Poland

Originally published: Nov-27-2007

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Official Name: Republic of Poland

Internet Domain: .pl
International Dialing Code: +48

Table of Contents

Government

Parliamentary Republic established on November 11, 1918 and comprised of three branches: executive -- chief of state President Lech KACZYNSKI, head of government Prime Minister Jaroslaw KACZYNSKI, cabinet; legislative -- bicameral National Assembly; judicial -- Supreme Court and Constitutional Tribunal.

Legal System

Based on a mixture of Continental (Napoleonic) civil law and Communist legal theory. Changes are being gradually introduced as part of broader democratization process. There is limited judicial review of legislative acts, but rulings of the Constitutional Tribunal are final. Court decisions can be appealed to the European Court of Justice in Strasbourg. Poland accepts compulsory ICJ jurisdiction with reservations.

Commercial disputes are generally heard by the commercial courts (sad gospodarczy), falling under the jurisdiction of either district courts or regional courts depending on the size of the claim.

The Polish court system is slow and over-burdened, and the legal system is prosecutorial. Therefore, contracts involving foreign parties usually have a dispute settlement clause that provides for arbitration of disputes in a third country court (Britain or Switzerland, for example).

People

• Population: 38,5618,241 (2007 estimate)
• Population growth rate: -0.046% (2007 est.)
• Ethnic groups: Polish 96.7%, German 0.4%, Belarusian 0.1%, Ukrainian 0.1%, other and unspecified 2.7% (2002 census)
• Languages: Polish (97.8%)
• Literacy: 99.8%

Economy

A new era began when Poland became an EU member in May 2004, five years after joining NATO and 15 years after the end of communist rule. Poland has steadfastly pursued a policy of economic liberalization since 1990 and today stands out as a success story among transition economies. Poland has a thriving private sector which created more than 300,000 new jobs during 2006. Consumer price inflation is among the lowest in the EU. However, Poland still faces challenges of high unemployment, underdeveloped and dilapidated infrastructure, and a poor rural underclass. In addition, an inefficient commercial court system, a rigid labor code, bureaucratic red tape, and persistent corruption keep the private sector from performing to its potential.

Currency: New Zloty (PLN)

• PLN per USD: 2.48380 (11/27/07)
• PLN per EUR: 3.69098 (11/27/07)

Leading Markets (2006): Germany 27.2%, Italy 6.4%, France 6.3%, UK 5.7%, Czech Republic 5.6%, Russia 4.3%

Leading Exports-commodities: machinery and transport equipment, intermediate manufactured goods, miscellaneous manufactured goods, food and live animals

Leading Suppliers (2006): Germany 28.8%, Russia 9.6%, Italy 6.3%, Netherlands 5.7%, France 5.4%

Leading Imports-commodities: machinery and transport equipment, intermediate manufactured goods, chemicals, minerals, fuels, lubricants, and related materials

Top Industries: machine building, iron and steel, coal mining, chemicals, shipbuilding, food processing, glass, beverages, textiles

Economic Indicators

(e) estimate (f) forecast

Comparative Economic Indicators - 2006

* 2007 estimate

Credit and Collections

• Collection Experience: Fair-Good
• Exchange Delays: 2 months
• Preferred Credit Terms: Sight draft
• Minimum Credit Terms: 30-day Sight draft

Credit and Payment

Payment Facilities: Bank transfers are by far the most common means of payment. Bills of exchange and checks are not widely used, as they must meet a number of formal issuing requirements in order to be valid. For dishonored and protested bills and checks, creditors may resort to a fast-track procedure resulting in an injunction to pay.

One unique instrument available in Poland is the weksel in blanco. The signature on this document constitutes an irrevocable promise to pay and this undertaking is enforceable upon completion of the promissory note (amount, place and date of payment) in accordance with a prior agreement between issuer and beneficiary. They are widely used as they constitute a guarantee of payment in commercial agreements and the rescheduling of payments.

Collections: It is best not to initiate legal action in Poland due to the cumbersome formalities, high costs, and lengthy time frames. (It takes almost two years to obtain a writ of execution). If possible, seek an amicable settlement based on a payment schedule drawn up by a public notary, which includes an enforcement clause. In the event of default, this instrument allows the creditor to move directly to the enforcement stage, subject to acknowledgement by the court of the binding nature of this document.

Creditors may also seek an injunction to pay (nakaz zaplaty) via a fast-track procedure, provided they can produce positive proof of debt (like bills of exchange, checks or unpaid weksels in blanco, or other acknowledgements of debt.). If the judge is not convinced of the substance of the claim – a decision he alone is empowered to make – he may refer the case to full trial.

Risk Assessment

Coface Country Risk Rating: A3 -- rating watchlisted with positive implications since June 2007. An already patchy payment record could be further worsened by a deteriorating political and economic environment. Nevertheless, the probability of a default is still acceptable.

Ducroire Delcredere Political Risk Rating: 1 – Lowest risk
Ducroire Delcredere Commercial Risk Rating: B – Moderate risk

Business Climate

Poland's entry into the EU in May 2004 was a milestone in the country’s political and economic transformation. The largest of the new accession countries in terms of size and population, it is also the biggest recipient of EU funds. With reasonably good economic growth, a young and well-educated labor force, and location at the crossroads between eastern and western Europe, Poland offers a large potential market in central Europe.

