC

STRATEGIC PARTNERS

Contact: Aneta Pernak

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phone: +48 22 379 29 18

www.smartcityforum.pl

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placement for Ghelamco’s PPC series bonds was PLN 76,800, which suggests that much of the offer was sold to those who were investing millions. The actual number of small investors might have been rather limited. Moreover, if the bond issue had been bought mainly by small investors, this still represents only a miniscule proportion of those individuals with money to invest.

Cipiur regards the size of Ghelamco’s PPB bond offer as a mere drop in the ocean in comparison to the number of people investing in apartments. “If we assume that the average investment in an apartment in Warsaw is worth PLN 500,000 and the value of these bonds was PLN 50 million, then we are speaking about 100 apartments in Warsaw. Last year, more than half the acquisitions of apartments in Poland were done with cash,” he explained.

Whether private investors are investing in Ghelamco or not, the success of its last bond offering speaks only of the track record of the company and the trust investors place in it. u

EU-US Young Entrepreneurs Summit Katowice 2015

12-14 października 2015

during

Małych i Średnich Przedsiębiorstw

KATOWICE V Europejski Kongres

5th European Congress of Small and Medium – Size Enterprises

Nauka - Biznes - Samorząd RAZEM DLA GOSPODARKI

KATOWICE 12th-14th October 2015 V European Congress of Small and Medium - Size Enterprises

Biggest meeting of young entrepreneurs in Europe

fot. Urząd Marszałkowski Woj. Śląskiego

Science - Business - Self-government TOGETHER FOR ECONOMY

Катовице 12–14 октября 2015 V Европейский конгресс

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малых и средних предприятий

Hаука - Бизнес - Cамоуправление BMECTE ДЛЯ ЭКОНОМИКИ

smecongress.eu

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Room for more THE WARSAW MARKET CAN STILL ABSORB SEVERAL NEW LARGE-SCALE SHOPPING MALL SCHEMES

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arsaw Stock Exchange-listed developer Globe Trade Centre (GTC) will soon officially launch construction on its Galeria Północna shopping center project in the Polish capital, which will deliver approximately 64,000 sqm of leasable retail space in the first half of 2017. Located in the Białołęka district of the city and valued at around €160 million, the planned scheme will be the first new retail development of this scale in Warsaw since the opening of the Złote Tarasy investment in 2007.

Over the last few years, large new shopping center projects were mostly developed in the major regional cities across Poland, but now it seems that such schemes are finally going to start coming back to the Polish capital. Warsaw has changed significantly in recent years, with the growth of new housing neighbor-

hoods in peripheral districts, including the Białołęka district in the north-eastern part of the city and the revitalization of some of the neglected central areas, having created new opportunities for retail space development.

Several investments have already been announced. GTC itself is currently also planning a large shopping center project called Galeria Wilanów which it hopes to develop in the fast-growing Miasteczko Wilanów residential area. The development, for which the company is now trying to secure a building permit, will comprise almost 80,000 sqm of GLA. GTC wants to launch construction on the scheme as soon as all the administrative hurdles have been cleared.

The city center itself will see a few major changes as well. A new mall will probably be built as part of the huge mixed-use

“Among the eight largest agglomerations in Poland, Warsaw and Szczecin feature the lowest retail space saturation rates.The retail space saturation rate in the Polish capital is lower than in such regional cities as Kielce, Lublin, Poznań and Wrocław.

Anna Hofmann, Cushman & Wakefield

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Images: Shutterstock

complex which Polish State Railways and Immofinanz Group are planning to develop on the former Warszawa Główna railway station site in the central Wola district. Negotiations regarding the joint investment are still underway.

Another shopping center development is likely to spring up on the site of the existing Tesco facility located in Kabaty, the southernmost part of Warsaw’s Ursynów district. A number of other locations across the city are now being talked of in the market.

New locations emerging

Developers and analysts argue there is still room for new large-scale shopping center projects in Warsaw. Jacek Wachowicz, management board member at GTC,

noted that as early as 2009, a JLL study pointed to Białołęka and Wilanów as two of the most promising locations. The districts are now two of the fastest-developing parts of Warsaw in terms of population growth and both are evidently suffering from modern retail space shortage, Wachowicz said.

According to Beata Kokeli, a senior director at the retail space department of CBRE, apart from Białołęka and Wilanów, there are at least three other locations in Warsaw where large-scale shopping center projects could definitely be developed in the coming years. She mentioned the Młociny neighborhood in north-western Warsaw’s Bielany district, as well as the Ursynów district which currently does not really have any large modern retail scheme

that would cater to the needs of its affluent population.

Kokeli also pointed to Praga on the right side of the Vistula River as an emerging retail location. The previously neglected area is being revitalized and the recent opening of the second subway line is expected to help attract more real estate investment there. Several major residential and commercial projects, including Centrum Praskie Koneser and Port Praski, are already under construction. Praga is another area of Warsaw which will, in the short-term perspective, become ready to accommodate a new retail investment, Kokeli said.

Anna Wysocka, head of the retail agency at JLL Poland, said that Wola also remains an attractive location. Admittedly, there are already several malls in the district but

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“Apart from Białołęka and Wilanów, there are at least three other locations in Warsaw where large-scale shopping center projects could definitely be developed in the coming years --Praga, Młociny and Ursynów. the growing Odolany and Czyste housing neighborhoods have the potential to absorb new space.

Apart from this, the eastern Wawer district, with the largest area of all the districts in Warsaw, is still under-supplied.

However, when the planned southern Warsaw ring road is completed, Wawer could become part of the catchment area of Galeria Wilanów, Wysocka said.

Low saturation rate

The Warsaw retail market has been stable in recent years, with no new major developments having challenged the position of the largest existing malls. However, despite the stagnation, the market has been diversifying of late, Kokeli said.

She pointed out that new mixed-use and specialized schemes, including Plac Unii

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Beata Kokeli, CBRE

City Shopping, which was developed by Liebrecht & wooD and BBI Development, have been delivered since 2007. Also, Warsaw’s high streets have been changing, Kokeli said.

