Polish News Roundup 6-11.02: Government refuses to combine grants

Poland’s chances to attract foreign investments are declining due to the government’s refusal to let foreign investors combine various state EU grants, Polish economic daily Puls Biznesu wrote Monday.

For major investments, investors expect more than just one incentive. In Poland, however, large projects are either granted a state subsidy worth a total of up to a few million zlotys (so-called ‘long-term program’), or are offered tax exemptions if they decide to invest in one of the Special Economic Zones (SEZs).

Many investors choose EU grants over Polish incentives. Cases in which investments are granted combine support from more than one source (for instance the state grant and the tax exemption) are extremely rare as they require special approval from the government.

“A state grant cannot be combined with other forms of support,” Finance Ministry’s press office informed the newspaper. “As an exception, granting an investor the permission to combine more than one source of financial support has to be agreed by the government. The approval must pertain to investments which are of crucial importance to the Polish economy.”

UPDATE: Polish government finally granted state subsidies to the three foreign investors which are already operating in various Polish SEZs: Ronal, Mando, Capita, Puls Biznesu wrote Wednesday.

As the newspaper indicates, the UK-based Capita will be granted PLN 2.1 mln (the state expects a return on the investment of PLN 12 mln), the automotive Ronal Polska will obtain PLN 14.1 mln from the state (some PLN 143 mln is expected to return to the state budget in taxes), and Mando will be given a PLN 71 mln grant (the state estimates to save PLN 95 mln in five years on this deal).

Polish entrepreneur Solorz-Zak launches PLN 830 mln IPO

National Investment Fund Midas (NFI Midas), owned by Polish entrepreneur Zygmunt Solorz-Zak, will launch an IPO worth PLN 830 mln on the Warsaw Stock Exchange (WSE), Polish daily Rzeczpospolita reported in its weekend edition.

“The issue price was valued at PLN 0.7 per share,” the company’s managers informed the press. The fund is building a high-speed broadband internet service network in LTE technology.

The public offering is expected to raise PLN 830 mln, PLN 548 mln of which will be taken over by Solorz-Zak in exchange for a 100% stake in his telecoms company Aero 2. The remaining PLN 280 mln, if raised, will be used to finance the construction of the mobile internet network.

The total cost of the project exceeds PLN 1 bln, and Solorzx-Zak may be forced to take up new loans to pay for the venture (he is still paying off credit on one of the largest takeovers in the recent history of CEE when he acquired the telecoms giant Polkomtel, originally controlled by the state).

Brokerage House Trigon anticipates that Midas revenues will be increasing by leaps and bounds: from PLN 30 mln in the last year, through PLN 116 mln in the current year to PLN 500 mln in 2014. This will be mainly due to the increased number of data transmissions in the mobile industry.

Protests against ACTA continue, PO’s popularity declines

As protests against ACTA are growing, leading party PO is gradually losing the younger part of its electorate, Polish daily Rzeczpospolita wrote Wednesday.

A Monday debate organized by the Prime Minister Donald Tusk and his party PO and attended by various professional groups in order to discuss the validity of the ACTA protocol, left those who oppose the document unconvinced.

“Internet users are making a serious gap in the PR defense machine of PO and Donald Tusk,” political sciences doctor Jacek Kloczkowski. “The PM has already commited a few serious gaffes, such as the one regarding health care, but his PR experts always managed to somehow patch things up. This time the matter may be more disconcerting for there are many intelligent and creative people acting against the Prime Minister.”

Due to the easy access and openness of the internet, its users have not had the slightest difficulty in mobilizing. More and more fan pages are being created on social networks, which bring together Tusk’s opponents. Some of the most popular ones include: “Supporting PO shows lack of independent reasoning” (counts with more than 11,000 members) and “Donald, what is up with the economy, stupid” (3,000 members).

Despite the fact that PO officials are trifling the seriousness of the matter, claiming that the protests are temporary, experts point to the fact that the younger generation of internet users has a powerful impact on public opinion and should not be underestimated.

“PO has started losing the young internet users,” Dr Kloczkowski commented for the newspaper. “While it is not an electorate which is likely to prevail the election results, its support or lack thereof is not without weight, considering the group’s creativity and mobility.”

The ratification of the ACTA protocol was postponed by Tusk last week following the first wave of protests. The Prime Minister declared that the government will extend the deadline until end of March to guarantee a proper public debate.

Polish treasury bonds rate high in Bloomberg agency rating

Polish state bonds placed first in a ranking recently published by the Bloomberg agency, Polish daily Puls Biznesu wrote Thursday. Treasury bonds of 25 different countries worldwide were put to the test, beating such economic powers as the United States, Switzerland or Germany.

“Ever since the outbreak of the debt crisis in Europe, Polish treasury bonds have kept topping other similar investments,” Bloomberg  wrote in its publication. “A country which two decades ago had to go through debt restructuring has now become an oasis of peace.”

Polish bond real interest value reached 8.3%, surpassing New Zealand by 1%, while analogical data for Germany totaled 4%, 3.7% for Switzerland and 3% for the USA.

Poland’s success is not as much due to a high interest of the bonds as to its stability. Poland’s so-called average true range gauge from the last three years totaled 2.3pts which, considering the great fluctuations of the market brought about by the financial crisis is an impressive result. Only Japan got the better of Poland by achieving a rating of 1.8pts. Other countries were far behind: Germany’s rating was 4.9pts, USA – 5.4pts, and Greece – 25pts.

Experts believe that for the time being the upward tendency is not endangered.

“Main reasons for investing in Poland will remain unchanged, and on top of that the budget deficit will be declining in the public finances,” Chief Eonomist at BRE Bank Ernest Pytlarczyk told the newspaper. “Investors mainly look at statistical data which is bound to keep improving in the upcoming years.”