Q3 2015issue No. 10

A picture of tomorrow’s Polish economy

What are the sectors Poland should focus on to ensure an innovative future?

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Poland Today presents a special supplement on the booming business services sector. page 27

Primetime Warsaw III: What are the opportunities and challenges facing Poland’s capital? page 39

Russia’s information war: What are the risks for Poland, and how should the country respond? page 60

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16-26Economy of tomorrow Picture of the future: The priority for Poland’s economy as it continues to move closer to Western European levels is innovation – but in what sectors does the country have the best chance to make technological leaps? Poland Today explores this question and asks experts and business leaders what the picture of Poland’s economic future will look like

18The next transformationWhat sectors should Poland focus on to modernise its economy?

20Future transformed: industry by industry Companies sound off on the challenges and opportunities in their industries over the next 10 years

24Setting business freePoland Today editor Andrew Kureth sits down with Andrzej Malinowski, president of advocacy group Employers of Poland, to talk about the challenges facing Polish businesses

26A brand waiting to happenHow is ‘Brand Poland’ perceived around the world? Poland Today editor in chief Richard Stephens asks two top executives at global brand valuation consultancy Brand Finance

Business serVices in focus

27-38Booming business services: The business ser-vices industry, which includes everything from business process outsourcing (BPO) to shared service centres (SSCs) to research and develop-ment operations (R&D) has become one of the fastest-growing sectors in Poland’s economy. It is now estimated that it is the second largest employer in the country. But to keep the flow of investment coming, Poland will have to move up the value chain, providing complex, knowledge-intensive services

urBan issues: PriMetiMe WarsaW iii

39-51Poland Today’s Primetime Warsaw III confer-ence brought together decision makers from the public and private sectors to hash out the opportunities and challenges facing urban de-velopment in Poland’s capital. Warsaw Mayor Hanna Gronkiewicz-Waltz, former Prime Min-ister Jan Krzysztof Bielecki and editor-in-chief of fDi Magazine Courteny Fingar were among the attendees of the event, held in the National Stadium in Warsaw. In this edition of Urban Issues, we provide in-depth coverage of the major themes that were explored at the event

Business

52Banking on a challenging yearThe past several years have been good to Po-land’s lenders. But lower interest rates and new regulations could mean that will change in 2015

54Transformational expertiseThe story of Elzab, a Polish IT company whose business model has undergone several suc-cessful transitions, offers lessons for how other Polish firms can meet future challenges

59Lost and foundA Kraków start-up is creating solutions to help you find all of the things you have left behind

international

60Weapon of choiceRussia has been waging an information war in Poland and across the region. How should the country respond?

science & tecHnoloGY

62Fuel to spareYoung Polish engineers are building ultra-efficient cars – and getting plenty of educational mileage out of the experience

HistorY

65It happened in ... July13 July 2000. Holocaust chronicler Jan Karski dies

66Eyewitness: Władysław BartoszewskiWładysław Bartoszewski was never officially a professor. But he had plenty to teach us

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The lessons of Władysław Bartoszewski. page 66

Young Poles are building ultra-efficient cars. page 62

Investment in Warsaw’s Praga district. pages 46 & 51

5 BooKs & arts

69Weaver of a tangled webThe tale of the ‘dangerous’ Polish-American immigrant leader Louis Hammerling is wild, convoluted and fascinating

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70Size mattersPoland won the world junior volleyball gold, a record number of athletes from Poland attended the European Championships, a huge Pole signs with the NFL’s Minnesota Vikings, and Poland drew with Ireland in a thrilling Euro 2016 qualifier

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74Warsaw in focus at MIPIMExperts expect a BPO boom to come to Warsaw – but can the city capitalise on it?

76Kraków getting in the innovation gameHow should Poland’s second city tackle the challenges it faces as a rapidly developing knowledge-based economy?

78Can Europe lead?Leaders from business and politics discussed Europe’s role on the increasingly unpredictable global stage

79A new chapter for local government How should local authorities manage the distribution of EU funds, and spur innovation?

80Lublin: inspiring business Business leaders and economic experts evaluated the eastern city of Lublin’s strategy for creating investment incentives

81Gliwice shines for logistics investmentWhat are the factors influencing Poland’s logistics market? Sector firms large and small gathered with city decision makers and economic experts to explore that question

iMPressions

82Good things are on the wayPaul Chen, originally from the United States, talks about his personal experience as a foreigner living in Poland

This issue of Poland Today, our 10th, includes an interview with the presi-dent of the employers of Poland (Pracodawcy RP), the influential organi-zation which represents around 10,000 businesses across the country. in the interview he talks about the adversarial attitude of the tax authorities towards entrepreneurs and says he wishes that they “would finally stop treating entre-preneurs as potential fraudsters. i wish their rights were respected, so that they can concentrate on running their busi-nesses, developing them and creating new jobs.” Trying to run a young busi-ness here, as i do, i can only endorse his opinion. Poland is a nation of entrepre-neurs, but the tax authorities seem to be on a mission to counteract this spirit of enterprise. And the government, it often seems, doesn’t much want to help. Where are the initiatives to help new businesses (not only high-tech start-ups)? Where are the tax breaks for young companies? Ruling party Civic Platform had the opportunity to enact comprehensive, business friendly measures but, for the most part, played it safe and did the minimum necessary. And now it looks like their time could be passing. There’s clearly a message there for new governments: be bold, as you’ll get voted out sooner rather than later anyway.

Meanwhile, Poland Today is turning its head in a more international direc-tion. in the second half of the year we will be organizing an event in London, bringing several of the country’s lead-ing businesses in selected sectors to europe’s financial capital and show-casing the country’s investment poten-tial. The intention is that this will be the first of several forays abroad, with the objective of bringing Poland’s strengths and opportunities to as many potential investors as possible. We will report on our progress in upcoming issues. i would like to wish all our clients and readers a relaxing summer break.

Richard Stephens Publisher Poland Today

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Russia’s information war. page 60

How to boost the business services sector. page 29

6 ‘Poland already has a head start in many industries. The question is how the country can leverage its advantages to create innovation. ’

editoriAl

Poland’s economy is moving forward. simple manufac-turing and low-cost services are making way for complex, value-added operations and high-tech products. But the going, so far, is slow and often haphazard.

it doesn’t have to be that way. Poland already has a head start in many industries, from agriculture to mining and from energy to pharmaceuticals. The question is how the coun-try can leverage its advantages to create innovation. in our leader section about Poland’s economy of Tomorrow, we explore that question and others (see pages 16-26). For one, consolidation will allow some efficiencies of scale to appear, enabling the larger companies to invest more in research and development while creating home-grown technologies and advanced processes. Those, in turn, could be sold around the world.

Another industry that holds significant potential is business services. Previously, the sector was referred to as business process outsourcing, or BPO – but in Poland it has evolved into much more than cheap accounting or human resources services. Polish employees are complet-ing ever more complicated operations, often performing critical R&D. This evolution must speed up if investment in the sector is to continue. in our Business services in Focus section (see pages 27-38) we explore how the country can make that happen.

The business services sector has transformed the econo-mies of many cities in Poland, but Warsaw, particularly, may be in for a business services boom (see pages 33 and 74). This will spur even more development in the capital, which will bring with it new challenges.

in Poland Today’s third annual Primetime Warsaw con-ference, participants including Warsaw Mayor Hanna Gronkiewicz-Waltz and former Prime Minister Jan Krzysztof Bielecki debated how the city should face the future. One message came through loud and clear: Warsaw must do more to tell its story to the rest of the world. The number of foreign investments in the city has been declining steadily, as Asian cities rise up the ranks. in this issue’s edition of urban issues, we present a special feature with several stories cov-ering all of the major themes and debates during the confer-ence (see pages 39-51).

Poles, however, aren’t waiting for the country to get its act together. For example, a Kraków start-up that makes it nearly impossible for you to lose your wallet beat its fundraising goal by over 2,000% (see page 59), while students from the Warsaw university of Technology are setting records for fuel-efficient cars (see page 62). Forward, indeed. E

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Founder & Editor in ChiefFinancial DirectorBusiness Development Director

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EditorMarketing & Communications DirectorNew Business Partner

Business EditorReal Estate Editor

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Richard Stephens Arkadiusz JamskiJames Anderson--HanneyBartosz StefaniakTomasz AndryszczykToby HancockAna Hermoso

Andrew KurethSylwia ZiemackaAneta Kłodaś

Lech KaczanowskiAdam Zdrodowski Magda GawlikowskaMaja Sorochtej

Wojciech BrzezińskiAnnabelle ChapmanGabriel RomKamila WajszczukYoni Wilkenfeld

Polska Agencja Fotografów ForumPiotr Dziubak

Andrew Kureth is editor of Poland Today. Originally from the United States, Andrew has been living in Poland since 2001 and has covered the major political, economic, business and social stories in the country for over a decade. He has written for numerous global media, including the Financial Times. Andrew graduated from Kenyon College in Ohio.

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8 Associated PressPoland makes payout to alleged victims of CIA renditionsPoland is paying a quarter of a million dol-lars  o two terror suspects allegedly tortured by the CIA in a secret facility in the country

–  prompting outrage among many in Poland who feel they are being punished for American wrongdoing. Last July, the European court of human rights ruled that Poland violated the rights of suspects Abu Zubaydah and Abd al-Rahim al-Nashiri by allowing the CIA to imprison and torture them. The court ordered Poland to pay €130,000 to Zubaydah, a Palestinian, and €100,000 to Nashiri, a Saudi national charged with orchestrating the 2000 USS Cole terrorist attack.

Financial Times UK warned by Eastern Europe not to meddle with migrant rightsA group of Eastern European countries has voiced concerns with the United Kingdom’s recently re-elected Conservative government over its immigration policy. In his election manifesto, British Prime Minister David Cameron promised a four-year waiting period for migrant workers claiming UK benefits. Polish officials stressed that the policy could lead to de-facto discrimination against migrant citizens. According to recent census estimates, there are over a million Polish migrants living in the United Kingdom.

New York TimesPoland: FBI director regrets remarksFBI director James Comey told the Polish ambassador to the United States that he regret-ted recent remarks that Polish officials had said amounted to an accusation of complicity in the Holocaust. Comey’s remarks, published in The Washington Post in mid-April, prompted an outcry in Poland. “In their minds, the murderers and accomplices of Germany, and Poland and Hungary, and so many, many other places didn’t do something evil,” he said. “They convinced themselves it was the right thing to do, the thing they had to do.” Poland said the passage wrongly implied it was complicit in the Nazi genocide of European Jews. In a letter to the Polish ambassador released by the Polish Foreign Ministry, Comey said: “The Polish state bears no responsibility for the horrors imposed by the Nazis.” Poland now considers the matter settled, a Foreign Ministry spokesperson said.

ReutersPoland to buy US Patriot missiles, French helicoptersPoland announced plans to purchase Patriot missiles from US company Raytheon and heli-copters from France’s Airbus. The two tenders, valued together at approximately 29bn złoty (€7bn), come amid a rapid modernisation effort from the Polish military. “For the armed forces’ technical modernisation and the Polish armed forces’ resilience to be effective, the so-called anti-missile shield ... had to become the priority of priorities,” said Polish President Bronisław Komorowski. Washington PostJeb Bush planning to visit Germany, Estonia and Poland in JuneJeb Bush, an expected US presidential candi-date and former governor of Florida, plans to visit Poland along with Estonia and Germany in June. According to an itinerary released by his press office, Bush will speak on the United States’ defence alliance with Poland, issues per-taining to NATO, as well as meeting with Polish business leaders. The trip to Poland will be Bush’s first.

The GuardianRussian biker gang Night Wolves refused entry into PolandIn April, a group of 10 bikers from the Russian group Night Wolves were refused entry at the Polish-Belarus border. The Night Wolves are outspoken in their support for Russian President Vladimir Putin. The group planned to take a ‘victory ride’ across Europe, ending in Berlin to commemorate the Red Army’s vic-tory in World War II. The tour raised hackles especially in Poland, where politicians decried it as unnecessarily provocative. In the end, at least 30 members of the group made it to Berlin in time for the 9 May anniversary.

Boston GlobeBasketball star Paul Pierce gets a vote for president of PolandA professional American basketball player has shown up in an unlikely place: a Polish ballot box. Paul Pierce, a member of the Washington Wizards and teammate of Pole Marcin Gortat, was added to a ballot in Poland’s recent election by Wizard super-fan Bartosz Bielecki. Bielecki, the Polish correspondent for ESPN’s Washing-ton Wizards fan-site, explained that he voted for Pierce “due to the lack of better candidates”.

Associated PressPoland declares Russian journalist a danger to country’s securityPolish authorities accused a Russian journal-ist living in Poland who works for Rossiya Segodnya, a pro-Kremlin news agency, with threatening Poland’s national security. Authori-ties claim that the journalist, Leonid Sviridov, should lose his right to reside in Poland and the European Union. Specifics on the case remain secret, but Sviridov was accused by the govern-ment of being a spy in 2014. He plans to contest all charges.

Herald ScotlandScottish police in Warsaw for talks over secondmentsScottish police officers visited Warsaw in April to discuss with the Polish National Police plans to increase cooperation between the two countries’ police forces. The meeting helped Scottish police learn how to better engage with Polish communities in their country. As part of the proposed plan, a small number of Polish officers may be seconded to Scotland. At 55,000, Poles are the largest migrant group in Scotland, according to 2011 census figures.

Newsweek EuropePoland to build 24-hour surveillance watchtowers on Russian borderPoland is further fortifying its 200km land bor-der with Russia as it constructs a series of high-tech watchtowers. The project is expected to become fully operational in June, and will see six observation towers between 35 and 50 metres in height. The towers will provide the Polish military with increased intelligence on activity in the border region with the Russian exclave of Kaliningrad. The project will cost 14m złoty (€3.4 million), the majority of which will be paid by the EU’s External Borders Fund. Gulf NewsTrade relations between UAE, Poland to growOfficials speaking at the UAE-Poland Busi-ness Forum pledged to increase economic cooperation between the United Arab Emirates and Poland. Sultan Al Mansouri, the UAE’s minister of economy and Janusz Piechociński, Poland’s deputy prime minister, highlighted plans for further cooperation between in the pharmaceutical, agricultural and biochemical industries. In 2014, bilateral trade between the UAE and Poland stood at over 4.7bn złoty (€1.2 billion), making the country one of Po-land’s largest trade partners in the Middle East.

The GuardianBoard game focuses on Polish heroicsA 25-year-old Polish game designer has created a board game that attempts to capture Poland’s war-time heroism. ‘Seven Days of Westerplatte’, invented by Łukasz Woźniak, transports play-ers to 1939 as commander of a small Polish force under siege from waves of German infan-try and artillery. “We need to remember such events to honour them and to learn,” Woźniak told the Guardian.

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Government gains authority to order compulsory military training

under new regulations, the Polish gov-ernment has the authority to draft men with no prior military experience for military training. Poland ended compul-sory national service in 2008, in favour of a professional force. According to prior rules, the military could only call up personnel who had previously served in the armed forces. Now, any able-bodied man can be drafted, either during a crisis or for any peace-time training deemed necessary. Though the legislation was signed by Prime Minister ewa Kopacz, the government is not expected to make use of this authority in the near future.

The new rules come at a time when Poles have become increasingly wor-ried about Russian aggression to their east. since the outbreak of war in ukraine early last year, Poland has revealed plans to significantly increase its military spending. in late April, Poland announced that it would buy eight patriot missile batteries from us firm Raytheon at a cost of around €3bn and 50 military helicopters from France-based Airbus for about €3.2bn. in total, Warsaw plans to spend some €34bn on military upgrades over the next decade. by Gabriel Rom

Paweł Kukiz surprises with 20% support in first round of presidential election

Rock musician Paweł Kukiz struck a chord with Polish voters in the first round of Poland’s presidential election, which was held in early May. He came in third place, taking more than 20% of the vote – a huge surprise, considering he had not been taken seriously by the media or other politicians until a few weeks before the election.

support for the 51-year-old Kukiz was fuelled by anti-establishment sen-timent in Poland, especially among young people. Kukiz, who once played in a band called ‘The Breasts’ is a social conservative and ardent Catholic. However, his economic views are a bit harder to pin down: he has said he favours low taxes, but also heavy state involvement in tackling poverty. He has called himself a “right-winger with a left-wing heart”. His signature proposal was the introduction of single-mandate voting districts (also known as the ‘first-past-the-post’ system), similar to those in the us or uK, rather than the current list system. This, he said, would allow Poles to hold their elected politicians more directly accountable.

Though he didn’t make it into the sec-ond round (which was won by Andrzej Duda, see page 14), Kukiz is expected to remain active in Polish politics. A strong critic of political parties, Kukiz has said his ‘movement’ will bring together his supporters to run for parliament in elec-tions set for October.

“We have already won,” said Kukiz after the results of the first round of the presidential election were released. “We will win in autumn, we will change the constitution and we will return Poland to its citizens.” by Andrew Kureth

New revelations as fifth anniversary of Smolensk tragedy observed On 10 April, Polish leaders and gov-ernment representatives gathered to commemorate the death of former President Lech Kaczyński, his wife and 94 others who perished in a plane crash near smolensk, Russia five years ago.

According to a new transcript of cockpit recordings leaked in April to Poland’s RMF FM radio station, top gov-ernment officials on board appeared to have pressured the plane’s pilots to land in thick fog. “The fact is, we have to get it [the landing] done,” General Andrzej Błasik reportedly told the pilots six minutes before the crash. The pilots can then be heard attempting to get Błasik and other unidentified govern-ment officials out of the cockpit, but with no success. Polish military pros-ecutors, who are still investigating the crash, claim that the leaked transcripts are “imprecise”.

The leak comes as Poland prepares for autumn parliamentary elections in which the late president’s brother Jarosław Kaczyński will lead the oppo-sition party Pis. some members of Pis contend that the crash may have been caused by Russian foul play. The party has boycotted the official commemora-tion of the crash for the past four years.

Adding to growing tensions between the two countries, Poland charged two Russian air traffic controllers with neg-ligence in March. Russia and Poland are conducting two parallel investi-gations into the crash, but with little apparent cooperation. Russians offi-cials contend that they cannot reach a final conclusion to their investiga-tion because Poland has refused their requests for additional information. by Gabriel Rom

Something to teach us: Władysław Bartoszewski was never officially a professor, though many referred to him as such due to his long career as a university lecturer. In fact, he had much to teach humanity: sent to Auschwitz by the Nazis, he later went on to champion rec-onciliation between Poland and Germany. see page 66

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16 June 2015, The Westin Warsaw Hotel (conference), Hotel Sofitel Warsaw Victoria (cocktail party)

The Spotlight Hotel Investment Poland conference brings together investors, developers, hotel operators and finance

providers to discuss the issues affecting the hotel sector, including development, finance, management and acquisition potential

www.poland-today.pl

conference & cockTail parTy

Spotlight Hotel Investment Poland II

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Agata Kulesza

Actress Agata Kulesza, co-star of Paweł Pawlikowski’s Oscar-winning film ‘ida’, may be a new name to her international audiences. in Poland, however, the vet-eran actress has been performing on stage and in the movies for over two decades. Kulesza first gained wide-spread popularity as a contestant on the popular show ‘Taniec z Gwiazdami’ (‘Dancing with stars’), and since 2011 she has performed regularly at the Ateneum Theatre in Warsaw. in 2012 she received the Polish Academy Award for Best Actress for her leading role in the film ‘Róża’, directed by Wojciech smarzowski. However, her performance in ‘ida’ ele-vated Kulesza from a domestic star to international fame. in the film, Kulesza plays Wanda Gruz, a Communist Party functionary and the aunt of the title character, ida. Wanda is a hard-drinking woman with a bitter edge who repre-sents a cruel regime. As a Jew, Wanda’s family suffered tremendously during World War ii, yet as a Party member she is a part of an oppressive system. What gives Wanda depth, and where Kulesza shines, is that she is both victim and perpetrator, both sympathetic and contemptible, and Kulesza plays out the contradiction with skill. “i had to accept the fact that there were real women

– as in this case – who did evil things, but who could also remain charismatic and very easy to relate to,” Kulesza said in an interview with The Varsovian, an internet portal.

For her performance, Kulesza won both “Best supporting Actress” from the Los Angeles Film Critics Association (LAFCA) and “Best Actress” at the Gdynia Film Festival in 2013. Pawlikowski refers to her simply as

“Kulesza the virtuoso”.Due to the worldwide success of ‘ida’

and Kulesza’s impressive performance in the film, her career has taken on a second life. she is now a sought-after actress for international directors and is currently working on a movie called ‘innocent’, which is directed by Anne Fontaine and features a joint Polish and French cast. “i am always looking for a powerful story ... one that moves some-thing in me and hopefully something in the viewers,” Kulesza said.

Bohdan Tomaszewski

Bohdan Tomaszewski, the distinctive voice of Polish sports for more than 50 years, died 27 February in Warsaw at the age of 93. Generations of Poles fol-lowed important global sporting events through the images he painted with his voice. “Radio is immortal,” he told Press magazine in a 2007 interview. “it stimu-lates the human imagination.”

Considered a legend of Polish sport journalism, Tomaszewski spent decades working in radio, covering 12 Olympic Games. During that time he commen-tated on some of Poland’s greatest sporting triumphs, including the dual gold medals of Władysław Kozakiewicz and Bronisław Malinowski at the 1980 Moscow summer Olympics.

Tomaszewski also had a strong politi-cal conscience. He fought with the Home Army during the Nazi occupa-tion during World War ii and refused to work with regime-associated media during the imposition of martial law from 1981 to 1983.

Before dedicating himself to journal-ism, Tomaszewski was a highly ranked youth tennis player. His first broadcast assignment was the 1947 Poland-Great Britain Davis Cup match. From that time, he had worked to popularise the sport in Poland. in 1968 he established an annual tennis tournament called the Tomaszewski Cup, where the now-famous Radwańska sisters – urszula and Wimbledon finalist Agnieszka

– launched their careers. Tomaszewski continued freelanc-

ing late into his life, and he is widely reported as saying at age 90 that “the microphone is like a drug”. For his final assignment he covered the 2013 Wimbledon Championships, a fitting goodbye to the sport he had always loved.

Jan Żyliński

sword duels in Hyde Park could be mak-ing a comeback. That is, if Jan Żyliński, a Polish aristocrat and businessman liv-ing in London, has his way. in a widely publicised YouTube video that has received over 365,000 views, Żyliński challenges Nigel Farage, a British poli-tician and leader of the right-wing uK independence Party (uKiP), to a duel. uKiP is known for its strong stance in favour of limiting immigration to the uK. it is estimated that over a million Poles have moved to the uK since 2004. Żyliński explains in the video that he takes issue with discrimination against Poles in the united Kingdom – discrimi-nation he believes is being fanned by Farage and his party. “i’ve had enough of the discrimination against Polish peo-ple in this country,” Żyliński says. “The most idiotic example i’ve heard of has been Mr Nigel Farage blaming migrants for traffic jams on the M40.”

Żyliński’s father was cavalry officer and Polish war hero Captain Andrzej Żyliński, who led a famous charge against the Nazis during the Battle of Kałuszyn. The video opens with Jan Żyliński pointing to a gold statue of his father on horseback, holding his sword aloft.

“i am his son, i have his blood and i have realised that now what i have to do is stand up in defence of my people in the united Kingdom,” he says.

Żyliński claims a duel is what any self-respecting 18th century Polish aristo-crat and english gentleman would do to settle such a disagreement. He qualified his challenge, however, saying that if Mr Farage’s sword-fighting skills are “rusty” then he would gladly engage in a duel of words – a debate. Farage declined.

“i’ve been trying to keep violence out of the election,” he said.

by Gabriel Rom

Fuel to spare: Young Polish engi-neers are building super-efficient cars for educational mile-age. We talk to a team from the Warsaw University of Technology as they prepare for the Shell Eco-Marathon with ‘Kropelka’, an ultra-light vehicle that can travel nearly 700 km on a litre of fuel. “We’lll never learn more than by working all night on something that will actually run and compete,” said one student. see page 62

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Victory celebration: Andrzej Duda shocked Poland’s political scene by beating incumbent Bronisław Komorowski in the second round of the country’s presidential elections on 24 May. Duda won with 51.55% of the vote to Komorowski's 48.45%. Turnout was 55.34%. Duda was backed by opposition party PiS and ran on a platform of social conservatism and greater state involve-ment in the economy. He is due to take office in August.

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1717Economy of tomorrowleAder

Picture of the future: The priority for Poland’s economy as it continues to move closer to Western European levels is innovation – but in what sectors does the country have the best chance to make technological leaps? Poland Today explores this question and asks experts and business leaders what the picture of Poland’s economic future will look like.

