Summary

Dear Sir/Madam,

We would like to provide you with a summary of discussions conducted and final conclusions reached during the 13th edition of the TIME Economic Forum, which took place on 8-11 March 2021 online, due to the current epidemic restrictions. The goal of the Forum’s organizers and the Program Committee was to streamline domestic and international efforts of the business community, professional associations, economic chambers and regulators to establish a new digital EU deal, dubbed “Europe 2030”. In the past year, European business organizations have made repeated interventions and on many occasions urged the EU institutions and governments of the EU Member States to adjust the existing regulatory framework to the development needs of industry and to implement an EU recovery fund to support the European economy affected by the Covid-19 pandemic. This is why this year’s Forum was entirely dedicated to the issues of digitization, the National Recovery Plan (NRP), network infrastructure, EU economy 2030, Industry 4.0, digitization of the financial sector, and digital services.­

The size of the European Union market translates into new development opportunities for the member states. However, taking advantage of them requires close cooperation and immediate modernization of the applicable legal framework. Only common and comprehensive action taken by the entire ICT community will make it possible to accelerate the transition from the idea to practical implementation of streamlined solutions, along with the skilful and effective use of the EU recovery plan.

Due to the Covid-19 pandemic we were forced to host the 13th TIME EC online. This, unfortunately, had a negative impact on discussions and informal exchange of information. Although digital tools available on the TIME EC platform provide a high degree of innovation, they will not make up for human contact. To compensate for it, we made all the recordings of presentations, speeches and discussions held during this year’s conference available on TIME’s website (https://fgtime.pl/) . This way you may get back to the content of your interest in every time and place.

Below we present our summary and conclusions stemming from presentations and discussions held during the event.

At the same time, we encourage you to continue your efforts for successful development of the ICT community, and building an innovative, digital EU economy. We encourage you to share with us your suggestions, conclusions and remarks, even if critical. In fact, it cannot be ruled out that changes currently judged to be unnecessary or even dangerous in the long run may be used for wise, useful and effective education and construction of the EU economy.

Summary

The program of the 13th FG TIME was developed based on the key conclusions of the previous edition of the Forum, which reached their final shape over the past year: They included, inter alia:

  • active participation of Poland in the process of building the Green Deal, to embrace the opportunity to maintain the pace of economic development based on the benefits of EU membership,
  • approaching the National Recovery Plan as a tool for building a green network economy,
  • assuming that the technological basis of green transition is digitization, and the condition for the effective use of funds allocated for this purpose is to define digital technologies that will become our regional specialization,
  • perceiving Polish enterprises as being as competitive as many foreign companies, but while placing focus on constantly increasing and expanding productivity growth relying on long-term cooperation,
  • perceiving subsequent digitization of the national financial and monetary system as a necessary element of the entire digitization process and as a cornerstone of the implementation of the Green Deal strategy.

The analysis of the subjects approached during the previous editions of the Forum shows that the spectrum of topics discussed by the digital business community is constantly expanding. Digitization is being embraced by a growing number of manufacturing entities. The digital network is a key tool determining the effectiveness of technological development and management of any network-based infrastructure. The same goes for the majority of entities from the service and finance sectors. The majority of innovations rely on digital technologies. In fact, digitization constitutes a necessary condition for limiting the negative impact of the economy on the environment and climate. The essence of the development of industry 4.0 is the transformation of any production plant into an element of the IoT network.

Digitization should become the foundation of a horizontal policy supporting the country’s social and economic development strategy. It is at the same time a basic means for increasing productivity.

Solutions proposed by European digital business organizations have a positive effect on GDP growth. We believe that the shape of the digitization policy will determine whether and to what extent individual EU Member States will achieve the expected goals in 2030 and, consequently, the level of prosperity and well-being. According to the organizers of the Forum, it is completely realistic for Poland’s GDP per capita in 2030 to reach the level of approx. 90% of average EU GDP.

