Wojciech Szelagowski,  Vice-President of the Polish Information and Foreign Investment Agency (PAIiIZ), discusses opportunities and incentives for foreign investors in Poland with Agnieszka Flakus.

- The total amount of foreign investments in Poland for 2006 was 15 billion dollars. What are the estimates of foreign capital inflow in Poland for the year 2007?
Wojciech Szelagowski:The year 2004, with nearly 13 billion dollars of foreign direct investments, was also noteworthy, but we must remember that it was mainly the result of a single transaction: the purchase of Telekomunikacja Polska by French Telecom. The year 2006 was in fact an absolute record. The share of privatization in the 15 billion dollars was much lower than in 2004, which means that the investments were a direct boost to the economy: they made it to the market in the form of real estate, equipment, machinery, and human resources. Estimates for 2007? I think that we should be glad to match last year's results. We are aiming, however, not just at maintaining or increasing the investment capital, but also at another factor, perhaps even more important - the number of new jobs.

- Are there any concrete goals as to the number of new jobs you would like to achieve this year?
W.S.: Unfortunately, we don't have specific numbers. However, we have noticed a trend for the last year: the creation in Poland of a number of service centers which assist large foreign corporations in outsourcing their operations to Poland. There are already over 60 of these outsourcing centers in Poland. This is a trend we would like to maintain as it is a primary source of jobs creation.

- What are the main incentives which attract foreign investors to Poland? In other words, why should foreign companies be interested in our country?
W.S.: We are also asking that question, especially to the companies which have invested in Poland. The answer is all the more critical because there is a great deal of competition with other countries for foreign capital, not only with our immediate neighbors but also with distant nations such as China or India. What attracts investors to Poland? The greatest asset we offer are our citizens who are well educated and dynamic. The young, energetic quality of our society, the image of a new Poland, is very attractive to investors. Moreover, Poles have a reputation for being hard-working. This is feedback we have received from representatives of large companies that have decided to develop their corporate activities in Poland, for example Motorola, IBM, Dell, and others.

- So our educated workforce tops the list of reasons for foreign investment in Poland. Are there other contributing factors?
W.S.: The first important aspect might be the high quality of life that many who left Poland 20-30 years ago did not expect at all. I think that Poland's geographical location in the heart of Europe is another determining factor. That location has been problematic for many centuries as enemy armies marched through Poland from East to West and made Poland a theatre of war. Today, however, in times of prosperity, the country has become an excellent place for conducting business. Poland has easy access to an enormous market of around 250 million people, wealthy citizens of other countries, such as Great Britain, France, or Italy, and eastern markets which offer great potentials. The location is also something that attracts companies interested in production or providing services.

- Have recent political scandals in Poland dampened investors' interest in Poland?
W.S.: Luckily not. In Poland, it's a bit like Italy: just look how many times their government was reshuffled within the past few years. Fortunately it does not seem to bother investors. The Polish economic situation resembles that of stabilized markets where the economy is

 developing well. The data for the fourth quarter of 2006 indicate a 6% increase of the GDP compounded annually. It is an excellent result, especially with respect to the countries of so-called 'Old Europe' which have not experienced such growth in a long time.

- Since we are speaking about investment incentives, could you tell us what most attracts Americans to Poland?
W.S.: I think Poland has a particularly favorable attitude towards America. Poles still look up to Americans. I think that if we were to conduct a referendum on currency change in Poland, most Poles would probably opt for conversion into the U.S. dollar rather than the Euro. We still like Uncle Sam and believe in him, which is quite evident. This attitude is rooted in us. Please note that anti-American tendencies are very strong in other European countries: this can be seen in the media and translates into human relations, as well. However here, on the Vistula River, the situation is the opposite. A visitor from the United States is treated as a friend.

- This must favor the development of mutual trade relations'
W.S.: This is what we are counting on. Many Polish émigrés have succeeded in the States and we hope that this success

 will influence the way they perceive their old country and realize that it is completely different than the one they or their parents left. Today, Poland is a very good place to do business with Western Europe as well as with the East. It is a place to grow and where one can bring one's experience. And it's not just a question of money, but also a way of understanding our culture and our language.

