Poland Discusses the Future of its Special Economic Zones
The future of special economic zones (SEZ) beyond 2020 is the subject of a conference in Suwałki, which is to be held on the 16th of September.
During the conference, Polish Minister of the Economy, Waldemar Pawlak, will meet with representatives from Lithuania to sign an agreement on the creation of an energy bridge between the two countries.
Among the other attendees are the Deputy Prime Minister and delegates from local government and SEZ’s from across the country, representatives of business and foreign guests.
All SEZ’s in Poland are set to expire in 2020. However, analysts and SEZ representatives are calling for extensions.
Attracting foreign investment
SEZ’s are in the spotlight this year, due to a significant growth spurt in 2011. In the first seven months of the present year, Poland’s 14 zones attracted nearly 4 billion złotys (roughly $1, 3 billion) worth of investment, creating 4,600 new jobs. The figure is almost twice that of the same period in 2010. In three of the zones, investments are estimated to exceed 1 billion złotys by the end of the year.
The first SEZ in Poland was set up in Mielec in 1995. By 1998, there were 15 zones in existence. 14 are still in operation today and are still in the process of expansion. The zones were set up with several aims in view: To accelerate the economic development of specific regions, to rehabilitate existing post-industrial property and infrastructure, to create new jobs and to attract foreign investors to Poland. The latter has been pursued in order to help improve the competitiveness of the national economy and to facilitate the transfer of key technologies and expertise.
Among the most favoured sectors have been manufacturing (including high-tech), transport, IT, banking and environmental protection industries. In recent years, Poland has also seen the creation of many shared service centres and R&D centres.
Tax Incentives
In order to attract investors, the scheme was introduced to offer corporate income tax exemptions. Currently, the tax rate in Poland for corporate income is set at 19%.
Tax exemptions are calculated on the basis of the investment location, the size of the company and the cost of investment. Large enterprises can seek from 30% to 50% of eligible costs, mid-sized enterprises from 40% to 60%, and small enterprises from 50% to 70% of eligible costs of investment. Exemptions are approved by local authorities.
In addition, real estate tax exemptions may be granted under certain circumstances on a case-by-case basis, usually following a pledge to maintain operations for at least 5 years. The administration of each zone offers assistance to investors by facilitating contacts with the local authorities or central administration, enabling the fast-tracking of legal processes, such as the purchase of land.
The results so far indicate that the strategy has paid off. During both 2006 and 2007, investors contributed 10 billion złotys per annum, creating, in 2007, 36, 000 new jobs, a 25% jump in the growth of employment at that time.
Besides the incentives, investors have been drawn by the development potential of the Polish and neighbouring markets. The country markets itself as a strategic location at heart of Europe with ready access to markets in Germany, Russia and the rest of Eastern Europe. The country still offers some of the lowest labour costs in Europe (average monthly wage is €750). Yet at the same time, Poland also promises a highly qualified and young labour force.
Companies that have launched operations in Polish zones include Saint-Gobain, Fiat Powertrain Technologies Poland (Katowice Zone), Dell and Procter & Gamble (Łódź zone), Mondi Packaging Paper Świecie and Sharp (Pomeranian Zone), Swedwood Poland (Warmia-Mazury Zone), LG Electronics (Tarnobrzeg Zone), Shell Polska (Kraków Zone), and Rockwool Polska (Suwałki Zone).
