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Wednesday, November 16, 2016
Warsaw Business Journal’s daily news update Tel: +48 22 257-7500, Fax: +48 22 257-7599

 Highlights

Top Story Szydło: ‘Plan for responsible development a priority in 2017’
Business Morawiecki to outline Poland’s new ‘Business Constitution’
Economy Szyszko: hard coal and lignite “the foundations of Poland’s economy”
Domestic Świętokrzyskie will receive PLN 4.5 million for road improvements
Real Estate Prologis leases over 33,000 sqm in Silesia
Society Loss of identity cards reaches a high

 Top Story

Szydło: ‘Plan for responsible development a priority in 2017’

Polish Premier Beata Szydło announced on Tuesday that her government would focus on increased economic development in the coming year. She indicated that the focus during the first year of her party’s reign had been on funding programs for families and on security issues.

The government’s official economic plan, unveiled in February, aims to spend PLN 1 trillion over the next 25 years. The PM claimed that the government, thus far, had achieved success in implementing its 500-plus program, in introducing free prescription drugs to seniors over the age of 75 and in raising the minimum wage. “If we want to meet all the commitments that we have made, we have to show determination, consistency and consistently implement our plan and timetable. This is happening,” she said at a press conference.

According to the Ministry of Labour and Social Policy, the minimum monthly salary in Poland for workers who work under a full-time employment contract increased by PLN 100 to the level of PLN 1,850 before tax.

Onet







 Business

Morawiecki to outline Poland’s new ‘Business Constitution’

Poland’s Deputy Premier, Mateusz Morawiecki, was on Tuesday expected to lay out general guidelines under which the country’s businesses would be obliged to operate at a meeting of the Council of Ministers. The constitution is expected to be a collection of the rights and guarantees protecting entrepreneurs in Poland, and is said to be based on the country’s Wilczek Act, which laid the groundwork for the development of free enterprise during the country’s transition from communism to free-market capitalism. Morawiecki is expected to release a detailed explanation of the new guidelines this Friday at the 590 Congress in Rzeszów.

Puls Biznesu


New innovation law to be introduced

The Ministry of Science and Higher Education has confirmed its intention to implement new legislation that it claims will support innovation in Poland, according to a report on Tuesday in the Polish Press.

The Innovation Act, which will affect tax deductions for businesses and profits for scientists who benefit from new inventions, is expected to be implemented in two phases. The first phase, which be effective as of January 1, 2017, will allow SMEs to deduct a total of  50 percent of the cost of obtaining a patent and expenditures on research and development (R & D). It will also allow a 50 percent deduction for larger businesses, plus a 30 percent deduction for R & D. The second phase, which will be implemented at the beginning of January, 2018, will extend the period of time in which scientists can benefit from the commercialization of products they have invented – from five years to six years.

The Minister, Jarosław Gowin, stated in September, “The most important element of this law...are deductions of taxes for a large group of Polish entrepreneurs. We estimate that in the portfolios of those entrepreneurs who decide to develop pro-innovation activities remain together even up to PLN 0.5 billion per year.” The report also mentioned that, beginning in 2017, the tax imposed on new intellectual property will be eliminated.

Onet


LPP having success abroad

Polish clothing company LPP said on Tuesday that its total sales have increased by almost 11 percent, y/y, during the first three quarters of 2016. It reported that the highest growth came from sales in its shops in Russia, Ukraine, Bulgaria, Croatia and Romania. What’s more, the company, which manages franchises such as Tallinder and House, forecasts revenues of 11 percent in 2017.

The company is counting on increased profits from the expansion of its Reserved franchise in Germany, which is a fairly new market for the apparel giant. The VP and CFO of LPP, Przemysław Lutkiewicz, said in a press release, “In the reporting period, for the first time in history, Reserved shops outside of Poland generated more revenue than the national outlets. We can see clearly that the positioning of our flagship brand as a global brand...directly translates into our business increasing in Germany, which is now our fifth-largest market in terms of revenue. We assume that in two or three years the greater part of our revenue will come from abroad.” Reserved opened its first store in Munich in September of this year.

Onet






Podkarpacie region’s aviation industry is taking off - FT

Growing investment in the Podkarpacie voivodship, specifically that concentrated in the area between Rzeszów and Mielec, has enabled it to become one of Europe’s most promising “aviation valleys,” according to a report published on Tuesday in the business publication the Financial Times (FT). The cluster of aviation manufacturing plants now produce exports valued at $ 2 billion, compared with only $250 million in 2003.

