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    Erratic Policy of Polish Gov't Scares Off Investors, Puts Projects on Hold

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    Wary of controversial policy moves by Polish Prime Minister Beata Szydlo’s Cabinet, foreign companies are hesitating to invest in new projects in the East European country.

    Since coming to power in October 2015, Poland’s nationalist government has passed a long list of investor-unfriendly measures, such as a tax on banks and insurance companies, measures restricting the use of renewable energy, mandatory conversion of Swiss franc-denominated mortgages in zlotys as well as a tax on major retail chains.

    These measures, both implemented and planned, have sent alarming signals to German companies which lead the list of foreign firms that have flourished in Poland following eight years of a pro-European coalition government.

    A recent poll of German corporate managers of Central Europe showed that Poland, for the first time in four years, had lost its investor attractiveness to the Czech Republic.

    Foreign businessmen have bad feelings about the political instability of the new Polish government and its erratic economic policy.

    “This situation brings a lot of uncertainty to the economy, which has an impact on private businesses and foreign direct investment into Poland,” said Krzysztof Kalicki, chief executive of Deutsche Bank AG’s Polish unit, told The Wall Street Journal.

    He added that even though projects already agreed upon for this year are continuing, “new investments are in prolonged discussions.”

    Meanwhile, people in the government are making light of the foreign investors’ jitters and insist that they should take their time getting used to the country’s new leadership.

    Some major companies keep investing into the Polish economy though. In May Daimler AG said it was going to invest €500 million into its first Mercedes engine factory in Poland.

    Others appear more cautious though with an annual survey of German investors released in June, highlighted investors’ disquiet.

    Their fears were additionally fueled by the tax on large retail chains that was recently passed by the Polish parliament. The government argues that this would give small stores a leg up against Metro, Aldi, Tesco and other giant foreign retailers. Investors, for their part, insist that the tax flies in the face of the EU’s equal treatment rules and threaten to challenge it in court.

    Michael Kern, managing director of the German-Polish Chamber, said that companies “across the economy” were worried by the taxes on financial institutions and retail chains.

    “Companies are waiting to see what will come next. We expect it will take some time before it becomes clearer,” he said.

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    Tags:
    new taxes, investor jitters, erratic policy, economic instability, German-Polish Chamber, Daimler AG, Deutsche Bank AG, Michael Kern, Krzysztof Kalicki, Beata Szydlo, Poland
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