According to CBRE data, there are currently 42 shopping centers in the Warsaw agglomeration (of which 32 are located within the city) which comprise a total of approximately 1.4 million sqm of retail space. The retail space saturation rate in the Polish capital turns out to be relatively low when one compares Warsaw with the largest regional cities in Poland, and amounts to 422 sqm per 1,000 inhabit-

ants. This is a similar level to that seen in Szczecin, Kokeli said.

Anna Hofman, a senior negotiator at the retail space department of Cushman & Wakefield, said that among the eight largest agglomerations in Poland, Warsaw and Szczecin feature the lowest retail space saturation rates. The retail space saturation rate in the Polish capital is lower than in such regional cities as Kielce, Lublin, Poznań and Wrocław. Meanwhile, when comparing the purchasing power of the inhabitants of the same cities, Warsaw is the undisputed leader. This demonstrates that there is still much room for the develop-

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A bumpy road

Why did Warsaw have to wait so long for new large-scale shopping center projects? According to Wysocka, when the Złote Tarasy scheme opened for business in 2007, both developers and tenants came to the conclusion that the market had already become saturated. Today, the situation is quite different – the dynamic growth of the city’s residential market in recent years has created substantial demand for new retail space in the Polish capital, Wysocka said.

Warsaw has been seeing its population grow and the purchasing power of Varsovians has increased. The strengthened position of the Polish capital as the business center of the CEE region has been attracting more and more business and leisure travelers to the city. Consequently, occupants, including fashion concepts, are currently looking for new locations on

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Warsaw’s retail map and are finding it difficult to secure sufficient space, especially when seeking large areas, Wysocka said.

However, other property market experts also point to complicated land ownership, administrative and legal issues as the main reasons for the fact that no largescale shopping center development was delivered in Warsaw over the past eight years. In the opinion of Kokeli, land-related issues are the main hindrance to the development of large retail investments in Warsaw. There is a limited amount of large sites in the city which have a clear legal and urban planning status, she said.

The protracted administrative procedures a developer often has to go through further aggravate the situation. The process of enacting a zoning plan which will allow for the development of a large-scale retail project can be very time-consuming, said Hofman. The process usually involves many different parties which represent conflicting interests and the public administration officials often act in an ambiguous manner. “In the case of some schemes, the investment cycle can even take more than ten years,” Hofman said.

Old and new

Nevertheless, the obstacles are not putting developers off. Attracted by new retail opportunities which have emerged

Anna Wysocka, JLL

in Warsaw in recent years or are appearing in the city right now, they continue to plan new projects of all kinds. Apart from new large-scale shopping center schemes, developers are now involved in the repositioning and extension of a number of existing Warsaw malls, as well as in the development of new local shopping center investments, including Ferio Wawer.

Andrzej Jarosz, marketing and communications director at Mayland, argued that Warsaw has the potential for the development of large retail projects in basically all kinds of locations – in the downtown area, in specific districts and in the suburbs at express road junctions. While Mayland itself is now focused on the development of the Serenada shopping center project in Kraków, it is also working on several planned retail schemes in Warsaw. The results of that work should be disclosed to the public within the next few months, Jarosz said. u

Image: GTC

ment of new retail space in the Polish capital, be it in large-scale shopping centers or in smaller retail formats including convenience centers. In the opinion of Kokeli, it is more difficult to compare Warsaw with other capital cities in Europe because in many Western European countries high streets are much more developed than in Poland and are the main shopping destinations for the inhabitants of those cities.

“The dynamic growth of the city’s residential market in recent years has created substantial demand for new retail space in the Polish capital.

COMMENTARY / DEFENSE

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B Y M AT T H E W C Z A J A

Quality over quantity THERE IS NO CITY LIKE IT. WARSAW’S PATCHWORK HISTORY HAS RESULTED IN AN URBAN LANDSCAPE THAT IS DIFFERENT FROM ANY OTHER IN EUROPE. IT’S HIGH TIME TO START FOCUSING ON THE QUALITY OF THE CITY’S DESIGN 68

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A public square in the new Ursus quarter, as envisioned by CPD

Image: CPD

I

ts stunning development, exemplified by savvy new high-rises, is witness to over two decades of consistent economic growth. Yet, fast development comes with a price. A general trend of urban sprawl can be witnessed and zoning plan ambiguity is disastrous for builders, the city and the citizens alike. The living quality of Varsovians depends on whether planning solutions that harmonize the city can be enacted.

We asked urban planning specialists about the present and future of Warsaw and how to give the city a human scale.

Former MP and architect Czesław Bielecki gives two objectives of urban plan-

ning: limiting urban sprawl and protection of open space. “It is the city’s responsibility to provide the framework for the market to develop harmoniously, yet freely.” Former candidate for Warsaw’s presidency, Bielecki is part of a citizens’ movement to draft a new urban planning and building code to stimulate responsible planning and enact laws that support it. “We currently have a situation where we have the coexistence of buildings that clash with one another. There is a lack of natural beauty in our urban landscape, which can be remedied by enacting good guidelines,” added Bielecki. One such guideline, might be a respect for maintaining proper ur-

ban density – with denser areas concentrated in the city and limited in the suburbs. Currently, there are many high-density projects on the city’s outskirts, which will cause quite an infrastructure and utility provision headache in the future. Urban sprawl practices are also very costly to the taxpayer in general.

One thing Warsaw boasts, is wide open (relative to other European cities) spaces in the city center. Hence, physically, a lot can be done to beautify public areas and build up the central districts. What seems to be the biggest problem, is the unclear ownership status of many land parcels. After World War II, the land in the city was nationalized and

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Industrial Targówek

reconstruction went on according to new parcels. Today, the result is a nightmare in trying to compromise between compensation of rightful owners and the granting of new building permits. Investors are scared off by the unclear status of properties, as well.

