WBJ #20 2013

‘Economic patriotism’

Data downers

Economist Krzysztof Rybiƒski takes a different view of economic policy than Mr Balcerowicz

Retail sales came in lower than expected, while unemployment remains high

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WWW.WBJ.PL

8-9

VOLUME 19, NUMBER 20 • MAY 27 – JUNE 2, 2013 . z∏.12.50 (VAT 8% included) . ISSN 1233 7889 INDEX-RUCH-332-127

LOKALE IMMOBILIA

Just reform it COURTESY OF GHELAMCO

REAL ESTATE

In this exclusive interview, Leszek Balcerowicz, the architect of Poland’s economic transformation, castigates politicians for not implementing the reforms needed to get the country back on track

• Senator sold • Skeletor revamp • MGPA-BlackRock

Sustainable growth Unilever’s CEO for the region explains why his firm still sees plenty of room for growth in Poland 6

12-13

Plus: • Croatia, crisis and the EU • Review: the new Xbox • Corruption in PGE • Big hybrid fleet

Saving face

In this issue

Polish surgeons have performed the world’s first life-saving face transplant

4

Un-PO-pular LUKASZ OSTALSKI / REPORTER

News . . . . . . . . . . . . . . . . . . . . .2-4 Business . . . . . . . . . . . . . . . . . .5-6 Finance & Economics . . . . . . . . .7 Interview . . . . . . . . . . . . . . . . . .8-9 Opinion & Analysis . . . . . . .10-11 Cover Story . . . . . . . . . . . . . .12-13 Lokale Immobilia . . . . . . . . .15-18 The List . . . . . . . . . . . . . . . . . . . .19 Markets . . . . . . . . . . . . . . . . . . . .20 Sports . . . . . . . . . . . . . . . . . . . . .21 Lifestyle . . . . . . . . . . . . . . . . . . .22 Last Word . . . . . . . . . . . . . . . . . .23

Since 1994 . Poland’s only business weekly in English

Prime Minister Donald Tusk looks to shake up his party as it sinks in the polls

3, 11

NEWS

www.wbj.pl

Energa IPO pushed back once again

3% was the higher-than-expected annual growth in wages in Poland’s corporate sector in April.

2.7% is how much Poland’s industrial output grew in April, in annual terms, more than expected.

-0.2% was the year-on-year growth rate of retail sales in Poland in April. Economists had expected an increase of about 1.2%.

“Talk of my candidacy is becoming more frequent, but it is not the right time to make such decisions.”

Prime Minister Donald Tusk comments on speculation that he could run for the position of president of the European Commission.

Figures in focus Arrested development Construction output growth in Q1 2013 in selected EU countries (in %, compared with Q4 2012) 2.2

When Foreign Minister Rados∏aw Sikorski visited Ukraine last month, his counterparts there laughed at him because he was wearing a watch that cost only $165. Why? Long on to WBJ.pl to find out.

-0.6 -1.3 -2.4 -3.8

* Highest in EU ** Lowest in EU

-4.6

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The Ukrainian leisure class

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Jacek Ciesnowski

Quote of the Week

Sp ai dK n ing do m

president, will see his current term end in 2014. The timing is ideal for Mr Tusk, as his candidature would be considered after next year’s elections for the European Parliament, but before parliamentary elections in Poland, scheduled for 2015.

However, Mr Tusk’s name is not the only one in the mix.

Other leaders mentioned as potential candidates include: current EC head Jose Manuel Barroso, European Commissioner for Internal Market and Services Michel Barnier, Sweden’s PM Fredrik Reinfeldt, European Commissioner for Justice Viviane Reding, and Latvian PM Valdis Dombrovskis.

On WBJ.pl

Source: Eurostat

Company index Ablon Group ..............................................18 London & Regional Properties ................16 Accenture ..................................................15 LOT ............................................................12 Air France KLM ..........................................5 Marathon Oil................................................3

Calendar

May/June MAY 28 Event:

Location: Web:

The initial public offering of Poland’s fourth-largest utility Energa will take place in late September or early October at the earliest, Treasury Minister W∏odzimierz Karpiƒski has stated. The ministry had earlier planned to float Energa on the stock exchange around mid-2013. ●

increased as Joseph Daul, leader of the European People’s Party, the biggest party in the current European Parliament, said, “His name has been coming up since last year, but to be honest I’m not going to ask him that question (about running for the EC presidency) right now,” he said.

PM Tusk commented on that matter in the same vein as Mr Daul, “Allow me to announce my decision regarding my future in Warsaw, not in Brussels. It’s not the right time for that,” he said.

Donald Tusk’s hesitation is no surprise, as first he has to deal with problems within his own Civic Platform party (see story p.3). Jose Manuel Barroso, the current EC

an y

“Talk of my candidacy is becoming more frequent,” said Prime Minister Donald Tusk at a press conference last week, confirming speculation that he’s one of the frontrunners for the office of European Commission president.

Donald Tusk’s name as a potential candidate emerged last year, and later in April 2013 Hugo Brady from the Centre for European Reform, a think tank, reignited the talk. “Germany might back Tusk in order to cement Berlin’s political alliance with Warsaw and because it is time for someone from one of the newer member-states to get a top job,” he wrote.

The speculation later

via

Poland’s copper and silver giant KGHM will try to recover z∏.100 million out of what it paid in local taxes during the years 2009-2011. This comes after Poland’s Constitutional Tribunal ruled that local authorities could not impose taxes on underground mining areas. Companies from the KGHM group have already filed 26 court motions demanding a tax reimbursement. The group’s CEO Herbert Wirth said that KGHM is a listed company and cannot let go of such a sum.

is the year in which the Europa League final will be held at the National Stadium in Warsaw, the first European Cup final held in Poland.

rm

KGHM demands return of z∏.100 mln

2015

Lat

Online music video service Vevo launched operations in Poland.

Poland is the seventh country in Europe and the 12th in the world in which Vevo operates. Just last year, videos in the Vevo database were watched four billion times. The company claims it has 90% of all the music videos ever made in the countries it operates in.

Nevertheless, it plans to expand its library and will focus on adding Polish artists to it.

Donald Tusk and the EC presidency

Ge

Vevo launches Polish website

Numbers in the News

ga ry*

Poland’s giant defense industry holding Grupa Bumar has been transformed into Polski Holding Obronny (PHO), the company’s chief executive Krzysztof Krystowski announced.

The CEO said the new name was the final move in a restructuring process that had been ongoing for several years now. PHO includes the same 40 companies that were part of Grupa Bumar.

IN THE SPOTLIGHT

Hu n

Bumar becomes PHO

MAY 27 – JUNE 2, 2013

COURTESY OF FLICKR/KPRM

2

YOUNG ART AUCTION The 25th Young Art Auction at DESA Unicum will be a chance to bid on 66 works by the best young artists in the Polish art market, including Karol Radziszewski, Honza Zamojski, Basia Baƒda, Ivo Nikiç, Wilhelm Sasnal, Laura Pawela and Norman Leto.

DESA Unicum auction house, Warsaw www.desa.pl

JUNE 6 ECR FORUM FOR COOPERATION Event:

Location: Web:

This forum is an annual conference for top managers from the FMCG sector. Participants represent manufacturers, retail chains, agents, small retailers, distributors and providers of logistics, marketing and IT services.

Hotel Marriott, Warsaw www.ecr.pl/forum2013

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WALLSTREET CONFERENCE

Event:

This conference is the largest meeting of individual stock exchange investors in Poland, organized annually by the Association of Individual Investors. It provides an opportunity to meet prominent analysts and to participate in discussion panels.

Hotel Go∏´biewski, Karpacz www.sii.org.pl

Location: Web:

24-26 EUROPEAN FINANCIAL CONGRESS Event:

Location: Web:

This congress, organized by the Gdaƒsk Institute for Market Economics – Gdaƒsk Academy of Banking, provides space for pragmatic debates of business, political and academic circles. This year’s edition will focus on financial security and European integration.

Sopot www.efcongress.com

Alma Market..............................................15 MGPA ........................................................16 AMD ..........................................................23 Microsoft....................................................23 Asbud ........................................................18 MIX Jasnogórska ......................................15 Banaszek NieruchomoÊci ........................18 Nintendo ....................................................23 Bank BPH ....................................................8 PGE ........................................................4, 20 Bank Gospodarstwa Krajowego ................5 Polski Holding Obronny ..............................2 Bank Zachodni WBK ..................................7 Polskie Inwestycje Rozwojowe ............5, 12 Beechcraft ..................................................5 Pomorska Kolej Metropolitalna..................5 Beverly Hills Video ......................................3 BlackRock Inc. ..........................................16 PORR Polska ............................................15 BZ WBK ......................................................8 Provident Polska ........................................5 Carrefour ..................................................12 Qatar Airways ..............................................5 CBOS..........................................................11 Shikun & Binui Group ..............................18 CBRE..........................................................15 Skype ........................................................23 Citi Handlowy ..............................................7 Sodexo........................................................15 DDJM Biuro Architektoniczne ..................15 Solomon Cordwell Buenz ........................17 Emirates ......................................................5 Sony ..........................................................23 Energa ........................................................2 STR Real Estate Group ............................18 Epstein ......................................................17 T-Mobile ....................................................21 Facebook ....................................................3 Talisman Energy..........................................3 GetHouse Developer ................................17 Tesco ............................................................9 Ghelamco Poland ......................................15 TNS OBOP ................................................11 Golub & Company ....................................17 TNS Polska ................................................11 Golub GetHouse ........................................17 Toyota Motor Poland ..................................5 Grupa Azoty ..............................................20 UBM Polska ..............................................15 Hochtief ....................................................16 Home Broker ............................................17 Unilever........................................................6 IBM ............................................................23 Union Investment Real Estate GmbH ......15 Investkredit Bank ......................................18 Verity Development ..................................15 Jones Lang LaSalle ..................................16 Vevo ..............................................................2 KGHM ....................................................2, 20 X-Trade Brokers ........................................20 LeasePlan....................................................5 Yareal ........................................................15

NEWS

MAY 27 – JUNE 2, 2013

www.wbj.pl

Politics

PM calls for party elections as poll numbers slump

COURTESY OF THE EUROPEAN PARLIAMENT

Pulling the blanket Mr Tusk’s offensive came after weeks of speculation as to who would stand against him for the party’s leadership. The confusion contributed to Civic Platform’s slump in the polls, with three recent voter surveys showing the ruling party behind its main rival, the rightwing nationalist Law and Justice party.

“You should decide whether we want to pull this blanket called Civic Platform in one direction or whether everyone pulls in different directions,” Mr Tusk reportedly said at the executive council meeting. Describing the meeting on Twitter, Mr GraÊ said it was “tough, frank, open, determined, on point and sometimes painful.”

PM Tusk is gambling that new party elections will strengthen his leadership

With Civic Platform losing popularity, Donald Tusk says members must decide whom they want to lead them At a meeting of Civic Platform’s executive council last Thursday, Prime Minister Donald Tusk presented a plan

Any contenders? on June 29 to discuss changes to its electoral rules.

“If the convention changes the [party] statute, Civic Platform’s National Council will accept the new regulations and calendar for party elections,” said Mr GraÊ. Comments from politicians who attended the meeting seem to indicate that Mr Tusk’s proposals will be accepted.

to hasten the pace of internal elections in the party he currently heads.

He proposed the election for leader of Civic Platform be held this July or August and not between October 2013 and March 2014 as had earlier been planned. Government spokesperson Pawe∏ GraÊ announced that Civic Platform would hold a party convention

It is not yet clear though who will run against the prime minister, who is regarded as a ruthless political player. Possible candidates often mentioned by the media are Jaros∏aw Gowin and Grzegorz Schetyna.

Mr Gowin was justice minister from November 2011 until his dismissal in late April. He has often been

referred to as the leader of a strongly conservative faction in Civic Platform thought to number anything from 40-50 MPs in the ruling party’s 206member parliamentary caucus. However, it is unclear just exactly how loyal these conservative MPs actually are to Mr Gowin.

The second potential candidate and current deputy leader of Civic Platform, Mr Schetyna, is popular among segments of the party faithful.

A former parliamentary speaker, interior minister and deputy PM, after the meeting Mr Schetyna told RMF FM he would decide whether to run against the PM in a month’s time. “We will see, it’s an open question I will address when the rules of the election have been fully established, and so at the end of June,” he said.

Rafa∏ Grupiƒski, Civic Platform’s parliamentary caucus leader, has already said he will support Mr Schetyna if he runs. However, finance minister and deputy PM Jacek Rostowski said that he is “100 percent sure” Donald Tusk will be re-elected as party leader.

Remi Adekoya

Korolec in hot water over shale gas policies

Mark Zuckerberg, the founder and CEO of Facebook, met Poland’s Minister of Administration and Digitization Micha∏ Boni on Wednesday. They talked about the Polish ICT sector, personal data protection issues and the freedom of the internet.

Mr Zuckerberg said that for his company, Poland is the most important country in the region.

Europa League final in National Stadium European soccer’s governing body, UEFA, has announced that Warsaw will hold the final game of the UEFA Europa League at the National Stadium in 2015. At the same time, UEFA also announced that the Champions League final will be played at Berlin’s Olympic Stadium.

Poland’s national stadium seats over 58,000, and the Polish national team plays its European and World Championship qualifying home games there.

Poland delays hydrocarbon tax

Iconic movie rental network shuts down

COURTESY OF THE ENVIRONMENT MINISTRY

After reports surfaced that Poland’s Environment Ministry was taking a hostile stance toward foreign investments in shale gas exploration and two companies announced they would be exiting their investments in the sector, Prime Minister Donald Tusk was forced to step in, reprimanding Environment Minister Marcin Korolec for his ministry’s policies.

“I told the Environment Minister very clearly that I expect him to prepare regulations that won’t scare investors away,” the prime minister said last week at a press conference. Companies willing to invest millions in shale gas exploration and extraction in

Poland should be able to maintain a sense of security for their business, he added.

“He must either acknowledge that this project requires a business-oriented mindset or someone else will take over the task,” Mr Tusk added.

Mr Tusk said that the government is looking for regulations that would attract investors, in order to avoid future withdrawals. He added that foreign investors expressed the most concern over whether they would still hold rights to licenses after finding shale gas deposits.

Earlier in May, daily Rzeczpospolita cited unnamed sources as saying that Environment Ministry representatives had shown a lack of interest in shale gas investments from North America at a meeting with diplomats and foreign investors. The day after the report was published, Minister Korolec announced that the

Zuckerberg meets with minister

Finance Minister Jacek Rostowski said that Poland will delay the introduction of a hydrocarbon extraction tax until 2020 in order to encourage investors. The relevant law will come into force in 2015 but the tax itself will be effective as of 2020, he said. The Polish government decided on the basic rules of the hydrocarbon extraction tax in October 2012.

Energy

The PM has given the environment minister a tongue-lashing for taking an antibusiness stance

3

Environment Minister Marcin Korolec government was working on an investor-friendly law.

This year both Canada’s Talisman Energy and the US’s

Marathon Oil have announced plans to sell their Polish shale gas exploration assets. Talisman cited a change of strategy,

while Marathon said it had found a lack of commercial levels of hydrocarbons.

