ROAD TO IABM INTERVIEWS
“A SIGNIFICANT PROPORTION OF GERMAN CAR COMPONENTS ARE MANUFACTURED IN POLAND”.
Interview with Jan Kamoji-Czapiński, Director of the Investment Centre of the Polish Investment and Trade Agency (PAIH)
Building business relations in the automotive sector is the main goal of the International Automotive Business Meeting, during which experts and representatives of the industry from all over the world will meet online on October 20th.
The mission of the Polish Investment and Trade Agency is to increase the inflow of foreign direct investments into the country and the range and dynamics of internationalization of Polish enterprises. PAIH operates both in Poland and abroad through its offices.
PAIH provides access to information on the economic and legal environment for investments in Poland and helps to overcome administrative procedures for specific projects, develop legal and financial solutions, find the right location and reliable partners and suppliers.
The Agency currently supports 173 potential investment projects that could create more than 40 000 jobs and generate investments of more than EUR 9.5 billion.
Jan Kamoji-Czapiński is the Director of the Investment Centre at PAIH. Apart from direct cooperation with investors, he has actively participated in the process of recent changes in regulations concerning, among others, the Polish Investment Zone. Jan Kamoji-Czapiński has served the largest projects of global companies in Poland, such as Toyota, LG Chem, Goldman Sachs, SK Innovation, Johnson Matthey and Honeywell. Before joining the PAIH team, he worked in financial institutions in Budapest and Bratislava.
What does the support system for potential foreign investors in Poland look like? Can such an investor count on combined support from national and European funds?
The system of investor support is constantly adjusted to the expectations of investors and the current economic situation. Currently, large investors can receive the highest possible public aid in the European Union in Poland – up to 50% of the project’s eligible costs. This amount can be granted under various programmes, which are very attractive, as confirmed by the investors themselves.
Recently, the two most important state aid programmes have been modified, i.e. income tax exemption and a grant under the “Programme for supporting investments of significant importance for the Polish economy for 2011-2030”. As a result of these changes, income tax exemption within the Polish Investment Zone is possible throughout Poland, and not only on land belonging to Special Economic Zones. As far as the investment grant is concerned, many requirements have been adjusted in order to facilitate the application process for innovative companies, which we particularly care about developing. As part of regional state aid, investors can also benefit from property tax exemptions in many places.
However, the incentives quoted are not all that investors can count on when they decide to start or expand their business in Poland. Those who carry out research and development projects can count on a tax deduction of up to 250% of the costs incurred for this purpose. What is important, this does not affect the tax exemption within the Polish Investment Zone. Additionally, income from intellectual property rights can then be taxed at a very favorable – 5% tax rate.
All these solutions can be supplemented by various types of funds from EU programmes, and Poland is the largest beneficiary of EU funds.
Despite such an extensive support system, Poland is still working on new solutions which will allow us to maintain a favorable trend in new investments and, at the same time, actively contribute to the transformation of our economy. I am thinking, for example, of the planned implementation of the relief for robotization or procedural facilitations for strategic investors, but also of further improvements to the Polish Investment Zone, for example, based on signals from investors in the face of COVID-19.
What attributes does Poland have in relation to other countries in the region? I mean the Czech Republic, Hungary and Slovakia?
Poland is the largest country in the region, home to as much as 40% of the population of the nine Central and Eastern European countries that belong to the EU. This has been very important in recent years, when availability of workers has become a common problem. Unlike other countries in the region, Poland can still boast of the availability of staff, who are also highly valued for their diligence, competence, commitment and efficiency. Highly qualified staff, which, thanks to an extensive scientific training base and academic centers, is available in various regions of the country, combined with still competitive labor costs, is one of the success factors.
Another factor also draws attention – Poland’s location at the crossroads of transport routes and its infrastructure and resource potential. Investors highly value the preparation of investment areas, both in technical and legal terms. Year after year, Poland’s position in the ranking of logistics infrastructure is strengthening. Investors appreciate the progressive progress in the quality and development of national roads, motorways, air and rail transport.
From 2004 to mid-2020, over 1200 km of motorways and over 2300 km of express roads were opened in Poland. (Data: General Directorate for National Roads and Motorways)
Our own seaports, together with the infrastructure linking them to the centers in the hinterland, also distinguish us from the competition. Another strength is the telecommunications and ICT networks. Add to this the available natural resources and a large internal market.
