Polish Business Survey
Chase advises against złoty
In the opinion of the authors of the most recent Chase Manhattan report on Central and Eastern Europe the Polish economy is not looking as good as it could and the złoty will continue to fall.
The March trade deficit was worse than expected and the bank considers that the government is powerless in this respect. The only remedy proposed is to reduce the value of the Polish currency which will fuel inflation. High interest rates have done nothing to stop the growth of the deficit and have given an artificially high value to the złoty. The bank concludes that this policy is not working and should be discontinued. Devaluation, it feels, is the lesser evil to a continued growth in the deficit. The bank is advising its clients against investing in any papers nominated in the Polish currency.
Farming VAT will aid budget
Reforms in the taxation system have not led to any more cash in the public coffers. The state will gain more from the elimination of certain tax breaks but will probably lose the same amount from the drop in the rates of income tax. The Finance Ministry thinks that a three percent VAT rate on agricultural products may help make up shortfalls in the budget. MP s will vote on this today.
Small consortium goes for big refinery
Fourteen independent distributors of liquid fuels have founded a consortium which hopes to be the strategic investor in the Gdańsk refinery. The consortium hopes to raise USD200m to increase the share capital of the company.
The fourteen companies have between them 118 fuel stations and think that more will join them. Before the end of May they will form a company called Konsorcjum Gdańskie which will have a share capital of USD1m. After registration it hopes to increase its capitalisation to USD15m. As USD200m will be needed, the remaining USD185m will be borrowed.
Wojciech Żurawik, the new MD of the refinery, says that the consortium is not his ideal investor although in certain conditions it could take some of the shares. The means of privatisation for the refinery have not yet been decided, should shares be sold on the stock market or sold to passive investors then anyone with the money could buy them and this would leave room for the consortium to pick up as many as it wanted. However if privatisation advisors JP Morgan seek an investor from the fuel sector then the consortium would have no chance. Wojciech Żurawik considers that the latter option is the best although other experts from the sector do not agree with him.
Law regulates against private business
This month a second reading of a bill concerning the position of fertiliser transport and transporters. Private companies have complained that the law favours companies in the State sector who have managed to get an efficient lobby together. The smaller private concerns do not have such possibilities. The government has claimed that the regulated market is similar to that which exists in the EU.
More beer sold
So far this year almost 6.4 hectolitres of beer has been sold. On a year to year basis this is a six percent increase over the first four months of last year. In April more than 2m hectolitres of beer were sold compared to 1.8m hectolitres in April 1999. At this rate, the increase in consumption will be even greater than the eleven percent noted last year. Most sales came from three companies, Żywiec, Okocim and Kompania Piwowarska which between them had a 65.5 percent share of the market. Small and medium sized producers are doing quite well with German owned Bosman hitting increases of fifty percent and Białostok based Dojlidy making a thirty percent increase for example.
Vodka court battle to close
Today the Warsaw appeal court will decide who has the ownership rights to around twenty brands of Polish vodka currently contested between Agros and the Polmos companies. If the latter win then the State will be able to earn a lot more from the privatisation of the alcohol sector.
Belvedere trademark battle to end
Today the appeal court in Łódź will decide who owns the Belvedere vodka trade mark. If Euro-Agro Warszawa loses to the Polmos companies then it will have thrown away the PLN9m so far spent on the court action. The ownership batte has gone on since 1998. Euro-Agro belongs to the French Belvedere who has so far spent around USD2m on legal battles in Poland, France and the USA over the name which it obtained in 1996. In 1999 a court in Łódź ruled in favour of Polmos Warszawa that the name had been obtained from Polmos Żyrardów who did not have the right to give it away. It is likely that the French will lose and then they may sue the Polish government.