Kamila Wajszczuk

Beverly Hills Video (BHV), the best-known Polish movie rental network, closed down operations last week.

The company closed its outlets and published a statement on its website thanking customers for 16 years of business.

Companies active in the segment have tried to convince the government to reduce VAT tax on film rentals to make their services more competitive, but without success. ●

4

NEWS

www.wbj.pl

MAY 27 – JUNE 2, 2013

Medicine

Polish surgeons have performed the world’s first face transplant under life-threatening conditions Doctors from the Cancer Center and Institute of Oncology in Gliwice have successfully carried out the first full facial transplant in Poland. The surgery was performed on May 15 by a team led by Professor Adam Maciejewski. As of press time, the patient was in serious but stable condition.

The procedure was the first of such complexity to be performed in Poland, and was the first in the world to be performed under life-threatening

is being closely monitored.

Doctors believe he should be able to eat on his own within a week. He will stay on immunosuppressant drugs for the rest of his life to keep his body from rejecting the donor tissue.

The facility had been preparing for such a procedure for three years. The surgical team performed numerous transplants on cadavers as training. All medical facilities within a one-hour drive had been on stand-by in case facial tissue was needed for such a procedure.

The 33-year-old man had been injured in an accident at a construction site where he

conditions. The whole operation took over 24 hours and involved surgery on the majority of the patient’s face and a large part of his facial skeleton.

“Without the transplant the man would certainly die. He wouldn’t be able to eat, see, breath on his own, not to mention the risk of infection,” said Professor Maciejewski at a press conference explaining the surgery in detail. “We expect the surgery will allow the patient to return to normal life,” he added.

The patient is currently undergoing therapy to prevent his body from rejecting the transplant; his immune system

worked. A stone-cutting machine severely injured his face, nearly cutting it off.

The patient first underwent a procedure using his own body tissue on April 23 in a hospital in Wroc∏aw.

After the procedure proved unsuccessful, a more complex surgery involving a donor face was needed to save the man’s life.

Before the operation in Gliwice, the man had been in critical condition. The threeweek period between the accident and the surgery is the minimum preparation time frame for such a procedure.

Kamila Wajszczuk, Jacek Ciesnowski

COURTESY OF THE INSTITUTE OF ONCOLOGY IN GLIWICE

First Polish face transplant performed in Gliwice

The patient, after the successful transplant

SHUTTERSTOCK

PGE’s nuclear unit in corruption scandal

More troubles for Poland’s nuclear program

Poland’s Central Anti-Corruption Bureau (CBA) says it suspects large-scale corruption in PGE EJ 1, the subsidiary of Poland’s largest utility, PGE, responsible for its nuclear energy program. The CBA has reported the case to the prosecutor’s office.

The CBA suspects irregularities in two agreements worth a total of z∏.11 million.

The investigation was carried

out in connection with PGE EJ 1’s activities in 2010-2011, and the alleged corruption is linked to people then holding the posts of CEO and deputy CEO in the company.

The agreements mentioned in the CBA report involved activities promoting a positive image of nuclear energy. The activities were focused on the Pomorskie voivodship, a potential site for Poland’s first

nuclear power plant.

The CBA said the alleged crimes involve “mismanagement to a considerable extent” by the CEO and a deputy CEO at the time. The company has refused to comment on the matter, since it says it does not know the contents of the notice sent to prosecutors.

During the period covered by the CBA’s investigation, PGE EJ 1 had a three-person

board. Its CEO was Tomasz Zadroga and deputy CEOs Witold Dro˝d˝ and Marzena Piszczek, who joined the board in 2011.

Since July 2012, PGE’s two nuclear-power firms, PGE Energia Jàdrowa and PGE EJ 1, have both been headed by former Treasury Minister Aleksander Grad.

Kamila Wajszczuk, Jacek Ciesnowski

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BUSINESS

MAY 27 – JUNE 2, 2013

www.wbj.pl

Public investment

Air travel

Polish Investments program funds first project

Flying in style

The program will provide z∏.170 million for the rail link said Mieczys∏aw Struk, Marshall of Pomorskie voivodship, after the announcement was made.

In the pipeline BGK’s CEO Dariusz Daniluk said the Polish Investments program was currently analyzing roughly 50 projects valued at an estimated z∏.40 billion.

However, BGK will be allowed to spend roughly z∏.14 billion on co-financing projects.

Investments will mostly be in the area of infrastructure development (for road, rail and air travel), as well as in the

energy sector, including the construction of energy units, transfer networks and gas pipelines. This year alone, BGK is planning on investing z∏.10 billion in projects within the Polish Investments program.

The state bank is one of two operators of the comprehensive Polish Investments program. The other one, an SPV named Polskie Inwestycje Rozwojowe, is still in the process of formal registration.

It is expected to make its first investment in 2014.

KW, RA

Auto industry

Red light for hybrids Financial services group Provident Polska has recently leased an entire fleet of 80 hybrid cars. It’s an historic deal for Poland, as until now lease transactions have involved only a few low-emissions vehicles at the most.

“So far, clients have leased single hybrid cars for promotional purposes,” said Artur Sulewski, sales director at LeasePlan, the company that leased the cars to Provident.

“It’s hard to convince them to use low-emission vehicles because there aren’t any economic incentives, like tax breaks, for using such cars. We hope the deal will encourage others to follow,” he added.

Many EU countries have already introduced tax incentives for environment-friendly cars. “In many countries, like Germany, Italy, France or the Czech Republic, hybrid and electric cars are exempt from personal income tax as well as road or fuel taxes, in some

COURTESY OF LEASEPLAN

Lack of economic incentives for environment-friendly cars has stifled their popularity in Poland

Eighty Toyota Yaris hybrids will be driving on Polish roads as part of Provident’s fleet places companies buying ecofriendly cars are given subsidies from the government,” said Mr Sulewski.

According to LeasePlan’s calculations, a hybrid car can save some z∏.2,500 a year on fuel alone, but that still is not enough to convince companies to switch to hybrids, because leasing a compact hybrid can cost as much as a premiumclass car.

Government incentives could have an impact not only on the environment but also on the economy, as some car

manufacturers might take the tax framework into consideration when deciding where to start producing such cars.

“Cars are being made in places where they’re being sold,” said Jacek Pawlak, CEO of Toyota Motor Poland in an interview with news agency Newseria, emphasizing the fact that the company could produce components for such cars here in Poland, but only if there was a significant number of hybrids driving on Polish roads.

Jacek Ciesnowski

From first-class tickets to private jets, Poles have taken to traveling in luxury conditions There are currently 35 business aircraft registered in Poland, most of which (26) were delivered between 2007 and 2011. That number is miniscule when compared to the entire fleet of business airplanes in Europe (3,773), but Poland is slowly catching up.

During the 2007-2011 period, the number of business planes increased in Europe by 66 percent (compared to the 20022006 period), while in Poland the number of business aircraft rose by 160 percent.

“We see an increasing number of SMEs and individual entrepreneurs asking about our planes. Many of them need to operate through the whole CEE region and using planes saves them time and money,” said Shawn Vick, executive vice president at Beechcraft, a company that has nine of its planes currently registered in Poland.

Even with the economic downturn and companies looking to cut expenses, the producers are forecasting a

COURTESY OF BEECHCRAFT

The first investment to be carried out under the state-run Polish Investments program will be the construction of a new railroad network in the northern city of Gdaƒsk, after state-owned Bank Gospodarstwa Krajowego (BGK) signed an agreement last week to provide z∏.170 million in financing for the project. BGK will raise the funds by issuing bonds.

The new railroad will connect the Gdaƒsk Lech Walesa Airport with the city center and other areas. The total value of the project is z∏.900 million and it will be run by Pomorska Kolej Metropolitalna, a company owned by the Pomorskie voivodship. Construction of the railroad will be financed from EU funding to the tune of 70 percent.

“Today, we can talk about finalizing our project, a general contractor has already been selected and everything should be completed by mid-2015,”

SHUTTERSTOCK

The state program established to boost investment in Poland will finance a rail link in Gdaƒsk

5

There are seven Beechcraft King Air planes currently registered in Poland steady growth in the sector.

“For the next few years we plan on delivering one to two planes a year to Poland,” added Mr Vick.

Beechcraft’s plans are supported by data from Polish airports. Last year Warsaw’s Chopin Airport conducted 3,295 business flights, which comes to just over nine flights per day.

Those who can’t afford a business plane can still fly in style with traditional airlines.

Qatar Airways and Emirates, two Middle Eastern airlines known for their luxury fleet, began operating in Warsaw at the beginning of this year,

introducing first-class direct fights to Polish passengers.

Other airlines, even though they don’t provide direct firstclass flights from Poland, have also observed a surge of Polish passengers traveling in the most expensive seats. “In recent years we have seen a 50-80 percent increase in the number of Poles flying business class and a 30-40 percent rise in first-class passengers,” Marcin Gielnik, Air France KLM sales representative, told Gazeta Wyborcza, adding that most of the passengers flying in premium classes are 40- to 60-year-old businesspeople.

Jacek Ciesnowski

6

BUSINESS

www.wbj.pl

MAY 27 – JUNE 2, 2013

Fast-moving consumer goods

Unilever still sees room for growth in Poland

Jacek Ciesnowski: Is it a good time to start educating people about sustainable development? Under current economic conditions in Poland, as in other places, price is the main factor for customers when choosing a product. They don’t necessarily care if the product is good for the environment – or do they?

Harm Goossens: I don’t agree with that assessment. It’s true that price is becoming increasingly important, but so is sustainability and quality. People want to know what’s happening to our products and why. I can see from talking to many

people, including students applying for jobs at Unilever, that this is the most important thing for them.

I see the pressure on the market and that consumers vote with their wallets. Still, our brands on both ends of the market spectrum, both budget and premium ones, are showing growth.

You have to remember that even though these changes won’t be easy or cheap to implement, they will save us a lot of money as well.

We predict that in the 20132015 period, trucks from our logistics center in Katowice

Unilever Sustainable Living Plan Implemented by the company in 2010, the Unilever Sustainable Living Plan has three main goals: 1) improving people’s health and well-being; 2) reducing the company’s environmental impact; and 3) sourcing 100

percent of its agricultural raw materials sustainably. The company plans to achieve these goals by 2020. According to the plan, Unilever wants to double the size of its business at the same time. ●

will travel 20 million kilometers fewer. That will both save the environment and cut our costs.

Is it possible to introduce changes aimed at making all of your products sustainable, from the cheap to the highend, and maintain a positive bottom line?

Yes, however it might take some time in selected cases.

That’s why, for example, we have an earlier deadline for our Lipton Tea brand to be manufactured from sustainable source materials than in the case of other brands. We plan to meet the criteria for Lipton in 2015 and for other brands in 2020.

We still have a long way to go to achieve all our goals, but since we’ve said that it’s one of the core goals of Unilever, it means it’s a core goal regardless of the economic situation worldwide.

You’re CEO for both the CEE region and Poland. How big is the Polish market for Unilever compared to others in the region?

Poland is the biggest market in the CEE region, there’s no doubt about that. It still shows

a great potential for growth. In some sectors the current growth is just 2-5 percent, but in others we’re talking about a double-digit increase. Right now we see the biggest growth in personal hygiene products, with foodstuffs rising at a slower pace.

Where do you see the biggest potential for growth?

Ice cream is very exciting for us. Even with the weather not necessarily in our favor, we have double-digit growth here and still we have to remember that Poles eat less ice cream than your average Swede or New Zealander. There are many opportunities in Poland.

Especially in rural areas where we have a lot of space for penetration.

Unilever already has four factories here in Poland. Is there still room for growth?

I don’t have specific plans right now. There’s always room for growth, but whether it means expanding the current facilities, building new ones or buying already existing ones, I can’t really tell you. We don’t have specific plans [for expansion] right now.

COURTESY OF UNILEVER

WBJ sat down with Harm Goossens, CEO of food and cosmetics giant Unilever for Poland and the CEE region, to talk about the Sustainable Living Plan that the company is currently implementing and the company’s plans for the Polish market

Harm Goossens, Unilever CEO for the CEE region and Poland What about your brands? Are you planning to introduce new products to, or remove current ones from, the Polish market?

No, we definitely won’t be removing any brands from the Polish market. As far as intro-

ducing new ones, just last year we introduced a line of hair products: Toni&Guy. We constantly look at our global portfolio and think what we could sell in Poland. We usually try to introduce one new brand a year. ●

FINANCE AND ECONOMICS

MAY 27 – JUNE 2, 2013

www.wbj.pl

Industry

Labor market

Industrial production swings back into growth

Wage growth surprises higher, employment shrinks

Better than expected figures, but don’t get your hopes up yet After contracting by nearly 3 percent in March, Poland’s industrial output rose by more than expected in April, although analysts cautioned that the data did not necessarily indicate that the economy had reached a turning point.

Output grew by 2.7 percent year-on-year in April, a nearly six-percentage-point swing from the -2.9 recorded in March. In month on month terms, production fell by 2.3

percent, statistics office GUS said. Analysts surveyed by the Polish Press Agency had expected industrial production to increase by 2.6 percent y/y and fall 2.5 percent m/m.

In an e-mailed statement, Bank Zachodni WBK economists wrote that the surprisingly positive data were partly the result of an extra working day in April 2013 compared to the year before.

“We still observe stagnation in domestic manufacturing,” which was confirmed by PMI data earlier this month, they wrote. Poland’s PMI, or pur-

chasing managers’ index, came in at a worse-than-expected 46.9 points for April, indicating contraction in the sector.

The analysts added that “poor construction data did not give reason to be optimistic about investment growth in the second quarter.” In annual terms, the construction sector declined sharply, contracting by 23.1 percent y/y and growing by 8 percent m/m.

Most analysts agreed that the data were neutral for the Monetary Policy Council’s decision next month on whether to KW, AK cut interest rates.

Sign of a rebound?

As the slowdown in Poland digs in, firms are raising salaries and cutting employment The average gross salary in Poland’s corporate sector grew faster than economists had expected in April, at a rate of 3 percent year-on-year to z∏.3,830.89, statistics office GUS announced last week. In month-on-month terms, wages fell by 0.1 percent. The market had expected salaries to grow

by 2.1 percent y/y and by 0.9 percent m/m.

GUS also said that 5.48 million people were employed in Polish enterprises in April, a decrease of 1 percent y/y and 0.2 percent m/m. It was the sixth month in a row of decline.

“Today’s data do not change our general opinion on the situation on the labor market. We expect some gradual increase of wages in the coming months amid a further decline in employment

7

(though at slower pace, particularly in H2),” BZ WBK analysts wrote in an e-mailed statement. They added that the data should be neutral for Poland’s rate-setting Monetary Policy Council.

“Given the last data releases (GDP, CPI inflation) and recent comments of MPC members ... we continue to expect NBP rate cuts of a total of 50bps until end-July,” they wrote.