- Before we talk about the campaign to boost the image of Poland abroad, I would like to ask you which economic sectors attract the greatest amount of American capital investment?
W.S.: There is a lot of talk about new technologies, especially regarding missile defense systems. Many people have been writing on this topic recently. The automotive industry is still very popular. However, we hope that large American companies will start outsourcing their research and bookkeeping and financial services to Poland. To my surprise, especially as a banker, the American financial market is represented in Poland exclusively by Citibank which is practically a global bank. As to insurance companies, there is of course AID, but from the perspective of a potential of a world leader, much is left to be done'

- It seems that Poland is interested in pursuing American investments'
W.S.: Without a doubt.

- Are there any new American investments being planned in Poland?
W.S.: Our agency, PAIiIZ, encourages companies to invest in Poland: we portray the country as a very good place for conducting business, but the last word is the independent decision of a given company. We follow a convention according to which we will make public only those investments that can be disclosed upon the agreement of the company. But I can say that there are a number of large, very well known players with whom we are negotiating who may be settling on the Vistula River.

- In that case, could you name a few companies that have recently invested in Poland?
W.S.: The inflow from the U.S. has been steady for the past several years, and these are companies which are very familiar to everyone. I will be glad to mention two of the most recent examples. The first is the computer company Dell which is locating near Lodz. Only a few months ago there was an empty, wind-blown field where the factory is being built. As of now, the foundations have already been laid. Dell has made an investment of around 200 million dollars, which will create new jobs for around 3,000 people at the factory alone, not to mention employment for sub-contractors and other cooperative services. We are happy to say that this is an investment which will boost the entire regional economy.
The second project is in the field of research and development. There is a new IBM center being built in Cracow which employs over a hundred people, including programmers and engineers who are designing new software programs and applications. Poland has a modern, educated workforce which can generate quality products which can be exported and compete in the global market.
There are, of course, many American projects in Poland because our two nations cooperate on a constant basis. We should probably also mention the aviation industry and the contract between Sikorsky and Boeing. In this latter case PAIiIZ played a much smaller role, as we work less frequently with military contracts.

- What geographical areas in Poland are most attractive to foreign investors, especially Americans?
W.S.: Anything from the Odra to the Bug Rivers. Poland offers an increasing number of well-prepared industrial sites with developed infrastructure. A service provider or a designer needs at most an office in a pleasant location and good telecommunication. This can be found in any place in Poland. Poland is a country in which every region has a larger city, and the number of well-educated, well-trained people is not only impressive, but also uniformly distributed throughout the country. Of course, large cities such as Warsaw, Cracow, Wroclaw, Katowice, and Gdansk are the most obvious, but smaller locales also appeal to investors.

- Do economic zones continue to be more attractive for foreign investors?
W.S.: There are 14 economic zones in Poland and they definitely constitute an incentive, especially for production investment, but also for services, which I mentioned a little earlier. It must be noted that the Polish model of the economic zone is very interesting in that the company does not have to adjust to the location of the zone, but the zone often follows the projects and can expand to include areas that are later identified as attractive and interesting.

- What makes the economic zones attractive?
W.S.: The basic incentive within a zone is tax exemption of up to 50%. In accordance with European Union regulations, these exemptions will be enforced until 2017. The administrators of many zones have designed their own development strategies and specializations in given sectors. What matters to an investor is the level of services: the support which is available to assist with the administrative procedures associated with an economic zone.

- Let us return for a moment to the activities of PAIiIZ. What kind of support do you offer to foreign investors?
W.S.: Our agency was created to assist international corporations in the process of locating their operations in our country. We distribute general information about Poland as well as about specific investment opportunities. We approach every project individually; a project manager is assigned to each company and guides them through the entire process. PAIiIZ helps companies choose the best locations for their operations, and facilitates the process of making connections with local authorities, administrators of economic zones, or with universities, if needed. We assist in the whole set-up process.

