POLAND YOUR BUSINESS PARTNER Henryk Sanecki Consul, First Counselor Head of Trade & Investment Section Consulate General of the Republic of Poland 16 May 2013 Meeting with participants of the mission to Poland

POLAND - Basic information Poland, with a population of over 38.5 million inhabitants, is the largest member of the European Union among all the countries of Central and Eastern Europe. In terms of the number of inhabitants, Poland is the 34th largest country in the world and the 6th largest in the EU. In terms of gross domestic product (GDP), Poland is the 8th biggest economy in the EU and the 21st biggest economy in the world (2010 GDP in current prices, USD-denominated, IMF, World Economic Outlook Database, October 2012).

Poland - Key Facts USD 802,145 billion (PPP, 2012) – IMF estimates Area: 312 700 sq km – 6th in European Union (195 400 sq miles – comparable with Arizona) Population: 38,5 million – 6th in European Union (– comparable with California) Currency: Polish Zloty (1 USD ~ 3.2 PLN, 1 EUR ~ 4.1 PLN) GDP: USD 771.658 billion *(PPP, 2011) – IMF data USD 802,145 billion (PPP, 2012) – IMF estimates GDP per capita: USD 20,334.191 *(PPP, 2011) – IMF data USD 21,310.289 (PPP, 2012) – IMF estimates GDP growth: 1.8% (2009), 3.9% (2010), 4.3% (2011), 1.9% (2012), 1.3%(EC forecast, 2013) Membership: EU, NATO, OECD, WTO, Schengen Zone * (PPP - Purchasing Power Parity) GDP composition by sector: agriculture – 4%, industry – 31,3%, services – 64,7% http://www.imf.org/external/pubs/ft/weo/2012/01/weodata/weorept.aspx?sy=2010&ey=2013&scsm=1&ssd=1&sort=country&ds=.&br=1&pr1.x=68&pr1.y=7&c=964&s=NGDP_R%2CNGDP_RPCH%2CNGDPD%2CNGDPPC%2CPPPGDP%2CPPPPC%2CPPPSH%2CPCPI%2CPCPIPCH%2CTM_RPCH%2CLUR%2CLP&grp=0&a= 3

1000 km radius 250 m people Competitive Advantages 2000 km radius Location & economic fundamentals strategic location in continental Europe part of trans-European transportation corridor fourth fastest growing EU country in 2011 38 million consumers 1000 km radius 250 m people Labour force young, well-educated work force ca 11% of university students in the EU 460 universities & high education schools language proficiency increasing labour productivity 2000 km radius 550 m people Over the recent years, observers have grown accustomed to the Polish economy’s relatively good performance against the backdrop of the region of Central and Eastern Europe as well as the entire European Union. It was particularly visible in 2009, when Polish GDP, according to Eurostat data, grew 1.6%, making Poland the only EU country with a positive economic growth and earning the country the epithet of the “green island”. It was also in 2010 that Polish economy stood out among European peers: the GDP growth of 3.9% was the third highest in the EU, behind Slovakia’s and Sweden’s. Growing faster than its environment, Poland is catching up, in terms of economic situation, with Western EU countries. Poland’s GDP per capita in 1995 was 43% of the average of EU countries, in 2000 it was 48%, and in 2010 – 63%. Investment incentives tax exemptions in 14 Special Economic Zones grants co-financed from the EU (EUR 90 bn)

Unemployment rate 8/2012 : 12.4%, 1 964.7 thous. (labour force 16,99 M) Mazowieckie 10.2% Podlaskie 13.9% Lubelskie 13% Podkarpackie 15.3% Małopolskie 10.6% Śląskie Opolskie 13.1% Dolnośląskie 12.4% Lubuskie 14.9% Świętokrzyskie Łódzkie Wielkopolskie 9,1% Warmińsko- -Mazurskie 19.3% Pomoskie 12.1% Kujawsko- -Pomorskie 16.6% Zachodnio- 16.5% 14% > 11-13.9 10.9% < as of the end of August 2012 Labour force 16.99 M Year Unemployed Unemployed with higher education 2005 3 050 000 145 000 2012 1 960 000 216 000 Source: Central Statistical Office, August 2012

Harmonized unemployment rate in December 2012 in selected EU member states (source: Eurostat)

Main academic centers The most popular majors Tri-City 95 000 Poznan 137 500 Warsaw 276 000 Lodz Wroclaw 120 500 146 000 Katowice The most popular majors Krakow 112 000 185 000 ICT Finances, B&A Science Engineering Students by major:

Talent shortage problem by country Talent shortage problem in Poland does not exist: only 4% of employers have trouble filling vacancies Poland ranks 1st among 39 countries surveyed by Manpower http://us.manpower.com/us/en/multimedia/2011-Talent-Shortage-Survey.pdf Source: Manpower 2011 Talent Shortage Survey 8

Foreign language capabilities Foreign language capability by age groups Learning of foreign languages is obligatory in the Polish education system Children learn foreign languages from the age of 6 Source: CBOS Survey 2009 Foreign language capability among students http://www.cbos.pl/SPISKOM.POL/2009/K_111_09.PDF http://wyzszekwalifikacje.uni.lodz.pl/index.php/edoradztwo/artykul,polacy_o_swoich_wyjazdach_zagranicznych_i_znajomosci_jezykow_obcych._badania_cbos,78 Language proficiency is one of the strongest points for Poland as a BSS hub English is the most popular foreign language in Poland Source: Hays, 2012

Hourly labour costs and trade union density Hourly labour costs in 2011 in EUR Trade union density in OECD countries in 2010 (in %) Hourly labor cost: graph: http://epp.eurostat.ec.europa.eu/statistics_explained/index.php/Labour_cost_index_-_recent_trends Source: Eurostat, March 2012; OECD, Online OECD Employment database, May 2012 * data for 2009 (data for 2010 not available) ** data for 2008 (data for 2010 and 2009 not available 10

Modernisation of roads and railroads network http://www.gddkia.gov.pl/pl/1037/sprawdz-na-mapie-przygotowanie-drog-i-autostrad http://www.pkp.pl/files/mapa_linii_kolejowych.pdf Till 2006 2007-2013 2014 – 2020 New constructions After 2020 Highways and expressways:    existing    under construction    planned Railroads Source: GDDKiA, MT

Direct flights to major European cities Air transport Passengers served by Polish airports (in millions) Location of main Polish airports European flights Domestic flights Overseas flights WARSZAWA SZCZECIN ZIELONA GÓRA BYDGOSZCZ ŁÓDŹ RZESZÓW WROCŁAW KATOWICE KRAKÓW GDAŃSK POZNAŃ Airports under construction Q MODLIN LUBLIN KILECE GDYNIA Direct flights to major European cities London Warsaw, Gdańsk, Wrocław, Kraków, Rzeszów, Szczecin, Bydgoszcz, Katowice, Poznan, Łódź Frankfurt Warsaw, Gdańsk, Wrocław, Poznań, Kraków, Katowice, Rzeszów Munich Warsaw, Gdańsk, Wrocław, Kraków, Poznań Paris Warsaw, Katowice, Kraków, Wroclaw, Poznań, Gdańsk Dublin Warsaw, Wrocław, Katowice, Kraków, Poznan, Gdansk, Bydgoszcz, Szczecin, Łódź, Rzeszów Oslo Warsaw, Katowice, Kraków, Wroclaw, Poznań, Gdańsk, Szczecin Milan Warsaw, Katowice, Kraków Dortmund Warsaw, Katowice, Wroclaw, Kraków, Poznan, Łódź Brussels Warsaw, Katowice, Kraków, Wrocław http://www.ulc.gov.pl/index.php?option=com_content&task=view&id=324&Itemid=466 Source: The Civil Aviation Office, 2012

Top business locations across the world Warsaw Ranked #12 Among Top Business Locations Across the World Source: CB Richard Rllis, 2011

GDP growth in the EU countries in 2011 GB 0,7 France 1,7* Germany 3,0 Ireland Belgium 1,9 Spain Italy 0,4 Luxemburg 1,6 Holand 1,2 Czech 1,7 Slovakia Austria 3,1 Hungary Romania 2,5 - 0,2 Slovenia Bulgaria Greece* - 6,9 Denmark 1,0 Sweden 3,9 Finland Estonia 7,6 Latvia 5,5 Lithuania 5,9 POLAND 4,3 * forecast under 1,4 1,4 – 1,7 1,7 – 2,3 2,3 – 3,2 over 3,2 in 2009 Poland avoided recession & experienced the highest GDP growth in Europe in 2010 developed at one of the highest pace in Europe in 2011 Poland continued to develop at the pace three times higher then the EU average 2011 to Poland is an extraordinary head: First, 2011 is still in Poland and throughout Europe also filled in the “world will face a second round of economic recession, “the shadow; Second, it is in this difficult period, and drastic changes in Poland is still the seventh parliamentary elections. Overall speaking, the current economic situation in Poland than in some EU countries is better, but the situation is not satisfactory, not to mention some of its government measures, such as reforming the tax system, reduce unemployment, increase pensions and reduce the fiscal deficit, etc. have no significant effect, and even the Government’s flood relief 2010 was also ineffective opposition parties known as the “heart of stone.” Therefore, the political parties to participate in parliamentary elections regarded the debate focused on economic development and reform issues, and also shows the economic development in Poland 2011 ruling and opposition parties on how important it is. 2009, Poland is the only EU country to achieve positive economic growth in 2010, the Polish economy has continued to grow 3.8% growth rate among EU countries in the forefront, especially in the 2011 EU countries are shrouded in debt crisis under the shadow of the Polish economy still maintained rapid growth momentum. In France, Britain, Italy and Spain and other EU countries traditionally weak economic situation, but in Poland, with its stable economic growth, has grown into Central and Eastern Europe and the whole EU economy the new leader, this is undoubtedly the Civic Platform party in this general election to win a major factor. Portugal - 1,6** Source: Eurostat, 2012 14