Corral that sprawl At a recent planning-development conference, “Warsaw Days,” the city’s representatives stated that they will counter suburbanization. One of the reasons being that Warsaw is loosely built up. Compared to Barcelona, for example, it has five times fewer inhabitants per square kilometer of urban space. Furthermore, the city must brace for newcomers. Kazimierz Kirejczyk, residential market expert and CEO at REAS, a residential real estate research firm, foresees the construction of over 200,000 residential units (mainly by private investors) until the year 2030. It is expected that the city will house over three million inhabitants by then.

The main tool for urban planning are the local zoning plans. Completed plans cover 35 percent of the city, with another 31 percent being currently worked on, four percent of the city is undergoing a redesign of its plan.

“Suburbanization is very much present in Warsaw. People want to buy cheap land and build a single-family home. In effect, this tends to generate disorder. The individual, small-scale investments are often built hap-

Images: Dawos Design Studio

“WARSAW LACKS THE TRADITIONAL BOULEVARD PRESENT IN OTHER EUROPEAN CITIES. OUR CITY HAS LESS ‘CITY’ IN IT. IN EFFECT, MUCH OF THE CITY SIMPLY SERVES AS A BEDROOM. THE CITY NEEDS LIVELY PUBLIC SPACES WHERE CITIZENS CAN CONGREGATE AND SOCIAL LIFE CAN BLOSSOM.” KRZYSZTOF DOMARADZKI, ARCHITECTURE PROFESSOR AT THE WARSAW UNIVERSITY OF TECHNOLOGY Plac Trzech Krzyży

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hazardly, causing urban sprawl. Infrastructure cannot catch up with such sprawl and carries with it high costs of implementation since it’s done ad hoc,” said Warsaw University of Technology architecture professor Krzysztof Domaradzki.

There have been some successes in the planning of urban space in Poland: Manufaktura in Łódź is a fantastic example of renovation of old industrial areas in order to create a new and attractive retail area. The revitalization of the Royal Way, planned by Domaradzki’s Dawos Design Studio, has also done wonders to the city’s most popular tourist pathway. Its lively cafes are the city’s most recognizable feature. After delays in the construction of the second metro line, ul. Świętokrzyska has blossomed into a pleasant boulevard with street furniture. To the chagrin of drivers, the narrow street gave way to a wide sidewalk and bike path. By no means are the above projects void of mistakes, but they’re a move in the right direction.

New Ursus The former grounds of the Ursus tractor factory are to be developed as a cohesive, integrated city quarter. A local zoning plan has been granted for the 220-hectare area dubbed as Smart City. With public squares, a central green beltway, schools, a church and a cultural center all included in the plan, this huge new quarter is going to impress. There will be walkways and paths connecting the entire neighborhood and there will be no gated areas. Not one, but two rail stations are in the vicinity and the ride from Ursus to the city center lasts … a whopping 15 minutes. A new viaduct connecting Ursus with the ring highway has been constructed and a second will lead to Bemowo. This could be exactly

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“THE CITY CAN BE A WORK OF ART …

WHERE DELIBERATE HUMAN WILL SHOULD HAVE THE DECISIVE INFLUENCE ON ITS SHAPE.” TEODOR TOEPLITZ, A FOUNDER OF THE WARSAW HOUSING COOPERATIVE (WSM) IN THE 1920S, A NEIGHBORHOOD WHICH SURVIVED WORLD WAR II AND MAKES UP A PART OF ŻOLIBORZ TODAY.

what Warsaw has been sorely missing – a well-planned, holistic design for urban space.

Developer CPD owns 60 hectares of land in Ursus and is leading the entire project. “Quality of life is not only measured by the amount of square meters one can squeeze onto a parcel of land, but rather the quality of the public space that surrounds a house,” said Michalina Wiczkowska, CEO of CPD. According to Unidevelopment, a partner on the project, Ursus is an investment that is expected to last one decade. The local zoning plan stipulates that CPD may develop 740,000 sqm of space in the new quarter, with around 450,000 sqm devoted to residential apartments, some 250,000 sqm designated for services and about 40,000 sqm for public buildings. The first stage of CPD’s investment will yield 360 residential units (1, 2 and 3-bedroom apartments) in four buildings. A preschool, kindergarten, playground and a new public primary school will also be built alongside. CPD has been listed on the Warsaw bourse since 2010.

CPD decided to pass on its right of re-compensation from the city, giving up land for public institutions for free.

“We felt this is the right thing to do as

Image: Shutterstock

LOKALE IMMOBILIA / URBAN PLANNING

LOKALE IMMOBILIA / URBAN PLANNING

an investor that wants to provide basic amenities that increase quality of living,” said Wiczkowska. The re-compensation for land in public investments could be one of the deterrents in establishing quality urban space through zoning plans. According to the current law, the city has to “buy” land at market prices to build streets, parks or schoolyards, resulting in shortages of these amenities.

The commons The Służewiec quarter, a big business district in its own right, is almost totally devoid of public spaces. It grew from individual building permits and without a holistic zoning plan. Hence, the block bordered by ul. Cybernetyki, ul. Obrzeżna, ul. Postępu and ul. Bokserska is a 26-hectare area with new residential and office buildings, but lacking any streets or footpaths that would cut across it. A resident of an apartment on ul. Obrzeżna, for example, must walk a kilometer to reach an office building that is 400 meters away on ul. Postępu.

It is also unfair to expect that the taxpay-

er will fund new, premium infrastructure and transportation options to this densely built-up quarter.

Here, the developers need to do their homework. “The market offer is becoming more diversified. It’s not enough to just build an office building.

A developer should think of the entire support base, including transportation options and adjacent areas,” said Joanna Mroczek, director of CBRE Research & Marketing. Tenants are no longer eager to scoop up whatever is put up for sale, they are more and more picky. “Poles are evolving to the point that they’re asking themselves what they want from life, other than the basics. Oftentimes, the aura and complimentary facilities are becoming the most important factor in buying a home,” said Wiczkowska.

resemble a Mad Max movie set. An urban design competition has yielded a plan for the quarter’s development. The winning plan from Dawos includes the refurbishing of industrial buildings, smooth integration with the nearby Residential Targówek and publicly accessible green spaces. A ring road will be built nearby and a two-level rail station called Warszawa Stalowa will also be accessible to the quarter’s inhabitants.

