LEGNICKA SPECJALNA STREFA EKONOMICZNA (LSSE) IS THE NEWLY ESTABLISHED SPECIAL ECONOMIC ZONE IN LEGNICA. THE ZONE WAS CREATED ON APRIL 15, 1997 AND INCENTIVES WILL BE IN EFFECT FOR TWENTY YEARS. THE ZONE IN LEGNICA WAS ESTABLISHED TO ABSORB UNEMPLOYMENT RESULTING FROM THE EXPECTED RESTRUCTURIZATION OF A BIG COPPER MINE AND TO FACILITATE DEVELOPMENT OF THE AREA LEFT BY THE FORMER SOVIET ARMY. THE ZONE COVERS 382 HECTARES (HA) OF LAND DIVIDED INTO THREE PARTS: LEGNICA - 66 HA, POLKOWICE - 109 HA, AND KRZYWA - 207 HA. THE ZONE IS MANAGED BY THE JOINT-STOCK COMPANY LEGNICKA SPECJALNA STREFA EKONOMICZNA, WHICH OWNS THE AREA.

INCENTIVES FOR OPERATING IN THE LEGNICA SPECIAL ECONOMIC ZONE ARE THE SAME AS FOR OPERATING IN OTHER SPECIAL ECONOMIC ZONES IN POLAND: DURING THE ZONE'S 20-YEAR EXISTENCE, INVESTORS OPERATING UNDER LICENSES ISSUED BY THE ZONE'S MANAGING AUTHORITY OR THE MINISTER OF ECONOMY ARE COMPLETELY EXEMPT FROM REAL ESTATE TAX AND ADDITIONALLY ELIGIBLE FOR 100 PERCENT INCOME TAX RELIEF DURING THE FIRST TEN YEARS AND A 50 PERCENT REDUCTION OF INCOME TAXES FOR THE NEXT TEN YEARS, IF INVESTMENT IN THE ZONE EXCEEDS 850,000 ECU OR CREATES EMPLOYMENT FOR AT LEAST 100 PEOPLE. IT IS ESTIMATED THAT THE ZONE WILL CREATE ABOUT 20,000 NEW JOBS IN THE LEGNICA REGION IN THE FIRST SIX YEARS. THE REGION HAS A QUALIFIED LABOR FORCE TO BE EMPLOYED IN THE TARGET ACTIVITIES OF THE ZONE: ENGINEERING INDUSTRY, METALLURGY, AUTOMOBILE, CHEMICAL INDUSTRIES, AS WELL AS PRODUCTION OF MUSICAL INSTRUMENTS AND PROCESSING OF INDUSTRIAL PLANTS SUCH AS FLAX, HEMP, AND RAPE SEED. ALMOST 60 PERCENT OF THE REGION'S POPULATION IS COMPOSED OF EDUCATED PEOPLE (4.8 PERCENT WITH HIGH SCHOOL DEGREES, 54.1 WITH SECONDARY SCHOOL DEGREES INCLUDING VOCATIONAL DEGREES), AND IS YOUNGER THAN 34.

LEGNICA PROVINCE HAS 524,000 INHABITANTS AND IS LOCATED IN SOUTHWEST POLAND, NEAR THE CZECH AND GERMAN BORDERS. THE ECONOMIC STRUCTURE OF THE REGION IS SHAPED BY THE COPPER INDUSTRY, WHICH EXPLOITS SIGNIFICANT LOCAL DEPOSITS AND IS CONCENTRATED IN THE ENTERPRISE KGHM "POLSKA MIEDZ" S.A., THE SEVENTH LARGEST MANUFACTURER OF COPPER AND SILVER IN THE WORLD. THE COMPANY IS LISTED ON THE WARSAW STOCK EXCHANGED AND ITS GDR (GLOBAL DEPOSITORY RECEIPTS) ARE ALSO LISTED ON THE LONDON EXCHANGE. PRESENTLY 49 PERCENT OF STOCKS ARE OWNED BY THE POLISH STATE, 21 PERCENT BY FOREIGN INVESTORS, AND 15 PERCENT ARE ASSIGNED BY LAW TO THE COMPANY'S WORK FORCE. APART FROM THE COPPER AND MINING INDUSTRIES (THE PROVINCE HAS ALSO DEPOSITS OF BROWN COAL) THE REGION IS KNOWN FOR ELECTRICAL EQUIPMENT, METALLURGY, AND LIGHT INDUSTRIES (TEXTILE, CLOTHING, LEATHER.) NATURAL CONDITIONS ALSO FAVOR AGRICULTURAL DEVELOPMENT. THERE ARE SUGAR PLANTS, DAIRIES, DISTILLERIES AND MEAT PROCESSING PLANTS.