Spending structure of Polish households in 2010 (in %) Communication 4.5 Other 8.6 21.8 Food Health 4.9 Household equipment 4.9 Clothing & footwear 5.2 Alcohol & cigarettes 5.7 20.7 Housing & energy Restaurants & hotels 6.8 Recreation & culture 7.8 9.1 Transport Source: Central Statistical Office

FDI Attractiveness Source: FDI Intelligence Report, September 2011

International recognition 6th place as the most attractive FDI destination World Investment Report 2nd most attractive country for FDI in the next 3 years European Attractiveness Survey 3rd place worldwide as the best quality location for manufacturing projects FDI Benchmark 2nd location in Eastern Europe and Russia offering the greatest revenue opportunities over next three years Emerging market growth strategies, practices and outlook

Top ranking destination countries by estimated jobs in Business Services Poland ranked 8th in the top destination countries by estimated jobs Poland no. 4 according to new jobs creation in Business Support Services Poland ranks 4th placse as a country od destination for BPO’s right after US, Philipines and India Source: IBM Global Location Trends, 2011

Geographical sources of FDI in Poland Source: National Bank of Poland 2011

Poland’s foreign trade volumes in January-August 2012 – breakdown by countries (source: GUS)

Poland’s foreign trade volumes in January-August 2012 – breakdown by countries (source: GUS)

Foreign trade – in 2012 exports grow faster than imports Poland’s foreign trade volumes (source: GUS) Foreign trade – in 2012 exports grow faster than imports According to the newest data from GUS, exports grew faster than imports in the first eleven months of 2012. PLN-denominated exports in current prices were higher by 8.1% y/y and amounted to PLN 553.7 bln. Imports, in turn, increased y/y by 3.2%, hitting the level of PLN 587.9 bln. Poland’s foreign trade deficit declined significantly to EUR 8.1 bln at the end of November, compared with EUR 14.3 bln at end-November 2011.

Major FDI investors in Poland (FDI stock as of the end of 2010, in bn EUR) Source: National Bank of Poland 2011

Corporate income tax rates across Europe Entrepreneurs in Poland pay one of the lowest CIT in Europe http://www.worldwide-tax.com/ Source: http://www.worldwide-tax.com/ 24

Companies with foreign shareholding in Polish regions Number of entities with foreign shareholding Number of persons employed Poland 23 078 1 518 398 Mazowieckie 8 576 532 109 Dolnośląskie 2 274 145 807 Śląskie 2 077 167 758 Wielkopolskie 2 062 204 216 Małopolskie 1 471 87 956 Zachodniopomorskie 1 299 48 656 Pomorskie 1 246 57 335 Łódzkie 950 75 794 Lubuskie 777 36 252 Kujawsko-pomorskie 571 38 195 Opolskie 471 24 909 Podkarpackie 345 36 566 Lubelskie 343 20 875 Warmińsko-mazurskie 301 14 091 Świętokrzyskie 174 18 704 Podlaskie 141 9 175 Mazowieckie Podlaskie Lubelskie Podkarpackie Małopolskie Śląskie Opolskie Dolnośląskie Lubuskie Świętokrzyskie Łódzkie Wielkopolskie Warmińsko- -Mazurskie Pomorskie Kujawsko- -Pomorskie Zachodnio- Labour force 16.99 M Source: Central Statistical Office, 2011

Companies with foreign shareholding in Poland     Companies with foreign shareholding in Poland 23 thous. companies with foreign shareholding, majority of which are large companies companies with foreign shareholding give job to over 1.5 m people, which represents 9.7% of all employed companies employ more people than domestic firms (respectively 175 and 92) they are characterized by far higher productivity than domestic firms (by 74.7%) they are responsible for 52.8% of Polish exports and 54.2% of Polish imports their employees are better paid and have access to know-how and newest technologies

