Azerbaijan – Poland: business and investment cooperation

Wojciech Fedko

Vice President

June, 2017

Polish Investment and Trade Agency

Poland – main facts

6th largest in the EU: area,

population and economy

largest EU funds beneficiary: ~100 bn EUR

between2014-2020

EUR 100 bn

low public debt: 52.0% of

the GDP vs. the EU average

87.8%

FDI stock: EUR 167 bn

as of the end of 2015

GDP per capita: USD 26,403 (PPP, 2015) – IMF

EUR 167 bn

G20 aspirations

24 years of constant growth

-6.0

-4.0

-2.0

0.0

2.0

4.0

6.0

8.0

19

92

19

93

19

94

19

95

19

96

19

97

19

98

19

99

20

00

20

01

20

02

20

03

20

04

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

20

17

e

20

18

e

GD

P G

RO

WT

H

Poland EU

Stable macroeconomic

fundamentals

Source: Eurostat, World Bank. 2016

Comparative advantages of Poland

Quickly developing infrastructureOver 1200 km high speed roads under construction

4.4 times more high speed roads than before joining EU

Academic hub 1.4 million students and

400 thousand graduates each year

Big internal market6th biggest country in the EU (area, population)

Unlimited access to the EU market of 510 million inhabitants

Highly skilled and young labor force25 million inhabitants under age of 50

Healthy unemployment level of 8.2%

Attractive incentives system250 million m2 of land incorporated in SEZ

Government Grants for strategic projects

50% public aid intensity in Eastern Poland

Business friendly environment1st place in the CEE region –the most attractive country to establish operations

Katowice SEZ - best free zone in Europe in 2015 and 2016Poland advanced in Doing Business ranking by 50 positions since 2012

Vast pool of young labour force

National unemployment rate: <8.2%

Vigorous human capital

Working age population at uncomparable level in CEE

0

5

10

15

20

2004 2008 2012 2016

%

0

2

4

6

8

10

Poland Bulgaria Czech Republic Hungary Romania Slovakia

In m

illio

n

age 15-24 age 25-44 age 45-64

Working age population at uncomparable level among the peers in CEE

2016 marked highest employment and lowest unemployment levels

Historically lowest unemployment

Source: Central Statistical Office, Eurostat 2017

Rising productivity

Attractive unit labour costs

Very attractive quality/cost ratio in the Polish economy

Producitivity growth accompanied by healthy nominal unit labour costs growth (inc. wages)

Producivity dynamics higher than at the peers in CEE and euro area

Rising labour productivity per hour

100

101.5102.3

103.4104.1

105

100

101.9 102.4 102.3

103.7

108.2

100

104.7

106.5

108.3109.6

111.8

100

105

110

115

2010 2011 2012 2013 2014 2015

Pro

du

civi

tyin

dex

edat

2010

=100

Euro area (19 countries) Czech Republic

Poland Hungary

Slovakia

6.2

3.2 3.54.2 4

0.5

3.2

6.1

3.2 3

5.96.7

3.4

8.4

11.3

4.2

5.3

3.1 2.9

0.3

4.8

0

3

6

9

12

2010 2011 2012 2013 2014 2015 2016

Nom

inal

uni

t lab

our

cost

-3

year

s %

cha

nge

Czech Republic Hungary Poland Slovakia

Source: Central Statistical Office, Eurostat 2017

24

55

32

25

45

2017 2016 2015 2014 2013

17

24

27

31

33

10

15

20

25

30

35

Germany Poland Czech

Republic

Switzerland Slovakia

Doing Business 2017

Doing Business 2017

Source: World Bank, Doing Business

Up by 46 positions since 2010

Jumping over countries such as: Switzerland, the

Netherlands or Japan

46positions

100

200

2008 2009 2010-2012 2013 2014 2015

Gross domestic expenditure on R&D

(GERD)

Poland China Korea Rep. Russia

Global Innovation Index 2017

Source: Global Innovation Index 2017, WIPO

Poland is 1st globally in terms of increase of BERD, which has risen by 312% between 2008-2015

1st

100

200

300

2008 2009 2010-2012 2013 2014 2015

Gross domestic expenditure on R&D (GERD)

Poland China

Poland is 2nd globally in terms of increase of GERD, which has risen by 207% between 2008-2015

2nd

38th globally

however

Europe’s favourite FDI destination

1st place in the CEE region – the most attractive country toestablish operations

1st place in terms of number of the investmentprojects in the CEE (256 projects, 12% y-o-yincrease)

1st place in Europe in SSCprojects (24% of total number)

2nd place in the whole of Europe in terms ofcreated jobs through FDI (22100 jobs – only the UKwas better)

Investment attractiveness

FDI stock in Poland at the end of 2015

0

20

40

60

80

100

120

140

Germany USA France Great Britain Italy Poland Spain TheNetherlands

Austria Switzerland Japan

1 2 3 4 5 6 7 8 9 10 11

billi

ons

zlot

ysFDI STOCK BY ULTIMATE INVESTING COUNTRY AT THE END OF 2015

1.

2.

3.Source: The National Bank of Poland, 2016

Poland’s biggest trade and investment partnerGERMANY

A number of manufacturing, business services and R&D investment in PolandUNITED STATES OF AMERICA

Strong presence in retail, manufacturing and banking sectors in PolandFRANCE

Reinvestment of earnings in Poland

-500.0

1,500.0

3,500.0

5,500.0

7,500.0

9,500.0

11,500.0

13,500.0

15,500.0

17,500.0

20

05

20

06

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

20

16

e

EU

R M

ILL

ION

Reinvestment of earnings Total FDI inflow

REINVESTMENTS ARE ONE OF THE MOST CRITICAL PART OF FDI INFLOWS IN POLAND

It confirms, that investment and business climate in Poland is very attractive!

