Although the global financial crisis has had a negative effect on the value of foreign direct investment to Poland, the country has remained “sexy” for investors, according to panelists at a conference marking the launch of Investing in Poland 2012, Warsaw Business Journal’s annual guide to Poland’s investment climate and business environment.

Left to right: panelists Adam Żołnowski (PwC), Andrew Kureth (WBJ), Sławomir Majman (PAIiIZ), Jacek Błoński (Lewiatan Business Angels), Tomasz Nawrocki (Agricultural Property Agency)

Sławomir Majman, president of the Polish Investment and Information Agency (PAIiIZ), which co-organized the conference, said 2011 could see a 10 to 20 percent increase in FDI compared to 2010. As of September, PAIiIZ had 170 investment projects valued at €6.2 billion, a portfolio 40 percent larger than during the same period of last year, he added.

Challenges and successes

But several participants, including Adam Żołnowski, a director at PwC in Poland, voiced fears that the crisis might lead to Poland gaining a greater share of lower-capital, service-oriented investment projects. He said his company was seeing an “alarming trend” of more service-oriented projects, which lead to smaller injections of funding into Poland. The service sector is also not immune to competition from eastern neighbors like Ukraine or even giants like India, where labor costs are lower.

One answer to this challenge, said panelists, is to put emphasis on training to make quality rather than price the major asset of Poland’s labor force. A good sign this message is getting through is that Polish universities are increasingly open to adapting their curricula to the needs of industries, said Jolanta Jaworska, governmental programs director for Central & Eastern Europe at IBM Polska, which has over 5,000 employees.

Poland is also successfully capitalizing on traditional FDI sectors such as manufacturing. Indeed, in September the Financial Times’ fDi Intelligence put Poland in third position globally – behind the US and China – as the best location for projects in the production sector. “I think we have a good chance of becoming a manufacturing base for the EU,” Mr Majman said.

With the Euro 2012 soccer championships getting closer, infrastructure investments were also in the spotlight. Radosław Stępień, undersecretary of state in the Ministry of Infrastructure, was keen to stress that demand for new infrastructure would continue long after 2012, although negotiating continued generous EU funding for Polish roads, railways and airports might be challenging given the current economic situation in Europe.

New possibilities

Interesting projects involving lower capital and higher risk are also emerging in sectors such as clean technology, biotechnology, advanced solutions for the health sector and even the film industry, said Albin Pawłowski, investment director at investment fund Blumerang Investors.

But the real star among new investments is, of course, shale gas. Poland might be sitting on reserves that could guarantee independence from Russian natural gas and even turn the country into a net exporter. But finding out whether this is more than just a pipe dream involves heavy investment, and Polish companies are teaming up with international oil and gas giants to mitigate the risk.

“It costs between $10-20 million for every drilling,” said Adam Czyżewski, PKN Orlen’s chief economist. Mr Czyżewski declined to give details on an agreement between his firm and Canadian Encana regarding exploitation of shale gas in the US and in Poland, but said “we cannot wait for gas to show up in Poland, we have to invest.”

“We are convinced that we will have plenty of gas in Poland. Orlen is taking this risk consciously.”

Sławomir Majman, PAIiIZ

Jolanta Jaworska, IBM Polska

Adam Czyżewski, PKN Orlen

Jacek Błoński, Lewiatan Business Angels