The valley really took off in 2003, when Marek Darecki, the head of WSK Rzeszów, set up an association to link the facilities, business associations and educational institutions that support the aviation technology sector throughout the region. Today there are 14 large international companies, as well as 20 mid-sized companies. In 2017, Safra, partnering with Rolls-Royce, will open another aviation engine parts plant that is expected to do well. “If a company came here, invested, built a factory and now it is building another, it means it works,” Darecki said in an interview with the FT.

However, some feel the region could do even better by re-positioning itself as a designer of components -- not only as a manufacturer/exporter. “This is a moment when Rzeszów should stop paying the cheap labor force card,” said Łukasz Wąsikiewicz, a manager at PwC. He feels it’s time “the Valley” moved up the value chain. The area currently receives over PLN 500 million under the Innolot funding program, designed to encourage cluster start-ups in Poland. Today, the region employs 24,000 people in businesses related to aviation parts production, according to the FT report.

The Financial Times


Exports fuel Poland’s white goods production

Poland’s white goods production increased by 25 percent between 2013 and 2016, from over 18 million to an estimated 23 million pieces, according to a report by research firm TNS made for industry association CECED Polska. The total value of white goods (washing machines, dishwashers, fridges etc.) manufactured in 2015 stood at PLN 17 billion.

“The industry in Poland has made an enormous leap over the past 10 years. Our production plants are production complexes now, comprising R&D centers, laboratories, supply chain departments as well as a back offices maintaining their functioning. We want the industry to be rooted in Poland, both in terms of production and all the aspects surrounding it,” said Adam Cich, CECED Polska’s president of the management board, and General Manager CEE of Electrolux Major Appliances.

The increase can largely be attributed to the growing exports of Polish white goods and household appliances, as 90 percent of all white goods and household appliances produced in Poland are exported. In 2005, white goods accounted for 1.82 percent of Polish exports, while ten years later they made up 2.52 percent of the total exports value.

Poland’s top exports markets for white goods and household appliances are Germany (21 percent), the UK (13 percent), France (12 percent), Italy (8 percent) and Russia (6 percent). Poland exports mainly washing machines (23 percent of total white goods exports), fridges and freezers (19 percent), cooking appliances, dishwashers and small household appliances (14 percent each).

There are 25 white goods production plants in Poland, employing 22,500 people.

Warsaw Business Journal


CDRL SA growth for 2016 steady – VP

One of Poland’s largest manufacturers of children’s clothing expects to have a slightly higher turnover than last year, a report in the Polish press said on Tuesday.  At the end of the first three quarters of 2016, the company reported revenues of PLN 151 million, an increase of 14.4 percent, y/y, said Vice President Tomasz Przybyła. However, the company’s net profits were down 8.1 percent y/y. Przybyła indicated that in spite of this, under its flagship brand Coccodrillo, the company would continue its expansion in the months ahead. “The weaker results are related to increases in salaries in the educational store, where (there are) nearly 400 employees, to increased depreciation due to investments in IT and furniture, and an increase in external services due to marketing online store.” Furthermore, he said that, as part of planned growth, the company was looking for opportunities for acquisitions.

The WSE-listed company is based in Koscian and is opening 47 new outlets in 2016. At the beginning of trading on Tuesday its shares were trading at PLN 29.20.

Onet







 Economy

Szyszko: hard coal and lignite “the foundations of Poland’s economy”

Poland’s Environment Minister, Jan Szyszko, said that Poland’s ability to be energy independent would not be endangered by ratification of the UN Climate Change Conference Paris Agreement, and that it could continue to take advantage of natural resources such as coal while still meeting the terms of the Paris Accord.

Szyszko was speaking to reporters in Poland while summarizing the year-end accomplishments of Poland’s government. He mentioned that the actions of his (PiS) government had saved Poland from the “unreasonable” conditions that the previous (PO) government was prepared to agree to. “(Natural) biodiversity cannot be a barrier to economic development,” he said. He explained that his government only agreed to ratify the accord based on its own terms. Poland will compensate for the pollution it produces from fossil fuel emissions by taking into account the ability of the country’s forests to absorb carbon dioxide, he indicated.  “We can develop based on our own huge, traditional energy resources, and at the same time, dictate (to other countries),” he said.

In late September, all 28 members of the EU ratified the Paris Accord, which sets specific targets to reduce carbon emissions that have led to global climate change. The agreement entered into force on November 4. This month, countries are meeting at this year’s UN Climate Conference, being held in Marrakech, Morocco through November 18.

Reuters



 Domestic

Świętokrzyskie will receive PLN 4.5 million for road improvements

Leaders of communities across the Świętokrzyskie voivodship met on Tuesday to sign an agreement on government funds earmarked for road repairs, according to a report in the Polish press. The funding comes as part of a PLN 41 million-program outlining transportation infrastructure improvements between 2016 and 2019. “Any money that flows into Kielce from outside, and that the government grants to meet our needs, is very welcome. (And) this intersection is extremely important,” the president of Kielce Wojciech Lubawski told reporters in an interview.

