Doing business with Poland

Doing business with Poland
Rafal PAWLAK Senior Trade Commissioner Trade and Investment Promotion Section Consulate of the Republic of Poland in Montreal Toronto, October 25, 2016

about Poland and Polish economy
Part I. General information about Poland and Polish economy

Poland - Key Facts Official name Official language Capital Area
Population Currency Time zone Republic of Poland Polish Warsaw sq km (6th place in the EU) 38,5 million Polish Zloty (PLN) 1 USD ~ 3,92 PLN 1 EUR ~ 4,32 PLN 1 CAD ~ 3,00 PLN UTC + 1 (Winter) UTC + 2 (Summer)

Future looks just as bright
Real GDP growth (%) 2015 2016 (est.) 2017 (est.) EU 2.3 1.9 1.7 Euro area 2.0 1.5 Germany 1.4 Poland 3.6 3.1 3.4 Czech Republic 4.5 2.5 2.7 Hungary 2.9 USA 2.6 1.6 2.2 Japan 0.5 0.6 China Canada 6.9 1.1 6.6 1.2 6.2 World 3.2 The Economy of Poland is a high income economy[11] and is the sixth largest in the EU, and one of the fastest growing economies in Europe, with a yearly growth rate of over 3.0% before the late-2000s recession.[12] It is the only member country of the European Union to have avoided a decline in GDP, meaning that in 2009 Poland has created the most GDP growth in the EU.[13] As of December 2009 the Polish economy had not entered recession nor contracted. According to the Central Statistical Office of Poland, in 2010 the Polish economic growth rate was 3.9%, which was one of the best results in Europe. Source: IMF, World Economic Outlook, October 2016

We can compete with the strongest
The last 26 years have showed a huge potential in Polish economy: its GDP doubled in size (measured in real times) GDP per capita (at PPP) has moved from 32% to over 60% of the Western Europe (EU15) Annual GDP growth between equalled to remarkable level of 4.6% Strong macroeconomic foundations, stable domestic demand and agile fiscal policy made Poland the only European Union country to avoid recession in times of financial crisis ( ), growing by an outstanding 25%　between , with an annual dynamics of 3.6%. Nowadays Poland is eight largest economy in the EU. Basic macroeconomic indicators: GDP value: USD bn (current prices) GDP growth: 3.6% (2015) GDP per capita: 68% of the EU average Inflation: -0.9% (CPI; 2015) Exports: USD bn (2015) Public debt/GDP: 51.3% (at the end of 2015) Unemployment rate: 9,8% (at the end of 2015)

Poland – the marketplace
In 2015, Poland, for the first time in its history, has noticed a positive trade balance (EUR 3.7 bn) Exports have increased by astonishing 150.3% increase of export over the last decade, making Poland the new EU’s exporting engine Almost 2/3 of Poland’s export value is generated by companies with foreign capital Poland’s traditional trade partners are located in the EU (79.3% of exports share), but there has been also a gradual increase in trade cooperation with emerging and developing economies (9% of exports share in 2015) Germany is traditionally Poland’s number one trade partner with 27.1% of share in exports, and 22.9% share in imports.

Top Poland Exports Opportunities

Polish major export hits
Furniture Poland is the world’s 4th largest furniture exporter and 7th in furniture manufacturing worldwide In late 2014 Poland overtook Germany to become Europe's second largest exporter of wood furniture. The country last year export was worth over 8 billion EUR Windows and doors Poland is Europe’s leader in export of wooden and PVC windows and doors From 2004 to 2015 manufacturers increased their exports nine fold from 65 million euros ($70.5 million) to last year’s 600 million euros Cosmetics Poland is ranked 6th in cosmetics exports in Europe. In 2015, every second piece of cosmetics manufactured in Poland has been sold somewhere in over 130 countries

Apples Poland is the largest EU producer and world exporter of apples. In 2013, Poland overtook China in apple exports and moved to the position of global leader. The Poland’s total apple production is estimated at 3.5 million metric tons (13% increase compared to the previous year) Dairy products The value of dairy products exported last year amounted to 1.7 billion EUR. Imports in the period amounted to EUR 700 million, which gave Poland 1 billion EUR surplus in foreign trade Poultry meat Poland is the 3th largest poultry exporter. Poultry meat exports expanded by 21% to tons in 2015, with revenues of 1.4 billion EUR – an increase of 22% compared with 2014.

