Through tough structural and institutional reforms, Poland has become a leader in the region and has been able to survive the grueling tests of a global financial shakeup. Its membership in NATO and the inevitable integration into the EU will further strengthen the country’s role in the region.

Many challenges undoubtedly remain for Central Europe’s largest country before it becomes a full partner with the West. Even though it is a different country than a decade ago, Poland’s farms, factories and bureaucrats still have a steep hill to climb before they meet European standards. Industries like telecommunications, construction and energy are still crying out for investment and restructuring while many state-owned enterprises face a heavy burden. The push down the road to integration with the West may lose popularity as the cost reaches deeper into Polish pockets.

As Poland strives to secure its spot on the international plateau, pressures to change will only intensify. But the country has already proven it is different. Poland exemplifies progress through reform.

The last five years have provided a gross domestic product growth rate between 5 percent and 7 percent. Both inflation and unemployment dropped to below 10 percent last year, and despite a global slowdown, growth of 5.1 percent is predicted for 1999.

These statistics are helping make Poland the destination for billions of dollars of foreign investment. Low labor costs and widely available skilled labor combined with a huge domestic market and 17 special economic zones are attracting eager investors from around the globe.

Vice Premier and Minister of Finance Lescek Balcerowicz

Privatization of Poland’s largest enterprises has also played a role in the country’s growth. Proceeds from privatization in 1999 are expected to be in excess of $4 billion. “Poland is one of the most fascinating countries in the world in terms of attracting foreign investment,” stated Dr. Andrzej Polaczkiewicz, managing director of the Foreign Investors Chamber of Industry and Commerce, an agency assisting foreign investors in Poland. The organization provides consulting services and helps to promote and coordinate investment projects.

“Germany has supplied Poland with very high technology. Today, many Polish companies are operating at a very high level and offering products that are competitive with other parts of the world.”

A bourse to reckon with

Even the Warsaw Stock Exchange has shown continuous growth in a year characterized by many sluggish bourses.

One of the oldest stock exchanges in the world, the Warsaw bourse was founded in 1817. It operated until 1939, but after World War II, due to the change of political and economic systems, capital markets could not be re-established. In 1991, the exchange was set up again, ironically enough in the former headquarters of the communist party, and it has shown enormous growth in the past nine years. At end of 1998 the listed companies numbered just shy of 200 and had a market capitalization increase of more than 60 percent.

The initial public offering of Telekomunikacja Polska SA, Poland’s national fixed-line telephone company, was the biggest news of the year as 15 percent of the company’s shares, owned by the state treasury, were floated to attract foreign investors.

“LOT Airlines, large oil refineries, electric companies and the shipyards are scheduled to be listed in 1999 to draw a new class of foreign investors,” said Dr. Wieslaw Rozlucki, president of the Warsaw Stock Exchange. “This will change the market capitalization. We are still in the fortunate position of being able to privatize some of our crown jewels.”

Winter snow dresses up Krakow's historic main market square.

“In particular, the market is awaiting the privatization of large enterprises. It has never had a problem to digest these large, attractive companies. On the other hand, great progress has also been made among small and medium-size businesses. There are thousands of entrepreneurs, and the number of new companies in Poland is incredible. This not only shows the strength of the Polish economy but of the people as well.” Rozlucki warns investors against the tendency to group all Central and Eastern European countries together and perceive them as one economy. “Our task is to differentiate ourselves in the region and prove that we will react differently,” he said. “Poland is not a target for hot money. Emphasis is on transparency and maintaining a close correlation between the actual facts and the figures reported. We are striving to attract cautious investors who like to invest in a transparent market. We’d like to see more investment from Japan, too.”

Strategic partner
Prime Minister Jerzy Buzek, the eighth prime minister of Poland since the fall of communism in 1989, speaks about the changes his nation faces.

What sector will have the strongest impact on the future economic growth of Poland, and what is being done to improve Polish exports?

At the turning point in 1989, the Polish economy was weak, having been practically destroyed by 45 years of isolation from free market mechanisms, and it was also suffering from a financial crisis. The economy was based on exploration and export of raw materials, especially coal, to our main trading partners like the Soviet Union and other countries of the Council for Mutual Economic Assistance.

Prime Minister Jerzy Buzek of Poland

In recent years the Polish economy has successfully ridden out the crisis. Inflation was tamed and foundations were laid for an economically strong system. However, the problem of giant state industries, which were indebted both to external creditors and the state treasury, still needs to be sorted out. Such industries as mining and steelworks have to be restructured. One of the most important tasks for the Polish economy is to reach higher export levels. We are trying to analyze and assess our export processes in order to forecast areas where growth in exports will exceed growth in production sold.

What is your opinion on the development of relations between Poland and Japan?

Relations between Poland and Japan have a long tradition. This year, we will celebrate the 80th anniversary of establishing relations between our countries. We consider the anniversary a very important event, and Poland perceives Japan as having great international importance. We treat Japan as our strategic partner in Asia.