Economic Freedom: According to the Index of Economic Freedom’s 2007 assessment, Poland's economy is 58.8% free, making it the world's 87th freest economy. Poland is ranked 35th out of 41 countries in the European region, and its overall score is much lower than the regional average.

Poland scores well in trade freedom and monetary freedom. The average tariff rate is low, but non-tariff barriers include distortionary EU subsidies of agricultural and other goods. Inflation is also low. Poland has a fairly high top personal income tax rate, but its corporate rate is relatively low.

Poland faces several economic challenges, as do other formerly Communist nations, but is progressing. Freedom from government, freedom from corruption, and labor freedom remain weak. The court system, though fairly reliable, is prone to inefficiency and sudden changes in laws or regulations. Foreign investment is generally welcome, but foreign ownership of companies in certain industries is limited. The financial sector, while subject to government interference, is well-regarded overall.

Transparency of Regulatory System: The government acknowledges that its policies are not as transparent as they ought to be, and that bureaucratic requirements continue to impose a burden on investors. Reforms designed to deregulate, increase transparency, and promote competition have been introduced as part of the EU membership process, which will eventually make the Polish legal and financial framework more transparent. Recurring complaints of both domestic and foreign investors include regulatory unpredictability and a high level of administrative red tape.

Intellectual Property Rights: In early 2000, Poland passed major new legislation, bringing the country into compliance with its obligations under the WTO TRIPS Agreement and membership in the European Union. However, piracy of intellectual property still remains a problem. Poland was placed on the US Trade Representative "Watch List" in 2005. Improved penal provisions and ongoing judicial reforms should help curb piracy. Poland continues to implement provisions to improve copyright and patent enforcement.

Conversion and Transfer Policies: Poland provides full IMF Article VIII convertibility for current transactions, and the foreign exchange law fully conforms to the OECD Codes of Liberalization of Capital Movements and Current Invisible Operations. A new law has introduced a distinction between non-residents from EU countries and non-residents from third countries. It breaks the latter into not only non-EU countries, but also to non-OECD and non- European Economic Area (EEA) countries. Non-residents from the EU (as well as OECD and EEA) are treated with priority and currency transactions in their case are subject to more lenient provisions than currency transactions with non-residents from third countries. The foreign exchange law defines restrictions and obligations connected with transactions turnover in foreign exchange. Exceptions from those restrictions and obligations require a general (issued by the Minister of Finance in the form of a decree) or individual foreign exchange permit.

Corruption: Polish laws and regulations provide a legal basis for combating corruption; however, corruption continues to be perceived as significant. Poland ranks 70th out of 158 countries in Transparency International's Corruption Perceptions Index for 2005.

Political Violence: Poland is a politically stable country. There have been no confirmed incidents of politically motivated violence toward foreign investment projects in recent years.

For more detailed information on these topics, visit the 2007 Investment Climate Statement – Poland, of the U.S. Department of State.

Business and Cultural Practices

Business Cards: It is not necessary to have your business cards translated; an English version is acceptable.

Business Attire: In small and medium-sized companies (excluding banks and consulting firms), executives wear casual, conservative clothes; in big companies, conservative suits and ties in subdued colors are the norm. Dress well, but modestly. Vivid colors are considered inappropriate.

Names and Titles: There is no general rule as to how Polish people address each other. In initial contacts they may use the person's title. Just follow your hosts' example.

Conversation: Maintain direct eye contact during conversations; Polish people are very sensitive to body language. Businesspeople like to conduct discussions on a wide range of topics including public life, family and career.

Gifts: According to Polish business etiquette, gifts are given at the beginning of a relationship, especially when contacts are made for the first time, and at the end of a collaboration. The best gifts are always items which are typical of your culture, or a book describing your country or the region you are from.

Appointments: Appointments should be made 4-5 days in advance; always confirm. Be punctual.

Meetings and Negotiations: Polish negotiators tend to be reserved and taciturn. Be patient. In Poland, the decision-making process is slower than in North America. Be prepared to have several meetings before clinching a business deal.

Acceptable Public Conduct: You should not speak with your hands in your pockets. Do not sit with your legs crossed. It is expected that men will hold doors for women. Do not perform physical labor on Sundays; Poland is 90% Catholic and Sunday is considered as a day of rest.

For more detailed information on these topics, visit Poland, on the Executive Planet web site.

Sources for further information on doing business in Poland

A Guide to Doing Business in Poland (2006), Wardyñski & Partners - PDF

Doing eBusiness in Poland, Global Technology Forum, Economist Intelligence Unit

How to Do Business in Poland (2006), Deloitte

American Embassy in Warsaw, Poland

Embassy of the Republic of Poland, Washington, DC, USA

Polish American Chamber of Commerce

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This information is provided by ABC-Amega Inc. Providing international receivable management and debt collection services for exporters to more than 200 countries including Poland. For further information, contact info@abc-amega.com. This report represents a compilation of information from a wide variety of reputable sources.

Risk Assessment information: Provided with permission by Coface Country Rating. Also Belgian credit insurance company Ducroire Delcredere

Information on credit terms and the probability of prompt payment are provided, with permission, from Overseas Press and Consultants (OP&C) as published in IOMA's Report on "Managing Credit, Receivables & Collections," December 2007.