The idea that Poland needs to innovate in order to ensure its economy catches up to Western European lev-els seems to be slowly but surely filtering through with pol-icy makers. At both national and local levels, politicians in Poland are beginning to talk about attracting more high-tech investments or R&D centres. They express their desire to cre-ate a Polish ‘Silicon Valley’ and show interest in building on Poland’s strong IT skill set and entrepreneurial spirit.

All of that is fine. But while R&D investments from foreign investors are welcome and high-tech IT clusters could greatly benefit Poland, innovation doesn’t have to come from out-side or be built from scratch.

Innovation can happen, and should be encouraged, in sectors where Poland is already strong. The country has sev-eral industries ripe for an innovation jump that could propel the economy into the future. These include sectors in which Poland has so far held an advantage on the low-tech side, such as agriculture or manufacturing. Other industries that have long been dis-missed as perpetually inefficient, such as mining and energy, can leapfrog into the 21st century. Technologically advanced industries where Poland already has a strong knowledge base and a cost advantage, such as pharma-ceuticals, could also inject innovation into the Polish economy.

The benefits are clear: “Poland could achieve GDP growth above 4% each year between 2015 and 2025. This level of growth would put Polish per-capita GDP (PPP) in 2025 at 85% of the pro-jected Western Europe (EU-15) average. This performance would see Poland attain the per capita GDP levels of Portugal, Spain, or even Italy, and be a globally competitive advanced economy,” said Tomasz Marciniak, a local partner at the Warsaw office of consultancy McKinsey & Co. McKinsey recently published a 96-page report called ‘Poland 2025: Europe’s new growth engine’ that explored how the country could accelerate its growth. Here, Poland Today takes an in-depth look into the report to find out pre-cisely what can be done. Agriculture: growing productivityNo one disputes that Poland’s agricultural sector is strong. The country is one of the world’s largest producers of apples, blueberries and raspberries, while its meat products enjoy popularity as far afield as Asia. Potential is high: Poland ranks fourth in the European Union in arable land, while over 200 million people live within 1,000 kilometres of the country.

“Poland has more advantages than any other country for becoming Europe’s major food production and processing hub,” McKinsey said in the report.

However, the sector still has a productivity gap of about 59% compared with the rest of the EU. Average yields for its main crops (except sugar beets, where Poland leads) are

around 40% lower than in comparable countries, such as Germany. Consolidation – both of food processing compa-nies and farms themselves – could go a long way to bridg-ing the divide. The average Polish farm size is 10 hectares, compared to 50 hectares in France or 90 in the UK. The fragmentation has led to inefficiencies, such as an oversup-ply of farming equipment: Poland now has 13 tractors for every 100 hectares of arable land. In Denmark the figure is just five. “Any significant improvement in productivity would require first increasing the size of the average Polish farm,” says the report.

To help along the consolidation pro-cess, authorities could encourage a few different solutions. One is contract farming, which allows processing com-panies to hire farmers as suppliers and set prices contractually. Another is pro-ducer co-operatives, which are already being promoted by the European Union and the Polish government. Co-operatives enable agricultural pro-ducers to integrate horizontally, while retaining land ownership and a measure of independence. Advanced manufacturing: building a winnerPoland’s advanced manufacturing and high-tech sector has grown between 7% and 10% annually since 2004, though as a share of the economy it remains small, at only 2%. Growing this sector could have powerful knock-on effects for the whole economy: innovation in advanced industries often filters down to other sectors in the form of pro-

cesses and technologies. However, growth in technology-intensive industries depends heavily on scientific advances that require high risk investments.

This can be overcome by encouraging high-tech manu-facturing clusters, through which Polish firms could gain the scale required to have a significant footprint in the global market. “Clusters attract a qualified workforce, support knowledge development and knowledge sharing, and ena-ble the consolidation of the supply chain, while raising the investment profile of the industry,” argues the report. There are already some models in Poland to follow. Aviation Valley, for example, is one of the strongest. Based in the country’s south-east, 90% of Polish aerospace production is concen-trated there, including 119 companies and 23,000 workers.

Foreign acquisitions would allow Polish firms to bring on the experience and technology they haven’t yet acquired. Promotion of advanced manufacturing could boost exports, which is key due to Poland’s relatively small domestic mar-ket. There are several Polish examples that can be followed. These include Solaris, which produces electric buses that are exported to 28 countries, and the Polish Defence Holding, which recently raised R&D investment by a third – it now has 1,000 designers and engineers working on over 100 projects.

The nexT TransformaTion What sectors should Poland focus on to modernise its economy?

‘Foreign acquisitions would allow Polish firms to bring on the experience and technology they haven’t yet acquired’

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Andrew Kureth is editor of Poland To-day. Originally from the United States, Andrew has been living in Poland since 2001 and has covered the major political, economic, business and social stories in the country for over a decade. He writes fre-quently on Poland’s relations with other countries, notably re-porting from France, Georgia and the United Arab Emir-ates. He has written for numerous global media, including the Financial Times. Andrew graduated from Kenyon College in Ohio.

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Mining: digging for treasureIn coal mining, huge losses and mountains of unsold product are piling up for the industry in Poland, which is cursed with high labour costs and geologically difficult mines. However, it is blessed with large, deep reserves and a skilled, experi-enced workforce, as well as support from academic institu-tions such as the AGH University of Science and Technology and the Silesian University of Technology. Rather than allow the industry to die under a mountain of debt or keep it on life support through payouts from the national budget, Poland could reinvigorate it by improving efficiency and basing an R&D hub around the sector.

While more labour flexibility would be welcome, not all of the inefficiencies in Poland’s mines comes from intransigent workers. The report suggests using data analytics to enhance equipment availability and improved operating procedures to raise productivity. Automation doesn’t always have to mean reductions in the workforce either – the industry could improve both productivity and safety by introducing more remote-controlled processes. Mines could also improve util-ity efficiencies (using less water and energy) and raise safety standards. Shutting down unprofitable mines and increasing production in profitable ones would also help.

When it comes to R&D, Poland stands to benefit from the global trend toward automated mining technologies.

“Poland’s mining industry has very strong foundations for world-class R&D capabilities in mining technologies,” reads the report. Academic resources, active mining equip-ment companies and significant demand from domes-tic mines offer a core around which an innovation cluster could be developed. Energy: investment in the futurePoland’s energy sector is desperate for investment to upgrade its generation technology, revamp its outdated grid and develop renewable energy capabilities. Along with find-ing the financing for these projects, “efficient operations will be critical to provide the solid financial foundation needed to avoid putting pressure on energy prices and suppress-ing economic competitiveness,” says the report. Poland’s energy firms will have to go through some consolidation, and then maximise the efficiencies of their generation portfolios, perhaps upgrading hard coal burning facilities and waiting on riskier investments such as nuclear power and natural gas. The report also suggests revamping the market sup-port system, so that it would subsidise only the lowest-cost renewable technologies. The effects of such reforms would

be multiplied if they were coordinated with the European Union. “Development of European transmission capacities for electric power and gas would enhance interconnectivity while European coordination would boost security of supply,” the report adds. Pharmaceuticals: prescription for innovationPoland’s pharmaceutical industry is on a 10-year growth streak and by itself accounts for about 1% of GDP. Poland’s pharma market is the largest in the region and the sixth larg-est in the EU. Exports, especially to Western Europe, have been strong, as Polish producers focus on advanced-medi-cine markets. “Poland has established a solid reputation and fundamentals in the manufacture and marketing of pharma-ceutical products,” says the report. The country’s strong-est points include generic prescription drugs and branded over-the-counter (OTC) products. The sector boasts several modern manufacturing plants, with plenty of skilled labour.

According to the report, Poland could create its own high-tech pharma hub by becoming a European manufacturing centre for complex generics and biosimilars, by strength-ening its role as a manufacturing contractor for European generics products and by becoming a packaging and logis-tics centre for European pharmaceutical companies. Here it can use its lower cost labour force, its familiarity with EU norms and its geography to its advantage. “Should Poland succeed in strengthening exports and becoming a European hub for generics manufacturing and logistics, manufacturing capacity as well as sales could nearly double,” predicts McKinsey. Pieces in placeAgriculture, advanced manufacturing, mining, energy and pharmaceuticals are all sectors that could help form a foun-dation for a knowledge-based economy in Poland. Though no one is ready to dub them with a sexy (but hackneyed) moniker like ‘Silicon Valley’, they are sectors where Poland already has many of the pieces in place. And while very dif-ferent, there are several common areas of focus that will help them become more innovative: clustering, consolida-tion, technological advancement and increased efficiency.

Achieving some of those goals will be harder than others, but that’s no excuse not to begin. The McKinsey report makes it clear: if Poland plays its cards right, by 2025 it could reach GDP levels on par with some Western European countries. That would be welcome news to Polish citizens, who long to reach the economic levels of their peers. by Andrew Kureth

Growth industry: It is well known that Poland boasts high quality agricultural products and plenty of customers for them close by. But Polish agriculture has a productivity gap of 59% when compared with the rest of the EU. To close it, the experts at consul-tancy McKinsey & Co say Polish farms need to consolidate. “Any significant improve-ment in productivity would require first increasing the size of the average Polish farm,” says a recent report from the firm.

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AspirAtionAl nAtionIn its ‘Poland 2025’ report, McKinsey set out two potential growth scenarios – the first under a ‘business as usual’ scenario, where Poland doesn’t make any economic reforms, and the second where it makes a concerted ef-fort to catch up with advanced economies. The differences are stark.

Size of economy

– Real GDP– GDP per capita in PPP– GDP per capita in PPP

as % of EU-15 average– Position in EU-28 GDP

per capita in PPP

Today (2013)

517bn USD23,000 USD60%

23rd

Business as usual 2025

700bn USD32,000 USD70%

22nd

Aspirational 2025

850bn USD40,000 USD85%

17th

Sources: International Monetary Fund; McKinsey Growth Model

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Economy of tomorrow: industry by industry Companies sound off on the challenges and opportunities in their industries over the next 10 years

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We asked companies from a wide range of sectors to tell us what the future holds for their industries in Poland and how businesses will have to react to them. Below is a selection of the answers firms gave us.

DB SchenkerMarek Staszek, CEO of DB Schenker Rail Polska:

The transport and logistics market followed customers’ needs beyond the borders of one country a long time ago. When we talk about its development, we should look at the market not only from a national but at least from a Eu-ropean perspective. Here we can see five trends which will shape the market in the near future: globalisation, deregulation, demographic changes, climate protection and digitalisation. Moreover, the emerging new concepts in the management and organisation of production – such as lean management – will strongly influence the development of the transporta-tion and logistics sector.

Arctic PAPerWolfgang Lübbert, CEO of Arctic Paper:

Over the next 10 years, the paper sector will most probably see an increasing number of areas where the digital and analogue media converge to create new and positive synergies. The nearest future may bring even stronger necessity to create new products both within the packaging and the digital printing seg-ments. Also, there will be a need for more specialised and non-wood papers. There will also be an increase in investments in new tech-nology to protect the environment. Arctic Paper plans to further concentrate on finding new solutions to fill or even to create new demand for specialised products.

BoryszewCezary Pyszkowski, member of the management board at Boryszew:

In the next 10 years the automotive sector will continue to be one of the most important branches of the Polish economy – one that generates significant revenue and creates sustainable jobs for thousands of Poles. The automotive sector in Poland is not just factories producing cars, but also manufactur-ers of components constituting an increasing percentage of players in the industry, employing about 150,000 employees across the country. Development centres will increase in importance, replacing the currently domi-nant assembly plants. Domestic components manufacturers will gain new competencies, expand production facilities and allocate more resources to growth and innovation. We definitely want to fit into this trend and grow our R&D – we see the opportunity to build a sustainable competitive advantage and the basis for future growth.

compiled by Lech Kaczanowski

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SolariSMarcin Napierała, spokesperson for Solaris:

The bus industry, although it is part of the automotive industry, is specific. In its scope, we see an increasingly strong trend gaining in the popularity of zero-emission solutions, such as electric buses. We anticipate that emission-free solutions will gain in importance, and in the near future electric buses on the streets of European cities will not be uncommon.

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CieChDariusz Krawczyk, CEO of Ciech:

Polish chemical companies are often listed among the largest in the European market, and their position in the world is continuously get-ting stronger. The Polish chemical sector has a large potential for further growth. The positive development of consolidation, privatisation and restructuring processes in the sector will have a good influence on the financial condition and liquidity of large companies. Thanks to increas-ing productivity, innovative solutions and com-petitiveness, Polish chemical companies should continue their dynamic expansion to foreign markets in the long-term perspective. In order to achieve this, it will be necessary to maintain Polish products’ high level of quality and invest boldly in new technologies and production capacity. However, we have to keep in mind larger obstacles, such as the climate policy of the European Union, which may hinder the competitiveness of Poland and Europe on the global market.

ComarChJanusz Filipiak, founder and CEO of Comarch:

Before 2020, each hospital and clinic in Poland will have an implemented IT system enabling the secure electronic processing of patient data. Services such as e-registration, e-referrals and e-ordering will be common and patients will have access to their medical records remotely, via the internet. Experience from other mar-kets shows that the absorption of ICT leads to considerable cost reduction, for example by shortening the duration of hospitalisation. There are many applications for ‘telemedicine’ – from care for the chronically ill to extreme sports. Our ambition is to pave the way for the idea of a fully computerised medical facility of the future, where the use of information systems can be much more efficient.

FakroAnna Korczyk, spokesperson for Fakro:

Recent years have brought rapid development of the construction sector in Poland. Polish companies have invested substantial financial resources in production facilities and advanced technologies. As a result, today domestic Polish companies successfully compete in foreign markets. We offer excellent quality and com-petitive solutions. We expect that in the coming years the Polish building materials sector will be associated with a strong name brand.

DCT GDańskMaciek Kwiatkowski, CEO of DCT Gdańsk:

To see the full picture of the Central and Eastern European container market one must remember the unstable and unpredictable situ-ation in Russia. Part of container flow through Polish ports is dependent on the situation in and around Russia, which recently is very difficult. Weak domestic economy, collapsing currency, European Union’s embargoes and Russian counter-embargoes have influenced not only the direct cargo flows to Russia but also the economic situation of the Russians. This means changes in the structure of Russian cargo flow and it directly affects the condition of container terminals serving the Russian market.

Can-PaCkStanislaw Wasko, vice president of the management board at Can-Pack:

Poland is one of the largest packaging markets in Europe. The packaging industry is equipped with modern means of production and the latest technology, and the offer of packaging manufacturers is fully competitive in foreign markets. In light of the current economic situa-tion in Poland, the packaging market contin-ues to grow and has good prospects – it has a chance to achieve a level comparable to the developed markets of Western Europe over the next decade. We intend to play a signifi-cant role in metal and glass packaging, mainly by changing production technology result-ing in: increased productivity, reduced costs, innovative printing solutions, product quality improvement and usability improvement.

EricpolJan Malkiewicz, communication & marketing department manager at Ericpol:

I think that the IT services sector will con-tinue to grow, but without the fireworks and spectacular successes. A few companies will strengthen their presence abroad, but not much, because the key problem is that the state is not able to support the export of technology and therefore we have not been able to achieve mass presence on the global market. Another problem will be demographics. The demand for qualified engineers and science graduates con-tinues to increase while their number in Poland is falling. If more students go into humanities than into computer science, electrical engineer-ing, mathematics, physics or even chemistry, it will have a decisive impact on the price of services and the quality of our solutions on the Polish market.

GoodmanMaciej Madejak, head of business development Poland at Goodman:

Logistics, as well as the warehouse market, have good prospects in Poland. Thanks to progress in infrastructure development, access to a qualified workforce and strong internal de-mand, Poland is becoming more attractive for foreign companies year by year. E-commerce will remain one of the sectors that has the greatest influence on the growth of demand for warehouse space. Secondly, Poland will attract production companies seeking high-quality space designated for production and warehousing, and often for office space as well. At the same time, competition among develop-ers is growing. The Polish warehouse market is maturing, so only the strongest players, with access to financing, will survive.

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PrologisBen Bannatyne, managing director and regional head at Prologis Central and Eastern Europe:

We believe there are strong growth opportuni-ties for the warehouse and industrial sector in Poland. According to estimates, the warehouse sector in Poland could grow by 50-60% by 2020, and reach close to 13m sqm. This shows that there is still a lot of room for development in this sector. The market recovery in 2014 has allowed developers to return to a conservative amount of speculative development and this is likely to continue and increase in the core markets where levels of vacant supply are falling to all time low. Certainly the popu-larity of build-to-suit facilities is unlikely to fall, particularly for the light assembly and produc-tion companies that due to the specifics of their activity, prefer a tailor made solution.

IntegerRafał Brzoska, CEO of Integer.pl Group:

In the near future we can certainly expect the development of services for the food industry – an increasing number of e-retailers offer cus-tomers bread, fruit, vegetables and delicatessen products. The e-commerce market is evolving very rapidly, consumer expectations are rising – they want to buy products online in virtually every sector. Delivery service providers will have to adapt to this trend. In addition, cross-border services are still thriving. Cross-border deliveries in the future will play an increasingly important role in the e-commerce market. Drones are another interesting direction some companies are going. However, there are still a lot of difficulties related to security and legal issues. We believe the most proven solution in the market will continue to be machines for sending and receiving packages independently. That is why we continually strive to develop our network of automated parcel lockers.

SkanSkaKatarzyna Zawodna, managing director at Skanska Property Poland:

The real estate market will be driven mostly by the sector of modern business services, which is expected to grow by 15,000 to 20,000 new jobs annually. From the outsourcing centres alone we will see high demand for modern of-fice space. The increasing demand will also be driven by the public sector and growing Polish companies. Polish GDP is expected to amount to 70% of the EU15 countries’ average by 2025. Presumably, this will also result in a growing demand for office space. It is significant that numerous companies are locating their offices outside Warsaw, because they are finding skilled workers in regional markets, while reducing costs.

PanattoniRobert Dobrzycki, managing partner Europe at Panattoni Europe:

The next 10 years will see the emergence of Eastern Poland, which has appeared on inves-tors’ radar only recently, due to a number of newly completed and ongoing infrastructure projects, most importantly the A4 highway. The latter has brought places like Rzeszów and Lublin so much closer to Western Europe. The eastern parts of Poland are a huge reservoir of labour, which is becoming increasingly hard to find in areas near Wrocław and Poznań. One can expect an influx of manufacturing invest-ments to Eastern Poland precisely because of the availability of workers. The labour intensive projects will move there, while logistics busi-nesses that prioritise short delivery times to Germany and beyond will remain near the Western border.

IKEA Industry PolAndWojciech Waligóra, chairman of the management board at IKEA Industry Poland:

We believe that Poland has good conditions for further development in the wood and furniture industry, including skilled employees and know-how, good quality raw materials and long-term sustainable forest manage-ment, as well as a stable overall economy. We also believe that the growth will come not only from exports but also from the national market, where consumers will be more likely to exchange their furniture in a shorter periods of time. There are several trends that will probably have an impact on the Polish wood industry’s competitiveness: improved efficiency and quality through automation and the grow-ing importance of safety and sustainability.

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ArcelorMittAl PolAndSylwia Winiarek, spokesperson for ArcelorMittal Poland:

The development of Poland’s steel market in the next few years will be driven by a number of infrastructure projects that will be imple-mented within the new financial perspective of the European Union. However, there are a number of challenges that the steel industry in Poland is facing at the moment and which make it impossible for it to compete against imports from countries in which market condi-tions are more favourable. We need to have a level playing field. For this to be achieved, the issue of energy cost needs to be addressed im-mediately: the excise tax on electricity should be abandoned and the gas market should be fully liberated.

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PolskiBus.comPiotr Pogonowski, director of marketing and communications at PolskiBus.com:

The rapid development of infrastructure, specifically more and better local road connec-tions, will be an incentive for us to add new routes and extend current ones. Our research shows that an increasing number of people will decide to travel as prices become more affordable connections between individual cities improve.

Wizz AirJózsef Váradi, CEO of Wizz Air

Poland has a great future in air transport. Over 50% of Polish air transport capacity is now attributed to low-cost airlines, and this trend will continue to develop in the next 10 years. Economic convergence is one of the drivers of long-term transport prospects and as a result air transport should grow disproportionately fast compared to Western Europe – here it’s growing at about two times the growth of GDP. There’s a lot of growth capacity on existing routes, as some routes are flown with a very tight capacity. There’s scope for adding more frequency to those routes. Many of the drivers will happen be-cause we’re stepping up, with 6 million passen-gers expected this year compared to 4.7 million last year. So we will be driving this growth.

PKO BPŁukasz Świerżewski , spokesperson for PKO BP:

The Polish banking sector over the next 10 years will consistently support the develop-ment of the economy, which will systematically close the gap with Western Europe. In parallel, there will be a process of consolidation of the banking sector. As a result, some small banks with small market shares will disappear from the market if they don’t find a lucrative niche. They will be taken over by larger institutions. We also see changes in customer behaviour and preferences. It will be important to build and develop modern communication and customer service tools.

WarsaW stock ExchangEIf the Polish capital market is to thrive, every-one needs to be made aware that the capital market is an important part of the economy. There are many examples that confirm a strong relationship between the capital market and a fast-growing economy. Therefore, it should be permanently inscribed in Polish economic policy. All related entities should be engaged and specific actions should be taken in order to support the dynamic development of the capital market. Steps to promote the success of the Polish economy on the international stage, for example, would give a positive stimulus to the development of the market. It is also neces-sary to simplify procedures and to introduce changes in tax regulations to promote market transparency and stock market investment, such as incentives for investors and issuers. In addition, the Warsaw Stock Exchange sees the need for regulatory changes facilitating access to the Polish capital market, which would increase competitiveness.

PKN OrleNThe chemical sector currently accounts for a smaller portion of industrial production in Poland than in other countries. While Europe’s share in global production is 24%, Poland’s is only 2%. Furthermore, with Poland’s foreign trade deficit at some €7bn annually, the sector offers considerable potential for growth. In terms of competition, the situation in the indus-try will also improve as new products and tech-nologies are created thanks to the EU Horizon 2020 programme and other dedicated financial support schemes. We believe that the petro-chemical industry has considerable potential for growth, and so we are consistently pursuing our petrochemical investment projects.

VeoliaGerard Bourland, general director at Veolia Group in Poland:

European climate policy will significantly influence the Polish energy and utilities market within the next 10 years. Even though coal will remain the dominant fuel in Poland for a long time yet, gas and renewable energy will have an increasingly larger share of the market. I also believe that district heating will be recognised as a very efficient tool to tackle both energy ef-ficiency and lower emissions. Nevertheless, the changes won’t be revolutionary. It is not pos-sible to completely transform the energy sector of a country within 10 years. The direction of change will be toward a low emission economy, but the pace of change will largely depend on regional conditions.

23Asseco PolAndEwa Kryj, press spokesperson for Asseco Poland:

We develop technologies that are not only able to satisfy current market demands, but can also create future trends. This is particu-larly important in times of a global economy where we need to face the competition from both Polish and international IT vendors. The expectations of companies and institutions that buy our software solutions are increasingly higher as they become better educated in infor-mation technology and are able to determine precisely what they need.

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EmployErs of polandEmployers of Poland (Pracodawcy RP) is the oldest and largest organisation of employ-ers in Poland, according to its website. The group has accompanied Poland’s political and economic transformation since 1989 by repre-senting the interests of Polish entrepreneurs from all sectors and businesses. The orgainisa-tion brings together more than 10,000 compa-nies employing around five million people.

Andrzej Malinow-ski has been presi-dent of the Employ-ers of Poland (Praco-dawcy RP) since 2001. The group brings together 10,000 com-panies that altogether employ about five million people. He is one of the co-creators of Poland’s Ministry of Economy, serving later as its secretary of state. He also served as a member of parliament and held other ministe-rial positions. In parliament, he was vice-chair of the Committee of Foreign Economic Relations. He holds a PhD from the Poznań Univer-sity of Economics.

Employers of Poland (Pracodawcy RP) is campaigning to change how tax authorities treat entrepreneurs and taxpayers in general. What would you like to see changed and how would such changes benefit Poland’s economy?

Changing tax policy in Poland is one of the priorities of Employers of Poland. It would be unfair to say that policy-makers are not doing anything to rectify the tax system. However, the changes are often only temporary and occur far too slowly. In addition, solu-tions favourable to taxpayers are often adopted only because we are obliged to implement directives and recom-mendations of the European Union. There is no will and courage to make bold changes.

