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Foreign investments in Poland – why is it worth to invest?

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Poland is an excellent destination for investment and business development. This is confirmed by numerous studies, conducted both globally and nationally. The latest Global Best to Invest ranking indicates that we are in the fifth place, with only China, Germany, Great Britain and India ahead of us. The Financial Times report, which is partnered by the Republic of Poland, presents similar findings. It shows that Poland also ranks fifth in terms of the value of new investments. On the other hand, according to the NBP data for Q1 2019, foreign direct investments increased by 48%.

94% of foreign investors would invest in Poland again

The decision to invest again would be made by 94% of investors – according to the 12th edition of the “Investment climate” survey carried out by Grant Thornton, the Polish Investment and Trade Agency and HSBC.

So you could say: “the grass is always greener on the other side”… Meanwhile, our country is considered not only by Europeans, but also on a global scale, as one of the most attractive places in the world to invest.

So what makes it worthwhile to develop your business in Poland?

First and foremost, the potential of the internal market

The most important fragment

Investors have the highest opinion of market absorption, expressed both in terms of production and service potential, as well as the target sales location. The high assessment of this factor goes hand in hand with the criterion of a stable macroeconomic environment. In 2018, GDP grew by 5.1%, while in 2019 the European Commission forecasts economic growth at 4.4%.

Human capital is crucial

Despite the increasing difficulties on the European labour market, Polish employees are rated very highly in terms of loyalty, commitment and efficiency. Our advantage is the availability of qualified and competent personnel, and labour costs are still considered lower than in the Western countries. These factors are important for investors not only from the point of view of production placement, but above all in view of the dynamically developing sector of modern business services (BSS), which regularly increase employment due to their rapid growth. Regardless of the high quality of human capital, we create the largest number of jobs in Europe as a result of foreign direct investments (according to the PAIH announcement).

A friendly business environment is important

Investors pay attention to the transparency and reliability of business partners. Cooperation with local government administration is highly rated. Quality and efficiency of service in offices, assistance in establishing contacts with trade partners and business-related institutions stimulates friendly development of business in Poland.

Resources are what counts

Another factor that draws attention is the location of Poland in the centre of the European Union, as well as its infrastructural and resource potential. Investors highly value the preparation of investment spaces, both in technical and legal terms. Year by year the rankings of logistics infrastructure are rising, and investors appreciate the ongoing progress in quality and development of roads, motorways, air and rail transport. Telecommunication and ICT networks are also considered to be strengths. Availability of raw materials, materials and components for production is also an important issue for investment.

Poland, with its resource potential, is currently a key player on the global market, an attractive location and a very important production partner for the production of the state-of-the-art technologies and products as well as the development of modern services.

Investment incentives are the attracting factor

An important argument for investors is the possibility of benefiting from subsidies from EU funds supporting R&D activity (allowing to finance the process of works implementation, as well as purchase of necessary infrastructure and equipment).

2018 and 2019 brought further positive developments. For entities conducting research and development activity, a preferential income tax rate of 5% in relation to qualified intellectual property rights, the so-called Innovation Box, has been introduced.

Another relief applies to the Polish Investment Zone, which currently covers the whole Polish territory. Depending on the location of the investment and the size of the enterprise, investors may be granted tax exemptions from corporate or personal income tax.

What do we have to face?

In addition to a number of strengths, there are areas where urgent improvements are needed. The weak points are the unstable law, the low efficiency of the judiciary and the complicated tax system. Investors complain that this makes it difficult for them to plan investments in which they have to anticipate long-term financial encumbrances and complicates day-to-day operating activities. Since we have received the yellow card for bureaucracy, in order to maintain Poland’s investment attractiveness, governments must take immediate action to improve the condition of the legislative process, both in terms of the quality and quantity of legislation. We can see the light at the end of the tunnel since, according to the results of the cyclical “Law Barometer” study by Grant Thornton, 46% fewer pages of new legislation came into force in 2018 than a year earlier, and these are already positive signs of positive change.

CEE countries, including Poland, are becoming increasingly important for foreign investments. Due to the high investment attractiveness of Poland, assessed in terms of many criteria, and at the same time the relatively lower level of costs compared to Western Europe, foreign investors more and more often consider Poland not only as a place for direct investments, but also as a target for reallocation from other European countries. We have the internal potential to develop technologically advanced production and offer modern services for business, the main strength of which is a well-educated and qualified staff of employees and managers, speaking foreign languages. In the package for a foreign investor we add a Grant Thornton tool – Foreign Investor Navigator – which allows you to conduct and receive support at every stage of project development and to select safe and beneficial legal, tax and economic solutions.

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