Investors pay attention to the transparency and reliability of business partners. Cooperation with local government administration is highly valued. The quality and efficiency of service in offices, assistance in establishing contacts with business partners and business-related institutions stimulate business development in Poland. And these procedures will be additionally accelerated thanks to the planned act on the status of a strategic investor.
Poland ranks fifth in the world in terms of attractiveness for investors, and only China, Germany, Great Britain and India are ahead of Poland. (Data: Global Best to Invest ranking)
All this makes Poland a perfect destination for setting up and developing a business. This means that not only are we able to attract new attractive projects to Poland, but we are also able to prove that this decision was the right one, and our country offers excellent prospects for development. Even though Poland maintains its own currency, concluding a transaction is not a problem, and securing an appropriate rate is not a problem at present.
There are certain associations, or perhaps stereotypes, when we see ‘Made in Germany’ or ‘Made in Japan’ on a product. What are the associations of European customers when they see “Made in Poland”?
Above all, Poland is increasingly associated with specific industries. When we say “Made in Germany”, we often think of cars. However, are we aware that a significant part of the components of German cars is no longer produced in the Federal Republic, but in Poland? Polish plants are known in many industries for their good quality. Even in such an advanced and exceptionally strict standards as aviation, we already produce some of the most complicated parts. Currently, Poland is becoming the main hub for the production of cells and batteries and their components for electric cars in Europe – an industry which is responsible for a large part of the value of electric vehicles.
There are many examples of industries where the Polish brand means a lot in the world; yachts, cosmetics that are successful in more than 130 countries, breaking successive sales records year after year, and finally games that are not even released, such as “Cyberpunk 2077”.
Polish companies started to implement new technologies and increase expenditure on research. They invested in modern machinery, which was used for efficient production and better use of resources. Support was given to the activities of Polish entrepreneurs, who started to increase their export activities in a very dynamic way. And it has not been known since today that export is one of the key factors, alongside modern technologies, which testifies to market innovation and builds its brand and reputation. It is no different in the case of the Polish economy and “Made in Poland” products.
In the future, I think that the ‘Made in Poland’ brand will primarily mean innovation. We are a digitized society that is willing to use new solutions. It is enough to look at the success of non-cash payment, whether it is native Blik or eCommerce industry. Large global corporations are already seeing this trend – Microsoft itself uses the term “Polish Digital Valley”. We are not as far away from the reputation of the “Made in Germany” brand as we might think!
How does PAIH assess the possibility of taking over part of the production, so far located in China by Polish sub-suppliers? Coronavirus has shown that the supply chain has suddenly been disrupted, which has had enormous negative consequences for the creation of the final product. Can such ‘reindustrialization’ of Europe take place?
Since the first days of the pandemic, we have seen the collapse of supply chains around the world. Our employees are in constant contact with investors located in Poland, so we had many first-hand accounts. Wherever possible, we tried to identify Polish producers who could deliver the missing elements for production. In the near future, we want to continue to support Polish companies as natural sub-suppliers for large producers, both those located in Poland and in neighboring countries. Over the last 30 years, the Polish economy has come a long way, and domestic producers are production capabilities combined with technology and an innovative approach. Thanks to this, they are able to offer the highest quality products at competitive prices. Ultimately, Poland can come out into the world even with a more comprehensive and better responding to the challenges of industry 4.0 than its Chinese counterparts. Our role is to help them in contacting the biggest players.
Regardless of these actions, the COVID-19 epidemic has caused an increase in interest in Poland as an investment destination for foreign investors. Global trends show a change in investor behavior. The result is a move away from the current offshoring model and a move to nearshoring investments. Poland, as a European Union country with competitive business costs and qualified staff, should expect increased activity from investors from richer parts of Europe and the USA looking for new opportunities to diversify their business without taking the risk of being located very far from the main plants and customers.
Foreign direct investment in Poland increased by 48%, and the decision to reinvest in the country would be taken by as many as 94% of the investors. (Data from the 12th edition of the survey “Investment climate”, Grant Thornton, PAIH and HSBC, as well as NBP data for Q1 2019)
Using our experience, we will actively seek out the most interesting of these and those that will be relocated from remote regions, not just China, as a result of recent events.
Motorization is facing a massive transformation, moving away from internal combustion engines to alternative propulsion. Do we stand a chance of being at the forefront of these changes or will we follow others? If a leader, in which areas?