Connection with the second metro line will be just 10 minutes away. So, it seems that another new quarter with fantastic public transportation options is going to be developed in Warsaw.

Good urban planning law is a must if Warsaw is to develop harmoniously. The city should enforce certain measures that prevent a hodgepodge development style and the pouring out of the city to the suburbs. Of course, all sides, investors, inhabitants and city hall should carry responsibility for the aesthetic appearance of the nation’s capital and a forum where these ideas can be shared is needed. u

Industrial Targówek Another area due for a revamp, the Targówek Fabryczny quarter, is a mixture of rail tracks, individual pre-war tenements, warehouses, the Wilno neighborhood and industrial sheds that

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The Tri-City makeover

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100,000 sqm of this stock set to be commissioned for use by the end of H1 2016.

Local brands

Developers are eager to build there, given the continually low vacancy rate of 10.6 percent, according to Colliers International surpassed only by Kraków (4.1 percent) and Łódź (8.1 percent), as well as solid demand figures (52,800 sqm in H1 2015, which is the second-best score among regional markets, after Kraków).

The office stock of the Tri-City has thus far been developed mainly by local players.

Olivia Business Center’s eponymous project, launched in 2010 and scheduled for completion in 2017, will offer a total of over 100,000 sqm. Thus far, the developer has added 73,000 sqm to the market within five buildings. Meanwhile, Alchemia, by another local developer Torus, will feature 80,000 sqm of office space once fully delivered in 2017. The third phase (out of a total of four stages) of the complex has recently been launched. Both projects are located within a kilometer of each other, in the Oliwa district of Gdańsk.

Images: Torus

THE LANDSCAPE OF THE TRI-CITY HAS SEEN SOME SERIOUS CHANGES OVER THE PAST FEW YEARS. AS DEVELOPERS INCREASE THE AGGLOMERATION’S OFFICE STOCK, AUTHORITIES ARE HELPING TO ATTRACT NEW INVESTORS. WILL THE TRICITY MAINTAIN ITS MOMENTUM?

eing an important seaport and trade hub, Gdańsk was, for the better part of its 1000-yearlong history, a bone of contention mainly between Polish and Prussian interests. Over the centuries, it changed hands more than a dozen times, eventually becoming the main Polish seaport and shipbuilding center after WWII. Once the shipbuilding industry closed down in the 1990s, Gdańsk, as well as its neighboring cities, Gdynia and Sopot, altogether forming the Tri-City, went through a period of uncertainty and had to look for alternative ways to develop. Over the past few years, the Tri-City has managed to establish itself as a major BPO destination and office market, overtaking several other regional cities.

Thanks to strong developer activity over the past five years, the Tri-City has risen in the ranks to become the fourth largest office market in Poland, falling behind only the well-established markets of Warsaw, Kraków and Wrocław. The total office supply in the Tri-City stands at 526,000 sqm, according to the latest JLL report. Another 130,000 sqm of office space is under construction with

LOKALE IMMOBILIA / OFFICE

Gdańsk’s new City

With two major office investments located there, Oliwa, which for years remained largely neglected, has now become the new office hub for the Tri-City area. “Gdańsk’s Oliwa district is becoming an undisputed business center. … It is where nearly a third of the Tri-City’s total office stock is situated.

Importantly, these investments are located in an area which, despite being close to the main thoroughfare connecting Gdańsk, Gdynia and Sopot, was hardly the city’s showpiece only a few years ago,” said Edyta Korycka, director responsible for investment planning at Torus. Now, it is a bustling area with more development underway.

But does the Tri-City really need more office space, given how much stock has been delivered recently? Data would suggest it does. The market has seen a number of new tenants enter the market over the past few years, with more expected to come. “Forecasts remain optimistic, as evidenced by the recently announced investment in Gdańsk by a company called State Street, which is looking to hire some 1,200 people. It leased over 14,000 sqm of office space in the Alchemia complex, in the largest transaction the Tri-City has ever seen and one of the largest deals in Poland this year,” explained Korycka. The Gdańsk office, whose lease was announced in late July, will be the second location for the US-based State Street, a financial services firm. It already has an office in Kraków, employing 2,000 people.

Images: Torus

Three cities – one policy

One of the things that has helped establish the Tri-City as an investment destination for international BPO/SSC companies was a cohesive urban and investment policy of all the municipalities forming the agglomeration. But it wasn’t always this way.

Katarzyna Gruszecka-Spychała, the deputy mayor of Gdynia, admitted that for many years, Gdynia’s biggest competitor in attracting new investors was in fact its closest neighbor, Gdańsk.

“We’re finished with the sort of cannibalistic competition. We started an initiative ‘Invest in Pomerania.’ Now, the offer an investor gets is identical in every city [within the Tri-City area],” she explained during a conference held by Urban Land Institute back in May. She also admitted that reaching a compromise to establish a common policy for the entire Tri-City area wasn’t an easy feat. “But it works. Now, Kraków, Wrocław and Poznań are our competitors,” she added.

Not only offices

However, it is not only office space that investors, as well as Tri-City residents, need and value. In order to bring in new companies, the location needs to be attractive on all fronts, also providing convenience and comfort of living. “The supply of sports and recreation facilities is insufficient in the Tri-City, as is the case in most Polish cities. It was one of the reasons why Torus decided to build

“Gdańsk’s Oliwa district is … where nearly a third of the Tri-City’s total office stock is situated.”

Edyta Korycka, director, Investment Planning at Torus

the largest publicly accessible sports and recreation center in the Tri-City within the first stage of the Alchemia scheme. … It features swimming pools, saunas, a fitness club and a climbing wall,” said Korecka.

It was a smart move on the part of the developer, one that was immediately appreciated by the city’s residents. Until recently, the agglomeration had only a handful of swimming facilities that were often inaccessible for much of the day due to schools’ occupying the premises for swimming lessons. Gdańsk’s residents who were looking to have a swim had to take a train to get to the nearest public aquapark in Sopot. “The situation improved with the construction of a fitness center with swimming pools in the Alchemia office building, but the demand

for recreation facilities remains unsatisfied,” said Urszula Sawicka, an IT professional from Gdańsk, currently working in Warsaw.

