KAZAKHSTAN - POLAND: Our priorities are similar
Kazakhstan is a promising economic partner for Poland
The Deputy Minister of Economic Development of the Republic of Poland, Mr. Radosław Domagalski-Łabędzki, gives an exclusive interview for Kazakhstan Magazine.
Kazakhstan is for Poland and the entire European Union an important economic partner on the Asian continent in respect of trade and investments. The fact that the European Union has signed with Kazakhstan as the first country in Central Asia the new Enhanced Partnership and Cooperation Agreement (EPCA) highlights the importance of and the role that the Republic of Kazakhstan plays in developing such ties. I am counting on this Agreement to facilitate deeper collaboration and to elevate the mutual relations to a qualitative new level, similarly as with Kazakhstan’s accession to the World Trade Organization.
Being located at the crossroads of the world’s major trade routes today, Kazakhstan is standing out for its big growth potential, and owing to the creation of the International Financial Center in Astana, Kazakhstan is strengthening its position on the global capital markets. Therefore, the Government of Poland has the will to implement joint undertakings that will propel companies to expand operations on European and Asian markets. Another positive impact for our two-way trade and investment relations also comes from the fact that Kazakhstan and Poland are among the founding members of the Asian Infrastructure Investment Bank.
Our two countries together build on the years-long tradition of economic relations which in effect have more than doubled our two-way trade over the recent decade and have witnessed an increasingly strong interest by Polish companies to invest in Kazakhstan.
Last year, trade between Poland and Kazakhstan totaled 1.2 billion euro, including 0.36 bn euro worth of Polish exports and 0.85 bn euro worth of Polish imports. Poland exports to Kazakhstan, among other things, medicinal drugs, toiletries, cosmetics, construction chemicals, furniture, agricultural machines, industrial fixtures and fittings, air-conditioning equipment and foodstuffs. From Kazakhstan we buy mainly mineral fuels, propane, butane, frozen fish and cereals.
Polish companies want to invest in Kazakhstan
Kazakhstan’s high rank in the World Bank’s Doing Business indicators proves how attractive it is for investors, encouraging them to make business decisions to locate new projects in this country. Polish entrepreneurs feel equally encouraged to invest in various Kazakh economic sectors, such as oil and gas or pharmaceuticals where Polish drug producers already have a successful track-record. Likewise, construction services, highway and railroad infrastructure companies favor the opportunities to deepen their ties with Kazakh business partners.
The prospects to boost Poland’s exports to Kazakhstan also relate to the participation of Polish companies in implementing key government programs for projects designed to develop transport, industry, housing-municipal and tourism infrastructure. Furthermore, we examine the avenues for Polish companies to bid for contracts under the government privatization programs.
Polish investors regard petrochemicals, chemical industry, mineral extraction and agri-food processing as the most attractive sectors of the Kazakh economy.
Particularly food-processing is our major specialization, because Poland is among the largest net exporters of foodstuffs in the EU. On top of it, Poland specializes in high quality, ecologically healthy food products which represent a prospective very high growth market in Asia.
We also take note of big opportunities for Polish manufacturers of building materials and construction machines, as well as those specializing in highway and railroad infrastructure projects, power grid retrofit, oil refinery construction and logistics. Kazakhstan’s innovation-led sectors such as pharmaceuticals and aviation represent a big growth potential.
In Poland, the mission of financial support for exports and foreign investments by Polish companies is the responsibility of Bank Gospodarstwa Krajowego (BGK). Being a state-owned development bank, it tailors its financial support measures to industry specifics, ranging from the financing of investments in production plant to corporate acquisitions to financing exports of machinery and consumer products.
Under the Government “Financial Support for Exports” program, Bank Gospodarstwa Krajowego is coming up with easy lending facilities for the foreign buyers of Polish goods and services, and for their respective banks. With the instruments being offered by the BGK, Polish exporters can safeguard transaction security (with BGK taking the risk of a contractor’s insolvency) and improve their liquidity (with BGK discounting receivables on deferred terms). Support can be obtained both for project financing with a Polish company as the general contractor (example: factory or hotel construction) and for the delivery of capital goods (such as production lines or transport vehicles) as well as consumer goods (e.g. foodstuffs or clothes). The export deals secured by the BGK in 2015 included facilities to finance the export of mining machines to Kazakhstan.
BGK also supports the expansion of Polish companies on foreign markets. In this respect, it provides credits for acquisitions of foreign companies and for investments in foreign-based affiliates of Polish capital groups.
Also, the Foreign Expansion Fund created by the BGK Group can get involved in lending, but above all can buy back from a Polish company a part of stock held in its foreign-based affiliate. The Fund always holds a minority stake, leaving a project management in the hands of a Polish partner and supporting him through the supervisory board of a foreign company. All such solutions can be used by Polish companies investing in Kazakhstan and followed by Kazakh institutions intending to support Kazakh entrepreneurs.
In return, Poland is offering Kazakh investors good conditions for business in our country as confirmed again by „Doing Business”, which affirms that Poland is one of the EU’s most attractive destinations for foreign investments. We also lead the investment attractiveness ranking among the Central-East European countries.
New open-door approach
We attach big importance to the development of our bilateral cooperation as evidenced by the featuring of Kazakhstan in the ranking of our best promising economic partners. I hope that the visit by President Nursultan Nazarbayev to Poland scheduled in August this year will give a new impulse to relations between our two countries, making them even deeper and stronger. Our involvement to this end is also reflected in the Polish government decision to participate in the International Specialized Exhibition Expo Astana 2017.
Recent weeks have seen many bilateral political-level meetings which promote the strengthening of our cooperation. Last April marked the 7th session of the Polish-Kazakh Intergovernmental Commission on Economic Cooperation. Early in May, the Marshal of the RP Senate paid an official visit to Kazakhstan. We will also be present at the Astana International Economic Forum, opening up new avenues for expanding and diversifying our cooperation.
We would like to see good political and economic relations with Kazakhstan and other states in the Region contribute to the realization of the New Silk Road projects. Being a gateway to Central Asia, Kazakhstan is playing a special role in the building of economic ties between Europe and Asia, while Poland is playing a corresponding role as a gateway to the European Union.
We have shared many years of good economic relations and similarities in economic priorities. Additionally, Kazakhstan is a country with a significant community of Polish ancestry who are active in our two-way relations and who successfully promote our business ties.
Poland’s current economic outlook
Poland continues as a stable economy. In 2015 the GDP grew in real terms by 3.6%.In that year, domestic demand was the main growth driver. Capital spending in 2015 increased by 5.8% over and above the GDP growth rate, which was facilitated by a high level of cost-based competitiveness of Polish companies, their stable financial footing and low interest rates. Polish exports increased by 7.8% to the tune of 178.7 billion euro, while imports went up by 3.9% totalling 175 billion euros.
As projected by the Ministry of Development, the GDP real growth will be accelerating in effect of the reforms program now under way, economy’s modernization and investment dynamics from European funds. The GDP growth is projected at 3.8% this year, and possibly in excess of 4% in the subsequent years.