LG.Philips leads the way for more Korean companies to set up shop in Poland The Korea IT Times recently had an exclusive interview with the Polish Ambassador to Korea in Seoul, Andrzej Konrad Derlatka....Ed. Q: First of all, please give us your assessment of the business activity of LG-affiliated enterprises such as LG.Philips LCD as well as LG Electronics and LG Chemical etc. in Poland Capital involvement of LG Group is currently the major Korean investment in Poland. LG started its presence in the Polish market in Mlawa (roughly 130 km north from Warsaw) with production of LG Electronics digital TV sets. Significant development and projects extension in 2005 made it one of the most important player in Polish electronic industry. The decision taken by LG Philips and LG Electronics in 2005 to invest in Kobierzyce near Wroclaw will bring the Polish economy the biggest and most spectacular Greenfield project in the history of Poland. According to official data LG Philips will create 3,149 new jobs investing 429 million EUR. Its main products will be highly innovative LCD monitors ranging from 26 to 42 inches. Concurrently with LG Philips production facility we expect cumulative investments of suppliers valued 202 million EUR and over 7000 new jobs. Among them there will be leading Korean companies from electronic sector. At the same LG Electronics decided to establish a white goods and PDP TV factory valued at 100 million EUR and creating 1,625 jobs. Apart from advantages of LG investment for the Polish economy there are also significant aspects for LG itself. Poland is the ninth largest country in Europe. British historian Norman Davis entitled his history book about Poland, "The Heart of Europe." Indeed considerable domestic market and perfect central European location make Poland a unique platform between western Europe and Russia. Rapidly developing infrastructure and accessibility of the country provides investors the opportunity to reach both the developed markets of the EU and the emerging markets of Central and Eastern Europe. Q; How do you see the potential for business expansion, in particular the IT field, between Poland and Korea General economic cooperation between Republic of Korea and Poland can be described as perspective and promising. It is driven by rising trade exchange between the countries with surplus of Korean export to Poland that includes mainly electronics and machinery as well as cars and car parts. Polish export also develops rapidly. In 2005 for the first time over last 10 years it exceeded US$100 million. It includes considerable quantities of food products (with Polish pork meet as export hit to Korean market) and chemicals that record dynamic growth each year. On the other hand we can see a massive increase of interest of Korean companies choosing Poland as an investment location. According to data gathered by Economic and Commercial Dept. of the Polish Embassy there are 33 companies that currently have representation in Poland but undoubtedly with the decision of LG.Philips and LG Electronics this number will be soon multiplied. "Foreign investors from Korea, Japan and other Asian countries will be treated in a special way by the Polish government," promised former Polish Prime Minister Marek Belka during the European Union- Asia summit in December 2004. Until Poland's accession to the EU, which took place on May1, 2004, interest of Korean entrepreneurs in investment opportunities in the Polish market was rather limited. This was due to the fact that in their opinion there were some unclear regulations, while financial support and incentives schemes for foreign investment were not fully adequate. The situation changed after 1 May 2004 as Poland adjusted its legislation to European Union standards with this regard. Currently, almost two years after Poland's accession to the EU, a number of things have improved. The Commercial Section of the Korean Embassy in Poland recorded growing interest among Korean entrepreneurs in investment involvement in Poland. It also stressed a substantial change in the structure of FDI inflow to Poland. Korean investments were up to date associated with manufacturing facilities representing automotive sector (Daewoo), chemicals (SK Chemicals) and electronics (LG, Samsung). However we observe rapid increase of investment of companies representing electronics with highly innovative technology and IT systems. Particularly, the IT field provides excellent opportunities for cooperation. Korea as one of the strongest IT-oriented countries in the world can be a significant investor in Poland. Korean companies can rely on the young, well-educated (especially in IT and software) Polish labor force and advantageous labor cost. At the same time, trade and research cooperation is a considerable challenge for both sides. Currently we identify over 80 Polish companies as exporters of IT and software solutions. Q: Could you briefly tell us about Poland's investment inducement policy Undoubtedly, Poland is the Central and Eastern Europe (CEE) leader in attraction of foreign direct investments. With overall FDI inflow of over 80 billion USD, Poland attracted almost 35% of capital invested in CEE since 1990 (Since the early 1990s, international business has so far invested almost USD 90 billion in Poland). Polish