Poland

Companies Flock to Poland, Despite Domestic Criticisms

Volkswagen in Poznan – Polen
VW is one of many German companies investing in Poland. Source: DPA/Picture Alliance

The Polish government seems unruffled by pressure from the European Commission to ends its attacks on the Polish judiciary and the media, and its restrictions on the right to assemble. It’s business as usual in Warsaw, despite the threat of sanctions from the European Union.

“Investors have voted with their money,” Mateusz Morawiecki, Poland’s deputy prime minister, told Handelsblatt, on the sidelines of the Hanover industry trade fair.

Foreign investments in Poland are at record levels, said Mr. Morawiecki, who is also the finance minister. Tension between Brussels and Warsaw, he claimed, hasn’t kept companies from investing in the country.

A recent business survey of foreign companies by 14 European chambers of commerce ranks Poland as the second-most attractive location for companies from central and eastern Europe – right behind the Czech Republic.

“Investors have voted with their money.”

Mateusz Morawiecki,, Poland’s deputy prime minister

German carmakers are among the companies taking advantage of the low labor costs in the country. Last year, Volkswagen opened a new plant in Września to assemble its Crafter model, and Daimler is building a new engine plane in Jawor.

Poland’s economy grew 2.8 percent in 2016, outperforming expectations, and is expected to grow between 3.5 percent and 4 percent this year.

But the chambers of commerce survey points to growing criticism of Poland’s government and paints a different picture of the business climate. “Poland is not as attractive as it was 20 years ago,” said Peter Baudrexl, president of the Polish-German Chamber of Commerce (AHK) and CEO of Siemens Poland. “The assessment of legal certainty has clearly gotten worse.”

The study listed Poland at the bottom of its ranking for “political and social stability and predictable economic policy.” Antoni Reczek, president of the British-Polish Chamber of Commerce, offered a blunt assessment: “Chaos is normal there.” Several investment projects, he said, have been put on ice because of concerns about Poland’s legal system.

The survey showed a declining interest among polled companies to invest in Poland, down to 32.5 percent from 36 percent.

Poland, the largest eastern EU member, is currently ruled by the national-conservative Law and Justice Party, whose leader is rightwing populist Jaroslaw Kaczynski. The party has had a majority in both houses of the Polish government since elections in November 2015.

The Commission, the Germany Federal Constitutional Court and others have criticized the Polish government’s attacks on the rule of law. Under the guise of “democratic reforms,” state-sponsored television was put under more government control last year.

 

Mathias Brüggman is the head of Handelsblatt’s foreign news desk. To contact the author: brueggman@handelsblatt.com

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