Pork meat In the first quarter of 2016, Polish pork meat industry players managed to export some 104,000 tonnes of pork meat which represented an increase of some 5% compared with the same period a year earlier. Chocolate and Beer In 2015 Poland was 7th chocolate exporter in the world, with shipments amounting to $1.4 billion, 5.1% of global exports Exports of Polish beer are also gaining ground, with international sales amounting to million EUR, up by 14.5% year-on-year Household appliances Poland is among Europe’s top household appliances producers In recent years, the segment enjoyed a high output growth rate of 5-10%. The export of household appliances represents more than 9% of the total national export

IT/ICT One of the fastest growing sectors of the country’s economy. Overall there are Polish ICT companies, with mobile application development companies taking the largest percentage. There are more than 360 of SSC/BPO outsourcing centers in Poland that employ specialists and of IT professionals. “Truffle 100” included Asseco Poland and Comarch, two ICT companies to its list of top 100 software companies in Europe Automotive Poland's automotive sector exports will exceed 20 billion EUR in The first quarter exports grew 14% year-on-year to 5.4 billion EUR. The key component (43%) of Polish automotive export are car parts and accessories. Moreover, 75% of revenues from the sales of the Polish automotive sector come from export sales Yachts Poland has become 2nd (after United States) in the production of small motorized yachts up to 9 m in length, and one of the largest producers of boats in the 6-10 m category. Export is the specialty of Polish yacht producers - almost 95% of Polish yachts are shipped to overseas customers

Total direct investments in Poland (end of 2015): US 182,5 bln
They have trusted us! Total direct investments in Poland (end of 2015): US 182,5 bln

Economic cooperation between Poland and Canada
Part II. Economic cooperation between Poland and Canada Ontario as economic paretner for Poland.

Trade facts between Poland and Canada in 2015
Poland is the largest supplier of Canada for raw mink and fox furskins. Poland is the second supplier of Canada for : - parts of power transmission equipment or other goods used to transmit power (right behind the USA), - preparations for cleaning, laundry detergents , etc. ( right behind the USA ), - apple juice (Brix value more than 20, whether or not sugared) (right behind China) Poland is the third supplier of Canada for : - parts of Turbo-Jets or Turbo-Propellers, - parts of Gas Turbines Nes Poland is the fourth supplier of Canada for : - under-carriages and parts thereof for aircrafts - vodka - wooden furniture for bedroom use - swine, cuts boneless – frozen Poland is the fifth supplier of Canada for : - furniture (behind the USA, China, Vietnam and Italy) - parts of hydraulic, pneumatic - graphite electrodes and carbon

Trade relations Canada – Poland 2009 – 2015 (millions CAD)
2010 2011 2012 2013 2014 2015 Canadian imports 753.19 991.51 1,439.24 1,094.72 1,253.94 1,593.46 1 761,85 Canadian exports 236.37 219.46 251.58 445.12 456.59 346.24 445,39 Total 989.57 1,210.97 1,690.82 1,539.84 1,710.53 1,939.70 2 207,24 Trade balance -1,187.66 -1,247.22 ,46 Source: Statistics Canada

Trade relations Canada – Poland January - August 2016 (millions CAD)
I – VIII 2015 (mln CAD) I – VIII (mln CAD) % Change (I-VIII) 2016 / 2015 Canadian imports 1,218.26 1,331.80 9.3% Canadian exports 42.2% Total 1, 1, 15.1% Trade Balance -959,593 -0.3% Source: Statistics Canada

Source: Statistics Canada
Imports from Poland to Canada in 2015 Share of Canadian Provinces Source: Statistics Canada

Source: Statistics Canada
Exports to Poland from Canada in 2015 Share of Canadian Provinces Source: Statistics Canada

