Strategic options for how to use the crisis to Poland's benefit

In this week's edition, The Economist runs two stories on how Indian and Chinese companies use the crisis to expand abroad through acquisitions. These stories dovetail with what I have been saying for a long time (see for instance my article in Rzeczpospolita from September of last year) that Poland's government should take advantage of the crisis to promote foreign expansion of public and private companies. It, of course, can do much more for state-owned entreprises such as PKO BP, KGHM or Orlen. PKO BP is a particularly good example: using the historical weakness of foreign banks, it could cheaply buy banks in Poland, CEE region, and even in Western Europe. The latter option would actually be the best: it would give PKO BP the needed know-how, expertise, brand name, access to markets etc, and serve as a a platform for further expansion.

What needs to be done: first, the government should forgo dividends from large state-owned companies (particularly from PKO BP). second, when profits are not enough, the state should increase equity in selected companies, even if it required increasing budget deficit (although it could be done through BGK, the state-owned bank). third, it should ensure that management boards of the state-owned institutions are as professional as they can be (which is largely the case, but not always). lastly, it should clearly state that it would not punish state-owned companies for being ambitious (it is risky, I know, but there is never a free lunch).

State ownership should not be, however, a long-term option: PKO BP and others should at some point be privatized to long-term domestic investors, such as the pension funds. Let Polish citizens benefit from international expansion of our companies...