I wish that, after 25 years of a market economy in Poland, the tax authorities would finally stop treating entrepreneurs as potential fraudsters. I wish their rights were respected, so that they could concentrate on running their businesses, developing them and creating new jobs. Simplifying the tax system and changing the tax adminis-tration’s approach to taxpayers would enable existing businesses to develop and new ones to be established. This would be a win-win, since it would ben-efit the Treasury, entrepreneurs and ordinary citizens. We are an extremely entrepreneurial nation and therefore the state should introduce legal and tax solutions creating conditions in which Poles could spread their wings, pursue their goals and dreams, which obviously will affect the public welfare.

Other than taxation issues, what do you consider the biggest challenge currently facing employers in Poland?

One of the biggest challenges fac-ing employers in Poland is an increasing

tive as we would like them to be. In the European Commission’s Innovation Union Scoreboard we are only ahead of Romania, Bulgaria, Latvia, and Lithuania. That is bad. We need an overhaul of the playing field. I am talk-ing both about changes in the law that will make investment in research and development attractive in terms of tax-ation and about facilitating access to financing for micro and small compa-nies. We have many start-ups with great business ideas and all they need are the right conditions. We have to create a whole ecosystem for innovation, focus-ing in particular on commercialization and cooperation between science and business.

These are grassroots processes now as policy makers have not fully grasped how serious the problem of our low innovation level is. They should bear in mind that innovation allows you to sell your goods or services with a higher margin, which then enables mov-ing up to the next stage of economic development. This has a fundamental impact on the whole economy, provid-ing not only for its dynamic develop-ment but also a significant increase in wages, and therefore in the wealth of the society. The advancement of civili-sation depends on innovation. We hope the new EU budgetary perspective will enforce some processes even against the administration.

In 2007 few people believed that Poland would manage to build any highways, and today some of them are of better quality than the German ones. I hope the same process will take place in terms of innovation and strength-ening cooperation between business and science, so that by 2020 we will be proud of the number of new pat-ents. One thing I know for sure – Polish entrepreneurs have huge potential

difficulty in recruiting suitably qualified staff. This is a matter of changing the education model so that it meets labour market needs. Otherwise, graduates will be unemployed while employers still struggle to find staff they need. To grow and to be competitive, we need to treat financial expenditures on per-sonnel primarily as an investment, not just costs. We really need broader and closer cooperation between busi-ness and schools, especially vocational schools. It is also necessary to support the development of human capital and increase awareness of how important good human resources management is.

What is the most important change you would like to see made in Polish regulations?

All of the changes expected by Polish businesses concern reducing pervasive formalism, taming bureaucracy, and enacting rules that are not highly ques-tionable in their application. The degree of complexity in Polish law is not con-ducive to building mutual trust between the state and entrepreneurs.

What can be done to encourage Polish companies to invest more in R&D and innovation?

Ratings clearly show that the Polish economy as a whole and indi-vidual companies are not as innova-

Setting business free Poland Today editor Andrew Kureth sits down with Andrzej Malinowski, president of advocacy group Employers of Poland, to talk about the challenges facing Polish businesses

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There are at least a couple of prob-lems stacked together here, so there is no single solution. Poles aren’t leaving because they can’t find a job in Poland, but rather because they want a job that is better paid and better suited to their qualifications, and because they want a higher standard of living. With this in mind, we must conduct reforms in many areas. We need a comprehen-sive and rational family policy, housing policy, regulations conducive to coop-eration between science and business, investment in human capital and entre-preneurship, real support for entrepre-neurs from state institutions, and health care reform.

Additionally, it is important to remember about a proper migration policy, which in our situation should focus on the labour market.

What do you think will be Poland’s greatest economic advantage over the next several years?

Poland has many strengths, but uses them poorly. In my opinion, our great-est asset is our absolutely remarkable entrepreneurial spirit. Its explosion could be seen best a quarter of a cen-tury ago, when we began the transfor-mation. Despite many obstacles, Poles are still one of the most creative and entrepreneurial nations in the world.

If in fairly difficult legal and regu-latory conditions we can surprise the world with interesting ideas, imag-ine what we would be capable of in a more friendly environment. If we free entrepreneurship from the fetters of bureaucracy and provisions incompat-ible with the socioeconomic conditions of the 21st century, if the tax administra-tion does not persecute brave people running their own businesses, we can

– as the saying goes – move mountains. interview by Andrew Kureth

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Taxing attitude: “I wish that, after 25 years of a market economy in Poland, the tax authorities would finally stop treating entrepre-neurs as potential fraudsters. I wish their rights were respected, so that they could concen-trate on running their businesses, develop-ing them and creating new jobs. Simplifying the tax system and changing the tax administration’s ap-proach to taxpayers would enable existing businesses to develop and new ones to be established,” says Andrzej Malinow-ski, president of Employers of Poland (Pracodawcy RP).

and they can unlock it by themselves as long as the administration does not get in the way.

You have criticized the govern-ment for not choosing Poland-based manufacturers to provide 70 new helicopters for the Polish mili-tary. Are quality of equipment and Poland-based production the only criteria the government should use, or should geopolitical concerns be taken into account as well?

The government plans about 130bn złoty in expenditures on armaments. This is a huge amount of money that should go to Polish industry if possible. Buying foreign products with Polish tax-payers’ money when the same – or bet-ter – quality products can be made in Polish plants, is acting to the detriment of the economy. Most Poles agree with that, as opinion polls show. In countries such as France or Germany it is incon-ceivable that domestic companies are not the first to be considered.

Of course, we should also take into account the geopolitical situation and our membership in NATO. I am con-vinced, however, that there is no con-tradiction here, and you can reconcile those two criteria – geopolitical and economic factors. Without a doubt, we should increase the potential of Polish armaments companies during

the planned process of modernisation. The aim of this action is that in a few years, perhaps a decade, Polish com-panies will be able to not only to meet most needs of the Polish armed forces but also effectively compete for con-tracts abroad. It is simply a matter of our national interest. Such is contem-porary patriotism.

Is the emigration of so many young, educated Poles an overall negative or an overall positive? How should this issue be addressed from the side of policymakers? Do Polish employers have a role to play in stemming the tide?

At the end of 2013 the number of Poles temporarily residing outside Poland was estimated at approximately 2.2 million people, not counting emi-gration prior to joining the EU. At the same time the number of immigrants in relation to the total Polish population remains at one of the lowest levels in the EU and is approximately 200,000 people. If emigration and immigration balanced each other, we would consider them as enriching our labour market with international experience and stim-ulating entrepreneurship. Unfortunately, at the moment there is no indication that we might expect massive returns of Poles. And no one has an idea how to change this situation.

‘I wish that, after 25 years of a market economy in Poland, the tax authorities would finally stop treating entrepreneurs as potential fraudsters’

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David Haigh (top) and Brynn An-derson (bottom)are CEO and COO, respectively, of Brand Finance, a brand valu-ation company. We asked them to evalu-ate Poland’s brand. They said that Poland still needs to do more to improve its image abroad. However, they also said that Polish companies should still identify themselves as such:

“Poland could be a very powerful nation brand” they said.

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‘I think it would be a big mistake for businesses not to emphasize their Polishness’

about brand FinanceBrand Finance is a brand valuation consul-tancy. The company advises organisations on how to maximise their value through the effec-tive management of their brands and intangible assets. Founded in 1996, Brand Finance has per-formed thousands of branded business, brand and intangible asset valuations worth trillions of dollars, according to the company’s website. Brand Finance is headquartered in London and has a network of international offices.

What is Poland’s reputation abroad at the moment?

Brynn Anderson, Brand Finance COO: According to our study, the Polish brand comes in at about the middle of the scale. The reputation of Poland in overseas markets is very much a mixed bag. The gulf between percep-tion and reality is enormous. There are some key segments which are relatively negative, which are wrapped up with other Eastern European nations – that it was under Soviet control, that it’s grey and bleak, when in fact it’s completely different.

David Haigh, Brand Finance Founder & CEO: The keys are tourism, FDI, prod-ucts and services, and people. When it comes to tourism, it’s either negative or niche – Poland’s treasures are not well known. Concerning companies from Poland, a number of Polish brands have given themselves names which sound German, English or Japanese. From a products and services point of view it’s not great. Aldi and Lidl source a lot of products from Poland but they don’t want to admit it. Concerning people, foreigners know Poles are Catholic, hard-working and honest. People are probably Poland’s most positive asset. Finally, concerning FDI, there’s the residual fear of what’s happening in Ukraine, which may be unfair, but it’s the case. So it’s a bit of a mixed picture.

BA: But it’s also positive in compari-son with Ukraine. Poland has good fis-cal and political management and the economy is growing reasonably well. It’s on a stable footing. In our nation brand study, Poland did best in peo-ple and skills, as well as in goods and products. Polish products are of good quality – Poland’s biggest exports are in heavy machinery and electrical equipment.

DH: Business to business it’s doing OK, but name recognition is not there.

What advice would you give Poland in terms of improving its brand?

DH: The country has to list the things it’s good at and rank them. Concerning Polish brands and products, they have to think about where they are likely to be positively received – and in my opinion it’s where Poles have emigrated. So prioritise where Poland has a com-parative advantage, and then target

there. I understand Poland has lots of natural wild beauty – people can go there for horse riding or outdoor holidays.

BA: It has to be managed very well so people leave with a positive opinion.

When Polish companies operate abroad, should they emphasise that they are Polish, or rather only that they are from the European Union?

DH: I think it would be a big mis-take not to emphasise their Polishness. Poland could be a very powerful nation brand. It’s not a dump, it’s just not well known. It would be an admission of defeat and it would be wrong to go under the EU brand. Most people would look at the product and would say: “What do you mean it comes from the EU? Where in the EU?”

BA: You’ve got to have confidence. Poland is a brand waiting to happen.

What should Polish companies do to improve their chances of success in foreign markets?

DH: If the Poland brand is not very strong, they will have to do their own marketing. The government has a responsibility to help their compa-nies. You can’t wait 50 years for it to happen organically. The govern-ment has to act now – it’s imperative. interview by Richard Stephens

the right products to these places. The world is so big and crowded that you can’t do everything – you have to use your resources carefully.

Poles find it hard to agree on what face to show.

BA: That’s the hard part. Every organization faces this. You have to come up with something and then bring people along with you – people have to get behind it or it won’t gain traction. Poles are fun, tolerant and artistic – that would fit with a series of festivals.

DH: It has to be believable. For example the alcohol industry is where Poland could have a comparative advantage. My understanding is that lots of filmmakers have come from Poland. If  there’s a major film festival in Poland, I’ve never heard of it.

BA: It’s all about communication. In my experience Poles don’t shout about what they’re good at.

Is there a country or countries whose example Poland should follow?

DH: Peru has done a great job, as has Britain, with its ‘great’ campaign. Spain has done a good job with its ‘Marka España’, which is coordinated by the government. Spain is similar to Poland in some ways – they’re both Catholic countries, agriculture is big for them both, but unfortunately Poland doesn’t have the beaches.

But Poland has great beaches, actually.

DH: That illustrates the point. I didn’t know that. When you talk about Poland, people’s faces are often a bit blank.

BA: Poland is a perfect candidate to host the World Cup or Olympics.

DH: Countries which want to change perceptions of their country have to develop their tourism industries, so the government needs to put resources

A brand waiting to happen How is ‘Brand Poland’ perceived around the world? Poland Today editor in chief Richard Stephens asks two top executives at global brand valuation consultancy Brand Finance

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Booming business services: The busi-ness services industry, which includes every-thing from business process outsourcing (BPO) to shared ser-vice centres (SSCs) to research and devel-opment (R&D) opera-tions, has become one of the fastest-growing sectors in Poland’s economy. It is now estimated that it is the second largest employer in the country. But to keep the flow of invest-ment coming, Poland will have to move up the value chain, providing complex, knowledge-intensive services. How to sustain the boom page 29 Diving into Warsaw’s deep talent pool page 33 Regional earthquake page 37

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exaMPles of neW inVestMents in tHe Main locations for Business serVice centres in Poland (2013-2014)Location

Katowice AgglomerationKrakówŁódź Lublin Poznań Szczecin Tri-City

Warsaw Wrocław

foreiGn caPital serVice centres (2014)City

Kraków Warsaw Wrocław Tri-City Łódź Katowice AgglomerationPoznań

‘Warsaw is the second-biggest location for business service centres in Poland. I think that Warsaw hasn’t been perceived as a location for shared service centres and BPOs until now, because those operations were located within big organisations. Now we have a few good examples of the more complex operations. Samsung is one. Its R&D centre in Warsaw is one of its biggest in the world.’

Arkadkiusz Rudzki, leasing & asset management director, Skanska Property Poland

‘In the last 14 years, this sector has created more jobs than in the whole mining industry – coal mining, copper mining, salt mining, there are 90,000 people involved. In business services, just within the companies with at least 10% foreign capital, it’s 150,000 people.’

Paweł Panczyj, managing director, Association of Business Services Leaders in Poland

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tHe BooMinG Business serVices sector in PolandThe employment rate in the business services sector in Poland is increasing. Compared with the beginning of 2012, the number of employees in service centres with foreign capital increased by over 50% – from 83,000 to 128,000. From April 2013 to April 2014, at least 18,000 new jobs were created, most of them in Kraków.

The average annual increase in employment in Poland over the last few years (since early 2009) stands at about 15,000. Taking into account the sector’s current development, it should be assumed that, by the end of 2015, foreign business service centres in Poland may already have at least 150,000 employees (according to a modest scenario).

150,000-170,000forecasted employment in the sector in Poland by the end of 2015 470number of service centres in Poland with foreign capital (2014) >50%increase in employment in the sector in Poland since early 2012

66new service centres were established in Poland between 2013 and 2014 60%of those were created by new investors with no service centres previously established in Poland 87%percentage of service centres that have expanded their scope of services in recent years

273average size of workforce in business service centres in Poland

There are 325 investors from 28 countries in Poland’s business services sector

13-18% average turnover rate in SSC/BPO centres

8-13% average turnover rate in ITO/R&D centres

450,000 number of graduates in Poland (2012/2013)

85% of SSC/BPO employees will consider moving to another city for work, provided that they receive an attractive employment offer

Sources: ABSL, Hays Poland, Central Statistical Office

Average employment

360266360244224243200

Number of employees

30,60022,30020,50011,50010,80010,0007,500

Selected new business service centres

– IBM, Sii, PERFORM– GE Healthcare, Lundbeck, RWE, Samsung– Clariant, McCormick, Veolia, Samsung– Convergys, Mobica, Sii– DFDS, Mars, Newell Rubbermaid, Propex– Netto, Genpact, Mobica– Competence Call Center, Kemira,

Powel AS, ThyssenKrupp– Linklaters, Procter & Gamble, TNT Express– Merck, Parker Hannifin, Unic Group,

Viessmann

Knowledge of foreign languages among well-educated job candidates English: 90% German: 46% Russian: 38% French: 20% Spanish: 15% Italian: 9%

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in a little over a decade the busi-ness services sector has exploded in Poland, creating over 160,000 jobs and accounting for millions in investment. The sector is now the country’s second biggest, having surpassed mining, with only the automotive industry employ-ing more people in Poland. The wave of foreign investment has transformed economies in Poland’s regional cities (see page 37), while an increasing num-ber of investors are looking at the capi-tal, Warsaw, as a location for their more complex operations (see page 33).

Business services is a term adopted by the industry which includes busi-ness process outsourcing (BPO), and shared services centres (ssC). BPO/ssC operations are usually associ-ated with simple back-office activi-ties, such as payroll processing, human resources management and accounting functions, as well as customer service services, usually in call centres. Those were indeed the first types of invest-ments that came to Poland, but busi-nesses soon learned that the country’s well educated, hard working, polyglot labour force offered the talent they needed to complete more complex operations. These include research and development (R&D) and information and communications technology (iCT) services. Together all of these types of operations come under the ‘business services’ umbrella. super-charged sectorPoland is now a well established loca-tion for investment from this sector

– Kraków, Warsaw and Wrocław are fre-quently ranked within the top 100 busi-ness services investment destinations worldwide. Kraków is regularly ranked within the top 10 in the world and first in europe. The list of investors reads like a who’s who of major global technology, financial and consulting firms.

The sector pays well, too. estimates put the average wage for mid-level jobs in the sector in Poland at around 6,000 złoty per month, nearly twice the national average. As tens of thou-sands of Poles leave their home coun-try to work in other parts of europe

– mainly to find higher wages and a bet-ter standard of living – the sector offers hope of creating the high-paying jobs that Poles yearn for. However, it was the

low wages here in Poland that originally drew business services investment to the country in the first place. Now, in places like Kraków, the Polish city with the highest number of employees in the industry, employers complain that the labour market is becoming over-heated. Wages are beginning to rise to Western european levels, especially when it comes to workers in advanced iCT services or with rare language skills.

At the same time, Asian locations continue to move up the ranks for busi-ness services investment locations. Poland already can’t compete with wages in most of those countries – as salaries rise, it will become even less labour-cost competitive.

Poland must therefore continue to move up the business services value chain, say experts. The future of the industry in the country does not lie in payroll processing and call

How to sustain the boom The business services industry has been one of the great positive surprises for the Polish economy over the last 10 years. Here’s how Poland can keep investment in the sector flowing

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GeoGraPHic adVantaGeThough Asian locations are gaining momen-tum for business services investment, Poland holds some important geographic advantages. For one, it is closer to many of the firms that are making such investments – it can be much more convenient for Europe-based firms to locate their business services operations close to home. Also, since Poland is a member of the European Union, companies know that the legal and regulatory framework will be in line with the bloc’s norms. Finally, cultural similar-ity means management is easier. “We have close cultural relationships with Western countries. It’s quite easy to adapt an employee here in Poland,” said Jacek Brzozowski, an advisor at business advocacy group Employers of Poland (Pracodawcy RP).

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30 information about businesses’ needs and include that in their curricula,” said Brzozowski. Possible courses of study could focus on anti-money laundering services, financial fraud detection, cor-porate compliance, big data business analytics, advanced software program-ming and supply-chain optimisation, according to McKinsey.

The cooperation is already happen-ing on a small scale in some places. For example, the private Kozminski university in Warsaw offers an interna-tionally recognised certificate of spe-cialisation in anti-money laundering processes.

universities also need to help develop skills in management, team-work and leadership. Other recom-mendations include raising the level of foreign-language proficiency through-out Poland’s educational system. schools should encourage students to learn more than one foreign language, the report says. it predicts that French, spanish and Nordic language skills will prove particularly valuable.

Finally, entrepreneurship in the industry should be fostered. so far, the growth in Poland’s business services sector has come almost exclusively from foreign investment. in places like india, domestic companies that offer business services have sprung up, allowing international firms that don’t want or need their own centre to simply hire out those processes. But this segment is only still in its nascent stages in Poland.

“For Poland to become an interna-tional leader in the provision of busi-ness services, new international private companies will have to be created here,” says the report. it suggests consolida-tion and acquisition of mid-scale, inter-national business services companies from Western europe.

“it is high time for local companies to start providing their services all over the world,” agreed Brzozowski. “There are more and more people with great experience in the sector, so the local firms should appear soon. However, it will only be possible in the case of simple services – the more advanced ones seem to be too important for the companies to outsource them to external providers.”

Nevertheless, a robust cadre of home-grown providers will further solidify Poland’s position as the pre-mier business services location in europe. if academia can be brought more in tune with the sector’s needs and a national programme promot-ing the country’s potential in business services can be initiated, the indus-try will be poised to reach the growth and sophistication necessary to drive Poland’s development to the next level. by Andrew Kureth

centres. instead, Poland will need to attract more R&D and iCT opera-tions – the kind that pay high wages and add intellectual capital. if it does, the sector could take the lead in finally transforming Poland into a knowledge-based economy.

“We have an overproduction of highly educated young people,” said Jacek Brzozowski, an advisor at business advocacy group employers of Poland (Pracodawcy RP). “The business ser-vices sector absorbs these people, and in the future can do so on a larger scale. These Poles are adaptable, they can speak foreign languages, they are well educated. We won’t become a second Germany – we don’t have huge conglomerates like VW or siemens. so services should be a key element of future growth.” Prescription for growthThe potential is eye-popping. Consulting firm McKinsey predicts that with the right mix of incentives, the sec-tor could expand four-fold, to 600,000 jobs, over the next 10 years. That could bring with it up to 150,000 additional jobs in related support services. The advantages don’t end with more work-places, either.

“Potential benefits include rising man-agement capabilities in areas such as multicultural and dispersed team man-agement, more niche specialists ... and greater availability of world-class man-agement processes,” the company wrote in a recent report.

so what needs to be done? “First we have to assess our potential, and then sell that potential,” said Brzozowski. For some years now, Polish cities have been marketing themselves abroad as excellent destinations for business ser-vices investments, but experts agree a national promotion strategy is in order. The McKinsey report calls on Poland to “develop and finance a broad interna-tional promotion campaign for Poland as a european champion of outsourced business services.”

Just as important, the industry and academia need to start working more closely together to ensure that the graduates coming out of Polish uni-versities have the skills investors will be looking for. “universities should engage more with business, get more

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industrY initiatiVesThe business services sector itself can-not sit back and wait for the government and academia to implement initiatives to boost the industry in Poland. According to McKinsey, industry associations should adopt a 10-year plan that includes the following points: – Develop a vision for how the industry should

look in 2025, to highlight the growing services and the resources needed to feed their growth

– Train government and local authorities to understand the value of the business services sector to the Polish economy and task them with establishing strong global awareness of Poland’s services provision

– Develop a model for the constructive and mu-tually cooperative engagement of the three core ministries involved in sector growth: Economy, Science and Higher Education, and Labour and Social Policy

– Develop a world-class ‘front desk’ to serve all foreign investors considering establishing centres in Poland, in cooperation with the Polish Information and Foreign Investment Agency and local authorities of the 16 largest metropolitan areas

– Develop an education program and standards to help the less experienced among the 16 municipalities attract and retain outsourcing centres in their local areas

– Help Polish universities and the Ministry of Science and Higher Education connect with the important outsourcing companies, so that new specialised education programs can be developed to meet their professional needs in such areas as insurance and financial services, IT, business research, and marketing and sales

sources of GroWtHAreas that are expected to be the richest sources of growth in advanced business services:

– Middle-office for banks and insurance companies

– Advanced IT programming – Supply-chain and logistics

coordination centres– Business research and analytics – Research and development – Remote health diagnostics and data storage – Advanced administrative business support

Source: McKinsey & Co

‘The future of the industry in the country does not lie in payroll processing and call centres. Instead, Poland will need to attract more R&D and ICT operations’

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33Diving into Warsaw’s deep talent pool The capital’s huge supply of well educated, skilled labour is the key advantage that will make it a european hub for complex business services in coming years

Kraków currently rules the roost when it comes to business services investments in Poland – but that could change soon. Warsaw is not far behind, and its sheer size gives it a distinct advantage. The smaller regional cit-ies that have previously garnered the attention of international investors are becoming saturated and less competi-tive. Warsaw, for its part, still offers plenty of potential employees and office space. At Primetime Warsaw iii (see pages 39-51), Poland Today held a round table discussion on the future of the industry in the capital.

Taking part in the discussion were: Courtney Fingar, editor-in-chief of fDi Magazine; Paweł Panczyj, managing director of the Association of Business services Leaders in Poland (ABsL); Arkadiusz Rudzki, leasing & asset man-agement director at skanska Property Poland; Jakub Sylwestrowicz, head of tenant representation at JLL; and Andrzej Wilk, senior vice president at MoneyGram Payment systems Poland. Poland Today editor Andrew Kureth moderated the discussion.

Andrew Kureth, Poland Today: What does the future hold for the business services sector in Warsaw?

Paweł Panczyj, ABsL: it all started with Warsaw. in the 1997-2000 period, Warsaw, Prague and Budapest were the most popular destinations in the region for business services investments. The smaller cities in Poland, especially Kraków, came later. Just taking into account companies with foreign capital, this business has created nearly 30,000 jobs in Warsaw in the last 10 years.

At the moment we have the seventh or eighth wave of investors from loca-tions like scandinavia, Germany, Austria, switzerland, France, the uK and the us. The recent trend shows that the com-panies coming to Central and eastern europe are coming with more and more complex processes. When you think about the analytics, complex data

– companies don’t want to take much risk. The more traditional businesses – heavy industry, pharma, medical, and the financial industry – these compa-nies do not want to take the risk of going somewhere where their invest-ment may not work. They want proof that it will work within the time frame

AW: When it comes to the talent pool, Wrocław and Kraków are cit-ies of approximately 700,000 people. Warsaw has an agglomeration that hosts close to 2 million. That’s a big difference.

