PAIZ lists top investors for 2000
France Telecom (FT) led foreign investors in Poland last year, helping to boost foreign direct investment (FDI) to a record amount, according to figures released last week by the Polish Agency for Foreign Investment (PAIZ).
Altogether, foreign concerns invested $10.6 billion in Poland in 2000, bringing the last decade's total FDI to $49.4 billion. FT, together with Poland-based Kulczyk Holding, last year bought a 35% stake in Telekomunikacja Polska (TPSA); FT paid $3.14 billion, making up a significant share of FDI for the year.
Economists said 2000 was a strong year for investment but noted that PAIZ's figures are suspect.
"In our opinion a good number is $9.3 billion (for 2000 FDI)," said Konrad Soszynski, an economist at Kredyt Bank. The National Bank of Poland counts FDI from its balance of payments data and said it reached $9.3 billion last year.
"This is a good number but in this figure the big part is the income from selling TPSA," he said. "But this is generally a good year for foreign direct investment in Poland this is the highest level of direct investment."
FDI will likely taper off in 2001, possibly to $6 billion-$7 billion, Soszynski said, noting that the first two months of the year have been strong considering the absence of major privatizations.
PAIZ noted that 35.5% of FDI for 2000 has come from privatizations. A big part of this year's FDI will depend on the government's program to sell off state assets, said PAIZ president Adam Pawlowicz.
The government said it wants to complete the initial public offering of insurer Powszechny Zaklad Ubezpieczen (PZU) and plans to sell a further stake in TPSA this year. Major privatizations are in the works for oil, coal, power, mining, steel, defense, sugar, liquor and banking companies, though a final timeline is uncertain. With PZU, for example, the Treasury Ministry only made peace with strategic investor Eureko this month following a protracted battle that had stalled PZU's ongoing privatization. With TPSA, FT has backed away from taking a further stake.
In addition to privatizations, investor sentiment leading up to this fall's parliamentary elections and changing regulations for Special Economic Zones, which offer tax breaks to investors, will influence this year's FDI figures, Pawlowicz said. PAIZ officials also said the government should focus on improving infrastructure and reducing administrative barriers that discourage international investors, especially in the face of competition from the Czech Republic and Hungary.
Some of Poland's largest investors have had significant trouble on the market either because of the economic slowdown or trouble with strategic partners. From the list of Poland's top 15 investors, auto manufacturers Daewoo and Fiat are feeling the pinch of slowing auto sales and are laying off workers; media conglomerate Vivendi is fighting with its Polish partner Elektrim; and insurer Eureko only recently settled its fight with the government.
Companies and organizations with success in the Polish market are quick to note that these cases are exceptions. The European Bank for Reconstruction and Development (EBRD), which focuses on high-risk projects and is one of the largest institutional investors in the country, said its experience in the Polish market has been positive.
"I would say Poland is one of the most dynamic countries in the region," said Libor Krkoska, an economist at the EBRD. "It has the longest period of positive growth of any transition economy."
An Organization for Economic Cooperation and Development (OECD) report released last week highlights the generally positive influence of FDI but notes the vulnerability that comes with globalization.
"Firms dominated by large foreign direct investment have benefited from new capital and modern managerial and technological know-how in several sectors," the OECD said. "The investment rate of foreign-owned firms is much above domestic enterprises ... their labor productivity is twice the national average, they contribute to human capital formation and pay salaries higher than national averages."
However, local activities become dependent on mother companies' worldwide fortunes, the OECD wrote, specifically mentioning Daewoo. Foreign investors play a central role in several sectors, the OECD said, noting that as of 1998 outsiders owned 60% of total assets in banking, 50% in insurance, 40% in hotel and catering, and 29% in the retail trade with additional increases since then.
Still, Poland is lagging behind other Central European and OECD countries in terms of total FDI stock per capita, the OECD noted.
Behind FT in 2000, U.S.-based Citibank invested $1.06 billion in the banking sector, Sweden-based Vattenfall invested $438.8 million in power generation and distribution, Bank Austria invested $392.4 million in the financial sector, Sweden-based Telia invested $314.6 million in the telecoms sector, U.S.-based General Motors invested $300 million in the auto sector, U.S.-based General Electric invested $291.4 million in the financial sector and electrical equipment production, Netherlands-based Philips invested $255.7 million in electrical equipment production, France-based Alstom invested $255 million in transportation, electrical and optical equipment production, and Anglo-Dutch Shell invested $238 million in commercial activities, according to PAIZ.
By country, the top 10 investors through the end of 2000 were from France ($7.9 billion), the United States ($7.35 billion), Germany ($5.9 billion), the Netherlands ($4.22 billion), Italy ($3.42 billion), international concerns ($2.3 billion), the U.K. ($2.18 billion), Sweden ($2.03 billion), Korea ($1.62 billion) and Russia ($1.29 billion).
