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Country Commercial Guides for FY 2000:
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CHAPTER V: Leading Sectors for U.S. Exports and Investment
A. Best Prospects for Non-Agricultural Goods/Services:
Best prospects are ranked by percentage of expected growth of U.S. exports over the coming year. All statistics shown are in U.S. dollars.
Sector Rank: 1 Sector Name: Computer Software ITA Industry Code: CSFThe Polish software market has grown at a remarkable 30% annual rate during the past few years, reaching a total of approximately $560 million. Preliminary estimates for 1998 show an annual growth rate of 27%, with similar growth expected during the next two years. Over 60% of software sold on the market is manufactured by Polish companies; more than 25% of market share is held by U.S. companies.
Software development tools represent 38% of the software market, office software 26%, system software 20%, and communications software 16%. The financial and industrial segments of the economy are the main purchasers of software.
The spectacular growth in computer software sales is due in part to the growth of computer networking in many organizations and the upsizing of data base management systems. Excellent opportunities exist for special software in networking and tools.
USD Millions 1997 1998 1999* A. Total Market Size 330 430 560 B. Total Local Production 211 263 346 C. Total Exports 70 98 127 D. Total Imports 189 265 341 E. Imports from the U.S. 83 130 190* The above statistics are unofficial estimates.
Sector Rank: 2 Sector Name: Construction Materials and Equipment ITA Industry Code: BLDStrong and growing demand for construction materials is expected to continue through the next decade for both housing construction and major commercial projects. American companies constitute strong competition in the Polish market for the traditional suppliers from Germany, Italy, and Belgium. The domestic construction industry is also very competitive. Imported construction materials and equipment, particularly from the U.S., are preferred by Polish buyers.
Growth in the Polish market for construction materials and equipment is expected to continue at a high rate for at least the next two years.
USD Millions 1997 1998 1999* A. Total Market Size 1,500 1,850 2,400 B. Total Local Production 1,700 2,200 2,300 C. Total Exports 600 650 800 D. Total Imports 800 900 1,100 E. Imports from the U.S. 80 100 120* The above statistics are unofficial estimates.
Sector Rank: 3 Sector Name: Rehabilitation Equipment ITA Industry Code: MEDThere is growing demand for rehabilitation equipment in Poland, and the market presents excellent opportunities for U.S. suppliers. Best prospect products for American companies include wheelchairs, electric wheelchairs, wheelchairs for children, and active rehabilitation wheelchairs (used to play sports such as tennis, rugby and basketball), equipment for alleviating pressure sores, including pneumatic mattresses, hydrotherapy bathtubs and equipment and wheelchair lifts.
About 15% of Poland's population is considered to be disabled. More than 600,000 people have serious disabilities that require outside assistance. Polish made rehabilitation equipment is of low quality and much cheaper than the imported equipment. Wheelchairs for children and wheelchair lifts for buses, buildings and swimming pools are not produced in Poland at all. Price is the main factor considered by potential buyers. The second factor is the local availability of service and spare parts. Quality is usually the third element considered.
USD Millions 1997* 1998* 1999* A. Total Market Size N/A N/A N/A B. Total Local Production N/A N/A N/A C. Total Exports 4.21 4.5 4.9 Total Imports 2.37 2.96 3.85 Imports from U.S. 0.139 0.17 0.20* The above statistics are unofficial estimates.
Sector Rank: 4 Sector Name: Drugs and Pharmaceuticals ITA Industry Code: DRGThe Polish pharmaceutical market presents excellent prospects for U.S. suppliers. In 1998, $2.45 billion worth of medicines were sold in Poland, and experts estimate that the value will increase by 9% annually over the next decade. The primary distribution channel for pharmaceuticals in Poland is through wholesalers, of which there are 913, and pharmacies, of which there are 7,000. Most pharmacies are privately owned.
According to World Bank projections, Poles will spend $4 billion annually on pharmaceutical products by 2001. Most major Western pharmaceutical companies are present on the market. Each year, about 3,000 applications for new drug registrations are presented to the Polish Drug Institute for approval. This number is about five times higher than in Western European countries. Currently, there are 12,000 drugs and medical materials registered in Poland.
USD Millions 1997* 1998* 1999* A. Total Market Size 1,700 1,970 2,450 B. Total Local Production 1,400 1,500 1,900 C. Total Exports 500 550 625 D. Total Imports 300 470 550 E. Imports from the U.S. 90 95 114* The above statistics are unofficial estimates.
Sector Rank: 5 Sector Name: Electrical Power Machinery and Equipment ITA Industry Code: ELPThe Polish market offers significant sales opportunities for U.S. power equipment and services. Polish companies are familiar with and extremely receptive to U.S. products and services in the power sector. A new energy law, which recently came into force, will ultimately force Polish power companies to operate under competitive conditions, requiring major upgrades of power facilities. The best opportunities for U.S. companies include coal-fired fluidized-bed combustors, pollution control equipment, pumps and compressors, electrical systems, heat recovery systems, turbine generators and gas and steam turbines. U.S product offerings are particularly strong in cogeneration and clean-coal technology, two primary areas of interest to the Polish power sector.
U.S. firms face competition from European firms, as well as Polish manufacturers of power generating equipment. Large international groups have been examining investment and sales opportunities in Poland.
USD Millions 1997 1998 1999* A. Total Market Size 1,439 1,500 1,550 B. Total Local Production 1,211 1,300 1,400 C. Total Exports 260 350 450 D. Total Imports 488 550 600 E. Imports from the U.S. 15 25 30* The above statistics are unofficial estimates.
Sector Rank: 6 Sector Name: Plastics in Primary Forms ITA Industry Code: PMRThere is a steady increase in sales in primary plastics. The per capita consumption of plastics in Poland is relatively low. However, it is anticipated that consumption will grow tremendously as advanced technologies are introduced in the market and the demand for packaging materials increases. The market has been growing over the last few years at a brisk average annual rate of 15%. Imports are growing even faster. Imports from the U.S. grew from $7.5 million in 1994 to $25 million in 1998.
The most commonly used plastics in Poland include High Density Polyethylene (HDPE), Low Density Polyethylene (LDPE), Polystyrene (PS), High Impact Polystyrene (HIPS), and Acrylonitrile Butadiene Styrene (ABS), Polyproppylene (PP). HDPE, LDPE, and PP are used in toys, housewares, appliances, and consumer goods. PS and HIPS are used for toys and inexpensive housewares. For engineering, polycarbonate, nylon, and PET are the most common plastics. They are used in production of car parts, refrigerators, computers, fiber optics, and many other high-tech products. The development of engineering plastics follows not only the improvement of their own technologies but also the development of other new and high-tech industries. The continued development of local automobile, electronic and electrical appliances will increase the demand for special plastics. Polyethylene terrephtalate (PET) is rated as one of the best prospects because of the projected growth of the production of bottles for beverages. PET bottles continue to be upgraded for carbonated beverages such as beer, alcohol, food products, and cosmetics in other countries; this will also be the trend in Poland.