KW, AK

Consumption

Retail sales show unexpected drop

Poland’s industrial output growth, April 2011-April 2013 8 6 Source: Central Statistical Office

4 2 0 -2 -4 -6 -8 -10

Ap r. ’ 1 Ma 1 y ’1 1 Jun . ’1 1 Jul . ’1 Au 1 g. ’1 Se 1 p. ’1 Oc 1 t. ’ 1 No 1 v. ’ 1 De 1 c. ’11 Jan . ’1 Feb 2 . ’1 Ma 2 r. ’ 12 Ap r. ’ 1 Ma 2 y ’1 2 Jun . ’1 2 Jul . ’1 Au 2 g. ’1 Se 2 p. ’1 Oc 2 t. ’ 1 No 2 v. ’ 1 De 2 c. ’12 Jan . ’1 Feb 3 . ’1 Ma 3 r. ’ 13 Ap r. ’ 13

-12

Unemployment falls to14% in April The registered unemployment rate in April fell to 14 percent from 14.3 percent in March, according to data published by statistics office GUS. The figure is in line with the estimate published by the Ministry of Labor and Social Policy earlier in May. BZ WBK economists wrote in a comment that the decrease in unemployment

was seasonal. “However, data show that this effect was weaker than in past years – employment in construction decreased in April on a monthly basis for the first time in over 10 years,” they added.

“In the upcoming months the unemployment rate will [continue to decline] due to seasonal factors, but in annu-

al terms we will be observing an acceleration of its increase, reflecting further deterioration of labor market conditions,” the economists wrote.

GUS said that the number of registered unemployed persons at the end of April was 2.26 million, while labor offices offered jobs for 44,300 people.

KW

April retail sales in Poland fell by 0.2 percent year-on-year in April, statistics office GUS announced. In month-on-month terms, the figure decreased by 2.7 percent. The real growth of retail sales was 0.1 percent y/y, GUS said.

Economists surveyed by the Polish Press Agency had expected retail sales to increase by 1.2 percent y/y in April and to decline by 1.2 percent m/m.

In an e-mailed comment BZ WBK economists wrote that poor retail sales in April, especially that of food and other sales in non-specialized stores, was largely due to Easter being celebrated earlier. However, “even when we take into account the effect of Easter, April’s data on retail sales confirm weakness of consumer demand at the beginning of Q2,” they added, stressing that consumers are now more likely to make savings than

increase spending.

“What strikes us in [the] data is that retail sales in real terms (i.e. adjusted for the impact of prices) actually increased by 0.1 percent y/y when nominal sales fell by 0.2 percent” said Citi Handlowy economists in an analysis.

“This would imply a deflator of -0.3 percent y/y (deflation), while headline CPI stood at +0.8 percent y/y. However, this difference probably reflects the

fact that fuels – a category that experienced substantial fall in prices – constitute a larger share in retail sales than in the CPI basket,” they added.

“Also, given that retail sales data reflect only activity in large stores, the difference between the sales deflator and headline CPI may imply that smaller shops continue to raise prices while bigger stores try to compete in the market by cutting KW, AK prices.”

They shopped, then they dropped Poland’s monthly retail sales growth rate (annualized), April 2011-April 2013 20 15 10 5 0 -5 Ap r Ma . ’11 y Jun ’11 .

Ju ’11 Aul. ’11 g Se . ’11 p Oc . ’11 t No . ’11 v De . ’11 c Jan . ’11 Feb. ’12 Ma . ’12 r.

Ap ’12 r. ’ Ma 12 y Jun ’12 .

Jul ’12 Au . ’12 g.

Se ’12 p Oc . ’12 t No . ’12 v De . ’12 c.

Jan ’12 Feb. ’13 Ma . ’13 r.

Ap ’13 r. ’ 13

Consumer spending continues to lag

10

Source: Central Statistical Office

8

INTERVIEW

www.wbj.pl

MAY 27 – JUNE 2, 2013

Economic policy

Defending national interests Ewa Boniecka: You have been expressing very critical views of the government’s economic policy for a long time now. Is your assessment based on the government’s performance or its economic strategy for Poland?

Krzysztof Rybiƒski: First of all, there is no strategy. If we look at the ruling Civic Platform’s (PO) agenda on economic matters, we find a vast discrepancy between what they promised and what has been done so far.

There is no strategy on the economic front, there is no strategy to improve the Polish economy’s competitiveness, there is no strategy to fight growing unemployment, especially among young people.

But I look at it in a longer perspective and do not find it unusual, because Poland has been ruled for the past 20 years without any coherent economic or social strategy. If PO presented any programs, they were not put into practice. The present government does not recognize what Poland’s economic strategy should be and it is committing the same mistakes as the previous governments, but on a larger scale.

But after the economic transformation of Poland, thenFinance Minister Leszek Balcerowicz implemented fundamental market reforms.

Poland adopted a strategy of liberal capitalism. Has it worked?

The first post-communist Polish government, in which Leszek Balcerowicz was responsible for designing market reforms, adopted a strategy based on the Washington Consensus,

imposed on us by foreign advisors.

The first years did help Polish development and we grew faster than other post-communist countries. Some opposed the reforms, however, and now we see that both sides had valid arguments. Never before did a country the size of Poland undertake such a big jump in economic reforms. And it did work for some time.

But after that big bang of reforms, there was a lack of direction and after that first government I don’t think there has been any government with a coherent economic strategy.

Without a strategic focus, Poland is gradually facing more and more challenges. And the current government is not tackling them.

So what should future governments’ economic policy be and what choices will they have to make to help the country develop?

Almost all our banks have been sold to foreign investors. The process of opening our country to foreign capital should have been done more gradually and carefully. And we should keep some financial assets in the hands of domestic investors.

Banks generate z∏.15 billion in profits every year, a sum which should be kept in Poland, but it mostly goes abroad. And all strategic decisions are made by foreign bank holdings, regardless of Poland’s financial and economic interests. Instead of selling Polish banks to foreigners, we could have appointed top foreign managers, paid them a lot, acquired know-how and our banks would have

developed much the same way while remaining in the hands of various Polish investors.

But looking at the period before Poland entered the European Union, our domestic market was starved for capital.

Some other post-communist countries also had to sell their banks to Western financial institutions. Poland was not an exception, was it?

But these changes in the banking system in Central European countries have created a pathological situation. Imagine, for example, that all French banks were in the hands of German, Italian or American companies.

It is inconceivable. So why do we accept such a situation in Poland? This is a situation where foreign financial groups own almost all our banks and decisions about banking operations are not made in Poland, but elsewhere.

Research done by the Bank for International Settlements in Basel shows that because of the economic situation in France, Germany and in Austria, their bank managers decided to stop financing firms in the CEE region. That means that now, because of the crisis, their banks are protecting domestic markets and this causes asymmetric effects and financial fluctuations in their branches elsewhere, including in Poland.

So after 15 years we see both the advantages of having foreign capital in our banks, but also increasingly the negative side of that. But we have already sold our banks to foreign ones and taking back at least some of them will be difficult and costly.

Are you against foreign investment in Poland generally?

Of course not. I am against giving more privileges to foreign investors than to Polish firms.

The thinking in Poland was that foreign investments are always great, they provide jobs and

COURTESY OF KRZYSZTOF RYBI¡SKI

Krzysztof Rybiƒski, former vice president of Poland’s central bank and a former chief economist at BZ WBK and Bank BPH, sits down with WBJ to present his views about the condition of the Polish economy, his assessment of the government’s economic policy and his ideas for an alternative strategy for Poland

Professor Rybiƒski believes domestic firms are unfairly sidelined in favor of foreign investors in Poland generate economic growth.

But when I talk to businesspeople across Poland, they tell me that Polish authorities treat foreign investors much better that domestic ones. Why do foreign investors receive special treatment and special taxes, while at the same time Polish investors are treated as potential criminals?

So it is high time to understand that we will be able to continue on the path of development, provided that we pay at least the same attention to Polish companies and to supporting them. So why don’t we apply methods to support domestic businesses, even aggressive ones, like other countries do?

Let’s stop celebrating the next foreign investor who opens its subsidiary here. Instead, let’s celebrate when a Polish company expands to foreign markets.

And we should say to foreign investors: if you invest in Poland, pay taxes here and compete on equal terms with our domestic investors, who are creative and capable of achieving success against all odds.

But Poland is still not a rich country, there is not enough Polish capital to invest, so we need foreign investors.

I fundamentally disagree with the argument that because we still haven’t accumulated a huge capital base, Polish companies cannot expand abroad. The examples of successful Polish companies show that you do not need a billion z∏oty to start

expanding. To expand, entrepreneurs need a good product, proper support from the state, a good legal framework and tax incentives for Polish business – and that is all.

The thinking that the core of our development lies in attracting foreign investors was imposed on us by foreign companies and by academics from the US, Germany and France, indoctrinating Poles that their future is to become workers in foreign factories.

We have to change our mentality and as an economics professor I stress that we need to teach our students that we should create our own businesses, create jobs and not dream of becoming part of a rat race in foreign corporations.

You support nationalistic ideas in implementing capitalism, like Victor Orban is doing in Hungary, but we are living in a global economy. There are increasingly fewer barriers for capital, workers, businesses.

Do you believe that it is possible to change Poland’s economic trajectory?

Yes. Globalization is a trend that can’t be reversed, because it brings so many benefits to various powerful interest groups. But other countries understand what it means and are playing smart, while Poland is being naive and stupid.

Everybody in the era of globalization is using a strategy which I call economic patriotism. When Lakshmi Mittal said that he had to lay off a third of

the workers in his steel mills in France, what answer did he get from the French prime minister? If you do that, we will nationalize those firms.

All the European Union’s regulations and property rights are disregarded when it comes to defending national interests.

Poland is a big state and should do exactly what the French and Germans do to defend their economic interests. But we are not doing that.

How do you assess the economic impact of Poland receiving funds from European Union?

The last six years have been very different from what was done before we joined the European Union. Now big money is coming to Poland from the EU budget and yet there is no strategy to make our economy more competitive.

The only actual strategy I see on the central and local government levels is to spend all the money we get from the EU. Not to spend it wisely, but just spend it.

The tragedy here is that we think it is better to spend €1 billion poorly than give €1 million back to Brussels. And this strategy of spending EU money, often in a stupid way, is harming the Polish economy.

One of my problems with the current government is that they see that this is happening, but they aren’t doing anything to change it. All they do is spend, spend, spend, which makes Poland look like Spain.

We could end up with a similar

INTERVIEW

MAY 27 – JUNE 2, 2013

financial crisis.

Why do you think that spending all the money provided by the EU to Poland is harming the economy? Don’t EU funds help in building road infrastructure and support other investments aimed at modernizing the country?

Let’s look at the whole picture here. These funds support first of all EU bureaucracy, which keeps inventing thousands of rules for their distribution and ways of auditing the beneficiaries. All EU members who are experiencing crisis – Greece, Spain, Italy, Ireland – are those which receive money from EU cohesion funds.

If you base your future on the assumption that the best thing you can do is spend all of the EU money you receive, it results in many bad investment decisions and in the consumption of that money. It is happening in Poland: we are making the same mistakes that those other countries made before us.

I would say that the money we received from the EU could be cut by half maybe, because in my opinion only half of that sum is spent well – on building highways, expressways and other public facilities. Only that half is actually beneficial to the Polish economy.

The agricultural funds from the EU were also helpful in helping many of the rural poor become farmers. But money which is designed to help entrepreneurs build a solid base for the modernization of many branches of our economy, strengthening our human capital, is not really performing that function.

But why are you suggesting that EU funds, which Poland has fought so hard to obtain, should be cut by half?

I will explain. While the crisis in the EU deepens, the funds for Poland will shrink and more focus will be put not on financing infrastructure, but innovation.

And here Poland is doing very poorly, while the level of innovation is crucial for future economic growth in every country. It is disturbing that the €10 billion which was provided for the innovation program for Poland failed to increase the level of innovation. In fact, paradoxically, the level of innovation has dramatically decreased in the last five to six years.

In my opinion this occurred because Polish authorities both at the central and local levels distribute the money for innovation the wrong way. They go to large, often foreign corporations, which use these funds to reduce their costs and transfer profits abroad.

So basically the money comes from rich EU members and then goes back to them. It is not that the EU innovation program is entirely wrong – for instance in the Czech Republic the level of innovation has

increased. It is our poor management of the funds that is to blame here. It causes frustration and anger among the smaller Polish companies that do not receive money for innovation.

I have been talking to many of them and they tell me that while they fight hard to improve their products, they are pushed into a corner in the battle for access to EU innovation funds.

Do you think that the government’s decision to sign the European Union’s fiscal pact and its desire for Poland to meet euro zone criteria is good for Polish interests?

I think that discussing Poland’s membership in the euro zone today is a waste of time, because the crisis in the euro zone is deepening. It is not ending, it is just beginning. If you look at the real economy, you see that unemployment is rising and that economic output is dropping in Greece, Spain and in some other countries, pubic debt is rising fast. How can these countries recover?

These members of the euro zone are trapped in a decade of stagnation and recession, so sooner or later they may even leave the euro zone. I believe that Poland’s adoption of the fiscal pact shows that people who make such decisions do not understand the adverse effects they can have for Poland.

Do you think that the countries that adopted the euro made a mistake and they should go back to national currencies?

The euro was a badly designed currency. It required countries to follow specific mechanisms but politicians failed to follow their own rules, fiscal targets were not met – and also banks’ interests are involved here. So the whole establishment may

“Poland is a big state and should do exactly what the French and Germans do to defend their economic interests.” collapse and the euro zone will not survive in the form that exists today. Only the core of it will remain, countries that are economically alike.

A new core of the euro zone will emerge, because it is not possible to keep countries so different as Germany and Spain or Italy together in the euro zone. I am convinced that in the current highly volatile and unpredictable situation, Poland should refrain from making any obligations about our participation in structural changes in the euro zone or about implementing the euro in our country.

How do you see Poland’s economic and financial situation?

Our economy is in a state of stagnation and we are balancing on the verge of recession.

The condition of our state finances continues to worsen, public debt is increasing sharply.

Poland will soon face a risky choice: either reduce pensions ... or cross the constitutional public debt-to-GDP ratio limit of 60 percent. This should not be allowed to happen, but I am afraid that when desperate people appear on the streets in massive protests, politicians will allow public debt to grow above the limit of 60 percent.

To do this, they will try to amend the constitution.

The worst-case scenario is that if pubic debt reaches 70, 80 or 100 percent of GDP, it will put Poland at zero growth and on a path of economic decline for decades. So unless we find someone strong enough, someone with popular support, who could impose harsh measures to limit the abuse of public money, we will face the threat of increasing public debt.

As a conservative economist and advisor to right-wing parties, what economic strategy do you recommend as an alternative to the liberal strategy of Civic Platform?

Conservative or liberal may be used as descriptions of economic views, but I don’t like these labels, because the way I approach economic questions is based strictly on evidence. I do not care if the ruling party is right-wing, left-wing or center.

If I see that there is an economic problem and people do not respond to it, I write or say that something is wrong and should be corrected. I was an advisor to five previous finance ministers. I think PO deserves all the criticism I have given it in the past few years.

What specific economic proposals have you suggested?

For example to levy a new tax on banks and large retailers like Tesco, because those groups generate a lot of profits and develop so quickly and aggressively that they are killing smaller Polish businesses and shops.

In Poland we need someone who will say it is time to think about our market strategy in a different way. Whoever rules after 2015, the leader of the government should have a different way of approaching and implementing economic strategy than the leader of the present government.

And which party do you see that you feel could introduce such a program?

