New SEZ Act will discourage investment?

2010-02-22

The much-anticipated amendment to the Special Economic Zones Act may actually discourage investment in the zones rather than facilitating it as was its original purpose, Rzeczpospolita reported. That is because the government has watered down or reversed some of the most important sweeteners for investors contained in its draft version, drawn up more than a year ago.
A new internal report by the Ministry of Economy concludes that the changes may block investments worth PLN 17bn (approx. €4.2bn), thereby preventing the creation of more than 27,000 new jobs and the salvaging of 20,000 existing ones.
In the course of the consultation process, the maximum allowed scope of job cuts in the zones has been reduced, and the possibility of tax loss carry-forward dropped altogether. The latter change reflects concerns at the Ministry of Finance about a resulting fall in corporate income tax receipts. And now there are plans to scrap – rather than extend – the possibility to incorporate private land into the zones. According to the Ministry of Economy study, this latter change alone would reduce investment inflows by PLN 4-9bn (€1-2.2bn) and the number of jobs created by 7,300-11,400.
Furthermore, there are to be tighter sanctions for investors who fail to fulfil their investment obligations: if the actual outlays or jobs are less than 80% of the declared amount, the permit to operate in a special economic zone will be automatically revoked.