USD Millions 1997 1998 1999* A. Total Market Size 1,252 1,370 1,510 B. Total Local Production 503 510 520 C. Total Exports 125 140 160 D. Total Imports 874 1,000 1,150 E. Imports from the U.S. 23 25 30* The above statistics are unofficial estimates.
Sector Rank: 7 Sector Name: Printing Equipment ITA Industry Code: PGAGrowth in the Polish market for printing equipment is expected to continue at a high rate for at least the next two years. Rising demand for printing services has led to increasing demand for modern machinery. Poland does not manufacture printing equipment. U.S. printing equipment is known in Poland and well appreciated for its advanced technology and quality. Polish printing houses are gradually updating their equipment and reaching a level that satisfies domestic customers. These efforts are bringing Polish customers back to the domestic market after several years of contracting printing services abroad. Ever increasing demand for high quality published newspapers and magazines, books and packages make Poland an excellent market for U.S. suppliers.
Second-hand machines are also attractive to Polish buyers. U.S. suppliers face competition mainly from German, Swiss, Italian and British producers.
USD Millions 1997 1998 1999* Imports 140 168 180 Production 12 14 16 Exports 4 4 5 Market 148 178 191 Imports from U.S. 12 16 19* The above statistics are unofficial estimates.
Sector Rank: 8 Sector Name: Telecommunications Equipment and Services ITA Industry Code: TELThe Polish telecommunications sector is a large and important part of Poland's infrastructure. The Polish telephone network is estimated to be growing at an annual rate of 15%. There were 8.6 million telephone subscribers in Poland in 1998. Planned investments are estimated at $14 billion over the next ten years.
Until the end of 1999, supply of switching and transmission systems for public networks are limited to equipment designed and manufactured by Polish companies or by the three foreign companies that were given market exclusivity in the early 1990s. Those companies are Lucent Technologies, Alcatel and Siemens. All equipment connected to public networks must be type-approved (homologated) in Poland. The segments that are expected to display the fastest growth and best prospects for American producers in the coming year are in tele-information products and radio communication products.
Telecommunications services are one the most profitable business activities in Poland, enjoying profit margins of more than 19%. Poland's Telekomunikacja Polska S.A. (TPSA) will retain its monopoly over international telecommunication services until 2003. The first tenders for domestic long-distance services are expected in mid-1999 for companies that are majority Polish-owned. Domestic public services are open to foreign investors, subject to obtaining a license through tendering procedures. Internet, data transmission, VSAT and paging services are also open to foreign investors (up to 49%), upon obtaining a license; licenses for these services do not require going through a tendering process.
USD Billions 1997 1998 1999* Total telecommunications Market size 3.6 4.4 5.3 Number of subscribers (millions): 7.5 8.6 10 Growth in the number of subscribers (thousands): 900 1,000 1,160 Rate of growth (%): 15% 20% 20% Telephone density: 19.7 22 26* The above statistics are unofficial estimates.
Sector Rank: 9 Sector Name: Airport/Avionics and Ground Support Equipment ITA Industry Code: AVGPoland has 157 airports, including eight major facilities. Warsaw Okecie Airport handled four million passengers in 1998, close to the design capacity of the terminal. The airport's runways can handle aircraft carrying 14 million passengers annually. Thus, plans to enlarge the terminal's capacity are to be made public shortly. A second airport for Warsaw is under consideration to accommodate long-term traffic growth. The Ministry of Transport's airport development plan foresees expenditures of $2.5 billion early in the next century. The state-owned airport company, PPL, is also modernizing and expanding Poland's other three international airports, which are located in Kracow, Katowice and Gdansk.
Between 1995 and 2005, Poland's domestic air traffic is expected to increase by as much as 120%. Cargo traffic (domestic and international) is expected to increase by as much as 100%. Best prospects for U.S. companies include air traffic control equipment and airport design and construction services.
USD Millions 1997* 1998* 1999* A. Total Market Size 12.7 13.5 15.5 B. Total Local Production 5.0 5.0 5.0 C. Total Exports 1.5 1.5 1.5 D. Total Imports 9.2 10.0 12.0 E. Imports from U.S. 2.6 3.0 3.5* The above statistics are unofficial estimates.
Sector Rank: 10 Sector Name: Computers and Peripherals ITA Industry Code: CPTDemand for information technology products in Poland is expected to remain strong. The total information technology market reached a value of approximately $2.2 billion, with at least $1.2 billion spent on computers and peripherals. The Polish computer hardware market grew approximately 17% in 1998 and is expected to grow approximately 15% annually over the next two years.
The personal computer (PC) sector is estimated at approximately $800 million, roughly 37% of the total computer market. Since 1997, PC sales have been increasing steadily each year by about 13%. This trend is expected to continue over the next two years. Equipment made or assembled in Poland dominates the PC segment of the market.
The main buyers of computer equipment financial, transportation, telecommunications, manufacturing, trade, administration and science and education organizations. Individual users, small and medium size companies and the education sector significantly increased their purchases of computer equipment in 1998.
USD Millions 1997 1998 1999* A. Total Market Size 947 1,071 1,250 B. Total Local Production 587 641 734 C. Total exports 140 170 204 D. Total Imports 500 600 720 E. Imports from the U.S. 188.6 217 250* The above statistics are unofficial estimates.
Sector Rank: 11 Sector Name: Food-Processing Equipment ITA Industry Code: FODGrowth in the Polish market for food processing equipment is expected to remain strong in the coming years. The largest segments of the market are: meat and poultry processing (19.0%), spirits and yeast (18.0%), dairy products (12.0%), sugar and sweets (12.0%), tobacco products (10.0%), and breweries (7.0%).
The largest food processing equipment investments are by producers of sugar, beer, food concentrates, vegetable oil, dairy products, snack foods and vegetable and fruit juices. The food industry is expected to enjoy a steady growth rate of 5% over the next few years. Investments in the food processing industry are expected to be between $1.2 and $1.5 billion per year during that time period. The procurement of food processing technology, including equipment, is estimated to be $0.8 billion annually.
Domestic production of food-processing equipment does not meet overall market demand. The majority of food processing equipment is imported. The largest share of imports are reported in the brewery equipment group. The second largest group of imports include technology and machines that make candy, cocoa, chocolate, and sugar. The best opportunities for U.S. companies are equipment for processing fruits, vegetables, tea, and coffee. Poland's eventual integration with the European Union will force adjustments in its food processing industry to meet western quality, technology, sanitary, and ecological standards; these changes will require significant new investments in food processing equipment.