The second thing is that while Kraków is the number-one business services location in Poland, that is exactly why we didn’t want to be there. i would guess that those markets are a bit saturated at this moment. When it comes to the labour, when it comes to the ability to attract great people, you immediately enter into very strong competition with the players that are already established there. so for us, Warsaw was a less-penetrated market when it comes to talent.

That’s interesting, because some of the biggest global brands are here in Warsaw too. But what I understand is that the talent pool in Warsaw is simply deeper than in other Polish cities. Is that right?

AW: i think it’s deeper. Moreover, we see the contracting of the financial sector that started in 2008 and has not yet finished. so it’s a natural feed to our industry. Warsaw is the centre of finan-cial services industry in Poland. Great – that’s exactly why we are here, because we can source from this pool.

PP: Occasionally you will hear that the Wrocław or Kraków markets are saturated. Have you ever heard that said about Warsaw? No. Not because things weren’t happening here, but because it is so huge. so that’s the difference: it will not get saturated. 300,000 stu-dents in Warsaw, 200,000 students in Kraków. it’s just one of the data points that makes the difference.

Obviously, business services has driven a lot of the development of office space throughout Poland. How does Skanska, as a developer, see the industry on a Poland-wide scale?

Arkadiusz Rudzki, skanska Property Poland: We were the first developer who really believed in the sector. We were first to develop the tailor-made solu-tions, to be supportive for those com-panies’ operations. it was a really big boost for us to look for other locations in Poland and right now around 90% of our business is outside of Warsaw,

that they have prepared. so they go to a location that gives them that proof

– Warsaw is that location.

MoneyGram has a business services centre in Warsaw. What exactly does it do and why did you choose Warsaw?

Andrzej Wilk, MoneyGram: Within three quarters we’ve managed to put together a workforce of 550 people, and they speak 25 languages. Right now we deliver 45 processes to every MoneyGram location globally. At the moment we employ 25% of the global workforce of MoneyGram here. Warsaw plays a significant role on our map.

Why did we choose Warsaw? At the beginning, finding a low-cost location was at the core of the discussion. But i think the most important element is the talent pool. Obviously, the infrastruc-ture exists here. Also, we were able to secure a location that will finally host 800 people on one floor – that was an important element that differentiated Warsaw from Kraków or Wrocław or Łódź – which we also analysed. But the talent pool is something which is key.

i have just recently come back to Poland. i spent the last three years in Budapest with my previous company. One thing that really surprised me is that Warsaw has become an international centre. And when i talk about it – i see people joining my company right now who come from spain, Portugal, Greece

– Warsaw is becoming this european centre where it not only offers jobs, but it offers everything else: entertainment, reasonable costs of living, great con-nections to the rest of europe.

Wrocław and Kraków also have great talent pools, great recreation, low costs of living and so on. So what is it that differentiates Warsaw?

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Polish Cities of the Future 2015/16 ranking

1. Warsaw 2. Kraków 3. Poznań 4. Wrocław 5. Łódź 6. Gdańsk 7. Katowice 8. Szczecin 9. Gdynia 10. Gliwice Source: fDi Magazine

WHere WarsaW Placed in KeY fdi MaGazine ranKinGs– Global Cities 2014/15

#23 Overall #10 Major City Overall #5 Major City – Business Friendliness

– European Cities 2014/15 #6 Major City – Business Friendliness

Source: fDi Magazine

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‘If a company wants to put a business services centre in Europe, Polandhas one of the strongest

hands to play’

due to the fact that the regional cities in Poland are really booming and are sup-ported by the business services sector.

Does that indicate that maybe the trend will then come back toward Warsaw?

AR: i really believe that will happen, especially considering the turn toward specificity of services – it will be much more complex. Taking that into account, Warsaw seems to be the natural choice. One thing is the depth of the market, in terms of the labour force, and also the attractiveness of the city itself. This is truly an international place right now.

What is the view from the real estate advisory side in terms of business services?

Jakub sylwestrowicz, JLL: i can only repeat and add to what Paweł and Andrzej have already said about the great abundance of skills, the labour market and so on. But i would do so using the example of our company, because JLL has its shared services centre in Warsaw. it’s not huge in terms of headcount, but it is really doing well, and the team has grown by 20 people. A couple of weeks ago they moved to another building. The fact that we have been very successful and we are still growing this team, the fact that they are looking for people using different languages, from Hebrew to Hungarian, from Russian to Romanian, and the fact that we can find these people, it speaks to the quality of Warsaw as a place to run this business.

Real estate is not the essential ele-ment for business services investors. Once you are sure that you will find the people that you are looking for, that you will be able to pay the salaries they expect, only then do you have to find the place where these people will be working. in this respect, Warsaw not only has a large office market, but it has a market that is driven by speculative development. You simply go and collect the offers from landlords who are build-ing in anticipation for tenants. This fact, plus the fact that the rental rates are very attractive compared to other Cee locations, all of these factors speak for the advantages of making such invest-ments in Warsaw.

It is widely known that Warsaw’s high vacancy rate has been put-ting pressure on rental rates. How important a factor is that?

Js: i think it is important, but i wouldn’t go so far as to say it would make a big difference between whether a company chooses Warsaw, Wrocław or Kraków. At this stage i think it’s more about being in the city centre and the Wola district or a more peripheral dis-trict. so it is important, but not in the

sense that it will distinguish between cities. it will distinguish between differ-ent sub-markets within the city.

Courtney, where does business services stand in terms of the ranking of the number of foreign investments in Warsaw?

Courtney Fingar, editor-in-chief, fDi Magazine: Business services is third. Financial services is number one, soft-ware and iT services is number two, and then business services. But they all fit together, so that just shows the domi-nance of the industry.

Do you see that continuing?

CF: i think so. Having strengths in business services, from the perspec-tive of foreign direct investment [FDi], is handy, because business services is the number-two sector globally for cre-ating FDi projects, and it’s number one for capital expenditure. it’s a healthy sector. There a lot of projects around, so that’s good.

The other handy thing is that the top two source countries for business ser-vices projects are the us and the uK, and these are two markets in which Poland can compete for investments really well. in particular the uK, where Poland is clearly the regional leader. Looking at our data, Poland is ahead of Romania, ahead of the Czech Republic, and ahead of Hungary for these pro-jects. At the city level, Warsaw is ahead of Bucharest, Budapest and Prague, so it has clearly sown up the business services market in Central and eastern europe, which is encouraging.

However, if you look at the data over the past five years, compared to the data over the past 10 or 15 years, it has declined a little bit on the desti-nation list, as destinations in Asia have risen. so the competition is coming from there, rather that from some other regional players.

I’ve heard that it tends to be the more simple processes that are going to Asia, whereas the more complex process are coming to Poland. Do you think that’s the case?

CF: Possibly. There is a value chain and it is true that there is a role for all of these markets to play and as i said, busi-ness services projects are abundant,

more so than some other sectors that generate FDi. so it’s not necessarily a zero-sum game. However, some other locations are rising up the ranks.

You mentioned some of the positives of business services investments. Are there negatives?

CF: To be honest, there are not huge negatives for Poland or for Warsaw in this particular sector. it’s not the cheapest location going, but it offers a really good mix of cost and quality and the skills are really high. in some cases, maybe it makes sense for vari-ous reasons for a company to put a centre in Asia to deal with that market, and another in europe for that market. if they’re going to put a centre in europe, Poland has one of the strongest hands to play. it’s really just more about keep-ing up that competitiveness, adding to the skills and keep moving up the value chain rather than overcoming some glaring negatives, because it doesn’t have a lot in this area.

What are the other challenges it faces when it comes to the business services industry?

AR: We need to concentrate on mak-ing sure there is consultation between education and business. i’m not sure if this is happening in Warsaw. How Warsaw could improve is to have really specific vision of how to set up a pro-gramme for graduates.

Js: i would say that the traditional locations for business services opera-tions – namely locations in the służewiec Przemysłowy neighbourhood of the Mokotów district – are saturated in terms of the transport infrastructure. it is not aligned with the number of office blocks or the number of employees working there. it’s not a threat to the sector, but in certain instances it makes some investors less prone to decide to go to these locations.

Another challenge is whether com-panies want to follow the flock or be pioneers. Andrzej mentioned that they indeed were thinking about other cit-ies such as Kraków, but found that it was saturated. instead, they wanted to make a bold decision and be pioneers. However, i think Warsaw faces that challenge of whether companies have the guts to make that bold decision.

Regional benefit: While Warsaw still holds plenty of potential for business services, the sector has already reshaped the economic land-scape in Poland’s secondary cities. Poland Today takes a close look at how the economies in Kraków and Łódź have been transformed by this industry. see page 37

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Thirdly, going back to the more micro level, it’s about making a decision if they want to be in a more economical loca-tion within the city, and then maybe struggle to recruit people, or maybe they would like to go to locations like the Wola district which is booming and which has a lot of pipeline pro-jects underway, where they can take the benefit of the subway and the tram lines, but pay slightly higher rents.

AW: Commuting to work is one of the biggest issues. We see this in służewiec Przemysłowy. i think it requires the immediate attention of the city. That’s one thing and it’s going to hinder Warsaw’s development and growth. i cannot imagine that my CeO would put money behind służewiec Przemysłowy if she saw employees would have to spend an hour and a half in traffic each morning.

There’s another thing which i thought about and that is the talent pool. Today it is true that we are enjoying a time when we can attract pretty much eve-rybody. But i’m thinking that in five, seven years from now, we will need a strategy for how we are going to ensure that the talent pool can be redeployed to different sectors. Today what i see is that all the business services oper-ations are hiring people who are very ambitious and well educated. The problem is that if all of your employ-ees are very ambitious people, turno-ver is going kill you at some point. so how can we ensure that people can be redeployed? A structural approach to education is critical.

A good education system is always an important factor. Courtney, how does education factor in to your rankings?

CF: There are several data points within the rankings that are focused on education at all levels. Warsaw comes top in Poland. But in that cat-egory, it didn’t come in the top 10 in the european rankings at the city level. Poland suffers a little bit just because there are so many cities. Things are a bit spread out – in many other coun-tries, most of the main universities are concentrated in one city.

But the education system in Poland is well regarded, and that’s at the heart of the skills here being so well regarded, along with some characteristics to do with the work ethic and the way people are. But it gets top marks from inves-tors and is widely considered a good educational system, both by numbers and also perception.

Is there some kind of measurement of how education cooperates with the business community?

CF: That’s hard to measure. The thing is for the local authorities and those looking to talk to the companies to find

out what gaps there are in the skills and what skills they think they might need five or 10 years from now, and being ahead of the curve and making sure that either the technical colleges or the universities are offering those courses. That happens a lot anecdotally, but it’s very hard to measure in any real terms.

So many of Poland’s students are going abroad for their education. While some come back, many do not. At what point does that affect the talent pool?

PP: it’s true that there is this decline in the number of people. it’s no longer 2 million students, it’s 1.8 million. it’s no longer 500,000 graduates, it’s some-thing like 420,000. We can try to con-vince them to stay in Poland, but that won’t work if we don’t have the argu-ments to keep them, and right now we do not. Now companies are talking to the Ministry of Labour, Ministry of Foreign Affairs and Ministry of economy to open the Polish market and Polish universities for people that may fill in the gap that was created by Poles leav-ing: students from ukraine, from serbia, from Croatia, from Montenegro. There was even a campaign for students from india and from China to study in Poland. These efforts won’t lead to a complete replacement of the number of peo-ple who left, but we need a structural approach to this question, and we need to test something.

Andrzej, I know that a lot of foreigners work at MoneyGram. Could you tell us a bit about that?

AW: We have 18 different nationalities, and we didn’t really do any recruitment outside of Poland. We only advertised here in Warsaw. so there is a certain traffic of students, as well as young pro-fessionals, coming this direction.

There is another interesting thing to note when considering all of this. When we look at the history of Poland, when it was a really powerful nation and when the economy was growing, this was also a time when we as a nation were edu-cating our kids in the best universities of europe: Prague, italy, etc. so i don’t see this, at least the students moving abroad, as a danger but rather as an opportunity. We don’t need hundreds of thousands of identically educated people, we need people who will chal-lenge the status quo here. Now is the time when we have to figure out how to be very attractive for them in four or five years when they come back.

AR : education is one thing, but we do have a lot of foreigners coming to Poland to work – especially from spain, Greece, italy, Portugal, for example. so we are attractive as a country, i think. The question is whether business will be here. by Andrew KurethB

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‘We don’t need hundreds of thousands of identically educated people, we need people who will challenge the status quo’

FDI: projects breakdown. According to fDi Magazine, between January 2010 and Janu-ary 2015, Warsaw attracted 215 FDI projects amounting to an estimated $840m. The top sectors were financial services, software & IT services, business services, real estate and communications.

Source: fDi Magazine

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For years after Poland’s economic transition, Warsaw was far and away the Polish city that attracted the most attention from foreign investors. Major multinationals would establish their Polish headquarters in Warsaw, which would absorb the investment and gain the new workplaces. That picture, however, has changed dramatically: Poland’s secondary cities are now the beneficiaries of a wave of foreign invest-ment, mainly from the business ser-vices industry. The sector has become one of the country’s largest employ-ers, putting around 160,000 people to work. “This is a very large segment of the workforce that did not exist eight to 10 years ago,” said Wojciech Bogdan, partner at McKinsey & Company, a con-sulting firm.

An increasing number of cities are becoming desirable locations for ser-vices centres. “The first wave was Kraków, Warsaw and Wrocław,” said Bogdan. “Over time a second wave came with Poznań, Łódź, Katowice and Tri-City. Now we already see the third wave with cities such as Bydgoszcz, Toruń, szczecin, Lublin, Rzeszów and Białystok.” Further locations may come as business services providers move into smaller Polish cities. “This sector is poised to be well established in all agglomerations in Poland within 10 years, and it has the potential to be one of the largest sectors in the coun-try,” Bogdan added. Among the cities most affected by the influx are Kraków and Łódź. Poland Today took a deeper look at the change in these two cities’ economies, specifically. Kraków: Poland’s business services capital One of the biggest beneficiaries of the wave of business services investment is Kraków, the country’s second largest city. Known mostly for its rich history, the city now boasts more inhabitants employed in the business services industry than any other in Poland. in the most recent edition of Tholons’ Top 100 Outsourcing Destinations ranking, Kraków came ninth worldwide and first in europe. The next highest ranked Polish city, Warsaw, came 30th, while Wrocław ranked 62nd. According to Małopolska Regional Development Agency data, the business services

sector in the Małopolskie voivodship includes 103 companies and employs some 37,000-40,000 people – mostly in the region’s capital, Kraków.

The investment from the sector has led to other benefits. “For every 1,000 workplaces in Kraków’s service centres, 267 jobs are created in the local econ-omy,” said Beata Górska-Nieć from the Business in Małopolska Centre. The city has also seen growing demand for high quality goods and services, as well as greater interest in services such as catering, healthcare and education, she added. Kraków now has one of the low-est unemployment rates in Poland, at around 5.3%. The Małopolskie voivod-ship has an unemployment rate of 10.1%, while for the country overall it is 11.2%.

Companies in the sector also offer competitive remuneration. “salaries in the business services sector stand at about 80-90% of the Polish aver-age for the lower and medium-ranked employees group. There are only higher [salaries] in silesia and in Warsaw,” Górska-Nieć said. With a major con-tribution from the business services sector (which now occupies some 627,500 sqm in the city), Kraków has also become an increasingly important location for commercial real estate. According to Górska-Nieć, developers deliver some 70,000 sqm of modern office space annually.

Regional earthquake The wave of investment in business services has reshaped the economic landscape in Poland’s secondary cities

buSineSS ServiceSin focuS

‘Over the past few years, shared service centres have become some of the most attractive employers in terms of salary levels, not to mention non-wage benefits’

education for BusinessLinguistics for business is what high school graduates may choose if they wish to continue their education at the University of Łódź. The first three-year bachelor-level course was opened in 2013 and is co-managed by the philology and management faculties. Students are required to learn English and a chosen second language at advanced levels as part of the curriculum. So far, French, German, Ital-ian, Spanish and Russian have been offered as options. The course also includes classes held by business services managers and internships in sector companies. The university will soon open a second such course – on digital banking and finance – in cooperation with Accenture and mBank.

Kraków Business Park (above) is one of the locations in Poland’s second city that has attracted a number of companies from the business ser-vices sector. Kraków is routinely ranked in the top 10 locations for business services investments world-wide, and boasts the largest number of people employed in the sector of any city in Poland.

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Łódź: services in a post-industrial landscapeŁódź, located about 130 kilometres south-west of Warsaw, is a post-indus-trial city that saw intense development in the late 19th and early 20th centuries with the growth of the textile indus-try. But after the collapse of commu-nism its economy was never able to fully recover. Now, however, the busi-ness services sector has entered and changed the landscape. “At the moment some 15,000 quali-fied employees work in 60 companies in the business services sector in Łódź. They specialize in iT, financial services, accounting and customer service, with the use of more than 21 languages,” said Marcin Masłowski, spokesper-son for Łódź City Hall. “Over the past few years, shared service centres have become some of the most attractive employers in terms of salary levels, not

department or person who is the first line of contact for potential partners interested in locating their business ser-vices activities there,” said McKinsey’s Bogdan. “Cities learn from each other but they also compete for new jobs and investments.”

The Business in Małopolska Centre pays special attention to the business services sector in its promotional activ-ity. “The presentation of local potential, including higher education, language skills, the quality of life, the real estate offer and infrastructure development are a regular part of the business pro-motion activities of city and regional units,” Górska-Nieć said.

Łódź, for its part, focuses largely on cooperation between academia and business. it devised a programme called Młodzi w Łodzi (The Young in Łódź) that, among other things, encour-ages the youth of the city to take part in companies’ recruitment processes.

“First and second wave cities are already moving towards locating more advanced business processes and hence even further creating very attrac-tive growth opportunities for young tal-ents in the country,” Bogdan said.

This is true of Kraków, which is espe-cially interested in attracting iT com-panies and R&D centres. Regional authorities have earmarked a pool of funds for supporting such investment from the new eu-funded regional oper-ational programme.

“McKinsey forecasts that by 2025 Poland’s business services sector will have some 450,000-600,000 employ-ees and an additional 90-150,000 jobs will be created in cooperating adjacent services sectors,” Bogdan said. That rapid growth will undoubtedly con-tribute to the further economic devel-opment of many Polish regional cities. by Kamila Wajszczuk

to mention non-wage benefits, such as healthcare packages and fitness offers,” he added. Companies from the sector are also active locally, and some have engaged in cooperation with the city’s main university in educating future employees.

Like Kraków, Łódź has also observed a revival of its real estate market. “New investments in the business services sector translate into higher demand for office space in our city,” Masłowski said.

“As a result we see the construction of new, high-standard office buildings.” Developers are working on projects that will add some 40,000 sqm of office space in Łódź. New awakeningPolish regional cities have awakened to the opportunities from the boom in business services. “Almost every large agglomeration today has a specialized

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Kraków Warsaw Wrocław Tri-City Łódź KatowicePoznańBydgoszczSzczecinLublin

*includes graduates from ToruńSource: McKinsey & Co, based on ABSL and GUS data

Employment in business services

30,60022,300 20,50011,50010,80010,0007,5003,8002,8002,000

Estimated no. of graduates of relevant university studies

104,000156,00077,00055,00054,00090,00081,00043,000*32,00052,000

Infosys, a consulting, IT and software engi-neering firm, opened its Green Horizon building (above) in Łódź in 2012, where it located its business process outsourcing operations.

South Korean Ambassador to Poland Paek Young-Sun (above right) attended the opening of Samsung’s R&D centre in the city in 2013.

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Poland Today’s Primetime Warsaw III conference brought together decision makers from the public and private sectors to hash out the opportunities and challenges facing urban development in Poland’s capi-tal. Warsaw Mayor Hanna Gronkiewicz-Waltz, former Prime Minister Jan Krzysz-tof Bielecki and editor-in-chief of fDi Magazine Courteny Fingar were among the speakers at the event, held in the National Stadium in Warsaw. In this edi-tion of Urban Issues, we provide in-depth coverage of the major themes that were explored.

Time for Warsaw to stop resting on its laurels page 42 The ‘right’ side of the river page 46 Optimism vs oversupply page 48 Praga: revitalise, but be wise page 51

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Left: Paweł Panczyj, managing director, ABSL

Below: Hanna Gronkiewicz-

-Waltz, mayor of Warsaw

Above: Krzysz-tof Fijałkowski, development manager, ECE Projektmanagement

Below: Tomasz Andryszczyk, part-ner, Primo Corporate Advisory

Partners of Primetime Warsaw III included: ABSL, Amstar, BBI Develop-ment, ECE Projekt-management, EY, fDi Magazine, ITKeyple, Koneser Centrum Praskie, MIPIM, the National Stadium in Warsaw, Nowa War-szawa and Skanska Property Poland.

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Right: Richard Stephens, editor in chief, Poland Today

Below: Courtney Fingar, editor-in- chief, fDi Magazine, Financial Times Group

Above: Arkadiusz Rudzki, leasing & asset management director, Skanska Property Poland

Left: Michał Olszewski, deputy mayor of Warsaw

Above: Małgorzata Dybaś, managing director, Hotels Asset Management

Left: Anna Kiciń-ska, Partner and Leader for the CSE Region, EY Real Estate Advisory Group

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international investors still con-sider Warsaw an attractive destination, with the city ranking high among poten-tial investment locations among inter-national investors. However, according to participants at Poland Today’s Primetime Warsaw iii conference, held in April at the National stadium, city officials could do much more to promote Warsaw abroad, especially when it comes to reaching potential Asian investors.

A competitive marketAccording to data service fDi Markets, part of the fDi intelligence division of the Financial Times, between January 2010 and January 2015 Warsaw attracted 215 greenfield foreign direct investment (FDi) projects whose com-bined value amounted to an estimated $840m. Distressingly however, the fig-ures showed a constant trend of fewer projects each year – Warsaw attracted 23 FDi projects in 2014, compared with 30 in 2013, 48 in 2012, 50 in 2011 and 61 in 2010.

in her keynote address at the con-ference, Courtney Fingar, the editor-in-chief of fDi Magazine, a specialist publication from the Financial Times, noted that FDi in Central and eastern europe had been hit hard by the out-break of the global financial crisis. Greenfield FDi peaked in 2008 and has never really recovered, Fingar said. The downward trend in the region contin-ued last year, pulled down by worries connected with the Russia-ukraine cri-sis, she added.

Nevertheless, in the challenging global economic situation, when “flat is the new up”, as Fingar phrased it, Poland has proved to be more resil-ient than some of the other countries in Central and eastern europe.

According to fDi Markets data, the country attracted an estimated $6bn in capital investment in 2014, securing a 5% market share among european countries. Poland ranked fifth in europe last year for the number of FDi projects received, Fingar said.

The Warsaw storyAccording to Fingar, Warsaw retains a strong attraction for international investment and remains the clear leader in Poland. she called the Polish capi-

Better messaging neededFor all its positive performance in attracting global capital in recent years, Warsaw could certainly do more to bet-ter appeal to international investors and to take its international image up a notch. The best performing FDi cities have professional promotion strategies. According to Fingar, Warsaw has strong fundamentals for attracting foreign investment, but it must become more proactive and aggressive about attract-ing investment. “Many other Polish cit-ies simply seem to try harder,” Fingar said, adding that Warsaw seems to be suffering from what she calls “the capi-tal city syndrome” – taking its invest-ment attractiveness for granted.

she added that Warsaw City Hall could make better use of the Polish diaspora, with the millions of Poles liv-ing abroad being potential ambassa-dors for the city.

Last but not least, Warsaw, already the established business leader of the Cee region, should not rest on its lau-rels. The Polish capital should measure against the best in the world, not just the neighbours, Fingar said.

Warsaw should do its best to attract investment from foreign markets that have not yet begun to invest heavily in the city, including markets to the far east.

“Go hard on Asia,” Fingar suggested. by Adam Zdrodowski

tal a “very positive city” with “a good buzz in the air.” Fingar pointed out that despite its difficult 20th century expe-rience, Warsaw has emerged in recent years as a successful city that should tout its success abroad. “The Warsaw story needs to be told,” she said.

Asked what exactly constitutes Warsaw’s success story, Warsaw Mayor Hanna Gronkiewicz-Waltz pointed to the massive infrastructure improve-ments that have taken place in the city in recent years. “We have man-aged to use the european union funds well,” she said.

in the coming years, Warsaw City Hall plans to continue its focus on the further development of transport infra-structure. The completion of the sec-ond Warsaw subway line will be one of the priorities, Gronkiewicz-Waltz said. she admitted that the ubiquitous claims to plots of land across Warsaw are a major problem for private inves-tors in the city.

