Poland’s government needs to beware of the confusing message it is sending to international investors if it wants to maintain its status as a premier investment destination for central and eastern Europe, according to a group of panelists at the Krynica Economic Forum in south-east Poland, which was held September 5-7.
The government, led by the right-wing Law and Justice party, has tilted towards a populist, nationalistic message and sparred with the EU over such as issues as immigration and the judiciary. The rhetoric is in danger of dinting the country’s appeal to investors, warned participants in a session on FDI hosted by Polish business daily Rzeczpospolita during the forum.
“At a time when the EU is undergoing a rather strong identity crisis, Poland is acting as a contrary figure. The country’s [combative] interactions with the EU are damaging its image and creating uncertainty for investors,” said Marcin Petrykowski, regional head for central and eastern Europe at S&P Global Ratings.
What does Poland want?
S&P rates Poland’s outlook as ‘stable’ for the moment. “The driving engines of the Polish economy and its competitive edge [for attracting investment] are still strong – with the notable exception of the rhetoric coming out of the government,” said Mr Petrykowski.
“Poland has been a consistently attractive market for a long time. The key challenge now is the noise [coming from the nationalistic factions of the government] and the external perceptions that creates outside Poland,” seconded Francois Colombie, chairman of French retail group Auchan’s operations in Poland and Ukraine.
“Does Poland still want and need foreign investment, or does the country feel it is strong enough without it? We hear signals that the government wants to create more balance between foreign investors and domestic industry. But if we look at the value of inward inward investment into Poland versus its GDP, it’s not that much compared with the proportions France, Germany and the UK receive.”
Open for business
Key government representatives have been at pains to stress that the country remains open for investment and a new focus on boosting Polish exports need not come at the expense of attracting FDI. “Poland has seen a lot of success in attracting FDI over the past several years and is among the hotter destinations in the region for investment. We are keeping up the momentum and want to make our investors here as comfortable as possible,” Tomasz Pisula, president of the Polish Investment and Trade Agency, told fDi in March 2017. “At the same time, the Ministry of Development, our supervisor, has asked us to build a trade pillar to resemble what the other developed countries have been doing over the past decades,” he added.
In an interview during the Krynica forum, Mateusz Morawiecki, Poland's deputy prime minister and minister of economic development and finance, said while some prospective investors have posed questions about the country's political climate he does not feel it is “an important obstacle”. “[Investors] look for places where they can develop their business with a skilled labour force. This need for a skilled labour force is the number one reason people tell me they are interested in coming to Poland,” he told fDi.
Indeed, greenfield FDI flows to Poland remain strong, with crossborder investment monitor fDi Markets showing increases in both project numbers and capital investment in Poland in 2016.
At the local level, many city leaders are getting on with the business of promoting investment opportunities regardless of what happens at a national level. “In Gdynia we have a new development strategy we are pursuing and we remain deeply convinced we need investments. Supporting Polish industries and exports should not have to hamper foreign investment,” said the city’s deputy mayor, Katarzyna Gruszecka-Spychala.