About 40% of all food processing equipment is imported from Germany. The other large suppliers are Italy, Switzerland, the United Kingdom, the Netherlands, Austria and the United States.
USD Millions 1997 1998 1999* A. Total Market Size 313 345 375 B. Total Local Production 110 125 140 C. Total Exports 35 40 45 D. Total Imports 238 260 280 E. Total Imports from U.S. 12 14 16* The above statistics are unofficial estimates.
Sector Rank: 12 Sector Name: Toys and Games ITA Industry Code: TOYThe Polish market for toys and games continues to grow steadily. It is expected that the total market for these products will grow between 3% and 5% annually.
Domestic production of toys and games does not meet overall market demand, and imported toys and games are the basic source of supply. Poland specializes in the manufacturing of plush and stuffed animals and dolls, wooden and wicker toys, and ornamental bulbs for Christmas trees. Domestic toy manufacturers are export-oriented. The majority of their production is exported to EU countries and the U.S.
The largest share of Polish toy imports are mechanized military toys, construction ("building block") toys, dolls, doll accessories and toys representing animals. There is growing demand for toys and games with electronic applications. Most major international toy companies are present in Poland. Poles prefer to buy imported toys.
China supplies slightly more than half of Poland's toy and game imports. The other leading suppliers are Italy, Taiwan and the United States.
USD Millions 1997 1998 1999* A. Total Market Size 109 112 117 B. Total Local Production 39 42 44 C. Total Exports 92 100 105 D. Total Imports 162 170 178 E. Total Imports from U.S. 12 14 16* The above statistics are unofficial estimates.
Sector Rank: 13 Sector Name: Heating, Ventilation and Air Conditioning Equipment ITA Industry Code:Demand for heating and air conditioning equipment in Poland focuses on imported products. Local production is small and is not expected to grow during the next three years. The number of European products (mostly from Germany, Italy and France) present on the market is growing. U.S. equipment, though not as well known as European equipment, is perceived favorably in Poland. Construction and building projects, both large and small, present excellent opportunities for American suppliers.
USD Millions 1997 1998 1999* A. Total Market Size 647 739 838 B. Total Local Production 318 375 420 C. Total Exports 172 179 182 D. Total Imports 501 543 600 E. Imports from the U.S. 6.7 7.9 9.0* The above statistics are unofficial estimates.
Sector Rank: 14 Sector Name: Computer Services ITA Industry Code: CSVComputer services are considered to be among the most dynamic segments of the Polish computer market. Services represent approximately 21% of the total computer market, currently estimated at $460 million. This segment is expected to grow 30% annually. The services segment growth rate is higher than the average of the computer sector as a whole; the market is moving toward technology applications and services in place of just technology itself.
Computer services include integration services, computer educational training, consulting, hardware maintenance and services, and data processing. Integration services are the fastest developing segments of the services market.
The Internet services market is estimated at $200-250 million. The development of web sites is the most active segment in the Internet services market.
USD Millions 1997 1998 1999* A. Total Market Size 382 445 570* The above statistics are unofficial estimates.
Sector Rank: 15 Sector Name: Automobile Parts and Components ITA Industry Code: APSThe market for automobile parts and components has grown significantly over the past several years. This trend will continue as the number of cars registered in Poland grows. Investments by some of the world's major car manufacturers (Fiat, General Motors-Opel, Volkswagen, Ford, Peugeot, Daewoo) have significantly expanded the market for car parts. American automobile parts and accessories enjoy an excellent reputation for reliability and quality in Poland.
There are 8.5 million passenger cars registered in Poland. This number is likely to grow to 10 million by 2000 and to 15 million in 2010. In the past few years the number of new passenger cars annually registered in Poland has been growing rapidly, reaching an all-time high of 515,000 in 1998.
Experts estimate that the Polish car market is capable of absorbing some 500,000-600,000 new passenger cars annually. More than half of the cars registered in Poland were made more than five years ago. This translates into a continuing significant market for replacement parts for the next five to seven years.
USD Millions 1997 1998* 1999* A. Total market size 1,631 1,810 2,080 B. Total local production 725 900 1,100 C. Total exports 282 325 370 D. Total imports 1,188 1,235 1,350 E. Imports from the U.S. 8.16 10.6 12* The above statistics are unofficial estimates.
Sector Rank: 16 Sector Name: Pollution Control Equipment ITA Industry Code: POLPoland is the largest single environmental market in Central Europe. Solving air, soil and water pollution problems is a major priority for the Polish government. Since 1990, environmental investments have increased more than three times as a percentage of GDP, reaching 1.7% of GDP in 1998 (an increase from $580 million to $2 billion). Poland has been very successful in obtaining environmental financing through fees and fines based on "the polluter pays" principle.
The market for pollution control equipment has grown steadily over the last few years and is expected to increase rapidly. U.S. exports of pollution control equipment to Poland have grown significantly in the past few years. While U.S. products are considered to be the best quality, they face strong competition from European suppliers, especially German (ranked 1st in market share), Swedish (ranked 2nd), and Italian (ranked 3rd). The U.S. is ranked 4th in exports of pollution control equipment to Poland.
Competitiveness of products offered by European producers is based on lower shipping costs and lower customs rates for EU suppliers.
USD Millions 1997 1998* 1999* A. Total market size 430 458 514 B. Total local production 150 160 160 C. Total exports 39 42 46 D. Total imports 319 340 390 E. Imports from the U.S. 19.5 21 22* The above statistics are unofficial estimates.
Sector Rank: 17 Sector Name: Sporting Goods ITA Industry Code: SPTImports are the basic source of supply for the Polish sporting goods market. In 1998, imported products accounted for 72% of the total market. Many sporting goods products are not produced domestically, especially technically advanced products such as fitness equipment, ski bindings and boots, skis, snow boards, roller skates, golf equipment and tennis equipment. The product mix of Polish manufacturers is rather uneven, including mainly footwear, sportswear, outdoor/camping equipment (tents, mattresses, etc.) and bicycles. Although the dollar value of domestic production exceeds that of imports, most Polish-made products do not supply the Polish market. Seventy-eight percent of Poland's 1998 production was exported.
The Polish sporting goods market is very price sensitive because sporting goods are not at the top the average Polish consumer's shopping list. For the advanced end-user segment of the market, quality, strong local brand recognition and opinions about particular firms and their products are the most important factors. Foreign brands, particularly American, have an appealing image (especially among the younger population), and a reputation for high quality. The sporting goods sector suffered considerably over the past three years, but post believes that rising incomes and a growing middle class will soon produce a turn-around. This is an excellent time for U.S. producers to start identifying potential agents and distributors for this large European market.
USD Millions 1997 1998 1999* A. Total Market Size 210 180 152 B. Total Local Production 220 225 227 C. Total Exports 170 175 180 D. Total Imports 160 130 105 E. Imports from U.S. 3 3 3* The above statistics are unofficial estimates.
