State aid for the improvement of regional competitiveness Józef Węgrzyn Director of Departament of Economy and Infrastructure Marshals Office of the Malopolska Region

Plan of the presentation Some statistical data State aid legislative framework in Poland State aid in Poland and EU-15 in years Forms of the state aid in Poland and in the EU Cases of the regional aid in Malopolska Conclusions

Where we are... London – 1650 km Berlin – 600 km Brussels – 1300 km Paris – 1550 km Madrid – 2850 km Warsaw – 300 km Prague – 460 km Vienna – 460 km Rome – 1600 km

Some statistical data... Poland Population million GDP – 189 billion EUR Total average annual state aid (in the period ) – 2,41 billion EUR State aid as percentage of GDP – 1.3% State aid per capita – 63 EUR (or 127 PPS)

State aid in Poland... State aid is a form of state intervention used to promote a certain economic activity. Existing aid and the interim procedure

Types of the state aid Horizontal objectives –R&D; environment; SME; commerce; employment aid; training aid; heritage conservation; cultural aid; natural disasters; risk capital; regional aid Sectoral aid –Manufacturing –Coal –Financial services –Other

Map of the regional aid

State aid in 2003 State aid awarded: in the EU – 53 billion, 2003 in Poland – milion, 2003 (1 Euro = 4.39 PLN) ( mln PLN) in Malopolska – milion, 2003 (1 Euro = 4.39 PLN) ( mln PLN)

State aid awarded in the New Member States, in 2003 (as % of GDP) Source: State Aid Scoreboard, spring 2005 update, Brussels, , DG Competition, COM(2005)147 final.

Breakdown of the state aid in Poland and the EU by its assignment State aid in years Type of state aidEUPoland Horizontal50%60% Sectoral27%34.3% Regional23%5.7%

State aid instruments in Poland and EU-15 Source: State Aid Policy Program for years, Ministry of Economic Affairs & Labour, Warsaw 2005

Breakdown of state aid in Poland and the EU by instruments in period Form of the state aidEUPoland Grants58,6%35,3% Tax subsidies24,0%31,5% Equity participation5,6%0,7% Soft loans8,6%14,4% Guarantees3,2%13,5%

Existing programmes Coal sector – 24,9 billion PLN Metal industry – 2,8 billion PLN Shipbuilding sector – 0,6 billion PLN Railways – 5 billion PLN Regional aid (SEZ) – 1,6 billion (10% of total investments) Horizontal aid - Phare, Structural Funds – 0,8 billion PLN (for SMEs); - support for R&D sector – 0,34 billion PLN

State aid in Poland, Source: Report about state aid awarded in Poland in 2003, Office of Competition and Consumer protection, Warsaw, September 2004.

Cases of the state in Malopolska The Krakow Technology Park (SEZ) Integrated Regional Operational Programme (ERDF) –Measures 2.5 – Promotion of Entrepreneurship –Measure 3.4 – Micro-enterprises Guarantee Fund and Loan Fund at the Malopolska Agency for Regional Development

Special Economic Zones (untill 2017) The Krakow Technology Park (KPT) composed of four subzones: Jagiellonian University 3rd Campus (Biotechnology and Software) Tadeusz Kosciuszko University of Technology Campus (Industrial Engineering and IT Solutions) Industrial Park Sendzimirs Steel Works (Industrial Area) Tarnow Plastic Valley (Chemical Industry Park) The Gorlice Industrial Area is part of SEZ EuroPark Mielec The main activity in the Gorlice zone is focused on oil and energy production.

New investments in Krakow Technology Park Employment – 3644; New employed person – 2163 Present investment input – ,5 mln euro ( zł.) Planned investment input – ,2 mln euro ( zł.) Main investors: - ComArch S.A. - RR Donnelley Polska Sp. z o.o. - Motorola Electronics Polska Sp. z o.o. - AZ Soft S.A. - Pfaffenhain PL Sp. z o.o.

Public aid in future Policy in scope of public aid in years 2005 – 2010 (Program adopted by the Council of Ministers on 29th March 2005) Public aid in Poland shall fully comply with the standards and trens in the European Union Two particular aims - Public aid shall be focussed on innovative actions Granting shall be more efficient and effective

Future priorities and measures Supporting actions of horizintal nature, in particular these directed to SMEs Supprting economic development of regions Phasing-out restructuring processes

Some conclusions and projections Necessary to co-ordinate activitities of granting bodies and establishing coherent system (more than 3500 granting bodies now!) Social Insurance Institution, Tax Offices shall be involved in programming, monitoring, reporting and evaluation of state aid as major granting bodies State aid in Poland shall be limited and targeted to innovative projects 15,5 billion Euros - projection of state aid expenditure in Poland in years 2005 – 2010

Thank you for your attention

Marshal Office of the Malopolska Region Department of Economy and Infrastructure