For more than 25 years, Łódź Special Economic Zone (ŁSEZ) in Poland has provided help, advice and financial incentives to hundreds of companies looking to set up businesses in the region.
The organisation offers both undeveloped land for greenfield-type investments and existing buildings for redevelopment. Its advantages include the central location of the Łódzkie voivodeship in the country, a domestic market of 40 million consumers, and numerous scientific and research centres in and around Łódź.
Companies in the manufacturing sector, contemporary business services (BPO/SSC/IT), and those involved in R&D can all benefit from the support provided. At every level of the investment process, local experts provide advice and assistance. ŁSEZ has expanded its support for FDI with new incentives and services for prospective investors in addition to the income tax exemption.
Financial incentives
The organisation assists in the form of corporate and individual tax benefits for investing companies, of 40–60% of the price of qualified investments. Depending on the location chosen, the exemption can last for ten to 15 years. The vast array of sponsored activities gives the zone an edge over other types of government assistance for investments.
Poland, as a member of the EU, has to observe the rules and regulations for state aid. Therefore, it is limited to new (direct) investments generally defined as:
- setting up a new plant,
- increasing the production capacity of an existing plant,
- diversification of the company’s production by introducing new products,
- fundamental change concerning production processes in an existing plant, or
- purchase of assets belonging to a company that is closed or would close without being purchased.
State aid is dependent on the size of the company as well as the location of the investment. It is further governed by the amount required and for how long.
To maximise financial support, it is permissible to combine different types of regional help (such as corporate income tax exemptions, government cash grants and local real estate tax exemptions).
ŁSEZ: soft landing programme
ŁSEZ offers a soft landing programme to assist investors with the legal, tax and administrative support needed to establish businesses in Poland, together with networking services, business partner discovery and product development.
The zone has developed a ‘Partner Program’ that brings together consulting firms, law firms and accounting offices to help businesses more easily adapt to the new legal and fiscal reality. Companies must submit to verification and show professionalism and experience in order to be allowed into the programme.
Additionally, the Partner Program brings together businesses that can support investors at a later stage of their investment, such as construction firms and human resources advisers. Investors can use the zone to find possible partners and sub-suppliers.
Through the organisation of networking events, such as ‘Business Mixers’, the zone is constantly improving its support services to assist investors in their search for business partners.
Education and skills
A global school for the children of foreign investors was established by ŁSEZ in 2013 in partnership with the University of Łódź. At the moment, the British International School of the University of Łódź offers instruction in accordance with the British English National Curriculum at all educational levels. As a result, the facility has a kindergarten, elementary school and secondary school.
Together with investors, the zone established the Technical School of Automation and Robotics to give investors access to qualified workers. Based on the expertise of SEZ University of Technology professors and the expertise of domestic and international investors, the school is providing vocational education to students, plus other competencies desired by companies investing in industry 4.0 businesses.
Encouraging innovation
ŁSEZ plays a leading role in Poland as a hub for innovation.
A horizontal internet of things technology centre was built in collaboration with the Cambridge Innovation Centre, Warsaw, as the most recent project to foster innovation.
This hub’s objectives include fostering networks of collaboration between entrepreneurs and industry, advancing and implementing ideas on the start-up industry spectrum and imparting knowledge about the fourth industrial revolution.
The latest accelerator initiative of ŁSEZ, the zone’s fourth, is Re_source (Poland Prize). This time, it has taken things a step further by offering assistance and services to foreign businesses in Poland for soft landing, development and acceleration in collaboration with selected business partners.
Its goal is to strengthen the ecosystem in Poland by bringing in creative concepts, global business practices and foreign talent. It also hopes to establish Poland as the top destination in central and eastern Europe for foreign entrepreneurs.
It provides comprehensive support in three stages:
Re_locate: Up to 50,000 zlotys (€12,000) of financial support is available to companies for up to three months for a soft-landing during setup to help with initial development.
Re_act: Acceleration support from a chosen company, access to business development, industry and investment mentors from collaborating companies and infrastructure tailored to each of the top industry routes. With funding of up to 250,000 zlotys (€59,000), the product or service development cycle may extend to ten months.
Re_ach: Post accelerator initiatives for presenting and promoting partner startups inside the ŁSEZ network (about 300 investors).
The programme is designed to give prospective investors a soft landing with the preparatory steps in setting up for business. Some of the available help includes help to explore the Polish start-up ecosystem, and network and meet potential clients and partners (for example, Ericsson, Indigo Nails) or VC funds such as EEC Magenta.
For most companies, an investment in ŁSEZ could be their very first foray into Poland. In order to aid them in navigating around the country, the zone has established a number of alternatives.
ŁSEZ is continuously improving its services, and the additional soft landing initiatives are no exception. It is currently putting together a package of rental apartment buildings for prospective investors. These will be situated close to the regions where investments can be made. Additionally, it is ensuring that the flats will be offered on favourable conditions, both financially and administratively.