Sector Rank: 18 Sector Name: Health Care Services ITA Industry Code: HCSThe health care services market in Poland offers excellent opportunities for U.S. companies. Poland is the largest healthcare market in Central Europe. A major health care reform law took effect on January 1, 1999. This reform transferred the responsibility of ownership and management of health services to local governments. Local governments administer "Sick Funds" that contract out services from healthcare providers for consumers. The reform has decentralized the national health care system. The new system is expected to create a solid foundation for the development of private healthcare services, including the potential of introducing private health care providers.
The health system in Poland consists of public hospitals and outpatient clinics that provide free services, and a slowly growing private sector. In 1997, there were 717 general hospitals operating in Poland with a total number of available beds of 210,000. Approximately five million Poles were hospitalized in 1997. The average hospital stay was 11 days. The most common causes of death in Poland are cardiovascular disease, cancer, injuries and accidents, and accidental poisoning. Contagious diseases, especially tuberculoses and hepatitis, are still an important concern. About 24% (9.5 million) of the population is retired, and another 11.5% (4.5 million) are considered handicapped. These groups are the biggest consumers of healthcare services in Poland.
Private medical firms (Polish and foreign) have begun to offer health care services for individuals and companies. These companies provide basic medical services internally, while contracting some or all specialized services with third parties. They cooperate with specific hospitals to provide clients with hospitalization services. As Poland's economy continues to improve and health reform is fully implemented, it is expected that consumers will increasingly turn to private health care companies.
B. Best Prospects for U.S. Agricultural Products to Poland:
(In thousand metric tons, unless otherwise noted) Sector Name: Corn PS&D Code: 11Continuing expansion of Poland's livestock sector should increase utilization of higher-quality feed inputs and demand for imported corn. Both poultry and swine production based on commercially produced feeds are expanding as the transition to the market economy continues.
Thousand Metric Tons 1998 1999* 2000* A. Total Market Size 885 885 886 B. Total Local Production 496 500 480 C. Total Exports 0 0 0 D. Total Imports 200 400 400 E. Total Imports from U.S. 0.3 0.4 0.6* The above statistics are unofficial estimates.
Sector Name: Poultry Meat PS&D Code: 53Polish poultry meat demand and production continue to grow. Poultry meat imports are constrained by high tariff rates. Tariff rate quotas linked to domestic production levels provide some relief. Imports of poultry meat for processing and re-export are not constrained by tariffs. Poland has become an important transshipment point for poultry products to the countries of the former Soviet Union. Poland imports significant quantities of mechanically de-boned turkey and chicken meat which are processed, primarily into sausage products, and then shipped to customers in Russia, Ukraine and the Baltics.
Thousand Metric Tons 1998 1999* 2000* A. Total Market Size 518 520 525 B. Total Local Production 494 495 498 C. Total Exports 27 25 25 D. Total Imports 49 47 48 E. Total Imports from U.S. 28 26 26* The above statistics are unofficial estimates.
Sector Name: Soybeans PS&D Code: 06Relying largely on rapeseed as an input for the domestic oilseed crushing industry, Poland typically imports approximately 10,000 tons of soybeans annually. However, 50 percent of this total is imported by companies equipped with extruders to utilize full-fat soybean soybeans in feed formulas. According to industry sources, the feeds produced based on the full-fat formula are in high demand. Periodic shortages of domestic rapeseed, increasing demand for soybean meal and occasional favorable prices for US soybeans relative to South American soybeans offer potential for substantially higher imports of US soybeans. With increasing foreign investment in the Polish oilseed crushing, capital is available to retool facilities to capitalize on favorable conditions for processing soybeans when they arise.
Thousand Metric Tons 1998 1999* 2000* A. Total Market Size 8 8 8 B. Total Local Production 0 0 0 C. Total Exports 0 0 0 D. Total Imports 8 8 8 E. Total Imports from U.S. 0 0 0* The above statistics are unofficial estimates.
Sector Name: Soybean Meal PS&D Code: 06Feed manufacturing requirements for the Polish swine and poultry industry results in stable import demand for soybean meal in Poland. U.S. suppliers must contend with Polish government restriction on a perceived risk of live weed seeds in low-protein soybean meal resulting in increased risk. However, during a certain window during the year when U.S. soybean meal is competitive with alternative suppliers substantial imports of high-protein U.S. soybean meal enter Poland (worth $225,170 in 1997).
Thousand Metric Tons 1998 1999* 2000* A. Total Market Size 860 901 904 B. Total Local Production 0 0 0 C. Total Exports 0 0 0 D. Total Imports 900 900 902 E. Total Imports from U.S. 55 55 56* The above statistics are unofficial estimates.
Sector Name: Durum Wheat PS&D Code: 11Growing demand for potato alternatives such as pasta together with growing competition between major pasta producers is providing the framework for more focus on quality. Consequently, U.S. durum should be in a good position to secure a strong share of the market. However, traders express concern about the risk of importing (even) durum stemming from Poland's insistence on maintaining a zero tolerance on several weed seeds commonly found in imports of U.S. grain and oilseeds.
Thousand Metric Tons 1998 1999* 2000* A. Total Market Size 74 100 100 B. Total Local Production 0 0 0 C. Total Exports 0 0 0 D. Total Imports 74 100 100 E. Total Imports from U.S. 14 25 25* The above statistics are unofficial estimates. In 1998, official statistics published for durum imports were low because some durum wheat was registered as non-durum wheat due to no difference in tariffs between durum and non-durum wheat. It is estimated that with usual pasta production of 120,000 mt annually, demand for durum is at least 100,000 mt assuming that part of durum flour in pasta production is blended with non-durum wheat.
Sector Name: Peanuts PS&D Code: 06Growing incomes and proliferation of roadside convenience stores along with increased vehicular travel have contributed to a strong growth in demand for snack foods in Poland. Foreign investment in the Polish confectionery industry has also supported import demand from the United States for this product in particular. These trends should continue to support continued strong growth in imports of this product.
Thousand Metric Tons 1998 1999* 2000* A. Total Market Size 27 28 30 B. Total Local Production 0 0 0 C. Total Exports 2.5 2.4 2 D. Total Imports 29 29 30 E. Total Imports from U.S. 2.4 2.5 2.8* The above statistics are unofficial estimates.
Sector Name: Cotton PS&D Code: 04The U.S. has been priced out of this market due to cheap Uzbek cotton and the false notion that Polish machinery cannot utilize U.S. cotton. Polish importers have been able to successfully utilize U.S. cotton donated to Poland in FY 1996. According to Polish statistics, Poland imported over $6.3 million worth of cotton from the U.S. in 1997 when U.S. prices were favorable to other suppliers. Given the recent experience with U.S. cotton, imports of U.S. cotton are poised to resume during period when prices between U.S. and Uzbek cotton narrow.
