Nearly PLN 6 bln of state aid was given to undertakings in Poland in 2006. It is over a billion more than the previous year, reads a report prepared by UOKiK and adopted on 27 November 2007 by the Council of Ministers.

The President of UOKiK is responsible for state aid monitoring in Poland and preparing annual reports on the aid granted to undertakings. According to the latest report, the total amount of aid granted in 2006 was PLN 5.87 bln, which constitutes 0.6% of Poland’s GDP. In 2005 it was PLN 4.79 bln (0.5% of GDP). Most often the aid took the form of state grants and tax concessions (97.5%), with grants constituting a great majority (78.3%). However, for the first time the aid did not include state sureties or guarantees.

The highest amounts of state aid were granted by: the President of the State Fund for Rehabilitation of Disabled Persons (PLN 1.19 bln), the Minister of Economy (PLN 1.18 bln), tax and customs offices (PLN 656.7 mln) and the Polish Agency For Enterprise Development (PLN 293.6 mln).

Regional aid doubled in 2006 in comparison to the previous year (PLN 763.6 mln) and amounted to PLN 1.55 bln. This was mainly caused by the growing amount of tax exemptions granted to the undertakings in special economic zones and the use of grants from the EU Structural Funds, especially the European Regional Development Fund (ERDF). Most of the funds were used, similarly to the previous year, to support new investment: PLN 1.08 bln, out of which PLN 625 mln was granted in the form of income tax exemption for the undertakings in special economic zones. In comparison, it was PLN 459.1 mln the previous year.

PLN 21.83 bln was designated for supporting specific objectives (horizontal aid). Most of the sum was spent, similarly as in 2005, on employment (PLN 1.44 bln), as well as on the development of small and medium-size enterprises (PLN 322.6 mln). This amount was more than PLN 360 mln higher than the year before, mostly because of the increased aid for employment and trainings.

There have been no changes in the tendencies in sectoral aid, neither with respect to its amount, nor the beneficiaries. Out of the PLN 699.8 mln granted in 2006 (PLN 1.048 mln in 2005) the most was spent on restructuring the coal mining industry: PLN 596.2 mln The rest was used for supporting shipbuilding contracts.

Similarly to the period 2004-2005, the biggest beneficiary of state aid in Poland was the PKP Group (PLN 990.2 mln), followed by companies from the coal sector, among which the biggest aid was given to Spółka Restrukturyzacji Kopalń (PLN 262.3 mln) and Kompania Węglowa (PLN 189.9 mln). Significant aid, namely PLN 401.7 mln, was also given to LG Philips LCD Poland and the entities cooperating with it. Among the beneficiaries there were also two shipyards: Szczecińska Nowa, which received PLN 79.3 mln and Gdynia - PLN 24.3 mln Substantial amounts of aid were also granted to the undertakings operating in special economic zones, especially in the automotive sector: Isuzu Motor Polska (PLN 40.8 mln), Fiat-GM Powertrain (PLN 31.7 mln) and Volksvagen Motor Polska (PLN 24.2 mln).

The biggest aid was granted to the undertakings in the Śląskie voivodship (24.9% of the total aid in 2006), followed by the Dolnośląskie and Mazowieckie voivodships (17.3% and 9.2%, respectively). The presence of the Dolnośląskie voivodship alongside the other two traditionally top-ranking receivers of state aid is the outcome of the considerable aid granted to LG Philips and the entities cooperating with it, which are based in the region.

UOKiK is concerned about the still high, though gradually declining, levels of state aid granted to large undertakings. Supporting entities with strong market position creates more risk of competition restricting practices than supporting small and medium-size enterprises. A positive tendency, on the other hand, is the growth in the amount of aid granted to private undertakings, since, under the free market conditions, they should ensure better allocation of public funds than state-owned undertakings.

State aid, which is one of the tools of supporting enterprises by the state, is, paradoxically, not well known to the businesses themselves. A survey carried out by PBS DGA for UOKiK showed that despite the fact that 41.5% of entrepreneurs in Poland have applied for state aid, only 8% of the respondents have heard of state aid schemes. What is more, almost half of the surveyed entrepreneurs cannot name any institution which grants state aid.

More information:
Małgorzata Cieloch, Spokesperson for UOKiK
Pl. Powstańców Warszawy 1, 00-950 Warsaw, Poland
Tel. (+48 22) 827 28 92, 55 60 106, 55 60 314
faks (+48 22) 826 11 86
E-mail mcieloch@uokik.gov.pl