Source: The National Bank of Poland, 2017

1st place in the CEE region – the mostattractive country to establish operations (EYEuropean Attractiveness Survey 2016)

24th place in Doing Business 2017

Poland is one of the best countries for business in Europe

Recent investment announcements in Poland

Gardno - logisticsEUR 200 million

Jawor – automotiveEUR 300 million

Biskupice – EV battery plantEUR 300 million

Wrocław – high speed train body EUR 60 million

Warsaw – financial services

Dąbrowa Górnicza –automotiveEUR 100 million

Bielsko - Biała –automotive EUR 250 million

Wałbrzych and Jelcz – Laskowice – automotiveEUR 150 million

Bochnia – automotiveEUR 85 million

Ropczyce – aviationEUR 100 million

E X P O R T S I N 2 0 1 6

EUR 183.6 bn

T R A D E S U R P L U S I N

2 0 1 6

EUR 4.5 bn

A D V A N C E D E C O N O M I E S

86.2 %

T h e E u r o p e a n

U n i o n

80%

Increasing interantionalization of Polish exporters

$$$$$

$$

$

$$

$$$

$

Poland’s exports hitsPolish companies gradually attract new customers

around the World

2016Second

consecutiveyear of trade

surplus

Vehicles & accessories – automotive

Top producer in CEE23 bn EUR value of exports in 2016• 15% annual growth rate• The key component (43%): car parts and

accessories

LCD sets and household appliances

Largest manufacturer in Europe

Global companies located their

businesses in Poland

Yachts2nd manufacturer globally of small motorized yachts (up to 9 m length)

95% of Polish yachts shipped overseas

FurnitureNumerous Polish companies with global success

8 bn EUR in exports in 2016• 4th global exporter (2nd in Europe)• 7th global manufacturer Aviation sector

Over 130 companies manufacturing

Over EUR 1 bn of output90% of production exported

Windows and doorsThe leader in exports in Europe(wooden and PVC)

• 600 m EUR in exports in 2016• Exports grew tenfold between 2004 and 2016

Agri – food sectorLeading producer of sweets, dairy,

meat, fruits & veg

EUR 25 bn of exports value in 2016Over EUR 7 bn of trade surplus

80% of exports into the EU

New technologogiesComputer games and FinTech

Over EUR 1 bn of computer gamesexports in 2016

Over 80% of FinTech services exported

Azerbaijan – Poland: trade and investment cooperation

EUR54.5 m

Polish export to

AZE in 2016

2016/2015 (-50%) y/y dynamics

Great potential for re-building Polishexports, which valued over USD 100

million in 2015

EUR37.8 m

AZEexport to Poland in

2016

2016/2015 (+192%) y/y dynamics

Great annual dynamics, but results from the

low base (USD 13 m in 2015)

Trade cooperation

A number of prospective sectors: food-processing, energy, construction,

agriculture and know-how transfer

Automotive and machinery industry

Oil and gas industry – Azerbaijan and Poland could cooperatein a number of aspects, including technology transfer

Railway industry – Poland has a number of world classcompanies within the industry

Food industry – Poland is one of the largest food exporter in Europe

Logistics – Azerbaijan has a great logistics potential for Polish companies

Number of potential cooperation areas

New structure of institutional support

BGK’sInvestment Fund

Management

National

Development

Bank

Polish

Investment and

Trade Agency

Export Credit

Insurance

Corporation

Polish

Entrepreneurship

Development

Agency

Industry

Development Agency

Synergy effects

The new structure of all trade-enhancing governmental agencies coordinated by

PFR

The roadmap – foreign expansion package

Contact

PFR

The company is

given a dedicated

Project Manager

KUKE

BGK

TFI BGK

PARP

Foreign

Trade Offices

PAIH

De

ve

lop

ing

th

e o

ffer

EXPANSION

STRATEGYINTELLIGENCE

STRATEGIC PHASE

FINANCING

STRUCTURE

OPERATIONAL PHASE – PROJECT IMPLEMENTATION

Trailor-made service offer

for foreign expansion

of the company

FOREIGN

SUPPORT

Polish company

interested in

foreign

expansion or

investment

COOPERATION WITH

PROJECT MANAGER

After care

Network of Trade Offices

20

UNITED STATES

San Francisco

AFRICA

Nairobi

ASIA

Shanghai

Ho Chi Minh City

Singapore

EUROPE

London

Frankfurt

Budapest

Milano

CANADA

Toronto

MEXICO

Mexico CityMIDDLE EAST

Teheran

70 TO globallyBy 2019

9 TO operating

Trade Offices to be opened in 2017

Summary

POLAND’S5

CHARACTERISTIC

S

01

Credibility

97% of foreign investors

would invest again in

Poland (PAIiIZ/HSBC),

96% - in AHK research

02Stability

Significant increase in

employment generated

by the FDI, in spite of the

political changes

03

Predictability

Foreign investors are welcome, no dramatic

changes in the macro policy, no Brexit in Poland

04 05

Productivity

High motivation, works ethics,

hard-working and creativity of

the Polish workforce

Sustainability

Ambitious economic and social reforms

to be implemented in the coming years

We turn global

Looking forward to cooperate!

00-585 Warszawa, ul. Bagatela 12tel. (+48 22) 334 98 00, fax (+48 22) 334 99 99

e-mail: invest@paih.gov.pl

invest@paih.gov.pl

www.paih.gov.plwww.pfr.pl