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Poland may become another Singapore

Published on May 24, 2012 by: in: Economy

Poland may become another Singapore – Błażej Lenkowski’s interview with Cezary Smorszczewski

We are located between two powerful countries. The former is one of the greatest exporters in the world. We sell low-processed goods there and, as a result, our profits are insignificant. The latter country’s economy is based mainly on natural resources. Could we take advantage of that? Why not? I think that would be a great opportunity for Poland.

Liberte: Have you noticed any common goal which would encourage Polish society to take certain actions and unite Polish elites? Previously, we aimed to overthrow communism, engage in a democratic transition and become the member of the European Union. We have no common goal since 2004, although we seem to be looking for it. What else would encourage us to act? Just the crisis? What else can we do if we have already gone through the crisis?

Cezary Smorszczewski: I suppose that the actions taken by the government, in spite of the criticism, are reasonable. Before taking any other action, it should be considered what financial obligations may be imposed on the Treasury. I do not think that we could pretend to be Robin Hood even more. Money might be doled out if we robbed someone. But who could we rob? Mainly business entities and entrepreneurs. There is no better solution in macro and microeconomics than the increase of jobs and the improvement of labor productivity. It can be assumed then that we consider actions which refer to us as well as those who contribute to the increase of jobs. One cannot forget about innovations which improve the productivity and, as a consequence, knock the economy into shape. Is there any neat solution which would bring results immediately? I do not think so. Some people believe that shale gas may be a great opportunity, but it is like counting chickens before they are hatched. We discuss how to take advantage of it. We plan to establish a fund similar to the Norwegian one. We talk about the reforms of the pension system… But we haven’t started to mine shale gas so far! What else may generate profits then? I suppose this is the factor which we underestimate. Speaking in plain words, I would say that the geographical location may be advantageous for us. Investments in such infrastructures as roads, railroads and telecommunication services could breathe new life into Poland. We should be a connection between the East and the West. We should build the main airport. Why the transit airport is situated in Vienna? Why entrepreneurs do business in Prague, where economy is less developed?

L: Are you for building a transcontinental airport near Warsaw?

CS: First of all, every investment must be supported by a good business plan. It would be pointless to build a modern airport if there were no approaching roads, freeways and efficient telecommunication services. Moreover, such an airport may be built only if the local airlines are reliable. Are the Polish Airlines reliable? I will give the perfect example of a wrong decision. Greece raised first loans in 2004. Experts assumed immediately that they would not be repaid. So why Greece raised the loans? In order to build stadiums for the Olympic Games. Did it help? Greece became the focus of attention for several weeks without any doubt. But nothing more. We do not need such investments. It must be remembered, however, that the National Stadium in Warsaw is a successful project. I know people who are engaged in it. They have great ideas how to make use of the stadium.

L: Are you sure that the stadiums won’t lie fallow after Euro 2012?

CS: I am sure that the National Stadium in Warsaw won’t. The ideas will bring positive results. What the Poles need is continuation. In my opinion, the continuation of present politics may become the main source of stability. Nevertheless, strong opposition is undoubtedly crucial when one political party continues to wield power. I suppose that the opposition should have the right to veto decisions on fundamental issues. I will repeat the words of Tusk[1], “What we need is strong government”.

L: What may develop the relations between entrepreneurs and politicians? There is bad atmosphere among them. The relations remain soured and even Tusk is reluctant to meet with entrepreneurs. You probably gained valuable experience when you worked in PKN Orlen[2]. Can we do anything about it? Good relations in this field are essential.

CS: These community relations are false. There is no close relationship. It should be changed. Nobody but a few representatives of the government take care of that issue. Can you imagine to what extent German economy is influenced by the state? Experts value this at 49%. And what is the situation in France? 53% of French economy is dominated by the state. Angela Merkel and Nicolas Sarkozy claim that we should engage in matters which support national companies. Privatization is the process by which large-scale enterprises start to be governed by entrepreneurs. If the whole ownership structure changes, it is hard to reform all the surrounding elements simultaneously. This requires some time. The government should be encouraged to support the entrepreneurs. A number of companies have gained profits with reference to the abovementioned solution, but some large-scale enterprises still are not supported by the state. One should note that some sectors, such as electronics, infrastructure, telecommunication services and export, must be supported by the government. I believe that some fields need to be influenced by the state.

Taking into consideration that Polish government imposes more and more obligations on entrepreneurs, we cannot be under the delusion that the politicians are well-disposed towards investors. They aim to increase the VAT, prohibit double taxation avoidance agreements and impede entrepreneurs who plan to do business abroad. Moreover, politicians strive to introduce greater administrative restrictions and additional payments. Such actions are not the pride of our nation. Poland was to become another Japan. We did not manage. Then, Poland was to become another Ireland. Fortunately, we did not manage again. Why cannot we become another Singapore? The provisions concerning enterprises differ considerably between these two countries. Which Polish law on enterprises was the best? In my opinion, the law passed by Mieczysław Wilczek[3] in 1989 was successful. The legal act was concise and it included very common assumption that “everything is lawful unless it is prohibited”. But we have reversed these words. Therefore, it is claimed nowadays that “everything is prohibited unless it is lawful”. When it comes to the freedom of enterprises, the law of 1989 should be restored first. Next thing to be done is the reform of the judiciary concentrated mainly on fast decision-making, short legal proceedings, the enforcement of judgments and the observance of the law. One could argue that legal system in Singapore varies considerably from the European one. But I take regulations on economy into account. What is more, I suppose that the restrictions on the freedom of enterprises, which have been imposed on business entities from the East, are a huge mistake. It must be remembered, however, that the desire to become another Singapore concerns also the civil service. When and where Polish government examined the creativity of applicants? When public servants had to become concentrated on the effectiveness rather than the proper performance of duties?