Top traded commodities in 2015
Canadian imports from Poland (>30 mln CAD in 2015) Turbo-jets, turbo-propellers and other gas turbines 368,75 mln CAD Raw mink furskins 306,55 mln CAD Parts of gas turbines 69,13 mln CAD Parts of power transmission equipment 63,90 mln CAD Under-carriages and parts for aircrafts 60,14 mln CAD Wooden furniture for bedroom 47,30 mln CAD New pneumatic rubber tires - for motor cars (incl. station wagons and racing cars) 39,34 mln CAD Canadian exports to Poland (>9 mln CAD in 2015) Iron ores and concentrates, other than roasted iron pyrites - agglomerated 43,08 mln CAD Bituminous coal - whether or not pulverized but not agglomerated 36,40 mln CAD Parts of turbo-jets or turbo-propellers 29,53 mln CAD Hearing aids - excluding parts and accessories 16,98 mln CAD Turbo-propellers - power not exceeding 1,100 kw 13,70 mln CAD Flywheels and pulleys (including pulley blocks) 13,46 mln CAD Parts of power transmission equipment 10,47 mln CAD Raw furskins whole - mink 9,54 mln CAD

Top traded commodities from Poland to Canada January – August 2016
Nb. Code HS6 / Merchandise I-VIII 2015 (mln CAD) I-VIII 2016 (mln CAD) % Change 2016/2015 1 Raw Furskins Whole - Mink 293,033 235,344 -19.7% 2 Parts of Turbo-Jets or Turbo-Propellers 241,211 213,201 -11.6% 3 Cargo Vessels -- 71,319 4 Under-Carriages and Parts Thereof - For Aircrafts 38,382 44,787 16.7% 5 Parts of Gas Turbines 43,927 44,170 0.6% 6 Parts of Power Transmission Equipment or Other Goods Used To Transmit Power 40,926 36,440 -11.0% 7 New Pneumatic Rubber Tires - For Motor Cars (Incl Station Wagons and Racing Cars) 18,363 34,949 90.3% 8 Wooden Furniture For Other Use 31,942 33,974 6.4% 9 Gears and Gearing; Ball or Roller Screws; Gear Boxes, Speed Changers and Torque Converters 19,606 23,157 18.1% 10 Machines F R/C/T or Rege of Voice, Images or Data 22,580 22,204 -1.7% Other commoditied listed in top 25 are: silver, porkmeat frozen, cleaning detergents, products containing chocolate, vodka. Source: Statistics Canada

Top traded commodities from Canada to Poland January – August 2016
Nb. Code HS6 / Merchandise I-VIII 2015 (mln CAD) I-VIII 2016 (mln CAD) % Change 2016/2015 1 Parts of Gas Turbines 4,140 82,221 1,886.0% 2 Bituminous Coal - Whether or Not Pulverized But Not Agglomerated 30,167 27,701 -8.2% 3 Parts of Turbo-Jets or Turbo-Propellers 21,531 18,549 -13,8% 4 Gas Turbines - Power Not Exceeding Kw 0,22 14,192 65,748% 5 Iron Ores and Concentrates, Other than Roasted Iron Pyrites - Agglomerated 14,223 12,741 -10.4% 6 Soya Bean Flours and Meals -- 11,301 7 Parts of Power Transmission Equipment or Other Goods Used To Transmit Power 7,010 10,134 44.6% 8 Hearing Aids - Excluding Parts and Accessories 10,293 7,753 -24.7% 9 Flywheels and Pulleys (Including Pulley Blocks) 9,608 7,138 -25.7% 10 Parts of Airplanes or Helicopters 3,982 6,887 73.0% Other commodities listed in top 25 are: raw furkins, dog and cat food, motor spark ignition, nickel, transmission crancks Source : Statistics Canada *Data do not include Canadian re-exports.

