CHECKED
Economic and Commercial Section Embassy of Poland
An ideal counterpart for Indonesia
Foreign trade is an important factor in Poland's economic growth. The share of trade exchange in the GDP has grown from 35 percent in 1990 to 52 percent in 2000.
Last year total exports were valued at US$31.7 billion and imports reached $48.9 billion. This year exports have been growing at a record pace, while the value of imports remained stable.
European Union countries are the main partners of Poland in foreign trade. Their share in total Polish international commerce accounts for more than 75 percent.
Germany is the main single trade partner - it is the destination of 35 percent of Poland's overall exports and the source of 24 percent of Polish imports - followed by Italy, Russia and France. The above figures prove the high quality of "Made in Poland" products and their competitiveness.
Trade with member countries of the Central European Free Trade Agreement - CEFTA (Czech Republic, Slovakia, Poland, Hungary, Rumania, Slovenia and most recently Bulgaria) is also on the rise following liberalization of import duties.
The commodity structure of Polish exports has undergone profound changes in recent years, marked by the shift from agricultural and primary exports to labor-intensive manufactures.
Nowadays, Poland sends abroad not only various engineering products, such as motor cars, ships, boats, civil engineering machines and electrical equipment but also textiles, furniture (the second largest exporter in Europe), footwear, packaging machines, as well as a rich variety of food products.
The well-deserved sense of accomplishment should not prevent us from recognizing many challenges that Poland must still face. Those include a foreign trade imbalance and a relatively high level of unemployment.
The only way to meet the former challenge is through increasing the export capacity of the economy by securing more investment, even better technology and higher productivity.
The latter is a natural effect of the transformation from large, ineffective state-owned enterprises to an economy run by more efficient private companies and should be resolved eventually when the workforce undergoes necessary retraining and becomes absorbed by the fast-developing private sector. However, the social implications of even temporary unemployment cannot be overlooked.
Special attention must also be given to restructuring of the agricultural sector, which employs almost a quarter of the workforce while accounting for only 3 percent of GDP. Finally, resources must be found to increase R&D spending to stimulate productivity and shorten the technological life cycle of domestically produced equipment.
Indonesia is an important trade partner of Poland in the South-East Asia region. The mutual trade turnover shows a steady growth tendency.
According to Polish statistical data, the value reached $208 million in 1998, $209 million in 1999, and $219 million in the following year.
It is estimated that more than 97 percent of mutual commerce exchange on the Polish side is done by private companies.
The long tradition of commercial relations between the two countries saw Indonesia exporting to Poland mainly agricultural products and raw materials, such as natural rubber, coffee, tea and spices. This commodity structure has undergone profound changes in recent years. The share of chemical compounds and telecommunication equipment in total Indonesian exports to Poland is rising every year. Man-made yarns, garments, cloths, footwear, rattan furniture and paper products are also exported to Poland in large quantities.
On the other hand, Polish companies supplied to Indonesia various kinds of machinery, civil engineering equipment, chemicals, steel products, powdered milk and electrical apparatus. The commodity structure of Polish exports to Indonesia is rather stable, while Polish purchases from Indonesia become more diversified every year.
Unfortunately, a considerable part of trade transactions between Poland and Indonesia is executed by intermediary companies from other countries.
Polish businessmen consider Indonesia an attractive market offering great prospects. Producers and exporters alike are looking for new opportunities to supply mining, electrical, agricultural and food processing equipment, machine tools, packaging machinery, power generation equipment, various kinds of chemicals, including fertilizers, herbicides and insecticides as well as technology, all of which are in demand in contemporary Indonesia.
High-quality "Made in Poland" products can still be offered at very competitive prices, thanks to a comparative advantage in labor costs.
Polish business is keen to acquire new trade partners in Indonesia and establish more direct relations with individual companies.
The legal framework provides a firm basis for further development of trade and economic cooperation between Poland and Indonesia. In 1974 the countries signed a trade agreement, in 1986 an agreement on the development of economic and technical cooperation, and in 1992 two agreements - on avoidance of double taxation and on promotion and protection of investments.
Polish customs regulations offer a considerable advantage to Indonesian exporters entering the Polish market. The present system of customs duties is in line with GATT and WTO principles, and provides differentiated customs rates according to the country of origin.