THE LOCAL AUTHORITIES WELCOME INVESTORS TO BEGIN THEIR OPERATION IN THE LEGNICA SPECIAL ECONOMIC ZONE:
- THE DEVELOPED AREA IN LEGNICA (66 HA) LOCATED IN THE NEIGHBORHOOD OF THE LOCAL AIRPORT, ONLY THREE KILOMETERS FROM THE CITY CENTER, FAIRLY CLOSE TO THE HIGHWAY LINKING BERLIN AND KRAKOW (EAST-WEST) AND THE PLANNED NORTH-SOUTH HIGHWAY. THE AIRFIELD NEAR LEGNICA HAS AN AIRSTRIP 1,600 METERS LONG FOR BUSINESS PLANES.
- THE DEVELOPED AREA IN POLKOWICE (109 HA), CLOSE TO THE CENTER OF POLKOWICE, 32 KILOMETERS FROM LEGNICA, AND FOUR KILOMETERS FROM THE PLANNED NORTH-SOUTH HIGHWAY.
- THE AREA IN KRZYWA (207 HA), COVERING THE FORMER SOVIET ARMY AIRPORT WITH A 2,500 METER AIRSTRIP, BORDERING ON THE EAST-WEST HIGHWAY, COMPRISING A RAILWAY SIDING, AND LOCATED 33 KILOMETERS FROM LEGNICA. THE AREA HAS INFRASTRUCTURE TYPICAL FOR AIRFIELD INSTALLATIONS. NEAR THE AIRFIELD THERE ARE LIVING QUARTERS READY FOR DEVELOPMENT. THE AIRFIELD IS PLANNED TO BE A FREIGHT CARGO AIRPORT.

DURING THE TIME OF ITS ACTIVITY, THE FOLLOWING COMPANIES HAVE SET UP WITHIN THE ZONE:
- ROYAL EUROPA SP. Z O.O. WITH CANADIAN-AMERICAN CAPITAL (ROYAL PLASTIC GROUP LTD., CANADA, AND AMERICAN BUILDING PRODUCTS CORPORATION, USA). THE COMPANY IS INVOLVED IN BUILDING HOUSES. IT PLANS TO INVEST 43 MILLION USD, EMPLOY MORE THAN 500 PEOPLE AND BEGIN PRODUCTION BEFORE MARCH 1999. THE COMPANY IS LOCATED IN POLKOWICE AND COVERS 15.7 HA OF THE POLKOWICE SUB-ZONE.
- SBT POLSKA SP. Z O.O. WITH GERMAN CAPITAL GROUP WINKELMANN. THE COMPANY INTENDS TO INVEST 14 MILLION USD AND EMPLOY 140 PEOPLE. SBT POLSKA SP. Z O.O. PLANS TO SET UP AN ENAMEL SHOP AND PRODUCE CUBIC WATER HEATERS. PRODUCTION WILL START IN JANUARY 1999. THE COMPANY IS LOCATED IN LEGNICA AND COVERS 3.5 HA.
- "URZEDOWSKI" IS A POLISH COMPANY WITH 100 PERCENT POLISH CAPITAL. IT SPECIALIZES IN WOODWORK CONSTRUCTION, BUILDING WOODEN HOUSES AND CONSTRUCTION DETAILS. IT PLANS TO INVEST ALMOST 100 MILLION USD, EMPLOY 1,450 PEOPLE, AND BEGIN PRODUCTION IN JANUARY 2000. THE COMPANY IS LOCATED IN THE KRZYWA SUB-ZONE AND COVERS 51 HA. - VOLKSWAGEN MOTOR POLSKA SP. Z O.O. REPRESENTS GERMAN CAPITAL (VOLKSWAGEN AG). THE COMPANY IS COMMITTED TO INVEST 120 MILLION USD, EMPLOY 720 PEOPLE AND START PRODUCTION BEFORE JUNE 1999. THE COMPANY WILL MANUFACTURE DIESEL MOTORS WITH DIRECT INJECTION USING THE NEWEST TECHNOLOGY IN POLKOWICE SUB-ZONE ON 12 HA. - SITECH SP. Z O.O. ALSO REPRESENTS GERMAN CAPITAL (JOINT VENTURE: VOLKSWAGEN AG 49% AND KAROSSERIEWERKE DRESDEN GMBH 51%). THE COMPANY PLANS TO INVEST 70 MILLION USD, EMPLOY 300 PEOPLE AND BEGIN PRODUCTION OF CAR SEATS AND AUTOMOTIVE ACCESSORIES BEFORE MARCH 1999. IT IS LOCATED IN POLKOWICE SUB-ZONE AND COVERS 8 HA.

COMPANIES INTERESTED IN THE SPECIAL ECONOMIC ZONE IN LEGNICA SHOULD CONTACT:
MR. ANDRZEJ GLAPINSKI, PRESIDENT OF THE BOARD
MR. KRZYSZTOF SKORA, MEMBER OF THE BOARD
LEGNICKA SPECJALNA STREFA EKONOMICZNA S.A.
UL. KARDYNALA B. KOMINKA 9
59-220 LEGNICA, POLAND
TEL: (48-76) 852-2446, or 852-2447
FAX: (48-76) 852-2443
EMAIL: STREFALEG@CUPRUM.COM.PL
INTERNET SITE: HTTP://WWW.CUPRUM.COM.PL/STREFA

Date of Report: July 1997
Author: Barbara Blocka

INTERNATIONAL COPYRIGHT, U.S. & FOREIGN COMMERCIAL SERVICE AND U.S. DEPARTMENT OF STATE, 1997. ALL RIGHTS RESERVED OUTSIDE OF THE UNITED STATES.

**Provided courtesy of the Central and Eastern Europe Business Information Center (CEEBIC)
CEEBIC