Jan Krzysztof Bielecki, chairman of the partners board at eY Poland and former prime minister of Poland, pointed out that the country’s eco-nomic success over recent years has also helped build Warsaw’s position. He pointed out that Poland has now seen 24 years of uninterrupted economic growth, which is, apart from Germany, the best result in europe.

Karol Półtorak, vice president of the Warsaw stock exchange, said he could confirm that international investors who are considering listing their firms on the bourse see the Polish capital in a positive light.

Warsaw has already become the unquestioned financial centre of Central and eastern europe, he said, adding that closer cooperation between capi-tal markets and city authorities would greatly benefit the city.

Time for Warsaw to stop resting on its laurels Authorities could do much more to promote Warsaw and help it compete for FDi against the world’s leading cities

‘Many other Polish

cities simply seem to try harder’

WarsaW in fdi ranKinGsWarsaw was named the Polish City of the Future 2015/2016 earlier this year in an inau-gural ranking of Polish cities prepared by fDi Intelligence. Kraków and Poznań came in the second and third place, respectively. Warsaw performed best in the categories of Economic Potential, Human Capital & Lifestyle, Con-nectivity and Business Friendliness. The city was absent from the subjective category FDI Strategy, because it did not submit an entry.Warsaw also did well in the Global Cities of the Future 2014/2015 ranking which fDi Intelligence published in December last year. It ranked 23rd among cities of all sizes world-wide. The European cities that were ranked higher than Warsaw were London, Dublin, Bucharest, Zurich, Frankfurt, Amsterdam, Stockholm, Munich and Geneva. Interestingly, Moscow came in after Warsaw, in 25th place.

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Global Cities of the Future 2014/2015 Ranking: 1. Singapore 2. London 3. Hong Kong 4. Dublin 5. Dubai 6. New York City 7. Tokyo 8. Shanghai 9. Bucharest 10. Beijing 11. Paris 12. Zurich 13. Seoul 14. San Francisco 15. Frankfurt 16. Amsterdam 17. Stockholm 18. Atlanta 19. Munich 20. Geneva 21. Abu Dhabi 22. Houston 23. Warsaw 24. Sydney 25. Moscow Source: fDi Intelligence

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Partners of Primetime Warsaw III included: ABSL, Amstar, BBI Develop-ment, ECE Projekt-management, EY, fDi Magazine, ITKeyple, Koneser Centrum Praskie, MIPIM, the National Stadium in Warsaw, Nowa War-szawa and Skanska Property Poland.

Left: Andrzej Wilk, senior vice president, Global Business Center, MoneyGram Payment Systems Poland

Below: Jan Krzysztof Bielecki, chairman of the board of partners, EY Poland, former prime minister

Left: Rafał Rosie-jak, head of confer-ence centre & MICE, National Stadium

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Above: Karol Półtorak, vice president, Warsaw Stock Exchange

Above: Rafał Szczepański, vice president of the management board, BBI Development

Left: Jakub Sylwestrowicz, head of tenant repre-sentation, JLL

Left: Krzysztof Wilczek, regional director of region north at Skanska Property Poland

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The long-neglected Praga Północ and Praga Południe districts located on the east side of the Vistula, just across the river from the centre of Warsaw, are rich with opportunities for further real estate investment, said participants at Poland Today’s Primetime Warsaw iii conference, held at the National stadium in April. Recent infrastructure improvements, notably the opening of the central stretch of the second sub-way line, have given new life to the area, collectively known simply as ‘Praga’. However, for this potential-laden por-tion of the Polish capital to fully bloom, it will need to continue to combat its negative reputation. An authentic cityConference participants pointed out that Praga was not nearly as heavily damaged in World War ii as the districts of Warsaw located on the left bank of the Vistula – many of the historic pre-war buildings in Praga have been pre-served. Therefore its architecture, along with its location just across the river from the city centre, make this densely built-up area attractive for both invest-ment and daily life, said Warsaw Deputy Mayor Michał Olszewski. He admitted, however, that Praga still is not receiving the attention it deserves.

According to Rafał szczepański, vice president of the management board at developer BBi Development, Praga possesses the fundamentals that will enable it to develop rapidly in the com-ing years. For example it already boasts authentic urban tissue – with its streets and public squares – one of the most difficult elements of a city to develop. Within 10 years, revitalized historic ten-ement houses in Praga will be attracting plenty of interest, szczepański argued.The first major changes have already taken place. The National stadium, which was built as part of the prepa-rations for the 2012 european football championships that Poland co-hosted with ukraine, has become a new land-mark of eastern Warsaw. Rafał Rosiejak, head of conferencing and exhibitions at the National stadium, said that the hundreds of business events held at the facility last year attracted about a mil-lion people in total.

Warsaw City Hall is now planning a huge revitalization scheme for Praga

traffic problems that afflict the popular służewiec Przemysłowy business area of the Mokotów district of Warsaw.

According to Krzysztof Fijałkowski, a development manager at developer eCe Projektmanagement Polska, there is also the potential for the develop-ment of new retail projects, including high-street retail schemes. Fijałkowski noted that Praga has a long tradi-tion of retail trade, especially when it comes to streets such as Targowa and Ząbkowska. Challenging the stereotypeTo attract new real estate investments and new middle-class residents to the eastern bank, city authorities, residents and the area’s current investors will have to battle the stereotype that Praga is the ‘bad side of town’. Wilczek said that new landmark investments in Praga, including the National stadium and the second subway line, are already helping to challenge that image. Kicińska added that the revitalisation process will be crucial for generating investor interest. so development is moving forward and a positive image of Praga is gain-ing momentum. With that in mind, szczepański concluded on an optimis-tic note. “The money invested in Praga will bring return,” he said. The only question is how big that return will be. by Adam Zdrodowski

which is valued at about 1.4bn zloty and will cover a number of neglected neigh-bourhoods located in the Praga Północ, Praga Południe and Targówek districts. Many of the existing residential build-ings in those neighbourhoods will be modernized. szczepański said he hopes there will be various types of housing developed in Praga, so that it will see a return of the middle class. Room for moreAnna Kicińska, a partner and Central european real estate expert at eY, said she believes Praga could become a major office market. According to eY data, there is now only around 200,000 sqm of office space in the eastern part of Warsaw, which accounts for around 5% of the combined office stock in the city. Most of the space is located in rela-tively old buildings, Kicińska said. she added that a few years ago, one of the banks in Poland was considering mov-ing its headquarters to Praga. in the end however, the company had to aban-don the idea because it could not find a proper office building there.

Tenants from the creative services sector, including publishing firms and PR agencies, could be interested in having their offices in Praga. Also, companies from the business pro-cess outsourcing and shared service centre sectors could help fill office space in new buildings there, Kicińska said. Large-scale office projects are expected to be developed in the near future in the Port Praski area of Praga Północ. Construction on the Centrum Praskie Koneser mixed-use scheme is already underway in the district. More developments will likely appear as the process of revitalizing Praga proceeds. Krzysztof Wilczek, a regional director at developer skanska Property Poland, said that while his company was not considering building offices there now, it would be interested in doing so in the medium-term.

Both Wilczek and szczepański stressed the importance of the second subway line for the future development of new real estate projects in Praga. The recently delivered central stretch of the line connects Praga Północ to the Wola district, which lies to the west of the city centre. Wilczek pointed out that due to the subway line, Praga can avoid the

The ‘right’ side of the river New development based on revitalisation, the new subway line and the National stadium is spurring Praga’s comeback

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neW Projects coMinG to PraGaPraga does not offer as many easily rede-veloped vacant or post-industrial plots of land as the popular Wola district does. Nonetheless, there are a number of very attractive sites there that are expected to soon house new residen-tial, office and retail projects. The Port Praski area of the Praga Północ district is already see-ing the development of new housing schemes. However, the real changes will come in a few years when construction launches on new office towers next to the new subway stop near the National Stadium. BBI Development and Liebrecht & Wood are already working on their Centrum Praskie Koneser mixed-use project, which will involve the revitalization of a former vodka factory and will include residential, office, retail and cultural space. A similar devel-opment is currently being planned by developer OKAM Capital, which has recently purchased the former Pollena factory site in Praga Północ. A project called Bohema will involve the delivery of new retail, cultural and residential space there.

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‘Warsaw City Hall is now planning a huge revitalization scheme for Praga which is valued at about 1.4bn zloty’

Revitalisation plans: At Różycki Bazaar (left) trad-ers meet with the author of the revitalisation project, architect Aleksandra Wasilkowska.

Development train: The new, second line of the Warsaw subway is expected to bring new development to the eastern side of Warsaw. Below, the Dworzec Wileński Metro station in Praga.

Bohemian atmosphere: Below, a view of the courtyard of 11 Listopada 22, where several bars are considered the hub of Praga’s nightlife.

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Warsaw City Hall plans an exten-sive revitalisation programme for the neglected neighbourhoods of eastern Warsaw. The changes are highly antici-pated and will go a long way toward attracting more real estate investment to the right bank – but at the same time they must be made prudently and with forethought, so as to ensure Praga’s particular character is not lost, said guests at the Primetime Warsaw iii conference held by Poland Today at the National stadium in April.

The process will involve a number of major challenges and will require Warsaw authorities to be shrewd in combining old with new. Praga has long had its own specific atmosphere, characterised by the presence of his-toric architecture and a distinctive local folklore. in recent years, it has taken on a more bohemian personality, as art-ists move in and work there. A City Hall official pointed out that Warsaw, which was almost completely destroyed during World War ii, suffers from the lack of a proper urban tissue. For that reason Praga, with its preserved pre-war buildings and natural authentic-ity, has become increasingly appealing to Varsovians.

With the revitalisation scheme about to get underway and a new subway line providing easy travel between Praga and the centre of Warsaw, middle-class Varsovians are increasingly interested in moving to the east side of the Vistula. The revitalisation process planned by Warsaw City Hall will impact approxi-mately 1,500 hectares of land located in the Praga Północ, Praga Południe and Targówek districts. The area is inhabited by around 7.5% of the total population of the city. Finding the right balanceParticipants agreed that Praga has long deserved such a programme. Patryk Zaremba, from Forum Rozwoju Warszawy (The Warsaw Development Forum), an NGO, joked that he wished Warsaw City Hall could be moved to Praga, if only so that officials would pay more attention to the area. However, he also raised concerns over the extent of Praga’s planned transfor-mation. The area could be “over-revi-talised”, he said, resulting in the loss of its unique character.

The potential demographic shifts also raise questions: if apartment prices in Praga continue to rise and more afflu-ent inhabitants begin moving there in large numbers, will part of the local, low-income population of that area of Warsaw be displaced? How can the city ensure that the old and new inhab-itants become integrated? Participants pointed out that the education system could be a source of conflict – new upper- and middle-class residents in the area may not want to send their children to schools there.

Participants also voiced concern about retail space that is expected to go in on the ground floors of Praga’s revitalised tenement houses. Maciej Mąka, an architect from the Mąka sojka Architekci architectural studio, expressed disappointment at how Plac Wilsona – one of the most highly traf-ficked portions of the capital’s prestig-ious Żoliborz district – saw traditional cafes and grocery stores gradually replaced by bank outlets. He argued that Warsaw City Hall should be wiser about leasing policies in Praga so that it avoids the same fate.

Organisational changes could help officials tackle the challenges lying ahead. City Hall should establish a ded-icated unit to better coordinate Praga’s revitalisation process, participants said. by Adam Zdrodowski

Praga: revitalise, but be wise While Warsaw’s right bank desperately needs a makeover, authorities must be careful not to ruin the area’s specific atmosphere

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‘The process will involve a number of major challenges and will require Warsaw authorities to be shrewd in combining old with new’

HousinG, culture and sPorts

According to Warsaw City Hall plans, Praga’s revitalisation will involve the delivery of around 1,700 apartments, and the renovation of more than 3,000 existing housing units. The process will also include investments in culture (including the construction of a new concert hall for the Sinfonia Varsovia orches-tra) and sports infrastructure, such as the construction of a new swimming pool.Pr

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The prospects for the office prop-erty market in Warsaw in the com-ing years was one of the main issues discussed during the real estate open forum at Poland Today’s Primetime Warsaw iii conference, held at the National stadium in the capital at the end of April. While the participants in the discussion agreed that there will be room for much more office space in the Polish capital in the long-term, many also expressed worry about the spate of new office space which is currently in the pipeline. Cautious investorsMore than 700,000 sqm of office space is currently under construction in Warsaw, with approximately 300,000 sqm scheduled to be completed this year. Another 300,000 sqm is expected to be delivered in 2016. The market has seen a number of large lease transac-tions in recent months, but one broker pointed out that some of those deals happened as a result of consolidation processes, which does not necessarily indicate that net absorption of office space is on the rise.

Karol Bartos, executive director for portfolio and asset management at investor Tristan Capital Partners, said that some office developers have been too optimistic about the chances their newly launched projects have for suc-

But Bartos was clear: none of this has to mean that the market is in any trouble. it may be that in the com-ing years Warsaw’s office market will remain stable, with relatively low rents and a relatively high vacancy rate. Growth fundamentalsAlan Colquhoun, head of Central and eastern europe at DTZ, acknowledged the worries about the potential over-supply of new office space in Warsaw, but he was also very optimistic about Warsaw’s long-term development pros-pects. There are always going to be cycles in the market, but fundamental demand for new office space in Warsaw will continue, because the market is still relatively small compared other similar size european cities, he said.

Colquhoun pointed out that there is now approximately 19m sqm of office space in Munich, whereas in Warsaw the figure stands at about 4m sqm. The cities are similar in population: Munich has 1.4 million people while Warsaw has 1.7 million. so the question is when, not if, new space will be developed in Warsaw, he said. While one should not draw straight comparisons between the cities, the discrepancy shows that there is definitely room for more office space in Warsaw. “i am really positive about the future of this city,” Colquhoun said. by Adam Zdrodowski

cess. “How developers are doing their maths is a mystery for investors,” Bartos said. With rents falling and a consider-able amount of new space expected to be vacant when it comes on line, inves-tors will examine projects carefully, he said. in his view , if developers continue flooding the market with new space, investors may become cautious and think twice before buying office prop-erty in the centre of Warsaw again.

Optimism vs oversupply investors worry about the capital’s huge pipeline of office space, but the market’s potential for growth also keeps many upbeat

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‘How developers are doing their maths is a mystery for investors’

residential recordsDuring the same real estate open forum, participants pointed to the excellent perfor-mance of the residential property market in Warsaw, which last year saw the best new apartment sales results since the boom years. According to Maximilian Mendel, director of the transaction advisory, at REAS, the housing sector still has plenty of potential, especially since investment in the residential market is growing.

Too much room? The amount of office space in Warsaw’s development pipeline has investors wary. However, it’s a boon to potential tenants, who now have a wider spectrum of locations to choose from. For their part, developers point out that Warsaw still has far less office space than cities of compa-rable size. Will the market absorb all of the offices currently being built? Only time will tell.

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Judging by the overall sentiment in the banking sec-tor and the results Poland’s lenders have recently reported, banks in the country are riding high. Assets and net income have grown while equity levels and capital adequacy ratios meet regulators’ requirements. in 2014, banks’ total net prof-its in Poland grew by 7.1% from the previous year to 16.2bn złoty, according to data from the country’s statistics office. Total assets in the sector grew by 8.0% to 1.53tn złoty.

To add to the rosy picture, last year, Poland’s financial regulator, the KNF, carried out stress tests of 15 lenders in Poland which together accounted for 72% of the sector’s assets. All but two of the banks passed, and the pair that failed quickly increased their capital positions to satisfactory levels, the regulator said. This year, however, financial results could change significantly. According to a recent KNF survey, the aggregated net profit of the banking sector is expected to decline by as much as 10.3% in 2015. Difficult environmentThough it has shown strength over the last several years, experts share the view that 2015 may be a difficult year for the sector. “Despite positive forecasts for the economy and consumption, low interest rates and higher Bank Guarantee Fund contributions will have a negative impact on banks’ profits this year,” said stefan Kawalec, president at Capital strategy and a former finance minister responsible for the reform of the sector in the early 1990s.

A reduction of the Lombard rate (the rate Poland’s cen-tral bank charges on loans to other banks) to 2.5% last year cut the maximum interest rate a bank can charge on con-sumer loans to 10%, limiting banks’ revenues from credit cards and consumer loans. A further decline could result from new regulations on bancassurance (insurance sold by banks) and a cut in the rates banks can charge for card-based transactions (called interchange fees) to a limit of 0.2% for debit card payments and 0.3% for credit card payments, Kawalec pointed out.

Piotr sadza, financial services industry propositions leader at Deloitte Central europe, stressed that while retail bank-ing has been the growth driver for the sector over the last few years, the corporate segment is now more likely to drive further expansion. “After years of limiting their indebted-ness, Polish companies are now declaring an increase of both investments and employment, which should directly trans-late into higher revenues for banks,” he said, stressing that revenue from corporate banking activities is less sensitive to interest rate fluctuations.

BaNkINg ON a CHallENgINg yEaR The past several years have been good to Poland’s lenders. But lower interest rates and new regulations could mean that will change in 2015

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At the same time, banks could have a tough time maintaining profits from retail activities, especially with lower profitability from consumer loans, decreased interchange fees and a potentially troublesome swiss franc mortgage-loan portfolio. “Banks will not only increase fees and commis-sions, but also evaluate consolidation and further cost optimisation opportu-nities, especially in their retail networks,” sadza explained.

“This year the sector is subject to much stronger negative pressure than last year,” said Józef Wancer, CeO of BGŻ. “Net interest income may be affected by lower interest rates, while net fees and commissions may decline due to a reduction of inter-change fees and the implementation of Recommendation u [which limits ban-cassurance activity].” More negative factors may be linked to swiss franc-denominated mortgages.

“However, it is the almost doubling of banks’ contributions to the Bank Guarantee Fund that could have the most severe effect,” Wancer stressed. each year, banks make contribu-tions to the fund, which operates Poland’s deposit guarantee scheme. in 2015 banks may be forced to earmark some 1bn złoty more for such contributions than they did in 2014. swiss franc troublesWhen the swiss National Bank decided to unpeg the franc from the euro early this year, concerns were raised about how Polish lenders – and borrowers – would cope with the situ-ation. so far, however, there has been no significant impact. According to the KNF, at the end of 2013 there were some 562,500 swiss franc-denominated mortgage loans adminis-tered by Polish banks, accounting for 31.8% of the total num-ber of mortgage loans. Their average value at the time was 241,200 złoty. “The impact will depend on the solutions that are adopted,” Kawalec said. “A significant swiss franc loan portfolio is an important economic and political risk factor for Polish banks, though not a dramatic one.”

sadza agreed that future legal solutions will be crucial. “The impact on the sector’s results should be limited. However, potential supervisory decisions or legal actions leading to

the obligatory conversion of foreign-currency loans to złoty at non-market rates may have a detrimental impact on the financial results and stability of the banks,” he explained. “However, i don’t expect such radical solutions to be implemented in Poland.” Competition and consolidationA challenging market environment usually fuels consolidation. M&A activ-ity continues in Poland’s banking sec-tor and more deals are in store. Alior Bank’s owners have been looking for an investor for more than two years (Polish insurer PZu recently agreed to buy 25% of the company). Other possible targets include Raiffeisen Polbank and, according to reports, the Polish unit of Deutsche Bank. Andrzej Jakubiak, head of the KNF, has spoken out against fur-ther consolidation, saying it has already reached an “optimal” level in Poland. However, Most market players do not

share his view, insisting that consolidation is in the cards. “The level of consolidation in the Polish banking sector is well below the european average,” said sadza. “it is also worth remembering that a number of smaller market players gen-erate relatively low revenues, which will be subject to a lot of pressure. This may force further consolidation.”

“From the point of view of banks and their results, further consolidation would be justified. However, the participation of the largest lenders in consolidation would not be desirable in view of the banking system’s stability and the interest of customers,” Kawalec said. “The KNF opposes further merg-ers among the biggest banks and hopefully it will be able to withstand the pressure,” he added.

“One of the prerequisites for future consolidation is a possi-ble decline in profitability, which may also result from stricter regulation – the eu’s capital requirements directive for exam-ple,” Wancer said. He also stressed that the level of consolida-tion in Poland is low and that some foreign entities could be forced to leave the Polish market as part of their restructuring processes. Whatever happens, it is clear that 2015 will prove much more difficult for banks in Poland. Whether the sector will remain one of Poland’s most profitable will depend on how well they meet those challenges. by Kamila Wajszczuk

Swiss franc mortgages: Before the global financial crisis especially, many Poles took out mort-gages in Swiss francs, since the interest rate on such loans was much lower than on złoty-denominated mortgages. However, currency fluctuations have caused borrow-ers some headaches. So far, however, defaults have not become an issue for Poland’s banks.

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PolisH MoBile PaYMent sYsteMIn a bid to remain attractive to retail customers in an ever-changing environment, six Polish banks, including the country’s biggest lender, PKO BP, have launched a mobile pay-ment application named BLIK. The app allows for payments, cash withdrawals and transfers with the help of codes generated by a mobile phone. The move makes sense in a country with an estimated 3.5 million mobile banking customers. Alior Bank, Bank Millennium, BZ WBK, ING Bank Śląski and mBank have joined PKO BP in the BLIK system. A month after its launch in early February, BLIK had 500,000 us-ers. Poland’s second largest lender, Bank Pekao, is developing its own mobile payment app.

Kamila Wajszczuk is a journalist at buis-ness news agency ISBnews. Her previous experience includes work for Warsaw Business Journal and EMIS DealWatch. In her spare time she enjoys travelling, with a spe-cial focus on Central and Eastern Europe.

‘a significant Swiss franc loan portfolio is an important economic and political risk factor for Polish banks, though not a dramatic one’

financial results cHanGeas expected by banks surveyed by the KNF

Net financial result Net interest income Net fees and commissionsTotal assetsIncome from corporate loansIncome from consumer loansIncome from mortgage loansTotal deposits

Source: KNF. Based on data from banks holding 86.9% of the sector’s assets

2015 (forecast)-10.33%-0.47%+5.70%+5.06%

+14.38%+13.60%

+3.55%+7.2%

2014+6.76%+6.89%+2.78%+9.39%+8.21%+3.85%+5.51%

+7.1%

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if you’re interested in Polish com-panies that have weathered transfor-mation, look no further than elzab, a maker of cash registers and retail sales supporting solutions. The company has survived three revolutions in its busi-ness model, all while dealing with such earth-shattering events as the fall of the soviet Bloc and the global finan-cial crisis. Poland Today sat down with Krzysztof urbanowicz, the company’s CeO (who as of 28 April left that posi-tion to become vice president of elzab’s parent company, Comp). We asked him about the company’s past, and what firms can learn from its experience as they look to meet the challenges of the future.

elzab is the oldest company in Poland combining production with software development. under commu-nism, as many as 200 similar compa-nies were established, but only elzab managed to survive Poland’s transition after 1989. The company originated in 1969, when the Polish Communist Party’s politburo decided to create a Polish iT cluster in silesia in order to add some white-collar jobs to the blue-col-lar mining region. The elzab plant was established with 1,500 work places to produce electronic devices compatible with the eastern Bloc’s mainframe. The company enjoyed a long, successful run, and in 1983 was even behind one of the first computers to be produced in Central and eastern europe.

However, 1991 brought with it the collapse of Comecon – a trade and eco-nomic cooperation organisation com-prised of countries within the soviet sphere. Overnight, elzab was left with a warehouse full of products and no one to sell them to. “That’s when elzab made its first successful shift,” said urbanowicz. The company decided to focus on small monitors, particu-larly for the medical sector, as well as small computers.

But Poland’s transformation opened the country up to foreign competition, and elzab’s products became obso-lete. elzab had to quickly change tack again. The country’s economic transi-tion also brought with it modern tax-ation regimes: personal income tax, corporate income tax and value added tax (VAT). suddenly, there was demand for devices that could calculate and

Poland Today sits down with Krzysztof urbanowicz, CeO of elzab (now vice president of Comp)

What are some lessons that we can draw from Elzab’s most recent transition?

The main lesson is that you must be equipped from the very beginning with a very strong management team. Profit streams and cost drivers must be identified at the earliest stage. Proper due diligence, identifying problems from the past – this is a must.

Do you think that the ability of the company to manage change so well comes down to specific qualities of Elzab, or is it some-thing in the Polish character?

it’s a combination of both. in elzab we’ve made our transitions the most difficult way: without changing a lot of people. The easiest way to transform a company is to change top manage-ment and half of middle management. We made some changes, but the bulk of employees remained the same, which can make transition more difficult. it’s usually harder to change company cul-ture without changing the people, too.