- PAIiIZ is also charged with seeking out new investors...
W.S.: Yes, we actively seek contact with companies which are interested in development. We want to show that Poland is the best place for development in Europe, but also that it is a good starting point for other investment activities. We participate in many promotional campaigns. For example, we visited the United States twice this year.
In January, we participated in an event organized by the Heritage Foundation, and in February we took part in an informational tour which visited several places including Silicon Valley, Saint Louis, and Atlanta. We met with CEO's interested in cooperating with Poland and we presented our country and its investment opportunities. We will probably return to the U.S. in the fall.
We are also planning regular visits abroad in upcoming months. We do not organize media campaigns, because they are very expensive, but we try to reach out directly to companies in selected sectors that show the greatest potential for success. I think that such targeted marketing is more effective than general campaigns.

- What are the main problems faced by foreign companies in Poland? I read once that Polish legislation was a large problem'
W.S.: The Polish legal system has largely adapted to the standards of the European Union. In fact, our membership in the EU has been an important factor in Poland's economic development and its impact is hard to overestimate. The European legal system may differ from the American one, but the differences are not insurmountable. The greatest difficulties that investors face in Poland are those of infrastructure (for example the network of roads, telecommunications, and access to both airports and sea ports). But the infrastructure will continue to develop and Brussels offers us resources for development in this area. When we add together all the European Union resources at our disposal within the next five years, to our own input and the foreign investments we plan to obtain from other countries, the sum is enormous: over 100 billion dollars over the next five years. This is a great boost to the Polish economy.

- Recently, four companies have concluded an agreement according to which they will offer and provide services to foreign investors interested in Poland. These companies include: Cushman & Wakefield, real estate; Hewlett-Packard Poland, computers; Beker & McKenzie, law and taxes; and Russeul Raynolds Associates, management recruitment. What is the role of PAIiIZ in this project? Will they constitute competition for you?
W.S.: No, this is not competition. We have cooperated on this initiative from the start. Everyone who wants to support us in presenting Poland as an attractive place for investments is our friend and we do not view them as competition. What are the differences between their services and ours? Their project is private, commercial, and geared towards profit; we offer similar services at a much reduced cost because PAIiIZ is a governmental organization, designed to provide services to foreign companies in Poland.

- Earlier we mentioned the promotion of Poland abroad. You have already organized two advertising campaigns for the BBC. There were also advertisements in the Financial Times. Whom do the ads target? What is their general message?
W.S.: The advertisements aim above all at creating a positive image of the country. They are supposed to give the audience an idea of what is happening in Poland today: to inform them about the country's dynamic growth, new opportunities and possibilities. Many people who have seen our last TV spot were surprised that the pictures on the screen were taken in Poland. They were in total disbelief. The pictures were really from Poland. It is very important to us that the ads contribute to altering the image of Poland: it is no longer a peasant, rural country with weeping willows. Of course, we value our culture, but modern Poland is not just Chopin and folk culture. It is important to show what is happening in Poland today.

- How can you verify whether an ad reaches the proper audience?
W.S.: Before broadcasts, there were screenings with test groups. We have also requested viewer information during broadcasts, and we received a very good response. I think that our actions are not disappearing into the void. The next challenge is to bring more uniformity to the image of Poland as it is described by different organizations. We want everyone to speak with one voice.

- What are the future promotional activities organized by PAIiIZ?
W.S.: Over the next few months, we are planning a promotional campaign targeting specific companies, including, for example, investment seminars. We are focusing on activities involving direct contact with interested organizations and companies.

- Will PAIiIZ representatives participate in business events organized abroad, such as the Polish-American Trade Show which is to take place in the suburbs of Chicago in May?
W.S.: We make every effort to participate in important events that may have a direct impact on attracting investors. With regard to the Polish-American Trade Show, our presence is not yet decided.

- PAIiIZ has recently undergone some turnover in high-ranking personnel. Do these changes affect the achievement of PAIiIZ's goals?
W.S.: Personnel changes do not have a direct impact on PAIiIZ's activities. We assure companies uninterrupted access to current information. We have a team of skilled project managers who are at the investors' disposal, and we make sure that they provide the best service possible. Who the agency's president might be at any given point of a project's development does not change much. Of course, stability makes work easier, but life is never ideal and we should do our job and not complain.

- Thank you for the conversation.