In recent years there have been many exciting changes and developments in Poland and these have prompted enormous interest and potential investment from the international business community. The territory of Lower Silesia is a region especially attractive to investors thanks to its convenient geographic location at the intersection of international routes in Central Europe, a well-developed technical infrastructure and the relative affluence (high purchasing power) of its inhabitants. Many internationally recognised companies, such as Coca-Cola, PepsiCo, Cadbury, IKEA, Amstrong, McDonalds, Pizza Hut, ARAL, Shell and others have chosen Lower Silesia as a suitable place of investment. The Legnica Special Economic Zone (LSEZ), located in the region, offers additional advantages that promise fast re-imbursement of investment expenditures. You are welcome to take advantage of the investment and co-operation possibilities in the province of Legnica. Below you will find details about the Zone and the region.

The Legnica Special Economic Zone was established by the Council of Ministers with the decree no 274 of 15 April 1997.

The Zone is situated in the Legnica Province, southwestern Poland, on the Lower Silesia Plain. It covers a total area of 382 ha divided into three sub-zones:

• Legnica area - 66 ha;
• Polkowice area - 109 ha;
• Krzywa area - 207 ha.

Technical infrastructure

Communication

• Road links - thanks to its favourable geographical position and rapid industrial development, the Province of Legnica has important transport routes significant on a national and international scale. The Zone is located in the neighbourhood of the A-4 motorway which intersects the province from east to west and connects Western Europe with the countries of the former Soviet Union. The E-3 road (projected in the National Development Plan A-3 motorway) runs north-south and links the cities of the Polish coast (and, a little further away, Scandinavia) with Southern Europe;
• railways - the Province of Legnica takes fifth position as far as the density of the railway network is concerned. The Zone borders on an active railway line;
• air links - the Zone has two post-Soviet airfields at its disposal. Both are located in the direct neighbourhood; one is in Legnica itself(1600m runway) and the other is in Krzywa (2500m runway). In addition to this, the International Airport of Wroclaw is only 60km away, ensuring good connections with the main airports of Western Europe.

Telecommunication

Two independent telecommunication companies operate in the territory of the Legnica Province (Telekomunikacja Polska SA and Cuprum 2000) that are able to ensure the required number of telephone connections to the Zone.

Utilities

Public utilities such as high-voltage electric lines, sewage and supply systems, gas networks and heating pipelines will be accessible to the investors at the borders of the Zone without incurring any additional expenditure on their part.

Tax abatements

The Zone has been set up for a period of 20 years. The companies which have their registered seat and run economic activities within the territory of the Zone are offered high abatements of taxes.

The investors are entitled to choose one of the bases of tax exemption they intend to exercise during the following tax year. According to the rules there are two types of tax abatements:

a) investment type - the company is granted 100 per cent income tax exemption in the case where total investment expenditure exceeds the amount of 850,000 ECU. If the expenditures do not reach the amount, the income which is equal to investment expenditure is free from income tax;

b) employment volume type - the company is granted 100 per cent income tax exemption in the case where the company employs more than 100 people. The exemption from income tax is ten per cent for every ten employees. The number of employees is fixed as a monthly average of full-time jobs.

Companies running economic activities in the Zone that do not qualify for these exemptions may increase the depreciation rates of fixed assets which are used to running their activities within the territory of the Zone. They may also include expenses for the purchase of intangible and legal assets into the cost of obtaining earnings in the tax year in which these expenses have been incurred.

The above exemptions are valid for a period of ten years starting on the day of commencement of economic activities in the Zone. During the remaining period, until the end of the existence of the Zone, the company is granted 50 per cent tax exemptions.

Negotiation procedures

Investors interested in entering into the negotiation process are obliged to submit their offers in writing (in Polish) to the Board of Directors. The offers should include:

• the name and address of a tenderer;
• the commercial nature of economic activities planned to be run within the territory of the Zone;
• legal status of an enterprise;
• business plan;
• feasibility study of the project and its financial guarantees;
• in the case of foreigners, a licence to purchase real estate in Poland obtained from the Ministry of Administration and Home Affairs.

The negotiations will be concerned with the form of purchase and the price of the grounds as well as with ensuring that the economic activities planned by an Entity are in accordance with the target activities meant for the Zone. Permission to run economic activities within the Zone is given by the Zone management on behalf of the Minister of Economy. The Board of Directors is also authorised to issue building permits and indicate enterprise location.

Areas of specialisation in the Zone

All tenders submitted by potential investors will be thoroughly considered by the LSEZ Board of Directors. There are branches of industry that will be preferred to others on account of the economic structure of the region, the possibility of cooperation with the existing enterprises and the availability of a qualified labour force. However, all offers shall be accepted if in accordance with the binding rules (decree no 274, 15 April 1997). The target activities meant for the Zone are:

• metal industry;
• machine industry;
• motor and car industry;
• chemical industry;
• musical industry;
• food industry;
• building industry;
• other related to the above-mentioned industries.

First investor

After two months of its activity, the Management of the Legnica Special Economic Zone has issued the first permission to run economic activities within the territory of the Zone. It was granted to the company Royal Europa Sp zoo which bought 15.7 ha in the Polkowice area. Royal Europa is planning to invest US$43 million and employ over 500 people.

Royal Europa Sp zoo was formed by an amalgamation of two companies: Royal Plastic Group Limited of Canada and the American Building Products Corporation of the USA. The main aim of the company is to introduce modern building technology employing prefabricated elements from 'The Royal Building System' (RBS).

General characteristics of the region

Economy

The region's economic structure is dominated by the copper industry, which is based on domestic raw material resources and concentrated in the company KGHM Polska Miedz SA.

KGHM Polska Miedz SA is the world's fifth largest producer of copper and the world's third largest producer of silver. Copper is the most important export in the region, accounting for more than 90 per cent of the province's export revenue.

Apart from copper excavation and extraction industries there are also other branches that play an important part: the metallurgical, electrical and engineering industries as well as light industries (represented by knitting and garment plans).

The restructuring and privatisation process have created excellent conditions for starting one's own business by utilising available plots and facilities, for example, what was taken over from the retreating Soviet Army in August 1993. The Legnica Special Economic Zone was established partly on this territory on 15 April 1997.

Demography and the labour market

The Province of Legnica covers an area of 403,700 ha which makes up 13 per cent of the country's total area. It takes tenth position in the country in terms of urban population. By the end of 1996 the province was inhabited by 523,200 people, including 368,300 (70.8 per cent) in urban areas.

The province is divided into 37 administrative units. The region's main towns are:

• Legnica - 108,000 inhabitants;
• Lubin - 84,000 inhabitants;
• Glogow - 75,000 inhabitants;
• Jawor - 26,000 inhabitants;
• Polkowice - 23,000 inhabitants;
• Zlotoryja - 18,000 inhabitants;
• Chojnow - 15,000 inhabitants.

The average wages in the region are as follows:
a) public sector - 1,364 PLN = £234.69* per month
b) private sector - 822 PLN = £141.43 per month
including:

• production sector - 830 PLN = £142.80;
• retail trade - 812 PLN = £139.71;
• building industry - 1,050 PLN = £180.66;
• transport industry - 1,023 PLN = £176.02.

(* Average exchange rate given by the Polish National Bank on 22 July 1997.)

At the end of May 1997, the number of unemployed registered in the province's employment offices amounted to 36,533 people (women 63.1 per cent of the total number). The unemployment rate was 17.8 per cent in urban areas and 14.6 per cent in rural regions.

Welcome to the Province of Legnica!