But indeed Polish people are very entrepreneurial. i’ve seen it in many different sectors, but i’ll give you one example from elzab. We currently work with a German company. When we started working together, we could tell that they were highly sceptical of our abilities, just because we were Polish. Then, we found a lot of mistakes in a project they gave us. When we came back to them, not only did we point out the mistakes, but we also suggested solutions. Their eyes widened – it’s not what they were expecting. since then we have been cooperating as equals.

How will Polish companies need to adapt for future challenges?

The first key to success is having a good R&D department. second, have a good team. Flexibility will not guaran-tee success if you don’t combine it with high technical expertise. For example, Chinese companies are very flexible, but their level of technical expertise is too low. Their traditional strategy of creating a single product and coming

record transactions involving VAT, and elzab stepped in to fill the gap.

“elzab got a model of a cash regis-ter developed for the uK market which very quickly it transformed into a fis-cal device for the Polish market. At that time we were the only player in the market, but since then it has become very competitive. Currently we hold a market share of around 25%,” said urbanowicz. “Throughout our transfor-mations we have changed the product portfolio, the technology, the size of the company and the customers – but not the people. There are still families with three generations working at the same plant,” he added.

Nevertheless, history had placed a large burden on elzab. When it was created, the company was expected to be completely self-sufficient. it had its own power plant, its own heating plant, its own telephone network and its own metallurgical units. it also had a huge factory, scaled for 1,500 people, and a large piece of land adjacent the plant.

By the time private Polish iT com-pany Comp took over elzab in 2010, the company only employed 270 people. in the beginning of 2011, when the results were published “it was a shock to eve-rybody,” said urbanowicz. elzab’s profit had turned to zero. That’s when elzab made another important transition. urbanowicz, who had been brought on with the Comp takeover, implemented a restructuring plan that saw the com-pany completely revamp its product portfolio, as well as sell off or lease out all of the company’s fixed assets, reduce fixed costs and negotiate with suppliers. “At that time we received tremendous support from our supervi-sory board chairman, Jacek Papaj,” said urbanowicz. “He believed in our factory when no one else did.”

The first results of the restructur-ing were visible by the end of 2012. improvement in the bottom line con-tinued in 2013, when elzab made a record profit. By the time 2014 was half over, it had already beat the full-year figure from 2013. “Our success is also reflected in our share price,” said urbanowicz. “Over the last 24 months, our share price has risen by over 1,000%. i would say that’s not exactly typical for a long-established company.” by Andrew Kureth

Transformational expertise The story of elzab, a Polish iT company whose business model has undergone several successful transitions, offers lessons for how other Polish firms can meet future challenges

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‘Customers are beginning to understand that paying a higher price for a quality product is better than buying a cheaper, low-quality product’

Krzysztof Urbano-wicz, formerly CEO of Elzab and now vice president of its par-ent company, Comp, led a remarkable turnaround of Elzab that in three years brought it from zero profit to record profit. The firm’s share price rose by over 1,000%. Elzab, a maker of cash registers and fis-cal recording devices, believes the future of the Polish fiscal market lies in the implementation of a

‘central system’ such as that in Hungary, where the company’s innovative products found significant success.

in with below-market prices does not work here in our segment of the mar-ket. Customers want products that are reliable. even if the price of the Chinese firm’s product is much lower, custom-ers choose our product. Customers are beginning to understand that pay-ing a higher price for a quality prod-uct is better than buying a cheaper, low-quality product.

Isn’t that a big change in the Polish mindset?

i believe people have gained enough experience with products that break and are then expensive to fix. When it comes to products like white goods and electronic consumer goods, people are more careful.

Elzab has a robust expansion strategy. How is that going?

We are present in over 20 markets worldwide. This year we achieved a tre-mendous success in the Hungarian mar-ket. Hungary implemented a so-called ‘central fiscal system’ whereby every cash register and fiscal device is con-nected online to the Hungarian Ministry of Finance’s central server. every trans-action is reported over the internet to that server. That created a huge demand and a huge challenge for man-ufacturers of fiscal devices, because Hungary chose a very technologically sophisticated solution. so we had to create a product for the Hungarian mar-ket from scratch. At the time, our com-pany there had just a 3% share of the market. After introducing our advanced technological solution our market share rose to 40%, while at the same time we gained significant positive brand recog-nition in the Hungarian market.

What does the Polish market for fis-cal devices look like at the moment?

The government is requiring the use of cash registers in more sectors. This year, doctors, veterinarians, beauty salons, tyre businesses, car garages and barbers all have to make that transition. However, we believe that the future of the fiscal market in Poland will be the implementation of a central system. We are the only company in Poland pre-pared for such a system – we have a developed product and we’ve tested it in the market very successfully.

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You signed a lease deal with Samsung for 22,000 sqm in Warsaw Spire ear-lier this year. What will the company be doing there and how is leasing out the remaining space progressing?

The agreement with samsung is one of the most significant for the Warsaw market – it is the largest office lease deal ever for a building in the city cen-tre. samsung chose Warsaw spire and will consolidate its R&D functions there, from three separate locations in Warsaw.

Currently Warsaw spire is about 60% leased out. We have gained a second institutional tenant, our first being the eu agency Frontex. The new tenant is the Centre for eu Transport Projects, whose head office will take up 6,200 sqm in building C. We have also signed the first lease agreement for premises available on Plac europejski – stixx, a restaurant, will occupy the former warehouse on Wronia street.

Thanks to a number of unique fea-tures, the project has met the needs of the most demanding tenants. We are particularly proud of the fact that the concept, in its inclusion of Plac europejski, has received recognition for its integration of office space with public urban space. Negotiations are under way with new tenants, both for office space and for commercial space between the Warsaw spire build-ings. We expect that by the end of the year, 70-75% of the entire complex will be leased out. Do you plan to include urban space development in future develop-ments in Poland? Do you see other developers following this trend?

The Plac europejski development sets a precedent not only due to the fact that we are, as a commercial developer, creating public space. it is also unique in that it is the first consistently and thoughtfully designed urban, pedes-trian square of its scale to be built in Warsaw in decades. in the neighbour-hood between Towarowa, Grzybowska, Wronia and Łucka streets, we will cre-ate a completely new urban landscape and a new place to spend free time. On those 4,000 sqm we’ll have 140 trees along with fountains that children will be able to play in on hot days. Aside from the greenery and water, restau-

Beyond Warsaw Spire, you have several other developments in the pipeline in the capital. What is the status of these?

in addition to Warszawa Gdańska, we have several ready office projects in attractive locations in our portfo-lio that we will begin when the time is right. some of them will be built close to Rondo Daszyńskiego, like sienna Towers, which will combine office and retail space, and will rival Warsaw spire in scale.

Our flagship project in this respect was pioneering – it defined the area around Rondo Daszyńskiego as a new business centre in the capital. What, in your view, are the trends that will shape the real estate market in Poland going forward?

Building design that responds to changing tenant needs and is best adapted to contemporary Poles’ new living patterns will play a key role. On the other side, the requirements for future investments will certainly continue to grow – the priorities will remain functionality and maximum energy self-sufficiency.

Green certificates will become the standard across the industry, not only for office buildings. i am also convinced that the industry will become increas-ingly conscious of the value of creating urban public spaces.

The condition of the sector very much remains dependent on the quality of infrastructure, both between cities and within the cities themselves. i hope that public-private partnership projects will play an increasingly important role in this regard, because from the per-spective of the real estate sector, the future will belong only to those loca-tions in Poland that will provide people the highest mobility.

rants placed around the square and on the ground floors of the Warsaw spire buildings will add to the ‘microcli-mate’. so will the Art Walk, an outdoor exhibition space.

The solution we have offered in our investment goes far beyond the tra-ditional framework of development activity, confined as it usually is to a few elements of small architecture or modest greenery around the building. Our project is part of a much wider horizon of sustainable development. in this approach, we take the view that many actors are responsible for co-creating the urban environment – as a developer, that includes us. i hope that this approach will find followers in the future and that more ‘urban-space-ori-ented’ projects emerge. The vision, the creative potential and the functionality of the square have received very posi-tive reviews from Warsaw spire tenants and local community members.

Certainly, the Warsaw spire project has given us experience that we will bring to bear in further endeavours. A project that will have a similar sig-nificance for the city is the Warszawa Gdańska development. it will be the first time commercial and office space will be integrated with so many different modes of transport (rail, subway, buses and trams) on such a scale. it will be a modern railway station and office build-ing complex with retail space and ser-vice industries – and the whole area will undergo a revitalisation. Warsaw Spire just recently held its topping-out ceremony. When is the entire building expected to be finished?

indeed, at the end of April we closed a very important stage in the construc-tion – at an altitude of 180 metres, the concrete works on the last floor of building A were completed. The build-ing’s height will rise to 220 metres after the installation of two spires in autumn this year.

We still have a year of construction and work on many fronts: the elevation assembly, installation and finishing in buildings A and C, as well as the devel-opment of Plac europejski. We plan to complete the whole complex in April next year, although the last trees will be planted a bit later, in June 2016.

Ghelamco sees ‘wider horizon’ with urban space projects

Poland Today talks with Jarosław Zagórski, director of sales and develop-ment and member of the board at Ghelamco.

Ghelamco is a part-ner of Poland Today issue no. 10

The firm believes it is setting a trend by integrating public areas into its developments

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‘We take the view that many actors are responsible for co-creating the urban environment – as a developer, that includes us’

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June 17-18, 2015, Hotel Bristol, Warsaw

conference & cocktail party

Poland & CEE Real Estate Summit

Meet the property elite in Warsaw

London / Paris / Frankfurt / Madrid / Bucharest / Budapest / Prague / Warsaw

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Have you ever lost your wallet? Or maybe you’ve been late for a meet-ing because you had to search your house for it? A Kraków-based start-up is looking to make such inconveniences a thing of the past.

Woolet is a young company – its founders, led by serial entrepreneur and tech businessman Marek Cieśla – came up with the idea only last November. in March they launched a campaign on crowdfunding website Kickstarter with a goal of raising $15,000. The company crushed that goal by over 2,000%, earning nearly a third of a million dol-lars in just a month. Woolet, evidently, has struck a nerve.

The technology connects your wal-let to your smartphone, notifying you if you’ve left your wallet behind (or if your wallet is moving away from you – potentially in a pickpocket’s hands) by signalling your phone when you exceed a certain distance from it. The technol-ogy also works in the opposite direc-tion, with your wallet letting you know if you’ve left your phone behind.

The idea, in itself, isn’t terribly new. Companies have been working on such notification technologies for years. But Woolet differentiates itself with several features. First is a distinctive sound, instead of simple buzzing or beeping, so you don’t mistake the notification for a text message. second, the tele-phone application informs you just how far away your wallet is, and shows you when you are getting closer or farther away. Finally, the wallet’s battery is ultra-thin and self-charging.

Technology is easy to replicate though, and in some places, where intellectual property isn’t always well respected, it can be copied and pro-duced more cheaply. That’s why Cieśla and his team decided to make Woolet a wallet-maker, rather than just a tech firm. The wallets are hand-crafted using ecological, high quality materi-als and are thinner than your typical wallet. The combination of innovative technology with quality design and clever branding has obviously excited potential customers.

The Woolet team is working on creat-ing an entire ‘ecosystem’ of such prod-ucts, including key chains and phone covers. eventually, the company hopes to fully integrate these products into

Won’t the app be a drain on the battery in users’ phones?

No, the technology uses Bluetooth low energy – it’s always on. You don’t have to turn on the regular Bluetooth on your phone, which helps save energy.

The idea isn’t particularly original. How do you differentiate yourselves?

There are some other gadgets out there that help people find things. But the major issue with those devices is the battery and the sound. usually, such products are encased inside plas-tic. There is a small hole where the sound emits from. That has some seri-ous limits: it is often hard to hear, and you can’t tell exactly how far away it is. imagine trying to find your keys when you’re next to a busy street. Moreover, most of these technologies’ batteries last just two or three months. Plus, if someone steals your wallet, you are better off just seeing where the wal-let is than having it set off some kind of alarm – the thief could easily block out the sound.

Why make a wallet too? Why not just the technology, and sell that to wallet makers?

Because the technology can be made anywhere. so the first thing is the branding. The other thing is the cloud – if we create a product where users set up accounts, then we can use that data to help create all sorts of solu-tions. imagine that you are approach-ing your house in your car. Your Woolet key chain could notify the garage door and open it automatically. We’re also working on technology that would, for example, allow you to cancel your credit cards automatically if someone steals your wallet. There are many such pos-sibilities with an integrated product.

What are the next steps for the company?

in June we will ship the early bird products, and by July we’ll have the first retail products from the factory. We have already signed 12 distribution agreements, in the us, uK, Canada, Brazil, Germany and some other mar-kets. Of course, it will also be avail-able on our website. Geographically, we have covered all of the markets we wanted to.

the ‘internet of things’ allowing them to help you with other everyday necessi-ties, such as opening your garage door or turning off the iron.

Apart from the batteries, all of the parts are made in Poland. The firm has signed distribution agreements in several markets across the globe, where Woolet will be available soon. Cieśla told Poland Today that the com-pany has signed an agreement with a major european retailer, though it isn’t ready to reveal which one just yet. by Andrew Kureth

Poland Today talks with Marek Cieśla, CeO and founder of Woolet

You shattered your initial Kickstarter funding goal of $15,000, finally raising more than $330,000. Why do you think the response was so enthusiastic?

My team is not new to this. We learned how to do it in previous cam-paigns. it isn’t as simple as just set-ting up the website and waiting for the money to roll in. There is a lot that needs to be done ahead of time, includ-ing promotion. But we also focused on design. We actually turned the philoso-phy of the internet of things on its head. Companies like Apple, they create hard-ware and then hope people begin using it. We did the opposite. We took some-thing that people already make use of every day and solved a problem people have with it.

How will you use all of that extra capital?

What has happened is that the users have demanded features that we didn’t plan on initially, and we are working on those. One is wireless charging, where we have two types of technologies planned. First, you will be able put the wallet on your charging pad and it will charge there. second, we are working on photogenic charging: using artifi-cial light to power the battery. You can put it close to your lamp and it turns the energy from its light into electric-ity. With these technologies, the bat-tery will last years. i think the leather on the wallet will wear out quicker than the battery.

Lost and found A Kraków start-up is creating solutions to help you find all of the things you have left behind

Woolet’s wallet will let you know if you have left it behind – but it is also a designer prod-uct, made with high quality materials, all of which (except the battery) are made in Poland. The com-pany is now working on several different charging solutions and technology that will tell you in exactly which direction your wallet is in.

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60 WEaPON Of CHOICE Russia has been waging an information war in Poland and across the region. How should the country respond?

internAtionAl

Annabelle Chap-man is a Warsaw-based journalist. Her articles from Poland and Ukraine have featured in The Eco-nomist, Foreign Policy, Newsweek and Foreign Affairs, among others. In Warsaw, she is also English-language editor at Polityka Insight, a think-tank. She has a degree in Politics, Philosophy and Economics and a masters in Russian and East European Studies, both from Oxford University.

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61As Russia flexes its muscles in the east, Warsaw has been emphasising security. This includes plans to spend an additional 800m złoty on defence in 2016, reaching the 2% of GDP recommended by NATO (from the current 1.95%). At the same time, it is becoming clear that investing in mili-tary equipment is not enough. A Russian offensive need not involve battered soviet tanks trundling across the border – or even any kind of physical contact.

“Russia has engaged in a rather remarkable period of the most overt and extensive propaganda exercise that i’ve seen since the very height of the Cold War,” the us secretary of state, John Kerry, told a senate subcommittee earlier this year.

The combination of military force and information war-fare used in Russia’s annexation of Crimea – and in eastern ukraine since then – is known as ‘hybrid war’. A glossary on the website of Poland’s National security Bureau (BBN) defines this as “a war combining different means of violence, including regular and irregular armed action, operations in cyberspace, economic and psychological actions, and infor-mation campaigns (propaganda)”. strategic moveRussia is taking “psychological warfare” and the “war of perceptions” seriously. its strategy has moved “from direct annihilation of the opponent to its inner decay” and “from war with weapons and technology to a culture war”, writes Janis Berzins in a policy paper for the National Defence Academy of Latvia. in theory, a country could be brought to its knees without Russian arms or sol-diers so much as touching it.

Russia’s information war efforts tend to be ongoing, without a clear start or finish. Yet this kind of warfare works best

“when different tools are used in concert over a short period of time to achieve a limited number of goals,” accord-ing to a new analysis on Russia’s info-war by the european union institute for security studies.

The Polish government is well aware of the key role Russia ascribes to infor-mation warfare. in a policy speech in April, Foreign Minister Grzegorz schetyna emphasised Russia’s “infor-mation war to mask its own role in the conflict in ukraine and to caricature the Western reaction to Russian aggres-sion”. Poland is also being targeted. in his speech, schetyna warned of “slander campaigns or actions intended to stir confusion in the Polish information space”. He declined to list them, “so as not to play a role in this scenario”. At the ready?Poland needs to be ready for hybrid war, said General stanisław Koziej, head of Poland’s National security Council, speaking to journalists in Lublin in March. This includes con-vincing Poland’s NATO allies to prepare for it. But that may not be enough: in cases of hybrid warfare, when it is “unclear whether it is war or not”, it may be difficult to get a consen-sus within NATO, he added. This makes it particularly impor-tant that Poland raise “the interest of all society”, including citizens as well as social and paramilitary organisations who want to help strengthen its security, he explained.

This is not the first time Moscow has used propaganda to try and undermine Poland and other countries to its west. These tactics were honed in the first years after World War ii, as Anne Applebaum describes in ‘iron Curtain: The Crushing of eastern europe 1944-1956’ (2012). Her book contains a

fascinating chapter on the role of the radio – “the era’s most powerful form of mass communication” – in the communisa-tion of Poland, east Germany, and Hungary. Now propagan-dists simply have new channels at their disposal, from the internet and social media, to good old television.

When it comes to Russian television, the Baltic states face a bigger challenge than Poland does. Latvia and estonia are both home to sizeable Russian-speaking minorities, who account for around a third and a quarter of the population respectively. But Russian television is not just popular among members of the countries’ Russian minorities. in Lithuania,

the Polish minority – the country’s larg-est, at almost 7% of the population – is known for its reliance on Russian tel-evision. The only Polish channel readily available is TV Polonia, geared toward the diaspora around the world. “it might be interesting for a retiree in Chicago, but not for me,” said a 20-some-thing Pole from Vilnius. Members of Lithuania’s Polish minority could cross the border and buy a Polish decoder, but not all of them bother. sowing doubtYet Russian television channels have been reaching further west, with RT (which stands for ‘Russia Today’) in the lead. There is also sputnik international, a news service launched in late 2014 by an agency owned and run by the Russian government. sputnik, which calls itself a

“provider of alternative news”, has web-sites a handful of european languages, including spanish, Finnish and Czech. in February, it launched a Polish version.

sputnik’s coverage of the conflict in eastern ukraine is pre-dictably pro-Kremlin, anti-ukrainian and anti-Western. But the real danger posed by media like sputnik is not that it will make the Poles, spaniards and Finns who read it love Vladimir Putin. it is these Russian outlets’ venturing into domestic cov-erage – the Polish version of sputnik has a “Polska” section. Bit by bit, it aims to discredit the Polish leadership, spreading half-truths and sowing doubt. “Where are european democ-racy and law?” opens an indignant article on Poland’s deci-sion in April to refuse the Night Wolves, a pro-Kremlin group of bikers, entrance into the country.

identifying the threat posed by information warfare is one step, dealing with it is another. General Koziej has suggested that Poland could respond to information war with a “national doctrine of information security.”

Polish news outlets also have a role to play. in his speech, schetyna appealed to them “to show moderation and com-mon sense when covering topics that are present more in the media than in real life”.

Yet the risk is that if foreign capitals, from Kiev to Brussels, try to beat Moscow at its own propaganda game, they will become just like it. That is a trap that the Russian leadership would love for them to fall into. by Annabelle Chapman

‘Russia has engaged in ... the most overt and extensive propaganda exercise that I’ve seen since the very height of the Cold War’

Changing the channel? Russian television channels have been reaching further west, with RT in the lead. There is also Sputnik Interna-tional, a news service launched in late 2014 by an agency owned and run by the Russian government. Sputnik, which calls itself a “provider of alternative news”, has websites a handful of European languages, including Spanish, Finnish and Czech. In February, it launched a Polish version.

Shifting strategy Russia’s military strategy has moved

“from direct annihila-tion of the opponent to its inner decay” and “from war with weapons and tech-nology to a culture war”, according to a policy paper for the National Defence Academy of Latvia.

cYBerattacK surGeCERT, Poland’s Governmental Computer Security Incident Response Team, found that Poland came under a record number of cyber-attacks last year – 7,498, compared to 5,670 in 2013, 457 in 2012, and 249 in 2011. In addition to a marked escalation in cases, the threat and level of sophistication of the registered cyber attacks also increased compared to previous years, in many cases pointing to state backing.

internAtionAl

62 it looks like a white bullet, with its sleek lines and pointy beak. even lying on the ground, it looks fast. But despite its aggressive styling and razor-like wheels, don’t expect Kropelka to go

“vroom” – it’s more like a “purr”. But its creators like it that way. The Kropelka team are getting ready to take part in the shell eco-Marathon, a racing series with all the technical chops of Formula One, but none of the speed. unlike the ravenous roaring racers, these vehi-cles are designed for efficiency. And efficient they are – last year’s winner managed to drive for 3,300 kilometres on just one litre of fuel. imagine going from Warsaw to Kuwait on a pickle jar’s worth of ethanol.

But don’t imagine commuting to work in a similar vehicle. At least not any time soon. “That would be dif-ficult,” laughed Paweł Radziszewski, who heads the Kropelka team, a group of several dozen students from the Warsaw university of Technology who work in several makeshift workshops scattered around the campus. “First of all, it’s extremely light, at just 100 kilo-grams. We don’t use any non-essential parts like lights or mirrors. And sec-ondly, the engine’s been designed for efficiency, not power.”

That means that you could proba-bly outrun Kropelka with an effortless trot. But try to keep trotting for 659 kilometres – that’s the current Polish record set by the Warsaw Tech stu-dents. Part of the trick is to make the vehicle as light as possible. “We’re using materials that are virtually unheard of in automobile construction, save in a few super-expensive supercars,” said Radziszewski.

“But they are quite common in avia-tion, like Kevlar or duraluminium. We’re using ceramic bearings that are 10 times more efficient than metal ones. We’re using extremely thin wheels in a tricycle arrangement,” he added.

“And we’ve spent a lot of time per-fecting the aerodynamics. At low speed, drag accounts for about 40% of a vehi-cle’s energy expenditure. The faster you go, the more that matters. And then there’s the engine, designed by one of our colleagues as his master’s the-sis and manufactured to our specifica-tions,” he said.

Of course, creating a prototype vehicle is neither easy nor cheap. By its nature, a vehicle like Kropelka will cost about 10 times more than a comparable, mass-produced vehicle.

in this case, sKAP, or the student Vehicular Aerodynamics Club – the association behind the construction effort – resorted to crowdfunding. Their campaign was successful, with 147% of the asking donations level reached. “We’re up against teams with ten times the money and 30 years of

Fuel to spare Young Polish engineers are building ultra-efficient cars, and getting plenty of educational mileage out of the experience

Science & technoloGy

Kropelka: Students from the Warsaw University of Tech-nology have built a super fuel efficient car out of materials normally used in avai-tion. So far, they have set the Polish record for mileage: Kropelka travelled 659 km on a single litre of fuel.

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63experience in the competition,” said Adrianna Kaźmierczak, who heads sKAP. “They’ve been coming since 1985. i can’t imagine any Polish team competing on the world stage in 1985,” she added.

Obstacle courseThe Warsaw Tech team isn’t the only one trying to bridge the gap, though. Nine years ago they became the first Polish team to take part in the shell contest. since then, a number of Polish techni-cal universities have created their own teams. in most cases it was the students themselves who drove the efforts home, with the universities offering varying levels of support. Their motivations were simple: for future engineers nothing beats the challenge, the thrill, and the hands-on education of an actual, cutting-edge project. “it was never our goal to turn this into a business project,” said Kaźmierczak. “We want to learn. And we’ll never learn more than by working all night on something that will actually run and compete.”

“it’s fun, of course, but it’s also an amazing feeling to witness something like this being created from scratch,” added Radziszewski.

“Plus, most technical courses focus on theory. The result of that is engi-neering graduates who have never seen a power drill or a sander with their own eyes,” he said.