Ontario top traded commodities with Poland in I-VIII 2016
ONTARIO import from Poland Parts of Turbo-Jets or Turbo-Propellers 81,564 mln CAD Under-Carriages and Parts Thereof - For Aircrafts 44,458 mln CAD Machines F R/C/T or Rege of Voice, Images or Data, Incl Switching and Routing App 18,228 mln CAD Raw Furskins Whole - Mink 16,445 mln CAD Surface-Active Washing and Cleaning Preparations (Incl Detergents) For Retail Sale 9,869 mln CAD Silver in Unwrought Form 8,858 mln CAD Parts of Power Transmission Equipment or Other Goods Used To Transmit Power 6,229 mln CAD Suspension Systems and Parts Thereof, Including Shock-Absorbers, For Motor Veh 5,739 mln CAD Chocolate and Other Food Preparations Containing Cocoa 5,395 mln CAD Parts of Hydraulic, Pneumatic and Other Power Engines and Motors 5,023 mln CAD ONTARIO export to Poland Parts of Gas Turbines Nes 77,816 mln CAD Hearing Aids - Excluding Parts and Accessories 7,753 mln CAD Flywheels and Pulleys (Including Pulley Blocks) 7,012 mln CAD Raw Furskins Whole - Mink 4,595 mln CAD Parts of Airplanes or Helicopters 4,460 mln CAD Cylindrical Roller Bearings 3,523 mln CAD Nickel - Other Articles Nes 2,763 mln CAD Parts of Turbo-Jets or Turbo-Propellers 2,606 mln CAD Taps, Cocks, Valves and Other Similar Appliances 2,604 mln CAD Parts of Power Transmission Equipment or Other Goods Used To Transmit Power 2,597 mln CAD

Canadian investors in Poland
Canadian cumulative direct investment in Poland: USD million Advance manufacturing, mining, ICT, Food processing, Pharma

Polish investors in Canada
2012: KGHM acquired Quadra FNX for 3.5 billion C$ - besides assets in Chile, two mining projects are now under development in Ontario (Sudbury) and British Columbia (Kelowna). Two operating mines in production in Ontario. 2013: Wroclaw gaming studio Techland opened up a new studio in Vancouver, Canada to assist on the development of its open-world zombie game Dying Light. 2014/2015: Orlen Upstream acquired Calgary-based Kicking Horse Energy for C$356, TriOil for $183.7 million and Birchill Exploration for $256 million. 2015: Comarch opened two offices in 2015 (in Montreal and St. John, NB) to deliver a smart city project for the city of Montreal. 2015: InPost started a roll-out of their services in the Toronto area with 200 sites. Huge investments by KGHM and Orlen New areas like gaming Foreign investments create jobs, reduce costs, bring new technology and innovation

Investment possibilities in Poland Investment incentives.
Part III. Investment possibilities in Poland Investment incentives.

So, why Poland? Availability of skilled human resources
Strategic location – gateway to the EU Economic and political stability Effective incentives system 26

Doing Business 2016 DOING BUSINESS 2016 RANK DOING BUSINESS 2015 RANK DOING BUSINESS 2014 RANK DOING BUSINESS 2013 RANK DOING BUSINESS 2012 RANK 25 32 45 55 74 Quotations from the 2014 report: „Poland is now classified as a high-income economy, a remarkable achievement over 2 decades.” „Poland has made the greatest progress toward the frontier in regulatory practice in enforcing contracts in the past 5 years.” „Every region has a leading champion in the scope of improvements made since — whether Poland for OECD high-income economies, China for East Asia and the Pacific or Colombia for Latin America and the Caribbean.” Source: World Bank, Doing Business 2016, 2015, 2014, 2013, 2012

Strategic sectors to develop business with Poland
Aerospace industry Poland is the 5th best investment destination for aerospace manufacturing projects in Europe (8th in the world) (PwC surve) Long-standing traditions (over 80 years of the development of the aerospace industry) 200 aerospace and aerospace-related companies, annual sales of EUR 1,3 bln, over 30 thousand employees production of aircraft (agricultural, training, executive), helicopters, gliders, subassemblies (aluminium, composite, GRFP) and accessories strong export-orientation (90% of aviation production is exported to USA, Italy, Canada, China, Ukraine, Australia, UK, France, Germany) over 11 thousand engineers (650 graduates in aviation studies) graduate from Polish technical universities every year 5 aviation and space clusters: Aviation Valley, Wielkopolski cluster, Silesia cluster, Lubelski cluster and National Center of Space and Satellite Engineering Cluster

Renewable Energy Sector dynamic economic growth in recent years, growing number of business entities and domestic market of 38 million consumers demand for green energy will grow due to the targets of energy Policy: increase the proportion of energy from renewable sources in final energy consumption up to 15.5% in 2020 (19.3% for electricity, 17% for heating and cooling, 10.2% for transportation fuels) obligatory reduction of the percentage of municipal biodegradable waste that may be landfilled to 35% by 2020, and building waste-to-energy plants, favourable wind conditions, a large potential for obtaining biomass and biogas and investment incentives for renewable energy producers more than 200 production companies working for the renewable energy sector Ministry of Economic Development Trade and Investment Promotion Section Consulate General of the Republic of Poland in Montreal