Permanent political dialogue and a wide range of contacts in many areas tend to justify our expectations of Japan. Both sides agree, however, that our economic cooperation is still nor fulfilling the potential of the two countries, particularly in the amount of Polish exports to Japan.

In 1997, the total value of trade between Poland and Japan amounted to $792 billion, yet only $58.2 million was Polish exports. Nevertheless, we are pleased to note that in recent years the number of investment projects involving Japanese companies has continued to grow in our country. I would particularly like to mention such companies and ventures as Philips Matsushita, Battery Poland, NSK/Nichimen, Marubeni, Hitachi, Panasonic, Sony, Nikko Denki, Pioneer and Bridgestone-Firestone Poland, which have contributed to the growth in investments.

What benefits will Poland’s membership in NATO bring?

Poland is a country of Central Europe, and Poles have always had strong feelings about being part of the Western European civilization. For several years we have been a member of the Council of Europe, and currently we are aiming to strengthen links within our region. Applying for membership in the European Union will help Poland’s social and economic position. The entry into NATO, possibly this coming winter, will enable us to increase our external security, which has historically been full of misfortune. As a member of NATO, we will not limit ourselves to just enjoying the benefits of security generated by the organization; we will actively contribute to it.

Why has Poland become such an important target for foreign investment?

Our geographic position is advantageous to trade. We are at the crossroads of some major European trade routes. We have a fairly large population of about 40 million and are neighbors with Russia and Germany, an economic giant. We also have strong links to the West. Poles have a good educational background and have been focusing on improving their communication skills. Moreover, Poles have always liked people from other countries very much and are happy to have them as guests in their homes and in their country.

A transforming city

Since 1989, the arrival of the market economy in Poland, the face of Warsaw has undergone rapid changes. The city's skyline is a tangle of cranes and buildings-in-progress.

Warsaw is quickly becoming the most dynamic and cosmopolitan city in Central Europe. Monstrous postwar slabs are being replaced with newly constructed steel-and-glass towers, while shop windows are being filled with color and design. Within a decade, Warsaw has changed into an exciting, busy, Western-style city attracting businesses from all countries.

The city is set roughly in the center of the country and has 1.6 million inhabitants. This is twice as populous as the nation's second largest city, Lodz. Its size and status make it the focus of political, educational and business life in Poland. No matter where your interests lie, Warsaw can offer more in terms of luxury hotels, theater, restaurants, shopping, museums and other services, than any other Polish city.

In the middle of it all

Poland's capital is a sprawling city, so the city center, close to all businesses and many tourist attractions, is the most convenient place to stay. In the heart of the city stands the most visible relic of the communist era, the Palace of Culture and Science. This 230-meter structure was a gift from Soviet Russia to the people of Warsaw in 1952. It resembles Moscow's tower blocks built in the style of socialist realism.

Across the street one can see the largest hotel of the city, the Forum Hotel Warsaw. Covered with a runway-sized Pepsi banner, it is a member of the Intercontinental Hotel Group, located at the intersection of two main streets in Warsaw – Marszalkowska and Jerozolimskie. With 733 rooms, this monolith offers superb views of central Warsaw and is right in the middle of the business hub.

"Our location in the city center is the best in Warsaw," said Wieslaw Wilk, general manager of the Forum Hotel Warsaw. "This is the best place for guests of the city, particularly for businesspeople. Everything is within their grasp. There are shops, different museums, the ministries, banks and foreign trade organizations. One can walk to all of these places within 10 minutes. That is why we are the choice for those conducting business in Warsaw."

This year marks the 25th anniversary of the hotel. It was originally designed to cater for tourists, especially those coming in groups. Nowadays, the Forum has recognized the importance of Warsaw as the business capital of Poland and is therefore adding more services for businessmen. In 25 years, "we have created very good relationships with the local business community," said Wilk.

Even though Warsaw has become the business center in Poland, it still lacks sufficient conference and exhibition facilities. This is yet another advantage for the hotel. It can accommodate conferences, banquets or exhibitions up to 500 people and it has smaller meeting rooms for private conferences and meetings.

"We want make the Forum a more attractive place for people doing business in Warsaw," said Wilk. "That is why we are planning these renovations. We are sure that we can fulfill all of our guests needs and that they will be more than satisfied with our services."

Wieslaw wilk, general manager, Forum Hotel, Warsaw

As Wilk pointed out, like in all industries, one has to focus on becoming closer to the guest. "This is very important for us and our guests. We have been changing the mentality of the people working in the service industry. It may sometimes be more difficult to change the stereotypical view of what people are like in Poland. People are friendly." Many things have changed in Warsaw over the last ten years. In 1989, according to Mr. Wilk, there wasn't much competition. There were only three hotels appropriate for receiving guests. Today, there are about 12 very expensive hotels in Warsaw.

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