Thousand Metric Tons 1998 1999* 2000* A. Total Market Size 74 75 76 B. Total Local Production 0 0 0 C. Total Exports 1.5 1.5 1.6 D. Total Imports 76 76 76 E. Total Imports from U.S. 0.3 0.3 0.3* The above statistics are unofficial estimates.
Sector Name: Seafood PS&D Code: 54Poland's marine catch is declining at the same time domestic fish consumption and exports of processed fish are growing. As a result, opportunities to supply raw materials to the Polish fish processing industry and consumer-oriented fish products to the Polish retail market are increasing. Poland's per capita consumption of fish is estimated at 6.6 kg/person; roughly one-third of per capita consumption in the EU. As Poland's economy continues to improve and dietary focus shifts to healthier dishes, fish consumption and imports are expected to sharply increase.
Thousand Metric Tons 1998 1999* 2000* A. Total Market Size 215 216 217 B. Total Local Production 97 90 85 C. Total Exports 16 15 14 D. Total Imports 129 131 133 E. Total Imports from U.S. 0.5 0.8 1.2* The above statistics are unofficial estimates.
Sector Name: Dried Prunes PS&D Code: 10Growing incomes and proliferation of roadside convenience stores along with increased vehicular travel have contributed to a strong growth in demand for snack foods in Poland. Foreign investment in the Polish confectionery industry has also supported import demand from the United States for this product in particular. These trends should continued to support continued strong growth in imports of this product.
Thousand Metric Tons 1998 1999* 2000* A. Total Market Size 0.4 0.5 0.7 B. Total Local Production 0 0 0 C. Total Exports 1.6 1.6 1.7 D. Total Imports 2 2.1 2.4 E. Total Imports from U.S. 1.9 2 2.2* The above statistics are unofficial estimates.
Sector Name: Grapefruit PS&D Code: 24Despite a 10% lower import tariff for Spain and 0% import tariff for Israel, US exports of grapefruit (primarily ruby red) to Poland have more than doubled every year since 1992 and market share has increased from 2% in 1993 to 12% in 1996. US grapefruit sales are handled almost exclusively through Dutch and, to a lesser extent, German intermediaries who offer some credit terms and increased flexibility regarding size and timing of shipments to Polish importers. However, imports are large enough ($1.6 million in 1997) that Polish importers on a 1998 Cochran Program decided to purchase directly from the US. Even if Poland doubles grapefruit imports as expected by 2002, per capita consumption levels will still be substantially below average Western European levels.
USD - Million 1998 1999* 2000* A. Total Market Size 18 19 20 B. Total Local Production 0 0 0 C. Total Exports 1.7 2.2 2.8 D. Total Imports 18 19 20 E. Total Imports from U.S. .68 .78 .87* The above statistics are unofficial estimatesC. Significant Investment Opportunities:
Privatization has been slow, especially in what the Polish Government regards as "strategic sectors": banking, insurance, telecommunications, mining, steel, defense, transportation, energy, and broadcasting. A bill passed by Parliament in the summer of 1995 gave much of the authority for privatization to the Parliament and emphasized "commercialization," turning State enterprises into treasury-owned joint stock companies before truly privatizing them.
New privatization plans for 1999 include banks: PeKaO S.A. and Bank Zachodni S.A.; insurance giant PZU S.A.; the national airline LOT; the telecom monopoly TPSA; oil and gas company NAFTA Polska; iron and steel works; the spirits sector; and a series of power generation plants. The Government also has a 52.1% stake in the copper holding company KGHM Miedz and plans to sell shares to a few institutional investors. In 1999, Polish Oil & Gas Company, the insurance sector and sugar factories will be privatized. Privatization of the chemical sector (including pharmaceuticals and synthetic fertilizers) and several trade entities and distribution chains (Domy Centrum, Orbis, Ruch) which started in 1996 will continue. In 1996, companies under the Mass Privatization Program moved closer to privatization, and many of them were sold to strategic investors. The National Investment Funds, which manage the Mass Privatization firms, have been listed on the Warsaw Stock Exchange since June 1997.
The Government of the United States acknowledges the contribution that outward foreign direct investments make to the U.S. economy. U.S. foreign direct investment is increasingly viewed as a complement or even a necessary component of trade. For example, roughly 60% of U.S. exports are sold by American firms that have operations abroad. Recognizing the benefits that U.S. outward investment brings to the U.S. economy, the Government of the United States undertakes initiatives, such as Overseas Private Investment Corporation (OPIC) programs, investment treaty negotiations and business facilitation programs, that support U.S. investors.
Banking and Financial Services
The post-1989 reforms of the banking and financial sector led to the Polish National Bank NBP being divided into nine medium size regional banks for eventual privatization. Five are already private, one is currently being privatized, and the other three should be privatized before the year 2000. At the same time, changes in banking laws have allowed foreign investors to operate in this market. There are many foreign banks licensed to operate in Poland.
A logical trend towards consolidation of the banking industry began in the past year with mergers between Polish banks and some acquisitions of Polish banks by foreign banks. The consolidation has also involved insurance companies and will likely lead to the creation of major financial institutions. According to international financial experts, the Polish banking market is likely to be the fastest growing in Europe over the next five years. During this period, average real annual growth rates in Polish zloty terms are forecasted to be 13% to 15% for the assets of Polish banks and 16% to 18% for retail deposits. According to international consulting firms, the number of permanent users of banking services is increasing at the rate of 2% yearly, and is already at 30% of households. However, by the end of the first quarter of 1998, Poland had only six million current accounts. That number is expected to explode in the next three years, with the number of current accounts growing nearly 70% by 2000. It is still far from the approximately 80% usage rate of Germany, making this a promising market for those who enter.
Insurance
The Polish insurance market continues to be liberalized. As of January 1, 1999, insurance companies located outside Poland are allowed to sell their policies directly in Poland. There are 54 licensed insurance companies, including more than 20 with foreign capital. Of the 55, 24 are in the life-insurance business and 31 in the non-life business. In 1997, non-life insurance companies collected USD 2.89 billion in premiums, while life insurance companies collected USD 1.51 billion, a 27.5% increase over 1996.
PZU S.A. (Panstwowy Zaklad Ubezpieczen) still dominates the Polish market with about a 63% share and collected premiums in 1998 totaling more than USD 1.7 billion. PZU is still state owned, but privatization is expected to be started before the end of 1999.
Poland is the biggest insurance market in Central and Eastern Europe. Strong economic development, a decreasing level of inflation, and the progressive adjustment of legal regulations to EU directives create a good climate for investment opportunities in the insurance sector. Competition from foreign investors and the move toward a fully open and free market have started a trend towards consolidation in which large banks are taking part.
