A call for change
Stanisław Szewczyk is the president of the Foreign Investors Chamber of Industry and Commerce in Poland.
All the evidence seems to point in the direction of an improvement in the conditions for foreign investors this year.
Legal changes to make business operations easier, promised by the government for some time now, should find their way into the package of parliamentary acts and government directives connected with deputy prime minister Grzegorz Kołodko's plans for public finance reform.
Also the largest representative business bodies in the country are preparing (for the first time in a joint effort) an economic program containing a series of propositions and suggestions that stand a greater or lesser chance of being included in the government's plan. Their implementation would mean a significant improvement of conditions for investors.
The Foreign Investors Chamber of Industry and Commerce has put forth a large number of propositions. It is our opinion that there is a need for a more ordered and simplified legal system. This applies to the regulation of economic activities and tax laws in particular. It is necessary to improve the taxpayer's standing in relation to the authorities, to simplify the registration procedures and changes in the National Court Register and to improve the operations of the courts.
It is crucial to eliminate the following phenomena:
- the increasing deterioration of the quality of law
- inconsistency in regulations
- inefficient verdict executions in relation to claims brought up in civil law courts
- delays in legal procedures both in civil law courts and in company registrations, changes in the National Court Register, land registers, etc.
The quality of the work of the courts and other institutions of justice has been deteriorating from year to year, as demonstrated by not only social perception, but also a whole series of facts that have been confirmed by the verdicts of international tribunals.
Our legal system does not enjoy a good reputation either here or abroad. Bad laws, poorly implemented and constantly changed, lead not only to a deterioration in the business environment, but also to corruption, dishonesty and all sorts of improper dealings. The existing complex laws regarding construction, development planning and environmental protection hinder investment to a very high degree.
The government should step up its efforts to bring more order and simplicity to the country's legal system, especially with regard to economic activities. Representative business organizations should indicate the direction of future operations.
We hope for significant improvements in the immediate future as we notice with interest the idea that the institution of an Entrepreneur Ombudsman should be created. Our legal system makes for a significant inequality between economic entities, while entrepreneurs do not have an institution that would protect their interests. The situation could be remedied by setting up an ombudsman, answerable directly to the prime minister, who would have a range of legal rights at his disposal. It would bring significant improvement to the business environment. The ombudsman's powers would include in particular the following rights:
- to intervene in any proceedings of which an entrepreneur is a part whether they take place in court, before an administrative body or elsewhere
- to demand an explanation from any state or self-government institution on any case in which an entrepreneur's rights may be breached
- to initiate and give opinions on any projects of legal acts that are important to businesses
- to apply to the Supreme Court for an annulment in any case involving an entrepreneur
We also support the notion of a decisive cut of corporate income tax rates to 18%-20% in a single sweep, rather than over a number of years, starting next year.
We believe that the cost of loans is too high and that it should be reduced by limiting the disparity between the central bank's interest rate and the rate of inflation, which is presently 5.5%. Should this disparity be reduced to the level found across the world, 1%-1.5%, it would allow for interest rates on loans at roughly the EU's level. It should be brought about that the levels of obligatory National Bank of Poland provisions for commercial banks, coupled with the measure mentioned above, would boost the number of loans available for businesses.
We also put forward the notion that the Monetary Policy Council should set its inflation target at 3%-4% over the next two to three years, as the current policy is in danger of bringing about deflation, while modest inflation would allow for a controlled level of growth.
It is also very important that the excise tax for a given product does not exceed the level found in EU member and accession states.
These proposed changes would create a much better business environment than is the case in other countries. The "revolutionary" changes in CIT tax, accessible and cheap loans, comparable or lower rates of other taxes together with improvements in the infrastructure and the quality of laws, as well as a 40 million-strong market would put our country in a much better position with regard to attracting foreign investment.
