Poland is set to attract €50 billion ($79.2 billion) in foreign direct investment over the next three years despite the global turmoil and worries over the state of the world economy, the head of the state investment agency said.
Pawel Wojciechowski, appointed to head the agency by the previous conservative administration, said there would be no slowdown of investment flows also thanks to the more business friendly government of the center-right Civic Platform (PO), which took power last year. Wojciechowski said, however, the strengthening zloty, the tightening labor market and soaring wages were a concern and called on the government to launch measures aimed at increasing labor supply. “It is possible that in next three years foreign direct investments will reach nearly €50 billion. I think that this year we can maintain last year levels, that is over 15 billion, despite the global slowdown,” Wojciechowski told Reuters in an interview.
The agency, whose projects contribute about 10% of all foreign direct investment each year, signed 16 contracts in the Q1 worth €700 million or about 40% of the investment deals it signed in the whole of 2007. He said Poland’s strength in attracting high levels of foreign direct investments lay in the qualified labor force accompanied by quick growth of productivity levels. Wojciechowski also praised the new administration for a more investor-friendly image and improving Poland’s international standing, an important factor when competing for investments globally.
The Platform, which won a parliamentary election last autumn, took power on promises of less red-tape, lower taxes, quick euro adoption as well as better relations with Poland’s neighbors and the European Union. “Improved relations with biggest neighbors, the government’s declarations of a more business-friendly policy improved Poland’s standing in eyes of investors,” Wojciechowski said.
The previous government of Jaroslaw Kaczynski earned Warsaw a reputation of a troublemaker. It threatened to veto several European Union projects, and had an adversarial stance in its relations with Russia and Germany. Its rule was also characterized by infighting and fuelling conflict on the domestic political scene.
ZLOTY, LABOUR WOES
The optimistic outlook for Poland’s investment levels and the economy in general is, however, clouded by labor shortages and quickly rising wages. Wojciechowski, who is confident the government will carry out the necessary reforms, like its “over fifty” program aimed at encouraging people over 50 to seek jobs instead of early retirement, warns that failure to increase labor supply would have a negative impact on future investments. “Without increasing of the labor supply Poland’s competitive position will gradually deteriorate and it will have an impact on foreign investments,” Wojciechowski said.
Poland’s unemployment rate halved in recent years, reaching 11.4% in February and in selected industries and regions it is estimated some 600,000 workers are needed. At the same time wages have been rising robustly since last year. Wojciechowski also fears the strengthening zloty, which is hovering around a 7-year high against the euro after gaining 28% since Poland’s EU entry in May 2004, could hamper the country’s competitiveness. “We are gradually losing the competitive advantage through a strengthening zloty. One must remember the zloty appreciation impacts not only exports but investments too,” Wojciechowski said. (Reuters)