Power Industry
The Polish electrical power sector consists presently of three subsectors: generation, transmission, and distribution. As a system it is the largest in Central and Eastern Europe. Power is generated in 56 thermal power plants, of which 33 are combined power and heat plants. The installed generating capacity of the power stations is 33,000 MW. In 1998 the gross domestic production of electricity reached 143,000 gigawatts. All thermal power plants are coal-fired.
The Polish electrical power sector has been in dire need of modernization and refurbishment in order to create an economically efficient industry capable of meeting national energy requirements. The cost of modernization by 2010 is estimated at USD 50 billion. Modernization is needed to replace 16 gigawatts of obsolete installed capacity and to satisfy stricter ecological standards that will take effect between the years 1999-2001. Out of this amount, USD 15 billion is needed for the modernization of existing power plants. A substantial portion of the modernization cost will be covered by income generated from privatizing the power enterprises.
The sector is currently undergoing significant changes as it prepares for deregulation. The major trends in the power generation sector include liberalization of the electric energy market, deregulation, and privatization of energy sector enterprises. In December 1997, a new energy law created a solid legal framework for a competitive energy market based on third party access and a licensing system. The independent Energy Regulatory Agency was created to ensure competition within the energy sector.
The 1997 energy law opens the way to privatization of power generation enterprises and places Poland's energy sector on an equal footing with more liberal European countries. The law safeguards and facilitates foreign investment in Poland's energy sector, which, over the next 5-6 years, will lead to the development of a privatized electricity market. Eventually, prices for power producers, distributors, and trading companies will no longer be set by the Polish government, but verified by the electricity exchange and contract market. The Energy Regulatory Agency only supervises compliance with license and market rules.
Multilateral lending institutions such as the World Bank and the European Bank for Reconstruction and Development are interested in investing in Poland's power sector. The EBRD is focusing on joint venture arrangements in large turbines, gas-fired turbines, and hydro turbines as the best opportunities in the sector. The World Bank is also heavily involved in financing in the Polish power sector, including modernization projects within power generation, transmission, and distribution.
Oil and Gas Industry
The Polish Oil and Gas Company (POGC)is the major producer of oil (very marginal) and natural gas in Poland. The POGC holds a monopoly on the importation, transmission, storage, and distribution of natural gas. In order to reduce the overwhelming dependence on domestic coal and imported gas, Poland intends to develop exploration and production of methane gas from hard coal deposits in Silesia. In 1991, licensing was made available to foreign companies for oil and gas exploration and production in Poland. Several U.S. and foreign oil and gas companies are involved in the exploration of methane, natural gas, and oil in Poland.
According to government forecasts, by 2010 gas consumption will increase to 22-27 billion cubic meters annually (USD 11 billion cubic meters today). To meet the increasing requirements for gas, Poland is participating in the construction of a natural gas pipeline from Siberia to Western Europe. In 1996, the Polish Oil and Gas Company and Russian Gazprom signed a contract for delivery of 250 billion cubic meters of natural gas over the next 25 years through the Yamal pipeline. Annual shipments will amount to 14 billion cubic meters of natural gas. The implementation of an investment of this type will create the need for improved distribution systems and increased gas-storage capacity. Construction of two underground storage facilities has begun. Several others are planned to be built according to the bid procedure opened to foreign companies.
The Polish Government has designated the oil industry as one of the sectors of strategic importance for national security. The domestic refining industry only partly meets the demand for oil products; approximately 20% of liquid fuels are imported. The oil sector, for both production and distribution, has required substantial investments in order to be competitive with the rest of the world. Major problems faced by the petroleum industry in Poland include lack of capital, obsolete technology, poor energy efficiency, excessive use of raw materials, low utilization of existing capacity (below 80%), and burdens on the environment.
The majority of refineries in use today were constructed in the 1960s and 1970s and need modernization. The two largest refineries, Plock and Gdansk, are embarking on modernization programs worth more than USD 1.5 billion. The Plock and Gdansk refineries are eager to use U.S. technology, which enjoys an excellent reputation among Polish specialists, in their modernization investments. In addition, there is a need for additional storage capacity for fuel reserves.
The government has signed agreements with the World Bank and the European Investment Bank on loans for the energy sector. A substantial part of the loans to Poland were allocated for technological development in the oil and gas sector. The gas extraction industry was recognized as a key element in the restructuring of the overall national economy and the protection of the natural environment. Out of a total USD 310 million allocated, some USD 200 million will be used for technical restructuring in the oil industry, including the purchase of new equipment for geophysics, drilling and production installations.
The Yamal-Europe Transit Gas Pipeline Construction
The Yamal-Western Europe transit gas pipeline, more than 4,000 km long, will carry natural gas supplies from the richest Siberian reserves to Germany and other Western European countries across the territories of Russia, Belarus and Poland. This enormous investment project is estimated at USD 35 billion.
The Polish and Russian governments signed an agreement for the pipeline construction in 1994. According to this agreement, a tendering process will select construction companies and suppliers, primarily from Polish and Russian bidders, on a strictly competitive basis. Other international companies will be considered if neither Polish nor Russian companies qualify.
The Polish section of the gas pipeline is being designed, constructed and managed by EuRoPol GAZ S.A., a joint-venture founded in 1993 between the State-held Polish Oil and Gas Company (48%), Russian Gazprom (48%) and a Polish company, Gas Trading S.A. (4%). EuRoPol GAZ S.A. will be the owner of the Polish section of the gas pipeline.
The construction cost of the Polish section of the pipeline is estimated at USD 2.5 billion, making it the largest infrastructure investment in Poland to date. The Polish section of the pipeline will run from Kondratki, on the Polish border with Belarus, to the German border town of Gorzyca and will carry 65.7 BCM of natural gas. Two parallel gas pipelines are planned, each 665 kilometers long. The first pipeline is planned to become fully operational in 1999, along with five compressor stations. The second line will be completed in 2010. The construction of both lines is divided into several parts.
The construction of the first 107-kilometer long stretch of the pipeline, from Gorzyca on the Polish-German border to Lwowek near Poznan, was completed in 1996. The general contractor selected for this USD 400 million segment of the project was a consortium of five Polish energy and gas construction companies. EuRoPol GAZ selected the consortium through a tendering process. Construction of the second part of the pipeline, from Lwowek to Wloclawek, is in process and is being performed by the same consortium. The construction of the third 365-kilometer part of the pipeline running from Wloclawek to Kondratki started in the summer 1998 and is being performed by two Polish companies: Bug Gazobudowa (Wloclawek, Plock and Ciecahnow region), and Karpaty (Lomza and Bialystok region). Although the general contractor has been selected, there are still opportunities for U.S. providers of relevant materials and equipment not available from Polish or Russian companies.