They’re not alone in that senti-ment. Over the last couple of years thousands of Polish students have entered similar, international compe-titions, facing off against the likes of the us’s MiT or France’s ePFL: teams supported by world-class universi-ties, with top facilities and, inevitably, incomparable budgets.

They lost, time and time again, to their Western counterparts – but every loss was a win. Their experi-ence and self-confidence grew. Their results improved. And their technical competence soared.

Often it took more than technical knowledge. With funding scarce, most teams had to fight for every penny and work out inventive ways of circumvent-ing problems that other teams could buy their way out of.

And it took moxie. When a Polish team’s Husar rover, meant for a NAsA lunar digger competition held at the Kennedy space Center in 2014, was misplaced by their airline, the team worked to scrounge up spare parts from their competitors and used them to build a replacement vehicle, effec-tively designing, building, and testing a brand new lunar rover within 48 hours. They didn’t win, but the NAsA judges made a point of recognising their effort.

Talent in the tankin time, more and more young Polish engineers have proved they could be more than a match for top teams from the us and Western europe. The poster boys for those Polish success stories were Białystok university of Technology students whose Magma 2 rover won the university Rover Challenge – an interna-tional competition for prototype Mars rovers held in utah by the Planetary society. They became a media sensa-tion and Martian robots started pop-ping up at technical institutes across the country. Last year, Poland hosted its own rover challenge, a licensed version of the us competition. Held in the shadow of a Medieval castle in Chęciny, the event attracted teams from Asia, Africa and south America, but, more interest-ingly, thousands of spectators – a first for student engineering competitions. suddenly, engineering became some-thing of a national sport.

“We might be the best in the world at complaining,” said the european space Foundation’s Łukasz Wilczyński, the man behind the Chęciny compe-tition, “but we also have some of the most talented engineers in the world. The Apollo Program’s lunar rover was designed by a Pole, Mieczysław Bekker. Poles built one of the main instruments for the Rosetta mission. We brought the competition here to increase the visibil-ity of the Polish space industry and to give more young engineers a chance to show off their skills.”

Back at sKAP, the team is putting the finishing touches on Kropelka’s successor. “We’re hoping to hit 1,000 kilometres per litre,” said Radziszewski, the team leader. “Far more than anyone ever managed in Poland.

But the next design is supposed to have far more in common with every-day vehicles. unlike Kropelka and its fellow prototypes, the cars competing within the urban Concept class should, in theory, be capable of safely mov-ing down city streets. They must have windscreen wipers, a relatively normal seat, headlights, brake lights – all the things thrown out of prototype class vehicles as dead weight. Oh, and they must have a trunk big enough for a briefcase. They’re still a long way from your regular Fords or Fiats, but they look less like bicycles and more like real, tiny, urban cars.

“The commercialisation of these vehi-cles is a possibility,” mused Radziszewski.

“You can imagine them being used in urban car rental networks, similar to ones that are operational in France.” And, with gasoline prices creeping closer to the 5 złoty mark, it’s hard not to look at Kropelka and its succes-sors and hope that perhaps, one day... by Wojciech Brzeziński

Science & technoloGy

Wojciech Brzeziński is a journalist with  Polsat News, and a proud geek. He’s the creator of ‘Ho-ryzont Zdarzeń’, the first weekly science and technology news show on Polish TV and the author of a number of technol-ogy-related articles in weekly newspaper Tygodnik Powsze-chny and monthly magazine Logo.

PolisH student enGineer success storiesMagma: Built by a team from the Białystok University of Technology, this spidery-looking robot took third place in the University Rover Challenge in 2010 and won it in 2011. In 2013 and 2014 Polish teams took two of the three top spots. Husar: Built by a team from the Warsaw Uni-versity of Technology, the machine was meant as a prototype of a device that might, in the future, assist lunar astronauts by mining lunar dust. Instead the team was forced to build the robot from scratch using spare parts donated by their competitors after an airline misplaced the robot. PW-Sat: A tiny, cube-shaped satellite meant to test technologies useful for clearing space debris from orbit. It became the first Polish satellite in orbit on 13 February 2012. San Francisco Fire Department Headqu-arters: Two Polish student teams took the top two spots in the 2013 competition to design the new headquarters for the SFFD. The winning proposal by Gdańsk University of Technology students is unlikely to be built in its current form, but the judges appreciated its grandeur – the design included a fire department aircraft carrier for rapid deployment of fire-fighting teams in the San Francisco Bay Area.

KroPelKaWeight: Under 100 kgEngine: Single cylinder 58cm3, 1 HPFuel economy: 659 km/lWheels: Low-drag ceramic bearingsHigh pressure tyres – 5-6 bar pressure, compared to 2.3 bar in a standard vehicleBody: 0.098 drag coefficient; aerodynamics are the result of a computer analysis of over 150 models

‘We’re using materials that are virtually unheard of in automobile construction, save in a few super-expensive supercars’

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65hiStory

Jan Karski risked his life to personally witness and docu-ment conditions for Jews in Poland during the Holocaust. ‘The Mass Extermination of Jews in German Occupied Poland’, pictured above, was written by Polish Foreign Minister Ed-ward Raczyński for the United Nations and relied heavily on information provided by Karski.

Jan Karski, one of the most cou-rageous observers and chroniclers of the Holocaust, died on 13 July 2000. Forced to live with personal experience of unspeakable tragedy, Karski carried the first eyewitness accounts of the Holocaust to the West. At his funeral in Washington DC, his casket was wrapped in the Polish and American flags and adorned with the star of David.

in the summer of 1942 Karski, then a 28-year-old clandestine diplomat working in Warsaw for the Polish gov-ernment-in-exile in London, was visited by two leaders of the Jewish under-ground who reported on the conditions of Jews in Warsaw. shortly thereafter, Karski was smuggled into the Ghetto where he witnessed the day-to-day lives of its inhabitants.

What he saw during this and a subse-quent visit to the Bełżec extermination camp affected him deeply, “This sin will haunt humanity until the end of time and i want it to be so,” Karski said.

in the hopes of eliciting support for the plight of european Jews, Karski met with various Western leaders, including us President Franklin Delano Roosevelt, British Foreign Minister Anthony eden, and supreme Court Justice Felix Frankfurter.

in an interview from the Claude Lanzmann film ‘shoah’, Karski claimed that during a personal meeting that lasted more than an hour, Roosevelt showed absolutely no interest in the suffering of Jews in Poland.

in 1944 Karski published the first of his five books, ‘story of a secret state: My Report to the World’, an unflinching chronicle of his experiences during the War, Poland’s place in the world, and the destruction of Polish Jewry. After the war, Karski moved to the us, study-ing and then teaching at Georgetown university in Washington, DC. He became a naturalised us citizen in 1954.

in 1994 Karski was made an hon-orary citizen of israel, calling it one of the happiest moments of his life. Today, near the Yad Vashem Holocaust Memorial Museum in Jerusalem, a tree bears Karski’s name, while in Warsaw, near the newly opened POLiN Museum of the History of Polish Jews, a statue of Karski smiles broadly in the museum’s direction. by Gabriel Rom

It happened in ... July 13 July 2000. Holocaust chronicler Jan Karski dies

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66 Eyewitness: Władysław Bartoszewski

władysław bartoszewski was never officially a professor, but he had plenty to teach us

hiStory66

władysław bartoszewski, one of Poland’s most respected states-men and academics, died in April at 93 years of age. by just about anybody’s standards, that’s a long life, though the always quipping bartoszewski pointed out that longevity, in itself, doesn’t mean much. “A man can live a while, which doesn’t always mean wisely – but also not entirely stupidly,” he once said.

but bartoszewski, a prisoner of two dictatorships, cabinet minister for two prime ministers and honorary citizen of israel, filled his many years with wis-dom and then some, becoming one of his country’s most powerful moral voices for over seven decades.

As he wrote in one of his books, bartoszewski led a “difficult, but not boring” life. Just 17 years old when the nazis invaded Poland, he was sent to Auschwitz in 1940 for joining the Polish resistance in his home town of warsaw. After he was released in 1941 with the help of the Polish red cross, bartoszewski was active in the home Army and the catholic underground, and eventually fought in the warsaw uprising.

As a member of the Polish govern-ment-in-exile, bartoszewski was also a leader of Żegota, the council for the Aid to Jews, which saved the lives of some 4,000 Polish Jews and helped tens of thousands more by secur-

ing hiding places, food, and financial support.

while imprisoned at Auschwitz, bartoszewski began what would become a long career of influential writing, producing some of the first written eyewitness accounts from the nazi death camp. following the war, he was jailed again by the new regime for having served in the home Army and joining the anti-communist Polish People’s Party. bartoszewski served nearly seven years on fabri-cated espionage charges, after which he returned to journalism, writing for a prominent catholic weekly, radio free europe, and others. his support for the Solidarity movement in the early 1980s earned him another stint in prison, underscoring his consistent activism on behalf of the democratic opposition.

An expert on european history who authored several dozen books and countless more essays and articles,

bartoszewski was known for his witty turns of phrase. At an exhibit last year in wrocław honouring his 92nd birth-day, prominent artists celebrated some of his best-known quotations, including one about his fellow Poles: “i love my compatriots, even though they drive me up the wall.”

his work led him to the highest ech-elons of political office. bartoszewski served twice as foreign minister (for prime ministers Józef oleksy and Jerzy buzek), and was a member of the Senate, Ambassador to Austria, and a special envoy to Prime Minister donald tusk on international dialogue. but not even high office could restrain his sharp tongue. in a 2007 interview with der Spiegel, bartoszewski cautioned against worrying too much about the conservative law and Justice party. “i am almost 85, but the government will not be in office for more than another two years and seven months,” he said.

“i’m certain that – God willing – i will die under a different government.”

indeed, bartoszewski lived to see the civic Platform win the following two parliamentary elections, and help bring about a new era of Polish-German rela-tions for which he had worked so hard. following the path of european leaders like Karl Adenauer, charles de Gaulle and robert Schuman, bartoszewski committed himself to mending the

Yoni Wilkenfeld is a regular contributor to Poland Today. He also writes on finance, technology and for-eign affairs for Iambic, a communications firm. Based in New York City, he holds a degree in political science from Kenyon College in Ohio.

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wounds of war. “there is no better way, no better alternative,” he told deutsche welle in 2012. “the only way is that of a common future with each other.”

writing his condolences on twitter the day of bartoszewski’s pass-ing, his former boss, donald tusk, now president of the european council, addressed him as many did:

“Panie Profesorze,” or, “Professor”. bartoszewski lectured throughout his life in Polish and German universities, though he lacked the formal qualifica-tions for the title, causing him some minor controversy over the years.

nevertheless, through his witti-cisms, writings, and most of all through his actions, bartoszewski was a won-derful teacher indeed. A first-hand witness to the worst of humanity, he taught his country to respond with courage, honesty and an open heart. by Yoni Wilkenfeld

aWards and Honours for WładYsłaW BartoszeWsKiWładysław Bartoszewski’s unrelenting work for peace and reconciliation earned him a num-ber of distinctions, including knighthoods in several countries ’ national orders and various honorary doctorates. In 1965 the government of Israel named him Righteous Among the Na-tions, as a non-Jew who risked his life to save Jews from the Nazis during World War II.

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spies gripped the country, and he was questioned before Congress. He was eventually denounced as a German

“agent” and lost most of his influence.He moved back to Poland and began

a political career there as a native son who had made it big in America. His time in Poland’s senate was unsuc-cessful though, and he returned to New York where he died – either by accident or suicide – as the result of a fall from the 19th-story window of his apartment.

This wonderfully tangled and bizarre story is one that deserved to be told and Dr MBB Biskupski, in his new book ‘The Most Dangerous German Agent in America – The Many Lives of Louis N. Hammerling’, does so with grace, humour and enthusiasm. The book is a quick read and one that, hope-fully, will lead to more study of – and popular familiarity with – this most enigmatic character.

Biskupski is a professor of his-tory, not a novelist, and his academic instincts come through in the story. it is meticulously researched, fact-checked and end-noted. The reader can be con-fident that Biskupski gets the details right. At times however, the narrative suffers. Biskupski does his best to piece together Hammerling’s “many lives”, but the story’s time line can remain confus-ing, no less because so much remains unclear or undocumented. Biskupski’s tendency for using ten-dollar words when simple vocabulary would do can add to the frustration.

Overall, however, this is an excel-lent beginning to popularising the story of one of Poland’s most com-plex and captivating sons. in the pref-ace, Biskupski informs us that those who hear Hammerling’s story usually respond that it should be made into a film. Here’s to hoping that one day, it is. by Andrew Kureth

He was a correspondent of two American presidents, at least one of whom he met and advised person-ally. He was also an advisor to cabinet officials, a key figure in the Republican party, a media mogul, a wealthy busi-nessman, a union leader and a Polish senator. He used bribery, extortion and intimidation to pressure his wide net-work of foreign-language newspapers to print whatever the highest bidder asked him to. He was arguably the most influential immigrant leader in America in the early 20th century, and probably the most fascinating Polish-American you have never heard of.

Louis Hammerling – born Ludwik Mikołaj Hammerling into a poor Jewish family in Austria-controlled southern Poland in the 1870s – faced grim pros-pects as a child. But he moved to the united states, toiled in Hawaiian sugar fields and then in Pennsylvania coal mines, working up the union ranks until he was leading strikes and negotiating with the most powerful mining mag-nates in the country.

He organised his immigrant com-munity, converted to Catholicism and got involved in newspapers and poli-tics. The Republican party paid him to sway immigrant votes and by 1910 he was meeting personally with President William Howard Taft.

Nevertheless, Hammerling’s moral compass was too often pulled in the direction of money. in the initial years of World War i – before the us had entered the conflict – his connec-tions with German steamship and beer advertisers led him to force the many newspapers under his control to write pro-German editorials or print canned propaganda pieces.

it is questionable how effective these articles were, but when America finally did enter the war, a fear of German

Weaver of a tangled web The tale of the ‘dangerous’ Polish-American immigrant leader Louis Hammerling is wild, convoluted and fascinating

booKS & ArtS

‘This wonderfully tangled and bizarre story is one that deserved to be told’

aBout tHe autHorDr MBB Biskupski is the Stanislaus A. Blejwas Endowed Chair in Polish and Polish American Studies and coordinator of the Polish studies programme at Central Connecticut State University. Since 2011 he has served as president of the Polish Institute of Arts and Sci-ences of America. Dr Biskupski is the recipient of many awards, including the Honour Roll of Polish Science by the Polish Ministry of Educa-tion and the Officer’s Cross of the Order of Merit of the Republic of Poland. He has written numerous books on Poland, including ‘The His-tory of Poland’ (2000), ‘Hollywood’s War with Poland, 1939-1945’ (2009), ‘The United States and the Rebirth of Poland, 1914-1918’ (2012) and ‘Independence Day: Myth, Symbol, and the Creation of Modern Poland’ (2012).

70 Poland win world junior volleyball championship

Poland have put in another dominant performance in international volley-ball. in April, Poland’s junior national volleyball team won the 2015 under-19 european Volleyball Championship held in sakarya, Turkey. in the championship match Poland handily defeated italy 3 sets to 1 (25-15, 25-13, 25-27, 25-21). The win capped off an undefeated tourna-ment campaign.

The youth squad’s victory follows Poland’s adult men’s side triumphing in the Volleyball World Championship in september. “i don’t know what to say and can find no words for it,” said cap-tain Jakub Kochanowski after taking the title. “To win this european cham-pionship is a great success for volley-ball in Poland,” added Poland’s coach, sebastian Pawlik. “i think many people were watching us.”

This is Poland’s second title in the competition, having also won the gold in 2005. since the under-19 cham-pionship was established in 1995, the Poles have won silver four times and bronze twice.

Record number of athletes from Poland attend European Championships

Poland sent 42 competitors to the the european Athletics indoor Championships in Prague at the begin-ning of March. Of the 48 participating countries, the number of Polish athletes was the second highest, below only the host country Czech Republic’s 47.

Poland ranked 7th on the medals table, with one gold, two silvers and four bronzes. Marcin Lewandowski won the country’s only gold in the 800 metres. The 17-year-old sprinter ewa swoboda, Poland’s youngest athlete at the games, placed eighth in the 60 metre sprint at 7.20 seconds, setting a european junior record in the pro-cess. As many as 363 male athletes and 280 female athletes from 49 countries participated in the event.

compiled by Gabriel Rom

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Lost and found: A Kraków-based start-up is producing a new kind of wallet that you can never lose. Connected to your phone via an app, Woolet will tell you when you leave your wallet or keys behind

– but more than that, once you know you have forgotten your items, the technol-ogy helps you find them again. The firm crushed its fundrais-ing goal on Kickstart-er by over 2,000%. What does the future hold for this innova-tive company? see page 59

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Huge Pole signs with NFL’s Minnesota Vikings

it can be hard to stand out in the National Football League (NFL), but at 2.1 metres and 159 kilograms, Babatunde ‘Babs’ Aiyegbusi is large even by the league’s gargantuan standards. Less than a week after leaving Poland to be evaluated by American scouts, Aiyegbusi signed a three-year, $1.6m (5.8m złoty) contract with the Minnesota Vikings. The agree-ment officially makes him the largest player on the team and one of only five Polish-born players ever signed by an NFL team. Aiyegbusi began playing American football just six years ago.

The 27-year-old native of Oleśnica, born to a Polish mother and a Nigerian father, didn’t commit to the sport until 2010, originally trying his hand at bas-ketball. Naturally a dominating physical presence, he quickly realised football was where he could use his size best.

Aiyegbusi has impressed his American scouts. While it is unclear whether he will stay on the team for the 2015-2016 NFL season, the fact that he has come so far, so fast is spe-cial enough. “This is my week. This is all great stuff. What can i say? i’m actu-ally still a little surprised with everything, how fast everything goes,” Aiyegbusi told Foxsports.com.

Aiyegbusi’s meteoric rise has brought the spotlight to Poland’s burgeoning American football league, the PLFA (Polska Liga Futbolu Amerykańskiego), which is now in its tenth season and features over 70 teams competing in five divisions. in 2013 Aiyegbusi helped lead the Wrocław Giants to the league championship. Aiyegbusi is the first member of the league to reach the NFL, though hopefully not the last. “This is great for Polish football and for the Polish league,” he said.

Poland draw with Ireland in thrilling Euro 2016 qualifier

ireland and Poland drew 1-1 in a thrilling 2016 european football championship qualifying match in Dublin at the begin-ning of March.

Poland started in convincing fashion, with striker sławomir Peszko scoring in the 26th minute to give Poland a lead that they held for most of the match.

By the second half, however, the momentum had swung in favour of the irish side. For 45 minutes the irish threatened but were turned away time and again by the fine play of Polish goal keeper Łukasz Fabiański.

ireland eventually earned their reward, however, as shane Long scored a stoppage-time equaliser, stunning a Polish side minutes from victory. “We didn’t do ourselves justice in the first half, but we knew we could. We domi-

nated the game from the 45th minute,” said ireland’s manager Martin O’Neil in a post-match interview.

Poland’s skipper Adam Nawałka agreed, conceding that Poland “lost control of the central areas in the second half.”

With the draw, the Poles remained unbeaten in qualifying play and sat atop the fiercely competitive Group D, while ireland fell to fourth place.

Poland, with 11 points, are just one point ahead of Germany and scotland in the group, while ireland have eight points.

Poland’s next group match is due to be held in the National stadium in Warsaw in June against Gibraltar, who sit at the bottom of the Group D table with zero points. The final tournament of the european soccer champion-ship will begin in June 2016 and will be held in France.

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CONFERENCEWarsaw in focus at MIPIMExperts expect a BPO boom to come to Warsaw

– but can the city capitalise on it? see page 74

CONFERENCEKraków getting in the innovation gameHow should Poland’s second city tackle the challenges it faces as a rapidly developing knowledge-based economy? see page 76

MEDIA PATRONAGECan Europe fulfil its potential? Leaders from business and politics discussed Europe’s role on the increasingly unpredictable global stage. see page 78

MEDIA PATRONAGEA new chapter for local government How should local authorities manage the distribution of EU funds and spur innovation? see page 79

MEDIA PATRONAGELublin: inspiring business Business leaders and economic experts evaluated the eastern city of Lublin’s strategy for creating investment incentives. see page 80

MEDIA PATRONAGEGliwice shines for logistics investment What are the factors influencing Poland’s logistics market? Sector firms large and small gathered with city decision makers and economic experts to explore that question. see page 81

As part of our mission to bring Poland to the world and the world to Poland, Poland Today initiates, organises and grants media patronage to conferences that we believe help us achieve that goal. In this section, we provide a round-up of the conferences we have been a part of, with a view to providing an international per-spective on Poland’s story.

In this issue, we review Poland Today’s conference at MIPIM, the world-renowned real estate fair, as well as the Spotlight on Kraków & Małopolska – ‘The Brain Gain’ event. We also provide reports from the Executive Club’s annual forum on business and politics Europe, a con-gress of European local governments, as well as from conferences on investment in Gliwice and Lublin.

Warsaw is in for a business services boom. The question is whether it will be able to capitalise on the interest. The city offers a labour force ready to take on complex processes, but promotion and urban planning still leave much to be desired. see page 74.

Kraków is getting into the innova-tion game: Poland’s second city boasts one of the country’s lowest unemploy-ment rates largely due to a flood of BPO/SSC invest-ments in recent years. But if it wants to continue growing, it will have to move up the value chain. see page 76.

Richard Stephens writes on The Execu-tive Club’s confer-ence on Europe’s role in the world, as well as on the European Congress of Local Authorities in Kraków, which discussed EU fund-ing and innovation, and honoured local government leaders. see pages 78 and 79

Andrew Kureth writes on Poland Today’s conference at MIPIM, where Warsaw was the focus of discussion, as well as on the Spotlight on Kraków & Małopolska – ‘The Brain Gain’ event, where innovation and infrastructure were the hot topics. see pages 74 and 76

Join us for our upcoming events. For more information, visit poland-today.pl/events

EVENT rEVIEWtable of

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Business services is driving office demand in Poland, but until recently the phenom-enon had mostly been limited to the coun-try’s regional cities. However, within the next five years Warsaw is set to emerge as a major BPO hub, said experts at Poland Today’s Primetime Poland conference at the MIPIM real estate fair in Cannes, France. As a result, the city’s oversized vacancy rate – currently at 13.3% – will likely drop to levels that will make devel-opers more comfortable.

“In five years, Warsaw will be the leader when it comes to complex services, with support from regional cities,” said Paweł Panczyj, managing director of ABSL, a business services advocacy group. Throughout the country, he expects the industry to grow at a rate of about 20% annually over the next five years, he said.This prompted Martin Erbe, managing director at Helaba, a bank that invests in real estate in the region, to ask whether rental levels – which have been under pressure in Warsaw – would be the big-gest factor in attracting companies to the city. Panczyj answered that it was more the availability of educated workers able to do more knowledge-intensive work.

Wojciech Popławski, director at Accenture Operations Poland, which has service cen-tres in both Warsaw and Kraków, agreed.

“The services needed will be more com-plex, and Warsaw can be a home for com-panies that haven’t yet come to Poland, or who need more than what the other cities can offer,” he said. In a discussion after the conference Stanislav Frnka and Grzegorz Strutyński, HB Reavis’ coun-try manager and commercial director for Poland respectively, said that tenants of their buildings had told them that while other Polish cities also offer workers who can perform such tasks, the Warsaw mar-ket is “deeper” – there are simply more of them in the capital, making it more attrac-tive to investors.

Can the capital capitalise?The question is whether the city of Warsaw can make the most of it. On a panel discussion at the Primetime Poland conference that focused on Warsaw, Deputy Mayor Michał Olszewski had to go slightly on the defensive when it came to two aspects: city promotion and urban planning. While most of the pan-elists agreed that Warsaw had gone a long way to promote itself internationally, Olszewski agreed that more still needs to be done, saying: “Promotion of Warsaw is a long-term job.”

Jeroen van der Toolen, managing director for CEE at Ghelamco, said the city needed a comprehensive master plan for urban space planning, complaining Warsaw was allowing a hotchpotch of architectural styles in sections of the city. In off-the-record conversations after the conference, another Warsaw-based real estate profes-sional echoed these comments, saying Warsaw was allowing “crappy” buildings to go up in some of the most prestigious locations in the city. Speaking on condi-tion of anonymity because he feared it would affect his firm’s ability to receive regulatory approval for buildings in cities in the future, the professional said that the officials in Warsaw who dole out building permits are too old and bureaucratic, with

“no modern vision”.