picture: jjcb

L: The Ukrainians who aim to do business in Poland encounter severe difficulties. It must be emphasized here that Ukraine is outside the Schengen Area.

CS: Ukraine is our natural partner, similarly to Russia. We should allow them to do business here. What is more, I suppose that the cooperation with China would be a great opportunity for us.

L: Do you think that we should cooperate with China, regardless of some negative experience?

CS: In my opinion, it would be great to encourage any foreign investors to do business in our country! You are aware that such investments increase GDP and, as a result, make us richer.

L: We should take political systems into account. China is non-democratic and Russia is authoritarian. Would not Poland fall under the influence of these countries?

CS: I don’t think so because our economy is rather large and no one would even aim to dominate half of the enterprises. I am convinced that the cooperation with China would be absolutely advantageous for us. Some companies have made profits on this already. One mobile phone network operator, for instance, took out an export loan and bought commodities in China. The company won the market and has 6-7 million of customers today. This is a huge success. Nevertheless, we neglect to mention that. We refer to China Overseas Engineering Group Co., which had surprising expectations due to a cultural gap. When it comes to investments, China does not differ from Russia. What varies is the style of management. I suppose that it would be a great opportunity for us if Asian investors did business in Poland. Why there are separate EU and Brazil summits? These economies are completely different. We are located between two powerful countries. The former is one of the greatest exporters on the world. We sell low-processed goods there and, as a result, our profits are insignificant. The latter country’s economy is based mainly on natural resources. Could we take advantage of that? Why not? I think that would be a great opportunity for Poland.

L: Have you noticed that Polish entrepreneurs or your community strive to unite, for example, in order to complete some innovative projects? Have you observed such phenomenon?

CS: It can be observed with reference to innovations, income synergies and the reduction of costs. I am the supporter of Chicago school of economics. In my opinion, it seems reliable to consider the needs of own enterprise first so as to make great profits. Moreover, I think that the extremely neoliberal assumption is still common in Poland. Companies from the same branch or entrepreneurs specialized in different branches hardly ever cooperate. There are, however, such associations as Podkarpacka Rada Biznesu (Podkarpackie Council of Entrepreneurs), which constitutes a kind of purchasing consortium. The members of the Council have been first to unite. They aim to buy energy and petrol together because price is the derivative of the volume. Can we understand this as modernization? Yes. The process increases effectiveness and reduces costs. As a consequence, more workers may be employed. When it comes to innovations and innovative economy, we should also remember that Polish government does not fulfill its obligation.

The new investor of Polkomtel SA[4] will make huge profits. The transmission of information will become revolutionized. Nevertheless, such projects require major investments for which the state has no money. Having considered this, entrepreneurs must take the initiative.

L: If we were to summarize all the challenges which Poland faces, it could be easily assumed that Poles should make huge and profitable investments in such infrastructures as high-speed railways, roads and telecommunication services. We should also take advantage of the cooperation with the BRICs.

CS: There is another issue, which I haven’t mentioned so far, although it seems key. What I mean is educational system. Our educational system is old-fashioned. I don’t intend to discuss the low salaries of teachers here. We have many weak-minded students. Poles don’t value knowledge and do not belief that education helps to achieve success. I have been an academic teacher and I worked in a bank at the same time. I understand why people face such dilemmas. It is crucial to be enterprising. Next issue to be emphasized concerns the promotion of Polish brands. I think that Teraz Polska competition[5] makes a deep sense. Why the German are fond of Angela Merkel? Because she constantly repeats that every country should be self-sufficient. Merkel adds that we should consider own benefits first in spite of being the members of the EU. And what then? She encourages to lend Greece some money. Nevertheless, she still has numerous supporters and presents the opinion in public! Poles must turn their skills to good account just like Merkel! Polnische Wirtschaft (Polish management) has changed its previous meaning. Nowadays, the German associate the expression with order and success. That is how Poles should think! We should boast of our successes.

Translation: Aleksandra Kozłowska

[1] Polish Prime Minister

[2] Polish oil refiner and petrol retailer

[3] The minister of industry in People’s Republic of Poland

[4] Polish telecommunication enterprise

[5] Polish competition promoting domestic brands

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About Cezary Smorszczewski

Vice-President of Alior Bank. Between 2004 and 2007 he was Vice-President of PKN Orlen S.A. responsible for capital investments and integration of assets within Capital Group PKN ORLEN. Between 1995 and 2004 he worked in Bank PEKAO S.A.

Fredrich Naumann Foundation For The Freedom
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