Clean Technology Pro-environmental programs, large-scale investments in the modernization of its industry and innovative start-ups focused on green technologies such as: Efficient Energy Air Protection Waste Management Water and Sewage Management Protection of Biodiversity Solutions Supporting Energy Saving Leader of GreenEvo Editions Biogradex won project for developing 8 units of water and sewage management technologies in Alberta

Automotive industry Polish automotive sector ranks second in terms of manufacturing output (more than 9% of Polish manufacturing production) the industry gives jobs to around of employees out of 40 car and engine plants located in Central Eastern Europe 16 are based in Poland approximately 500 companies in Poland have ISO/TS 16949 certificate confirming quality management system required by automotive OEMs several R&D development centres operating in Poland (the largest – Delphi, others: Tenneco, TRW, Valeo, Faurecia, Wabco, Eaton, Mbtech operations) companies investing in the sector are entitled to apply – apart from other, general investment incentives – for the governmental grants provided in the „Programme for supporting investments of major importance to the Polish economy for years ”

Furniture manufacturing Poland is sixth world’s largest producer of furniture – total production 9,2 billions of EUR in 2015 (following: China – EUR 160 bn, USA – EUR 35 bn, Germany – EUR 16,9 bn, Italy – EUR 15 bn, India – EUR 11,4 bn). Poland is fourth world’s largest exporter of furniture in terms of value of exported furniture – 10,3 billions of USD in 2015 (following: China – USD 60,6 bn, Germany – USD 13,6 bn, and Italy – USD 12 bn) and second world’s largest exporter in terms of volume of exported furniture (3,2 mln t). Poland is fifth largest supplier of furniture to Canada (following: United States, China, Mexico and Italy) – in 2015 total supplies of Polish furniture exceeded 97,7 millions of USD (in 2014: USD 117,3 mln). Polish furniture industry generates approximately 2% of Polish GDP. More than 25,000 companies in Poland are producing furniture (including 91 large companies – employing more than 250 employees, 327 middle-size companies – employing employees, 1445 small companies – employing employees, and more than 23,000 micro firms – employing less than 9 employees). About 135,000 people is employed in Polish furniture sector (second result in Europe, after Germany). Graph 1. Sold production of furniture in Poland (data in millions of USD) * forecast Source: Polish Statistical Office Graph 2. Production of selected furniture in Poland (data in thousands of pieces) Seats convertible into beds Wooden furniture for kitchen Wooden furniture for bedroom Wooden furniture for dining and living room Source: Polish Statistical Office Graph 3. Furniture exports from Poland (data in millions of USD) Source: Polish Statistical Office Graph 4. Top ten Polish furniture export destinations in 2015 (data in millions of USD) Other countries of furniture export (chosen one): Russia (15th place; 141,3 mln USD), China (17th place; 125,4 mln USD), Canada (21st place; 97,7 mln USD) Source: Polish Statistical Office, Statistics Canada

Food processing agri-food industry – 4th sector of Polish economy (~20% of total Polish manufacturing production) over 14,700 companies, most of them, about 80%, are SME’s top standards of quality – four European and five national systems of quality control total sales of around 40 billion EUR the export of Polish food products has almost tripled in the past ten years to 26,5 billion USD Polish agri-food products sent to over 150 countries (Canada – 38th importer) 6th largest producer of food products in the EU (9% share) leader of poultry production in the EU 3rd largest producer of pork in the UE world’s leader in exports of apples, raspberries and champignons 3rd largest producer of grain products and sugar in the EU 4th largest producer of milk in the EU, leading producer of other dairy products 5th world’s largest exporter of vodka 7th world’s largest exporter of chocolate sweets; leading producer of other confectionary products Strengths of Polish food processing sector: centuries-old tradition high quality of products qualified workforce R&D potential and strong education base (both vocational and higher) well-developed suppliers network competitive costs of production