Nevertheless, the potential is there. Katarzyna Zawodna, managing direc-tor at Skanska Property Poland, said she had “no doubt” that Warsaw was the region’s clear leader in terms of invest-ment attractiveness.

Jason Lucas, managing director at Amstar, which recently partnered with BBI to buy the Złota 44 residential tower in the cen-tre of Warsaw, agreed, saying the city was a very business-friendly location. “For us it was a very obvious investment,” he said.

by Andrew Kureth

Primetime Poland: Poland Today hosted a conference at the MIPIM real estate fair in Cannes, France in March that included a networking lunch and two panel discussions. Warsaw took centre stage in the conversations: hot topics included the business services sector, international promotion and urban planning.

Richard Stephens (above middle), editor in chief of Poland Today, led a panel at MIPIM that focused on Warsaw.

Jason Lucas (directly above), managing director at Amstar, which recently partnered with BBI to buy the Złota 44 residential tower in the centre of Warsaw.

Warsaw in focus at MIPIMExperts expect a BPO boom to come to Warsaw – but can the city capitalise on it?

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CONFERENCE

eVent reView

Business services is driving office demand in Poland, but until recently the phenom-enon had mostly been limited to the coun-try’s regional cities. However, within the next five years Warsaw is set to emerge as a major BPO hub, said experts at Poland Today’s Primetime Poland conference at the MIPIM real estate fair in Cannes, France. As a result, the city’s oversized vacancy rate – currently at 13.3% – will likely drop to levels that will make devel-opers more comfortable.

“In five years, Warsaw will be the leader when it comes to complex services, with support from regional cities,” said Paweł Panczyj, managing director of ABSL, a business services advocacy group. Throughout the country, he expects the industry to grow at a rate of about 20% annually over the next five years, he said.This prompted Martin Erbe, managing director at Helaba, a bank that invests in real estate in the region, to ask whether rental levels – which have been under pressure in Warsaw – would be the big-gest factor in attracting companies to the city. Panczyj answered that it was more the availability of educated workers able to do more knowledge-intensive work.

Wojciech Popławski, director at Accenture Operations Poland, which has service cen-tres in both Warsaw and Kraków, agreed.

“The services needed will be more com-plex, and Warsaw can be a home for com-panies that haven’t yet come to Poland, or who need more than what the other cities can offer,” he said. In a discussion after the conference Stanislav Frnka and Grzegorz Strutyński, HB Reavis’ coun-try manager and commercial director for Poland respectively, said that tenants of their buildings had told them that while other Polish cities also offer workers who can perform such tasks, the Warsaw mar-ket is “deeper” – there are simply more of them in the capital, making it more attrac-tive to investors.

Can the capital capitalise?The question is whether the city of Warsaw can make the most of it. On a panel discussion at the Primetime Poland conference that focused on Warsaw, Deputy Mayor Michał Olszewski had to go slightly on the defensive when it came to two aspects: city promotion and urban planning. While most of the pan-elists agreed that Warsaw had gone a long way to promote itself internationally, Olszewski agreed that more still needs to be done, saying: “Promotion of Warsaw is a long-term job.”

Jeroen van der Toolen, managing director for CEE at Ghelamco, said the city needed a comprehensive master plan for urban space planning, complaining Warsaw was allowing a hotchpotch of architectural styles in sections of the city. In off-the-record conversations after the conference, another Warsaw-based real estate profes-sional echoed these comments, saying Warsaw was allowing “crappy” buildings to go up in some of the most prestigious locations in the city. Speaking on condi-tion of anonymity because he feared it would affect his firm’s ability to receive regulatory approval for buildings in cities in the future, the professional said that the officials in Warsaw who dole out building permits are too old and bureaucratic, with

“no modern vision”.

Nevertheless, the potential is there. Katarzyna Zawodna, managing direc-tor at Skanska Property Poland, said she had “no doubt” that Warsaw was the region’s clear leader in terms of invest-ment attractiveness.

Jason Lucas, managing director at Amstar, which recently partnered with BBI to buy the Złota 44 residential tower in the cen-tre of Warsaw, agreed, saying the city was a very business-friendly location. “For us it was a very obvious investment,” he said.

by Andrew Kureth

Primetime Poland: Poland Today hosted a conference at the MIPIM real estate fair in Cannes, France in March that included a networking lunch and two panel discussions. Warsaw took centre stage in the conversations: hot topics included the business services sector, international promotion and urban planning.

Richard Stephens (above middle), editor in chief of Poland Today, led a panel at MIPIM that focused on Warsaw.

Jason Lucas (directly above), managing director at Amstar, which recently partnered with BBI to buy the Złota 44 residential tower in the centre of Warsaw.

Warsaw in focus at MIPIMExperts expect a BPO boom to come to Warsaw – but can the city capitalise on it?

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Robert Dobrzycki (above), managing partner for Europe at Panattoni, talked up the potential of eastern Poland for logistics investments.

Michał Olszewski (above), deputy mayor of Warsaw, agreed with other panelists that more still needs to be done to promote War-saw internationally. “Promotion of Warsaw is a long-term job,” he said.

Martin Erbe, managing director at Helaba, wondered whether Warsaw’s under-pressure rental levels would be the biggest factor in attracting busi-ness services firms to Warsaw.

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eVent reView Kraków getting in the innovation gameHow should Poland’s second city tackle the challenges it faces as a rapidly developing knowledge-based economy?

Participation focused: Poland Today’s Spotlight on Kraków & Małopolska

– ‘The Brain Gain’ conference ensured audience participa-tion with open forum discussions (right) instead of closed pan-els, and a future fore-casting session led by foresight firm 4CF (below). The results of the forecasting session can be found at poland-today.pl/events.

Kraków is booming – a tidal wave of busi-ness services investments over the past 10 years has spurred the local economy, bringing in over 30,000 new jobs. The unemployment rate in the city is just 5.3%, according to GUS, Poland’s statis-tical office, while the country’s national average is 11.2%.

Nevertheless, the city faces plenty of chal-lenges ahead. An increasing number of cities around Poland are jumping on the business services bandwagon. Kraków is finding itself not only competing with them, but also with other cities in Europe and even around the world. As low labour-cost Asian cities rise up the ranks of BPO investment attractiveness, Kraków is see-ing its wages inflate, making it less com-petitive. Moreover, its former industrial district, Nowa Huta, still lies disused, without any significant investment. There are competing visions for how the author-ities should address the issue.

The city might be able to find some solu-tions in its fast-growing IT sector. Such was one conclusion of the discussions at Poland Today’s conference Spotlight on Kraków & Małopolska – ‘The Brain Gain’, held in late March.

The conference opened with a future fore-casting session led by foresight firm 4CF. During this session, participants broke up into groups and attempted to predict both probable and desirable futures for the Nowa Huta district in 10 years’ time. Both futures that the participants envi-sioned included improvement on the current situation, while the desirable sce-nario included a much younger popula-tion, an influx of middle class residents and high-tech businesses, with a thriving cultural scene.

The chief differentiator between the two scenarios was a clear strategy from the local government, which included well thought-out zoning plans and heavy investment in infrastructure. The session came to the conclusion that to avoid a sce-nario where such plans go awry, the gov-ernment would have to be smart about its incentives, make sure the tenders for infrastructure investments were not to bureaucracy-laden and that the arrival of middle class inhabitants didn’t lead to the exclusion of less wealthy residents. ‘Create the growth yourself’The afternoon session included two open forums, one on real estate and one on inno-vation. The real estate session focused on the impact the business services boom has had on the office sector, where the vacancy rate currently stands at 3.6%. While some developers on the panel said they thought such conditions could hold

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eVent reView Kraków getting in the innovation gameHow should Poland’s second city tackle the challenges it faces as a rapidly developing knowledge-based economy?

Participation focused: Poland Today’s Spotlight on Kraków & Małopolska

– ‘The Brain Gain’ conference ensured audience participa-tion with open forum discussions (right) instead of closed pan-els, and a future fore-casting session led by foresight firm 4CF (below). The results of the forecasting session can be found at poland-today.pl/events.

Kraków is booming – a tidal wave of busi-ness services investments over the past 10 years has spurred the local economy, bringing in over 30,000 new jobs. The unemployment rate in the city is just 5.3%, according to GUS, Poland’s statis-tical office, while the country’s national average is 11.2%.

Nevertheless, the city faces plenty of chal-lenges ahead. An increasing number of cities around Poland are jumping on the business services bandwagon. Kraków is finding itself not only competing with them, but also with other cities in Europe and even around the world. As low labour-cost Asian cities rise up the ranks of BPO investment attractiveness, Kraków is see-ing its wages inflate, making it less com-petitive. Moreover, its former industrial district, Nowa Huta, still lies disused, without any significant investment. There are competing visions for how the author-ities should address the issue.

The city might be able to find some solu-tions in its fast-growing IT sector. Such was one conclusion of the discussions at Poland Today’s conference Spotlight on Kraków & Małopolska – ‘The Brain Gain’, held in late March.

The conference opened with a future fore-casting session led by foresight firm 4CF. During this session, participants broke up into groups and attempted to predict both probable and desirable futures for the Nowa Huta district in 10 years’ time. Both futures that the participants envi-sioned included improvement on the current situation, while the desirable sce-nario included a much younger popula-tion, an influx of middle class residents and high-tech businesses, with a thriving cultural scene.

The chief differentiator between the two scenarios was a clear strategy from the local government, which included well thought-out zoning plans and heavy investment in infrastructure. The session came to the conclusion that to avoid a sce-nario where such plans go awry, the gov-ernment would have to be smart about its incentives, make sure the tenders for infrastructure investments were not to bureaucracy-laden and that the arrival of middle class inhabitants didn’t lead to the exclusion of less wealthy residents. ‘Create the growth yourself’The afternoon session included two open forums, one on real estate and one on inno-vation. The real estate session focused on the impact the business services boom has had on the office sector, where the vacancy rate currently stands at 3.6%. While some developers on the panel said they thought such conditions could hold

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Rafał Kulczycki (above left), director of Kraków’s development depart-ment, answers a question during one of the forum discussions.

Małopolskie Voivode Jerzy Miller and Poland Today editor in chief Richard Stephens (below) pose for a photo together at the conference.

up for three or four years, experts from the advisories said that was too optimistic. Instead, they said that with office devel-opment in the city moving ahead rapidly, vacancy rates were set to remain low for only two or three more years, at most.

Quickly, however, the discussion turned from real estate to how the city could sustain its economic growth in general. Participants agreed that the city could not depend on a single industry – busi-ness services – to create its growth indefi-nitely. “Depending on outsourcing is a bit like depending on Russian gas,” said John Banka, a partner in the development advi-sory services business at Colliers. “Sooner or later it’s going to run out. The city has to be in the innovation game. You have to create the growth yourself.”

This discussion continued during the sec-ond open forum, during which partici-pants were joined by Małopolskie Voivode Jerzy Miller. Miller spoke at length about his vision for the region, and answered questions from the audience regarding his strategy for encouraging innovation in the city and voivodship. He said he favoured using public funds to create infrastructure that could be used by firms to innovate, rather than subsidising innovation itself.

Explaining that market forces would determine the direction innovation in the region takes, he said, “I think we should follow the rule that the customer is always right – also in innovation.”

by Andrew Kureth

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eVent reView Can Europe fulfil its potential?Leaders from business and politics discussed Europe’s role on the increasingly unpredictable global stage.

Big names: (left to right) CEO of PKN Orlen Jacek Krawiec, former President of Poland Aleksander Kwaśniewski, former European Commis-sioner for Financial Programming and the Budget Janusz Lewandowski, and Member of the European Parliament Dariusz Rosati.

Richard Stephens, editor in chief of Poland Today, moderated the event.

Jacek Krawiec, CEO of PKN Orlen, Poland’s largest refiner.

Under the grand title of ‘The New Order in Europe and the World – Consequences for Business’, leading figures from the world of politics, business, economics and academia in Poland and Europe met at the third edition of the European Executive Forum in Warsaw to discuss how the changing world is impacting business, and how business can adapt to these changes.

“The moment in which we live is not easy,” said former President Aleksander Kwaśniewski, whose Amicus Europae foundation co-hosted the conference.

“You can call it chaos, a process which is unfolding, which has led us to a new architecture of the world. The coming years will be full of uncertainty, unpre-dictability, risks in decision-making and stress associated with it.”

With that sobering opening remark in mind, the various speakers set out to explain how they saw the future for business, although business soon took a back seat to the future of the European Union in the discussions. If one overrid-ing theme came out of the event, it was the question of whether the European Union could carve out a leading role in the new world order and fulfil its potential as a force for good.

“The EU should be particularly strong in the face of growing geopolitical ten-sions,” said Jacek Krawiec, CEO of PKN Orlen. But the European Union has its own problems, as Tomáš Sedláček from Charles University in Prague memora-bly put it: “Europeans are trying to milk a cow that has no more milk.” He presented European societies as mired in a “fulfil-ment depression”. “The objective that led the founders of the European Union, namely peace and free trade, has been completed. There is no new target, and this is the main reason for the current cri-sis,” said Sedláček. What was his prescrip-tion? “Enjoy what we have and be aware of the fact that we are the greatest threat to ourselves,” he said.

For professor Dariusz Rosati, a for-mer Polish minister of foreign affairs, the answer to the EU’s future is clear:

“Where does the future of Europe lie? In innovation, education and research and development, with economies led by strong leaders.” If only it were so simple.

by Richard Stephens

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eVent reView Can Europe fulfil its potential?Leaders from business and politics discussed Europe’s role on the increasingly unpredictable global stage.

Big names: (left to right) CEO of PKN Orlen Jacek Krawiec, former President of Poland Aleksander Kwaśniewski, former European Commis-sioner for Financial Programming and the Budget Janusz Lewandowski, and Member of the European Parliament Dariusz Rosati.

Richard Stephens, editor in chief of Poland Today, moderated the event.

Jacek Krawiec, CEO of PKN Orlen, Poland’s largest refiner.

Under the grand title of ‘The New Order in Europe and the World – Consequences for Business’, leading figures from the world of politics, business, economics and academia in Poland and Europe met at the third edition of the European Executive Forum in Warsaw to discuss how the changing world is impacting business, and how business can adapt to these changes.

“The moment in which we live is not easy,” said former President Aleksander Kwaśniewski, whose Amicus Europae foundation co-hosted the conference.

“You can call it chaos, a process which is unfolding, which has led us to a new architecture of the world. The coming years will be full of uncertainty, unpre-dictability, risks in decision-making and stress associated with it.”

With that sobering opening remark in mind, the various speakers set out to explain how they saw the future for business, although business soon took a back seat to the future of the European Union in the discussions. If one overrid-ing theme came out of the event, it was the question of whether the European Union could carve out a leading role in the new world order and fulfil its potential as a force for good.

“The EU should be particularly strong in the face of growing geopolitical ten-sions,” said Jacek Krawiec, CEO of PKN Orlen. But the European Union has its own problems, as Tomáš Sedláček from Charles University in Prague memora-bly put it: “Europeans are trying to milk a cow that has no more milk.” He presented European societies as mired in a “fulfil-ment depression”. “The objective that led the founders of the European Union, namely peace and free trade, has been completed. There is no new target, and this is the main reason for the current cri-sis,” said Sedláček. What was his prescrip-tion? “Enjoy what we have and be aware of the fact that we are the greatest threat to ourselves,” he said.

For professor Dariusz Rosati, a for-mer Polish minister of foreign affairs, the answer to the EU’s future is clear:

“Where does the future of Europe lie? In innovation, education and research and development, with economies led by strong leaders.” If only it were so simple.

by Richard Stephens

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MEDIA PATRONAGE

A new chapter for local governmentHow should local authorities manage the distribution of EU funds and spur innovation?

Zbigniew Jagiełło (right), president of PKO BP.

Jacek Majchrowski (left), mayor of Kraków.

Luiz de Mello (above, with mi-crophone), deputy director of the Public Governance and Ter-ritorial Development Directorate at the Organisation for Eco-nomic Co-operation and Development (OECD) talks with Bogusław Chrabota, editor in chief of daily newspaper Rzeczpospolita.

Debate (above): How to Enhance Investment Attrac-tiveness of Cities and Regions?

Under rules set out in the Treaty of Lisbon, the European Commission is now obliged to consult regional and local governments across Europe in the early stages of EU legislative processes, thereby increas-ing the importance of local governments in European integration. Consequently, the first day of the two-day European Congress of Local Authorities, which attracted over 1,000 local government and business figures from across Europe to Kraków, was under the theme of ‘Europe of regions – a new opening’. The alloca-tion of resources under the 2014-2020 EU financial perspective was the domi-nant topic at the event: the congress heard that the main challenge facing local gov-ernments is the effective use of EU funds while maintaining budgetary discipline.

One highlight was a debate featuring the mayors of some key Polish cities. Taking part in the panel were Jacek Majchrowski of Kraków, Tadeusz Truskolaski of Białystok and Zygmunt Frankiewicz of Gliwice. Though courting outsourc-ing investments has been en vogue of late, Mayor Frankiewicz argued that cities should concentrate on attracting manu-facturing, since outsourcing operations can quickly move on to other locations. Mayor Majchrowski advocated for greater autonomy for cities from the national gov-ernment, while Mayor Truskolaski urged cities to work together to keep more income tax in local government hands.

Another much-discussed topic was innovation and local authorities’ role in

fostering it, particularly when it comes to EU funds. Marc Bovenschulte, direc-tor of the German Institute of Innovations and Technology, noted the importance of harnessing the upside of ‘megatrends’ such as migration to use the potential of migrants in communities.

The event provided a fitting occasion to recognize the leaders of local gov-ernment over the last 25 years through a competition organized by newspa-per Rzeczpospolita and the Institute for Eastern Studies. The winners were: Grzegorz Czapla, Ożarowice commune; Jerzy Godlewski, the mayor of the town and commune of Glinojeck; and Tomasz Malepszy, the mayor of Leszno from 1998 to 2014. by Richard Stephens

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eVent reView Lublin: inspiring businessBusiness leaders and economic experts evaluated the eastern city of Lublin’s strategy for creating investment incentives

Looking at Lublin: (left to right) CEO of PZL-Świdnik Krzysz-tof Krystowski, vice president of AVIO Paweł Poncyljusz and economist Marek Zuber debate Lublin’s investment potential.

Full house: The How Lublin Inspires Business conference was packed with business leaders and decision makers in-terested in the city’s strategy for attract-ing investment.

Artur Szymczyk, deputy mayor of Lublin responsible for investment and development.

Mariusz Sagan, director of Lublin’s strategy and investor services department.

Lublin’s strategy for attracting investment consists of four pillars: openness, friend-liness, entrepreneurship and academic quality. In late April investors, economists and business experts gathered at the How Lublin Inspires Business conference to discuss how the city’s strategy works in practice.

Participants at the conference discussed how they saw the city’s business pro-file – sectors that were often mentioned included agriculture, biotechnology, avia-tion and logistics. Mariusz Sagan, director of the city’s investor services department and co-author of the ‘Lublin 2020’ strat-egy, argued that in 10 years Lublin would be among the top-tier investment loca-tions in Poland. by Andrew Kureth p

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eVent reView Lublin: inspiring businessBusiness leaders and economic experts evaluated the eastern city of Lublin’s strategy for creating investment incentives

Looking at Lublin: (left to right) CEO of PZL-Świdnik Krzysz-tof Krystowski, vice president of AVIO Paweł Poncyljusz and economist Marek Zuber debate Lublin’s investment potential.

Full house: The How Lublin Inspires Business conference was packed with business leaders and decision makers in-terested in the city’s strategy for attract-ing investment.

Artur Szymczyk, deputy mayor of Lublin responsible for investment and development.

Mariusz Sagan, director of Lublin’s strategy and investor services department.

Lublin’s strategy for attracting investment consists of four pillars: openness, friend-liness, entrepreneurship and academic quality. In late April investors, economists and business experts gathered at the How Lublin Inspires Business conference to discuss how the city’s strategy works in practice.

Participants at the conference discussed how they saw the city’s business pro-file – sectors that were often mentioned included agriculture, biotechnology, avia-tion and logistics. Mariusz Sagan, director of the city’s investor services department and co-author of the ‘Lublin 2020’ strat-egy, argued that in 10 years Lublin would be among the top-tier investment loca-tions in Poland. by Andrew Kureth p

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Gliwice shines for logistics investmentWhat are the drivers factors influencing Poland’s logistics market? Sector firms large and small gathered with city decision makers and economic experts to explore that question

Joanna Bensz and Paweł Kowal (above), country manager of CH2M HILL in Poland, and Member of the European Parliament, respectively.

What are the factors influencing Poland’s logistics market? Sector firms large and small gathered with city decision mak-ers and economic experts in Gliwice in March to explore that question at the fourth annual Logistics, Investment, Future’ conference. Gliwice itself was held up as an example of a city that has implemented a consistent development policy which has included investment in infrastructure. Its potential as a logisitics hub is obvious – it is one of only two cities in Poland where there is an intersection of two major national highways.

Gliwice’s strong position in the logistics market is not an accident, said the city’s Deputy Mayor Adam Neumann, point-ing out that authorities have put forth a consistent vision for the city as a well-connected ‘Silicon Valley’, with concrete plans for investment in infrastructure. Participants agreed that public invest-ment in roads, rail and internet connec-tions is key for the sector. “Infrastructure, infrastructure, infrastructure,” said Martin Kamola of DCT Gdańsk. “Let’s make sure the state invests in it.”

by Andrew Kureth

Economist Ryszard Petru (above), was one of the main speakers at the Logistics, Investment, Future conference in Gliwice.

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‘The lack of good customer service was hard to swallow at first’

Paul Chen is an American who has been living in Poland since 2010. He teaches at a major technical university in Kraków and blogs about start-ups in the city. He says he was surprised at the level of bureaucracy he encountered when he came to the country, but would love it if Polish-style milk bars began springing up in the United States.

i would like to have one of those Polish milk bars where you can get good food cheaply. And i wish they had American style diners here where you can get a Lumberjack Breakfast any time of the day.

What are the most striking simi-larities between Poles and people from the United States, and what are the most striking differences?

i think that like Americans, Poles can be pretty clever in coming up with different ways of achieving a target. i guess the biggest difference is that Poles have a hard time walking a mile in another person’s shoes.

What advice would you give someone from the United States coming to live in Poland?

i would advise them to have a lot of patience and keep an open mind. if you haven’t done so already, having a Polish companion or best friend will prove to be very helpful when trying to manoeu-vre through the little everyday things.

What advice would you give a Pole going to live in the United States?

save up before you get there; just about everything costs money. Maintain an open mind, and expect that things from one part of the country can be quite different from another part.

In what ways has Poland changed you for the better or for the worse?

it made me more resourceful and assertive, on the other hand it has made me even more cynical than i had been.

What keeps you here now?

At the moment, i am a journal-ist for the website web.gov.pl. i also blog about start-ups. You can find me at www.ksup.co. i see a lot of poten-tial in Polish start-ups. i feel that i am part of a movement and good things are on the way. i am also a member of the American Chamber of Commerce, so i am trying to make more meaning-ful connections between the Polish business community and their coun-terparts in the us. i teach at the AGH, a major technical university in Kraków. i see my job as a university teacher as a chance to change the future of Poland for the better.

How closely did your preconceptions of Poland match your first impressions?

To be honest, i didn’t have any con-crete preconceptions of Poland prior to that visit. i just heard a lot of good opinions from my friends who had come here before me. Having had some Polish-American friends, i had the idea that Polish people were nice and intel-ligent, and that the food was really pretty tasty.

Looking back, have those first impressions proved right or wrong?

in general, the food is pretty tasty. i love racuchy (a type of pastry) with apples. in general, people are nice and intelligent, but as with everywhere, you do get some dodgy characters as well.

What about Poland was unexpected? i didn’t expect how much red tape was involved in every aspect of life. i am up to my neck with paperwork! However, the cost of living is relatively low. You don’t have to earn a lot of money to remain sheltered, clothed and fed.

Was anything surprisingly familiar?

Did you know that you can get American style hamburgers in places other than McDonald’s now?

What was the thing that was hardest to adjust to when you moved to Poland?

The lack of good customer service was hard to swallow at first. it is getting better – very slowly though.

What has been the strangest or most memorable experience from your time in Poland?

something that sticks out was the border crossing between ukraine and Poland on foot. i did not expect there would be so many ukrainians trying to get into Poland to sell their goods. Having to deal with such a large crowd and getting squeezed and crushed was definitely something i will remember – trying to get across the border in time to catch a late train made things exciting.

What Polish thing do you wish they had in the United States, and vice-versa?

Good things are on the way Poland Today sits down with Paul Chen, an American living in Poland, to ask him about his unique perspective on the country

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