I think that the biggest opposition party Law and Justice is now adopting a new approach in economic policy. Something which I call economic patriotism. We will see whether they will get their chance. ●

www.wbj.pl

9

10

OPINION & ANALYSIS

www.wbj.pl

MAY 27 – JUNE 2, 2013

Amid crisis, the EU adds another member

Stratfor

Trends of expansion The largest EU expansion took place between 2004 and 2007, during which the bloc added Cyprus, Malta, the three Baltic countries and seven Eastern and Central European countries. Between 2000 and 2007, the economies of the EU 15 (later the EU 25) grew annually by an average of 2.4 percent, according to Eurostat. Every country save Malta showed positive growth the year it joined.

Now the situation is different.

The European Union and the euro

SHUTTERSTOCK

D

espite the European Union’s ongoing difficulties, some countries remain committed to joining its ranks. In fact, the bloc all but added its newest member, Croatia, on May 16, when the German parliament approved the Balkan country’s accession. Croatia will not become an official member until July 1, but its membership is virtually assured.

Croatia is joining the bloc at an inopportune time. Western European countries, which are struggling with domestic stagnation and with currency union reforms, may be less motivated and less equipped in the coming years to aid peripheral European countries. Croatia thus will likely be the last country to join the European Union for several years.

And considering the growing pressures for the bloc to reform its currency union and its institutional framework, Croatia probably will be the last country to join the European Union in its current incarnation.

The EU Commission, which assesses new membership bids, presented its final progress report on Croatia in March, stating that the country was ready to join the union.

Most EU countries had already approved Croatia’s EU accession before the report was released.

However, by being the last country to give its approval, Germany signaled to Croatia that it should not relax in implementing its EU-mandated economic and political reforms. Even after Croatia accedes, Germany and other northern European countries will continue to pressure Zagreb to implement further reforms, especially since many in Europe view expedited accession as a source of Europe’s current problems.

Croatia is due to enter the EU on July 1, 2013 zone are stagnating economically.

Europe’s core economies, particularly France, the Netherlands and Germany, are in recession or have very low growth rates. Facing unemployment and increased migration flows, northern countries are seeing growing opposition to the free movement of labor, especially regarding Eastern Europe. The last two members to join the European Union, Romania and Bulgaria, will only profit from full free movement of labor in 2014 – they have not yet been granted access to the Schengen zone. And after Croatia joins the bloc, Croatian workers will face years of labor mobility restrictions as other Eastern and Central European countries did when they joined.

With EU accession, Croatia will profit from additional EU funds that should help its struggling economy somewhat. It also means there will be fewer EU funds to be shared

among the other members. The fact that Croatia’s main export partner, Italy, is experiencing low growth will limit the effectiveness of these funds.

This could be foreboding for the

“Croatia probably will be the last country to join the European Union in its current incarnation.” country’s already fragile economy.

According to Eurostat data, the Croatian economy will contract in 2013 for the fifth consecutive year.

In March, the unemployment rate was 18.5 percent – twice as high as in mid-2009 (youth unemployment, peaking at 51.6 percent, doubled over the same time frame).

Croatia’s economic maladies seem to have tempered the joy expected to accompany EU accession. This was especially true as the country had to implement publicsector reforms and push through controversial privatizations of stateowned companies.

Redefining foundations Despite the European Union’s dwindling popularity, Europe’s leaders still intend to further integrate the Continent. Croatia’s accession – and Latvia’s bid to join the currency union – shows that poorer European countries are still trying to profit economically and enhance security through ties with Western Europe.

Among these countries are Serbia, Montenegro and Macedonia, which are candidate countries, and BosniaHerzegovina and Kosovo, which hope to become candidate countries. Croatia’s accession helped

Croatia and Slovenia solve their bilateral disputes. In turn, Croatia and Serbia have also become closer, showing that to some degree the prospect of EU integration is helping former Yugoslavian nations find some common ground.

Bilateral disputes and difficult institutional reforms are slowing their respective integration efforts.

But even if these countries implement reforms sufficiently, Western Europe’s interest in integrating the rest of the Balkans is not as strong as it was during previous phases of EU expansion – Croatia’s admittance notwithstanding. The core of Europe is simply too preoccupied with redefining the foundations of the European Union. ● This edited version of “Amid the crisis, the EU adds another member” is reprinted with permission of Stratfor.

Stratfor.com

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11

Trouble in Poland’s ruling party Remi Adekoya

T

hough parliamentary elections are two years away, a series of recent polls showing the main opposition party Law and Justice (PiS) ahead of the ruling Civic Platform (PO), have caused much speculation among political observers.

The surveys, carried out by TNS Polska, CBOS and TNS OBOP, all show PiS with a 2-3 percentage-point advantage over Civic Platform, led by Prime Minister Donald Tusk. They come after a couple of bad weeks for the ruling party.

Depressing data Recent economic data has been depressing: the economy is just barely growing. Unemployment is on the rise. Educational reforms meant to encourage parents to send their kids to school at 6, instead of 7 as is the tradition in Poland, have incurred their wrath instead.

PO’s electoral strength has always been concentrated in the big cities, especially the capital, Warsaw.

But today, inhabitants of Warsaw, which is run by Hanna GronkiewiczWaltz from PO, are growing increasingly irritated with the lackluster pace of construction on the city’s second subway line and the subsequent transportation nightmare it has entailed. Many parts of Warsaw are now blocked due to the construction work, and the delivery date for the subway line has been delayed from September this year to autumn 2014.

The government has also been arrogant, casually assuming that in the end, Poland’s middle-class pragmatists will always back it on election day, given the alternative: PiS and its

erratic, bellicose leader Jaros∏aw Kaczyƒski who calls Poland under PO rule a “Russian-German condominium.”

Additionally, last month Mr Tusk dismissed Jaros∏aw Gowin from his post as justice minister. A fired minister is nothing unusual, but Mr Tusk may have made a political miscalculation here. Mr Gowin is very popular among conservatives, an important segment of PO’s electorate.

A breakdown of the CBOS poll reveals that PO has been hit hard amongst voters who describe themselves as “conservative.” Seventeen percent of them now back PO, compared to the 30-40 percent support the ruling party enjoyed in that segment prior to Mr Gowin’s dismissal.

As if all that were not enough, Transport and Infrastructure Minister S∏awomir Nowak has come under scrutiny after sporting around a half dozen luxury watches, which he claims to have borrowed.

impression left is that PO is doing nothing. This is an unfair assessment, but that’s the way impressions go. Surprisingly though, some PO politicians seem to think the smartest strategy is to criticize the media for criticizing them.

Down and out?

So is PO’s popularity destined to go downhill now?

First, it is worth noting that the voters who have deserted the ruling party for now have not begun supporting PiS – or any other party for that matter – but instead have joined the undecided camp. They are essentially showing PO a yellow card and daring the ruling party to call their bluff. But they are bluffing.

The fact of the matter is that for now they have no alternative.

There is no way Poland’s middleclass (by far the largest voting block) will allow the rule of a nationalist, anti-European and ultra-conservative party which insists President Lech Kaczyƒski and 95 others were murdered on the orders of Vladimir Putin in the Smolensk forest in 2010, when the presidential plane they were traveling in crashed.

“Pundits rightly point to the lack of reforms enacted by Mr Tusk and the apparent inertia in parliament.”

Perception nightmare More important than these realitybased irritations though is the perception nightmare the ruling party is now facing. Most people don’t have the time nor the inclination to follow politics closely. They base their opin-

ions solely on impressions, which they form while watching the evening news, reading an op-ed from their favorite journalist or listening to the jokes about politicians people make in the office elevator.

Today, it is becoming trendy for journalists, previously supportive of Mr Tusk, to say they are “tired” of his government, to make fun of ministers and of the PM himself. This is a very dangerous state of affairs for PO. As a politician, it’s better to be the object of hate than derision.

Pundits rightly point to the lack of reforms enacted by Mr Tusk and the apparent inertia in parliament. The

the window now. The prime minister needs to get his act together fast if he doesn’t want his party’s poll numbers to fall below the psychologically important 20 percent threshold. If PiS opens up too wide a lead, PO could have problems turning things round.

It would also weaken Donald Tusk’s position as prime minister and strengthen the hand of his junior coalition partner, the Polish People’s Party. Instability could creep in.

Also, it is possible Mr Tusk could have a bruising leadership battle in his party ahead of him. This summer, PO will elect a new party leader. Mr Tusk has said he will stand for another term. What is not clear is who will run against him.

If the party’s current number-two, Grzegorz Schetyna, decides to team up with say, Mr Gowin and a few other party heavyweights, they could manage to overthrow the man who has run Poland for the past six years.

Donald Tusk needs to do two things now: first, present a cohesive, realistic and easily comprehensible plan to move the country forward; second, thoroughly rebuild his cabinet (a move he has announced he will make this summer) and bring in new ministers who are top professionals – or at least popular. Until now, Mr Tusk has not shown a propensity for daring action. Sitting on his hands now would all but guarantee the prime minister’s downfall. ●

Cocky attitude Having said that, Mr Tusk should not push his luck too far. He once said in an interview that he has “no one to lose to.” That kind of talk must go out

Remi Adekoya is Warsaw Business Journal’s politics editor. Read his blog, “The business of politics” on WBJ.pl

Misreading the global economy Ashoka Mody

In

April 2010, the International Monetary Fund’s World Economic Outlook offered an optimistic assessment of the global economy, describing a multi-speed recovery strong enough to support roughly 4.5 percent annual GDP growth for the foreseeable future – a higher pace than during the bubble years of 2000-2007. But, since then, the IMF has steadily pared its economic projections. Indeed, this year’s expected GDP growth rate of 3.3 percent – which was revised downward in the most recent WEO – will probably not be met.

Persistent optimism Persistent optimism reflects a serious misdiagnosis of the global economy’s troubles. Most notably, economic projections have vastly underestimated the severity of the euro zone crisis, as well as its impact on the rest of the world. And recovery prospects continue to depend on the emerging economies, even as they experience a sharp slowdown. The WEO’s prediction of a strengthening recovery this year continues the misdiagnosis.

European Central Bank President Mario Draghi’s announcement last

summer that the ECB would do “whatever it takes” to preserve the euro reassured financial markets.

But, as pressure from financial markets has eased, so has European leaders’ incentive to address problems with the euro zone’s underlying economic and political dynamics. Easy ECB liquidity is now sustaining a vast swath of Europe’s banking system.

Global impact The euro zone is operating under the pretense that public and private debts will, at some point, be repaid, although, in many countries, the distress now is greater than it was at the start of the crisis almost five years ago.

As a result, banks, borrowers, and governments are dragging each other into a vicious downward spiral. Politicians have exacerbated the situation by doubling down on fiscal austerity, which has undermined GDP growth while failing to shrink government debt/GDP ratios. And no decisive policy action aimed at healing private balance sheets appears imminent.

Moreover, Europe’s problems are no longer its own. Europe’s extensive regional and global trade networks mean that its internal problems are

impeding world trade and, in turn, global economic growth. In 2012, world trade expanded by only 2.5 percent, while global GDP grew at a disappointing rate of 3.2 percent.

Emerging deceleration Periods in which trade grows at a slower pace than output are rare, and reflect severe strain on the global economy’s health. While the trauma is no longer acute, as it was in 2009, wounds remain – and they are breeding new pathologies. Unfortunately, the damage is occurring quietly, enabling political interests to overshadow any sense of urgency about the need to redress the global economy’s intensifying problems.

Against this bleak background, it is easy to celebrate the success of emerging markets. After all, emerging and developing economies are growing much faster than the advanced countries. But even the world’s most dynamic emerging markets – including China, Brazil, and India – are experiencing a sharp deceleration that cannot be ignored.

Consider India, where growth is now running at an annualized rate of 4.5 percent, down from 7.7 percent

annual growth in 2011. The IMF projects that India’s economy will rebound later in 2013, but the basis for this optimism is unclear, given that all indicators so far suggest another dismal year.

The emerging economies’ supposed resilience, which has buoyed economic forecasts in recent years, needs to be reassessed. Like the advanced economies, emerging economies experienced a boom in 2000-2007. But, unlike the advanced economies, they maintained high GDP growth rates and relative stability even at the height of the crisis.

This was viewed as powerful evidence of their new economic might. In fact, it was largely a result of massive fiscal stimulus and credit expansion.

Slow process

heal themselves. But economies’ powerful self-healing capabilities work slowly. More problematic, a misdiagnosis can lead to treatments that impair the healing process. Overly optimistic economic projections based on mistaken assessments of the global economy’s ailments thus threaten recovery prospects – with potentially far-reaching consequences.

In Europe, the banks’ wounds must be closed – weak banks must be shut down or merged with stronger banks – before recovery can begin.

This will require an extensive swap of private debts for equity. For the global economy, the malaise reflected in anemic trade growth calls for coordinated fiscal stimulus by the world’s major economies. Otherwise, the risk of another global recession will continue to rise. ●

Indeed, as the effects of stimulus programs wear off, new weaknesses are emerging, such as persistent inflation in India and credit misallocation in China. Given this, the notion that emerging economies will recapture the growth levels of the bubble years seems farfetched.

Economic forecasts rest on the assumption that economies ultimately

Ashoka Mody, a former mission chief for Germany and Ireland at the International Monetary Fund, is currently visiting professor of international economic policy at the Woodrow Wilson School of Public and International Affairs, Princeton University.

Copyright: Project Syndicate, 2013.

Project-syndicate.org

COVER STORY

www.wbj.pl

SPV to build part of A1 highway The General Directorate for National Roads and Motorways (GDDKiA) has commissioned the construction of part of the A1 motorway to Polskie Inwestycje Rozwojowe (PIR), a company created by the state to manage the Polish Investments program. PIR will create an SPV to oversee the construction. The company will also be responsible for collecting payments for using the highway.

Carrefour to exit Poland?

French supermarket network Carrefour may withdraw from Poland, according to sector analysts quoted by Reuters. The comments came after Carrefour decided to sell its stake in a Middle Eastern project to its joint venture partner, Majid Al Futtaim.

An unnamed retail sector analyst quoted by Reuters said that this deal is likely to relaunch speculation about the possible sale of Carrefour’s assets in Italy and Poland.

Date set for Europarliament elections The European Parliament has decided to carry out next year’s elections on May 22-25.

The previously proposed date of June 5-8 was changed so as not to collide with vacation schedules. Elections in Poland are usually held on Sundays, which means that next year’s EU parliamentary polls will most likely take place on May 25.

LOT’s Q1 loss smaller than expected Poland’s national airline LOT had better Q1 2013 results than projected in the company’s restructuring plan, Deputy Treasury Minister Rafa∏ Baniak said. According to information obtained by PAP, the company’s net loss was z∏.30 million less than expected. The source also said that the airline’s Q1 cash flow was z∏.20 million higher than planned. ●

MAY 27 – JUNE 2, 2013

Exclusive interview

Balcerowicz: deregulate and reform to boost the economy WBJ sat down to discuss economics and politics with Leszek Balcerowicz, who has held the positions of finance minister, deputy prime minister and president of Poland’s central bank. He is widely regarded as the architect of Poland’s economic transformation from communism to a free-market economy.