The upgrades will include modernization of traffic lights, repairs to a total of 131 kilometres of roads, and the resurfacing of the main road in Ostrowiec.

Onet


Online retailers of e-cigarettes subject to heavy fines – report

Although the sale of e-cigarettes in Poland is booming, the recent EU directive banning distance sales of the vaping products applies to Polish retailers and those caught selling them either online or cross-border can be fined up to PLN 200,000, according to a report on Tuesday in Gazeta Prawna.

The tobacco directive in force in Poland since September prohibits the sale to consumers of e-cigarettes and accessories via the internet. The ban on distance delivery of e-cigarettes from or to Poland is fully in effect, the Ministry of Health warned, regardless of where retailers have registered the holding company. The report mentioned that some businesses that sell e-cigarettes illegally try to get around the law by changing the name of their products, for example, from “e-cigarette” to “vaporizer.” Furthermore, as lawyer Susan Malina told Prawna, the penal code stipulates that offenders can be charged according to either the place where the perpetrator sends the goods and/or the location in which he/she receives them.

Many Polish vaping advocates are concerned that the quick transposition into law of the directive by the PiS government is damaging to those employed in the industry, as well as to people who are trying to quit smoking regular cigarettes. In a petition to the Polish president, Vapers appealed to the government to rescind the ban, which, the organization claims, has been imposed inter-alia; the government has not yet responded to this appeal, wrote Mirosław Dworniczak of the Nicotine Science and Policy Association on the group’s website. The legal sale of e-cigarettes in Poland is also big business it is expected to grow this year to by over 30 percent, to $ 572 million.

Gazeta Prawna







 Real Estate

Prologis leases over 33,000 sqm in Silesia

Warehouse space developer Prologis has signed six lease agreements for a total of 33,730 sqm at its Prologis Park Chorzów, Prologis Park Dąbrowa and Prologis Park Będzin II logistics parks in Silesia. Magna Automotive Poland renewed its lease of 12,100 sqm at Prologis Park Dąbrowa, Polonia Logistyka and DTW Logistics respectively leased 9,500 sqm and 3,500 sqm at Prologis Park Będzin II, while Spokey, Zeta Pro Office and Colmec respectively took up 4,000 sqm, 2,700 sqm and 1,930 sqm at Prologis Park Chorzów.

Prologis Park Chorzów, Prologis Park Dąbrowa and Prologis Park Będzin II respectively offer 251,000 sqm, 144,000 sqm and 46,000 sqm of logistics space. As a result of the agreements, the Prologis portfolio of logistics parks in the Silesia region is now 94 percent leased out, said Piotr Brycki, the leasing manager at Prologis Poland.

One of the leading providers of warehouse space in Central and Eastern Europe, Prologis had a portfolio of approximately 4.4 million sqm in the region at the end of Q3.

Warsaw Business Journal


Ronson hopes to improve sales in coming quarters

Residential developer Ronson Development sold a total of 546 apartments in the first three quarters of this year, compared to the 658 apartments sold in the same period last year, which represents a y/y decrease of 17 percent. However, the total value of the sold apartments went down by only 4 percent y/y as the average price of the housing units offloaded by Ronson in Q1-Q3 2016 increased to PLN 433,000, up from PLN 375,000 in Q1-Q3 2015. In the January-September period, the best sales results were recorded in the City Link (155 apartments sold) and Espresso (116) projects in Warsaw, and in the Kamienica Jeżyce (68) project in Poznań. According to the developer, the decrease in apartment sales in Q1-Q3 resulted from the depleted stock, which the company has been replenishing in recent months.

Since the beginning of the year, Ronson has launched the sales of a combined 921 apartments in seven projects. As a result, at the end of September, the company had 1,256 apartments on offer. This record figure should translate into improved apartment sales results in the coming quarters, Ronson said in a press release.

Warsaw Business Journal



 Society

Loss of identity cards reaches a high

Poland’s Central Database System has revealed that, during Q3 of 2016, more than 39,000 people reported having lost identity cards, driver’s licenses and passports. The number of reported lost or stolen documents has increased yearly since record-keeping began in 2008. However, the figure has been been higher than the average in each yearly quarter since the first half of 2015.

The situation is especially problematic because identity theft is used to facilitate extortion. For instance, false-identity claims have been used to try to extract loans totalling PLN 3.54 billion over the past eight years. Officials warned that citizens who have lost an identity card –  including a bank card – report their loss by using an universal system card. In Poland, this can be obtained by calling the number (+48) 828 828 828.

Onet