Authorities could do much more to promote Warsaw and help it compete for FDI against the world’s leading cities
International investors still consider Warsaw an attractive destination, with the city ranking high among potential investment locations among international investors. However, according to participants at Poland Today’s Primetime Warsaw III conference, held in April at the National Stadium, city officials could do much more to promote Warsaw abroad, especially when it comes to reaching potential Asian investors.
A competitive market
According to data service fDi Markets, part of the fDi Intelligence division of the Financial Times, between January 2010 and January 2015 Warsaw attracted 215 greenfield foreign direct investment (FDI) projects whose combined value amounted to an estimated $840m. Distressingly however, the figures showed a constant trend of fewer projects each year – Warsaw attracted 23 FDI projects in 2014, compared with 30 in 2013, 48 in 2012, 50 in 2011 and 61 in 2010.
In her keynote address at the conference, Courtney Fingar, the editorin- chief of fDi Magazine, a specialist publication from the Financial Times, noted that FDI in Central and Eastern Europe had been hit hard by the outbreak of the global financial crisis. Greenfield FDI peaked in 2008 and has never really recovered, Fingar said. The downward trend in the region continued last year, pulled down by worries connected with the Russia-Ukraine crisis, she added.
Nevertheless, in the challenging global economic situation, when “flat is the new up”, as Fingar phrased it, Poland has proved to be more resilient than some of the other countries in Central and Eastern Europe.
According to fDi Markets data, the country attracted an estimated $6bn in capital investment in 2014, securing a 5% market share among European countries. Poland ranked fifth in Europe last year for the number of FDI projects received, Fingar said.
The Warsaw story
According to Fingar, Warsaw retains a strong attraction for international investment and remains the clear leader in Poland. She called the Polish capital a “very positive city” with “a good buzz in the air.” Fingar pointed out that despite its difficult 20th century experience, Warsaw has emerged in recent years as a successful city that should tout its success abroad. “The Warsaw story needs to be told,” she said.
Asked what exactly constitutes Warsaw’s success story, Warsaw Mayor Hanna Gronkiewicz-Waltz pointed to the massive infrastructure improvements that have taken place in the city in recent years. “We have managed to use the European Union funds well,” she said.
In the coming years, Warsaw City Hall plans to continue its focus on the further development of transport infrastructure. The completion of the second Warsaw subway line will be one of the priorities, Gronkiewicz-Waltz said. She admitted that the ubiquitous claims to plots of land across Warsaw are a major problem for private investors in the city.
Jan Krzysztof Bielecki, chairman of the partners board at EY Poland and former prime minister of Poland, pointed out that the country’s economic success over recent years has also helped build Warsaw’s position. He pointed out that Poland has now seen 24 years of uninterrupted economic growth, which is, apart from Germany, the best result in Europe.
Karol Półtorak, vice president of the Warsaw Stock Exchange, said he could confirm that international investors who are considering listing their firms on the bourse see the Polish capital in a positive light.
Warsaw has already become the unquestioned financial centre of Central and Eastern Europe, he said, adding that closer cooperation between capital markets and city authorities would greatly benefit the city.
Better messaging needed
For all its positive performance in attracting global capital in recent years, Warsaw could certainly do more to better appeal to international investors and to take its international image up a notch. The best performing FDI cities have professional promotion strategies. According to Fingar, Warsaw has strong fundamentals for attracting foreign investment, but it must become more proactive and aggressive about attracting investment. “Many other Polish cities simply seem to try harder,” Fingar said, adding that Warsaw seems to be suffering from what she calls “the capital city syndrome” – taking its investment attractiveness for granted.
She added that Warsaw City Hall could make better use of the Polish diaspora, with the millions of Poles living abroad being potential ambassadors for the city.
Last but not least, Warsaw, already the established business leader of the CEE region, should not rest on its laurels. The Polish capital should measure against the best in the world, not just the neighbours, Fingar said.
Warsaw should do its best to attract investment from foreign markets that have not yet begun to invest heavily in the city, including markets to the far east. “Go hard on Asia,” Fingar suggested.
WARSAW IN FDI RANKINGS
Warsaw was named the Polish City of the Future 2015/2016 earlier this year in an inaugural ranking of Polish cities prepared by fDi Intelligence. Kraków and Poznań came in the second and third place, respectively. Warsaw performed best in the categories of Economic Potential, Human Capital & Lifestyle, Connectivity and Business Friendliness. The city was absent from the subjective category FDI Strategy, because it did not submit an entry. Warsaw also did well in the Global Cities of the Future 2014/2015 ranking which fDi Intelligence published in December last year. It ranked 23rd among cities of all sizes worldwide. The European cities that were ranked higher than Warsaw were London, Dublin, Bucharest, Zurich, Frankfurt, Amsterdam, Stockholm, Munich and Geneva. Interestingly, Moscow came in after Warsaw, in 25th place.