Indonesian products enjoy lower tariffs under the General System of Preferences (GSP). In fact, almost all agricultural commodities imported from Indonesia may enter the Polish market without payment of customs duty (zero tariff). In order to be eligible for such preferences, commodities must be sold directly to Poland.
Indonesian businessmen interested in starting activities in the Polish market will find many attractive opportunities. They may easily open a representation office or find a partner to cooperate with. Therefore, Poland is expecting more and more Indonesian companies to visit Poland in the future, searching for trade and business opportunities.
The best way to get acquainted with the Polish exports on offer and also to present Indonesian products to many potential customers, is to participate in international trade fairs and exhibitions organized in Poland.
Some well-known events with a long tradition include: * Poznaq International Fair, Fair for Industrial Technologies and Investment Goods - the largest exhibition held annually in Poznaq City Fair Grounds in June; * Poznaq Fashion Week: Featuring clothes, fabrics, jewelry, footwear and leather -- organized twice a year in March and August; * Domexpo, Trade Fair for Household Appliances: Featuring household appliances, lighting equipment, heating, ventilation and air-conditioning, interior decoration - organized annually in October; * Polagra-Farm, Agricultural International Trade Fair: Dubbed one of the biggest agricultural machinery, equipment and tools and fertilizer fairs in Europe -- held every October; * Polagra-Food, International Trade Fair for Food Industry: Exhibiting the latest machinery and equipment for food processing industry, packaging machines, farm produce and foodstuffs -- held annually in September; * Meble, Furniture and Furnishings Fair - organized annually in May; * Drema, International Exhibition for Woodworking Machines and Tools: Featuring machinery and equipment for forest and sawmill industry, machines and equipment for cellulose and paper-making industry -- organized annually in May together with Meble, Furniture and Furnishings Fair; * Taropak, Packaging Technology and Logistics International Exhibition: Featuring packaging and accessories, packing machines and equipment and packaging manufacturing machines -- organized annually in October, together with Domexpo; * Poleko, Ecological International Fair: Displaying water, soil and air protection technology and equipment, control and measurement apparatus for monitoring pollution, noise and vibration, management of industrial, municipal and chemical wastes, municipal transport and transport means -- organized annually in November; and * Baltexpo, International Shipbuilding and Maritime Equipment Exhibition -- held every two years in September.
Acknowledging the Polish export possibilities and the great significance of the Indonesian market, many Polish producers and exporters have visited Indonesia in recent years.
They participated in some important exhibitions in Jakarta, for example in the annual Mining and Electric Indonesia, Oil and Gas Indonesia, and Manufacturing Indonesia in 1997, 1998, 2000, and every Building & Construction Indonesia event since 1996. During some exhibitions Polish companies have presented their products and services in national pavilions.
This year alone, Poland has already participated in two exhibitions in Indonesia. For the first time it has taken part in an agricultural exhibition called "Agro & Food Expo 2001" to promote Polish agricultural machinery, food processing equipment and processed food products.
As has already become a tradition, an offer of the Polish manufacturing sector was presented at the Manufacturing Indonesia 2001 exhibition.
Currently, from Nov. 7 til Nov. 10, a number of examples of Polish equipment and machines for the mining and energy sector are being presented at Poland's National Information Stand No. 2530 in Hall A3 at the Mining & Electric Indonesia 2001 exhibition held at the Jakarta International Exhibition Center in Kemayoran, Central Jakarta.
Polish companies offer many business and cooperation opportunities for interested Indonesian partners, especially in such areas as: the steel industry, the shipbuilding industry (including construction of tankers, container ships, LPG and LNG ships, Ro-Ro and passenger ships, fishing boats, navy ships and rescue boats), underground and open-cast mining equipment, the chemical industry, the machine-tool industry, building and construction machinery, food processing plants and environment protection equipment and know-how.
Prospective purchases from Poland may also include such goods as: fertilizers, pharmaceuticals, processed food, powdered milk, measuring instruments, agricultural machinery, railway equipment, energy sector equipment and fire-fighting and rescue aircraft.
In order to explore new areas of bilateral trade and to strengthen economic cooperation between Poland and Indonesia, more direct contacts between business circles are required, as well as becoming more familiar with each other's economies.
Then, no doubt, mutual trade will grow to the benefit of both of our distant (only geographically) countries.