Remi Adekoya: Poland’s statistics office recently released worse-than-expected preliminary GDP data that showed the country’s economy grew at a rate of just 0.4 percent yearon-year in the first quarter of this year. What do the data tell you about the condition of the Polish economy?

Leszek Balcerowicz: I think we are unnecessarily dramatizing a short-term economic slowdown. Of course, I would prefer we had bigger growth but in a situation where almost all European countries have a worse beginning to the year than expected, it is difficult to avoid a slowdown in Poland.

Compared to many of those countries, we are not doing that badly.

However, concentration on these short-term results overshadows for most people, and certainly for most politicians, a much more serious problem.

Poland is at threat of a longterm slowdown. I am not talking about a temporary slowdown similar to what we have now. Without some serious reforms, Poland will rebound, but it will rebound to a slower long-term growth-rate than the one which has been helping us catch up to Germany and the West up till now.

The danger results from three factors. First, without additional reforms, demographic changes will lead us to a situation where by 2020, we will lose a million people from our workforce. Second, we have the lowest private investment rate in the region.

And lastly, the biggest engine of Poland’s development, namely the quick tempo at which our productivity im proves, is increasing more slowly now. We must employ tools to counter each of these dangers, but one cannot find any sensible solutions to these problems in the world of politics.

Let’s start with the demography issue: What does Poland need to do?

Definitely quit repeating all those empty slogans, or even nonsense, spouted in the name of “pro-family policies.” These are often meaningless words which people buy because they react to the word “family.”

People react positively to that word ...

Worse, people stop thinking, just like when they hear words such as “Polish,” “social” or “national.” These are sentimental words, which lull the mind and enable politicians propose a cure worse than the illness.

For example?

For example, according to many surveys I am familiar with, prolonging maternity leave does not increase the birth rate, but it may make it more difficult for a woman to return to the labor market.

In which countries were those surveys you are quoting carried out?

I don’t have everything in my head, I don’t remember exactly. But recently, I saw German surveys which showed that subsidies for families are ineffective. There is no reasonable voice speaking out on this issue among Polish politicians.

They are convinced that using the word “family” will lull everybody to sleep. Meanwhile, serious solutions must take two things into account.

First of all, we have a low labor-participation rate among the young. That can be reduced through well thoughtout reforms. The minimum wage in Poland is too high and in recent years it has been systematically raised. The benefits are on paper, in reality it does damage.

Young people who have low-level qualifications will not be employed because they would bring too little to the company at the beginning.

This is the kind of typical false charity politicians regularly engage in. Before a young person decides on what to study, universities should enlighten him on what the unemployment rate is in that particular field.

People also have access to better schools in richer regions and worse schools in poorer regions.

That is a question of people being mobile. Workplaces differ depending on the region, one cannot replicate an identical quality of workplaces

COURTESY OF BALCEROWICZ.PL

12

Mr Balcerowicz says people “stop thinking” when they hear words like “Polish,” “social” or “national” everywhere. So people must move around. We need more apartments designated for lease. Today, private capital in Poland does not build apartments for rent.

Why not?

Because of laws, which protect a tenant so much he cannot even be thrown out for destroying the apartment.

Are you talking now about apartments in building cooperatives or classic privately owned apartments?

Private-owned as well. In Germany, private capital builds apartments for rent and there is a strong market there. In Poland we have absurd legislation, which, while passed under noble slogans, affects poor people negatively rather than helps them. If there was better legislation, we would have more apartments for rent and consequently rent rates would fall.

You also spoke of low private investment rates in Poland.

Why is that?

It’s called investment climate.

It comprises uncertainty as to the law, ever-changing rules and regulations, too much taxation, etc. These barriers must

be removed. But instead of doing that, the government is creating a new investment vehicle. Maybe this will start working in some time, but it will certainly not remove those barriers I spoke of.

Former Deputy Finance Minister Stanis∏aw Gomu∏ka says the government is trying to fill the investment hole that emerged after the completion of projects preparing Poland to host Euro 2012. That public spending gave the economy a boost.

That cannot replace private investment growth. That investment vehicle will not begin functioning for at least a year. The more it is public, meaning political, the more ineffective projects there will be, because they are political.

Traveling around Poland, I can see how many stadiums have been built recently just to please the crowds.

Going back to the issue of Poland’s investment climate, former Justice Minister Jaros∏aw Gowin did actually make some efforts to address this problem, didn’t he?

That is true. Deregulation is a very important element. I am surprised that Mr Gowin was

dismissed due to a few unfortunate words.

He was one of the few who tried to do something. Let’s hope that his successor will continue and go further. I also expect the prime minister to be active now. If you announce something is a priority, as he has classified deregulation, then you should treat it as a priority. And OECD research shows that Poland can, after Belgium, gain the most in terms of growth if it conducts complex deregulation reform.

We have doubled our GDP since 1991 thanks to a huge increase in the tempo of productivity, and if that most important variable is weakening then that is very worrying.

Deregulation increases competition, which in turn improves productivity, so it is absolutely necessary.

As a middle-income country, Poland should also start implementing its own innovative projects, but that would require reform of the higher education system.

“Innovation” is a key catchphrase at many Polish conferences nowadays. Singapore showed one way of achieving innovation, Silicon Valley has done it another way. What

COVER STORY

MAY 27 – JUNE 2, 2013

could be the Polish path to innovation?

Applying bad solutions does not result from not knowing good practices but from bad policies. Corruption and evergrowing bureaucracy are obviously harmful to innovation.

Of course, there are some issues we still need to examine, but we already know what the good and effective practices are.

When a democracy allows bad systemic solutions to prevail, as happened in Greece or Italy for example, it means you have to go further. If those who do damage have louder voices in a democracy, then we have to act, and not only in the political circles and among the intellectual elite, as I did for many years, but also on another level, shaping public opinion. I myself try to debunk flawed ideas which appear attractive.

Such as?

Such as the government’s seizing of assets from private pension funds (OFEs) and talk of seizing even more. Every government has two options: they can cut costs by limiting privileges or they don’t do that and have to reach for citizens’ savings. It’s either-or.

What do you think of suggestions that a referendum be held asking Poles whether they want to hold their pension savings in ZUS, the state pension fund, or in the private OFEs? We could also hold a referendum asking if miners want to lose their retirement privileges or not. After all, the answer would be obvious.

We are talking here about money that Poles have accumulated in their pension accounts over the years. It is their money, so why should they not be able to decide where it goes?

OK fine, but if those retirement privileges I spoke about are kept, then there will be pressure on the government to reach for those funds and that is why reform is the key. A referendum question could be: “Do you support keeping retirement privileges for miners, uniformed personnel etc.?” That would be a serious subject.

Each time macroeconomic data is announced, analysts start looking to the Monetary Policy Council. Will they cut rates or not? Are interest rates really that important?

If with the help of interest rates you could bring longterm economic growth ...

If that were the case, then America would be growing at 10 percent now.

The whole world would have that kind of growth [laughs].

When interest rates are low, then banks can keep zombie

“The deeper cause of the crisis lay in bad government policy” companies alive for a long period of time. These zombie companies are actually corpses. This leads to less available credit for SMEs, which create economic growth. You can pump the stock market but that is not necessarily where economic growth comes from.

Nor jobs.

Except on Wall Street [laughs].

Perception often trumps reality. The intentions people attribute to someone are important to how they receive their ideas. Many Poles believe when you talk of freedom, what you really want is freedom for the rich to do anything they want and that you are not fighting for the interests of the average folk.

How do you change people’s minds?

In the past five months I have had almost 60 public meetings and I never met with such opinions.

If someone like former prime minister and later head of Bank Pekao, Jan Krzysztof Bielecki, who is now the PM’s economic advisor, seems to be reviewing his previously very liberal economic views, should that not give us food for thought?

I am not referring to Mr Bielecki here, but look at how many entrepreneurs there are who talk nonsense about the economy. Even if someone has run a successful business, that does not necessarily mean he understands the economy.

Being an economics professor does not mean you understand the economy. Recently, I have held many meetings across Poland and do you know who says the dumbest things? Old-school economics professors. So please do not be swayed by someone holding the title of professor or the title of former prime minister.

That is all I am saying.

You write and talk a lot about personal responsibility. But when the crisis erupted, America’s bankers went hat in hand to the White House – and despite the fact that their actions had damaged the economy, they received state aid. They paid no price. What message does that send to the average Joe? In some of those cases in America, the bankers were fired or they left. Besides, you are assuming that the cause of the crisis emanated from the banks. Research shows that an environment was created in which it was profitable for financial institutions to take

great risks because these institutions seemed safe. Loans were subsidized, something we also had in Poland, called the “Family on its Own” program.

There were preferential loans in the US, etc.

And so, against conventional wisdom – or rather what I call conventional stupidity – the deeper cause of the crisis lay in bad government policy.

In England as well, where banks also received billions in bailouts?

Of course. During former Prime Minister Gordon Brown’s rule, we had a rapid increase in public spending and then a boom, which went bust. But politicians do not admit to mistakes and have to look for a scapegoat. When states first started saving banks decades ago, people quickly worked out that it was safer to lend money to big banks because if they have problems, the government will come to their rescue. That’s why we have the “too big to fail” banks.

Do you have any idea how to deal with that problem?

In my opinion, one should look into how to divide up those banks.

Reading your recent writings, I also noticed that you seem to question the rule whereby the state decides that during the agreement of a contract one party, for example, an employee, could be “structurally weaker,” and thus should be particularly protected by the state. Why do you question that?

That excerpt you are quoting still needs some context. What I mean is not automatically assuming that the worker is always the weaker party. In well-managed economies, jobs are created and then it is the worker who has a stronger position because companies must woo him.

That mentality whereby we assume the employee is always weaker leads to policies that multiply unemployment. If work is overly protected, entrepreneurs will be afraid to hire.

Does the Polish government still have any instruments available on hand to boost growth in the economy?

Like I said earlier, removing the barriers to doing business in Poland as well as deregulation. There is still space for a lot of reform in Poland. If we can force those through, then Poland will continue to catch up to the West at a good pace. ●

www.wbj.pl

13

BlackRock’s takeover of MGPA gives it Warsaw’s signature Rondo 1 building

The government’s new apartment subsidy program has some severe limitations

16

17

LOKALE IMMOBILIA

W a r s a w B u s i n e s s J o u r n a l ’s w e e k ly s u p p l e m e n t o n re a l e s t a t e , c o n s t r u c t i o n a n d d e v e l o p m e n t

Alma Tower cornerstone Developer UBM Polska held a cornerstonelaying ceremony at the construction site of its Alma Tower office project in Kraków. The 14-storey scheme will deliver around 10,000 sqm of office space in May 2014. Already, 50 percent of the development has been leased to Alma Market and its subsidiaries. The general contractor is PORR Polska.

Sodexo in Oxygen Park Outsourcing firm Sodexo has leased 1,500 sqm on the fifth floor of the Oxygen Park office building in Warsaw’s W∏ochy district. The development, currently being built by Yareal, will deliver 18,400 sqm of office space. ●

In this issue Senator sold . . . . . . . . . . . . . . . .15 Skeletor redevelopment . . . . .15 BlackRock/MGPA . . . . . . . . . . . .16 Tri-city offices . . . . . . . . . . . . . . .16 Apartment subsidies . . . . . . . .17 Prime Corporate Center . . . . . .17 Hotel on the water . . . . . . . . . .18 Karolkowa resumes . . . . . . . . .18

Senator office building sold for €120 million The sale marks the entrance of Union Investment into the Polish office market Developer Ghelamco Poland has sold its Senator office building in Warsaw to Union Investment Real Estate GmbH for €120 million. The building, which is located on ul. Bielaƒska in the capital’s ÂródmieÊcie district, comprises 25,000 sqm of space and 322 parking places.

The purchase is the first investment by the Hamburgbased real estate investment fund in the Polish office market. “The investment will contribute to expanding and refreshing the fund’s portfolio in the region,” Reinhard Kutscher, Union Investment’s CEO told Deal Magazin.

The Senator building was built on the site of the historic Bank Polski (Polish Bank) building and its architecture is modeled after that of the prewar structure. Opened in

September 2012, it acquired a BREEAM certificate of energy efficiency earlier this year.

As much as 80 percent of the six-storey scheme has been leased. The investment’s tenants include PKN Orlen, Rabobank Group, Discovery Legg Mason, Euronet and BRE Bank.

Part of Union Investment Group, Union Investment Real Estate GmbH is an open-ended real estate fund with assets under management worth some €14.2 billion.

Ghelamco Poland is also in talks with a potential buyer for another of its office facilities – the recently developed Mokotów Nova complex. The transaction will come through if the developer manages to secure a good price for the buildings, but company representatives stress that Ghelamco is under no pressure to sell.

Currently Ghelamco Poland is focusing on its Marynarska 12 and ¸opuszaƒ-

Located in the heart of the capital, the Senator building comprises 25,000 sqm of space plex, currently being built in the capital’s Wola district.

Warsaw Spire will comprise a 220-meter tower and two 55meter buildings. Scheduled

ska Business Park investments, both scheduled for delivery later this year, and on stepping up work on its flagship Warsaw Spire office com-

for completion in 2014, Warsaw Spire will deliver 100,000 sqm of GLA. Karolina Kowalska, Beata Socha

Office

‘Skeletor’ to stop haunting Kraków?

If Verity Development gets a zoning plan from the city, it could redevelop Kraków’s most infamous eyesore Kraków’s infamous unfinished “Skeletor” building, near the Rondo Mogliskie roundabout in the city’s Grzegórzki district, may be redeveloped next year into a modern office building. The investor Verity Development has recently applied for a zoning plan for the project.

Verity plans to extend the existing 92-meter, 24-storey structure with two additional storeys, which will bring the scheme’s height to 102 meters.

The company wants to start construction on the project at

the beginning of 2014, which would put its completion somewhere in mid-2015.

The new building will become the centerpiece of a complex called Treimorfa, designed by Kraków-based architectural studio DDJM Biuro Architektoniczne. It will comprise five to nine buildings of up to 35 meters in height each. The lower structures will probably host offices, apartments and hotels.

The “Skeletor” building, so named because it was never completed and remains just a “skeleton” of a tower, is considered Kraków’s most prominent eyesore. The building takes its name from a skeleton-like villain in the 1980s cartoon series “HeMan and the Masters of the

Universe.” Since construction began in 1975, the building has stood unfinished, an infamous symbol of the communist regime and a broken promise to create “Kraków’s Manhattan.”

The development of the “Skeletor” building, originally intended to become a regional office of the Polish Federation of Engineering Associations (Naczelna Organizacja Techniczna) was suspended and eventually canceled permanently due to economic constraints, the country’s political unrest and the imposition of martial law in Poland.

Verity Development wants the building to become a mixed-use structure, combining retail units on the first three floors with offices on the upper

floors. The company says it is also considering making it an apartment building. Initially Verity also considered turning the building into a hotel, but will likely have to give up the idea as the floor plan doesn’t

favor such a solution.

Although Treimorfa’s design was ready in 2010, environmental organizations have managed to hold up construction.

Karolina Kowalska

COURTESY OF VERITY DEVELOPMENT

Global management consulting, technology services and outsourcing company Accenture has leased 1,150 sqm in the Jasnogórska 11 office building in Kraków. The property, owned by MIX Jasnogórska, is located near the Rondo Ofiar Katynia roundabout and offers 8,400 sqm of GLA. CBRE advised Accenture in the transaction.

