LOCAL CONTENT

FOR THE BENEFIT OF POLAND

The local content project is part of the government’s economic policy framework and delivers on a key priority of the Ministry of State Assets. Its main objective is to strengthen procurement sovereignty and increase the share of Polish suppliers in supply chains, especially in investments carried out by state-owned or state-backed companies, including Polski Holding Hotelowy. All of this is intended to reinforce Poland’s strategic autonomy and economic security.

The local content concept is based on creating an economic ecosystem that, on the one hand, makes it easier for small and medium-sized domestic enterprises to join the supply chains of large corporations and, on the other, rewards companies that implement such principles.

Social and economic benefits of local content:

more resilient and flexible supply chains, less vulnerable to geopolitical turbulence and price pressure,
greater employment stability,
development of technical capabilities in smaller regional centres,
increased orders for local SMEs,
stronger local government budgets.

Incorporating local content principles into the state’s procurement policy means moving away from the “buy at the lowest price” model towards a “buy more wisely” approach, designed to deliver long-term benefits to the economy. This approach is already being adopted by the largest and most technologically advanced EU economies, as they protect and develop their strategic industrial sectors

The four pillars of Polish local content

Building the market position of domestic companies – integrating them into the supply chains of major investment projects and strengthening their strategic business and manufacturing capabilities.
Strengthening security of supply in times of geopolitical tension – especially in strategic sectors such as energy and defence.
A long-term state procurement policy – public procurement supports economic development.
Support from a team of experts from key financial institutions – developing financial products that help companies invest.

Tools supporting the development of local content:

Definition and methodology for calculating the domestic component – Statistics Poland (GUS) will measure the value of the domestic contribution to investments.
Code of Good Practice – this will enable state-owned or state-backed companies to level the playing field for domestic firms competing for contracts.
Key Performance Indicators (KPIs) – in companies with State Treasury ownership, supervisory boards will assess management boards against the implementation of the Ministry of State Assets’ priority.
The State Procurement Policy, adopted by the Council of Ministers at the end of March.

The domestic component from an entity-based perspective

In addition to defining what the term domestic component means within the local content project, the Code of Good Practice also sets out criteria that will help determine the degree of “domesticity” of individual entities with which state-owned or state-backed companies may wish to cooperate.

The indicated criteria have been assigned the following percentage weights:

25% weight – criterion relating to the ultimate parent entity being headquartered in Poland,
25% weight – criterion relating to the principal business activity being carried out in Poland,
15% weight – criterion relating to tax residence in Poland,
15% weight – criterion relating to employing more than 50% of staff who are Polish citizens or residents of Poland paying taxes and social security contributions (ZUS) in Poland,
10% weight – criterion relating to having a registered office in Poland (KRS / CEIDG) and conducting uninterrupted business activity for at least 3 years,
10% weight – criterion relating to generating more than 50% of annual turnover in Poland.