Ground to cover

Despite having undergone significant urban renewal, the Tri-City still has a number of neighborhoods in dire need of a makeover.

Even Oliwa, and particularly its older parts, has streets that make passers-by cringe at the sight. “You can see an old tram depot with boarded up windows and adjacent houses in danger of collapsing,” said Sawicka. She also pointed to Gdańsk’s outskirts, including Orunia and Chełm, where few dare to venture after dark.

Fortunately, developers are aided in their ventures by city authorities, which are well aware of the need to create a more cohesive city fabric. Recently, Gdańsk’s authorities completed the renovation of an entire district, called Dolne Miasto, a project which cost some PLN 24 million to complete over a period of two years. The city is now targeting its port area. Last year, it held a competition to select the best design for the makeover. Meanwhile, developers Immobel and Multibud have recently launched a public-private partnership with the city to redevelop the Spichrzów Island in the very heart of Gdańsk. The project has been scheduled to begin in 2017 and finish in 2023, delivering 58,700 sqm of multi-functional space and creating a new, hip location on Gdańsk’s map.

Hopefully, as developers and city authorities join forces in revamping the Tri-City, more companies will decide to locate their business in the area, bringing in more jobs and funds to make the Tri-City an even more desirable place to live and work. u

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the

Sentiment in the warehouse market continues to be highly optimistic. After great results two years in a row, who could have hoped that this year could do one better than 2014 and 2013?

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When Amazon entered Poland in 2013 with three built-to-suit facilities of 100,000 sqm each, the market was in awe as it finally saw the highest warehouse demand levels since before the 2008 crisis. Experts mused whether such great demand results could possibly be repeated in the future. Then 2014 came and managed to improve on the previous year’s results even without spectacular one-off deals. After two exceedingly good years for the market, could 2015 turn out to be another record-breaker?

Over the first six months of the year, 1.17 million sqm of warehouse and industrial space was leased, with 781,000 sqm being new contracts, according to JLL’s latest data.

According to Colliers, demand for warehouse space was 21 percent higher than the volume of transactions concluded in the corresponding period of 2014. Experts remain quite confident that the demand will continue to be strong throughout the rest of the year.

Image: Shtutterstock

Strong and getting stronger

LOKALE IMMOBILIA / WAREHOUSE MARKET

“Strong results in H1 as well as continued interest from tenants allows us to assume that 2015 has the chance of being another record-breaking year for the Polish market and exceed 2014’s excellent performance,” said Tomasz Mika, head of the Industrial Poland department at JLL. Green across the board Developers, too, feel very positive about the future of the market. “The segment should see unwavering interest from tenants, developers and investors over the next few years,” said Magdalena Szulc, SEGRO Business Unit Director for Central Europe.

“We expect slightly higher or comparable results to those from last year for the entire 2015. Naturally, this will be contingent on many variables, including the general macroeconomic situation, problems within the euro zone, as well as the geopolitical situation in Eastern Europe,” she added.

Indeed, vacancies have hit the lowest levels in ten years and have been single-digit across all the main markets. They stand between 1.7 percent in the Tri-City area and 9.5 percent in the Warsaw inner-city area, as per Colliers’ H1 data, and are expected to drop even further. “Taking into account the current market situation, we expect

general vacancy rates to be below double digits over the next few quarters,” said JLL’s Mika.

Speculations galore Given the promising demand and vacancy figures, developers have been building even more than in the year before. Between January and June 2015, the total warehouse stock increased by 437,000 sqm, 47 percent more than in H1 2014, according to JLL. Interestingly, nearly half of all that space was delivered in Poznań (207,000 sqm), with Warsaw suburbs coming in second, with a significantly lower result of 74,000 sqm.

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31%

of the current warehouse pipeline is located outside the five main markets.

Developers’ optimism is further evidenced by the amount of space being developed speculatively – nearly a quarter of the entire pipeline is being built without a pre-lease.

Analysts are far from alarmed, though. “Although we are recording growth in speculative projects, which now account for 23 percent of the stock under construction, the market – driven by strong demand – should absorb that space relatively quickly,” explained Mika.

Towards the end of last year, SEGRO went out on a limb and decided to build a facility in its Ożarów park that had only ten percent of its entire space covered by preleases. “Now, only 50 percent of the building remains vacant and it should be leased by the end of 2015. Such examples prove that you can be confident about finding tenants.

Especially, since we haven’t seen any weakening of demand from the most active tenants in the warehouse market over the past few years, that is logistics operators, retail chains and the automotive industry,” Szulc concluded.

Industrial hubs While the northern locations are ideal for logistics operators due to their multimodal transport opportunities, the southern and eastern regions are increasingly favored by industrial occupants. The continually improving road infrastructure has resulted in new and exciting opportunities for industrial development in eastern Lublin and south-eastern Rzeszów.

“Lublin has emerged on the warehouse map, with new logistics parks located near the S12 ring road. Completion of the next stages of the A4 highway and expressways around Rzeszów is also set to have a positive impact on development in this region,” said Agata Zając, associate director at the Industrial Poland department of JLL. The country’s capital is also about to benefit from an improved road network. “A new exit road from Warsaw towards Katowice has been opened and is planned to be extended. This may be an additional stimulus for initiating new industrial projects in the south-western part of Warsaw,” Zając added.

With strong figures and so much optimism in the market, one can’t help but wonder: could 2016 be even better for the warehouse industry? u 78

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23%

of the space being built is developed on a speculative basis.

Images: Shtutterstock, Segro

North, south and east Another significant shift in the market is the increasing geographical diversification of warehouse development. “A few years ago, the share of the five major regions in net demand amounted to 80-90 percent, in H1 2015 it dropped to 74 percent,” said Jan Jakub Zombirt, associate director, Research and Consultancy at JLL. Even more space that is currently under construction is located outside the “big five” – an unprecedented 31 percent.