Office

COURTESY OF GHELAMCO

Accenture in Jasnogórska 11

MAY 27 – JUNE 2, 2013, LI 18/20

Once redeveloped, the eyesore will become a 120-meter tower

Warsaw Business Journal presents Real Estate weekly newsletter • Know about the newest projects before they’re on the market • Keep up to date on the latest tenders and auctions • Learn the latest trends in Poland’s dynamic office, residential and retail sectors • Find out who’s who in Polish real estate To subscribe: e-mail subscribe@wbj.pl or call +48 22 639 85 68, ext. 201 and sign up for free two-week no-obligation trial subscription

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LOKALE IMMOBILIA – REAL ESTATE

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MAY 27 – JUNE 2, 2013

Office

Office

Rondo 1’s owner to be bought by BlackRock

Tenant-friendly in Tri-city

Rondo 1 was the first building in Europe to use a lightcontrol system based on the digital technology DALI. Every bulb can be operated through a computer network.

The remote-controlled blinds in the windows change their angle to maximize sunlight during the day.

Karolina Kowalska

More space to come Tri-city office market statistics Gross take-up* (sqm)

Q1 2013

y/y change

12,600

-20,500

➔

MGPA and London & Regional Properties. In 2008 MGPA acquired the remaining 50 percent of the building from its joint venture partner.

The 40-storey class-A scheme consists of two parts – a 10storey building completed in 2005 and a 192-meter glass tower delivered in 2006. It comprises 60,000 sqm of GLA.

“The office market in Tri-city is beginning to catch up with Wroc∏aw in terms of the volume of high-quality space,” commented Magdalena Reƒska, head of Jones Lang LaSalle’s Tri-city office.

12-month outlook

➔

Net tak-up (sqm)

7,000

-26,100

Vacancy (sqm)

56,100

+31,700

➔

Rondo 1 is a class-A complex comprising 60,000 sqm

Catching up

“Office buildings in the agglomeration are modern, and the vacancy rate is attractive for tenants who are considering opening their offices in the Tri-city area,” Ms Reƒska added.

At the end of Q1 2013, more than 56,000 sqm was vacant, giving the Tri-city market a vacancy rate of 13.7 percent. The vacancy rate may increase further as new office buildings are delivered.

Headline rents in Tri-city stood at €12 to €14/sqm/month at the end of Q1 2013. However, additional incentives offered by landlords cause effective rents to be lower.

JLL’s experts are of the view that office market conditions will most likely remain tenantfavorable in both 2013 and KEK 2014.

13.7

+6.7 p.p.

➔

The Tri-city area, which encompasses the coastal cities of Gdaƒsk, Gdynia and Sopot, is the fourth-largest office market in Poland (behind Warsaw, Kraków and Wroc∏aw), and the largest in northern Poland, according to Jones Lang LaSalle’s recent Tri-city Office Market report. The total office space in Tri-city is currently estimated at 409,000 sqm, with 31,600 sqm delivered in Q1 2013.

As Gdaƒsk accounts for more than 60 percent of office space in the Tri-city area, it remains the leading office destination in the region. It is followed by Gdynia (30 percent of the total office stock) and the tourist-driven Sopot (10 percent).

Out of the 80,000 sqm of modern office space currently under construction in the Tricity region, 68,000 sqm is located in Gdaƒsk. Nearly 53,000 sqm should be delivered between Q2 and Q4 2013, 61

percent of which has been preleased. An additional 63,000 sqm of office space is scheduled for completion in 2014.

In Q1 2013, more than 12,600 sqm was leased in the region, approximately 7,000 sqm of which came in new deals. Major renewals signed in Q1 2013 included Geoban (2,800 sqm in ¸u˝ycka Office Park), Acxiom Polska (1,600 sqm in Garnizon.biz) and First Data Global Service (1,200 sqm in Arkoƒska Business Park).

Completions (sqm)

31,600

+31,600

➔

New York-based global real estate investor BlackRock Inc. entered into a definitive agreement to purchase MGPA – an independent private equity firm and the owner of the Rondo 1 office building in the center of Warsaw.

By acquiring MGPA, BlackRock will become the new owner of its asset portfolio, worth some €9.3 billion ($12 billion). The transaction will bring the total amount invested by BlackRock in real estate worldwide to €19.38 billion ($25 billion). The terms and the value of the deal have not been disclosed.

The transaction is set to close in Q3 2013. Until then, both firms will have to meet all the customary regulatory approval requirements and closing conditions.

Rondo 1 was developed by German-based Hochtief and purchased in June 2006 by MGP Europe Fund II, a 50/50 joint venture formed by

COURTESY OF CBRE

By purchasing MGPA, the American firm will increase the total amount it has invested in real estate to €19.38 billion

With big vacancy rates and 53,000 sqm of new space expected to be delivered in 2013, tenants can find attractive office rents in Poland’s northern agglomeration

Under construction (sqm)

80,800

-14,500

➔

12-14

0%

➔

Vacancy rate (%)

Prime Headline Rent (EUR/sqm/month)

* Gross take-up = Net take-up including registered renewals Source: Jones Lang LaSalle

AVAILABLE NOW! “Investing in Poland is a one-stop shop for information on Poland’s investment landscape.”

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MAY 27 – JUNE 2, 2013

LOKALE IMMOBILIA – REAL ESTATE

Economy

Another government subsidy program will benefit Poles buying new apartments from developers The new government subsidy program called “Mieszkanie dla M∏odych” (“Apartments for the Youth”), has been approved by the government.

If passed by Poland’s parliament, it will come into force at the beginning of 2014. The previous government subsidy initiative, “Rodzina na Swoim” (“Family on its Own”), which cost the state budget some z∏.1 billion, expired at the end of 2012.

Some z∏.3.3 billion will be paid out from the state budget within five years, until 2018.

In the first year, beneficiaries will receive z∏.600 million in

subsidies. The Construction Ministry estimates that about 115,000 Poles will benefit from the program.

The program is designated for both married couples and single persons under the age of 35 who are buying their first home. The state will subsidize 10 percent of the apartment’s value for beneficiaries who have no children and 15 percent for those with children.

As the program is a part of the government’s pro-family policy, an additional 5 percent reimbursement will be available when a third or subsequent child is born within five years from the purchase of the apartment.

Stringent constraints As in the previous government program, subsidies from the current initiative will be

Get your own place, but...

The government program’s price limits in major Polish cities vs actual average prices City

Price limits (z∏.)

Avg. market price (z∏.)

Difference

Gdaƒsk

5,178

5,336

3%

Olsztyn

4,255

4,189

2%

¸ódê

4,598

4,536

1%

Kielce

4,115

4,516

-9%

Opole

3,819

4,203

-9%

Poznaƒ

4,820

5,414

-11%

Bia∏ystok

3,835

4,357

-12%

Rzeszów

3,839

4,407

-13%

Bydgoszcz

4,020

4,615

-13%

Warsaw

5,405

6,466

-16%

Szczecin

3,800

4,567

-17%

Lublin

3,857

4,699

-18%

Wroc∏aw

4,249

5,562

-24%

Katowice

4,262

5,685

-25%

Kraków

4,452

6,210

-28%

Average

4,300

4,984

-13% Source: Expander

SHUTTERSTOCK

New apartment subsidy has limited reach

The program aims to be pro-family, but how much will it really help? ation of the family or the developer will be by then.”

But the real obstacle for the potential beneficiaries are the limits on the price per sqm, which are significantly lower than the average market price in almost all major cities in Poland. In Warsaw the price was set at z∏.5,405, while the average price is 16 percent higher and stands at z∏.6,466. It is next to impossible to buy an apartment for less than z∏.6,000 per sqm, even in the most distant districts of the capital.

And Warsaw is not the exception here, either. In Kraków the limit is even 28 percent lower than the average price and stands at z∏.4,452 (as opposed to the average price z∏.6,210).

“In most cities, people will be able to choose an apartment only on the outskirts,” Mr Turek said.

subject to certain limitations.

The state will reimburse the beneficiaries a sum equivalent to the purchase cost of up to 50 sqm of an apartment no bigger than 75 sqm.

As opposed to its predecessor, the program will benefit only those buying new apartments from developers, excluding the secondary market and single-family houses.

Experts are skeptical of the effectiveness of the program. Bartosz Turek, a real estate market analyst at Home Broker, believes that under current economic conditions, the primary market offers too many unknowns to be attractive to people with limited financing options.

“On the secondary market, a person or family can buy an apartment immediately,” said Mr Turek. “For a new apartment they would have to wait some 18 months, and nobody knows what the financial situ-

Karolina Kowalska

Office

Construction of Prime Corporate Center could launch this year

Last Wednesday developer Golub GetHouse announced that it plans to start construction on a building in Warsaw, perhaps as soon as in the fourth quarter of 2013 and finish by the end of the third quarter of 2015. The 23-storey building, called Prime Corporate Center, will be erected on a plot near the capital’s ul.

Grzybowska, between ul.

Towarowa and ul. Wronia, in the Wola district.

Prime Corporate Center will have some 20,148 sqm of leasable space, 23 floors with an additional five underground levels, column-free

floor plates and floor-to-ceiling windows.

“We want Prime Corporate Center, like Warsaw Financial Center, to be a building that will set the best world-class standards,” said Cezary Jarzàbek, CEO of Golub GetHouse.

The 83-meter Prime Corporate Center is being designed by the Solomon Cordwell Buenz architectural studio, while Epstein studio is designing the interior.

As Warsaw’s central business district grows more congested, many companies have taken an interest in districts near the center, such as Wola.

However, Prime Corporate Center will be built just meters from the enormous, underconstruction Warsaw Spire office building. This will significantly impact rent rates, something future developers

will have to take into account when considering building another scheme in the area.

Indeed, given the competition in the immediate vicinity of the planned scheme and the current market climate, Golub GetHouse is remaining cautious about launching the investment. “If we manage to find a tenant for 7,000 sqm in the scheme, we will launch construction as soon as in Q4 2013,” said Mr Jarzàbek.

To heighten potential tenants’ interest in leasing space in Prime Corporate Center, the investor says the building may be renamed after a company which leases a significant part of the building.

Golub GetHouse, a joint venture of the Chicago-based Golub & Company and Poland-based GetHouse Developer, is the owner of three other buildings in War-

saw: Warsaw Financial Center, International Business Center and Warsaw Corporate Center.

Marta Mardosz

COURTESY OF GOLUB GETHOUSE

Golub GetHouse plans to start construction on Prime Corporate Center in Q4 of 2013, provided it can find a tenant for 7,000 sqm

The 23-storey building is to be 83 meters tall

www.wbj.pl

17

18

LOKALE IMMOBILIA – REAL ESTATE

www.wbj.pl

MAY 27 – JUNE 2, 2013

Hospitality

Office

Historic granary to be redeveloped as hotel

Karolkowa Business Park project to continue

The five-star hotel will be accessible by air, water and land, the investor says constructed once it purchases an adjacent plot to the one where the granary is located, currently the property of the Polish military. The real estate company from Nowy Dwór Mazowiecki is also talking of building a helipad and a marina to provide better access to the hotel.

Developer Banaszek NieruchomoÊci, specializing in multi-family housing, acquired the property in 2010 from the town of Nowy Dwór Mazowiecki for z∏.1.2 million. It then contracted the Enbud architectural studio to design a hotel that would incorporate

the historic walls of the granary. The investor is still waiting for the approval of the curator of historic buildings. The company says that as soon as it gets the green light, it will launch construction.

As of today, the curator has only allowed for removing excessive tree overgrowth endangering the historic walls of the building.

The granary is not the developer’s only involvement in historic buildings. Its Borodino restaurant is located within the Modlin Fortress, the biggest 19th-century fortress in Poland.

Karolina Kowalska

After a more than year-long pause, construction on Karolkowa Business Park will resume under a new investor Israeli-owned developer Asbud has bought a 50 percent stake in Karolkowa Business Park from developer Ablon Group. Construction on the class-A scheme, located on ul.

Karolkowa in Warsaw’s Wola district, was launched in August 2011. After less than a year the project was put on hold due to the investor’s financial difficulties.

Ablon Group terminated its agreement with Investkredit Bank, which provided the financing for the scheme, due to “a breach of contractual obligations” on the part of the bank, according to the company. After the project was halted, Ablon arranged with Karmar, the general contractor of the investment, to alter the project’s schedule and resume its construction by May 2013.

“We remain optimistic about the viability of Karolkowa Business Park and are confident of securing alter-

COURTESY OF ASBUD

A five-star hotel and conference center will be developed within an old and currently decrepit granary located on the tip of a peninsula at the confluence of the Vistula and the Narew rivers, some 35 km north of Warsaw.

The rectangular-shaped building, designed by a famous 19th-centrury Polish architect Jan Jakub Gay in the NeoRenaissance style, was described by journalists at that time as one of the most palatial buildings in its part of Poland. Due to its picturesque location, the structure, built in 1844, has been used as a site for historical films.

The building is well-known to locals and Varsovians, as it can be seen from airplanes taking off and landing at the nearby Modlin Airport.

At present, the granary has no road connection and is only accessible by water. The investor says a road will be

COURTESY OF BANASZEK NIERUCHOMOÂCI

Banaszek NieruchomoÊci plans to transform a 19thcentury granary near Modlin

Karolkowa Business Park will offer 15,000 sqm of leasable office space native financing in a short period of time,” Uri Heller, CEO of Ablon Group, said in a statement last year.

Now, with Asbud as its partner, construction on the investment will be relaunched. It is scheduled to be completed within the next 16 months and delivered in the third quarter of 2014.

Karolkowa Business Park will offer 15,000 sqm of leasable office space and 3,000 sqm of retail and entertainment space.

The building will feature a roof garden and is expected to obtain BREEAM certification of energy efficiency and envi-

ronmental performance.

The scheme will be constructed on the site of the former Polish Philips Factory (Polskie Zak∏ady Philips). The building’s facade will feature a crenelated roof line reminiscent of the former factory.

Developer Asbud, a part of Asbud Holdings, has been active in the Polish market since 1997. Its main shareholders are Shikun & Binui Group and STR Real Estate Group.

Until recently, Asbud has concentrated on residential projects. Karolkowa Business Park is its first office scheme.