In November 1996, EuRoPol GAZ S.A. announced the tender for construction of the first two, out of a total of five, compressor stations for the pipeline. There was an invitation for submitting pre-qualified bids for turn-key operations of the Wloclawek and Kondradki compressor stations. The bid winner was officially announced in January 1998. ABB Zamech was selected as the contractor for this project. The contract was signed on May 21, 1998. In January 1998, four companies, including foreign companies, were selected for negotiating contracts, including: Bug Gazobudowa, Karpaty S.A., Ludwig Freytag Gmbh (Germany), and Preussag Ag (Germany). The teleconnection system will be provided by Alcatel Polska S.A. (contract signed on June 19, 1998).
Companies included in this list are currently negotiating with EuRoPol GAZ.
EuRoPol GAZ S.A. Mr. Jerzy Adamczyk, President Aleja Stanow Zjednoczonych 61 04-028 Warsaw Tel: (48-22) 813-25-85 Fax: (48-22) 813-34-75Restructuring and Privatization of the Polish Oil Industry
The oil sector generates 8.5% of Poland's gross domestic product and over USD 400 million of profit. The petroleum industry needs restructuring in order to successfully face the foreign competition that will result from the reduction of fuel import quotas and customs barriers. The total cost of restructuring is estimated at USD 3 billion.
In accordance with the government program for oil sector restructuring, the state-owned joint stock company, Nafta Polska S.A., was created in 1996. Nafta Polska S.A. holds minority stakes in the strategic companies of the petroleum sector, including all seven refineries, the oil transportation company DEC, and the former gasoline distributor and retailer monopoly, CPN. Each of the relevant enterprises comprises an independent joint-stock company in which the Treasury holds a strategic block of shares.
Nafta Polska S.A. is responsible for the supervision and implementation of the government's program for oil sector restructurization and privatization. The current restructurization and privatization program for Poland's oil sector calls for merging the largest Polish refinery, Petrochemia Plock, with the fuel distributing and retailing company CPN, creating a new company called Polish Oil Concern (PKN). PKN will be privatized through a public share offering on local and foreign stock exchange markets. The merger of these two large companies was initiated in November of 1998 and is now in the final stages. According to the planned timetable, the Polish Oil Concern should be in place in July 1999, with the prospectus available in September 1999 and an offering of 45% of company shares on the stock exchange in November 1999. However, a group of CPN shareholders has sued CPN management over its decision to merge with Petrochemia Plock. The issue in question is the price of CPN shares versus the price of PKN shares. This suit may delay the registration process of the Polish Oil Concern as well as the subsequent privatization process.
The second largest refinery, Gdansk Refinery, was planned to be privatized by the end of 1998 through the sale of more than 50% of its shares to a strategic investor. In July 1998, Nafta Polska, the state-owned holding company that supervises privatization in the oil sector, extended invitations to firms seeking a controlling stake in Gdansk Refinery. However, only three companies have expressed interest in the offer, and only one has placed a bid. Nafta Polska did not accept the offer because the price proposed was only one-third of that predicted in the pre-privatization analysis. The Ministry of State Treasury has prepared several new proposals for possible Gdansk Refinery privatization. One possibility is to look for a strategic investor again; the others include company privatization through the public offering on the stock exchange or selling the refinery share package to the Polish Oil Concern. Implementation of these proposals would make Polish Oil Concern a monopoly. A sale of Gdansk Refinery to an investor outside the Polish oil industry would guarantee development of two competitive oil concerns.
In May 1998, the Council of Ministers decided that the Oil Rail Tank Company, DEC, should be privatized by the end of 1999. However, the DEC privatization plan has not yet been prepared. According to the Ministry of State Treasury, proposals for this privatization should be in place by the end of September 1999. The method and schedule of privatization of Oil Pipeline Exploitation Company are still unknown.
The three remaining southern refineries will be privatized separately. In the case of Czechowice, the prospective investor is requested to expand the plant's processing capacity to 2 million tons and participate in financing for the petrochemical segment of the planned Poludnie complex.
Nafta Polska S.A. Mr. Marek Foltynowicz, Board Member ul. Jasna 12 00-013 Warsaw Tel: (48)(22) 827-08-76 Fax: (48)(22) 827-31-05Tourism Development
Poland is widely recognized as an important destination in the global tourist market. It ranks among the top ten countries in the world with regard to the number of visitors about thirteenth with regard to the revenue generated from tourism (in comparison to sixty-fourth in 1991). The growth of Polish tourism has outpaced growth in traditional tourist giants such as Greece and Switzerland. Each year, Poland was visited by almost 90 million foreigners, five times more than in 1990. The tourist sector has been growing and this trend is expected to continue in the future. Tourism has encouraged the development of infrastructure and accommodations in Poland. In 1997, the number of accommodation facilities increased by 800 and reached a total of 12,000. The number of rooms in hotels rose by nine percent to 45,000. The number of rooms in boarding houses rose by 16 percent to 8,050.
Poland is a leader among Eastern European countries that supply visitors to the U.S. The number of Polish visitors to U.S. accounted for 20% of all Eastern European visitors (382,486 in 1997). The number of Polish travelers to the U.S. is increasing at a 20% annual rate. The potential for growth in outgoing tourism to the U.S. is significant. Poles have begun to travel more frequently than citizens from some Western European countries. The U.S. has a special image as a country of freedom to Poles, which makes the U.S. a popular tourist destination. The significant barrier limiting the growth and development of Polish tourism to the U.S. is the requirement to obtain a visa prior to entering the U.S.
According to the World Bank and International Monetary Fund reports, the Polish tourism industry has great potential to contribute to the restructuring of the national economy and Poland's competitiveness in the European market. PHARE TOURIN funds have been assigned by the European Community to support development of the Polish tourism sector.
Poland possesses adequate assets and tourist attractions as well as a sufficiently developed network of tourist services. Poland's diversified natural conditions provide potential for tourism in the mountain regions, at the seaside, in the lake districts, and in the countryside. Approximately 40% of foreign loans granted to Polish entities have been invested in tourism. The foreign capital engaged in the Polish tourism sector amounted to USD 1.2 billion in 1997.
There is a strong demand for new hotels in Poland, especially in large cities. Orbis S.A., the leading Polish travel agency and owner of the largest hotel chain in Poland has been privatized. Orbis Hotels owns 54 hotels in Poland. Several international hotel companies have recently developed hotels in large Polish cities. Holiday Inn Worldwide signed a franchise agreement this year with a Polish company, Global Hotels Development Group Poland S.A. (GHDG) to develop 20 hotels in Poland within 10 years. The total investment is estimated at USD 116 million and will include construction of four luxury Crowne Plaza hotels, ten Holiday Inn Express hotels at USD 5 million each, and four standard Holiday Inn hotels at USD 12 to USD 18 million each. GHDG also plans to modernize existing hotels and introduce them into the Holiday Inn chain. There is a tremendous need to develop moderate tourist accommodations in Poland to meet European and world demand. Moreover, investment in leisure activities, such as ski lifts, tennis courts, open and indoor swimming pools, golf courses, and bowling centers, is desperately needed.