“Locations that were previously viewed as peripheral, such as Kraków or Szczecin, as well as those whose first commercial industrial space has only been developed recently, such as Lublin or Rzeszów, have gradually grown in importance,” he added.

The northern Tri-City, Poland’s number one transport hub, connecting sea transport with road and rail routes, is also becoming a hotspot for developers. “Apart from the main locations, that is Warsaw, Upper Silesia, Central Poland, Poznań and Wrocław, we also see potential in the Tri-City region due to its sea access and a connection with the south of the country via the A1 highway,” said Szulc. “In the first quarter of the year, we completed the construction of a modern logistics center of some 27,000 sqm for Żabka [a leading convenience store chain in Poland] within the SEGRO Logistics Park Gdańsk,” she added.

LOKALE IMMOBILIA / WAREHOUSE MARKET

“We expect slightly higher or comparable results to those from last year for the entire 2015.

Naturally, this will be contingent on many variables, including the general macroeconomic situation, problems within the euro zone, as well as the geopolitical situation in Eastern Europe.”

Magdalena Szulc, SEGRO business unit director for Central Europe

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WBJ Observer presents High, above the city WBJ Observer spoke with Karolina Kaim, president of Tacit Investment, about one of the classiest high-rises in Warsaw’s central district We are meeting in one of the most interesting apartment buildings in Europe – the Cosmopolitan in Warsaw. Glass, concrete, steel, black and white. It immediately reminds me of New York.

For me, the Cosmopolitan is an absolutely unique place in Warsaw. Indeed, it is part of a different world, a different city. But at the same time, it is a building which is historically important and connected with Warsaw. It also fits very well with the landscape of the city. I think that Warsaw’s chaos is one of its biggest assets.

The Cosmopolitan stands out on the horizon in Warsaw.

It is definitely one of the most recognizable towers in Warsaw, although if you ask the clients and residents, everyone wants to have a view of the Palace of Culture, which says a lot about recognizability. But in fact, together with the competitor building, those two skyscrapers create a completely new category in Warsaw for people who want to live high above the city, in the center of events.

The building has been designed by the prominent architect Helmut Jahn. Please tell me a bit more about this extraordinary author.

Helmut Jahn is German, but we associate him more with New York. His accomplishments can be found all around the world and they are always very characteristic, innovative and most of all very simple. I was very impressed by the sketches that he presented before delivering the Cosmopolitan. What we can see today, meets his vision 100 percent. He is a visionary who has a fantastic understanding of the urban environment and creates buildings in which people greatly enjoy an urban quality of life.

KAROLINA KAIM, PRESIDENT OF TACIT INVESTMENT

Definitely, yes. Until now, Poles didn’t live in high rises.

However, in the last ten years, we have become a part of the European trend of reurbanization, which shows that we do not dream anymore of a house with a garden in the suburbs of the city. It shows us how to use the urban environment in a smart and effective way, which means

BROUGHT TO YOU BY TACIT

Can we talk about a fashion of living in skyscrapers?

creating high buildings. We come back closer to the center, we want to ride a bicycle to work or even walk. I would call this phenomenon “the new eco.”

What distinguishes the Cosmopolitan among the numerous apartment buildings in Warsaw?

It allows everybody who wants to be a citizen of the city to use all the related privileges. And I don’t mean facilities such as: an underground garage, a gym, restaurants or a concierge, that now are a standard.

Here, the most important thing is the location, the address on Grzybowski Square – from one side, the center of events, from the other silence, peace and distance.

Who buys apartments in the Cosmopolitan? To whom is the offer addressed?

Mostly to people who have already achieved a certain stage in life. Those people seek their own prestigious place and comfort – artists and businessmen. It’s a perfect place for people who divide their lives between two different cities or continents. Our residents are very mobile, they do not have a lot of time, that is why they seek help, comfort and the fact that they have all they need at their fingertips. Many of them are delighted that there are a few restaurants open on the ground floor of the building. I can bet that most of our residents don’t cook at home.

How do you evaluate the demand for premium properties in Warsaw?

The demand on the market of the so-called luxury goods is almost constant. Regardless of what is happening with our competitors and what is the

offer of the market, interest in the Cosmopolitan hasn’t decreased, it is even increasing. Our buyers are people who are aware of money and they know perfectly which investment will guarantee them an increase on the value of invested capital. The Cosmopolitan guarantees that without a doubt.

So you can think of purchasing an apartment in the Cosmopolitan as an investment, regardless of whether we buy it in a crisis or during a period of financial prosperity?

Absolutely. We have asked EY for a report which clearly shows how the market of prestigious properties reacts in comparison with the socalled middle-market. It showed that the premium properties are much more resistant to any change in prices. It applies most of all to our building which has a unique location. We all know that there is no other place like the Grzybowski Square in Warsaw. The value of this investment will only increase.

What are your plans for the upcoming years?

Tacit Investment, which created the Cosmopolitan, is currently involved in the realization of another apartment building called Park Line located on ul.

Podchorążych, near Łazienki Park. It is another prestigious location, addressed also for demanding clients who do not need to be very close to the city.

It is close to everything but a bit more aside and surrounded by greenery. This investment will be – like Cosmo – completely finished and equipped, ready to deliver in May 2016. However, the biggest investment that we are focusing on is a fantastic hotel in Wrocław, on Ostrów Tumski: 200 rooms, five stars.

It will be an important project that is awaited with eagerness by Wrocław.

CITYSCAPE / OLSZTYN

Did you know?

Some 8 percent of the city’s territory is covered with lakes. The city has 15 of them, with the biggest being the Ukiel lake. Its surface stretches along 412 ha and its maximum depth reaches 43 m.

The tiniest one is called Modrzewiowe lake and its area equals 0,25 ha. Most ponds are situated in the western part of the city, around 40 percent of the area is covered by water there. Earlier, the lakes were spread over even a larger part of Olsztyn, however, at the end of the 19th century they were artificially dried and used as land for private plants and factories

Favorite son

All along the watchtower

For several years in the 15th and 16th centuries, Olsztyn’s citizens fought

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against the Teutonic Knights, with mixed results. In the 17th century, Olsztyn developed mainly thanks to merchants on the Kaliningrad-Warsaw trade route. Craftsmanship played a significant role in the development of the city.