Karolina Kowalska

THE LIST

MAY 27 – JUNE 2, 2013

www.wbj.pl

19

Financial Services

Investment Fund Management Companies Ranked by total net assets under management (as of March 2013)

www.bookoflists.pl

Przewodnik po polskim biznesie i gospodarce

Rank

A guide to Polish business and industry

Company name Address Tel./Fax E-mail Web page

1

Towarzystwo Funduszy Inwestycyjnych PZU SA Al. Jana Paw∏a II 24, 00-133 Warsaw 22 582-4543/22 582-2151 tfi.sprzedaz@pzu.pl, www.pzu.pl

20,147.0

Yes 24

9 500

123 1999

PZU - 100% None

Krzysztof Tokarski

2

ING Towarzystwo Funduszy Inwestycyjnych SA ul. Topiel 12, 00-342 Warsaw 22 108-5700/22 108-5701 biuro@ingim.pl, www.ingtfi.pl

13,370.0

Yes 30

3 400

49 1997

ING Investment Management Polska - 100% None

Leszek Jedlecki

3

Aviva Investors Poland Towarszystwo Funduszy Inwestycyjnych SA ul. Domaniewska 44, 02-672 Warsaw 801-888-444/22 557-4075 bok@aviva.pl, www.avivainvestors.pl

11,702.0

Yes 2

WND WND

WND 1998

Aviva Towarzystwo Ubezpieczeƒ na ˚ycie - 100% None

Marek Przybylski

4

PKO Towarzystwo Funduszy Inwestycyjnych SA ul. Pu∏awska 15, 02-515 Warsaw 22 358-5600/22 521-5601 kontakt@pkotfi.pl, www.pkotfi.pl

10,729.0

Yes 17

4 1,100

88 1997

PKO Bank Polski - 100% None

Piotr ˚ochowski

5

BZ WBK Towarzystwo Funduszy Inwestycyjnych SA Pl. WolnoÊci 15, 60-967 Poznaƒ 61 855-7322/61 855-7321 tfi@bzwbk.pl, www.arka.pl

10,210.0

Yes 20

5 1,429

134 1998

BZ WBK AIB Asset Management 100% None

6

Skarbiec Towarzystwo Funduszy Inwestycyjnych SA ul. Nowogrodzka 47A, 00-695 Warsaw 22 588-1843/22 588-1944 www.skarbiec.pl

9,938.3

42

5 1,819

64 1997

7

Copernicus Capital TFI SA ul. Grójecka 5, 02-019 Warsaw 22 440-0101/22 440-0106 biuro@copernicus.pl, www.copernicus.pl

8,040.0

53

2 92

8

Forum Towarzystwo Funduszy Inwestycyjnych SA ul. Ksi´cia Józefa 186, 30-243 Kraków 12 429-5593/12 429-5593 info@forumtfi.pl, www.forumtfi.pl

7,530.0

49

9

Union Investment Towarzystwo Funduszy Inwestycyjnych SA ul. Polna 11, 00-633 Warsaw 22 449-0477/22 449-0476 tfi@union-investment.pl, www.union-investment.pl

6,767.0

10

KBC Towarzystwo Funduszy Inwestycyjnych SA ul. Chmielna 85/87, 00-805 Warsaw 22 581-2332/22 581-2333 biuro@kbctfi.pl, www.kbctfi.pl

11

Total net assets (z∏.mln)

Participation in 3rd pillar of pension fund / Number of funds managed

Number of licensed investment advisors / Number of customer service outlets

Total number of employees / Year founded in Poland

Ownership: Polish / Foreign

Top local executive / Title

Supervisory Board Chairman

Ryszard Trepczyƒski

President

President

President

President

Marten Nijkamp

WND

Jakub Papierski

Jacek Marcinowski

Mateusz Morawiecki

Skarbiec Holding - 100% None

Marek Winicjusz Rybiec

Bogus∏aw Grabowski

43 2004

Copernicus Securities - 100% None

Marcin Billewicz

3 2

29 2007

WND

Yes 5

6 WND

59 1995

None Union Asset Management Holding - 100%

Ma∏gorzata Góra-Dubiela

6,187.0

Yes 53

3 1

60 2001

None KBC Asset Management - 100%

Katarzyna Szczepkowska

Millennium Towarzystwo Funduszy Inwestycyjnych SA ul. Stanis∏awa ˚aryna 2A, 02-593 Warsaw 22 598-2970/22 598-2973 millenniumtfi@millenniumtfi.com.pl, www.millenniumtfi.pl

3,346.0

2

3 445

26 2001

Millennium Dom Maklerski None

Robert Borecki

12

BPH Towarzystwo Funduszy Inwestycyjnych SA ul. Bonifraterska 17, 00-203 Warsaw 22 538-9799/22 538-9798 info@bphtfi.pl, www.bphtfi.pl

3,149.0

Yes 13

5 WND

52 1998

BPH PBK Zarzàdzanie Funduszami - 50.1% General Electric Capital Corporation - 49.9%

13

Legg Mason Towarzystwo Funduszy Inwestycyjnych SA Pl. Pi∏sudskiego 2, 00-073 Warsaw 22 337-6600/22 337-6699 info@leggmason.com, www.leggmason.pl

3,129.0

Yes 9

3 1

33 1998

None Legg Mason - 100%

Tomasz J´drzejczak

14

Towarzystwo Funduszy Inwestycyjnych Allianz Polska SA ul. Rodziny Hiszpaƒskich 1, 02-685 Warsaw 22 567-4875/22 567-4609 tfi@allianz.pl, www.allianz.pl/tfi

2,717.0

Yes 11

2 1,300

48 2003

TU Allianz Polska - 100% None

Jaros∏aw Skorulski

15

Investors Towarzystwo Funduszy Inwestycyjnych SA ul. Mokotowska 1, 00-640 Warsaw 22 378-9100/22 378-9101 office@investors.pl, www.investors.pl

2,084.9

Yes 39

4 1,500

50 2005

Investors Holding - 100% None

Zbigniew Wójtowicz

16

Noble Funds TFI SA ul. Domaniewska 39, 02-672 Warsaw 22 288-8130/22 288-8131 biuro@noblefunds.pl, www.noblefunds.pl

1,858.7

14

6 WND

31 2006

Getin Noble Bank - 100% None

Mariusz Staniszewski

17

Idea Towarzystwo Funduszy Inwestycyjnych SA ul. Z∏ota 59, 00-120 Warsaw 22 489-9430/22 489-9448 info@ideatfi.pl, www.ideatfi.pl

1,847.0

25

2 1

21 1999

DM IDMSA - 57.9%; Warsaw Equity Management - 9.9%; other shareholders - 27.2% Polish American Investment Fund 5%

18

Amplico Towarzystwo Funduszy Inwestycyjnych SA ul. Przemys∏owa 26, 00-450 Warsaw 22 523-5710/22 523-5711 pok@info.metlifeamplicofundusze.pl, www.metlifeamplico.pl

1,293.1

19

2 900

27 2003

Amplico Life - 100% None

Krzysztof Stupnicki

19

BPS Towarzystwo Funduszy Inwestycyjnych SA ul. P∏ocka 11/13, 01-231 Warsaw 22 578-1450/22 578-1451 biuro@bpstfi.pl, www.bpstfi.pl

923.4

16

4 1

28 2010

Bank Polskiej Spó∏dzielczoÊci 100% None

Krzysztof St´pieƒ

20

Provide Towarzystwo Funduszy Inwestycyjnych SA ul. Ch∏odna 51, 00-867 Warsaw 22 460-9950/22 460-5220 biuro@providetfi.pl, www.providetfi.pl

9.5

2

2 1

5 2010

Altkom Akademia WND

Rafa∏ Zimakowski

Notes: WND = Would Not Disclose. Research for The List was conducted in March 2013. Number of employees and ownership structure are as of March 2013. All information pertains to the companies’ activities in Poland. Companies not responding to our survey are not listed.

President

President

Wies∏aw OleÊ President

President

President

President

Artur Czerwoƒski President

President

President

President

President

Agnieszka Rachwalska-Marko

Anna Pawlak

Mateusz Rodzynkiewicz

Alexander Schnidler

Gert Rammeloo

Mariusz Dàbkowski

Marzena Bielecka

Joseph P. LaRocque

Zbigniew Âwiàtek

Jaros∏aw Jatczak

Rados∏aw Stefurak

Grzegorz Leszczyƒski

President

President

President

President

Eric Clurfain

Jerzy Tofil

Jaros∏aw Ubysz

To the best of WBJ ’s knowledge, the information is accurate as of press time. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Corrections or additions to The List should be sent, on official letterhead, to Warsaw Business Journal, attn. Monika Brysiak, ul. Elblàska 15/17, 01-747 Warsaw, via fax to +48 22 257-7500, or via e-mail to mbrysiak@wbj.pl. Copyright 2013, Valkea Media SA. The List may not be reprinted or reproduced in whole or in part without prior written permission of the publisher. Reprints are available.

20

MARKETS

www.wbj.pl

MAY 27 – JUNE 2, 2013

Stocks report

world stock indices DJIA

NASDAQ

15,294.50 (May 23 close)

S&P500

3,459.42 (May 23 close)

0.40% (for the week)

FTSE100

1,650.51 (May 23 close)

-0.17% (for the week)

DAX

6,696.80 (May 23 close)

0.00% (for the week)

0.13% (for the week)

Profit taking

NIKKEI 8,351.98 (May 23 close)

14,483.98 (May 23 close)

-0.21% (for the week)

-3.68% (for the week)

CHANGE: 14.03% (year to May 23)

CHANGE: 11.15% (year to May 23)

CHANGE: 12.86% (year to May 23)

CHANGE: 11.11% (year to May 23)

CHANGE: 7.37% (year to May 23)

CHANGE: 35.51% (year to May 23)

52-week high: 15,542.40

52-week high: 3,532.04

52-week high: 1,687.18

52-week high: 6,875.60

52-week high: 8,553.74

52-week high: 15,942.60

52-week low: 12,035.09

52-week low: 2,726.68

52-week low: 1,266.74

52-week low: 5,229.76

52-week low: 5,914.43

52-week low: 8,238.96

Andrew Nawrocki WBJ market analyst It was a rather sluggish week, with stock sentiment slowly turning lukewarm at best. Polish indices have risen to impressive levels in recent weeks, with the midcap mWIG40 seeing the largest gains.

Monday again saw midsized companies witness the heftiest gains, with the broad WIG index gaining 1.77 percent. Pushing shares up for the index was Grupa Azoty’s stock, gaining up to 8 percent throughout the day. The WIG saw a 0.1 percent increase, while the blue-chip WIG20 opened the week with a loss of half a percent.

Profit-taking seemed to take hold on Tuesday, with indices throughout Europe closing lower.

Polish stocks saw little action for most of Wednes-

Major indices WIG

45,687.76 (May 23 close)

WIG20

2,359.42 (May 23 close)

23.05

22.05

21.05

20.05

17.05

16.05

15.05

14.05

13.05

10.05

09.05

08.05

07.05

23.05

22.05

21.05

20.05

17.05

16.05

15.05

14.05

13.05

2,200

10.05

43,000

09.05

2,260

08.05

43,800

07.05

2,320

06.05

44,600

02.05

2,380

30.04

45,400

29.04

2,440

26.04

46,200

25.04

2,500

24.04

47,000

06.05

52-week low: 2,035.80

02.05

Change year to May 23: -10.16%

30.04

52-week low: 36,653.28

29.04

52-week high: 2,628.36

Change year to May 23: -5.03%

26.04

Change for the week: -1.29%

25.04

52-week high: 48,222.72

24.04

Change for the week: -0.66%

Top 5 GANT HYPERION MEWA GREENECO TOYA

Closing 1.70 2.95 0.21 1.18 3.34

% change (week) 52-week high 26.87 7.49 26.07 3.18 23.53 0.36 22.92 3.56 22.34 3.34

52-week low 1.08 1.75 0.15 0.60 1.80

Top 5 EUROCASH PGNIG PZU BRE BORYSZEW

Closing 60.50 6.10 436.10 361.00 0.39

% change (week) 5.22 2.87 0.60 0.28 0.00

52-week high 63.20 6.20 455.00 379.00 0.67

52-week low 36.59 3.63 273.95 248.49 0.38

Bottom 5 REGNON KBDOM PRIMAMODA BIOTON EUIMPLANT

Closing 0.01 0.03 1.95 0.04 0.09

% change (week) -50.00 -25.00 -23.23 -20.00 -18.18

52-week low 0.01 0.02 1.85 0.03 0.07

Bottom 5 JSW PGE LOTOS ASSECOPOL KERNEL

Closing 73.09 16.42 38.90 41.22 56.00

% change (week) -8.47 -6.06 -5.35 -5.24 -5.08

52-week high 101.00 19.54 45.45 48.32 76.00

52-week low 67.15 15.11 22.66 36.84 47.25

52-week high 0.07 0.19 5.45 0.10 0.15

Currency report

Z∏oty remains stable

Other indices sWIG80

11,050.12 (May 23 close)

WIG-Banki

6,494.42 (May 23 close)

23.05

22.05

21.05

20.05

17.05

16.05

15.05

14.05

13.05

10.05

09.05

08.05

07.05

23.05

22.05

21.05

20.05

17.05

16.05

15.05

14.05

13.05

10.05

6,100

09.05

30.0

08.05

6,200

07.05

30.4

06.05

6,300

02.05

30.8

30.04

6,400

29.04

31.2

26.04

6,500

25.04

31.6

24.04

6,600

06.05

52-week low: 5,163.30

02.05

Change year to May 23: -3.40%

30.04

52-week low: 29.98

29.04

52-week high: 6,723.16

Change year to May 23: -9.09%

26.04

Change for the week: -0.99%

25.04

52-week high: 38.20

24.04

Change for the week: -1.92%

32.0

Adam Narczewski X-Trade Brokers DM SA

23.05

22.05

21.05

20.05

17.05

16.05

15.05

14.05

13.05

10.05

52-week low: 8,984.43

09.05

06.05

02.05

23.05

22.05

21.05

20.05

17.05

30.20 (May 23 close)

52-week high: 11,245.80

SOURCE: WSE

NewConnect

16.05

15.05

14.05

13.05

10,000

10.05

2,400

09.05

10,220

08.05

2,480

07.05

10,440

06.05

2,560

02.05

10,660

30.04

2,640

29.04

10,880

26.04

2,720

25.04

11,100

24.04

2,800

30.04

Change year to May 23: 4.93%

29.04

52-week low: 2,147.52

26.04

Change year to May 23: 7.31%

25.04

Change for the week: 0.67%

24.04

52-week high: 2,788.61

08.05

2,756.32 (May 23 close)

Change for the week: 0.59%

07.05

mWIG40

day, as investors nervously awaited comments by Fed chief Ben Bernanke on the topic of monetary easing in upcoming quarters. Investors closed the day unsatisfied with the Fed boss’s comments, with indices in Poland closing relatively flat.

On Thursday, after poor economic data from China was released and uncertainty grew concerning the future of monetary stimulus by the Federal Reserve, stocks dipped, with both the WIG and WIG20 shedding half a percent. Shares of KGHM and PGE were hit particularly hard, both falling nearly 3 percent.

Friday saw a much-needed rebound, as global sentiment improved, with the WIG gaining 1 percent and the WIG20 rising by 1.07 percent. ●

In a week with a full macroeconomic calendar, the most important event was a statement from Ben Bernanke, who said he does not see any reason for the Fed to change its current monetary policy. That means the quantitative easing program is still in play, and the statement helped the EUR/USD to regain some ground. The corrective upward movement lifted it to $1.2950 by the end of the week.

However, it seems the market has lost steam, and there is plenty of question as to whether there will be any further advances. On the local market, the macroeconomic data released last week disappointed investors.

Average wages in April increased by 3 percent on a yearly basis (one of the elements causing inflation) but industrial production in-

creased by just 2.7 percent.

