The Covid reality strongly affects the world economy. We are flooded with information about declines – stock markets, GDP, ratings. Things get nervous in the investment market. On the other hand, the latest global ranking of economic zones was announced. The Lodz Special Economic Zone has become the 3rd best zone in the world and the 1st in Europe. We checked what is its attractiveness and whether new investors appear despite the pandemic.
Special economic zones (SEZs) in Poland have been operating since 1995. The Lodz SEZ started two years later. SEZs were created by the Polish government to offer companies a simple but attractive mechanism – income tax exemption in exchange for implementation of new investment in the zone’s area. This is one of the best support tools for entrepreneurs. There is something to fight for, as the tax exemption can amount up to 55 percent of the investment value. All SEZs in Poland operate on the same principles, so what has made the Lodz SEZ the third in the world and the best in Europe?
– The place on the global podium and the leading position in Europe is the result of the record-breaking investment year 2019 in the Lodz SEZ and the continuous expansion/development of the Lodz SEZ’s offer. – says Marek Michalik, President of the Lodz SEZ.
The zone can offer many projects for business. Its portfolio includes programs supporting startups, training vouchers and a high technical school established with business partners. The authors of the ranking also appreciated the Lodz SEZ’s contribution to the development of modern technologies, for which they presented five awards to the zone.
– Our portfolio already includes nearly 100 startups that have received substantive and financial support from us. We are a leader in creating innovations based on 5G technology and introducing it to our investors’ factories thanks to the S5 accelerator. The results of the programs are, for example, digital twins of physical factories, autonomous vehicles, robots dealing with patients suffering from Covid-19. – says Agnieszka Sygitowicz, Vice-president of the Lodz SEZ.
However, the top 10 ranking is mainly a reflection of investment performance. In the case of SEZs, it is simply the number of investors, the amount of investment outlays and jobs created. Last year, in the case of the Lodz SEZ, there were 34 investments, nearly PLN 2.2 billion of investment outlays and 800 new jobs. This is the record-breaking result in the history of the zone. What’s behind it?
– The hard work of our team. Thousands of meetings with entrepreneurs, visits in all poviats (counties) in the area we manage and talks about our offer. – explains Marek Michalik.
It would seem that no one needs to be persuaded to be exempted from tax and that companies themselves should knock on the door of SEZs with applications for state aid.
– It may come as a surprise, but despite the fact that SEZs have been operating in Poland for over 20 years, not all entrepreneurs know what the public aid is. With the main information that in return for investments in SEZs we can exempt the company from income tax in the amount specified by law regulations we must reach especially smaller companies. They can count on the highest support. – explains Dorota Lombardi, director of the Department of Business Development and Support in the Lodz SEZ.
How high are these allowances? Maximum 35 percent of the investment value for large companies, 45 percent for medium and as much as 55 percent for micro and small enterprises. In short, a large international corporation investing PLN 100 million in the construction of a new plant, thanks to the support of the Lodz SEZ, will pay PLN 35 million less in income tax. A small entrepreneur building a bakery for one million zlotys will receive 550 thousand PLN income tax relief. There may be moreexamples because in the Lodz SEZ there are more and more companies especially from the SME sector. A few years ago, this ratio was around 30%, today it is more than half. This also caused that in the recent ranking of SEZs, the Lodz SEZ turned out to be the best for SMEs in the world and in Europe.
– Furthermore, the change of regulations was very helpful. Since 2018, the entire territory of Poland has become a special economic zone. This means that every investment area, every real-estate can be a part of SEZ. In the past, this could only be done in designated subzones and sites. However, with such information, we also want to reach companies that deal primarily with running a business and not all of them have the time and opportunities to follow changes on an ongoing basis. – adds Lombardi.
Large companies usually located their new factories in so called subzones. International corporations needed plots of land with large acreage. Such enterprises are still interested in investing in the zone. Last year, the Lodz SEZ attracted companies such as: Johnson Matthey Batteries Poland – British manufacturer of components for batteries used mainly in electric cars, Nippon Seiki Poland – Japanese global manufacturer of head-up displays, instrument sets for cars and motorcycles and Corning Optical Fiber – American manufacturer of optical fibers and cables. Since the act allows you to invest anywhere, it should not be a problem with investment areas for large companies.
– The change in regulations has actually unblocked many areas, although not always investment areas. It is necessary to build appropriate road and communication infrastructure, as well as appropriate technical utilities in accordance with the investor’s expectations. – explains Paweł Klimczak, Deputy director of the Department of Business Development and Support in the Lodz SEZ.
We buy pieces of land with potential for investment and prepare them for investment. We build their attractiveness and increase theirusability, thus expanding the offer of the Lodz SEZ. When an investor contacts our team, we have ready-made proposals for him. – adds Klimczak.
We checked what the Lodz SEZ currently has in the portfolio of investment areas. On the website we found a plot of land in Lodz Olechow, 5.6 ha. In the vicinity, there is a railway siding to which cargo trains with goods from China reach. Neighboring companies are e.g. B / S / H (Bosch-Siemens) and Dell factories. There is also a site in the Ksawerow commune which is close to the city of Lodz from the south. It consists of two plots: 31 ha and 12 ha. Companies such as Miele – a global leader in the household appliances industry – and the Japanese Nippon Seiki have located their factories in this complex. The company OxyLine from nearby Pabianice, i.e. this year’s investor, is about to develop a production plant on one of the plots.
How is the Lodz SEZ doing in the times of Covid-19?
– We have not slowed down. During this pandemic, we issue as many support decisions as last year. We already have 25 confirmed investments and we are in talks with several investors. It seems that they will also decide to invest in the Lodz SEZ, despite the situation related to the coronavirus. This allows us to forecast that we can repeat the result from last year. – says Marek Michalik.