In 1945, the city was occupied and burned by the Red Army. As a result, almost 40 percent of the city was destroyed. After the war, Olsztyn turned into a lively and prosperous city.

Several sectors of industry developed, e.g. rubber, timber or machine manufacturing. The famous French tire producer, Michelin, has its factory in Olsztyn. American Citi Group has set up a BPO center here as well.

Krzysztof Hołowczyc Krzysztof Hołowczyc is Poland’s most famous rally driver. He is not only a threetime Polish champion, but he has also won the European Rally Championship and took part in the most important rally events, such as the World Rally Championship or the Dakar Rally, where he finished third in the 2015 edition.

He is also a local celebrity, often appearing at various TV programs as a driving expert. He dabbled in politics, running for (and entering) the EP on a Civic Platform ticket.

Images: Shutterstock, Olsztyn City Hall

Located in the beautiful and picturesque region of the Masurian lake district, Olsztyn attracts a significant number of tourists both from Poland and abroad. First reports of the city come from 1334, when Henryk von Luter built a wooden watchtower and named it Allenstein. In the same year, in place of the watchtower, construction of a castle was started. Nineteen years later, after the city grew and gained town privileges, the name turned into Holstin and eventually Olsztyn. In the 14th century, a gothic church was built. It remains one of the most famous examples of brick gothic churches in Poland.

LONDON 1,409 KM PARIS 1,370 KM BERLIN 492 KM

MOSCOW 1,119 KM

PRAGUE 584 KM

ROME 1,451 KM

MAYOR: PIOTR GRZYMOWICZ AREA CODE: 89 AREA: 89 SQ KM

MAJOR AIRPORT OLSZTYN SZYMANY UNDER CONSTRUCTION

POPULATION (DEC. 2013) 174,675 MAJOR ROAD S7

WORKING-AGE POPULATION (DEC. 2012)

114,934

NUMBER OF UNIVERSITIES (VOIVODSHIP)

8

NUMBER OF STUDENTS (VOIVODSHIP)

32,547

NUMBER OF GRADUATES A YEAR (VOIVODSHIP)

9,177

UNEMPLOYMENT RATE (JULY 2014)

7.3%

AVERAGE PAY (DEC. 2013)

PLN 3,795.30

MAJOR INDUSTRIES: Furniture, FMCG, Automotive, Clothing

MODERN OFFICE SPACE 31,500 SQM OFFICE VACANCY RATE 13.8% PRIME HEADLINE RENTS €10.00-€11.50

SOURCE: JLL

WBJ OBSERVER • SEPTEMBER 2015

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OBSERVER RANKING

OBSERVER TOP 10 Software & Hardware Producers RANKED BY TOTAL REVENUE (2014)

1

2

3

Total revenue (2014, mln):

Total revenue (2014, mln):

Total revenue (2014, mln):

Net profit (2014, mln): 290.3 Types of products: Computers, software, network Main products: def 3000/CB; PROMAk; AMMS; AUMS Selected clients: Aviva; PZU; Deutsche Bank; ING; ZUS; NFZ; TV; Tauron; PKO BP Top local executive: Adam Góral, President Web: www.asseco.pl

Net profit (2014, mln): WND Types of products: Software, network, audio, video, photo Main products: WND Selected clients: WND Top local executive: WND Web: www.veracomp.pl

Net profit (2014, mln): WND Types of products: Components, software, computer peripherals Main products: Oracle Database; Oracle Fusion Middleware; Oracle Fusion Applications; Oracle Exadata; Oracle Exalogic Elastic Cloud; Oracle WebLogic; Oracle JD Edwards; Oracle Siebel Selected clients: Allegro; Polpharma; Energa; NBP; PKO BP; Orange Top local executive: Piotr Witczyński, General Director Web: www.oracle.com.pl

Asseco Poland

1,321.3

Veracomp

789

Oracle Polska

700

4

Comarch Total revenue (2014, mln): Net profit (2014, mln): 73 Types of products: WND Main products: Comarch OSS; Comarch BSS; Comarch Internet Banking; Comarch Loyalty Management Selected clients: Ministry of Justice; TeleFonika; T-Mobile; BP; Metro Group Top local executive: Janusz Filipiak, President Web: www.comarch.com

(L-R) Morten Lindholm, WBJ Group Publisher; Ewa Kryj, Senior PR Specialist & Press Spokesperson, Asseco Poland; Anna Popek, Gala Host

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SEPTEMBER 2015 • WBJ OBSERVER

Images: Shutterstock, Roxana Dawid/WBJ

557

OBSERVER RANKING

5

8

Total revenue (2014, mln):

Total revenue (2014, mln):

Net profit (2014, mln): 10 Types of products: Computers, software, computer peripherals, network, consumables Main products: TP.net; NAMOS; InterWpłata; BTS Management Studio; ATM Cineo; Cash system BEETLE; Self cash POS Tower; Cineo cash dispensers Selected clients: WND Top local executive: Mirosław Janik, President Web: www.wincor-nixdorf.com/pl

Net profit (2014, mln): WND Types of products: WND Main products: SAS Visual Analytics; SAS Visual Statistics; SAS Office Analytics Selected clients: PKO BP; NBP; Bank Pekao SA; PZU; UFG; Orange; ZUS Top local executive: Alicja Wiecka, Managing Director Web: www.sas.com/poland

Wincor Nixdorf

360

SAS Institute

108.8

6

S&T Services Polska Total revenue (2014, mln):

148

Net profit (2014, mln): WND Types of products: Software, network Main products: Olcast; Scanexpress Selected clients: Ministry of Justice; Gaz System; Auchan Polska Top local executive: Piotr Staszczak, President Web: www.snt.pl

7

Asseco Business Solutions Total revenue (2014, mln):

147

Net profit (2014, mln): 28.6 Types of products: WND Main products: Mobile Touch; Asseco Softlab ERP; Asseco Softlab HR Selected clients: Mondelez International; Nestle; Dr. Oetker; Work Service; Lotte Wedel; Grupa Atlas; Orange Top local executive: Wojciech Barczentewicz, President Web: www.assecobs.pl

9

OPTeam Total revenue (2014, mln):

98

Net profit (2014, mln): 3 Types of products: Software Main products: OPTiPASS; OPTiCOMMERCE; OPTiRCM;.