The transition towards electromobility is a very strong phenomenon, the importance of which Poland has long recognized. This sector has been identified in the Responsible Development Strategy as one of the key sectors, and our actions are producing the expected results. Among investors, we are seen as a European hub for electromobility. Suffice it to mention that it is near Wrocław that there is a battery factory for such vehicles, which will soon be the largest of its kind in the world. In recent years we have managed to attract many significant investments and build a wide value chain emerging in our country. Companies from this fairly new industry will supply, among other things, cathodes and material for their production, electrolyte or separator for battery production. We will also manufacture modules (also with a management system produced in Poland) or motors and other electric drive components. Being the largest exporter of batteries in Europe, with the growing production of other electric drive components, we are making a growing part of car production in Poland in terms of value.
LG Chem Wrocław Energy Sp. z o.o. is one of the world’s largest manufacturers of lithium-ion batteries for electric cars and the only plant of its kind in Europe. Since 2016, the plant has been operating near Wrocław and produces batteries that power cars of such brands as Volkswagen, BMW, Audi and Porsche.
Because this is the most interesting change that is associated with the transformation in this area. Traditional producers are losing the largest part of the cake since almost half the value of the vehicle is produced by independent sub-suppliers.
This is taken advantage of by the new players in the car market, who are likely to appear just now, with the slow departure of the combustion engines that the big companies have been developing for years. Poland, through the prism of Electromobility Poland SA, which is the designer of IZERA electric cars, also sees its chance in this revolutionary change. The R&D sector is also ahead of the electromobility revolution. For example, scientists from Szczecin have created a prototype engine that can be used to drive electric cars. The design allows for better acceleration, longer driving times and more power than current engines in electric vehicles. The source of success are patents of the employees of the West Pomeranian University of Technology, which allow better control of magnetic field inside the drive. Moreover, it has several additional power sources, which in turn allows for better torque.
You mentioned Izera, a Polish electric car, whose presentation on 28 July this year received a broad response. Is your experience used in the search for contact with potential business partners? Is the Polish supplier base capable of supplying components for the Polish EV car, is there a need and an area for further investment?
The Polish Investment and Trade Agency is involved in the majority of electromobility projects in Poland and our employees improve their knowledge in this area daily. Thanks to this we are able to support our clients in many areas of the investment process. Due to the best interests of our investors, the details of the activities undertaken are not made public. It should be emphasized, however, that identifying potential suppliers, especially Polish ones, is our standard activity, which is of great value to many investors.
As I mentioned earlier, the electromobility sector is developing very dynamically at different links in the supply chain. Mass production of electric cars has started relatively recently, so the industry has huge growth potential. At the moment, we can still see that demand exceeds production capacity in many areas of semi-finished products. This means that there are still many new investments ahead of us, both Polish and foreign, in this area. For my part, I would like to assure you that we are able to offer comprehensive and professional support to all of them.
Thank you for the interview!
(interviewed by Krzysztof Kowalski, electromobility expert)
About International Automotive Business Meeting
International Automotive Business Meeting (IABM) is an elite meeting of the automotive sector, which brings together industry leaders and experts, car manufacturers, the largest Tier 1 and 2 suppliers, representatives of European, Polish and local authorities, institutions and industry associations. The event is attended by over 300 representatives of companies from Poland, Europe and the largest global automotive markets such as China, Japan, India and the United States.
IABM provides independent, professional and reliable knowledge on the situation on the automotive market in Poland and worldwide. The objective of IABM is to provide a clear vision of the changes in the automotive sector in the near future and its impact on the supply chain and to determine how electromobility and advanced driver assistance systems will affect the development of the automotive sector in Poland and worldwide. IABM is a unique opportunity to gain a detailed insight into the automotive industry and new technologies associated with it, as well as build a network of contacts in the industry and acquire business partners.
During this year’s online edition of IABM each participant will have many networking opportunities .
In the previous edition of IABM, representatives of 270 companies took part in 5 Speed Business Mixer sessions and hundreds of B2B meetings. Many of the conducted talks resulted in later cooperation between companies.
Detailed program and registration for the online edition available here: www.iabmevent.com
Organizers: Italian Chamber of Commerce and Industry in Poland, Katowice Special Economic Zone (KSEZ) and Silesia Automotive & Advanced Manufacturing Cluster, City of Dąbrowa Górnicza.
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