Bloomberg Media: The Investors Appreciate Innovation in Poland
The benefits associated with digitisation are most important for global foreign investors. For those interested in investing their capital in Poland, key considerations include the opportunities presented by technology and innovation.
Foreign investments were the leitmotif of a thematic path proposed during the 2023 Krynica Economic Forum by the DGP daily.
In an opening intervention for a series of interviews and discussions, during a live broadcast from Dubai, Guy Douetil – managing director at Hickey and Associates, advisor to largest global investors – spoke of key current trends in foreign direct investments. In his opinion, current investor choices in the wake of recent changes are affected by such factors as war in Ukraine, geopolitical adjustments, ESG notions, logistic issues, natural threats, staff shortages, incentive wars, and energy supply-related matters.
“Labour force scarcity on the European market produces a need to bring in migrants from outside the European Union”, Guy Douetil pointed out. He also asserted that when it comes to attracting investors, the struggle to bring on board those whose operations involve greenhouse gas emissions abatement is blatant.
New Economic Ecosystems
In conversation on the DGP stage, Paweł Kurtasz, CEO of the Polish Investment and Trade Agency, mentioned nearshoring, friendshoring and manufacturing operations transfer from Asia to Europe.
“The combination of a number of dynamics has given rise to new economic ecosystems. Ready to attract sizeable investments, Poland is benefitting from the situation”, Paweł Kurtasz said. He referenced an example of a project announced in June this year – the largest direct foreign investment in the Polish history. Intel will be investing nearly PLN 20 billion in a Semiconductor Integration and Testing Plant in Miękinia.
Leszek Skiba, CEO of Pekao S.A. Bank, expressed similar sentiments at the Forum.
“Following the 2008 crisis, foreign direct investment reached no more than 1-2 percent of Poland’s GDP. Things picked up after the pandemic, once deglobalising and supply chain shortening had become important: efforts were made to move manufacturing operations from Asia closer to end users and decision centres. On the Old Continent, the phenomenon is particularly visible in Central Europe, including Poland – an attractive location when compared with her neighbours”, Leszek Skiba remarked.
Karol Rabenda, deputy Minister of State Assets, said that foreign investors can count on green energy in Poland, which pertains to questions frequent during capital investment venue talks. Energy transformation is underway in Poland.
Besides the opportunities they generate, investments in Poland were mentioned during a new technologies-related discussion. Attracting, among others, global business services, Cracow’s position is particularly conspicuous.
“Over thirty thousand programmers – chiefly Cracow university graduates – work in our city today. They are worldclass specialists: Poles rank third on global lists. Having served as a run-of-the-mill network hub handling a part of global operations in the early days, Poland is now a location of a Great Change in key areas, such as cybersecurity. As it turned out, the competencies we have to offer are unavailable anywhere else worldwide”, said Jacek Przybylski, director of the Cisco Global Services Centre in Cracow. The local Cisco branch employs nearly 2,500 people today, with approximately 1,700 IT experts – and is of key importance to essential areas of global technology development.
Intel’s Record-Breaking Investment
Prime Minister of Poland Mateusz Morawiecki and CEO of the Intel Corporation Pat Gelsinger kicked off the highest-value foreign direct investment in Polish history on 16 June 2023. It is also the largest high-tech industry investment in our part of Europe. The technological Silicon Valley giant will invest nearly PLN 20 billion (c. USD 4.6 billion at the current exchange rate) in a Semiconductor Integration and Testing Plant in Miękinia near Wrocław (Lower Silesia, Poland). Infrastructural backup facilities and the proximity of an academic centre with a prominent technical university were of key importance to the decision. Over 2,000 staff – mainly highly qualified specialists and engineers – will be employed at the plant on manufacturing lines alone.
In May 2023, news broke regarding the digital payment leader Visa, and its plans to open a global technology-and-product hub in Poland, the first project of the kind in Central and Eastern Europe. The investment has been designed to support a 24/7 operational mode-based innovation development model, and enhancements fostering swift digital commerce and payments development. Rajat Taneja, President of Technology for Visa, remarked that Poland has highly qualified staff and a dynamically developing IT sector, both of which make the country a perfect venue for acquiring new talent and developing new payment solutions in collaboration with partners and other companies. One thousand five hundred technology specialists are to be employed at the Visa Hub by 2025.
Global investments and projects located in Poland were the focus of a Bloomberg Media survey, outcomes presented to participants of DGP‘s thematic block.
The Preferences of Foreign Investors
Bloomberg Media surveyed the preferences of foreign investors from around the world for the fifth time. Participants of the survey included managers from Europe (UK, France, Germany, among others), America (US, Canada, Mexico, Argentina, Brazil) and Asia (China, Japan, Singapore, Hong Kong). The questions focused on foreign direct investment and the world as a whole, as well as the countries in which individual investors were interested.
The survey results show that a high level of optimism persists among investors. 37 percent declared themselves slightly more optimistic about the global economy status than in 2022, 15 percent – much more. Admittedly, a year ago the figures were 38 percent and 18 percent respectively but this is nevertheless higher than in pre-covid 2019, when these values reached 30 percent and 10 percent. In the current survey, 7 percent of those asked declared much more pessimism, 21 percent slightly more, 20 percent had the same expectations as a year ago. In the previous survey, the figures were 6 percent, 19 percent and 20 percent, respectively.
The most important global opportunities over the next 1–3 years were ranked by investors in the following order: accelerated digital transformation, security of global trade, rapid growth of e-commerce and agreements regulating the digital economy. On the risk factors side, in an identical timeframe, were: prolonged high inflation, escalation of Russia’s war against Ukraine and rising interest rates (in the US, EU, and UK).
As far as Poland is concerned, the prevalent goals among investors considering deploying capital in our country were: entering a new territory (62 percent), long-term investment in infrastructure (55 percent) and development of local supply chains and logistics (52 percent). Interestingly, 24 percent responded that it was to establish a regional headquarters.
According to the respondents, the most important drivers of investment were opportunities created by technology and innovation (38 percent, compared with 31 percent in Europe), access to a skilled workforce (25 percent against 20 percent on the Old Continent) and the market for new clients (24 percent, compared with 26 percent in Europe). Further down, Poland scored better than Europe in the category of lower production costs (22 percent vs. 21 percent), institutional efficiency (21 percent vs. 18 percent), access to natural resources (19 percent vs. 18 percent), among others. Poland and Europe scored identically when it came to tax breaks (16 percent considered this a key factor), investment risk protection (18 percent), and access to cheaper labour (14 percent). Respondents could choose more than one answer.
On the side of risk factors in Poland, political instability (understood broadly, this factor also weighed, albeit less so, in Europe) armed conflict, inflation and exchange rate fluctuations (the latter featured in one answer choice) were mentioned.
The survey was carried out in April and May of this year and the results were announced in September.
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