More disappointing news came on Friday with retail sales declining by 0.2 percent in April (annualized) while the unemployment rate remained at 14 percent. It seems Andrzej Bratkowski from the National Bank of Poland’s interest-rate setting Monetary Policy Council (RPP) is right when he says that interest rates should be cut to 2 percent if economic indicators do not improve.

The z∏oty should not be hit very hard, since the market has already priced in at least one more interest rate cut. During the course of last week, the EUR/PLN climbed to z∏.4.20 while, surprisingly, the USD/PLN was the more stable of the z∏oty currency pairs, finishing the week at z∏.3.24, precisely where it started the week. ●

3.1828 24.05

SOURCE: NBP

3.1418 22.05

3.2233

3.1611 21.05

23.05

3.1574

3.1688 17.05

0.1036

0.1035 24.05

3.13

20.05

PLN-100JPY

3.23

23.05

0.1036 22.05

0.1040 21.05

20.05

0.1035 17.05

3.3732

3.3579 24.05

0.101

0.1037

PLN-RUB

0.105

23.05

3.3337 22.05

3.3570 21.05

20.05

3.3633 17.05

4.9109

4.8968 24.05

3.0

3.3457

PLN-CHF

3.5

23.05

4.8781 22.05

4.9328 21.05

20.05

4.9516 17.05

3.2587

3.2400 24.05

4.7

4.9236

PLN-GBP

5.0

23.05

3.2322 22.05

3.2490 21.05

20.05

3.2520 3.0

3.2380

PLN-USD

3.5

17.05

4.2049 24.05

23.05

4.1813 22.05

4.1820 21.05

20.05

4.1834 17.05

4.1

4.1683

PLN-EUR

4.2

4.2020

currency rates

SPORTS

MAY 27 – JUNE 2, 2013

Soccer

21

American football

Legia edges out Lech in game for title

Eagles trounce Rebels

COURTESY OF T-MOBILE EKSTRAKLASA/X-NEWS

Ivica Vrdoljak (foreground) scored the only goal in the matchup between the league’s top two teams the box, and Ivica Vrdoljak turned the penalty into the only goal of the game.

Thanks to this, Legia is now sitting comfortably at the top of the table, five points ahead of Lech. The Varsovians need only four points in their last three games to guarantee themselves the championship. “If we don’t win the title it’ll be a criminal offense,” said Legia coach Jan Urban after the game.

In other games on the same

weekend, GKS Be∏chatów beat Zag∏´bie Lubin 3-2 thanks to some amazing saves from their goalkeeper. GKS has now increased its chances of remaining in the top division significantly. The Be∏chatów side, which earned just six points in the first round, has collected 20 points this spring, and currently has a three-point advantage over the last-place Podbeskidzie Bielsko-Bia∏a.

Jacek Ciesnowski

The Warsaw Eagles made easy work of the AZS Silesia Rebels, getting four touchdowns from Clarence Douglas Anderson on the way to victory.

Mr Anderson scored on a 1-yard run and a 2-yard reception in the first quarter, finishing off the first two Warsaw drives of the game. Eagles wide receiver Krzysztof Stojak then hauled in a 17-yard pass from quarterback Shane Gimzo in the back of the end zone to give the Eagles a 19-0 lead that they would hold going into the locker room for halftime.

The Eagles would add 20 more points in the third quarter to put the game away. Mr Gimzo began the run with his third touchdown pass of the game, another 2-yarder to Mr Anderson. Silesia punted the ball away on their next possession, and they made the mistake of kicking it to Mr Anderson, who had been threatening to break away on returns all

COURTESY OF MARCIN FIJA¸KOWSKI

Clarence Anderson bolstered his MVP bid with four more touchdowns in the 39-0 rout

After a crucial win, only a disaster can keep the Warsaw side from winning the championship The game between Legia Warszawa and Lech Poznaƒ on May 18 had the feel of a true championship game. Lech trailed Legia in the T-Mobile Ekstraklasa league standings by only two points, and could have taken over the Warsaw side in the league table with a win. Whoever won had the best chance of going on to obtain this year’s title.

The pressure didn’t get to the players. Although it certainly wasn’t the game of the season, both teams fought hard for every ball. In the end, the midfielders made the difference – Legia’s dominated the pitch, fought just a little bit harder and ran a little bit faster than their opponents.

That was the case in the decisive play of the game.

With some five minutes remaining, Jakub Kosecki received a pass that put him one-on-one with the goalkeeper, ran for his life, got fouled in

www.wbj.pl

The Eagles' Clarence Anderson hauls in a pass from QB Shane Gimzo game long. This time he took it the distance, scoring on a punt return for the third time this season. He now has 15 touchdowns on the year, giving him the overall Topliga lead.

Warsaw is currently in second place in the Topliga North Division, with a record of 4-2.

After playing on five consecutive weekends, the Eagles will host their crosstown rivals, the Spartans, on June 1. The two

teams from the capital have never faced each other.

The other games during the weekend of May 18-19 were all lopsided as well, with the Wroc∏aw Devils beating Koz∏y Poznaƒ 33-14, the Wroc∏aw Giants crushing the Warsaw Spartans 83-0 and the Gdynia Seahawks topping the Zag∏´bie Steelers Interpromex 42-7.

Alex Zarganis

22

LIFESTYLE

www.wbj.pl

MAY 27 – JUNE 2, 2013

Concert

Dr House – in the house

COURTESY OF WARNER MUSIC HAAK78/SHUTTERSTOCK.COM

Hugh Laurie

Slayer lead singer and bassist Tom Araya

Headbanger’s ball Impact Fest 2013

Hugh Laurie June 6 Sala Kongresowa Pl. Defilad 1 Warsaw We know him from TV, where he starred in popular shows such as “Blackadder” and “House M.D.,” but the actor and comedian has another, musical side. With two albums in his catalog Mr Laurie has embarked on a European tour, with a stop in Warsaw.

Hugh Laurie’s music is a blend of blues, jazz and a little

bit of R&B and tango. Along with his musician friends, including Tom Jones, Dr. John and Jean McClain, he recorded his own versions of many American standards such as W.C. Handy’s “Saint Louis Blues” and Robert Johnson’s “They’re Red Hot.” Mr Laurie, who’s an accomplished musician and plays piano, guitar, drums, harmonica and saxophone, will be accompanied by The Copper Bottom Band for the upcoming tour.

In Warsaw he will perform tracks from his debut album “Let Them Talk,” which was released in 2011 and sold over 1 million copies worldwide, as well as from his follow-up, released in May this year, entitled “Didn’t it Rain.”

While the first album concentrated on New Orleans sound, the second one branches further into other US regions.

Tickets for the show start at z∏.180.

Jacek Ciesnowski

June 4-5 Bemowo Airport Warsaw This year’s edition of the Impact Fest will offer plenty of opportunity for fans of metal music to bang their heads.

Rammstein and 30 Seconds to Mars are set to headline this year’s event.

Even though Rammstein released their last album four years ago (“Liebe ist für alle da”) the German group has not merely been sitting at home cashing royalty checks. The band is almost constantly on tour, and is back in Poland after a one-year break.

This year’s Impact Fest will mark the band’s first time playing an open-air concert in Poland, which will allow the (sometimes literally) fire-

breathing Germans to showcase their on-stage antics in full. Along with them, veteran metal band Slayer will play in Poland once again. One of the founding fathers of thrashmetal, Slayer is sure to please the crowd. This show will hold special meaning however, as it will take place just a month after one of the band’s founding members, guitarist Jeff Hanneman, passed away.

Also playing that day will be 1990s sensation and rap-metal pioneers Korn, and the Polish metal powerhouse Behemoth.

With a slew of other heavy metal bands set to play, the mosh pit that day won’t lack for energy.

The next day of the festival should be a calmer one, and caters to a younger audience.

The headliner that day will be

30 Seconds to Mars, whose leader, actor/singer Jared Leto, will attract a drove of teenagers to the festival grounds. The same can be said for the other headliner of the day – Paramore. Charismatic lead singer Haley Williams and her band mates will promote their recently released self-titled album, the group’s fourth.

Other bands on the bill that day include Welsh giants Stereophonics and electro mainstay IAMX. Fans will also have a chance to see former Metallica bassist Jason Newsted with his new project, the appropriately named “Newsted.”

Single-day ticket prices start from z∏.209, while two-day passes can be bought from z∏.330.

Jacek Ciesnowski

Museums, galleries and venues in Warsaw

DAILY EXECUTIVE DIGEST

Centre for Contemporary Art at Ujazdowski Castle ul. Jazdów 2 www.csw.art.pl Czarna Gallery ul. Marsza∏kowska 4 www.czarnagaleria.art.pl

Poland A.M. gives you the biggest Polish stories of the day.

Have the most valuable news delivered to your inbox each weekday morning.

Galeria 022, DAP, Lufcik ul. Mazowiecka 11a www.owzpap.pl Galeria 65 ul. Bema 65 www.galeria65.com Galeria Appendix 2 ul. Bia∏ostocka 9 www.appendix2.com Galeria Asymetria ul. Nowogrodzka 18a www.asymetria.eu Galeria Foksal ul. Foksal 1-4 www.galeriafoksal.pl Galeria Milano Rondo Waszyngtona 2A www.milano.arts.pl Galeria Schody ul. Nowy Âwiat 39 www.galeriaschody.pl

S i g n u p f o r a 2 - w e e k f r e e - t r i a l ! w w w. p o l a n d a m . p l G e r m a n v e r s i o n : w w w. p o l e n a m m o r g e n . p l

Green Gallery ul. Krzywe Ko∏o 2/4 www.greengallery.pl

Simonis Gallery ul. Burakowska 9 www.simonisgallery.com

Katarzyna Napiórkowska Art Gallery ul. Âwi´tokrzyska 32, ul.

Krakowskie PrzedmieÊcie 42/44 and Old Town Square 19/21 www.napiorkowska.pl

State Archaeological Museum in Warsaw ul. D∏uga 52 www.pma.pl

Królikarnia National Gallery ul. Pu∏awska 113a www.krolikarnia.mnw.art.pl Le Guern Gallery ul. Widok 8, www.leguern.pl Museum of Independence Aleja SolidarnoÊci 62 www.muzeumniepodleglosci.art.pl National Museum in Warsaw Al. Jerozolimskie 3 www.mnw.art.pl Polish National Opera at Teatr Wielki Pl. Teatralny 1 www.teatrwielki.pl Pracownia Galeria ul. Emilii Plater 14 www.pracowniagaleria.pl

State Ethnographic Museum ul. Kredytowa 1 www.ethnomuseum.pl Historical Museum of Warsaw Old Town Square 28-42 www.mhw.pl History Meeting House of Warsaw ul. Karowa 20 www.dsh.waw.pl Warsaw Philharmonic ul. Jasna 5 www.filharmonia.pl Warsaw Rising Museum ul. Grzybowska 79 www.1944.pl

Galeria XX1 Al. Jana Paw∏a II 36 www.galeriaxx1.pl

Rempex Art and Auction House ul. Karowa 31 www.rempex.com.pl

Wilanów Palace Museum and Wilanów Poster Museum ul. St. Kostki Potockiego 10/16 www.wilanow-palac.pl www.postermuseum.pl

Galeria Zoya ul. Kopernika 32 m.8 www.zoya.art.pl

Royal Castle Pl. Zamkowy 4 www.zamek-krolewski.com.pl

Zachęta National Art Gallery Pl. Ma∏achowskiego 3 www.zacheta.art.pl

LAST WORD

MAY 27 – JUNE 2, 2013

www.wbj.pl

23

Tech Eye

The wait is over. Microsoft has revealed its new gaming console, the last of the eighth generation to make its appearance. It’s called ...

Hold on a tick. Let’s take a moment to recall Microsoft’s history as a maker of gaming hardware. Xbox v1, as you might remember, was called the Xbox, plain and simple. It debuted in 2001, a little late to the market (Sony’s PlayStation 2 arrived in 2000), but it quickly earned a following among gamers.

Then came Xbox v2, aka the Xbox 360, in 2005 (beating the PlayStation 3 to market by a year). Of the seventhgeneration consoles, the Xbox 360 has fared respectably, taking second place in terms of units sold (after Nintendo’s lower-priced Wii console).

And so we come to Microsoft’s

nextest next-gen console, which will be released in Q4 in direct competition with the PlayStation 4. This device, Xbox v3, is called the Xbox One. That name is obviously short for “Xbox One Console to Rule Them All ... and in the Darkness Bind Them.”

Whatever you call it, Techeye is glad Microsoft finally got around to showing it off. That said, the unveiling was typically overblown, with an atmosphere of affected excitement and a gaggle of highly choreographed execs, each ejaculating a steady stream of empty superlatives. Unlike Sony, Microsoft seemed mindful of the female demographic; on the other hand, its sales pitch was skewed towards the US audience, with a pronounced

Getting their game on Eighth-generation gaming consoles at a glance

CPU Memory (RAM)

Xbox One

PS4

AMD with 8 cores

AMD “Jaguar” with 8 cores

8GB DDR3

8GB GDDR5

Hard-drive

500GB

Built-in, size unknown

Optical drive

Blu-ray

Blu-ray

HDMI in/out, USB 3.0

HDMI, USB 3.0

Kinect (voice & gesture control)

Touchpad on controller, Playstation 4 Eye

Ports Key peripherals

* All specs refer to status at launch; specs of unreleased hardware subject to change

emphasis on American TV and sports.

Microsoft’s core message for Xbox One is, as far as we can tell, that’s it’s the ultimate entertainment solution, so packed with awesome that consumers will become morbidly obese and mortally lazy, moving as little as possible until they finally expire and rot, blanketed in the loving glow of their HD TVs. In physical terms the Xbox One is ominously chunky, but its guts are intriguing. Inside are an as-yetunrevealed eight-core AMD processor, 8GB of DD3 RAM (similar but not quite as impressive as the PS4’s), a 500GB hard drive and a blu-ray drive. Full 1080p HD and 4K visuals are supported, as is 7.1 surround sound. All games must be installed – you can’t just play from a disk – and secondWii U hand games IBM “Espresso” with 3 cores will require a 2GB fee to play.

In keeping 8GB/32GB with the “One 25GB WII U Optical Disc entertainment soluHDMI, USB 2.0 tion” theme,

Wii U GamePad with embedded touchscreen Source: Manufacturers

COURTESY OF MICROSOFT

The nextest next-gen gaming console

Microsoft also revealed a live-action Halo TV series to be executive produced by Steven Spielberg (who totally phoned it in during the event, with a pre-recorded message). And, with the Kinect 2.0 voice- and motion-control peripheral, you can turn the TV on, channel surf, flip between games, movies and music, and even chat over Skype, all without reaching for a remote.

The Xbox One unveiling event

ended with a sneak preview of “Call of Duty: Ghosts,” a next-gen shooter which has – gasp – life-like dogs. And men with life-like arm hair. At last.

To sum up, the Xbox One looks marginally less powerful than the PS4 in terms of hardware, and fewer interesting games have been revealed, but Microsoft has momentum on its side and a strong palette of entertainment options. It’ll be One to watch this winter. ●

Ever been totally let down by Steven Spielberg? Let us know: techeye.wbj@gmail.com

To advertise in WBJ’s classifieds section, contact Agnieszka Brejwo, at (+48) 222-577-526 or abrejwo@wbj.pl