Poland: an attractive investment destination

Blessed with a steadily growing economy which puts special emphasis on innovation and technology development, Poland is an attractive investment destination for businesses wishing to tap opportunities in a progressive country located in the middle of the European Union (EU). Poland is the sixth largest economy in the EU and the largest in Eastern Europe.

The country's reputation as a great place for doing business is based in part on the abundant supply of its educated youth. Global companies have set up IT hubs there. One example is the new Google Cloud region in Warsaw.

With one of the largest pools of technological talent in Europe, Poland has also attracted global giants such as Intel and Microsoft. Intel recently opened a research and development centre in Gdansk, and Microsoft announced a US$1 billion investment on a digital transformation plan last year.

With many homegrown large and medium-sized IT firms and fast-growing startups, Poland is poised to achieve international prominence in areas such as production of hybrid cars and intelligent transport; games industry; Internet of Things; and telemedicine and medical equipment, say observers.

Poland also has the largest fintech industry in the Central and East European (CEE) region with its value pegged at 856 million euros out of a total of 2.2 billion euros for the entire region. It is estimated that over nine out of every 10 credit card payments in the country are contactless.

Poland and Singapore are working together in this area under the FinTech Co-operation Agreement between the Polish Financial Supervision Authority and the Monetary Authority of Singapore, signed in 2017.

Poland's pull as a preferred business location is reinforced by the fact that two of its leading cities were ranked among the top 25 future cities of the world. Wroclaw was ranked 15th, and Warsaw 20th in fDi's Global Cities of the Future 2021/22 overall winners list.

Wrocław was also awarded the top overall city accolade in the Mid/Small Cities category. Observers say that with these rankings, Poland is building on its reputation of having a well-educated workforce and good cost competitiveness. The country has 14 Special Economic Zones which offer investors lower taxes and other state benefits.

In the Bloomberg Innovation Index for 2021, which identifies the world's 60 most innovative countries, Poland was placed 23rd, climbing two ranks over the previous year's list. It did particularly well for two categories - manufacturing value-added and concentration of technologically advanced companies, coming in at 19th place in each of those categories.

Return to growth

There is also good news on the overall economic front with the Polish economy projected to return to growth in the second quarter of 2021 following a rebound in consumer demand. This will be augmented by the gradual lifting of lockdown restrictions and greater public confidence following Covid-19 vaccinations.

The country's central bank - the National Bank of Poland - has forecast that gross domestic product (GDP) is likely to expand by 4.1 per cent this year. It says that inflation is set to fall to 2.8 per cent next year, from 3.1 per cent this year. The growth in consumer and investment demand is backed by the assumption that the central bank's interest rates will remain at the current record low level.

In 2022 and 2023 the Polish economy is expected to see 5.4 per cent growth, says the central bank. However, the continued uncertainty over the pandemic this year will still hamper the recovery of corporate investment, which will increase significantly only in the years 2022 and 2023, it adds.

The Polish Investment and Trade Agency highlights that the country is the CEE regional leader and investors are attracted because for years, it was among the most economically stable and fastest growing countries in the world. Poland's strong position as a business-friendly place is reflected by the sizeable new investments it draws. In 2019, it was ranked highest in the CEE region and third in Europe in terms of greenfield investments, attracting US$21.8 billion. At the end of 2020, Poland was the third preferred location in Europe for foreign investments, and despite the pandemic, it has nearly 200 new foreign investments in the pipeline with a total record value of 10 billion euros.

Meanwhile, Startup Poland, the largest independent technology think tank in the CEE, says the startup scene in the country is vibrant despite the pandemic. Its Polish Startups 2020 report says that 56 per cent of respondents to its latest survey had found new customers and 48 per cent reported better sales. Combined with the high retention of staff, these are signs of success for startups during the pandemic.

In 2019, there was a significant increase in funding and the number of investments, with Polish startups raising US$323 million.

This was also due to greater interest from foreign investment funds which were involved in 70 per cent of the fresh funds invested in Polish startups.

Leading the innovation push in Poland is the National Centre for Research and Development, which is focused on the development of Polish scientific entities and enterprises.

Among beneficiaries of its support is PureApta, an innovative platform that enables the generation of new active particles which are used in new drugs and advanced medical diagnostics.

Projects in pipeline

Other innovative projects in the pipeline include developing new electronics for the automotive sector; Tucan eye which uses artificial intelligence to help people with visual disabilities; and a bionic hand prosthesis constructed by Polish engineers.

The National Centre for Research and Development and the Polish Agency for Enterprise Development, which supports the innovative and research activity of small and medium-sized enterprises, holds the Polish Product of the Future competition to select and promote innovative products and technologies developed in the country. Winners are deemed to have the potential to make a name for themselves in both domestic and global markets.

Among the success stories is the FlexiOss bone substitute composite by the Lublin-based company Medical Inventi. In one instance, this material was used to replace a 7-centimetre bone fragment in a patient who was at risk of amputation after a motorcycle accident.