policy concerning FDI attraction is oriented on emphasizing crucial advantages of our economy namely inexpensive but well educated labor force, largest domestic market of all new EU member states, rapidly developing infrastructure and modern industries as well as suppliers' base for new businesses. Poland identified several crucial sectors of the economy of highest importance for its future development. These sectors are electronics and IT, automotive, biotechnology and service centers. Companies creating considerable number of new jobs can count on advantageous system of governmental incentives including direct cash grants and tax incentives. Investment support service is well developed by the network created by Polish Information and Foreign Investment Agency (PAIZ). The investor can rely on professional and free of charge support as far as market, industrial and human resources information is concerned. Polish inducement policy is also connected with offering to investors developed industrial areas - prepared green field plots with easy access to industrial utilities and well accessible from bigger cities and transportation networks. It is also worth mentioning that after 15 years of courageous economic and political reforms, Poland has strengthened its position as one of the fastest growing countries of Central and Eastern Europe. As the member of the EU, NATO and OECD, Poland is a trustworthy and reliable partner for international business. The key asset of Polish society is its labor force. Poland has the largest working population in Central Europe. It is also one of the youngest countries on the continent - 50% of the Polish society is under the age of 34 and 35% is under the age of 25. This means that about 13 million young and well-educated people will enter the labor market in the near future. In addition, over 350,000 people graduate from basic and secondary vocational schools each year, so finding the right employees with the appropriate level of qualifications for any position in a company is easy for investors. Statistics indicate that number of students in mathematic, science and technology faculties in Poland is higher than in Czech Republic, Slovakia, Hungary, Estonia and Lithuania altogether what creates Polish advantage over these countries in the most crucial areas of future development. Concurrently with availability and skills Polish labor force is also characterized as inexpensive. The statistic points out that the pace of salary growth in Poland will be not higher than in neighboring countries and at the same Poland will maintain its cost effectiveness compared to west European economies. Current labor rate in Poland is estimated at 3, 78 Euro (gross) per hour. Besides, breaking the stereotypes, Poland has rather low ratio of trade union membership. In fact only 15% of working population is registered as trade union members compared to 20% in Hungary, 27% in Czech Republic, 31% in UK and over 60% in Sweden. Q: How is Poland's IT industry progressing and what do you think of the application possibility of Korean made DMB or WiBro technology in Poland In fact Polish IT industry belongs to the fastest growing sector of Polish economy mainly due to rapid growth of IT solutions for banking system, mobile telecommunication networks and digital transmission of multimedia. It is at the same relatively young sector of Polish economy. Therefore there is a significant potential for Korean companies to explore the market as investors utilizing Poland's strengths and providing new technological solutions. At the same Korean companies can be excellent providers of digital and IT solutions for fast growing multimedia broadcasting systems. As far as wireless broadband is concerned there is huge market potential for portable internet as the use of in the society consisting of 40 million people is rocketing. Q: How do you evaluate Korea's IT level Korea is surely one of the most advanced countries in the world as far as IT and software are concerned. It can be proved by application of modern IT solutions in business, industry and everyday life. IT level is determined on this market not only by activity of spectacular domestic and foreign IT companies providing state of the art technology and solutions but also by high awareness of IT implementation by Korean society. That is extremely important for further development of your IT and software sector as in this kind of activity new solutions and ideas are very often the realization of the needs and preferences of final users. Q; From a smaller or larger IT company perspective, what's your opinion on collaborative possibility between Poland and Korea As I mentioned at the beginning of this interview, collaboration between Poland and Korea has bright and promising future as far as trade and investments are concerned. The examples of LG Electronics, LG.Philips, SK Chemicals, Daewoo Electronics any many other companies show that there are no barriers and to further development of cooperation. IT sector is and activity of future so the perspective is that there will be a gradual decline in the traditional business sectors, with growing cooperation in IT. What is more, the introduction of new technology in Poland by LG.Philips and LG Electronics will require higher application of IT and software solutions.