Desperately seeking incentive
Poland's image in the eyes of foreign investors as one of the safer emerging markets to plow money into is deteriorating faster than even the most cynical observers could have predicted.
The economy isn't solely to blame. Barely 60 days into the Democratic Left Alliance (SLD)-led government's tenure, the anti-foreigner politicking, botched investment opportunities and the growing number of privatization deals that look set to be undone or delayed are growing by the day.
The timing couldn't be worse. Given the grim report card of Poland's economy, budget problems and escalating unemployment, foreign seed money and the wealth it brings for workers, managers and the state's coffers is desperately needed. Yet the government, led by Prime Minister Leszek Miller, has so far appeared unwilling to forge a policy that will lead investors to believe that their ideas, know-how and job-creating endeavors are valued here.
Perhaps this isn't the case. But how else does one explain the chilly approach of Treasury Minister Wiesław Kaczmarek last week when he announced he would not extend next month's deadline for Dutch insurer Eureko to get the permits it needs to take a majority stake in Powszechny Zakład Ubezpieczeń (PZU)? Given the stormy history of the deal, it should be concluded in good faith, not brushed off on the basis of technicalities, which now appears to be happening.
But the Eureko deal is only the tip of the iceberg: Kaczmarek is also stalling on the sell-off of the country's No. 2 oil refinery, Rafineria Gdańska, to the U.K.'s Rotch Energy, saying the government needs more time to make sure Rotch has the agreed $1 billion for the deal to proceed. But when hasn't the government required financial guarantees before parting with the family silver?
Obviously, politics and history are tied to the sell-off of this country's core industries. But what about greenfield investments? These should be welcome enough. Why then is Poland on the verge of losing a O1.5 billion car plant to the Czech Republic? The deal, a joint venture between Toyota Motor and Peugeot Citroen, would provide several thousand jobs in Dąbrowa Górnicza, in southern Poland. According to the former economy minister, if Poland offered better investment incentives the Japanese and French would build their plant here.
Incentives indeed. So what incentive for foreign investors did Miller have in mind two weeks ago when he remarked that Poland "must be living under some sort of occupation" in response to multinational banks' moves to offer long-term savings accounts? This government must stop sending out the wrong signals and create the right conditions for foreign investors and domestic businesses to operate without worrying about politicians suddenly changing the rules at a whim.