Mining industry in Poland A global leader in the mining of coal Strong domestic mining equipment production industry One of the largest producers of copper and silver in the world Vast deposits of hard coal The largest mining and machinery companies are Famur, Kopex, Fasing and Bumech Polish manufacturer of conveyor belts used in mining industry Conbelts Bytom has sent first (test) shipment of equipment to Canada. Moreover, Polish companies are able to deliver equipment dedicated to mining in Arctic conditions (like Remontowa shipyard) Polish Government launched dedicated programs (Go Arctic) This program could open opportunities for Canadian companies to work with Polish companies Ministry of Economic Development Trade and Investment Promotion Section Consulate of the Republic of Poland in Montreal

Shipbuilding and repair industry and boating industry One of the world’s most important regions for the industry The world’s second-largest manufacturer of yachts The Polish shipbuilding industry is the second largest in the EU The largest supplier of luxury boats to the US market Poland has rich traditions in maritime education: there are around 30 educational and research institutions related to the maritime sector, including 2 maritime academies; Note in 2014 Poland has won contract worth 165 million CAD to build three intermediate-class ferries for BC Ferries. in 2016 BC Ferries has awarded a lucrative contract to upgrade two largest vessels for 140 million CAD in 2016 Polish largest shipyard „Remontowa” has delivered multipurpose offshore support vessel for Secunda Canada in Newfoundland and Labrador servicing one of the biggest offshore platform – Hibernia. shipyard „Delphia Yachts” runs a project to deliver 104 touristic boats for Ontario

IT – ICT sector One of the fastest growing sectors of the country’s economy The value of Polish IT market to reach 13 billion CAD in 2017 The largest IT services market in Central Europe Among top twenty global markets Polish Government Digital Poland Programme will provide as much as EUR 2.2 billion to be allocated to projects related to high speed internet, e-government and digital competences of the society in years

Regional state aid in EU – forms of incentives
Tax breaks CIT exemption in Special Economic Zone RET exemption Cash support Government grants Cash grants available through EU Funds (82,5 bn EUR) Labour market instruments Funds for employment and trainings

Incentives for investors in Special Economic Zones
(operating until the end of 2016) tax exemption (CIT or PIT) a site fully prepared for development by the investor at a competitive price free assistance in dealing with formalities in connection with the investment exemption from property tax (on the territory of certain gminas)

Key facts about EU funds for R&D&I
Operational Programs co-financed by structural funds (82.5 bln EUR + national contribution) The main financial instrument supporting R&D&I is the Operational Programme Smart Growth (PO IR): the programme is nationwide and focuses on supporting key R&D&I projects enhancing cooperation between businesses and academic centers Innovations are also supported through other regional programmes: Regional Operational Programmes: each voivodship has defined its own list of smart specializations (KIS) and will support implementation of innovative projects in line with regional KIS Eastern Poland Operational Programme: funds will be distributed to innovative projects completed in the macroregion of Eastern Poland by cooperating companies GDP composition by sector: agriculture – 4%, industry – 31,3%, services – 64,7% 6 Operational Programs (55.3%) 16 Regional Operational Programs (37.9%) Source: NCBR, Ministry of Economic development, Ministry of Infrastructure 39

CETA CETA: Benefits to EU Goods
Complete CETA text reached in August , marking the end of negotiations. CETA will be one of the most ambitious and comprehensive FTAs ever signed by either Party, and covers namely: Comprehensive tariff elimination across all sectors Improved access for goods and services Greater certainty, transparency, and protection of investments New opportunities in procurement markets A 2008 Canada-EU joint study showed that CETA could result in a 20% boost in bilateral trade and a €11.6 billion annual increase to the EU economy. CETA Goods Non-tariff Barriers & Regulatory Cooperation Intellectual property Government Procurement Services & Investment Sustainable development, Labour & Environment

Benefits for Small and Medium Sized Enterprises
CETA will provide new opportunities for SMEs by way of … Comprehensive tariff elimination. Simplified border procedures. Expanded access for services providers. Greater access to government procurement markets. Formal mechanisms to facilitate joint initiatives on regulatory cooperation and a protocol on conformity assessment.

Thank you for your attention
Trade and Investment Promotion Section 3501, Avenue du Musée Montreal, Quebec H3G 2C8 Canada Tel:+ 1 (514) , Fax: + 1 (514) website: Wphi Montreal @WPHI_Montreal

Doing business with Poland

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