Three pillars of creating Polish SME paradise
Poland might become a paradise for small and medium enterprises. Our competitiveness advantage should be based on: simple law and effectively operating institutions, large-scaled demography policy, and wise economic policy. These are the main conclusions from the report of Union of Entrepreneurs and Employers: “Strategy of legal and institutional competitiveness of Poland”, which was presented during the 590 Congress in Rzeszów.
Currently, Poland has a problem with mediocrity. Everything is mediocre: regulations, common market, respecting the entrepreneurs’ rights, and economic policy. We will not catch up with the West without a clear vision, said Cezary Kaźmierczak, President of ZPP, during the 590 Congress in Rzeszów. Poland should attract consumers and entrepreneurs from all over the world with the best and the easiest economic law, clear and not-complicated tax system, effective judicature and education system.
Analyse of the rankings: Doing Business, Paying Taxes, and Global Competitiveness, combined with analyse of 20 the richest countries in the world according the the World Bank, shows that leaders of all of the rankings are almost the same. This means that countries with good business conditions, friendly tax system and modern institutions are also the most wealthy ones. And vice-a-versa, the ones at the lowest ranks are simultaneously the poorest ones.
Jarosław Gowin, Minister of Science and Higher Education who was present at the 590 Congress, admitted that our law is complicated and it often changes. Newly-appearing provisions cause the administrative apparatus to be very complex, which only enhances bureaucracy.
He mentioned the “one-in, two-out” principle existing in the UK. When one regulation is introduced, another one, with a similar scope of influence, is being abolished. “However, when we wanted to implement this principal in Poland, Donald Tusk stopped our works. At that same time Great Britain still realised this principle.”, said vice-Prime Minister, Jarosław Gowin.
In the Doing Business 2017 ranking, in the category of “Starting a Business”, Poland was placed on the 107th position out of 189. According to analysts of the World Bank, procedure of opening a company in Poland takes 37 days and requires expenses of 12,1% of income per capita. As the report states, excess of regulations is another significant hurdle for dynamic development of our country. In accordance to Grant Thornton, 31.9 thousand of typescript pages of new law were introduced in Poland in 2016.
Professor Robert Gwiazdowski, President of the Council of Warsaw Enterprise Institute, said that the biggest problem of Polish entrepreneurs are the tax law provisions.
We cannot deny the great economic success achieved by Poland after 1989. However, a trap of mediocre development may be especially dangerous for our country. It may lead us to a situation when instead of catching up with the richest ones, we will be becoming poorer, said Cezary Kaźmierczak. Economic law should be as deregulated as possible. We could use the already existing world patterns in this regard. What successfully works in Austria or in the UK may also successfully work in Poland. Maximally simplified economic law requires effective judicature which would ensure quick solving of economic conflicts, he added.
In this respect, ZPP recommends using the formulas proven in the Anglo-Saxon countries and introducing at least real division for minor and big economic cases. Another ideas is to change the tax system radically. The proposition “Remunerations+, Taxes-” prepared by the governing coalition assumes i.a. liquidation of revenue taxes and substituting them with income levies.
Authors of the document also presented their proposition regarding education system. Schools should cooperate with the locally operating entrepreneurs more closely. One of the proposed changes is to reduce the number of regulated professions (there are around 350 in Poland, only Hungary and Czech Republic have more). According to the authors of the paper, graduates of secondary and higher schools should have all of the necessary professional licenses.
“Even the best economic and tax law, or the most favourable conditions for running business won’t make a difference if the country doesn’t have enough citizens (…). In 2015, Poland had one of the lowest birth rates in the whole European Union – 1.32 – whereas the border of replacement of generations is 2.1.” – states the report. Only Portugal was in worse condition with the birth rate of 1.31. To face this problem, Poland ought to operate in three fundamental areas: augmentation in the number of births, attracting the emigrants to come back to the country, legalisation of stay of labour immigrants from countries such as Ukraine, Belarus, or Vietnam.
Finally, to compete with the most important players effectively, Poland need to perform effective economic policy. Basing on experience of countries like South Korea or Luxembourg and choosing a particular field, connected with new technologies would be very helpful in this regard. Such approach should be promoted and supported by all available tools.
Report: Strategy of legal and institutional competitiveness of Poland_pdf