Special Economic Zones (SEZ) SEZ is a designated area in which manufacturing or distribution activities can be conducted on preferential terms The purpose of SEZs is to support regional development Currently, there are 14 SEZs in Poland, each consisting of several subzones Total area of all SEZ – 20 000 hectares SEZ will operate until 2020, hopefully longer Permits to conduct activities in SEZ are issued by the authorities of each SEZ Minimum investment: EUR 100,000 Possibility of including the land selected by an investor into SEZ Benefits of obtaining a permit to conduct activities in SEZ : eligibility for income tax exemption – a form of regional aid plot of land prepared for an investment project, available at a competitive price free assistance in dealing with formalities relating to the investment project

Forms of regional aid Tax breaks Cash support CIT exemption in Special Economic Zone Real estate tax exemption Cash support Government grants through individual negotiations Cash grants co-financed from the EU Funds Nadrzędnym celem wdrożenia Systemu jest stworzenie finansowego instrumentu wsparcia, który umożliwiałby przekonanie przedsiębiorców planujących inwestycje w regionie Europy Środkowo-Wschodniej, a wahających się co do wyboru konkretnej lokalizacji, do umiejscowienia projektu w Polsce.

What do these objects have in common?

They were all invented by the Poles! Car wiper blades - Józef Hofmann Bullet-proof vest - Jan Szczepanik Telectroscope - Jan Szczepanik Kerosene lamp - Ignacy Łukasiewicz ENIGMA cypher machine decrypting code - Marian Rejewski, Henryk Zygalski, Jerzy Różycki Hand mine detector - Józef Kosacki Oil extracting device - Witold Zglenicki Blue laser semiconductor – GaN – Sylwester Porowski http://pl.wikipedia.org/wiki/Kategoria:Polscy_wynalazcy http://pl.wikipedia.org/wiki/Kategoria:Polskie_wynalazki http://www.historia.org.pl/index.php/publikacje/publikacje/prehistoria-i-staroytno/2281-synne-polskie-wynalazki.html http://odkrywcy.pl/gid,12331756,title,Najwieksze-polskie-wynalazki,galeriazdjecie.html?smg4sticaid=6e6c9

Created in Poland - examples Products and services designed, created and produced in Poland (also supported by EU funds 2004-2013 or winners of Polish Product of the Future Contest run by PARP) Just a few examples from: pharmaceutical sector, promoted during just finished Polish presidency in the EU, with the latest achievement: modular prosthesis of human hand – company Promanus – characteristic feature is the full modularity allowing for fast and easy change in the configuration of the device, as well as the advanced measurement system allowing for processing of biological signals; neutraceuthics (DNA chain) – Wroclaw Techno Park S.A. – modern technologies allowing for production of natural products – new generation diatery supplements (PARP beneficiary, 5.1 OP IE); agriculture and food processing – the apple pictured represents the organic food, in 2010 there were 519 thous. hectars of organic cultivation, over 6 times more than in 2004; Polish design – carpet produced by company Moho, made of life, pure wool; + success of Polish Expo 2010 in Shanghai, - ICT solutions, computer game (np. Wiedźmin); ecological sector and energy sector: solar collector (WATT company) of a high energy efficiency, small, 3 wheel electric car – SAM, produced by company Impact Automotive Technologies near Warsaw, Solaris – city bus with electric drive system; such buses can be seen in many European cities, as 60% of production of this company is exported. aviation – Avio Splot – company active in designing, development and production of low pressure turbins and engines (used in aviation); Aviation Valley in Rzeszow.

Emerging market, yet a mature & secure investment location Unemployment rate at 12% (at European Union average) Inflation rate at around 3,5% vs. 3% average for EU Attractive salary levels up to 40% lower vs. Western Europe VAT: 23%, Income Tax: 18-32%, Corporate Tax – 19% Youngest population in Europe (50% of Poles below age 37) 2 hours to London 2 hours to Moscow 7 hours to New York 1 hour to Berlin 8 hours to Tokyo Sources: International Monetary Fund, Ministry of Economics in Poland, Polish Central Statistical Office, Polish Foreign Investment & Information Agency

Sectors of opportunities Business Services Sector Research & Development automotive machinery food-processing aviation energy: nuclear power plant, renewable energy sources

Effective incentives system Why Poland? Summary Availability of skilled human resources Economic and political stability Strategic location – gateway to the EU Effective incentives system 35

Thank you for your attention HENRYK SANECKI Consul, First Counselor Head of Trade & Investment Section Consulate General of the Republic of Poland www.newyork.trade.gov.pl Presentation upon data given by Polish Information and Foreign Investment Agency ( PAIIZ: www.paiz.gov.pl )