Rail and Road Transportation
Poland's transportation network, suffering from years of neglect, is in dire need of upgrade and refurbishment. Only 15% of roads can be classified as good quality, some 50% of roads are not in satisfactory condition and need immediate upgrading work, and 35% are considered very poor.
To help meet this need Poland has planned a new system of toll roads operating alongside the already existing transportation infrastructure.
The program calls for approximately 2,500 km of highways to be built in Poland over the next 15 years with a total cost estimated at USD 8 billion. The plan, approved by the Parliament in 1994, provides for the construction of four highways. They will channel traffic between Western Europe and Poland's eastern neighbors and connect the Baltic coast with the southern borders. Each segment of the highway will be built individually by prime contractors.
The highway routes were selected on the basis of traffic volume. Tollways were supposed to be built under a license, Build Operate Transfer (BOT), with both private and public investors as participants in forming a consortium. Significant financial contributions will come from international institutions. The first tenders have been announced, and the first concessions that allow contract negotiations have been granted.
The contracting authority is: The Agency for Construction and Operation of Highways (Agencja Budowy I Eksploatacji Autostrad) Mr. Andrzej Urbanik, President ul. Chalubinskiego 4/6 00-928 Warsaw Tel: (48-22) 624-43-65 Fax: (48-22) 830-05-84The importance of railways in Western Europe has a significant effect on the development and modernization of rail transportation in Poland. Poland's location forces integration of a portion of the Polish railway network with the European transportation system. Its integration with the European network and competitiveness with international traffic requires a higher standard of service in both passenger and freight transportation. The share of railways in the transport of goods in Poland is now approximately 50%. The share of mixed road and rail transport is very low due to underdeveloped computer systems and lack of appropriate platforms, rolling stock for the transport of semi-trailers or containers, and the lack of equipment for container handling. However, mixed transport has the best prospects for growth in Poland.
The Polish State Railways (PKP) is the third largest railway in Europe in terms of line length with 25,000 kilometers of rail, but in terms of quality of equipment and service it is far behind EU countries. About 60-80% of PKP's rolling stock is outdated and needs modernization.
The Polish railway modernization project involves modernization of the main railway line from Warsaw to Kunowice (German border). The project will include the purchase of track rehabilitation machinery, signaling cables, power supply cables, signaling equipment, steel parts for standard turnouts, as well as hot- and flat-wheel detection equipment. The project's estimated value is USD 580 million. A financial contribution of USD 60 million will come from the EBRD. Other international agencies will provide USD 275 million.
The agency responsible for this project and its contracting authority is:
PKP CBZIS "FERPOL" Mr. Zbigniew Palczewski, Director Wojciech Stroinski, Commercial Director ul. Grojecka 17 00-973 Warsaw Tel: (48-22) 822-14-30 Fax: (48-22) 822-26-28Chemical Industry
The chemical industry in Poland continues to grow, with production figures increasing in all branches of the industry and in all groups of chemical enterprises. Figures from 1998 show that the manufacturing of soaps and detergents increased by almost 49%, the production of rubber products rose by almost 35%, and explosives, photo-chemical products, glues, products for clothing, and leather and textile industry products rose by 44%.
A new program for modernization and privatization of the Polish chemical industry calls for 105 investment ventures through the year 2005 for a total value USD 3 billion. It is expected that 30% of the financing will come from Polish chemical companies, 20% from a Polish investment consortium, and 50% from foreign investors.
Predictions of sales in the chemical industry in Poland in the next few months are also optimistic. Almost all Polish chemical firms expect sales to continue growing. Interested companies may wish to keep in contact with:
Polish Chamber of Chemical Industry Mr. Konstanty Chmielewski, President ul. Zurawia 6/12 Warsaw Tel/Fax: (48-22) 625-3178Environmental Industry
The environmental services sector has only recently emerged in Poland's growing market economy, and is in a state of flux. The new Polish environmental strategy emphasizes the principle of sustainable development. It encourages firms to rely on clean technologies, pollution prevention, and waste minimization in designing their production process. It discourages "end-of-the-pipe" control technologies.
Poland faces enormous environmental challenges, but this situation also presents opportunities for western companies with the equipment, advanced technology, and know-how that Poland requires. The most promising areas are air pollution control, wastewater treatment, waste disposal, and recycling technology. The importance of the environmental sector is widely recognized by Polish authorities and strongly supported by international financial institutions. Credit lines are available for environmental protection investments on preferential conditions, thanks to funds provided by internal sources as well as the World Bank, European Bank for Reconstruction and Development, and others. Poland has adopted the "polluter pays" principle. Fees and fines for use and pollution of the environment are being collected by the National and Regional Funds for Environmental Protection and Water Management. These Funds offer preferential loans for environmental projects.
Automotive Industry
Auto sales in Poland continue to grow. The automotive industry represents not only a great sales opportunity, but is also a very good investment opportunity. Several companies have already decided to take advantage of that by locating either production or assembly plants in Poland. Major investors include Fiat, Daewoo, GM-Opel, Ford, Volkswagen, Peugeot, Scania, and Volvo. The auto parts industry is also very promising for potential investors, as the majority of investors in car production commit themselves to sourcing their parts in Poland, not from abroad. Nearly 20% of foreign investment in Poland has been in the automotive industry.
Telecommunications
The Polish telecommunications sector is a key industry and a major part of Poland's infrastructure. Although the Polish telephone network is growing at 15% a year, the Polish infrastructure is far behind other European countries with approximately 22 telephones per 100 inhabitants. USD 14 billion will be invested over the next ten years.
The process of privatization of the national telephone operator, Telekomunikacja Polska S.A. (TPSA), is currently under way. With 15% of TPSA shares successfully floated on the stock exchanges in November 1998, the Ministry of Treasury plans to sell between 15% and 25% shares to a strategic investor in 1999. An initial invitation to bid will be published in summer 1999, and the whole transaction completed by the end of 1999. The Ministry of Treasury is expected to fetch USD 3.2 billion for this transaction. The consortium of ING Bank and Nicom Consulting is the Ministry's advisor for this endeavor.
TPSA will continue to have a monopoly for voice and international services until the year 2003. Tenders for long distance services are expected by autumn 1999 with foreign ownership limited to 49%.
Investment opportunities for foreign companies currently exist without limitations in local telephone services and value-added services. Foreign ownership in data transmission services is currently limited to 49%. The market share of private telephone operators, currently representing 6-8%, is expected to reach 25% in the year 2000, with investments of USD 3-4 billion.
A new telecommunications law that would comply with EU standards is currently being reviewed by the parliament. It is expected to be passed by the end of 1999.
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