OPTiBUDOWA; OPTiSRM; OPTiPRODUKCJA; OPTiCAMP;HROPTiCENTER Selected clients: PKN Orlen; PGE Dystrybucja; HS Wrocław; Regional Prosecutor’s Office in Rzeszów Top local executive: Wacław Szary, President Web: www.opteam.pl

10

Unit4 Polska Total revenue (2014, mln):

89.4

Net profit (2014, mln): WND Types of products: Software Main products: TETA ERP; TETA HR; TETA EDU; TETA WEB Selected clients: Danone; Getin Noble Bank; LG Electronics; Dozorbud Grupa Polska; Medical University of Gdansk; EuRoPol GAZ Top local executive: Artur Sawicki, CEO Web: www.unit4.pl

WND = Would Not Disclose; Data source Warsaw Business Journal Book of Lists; www.bookoflists.pl Research was conducted in May 2015.

WBJ OBSERVER • SEPTEMBER 2015

85

EVENTS / ARABIAN HORSE DAYS 2015

A GOOD TIME FOR POLISH ARABIANS

THE ARABIAN HORSE DAYS 2015 IN JANÓW PODLASKI ENCOMPASSED THREE PRESTIGIOUS EVENTS: THE 37TH POLISH NATIONAL ARABIAN HORSE SHOW, THE 46TH PRIDE OF POLAND SALE AND THE SUMMER SALE. THE TEN-YEAR-OLD MARE PEPITA, BRED BY JANÓW PODLASKI STUD, WAS SECURED BY A BUYER FROM SWITZERLAND FOR A RECORD PRICE OF €1.4 MILLION. THE SECOND RECORD WAS THE SALE’S OVERALL RESULT - 24 MARES WERE SOLD FOR ALMOST €4 MILLION

THE POLISH NATIONAL SHOW - A TICKET TO THE WORLD ELITE The Polish National Arabian Horse Show saw more than 100 horses undergo close evaluation in various age categories.

Chosen from among those that received the highest scores were Polish National Male and Female Champions: Polish National Junior Champion Mare – PUSTYNIA KAHILA (d.bay 2013, Michałów Stud) Polish National Junior Champion Stallion – PARIS (grey 2014, Janów Podlaski Stud) Polish National Senior Champion Mare – PINIATA (bay 2011, Janów Podlaski Stud) Polish National Senior Champion Stallion – CEFIR (d.bay 2011, Białka Stud) The Best in Show title went to PINIATA. The titles claimed in Janów are tickets to an international show career in European, Middle Eastern and North American arenas.

The 37th National Show took place under the honorary patronage of the President of the Republic of Poland, Andrzej Duda.

PRIDE OF POLAND - THE RECORDS Like each year, the culminating moment of the Arabian Horse Days was the Sunday Pride of Poland Sale, during which we could witness an exciting rivalry between buyers for the best horses, spurred on by the loud applause of the public. After a record price for the mare PEPITA, the second highest price was achieved by the nine-year-old Pistoria from Michałów Stud, who was sold to the United Arab Emirates for €625,000. Furthermore four more mares surpassed €200,000 thousand: Wieża Róż from Michałów Stud - €270,000, Wkra also from Michałów - €260,000, Wasa from Falborek Arabians €252,000 and Janów’s Altamira - €250,000. We will surely hear about these mares again.

This year, the sale’s clientele was made up mostly of representatives of the Middle East: Saudi Arabia, Qatar, Kuwait, United Arab Emirates and Iran. European buyers came to Janów from Switzerland, Belgium, Austria, the Czech Republic and the United Kingdom. Nobody can imagine the sale without Shirley Watts, who together with husband Charlie Watts (Rolling Stones) bid on three mares for a total of €400,000.

JANÓW ATTRACTIONS During the Arabian Horse Days the gathered public was treated to a riding show by young female riders atop Konik Polski horses from Sieraków Stud. Whereas two riders from the Janów Podlaski Riding Club performed atop the stud’s stallions, enriching the Pride of Poland program. As each year the stud’s grounds hosted a fair, where visitors could buy regional treats and culinary specialities.

WE INVITE YOU AGAIN Arabian horses are synonymous with beauty, charm and elegance, but also courage and valor, which we will soon be able to experience. On the 10th-13th of September, Janów Podlaski will host the 12th European Championships for Sport Arabians.

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SEPTEMBER 2015 • WBJ OBSERVER

Images: Royal Prestige Club

THE SUMMER SALE - EXCESSIVE PRICES The day after the Pride of Poland auction, the Summer Sale took place, where 27 horses were sold for €603,500. From among the sold mares, only four will remain in Europe, the rest will join herds of breeders from Saudi Arabia, Kuwait, Qatar and Iran. In comparison to previous years, there has been a visible increase in the demand of Polish horses, especially in the countries of the Middle East. Two Janów-bred mares, Floriana and Euzetia, albeit sold, will remain in Polish hands.

EVENTS / ARABIAN HORSE DAYS 2015

WBJ OBSERVER • SEPTEMBER 2015

87

COMMENTARY / COACHING

TERESA KAMIŃSKA President Pomeranian Special Economic Zone

EUROPE, REVISED EUROPEAN FORUM FOR NEW IDEAS. SOPOT 30 September - 2 October 2015 When will Europeans regain their sense of security? Will we overcome growing inequalities, radicalism and geopolitical threats? How can Europe regain its position as the leader of the global economy?

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This autumn, Sopot will be the place of a unique international debate for the fifth time. Entrepreneurs and managers, politicians, local government activists and outstanding experts from all over the world will meet to propose a new vision of a competitive Europe and to suggest what each and every one of us can do to help.

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