The digital business community expects the Polish government to take actions that require:

  • modernization of the applicable law in a manner consistent with the amended EU regulatory framework,
  • actions to increase the supply of modern network infrastructure,
  • public support for programs to develop Polish digital specialization,

The year 2020 brought us the long-awaited announcement of amendments to the energy policy and foreshadowed a breakthrough thereto. Therefore, the postulates contained in 2014 Energy Strategy elaborated by the National Chamber of Electronics and Telecommunications KIGEiT are still valid. The panel discussions revealed a significant convergence of the positions of energy and digital companies. The opinions on the optimal development path for the energy system pointed mainly to digital solutions. In particular, the ICT community emphasized that the technological transformation of the energy sector should primarily fuel the economy with revenues that will fully compensate for the costs incurred. It was emphasized that it is necessary to involve small equity investors in manufacturing and infrastructure investments supporting the national energy system.

We once again dedicated an entire conference day to discussing the digitization of the financial sector. The conclusions that emerged are that the resistance to introducing digital money into circulation importantly hampers development of the digital economy. The policy of containment pursued by the state authorities has in this case similar roots to the one currently limiting the energy sector. The social appeal of a digital currency with a finite number of monetary units such as bitcoin is that no government can inflate it through supplementary currency issuance. Its growing popularity relies on the hope that bitcoin and other digital currencies cannot be devalued or nationalized. Global digital currency with a predetermined number of monetary units could reflect the fact of limited resources that we currently face in many fields. This type of currency is somewhat deflationary by its very nature. Blockchain technology already allows for safe globalization of this type of instruments, and further advances in digitization processes may lead to the emergence of a global digital currency system.

This year, the focus of the digital business community was on current affairs affecting the local business landscape, significantly influenced by the pandemic. This year, particular attention was paid to the future of EU business. We need to further explore the topics of:

  • upcoming amendments to competition law and providing development conditions for coopetition,
  • the economies of scale and the opportunities offered by participation in European digital platforms and industrial cooperation networks,
  • European and regional strategy to increase innovation and productivity of enterprises,
  • business opportunities brought by the EU Green Deal strategy,
  • the effects of a low culture of economic cooperation.

The presentations and discussions brought a plethora of conclusions and postulates, which we have compiled in the form of one-sentence theses supported by in-depth argumentation.

Course of discussion

Digitization and National Recovery Plan

The opening speech was delivered by Prime Minister Mateusz Morawiecki, who pointed to the place and role of digitization in the National Recovery Plan (currently in development). He expressed his expectation for “the Plan to give an impetus to the development”. The pillar of the Plan is to be “a surge in spending on the broadly understood digitization of the country”.

The agenda allowed the participants of the Forum to discuss on and comment on government proposals. Our community has many ideas and initiatives for spending the state financial support effectively. The discussions also revealed some differences of views and interests, which means that the choice of solutions beneficial to the entire community must rely dialogue and compromise. We need a quality cooperation based on a culture of rational dispute in order to work out solutions that reconcile differences of interest.

As intended, each of the four days of the event gathered other groups of businesses and stakeholders. Discussions on infrastructure and finance were dominated by regulatory issues, while the discussions on industry and services were strongly marked by the issue of innovation.

This year’s Forum was dominated by 2 topics – the immediate future of the Polish economy and the great network transformations.

Network infrastructure

On the Forum day dedicated to infrastructure, the conditions necessary for the digitization of all infrastructure networks of the economy -i.e. necessity of making investments in fifth generation electronic communication networks (5G) – were discussed. The community of telecommunications operators once again raised a number of critical remarks to the government’s concept of building (or rather updating?) the National Cybersecurity System. The issue at the heart of the discussion was the intention to strengthen the competitive position of the state-owned telecommunications operator by law through its access to key radio frequency ranges. These topics resonated strongly in media publications that followed the Forum. An accurate summary of the discussion on the prospects for improving the policy of accelerated 5G network development was provided by TELKO.in portal (Czy z #Polskiego5G będzie chleb? – TELKO.in ).

Equally much time was devoted to the topic of digitization of energy networks, and in fact the entire energy system. Representatives of the management boards of State Treasury companies pointed to the need for rapid digitization of power grids. The development of a smart metering layer (AMI – Advanced Measurement Infrastructure) and an executive layer (Smart Grid) requires an appropriate market and regulatory environment. It is difficult to justify the profitability of investing in AMI without deregulating tariffs in the household segment. It was also postulated to open the market of dynamic tariff system immediately. Vertical disintegration of energy companies is necessary for the market mechanisms to work as expected. The actual opening of the energy system to accelerated private investments in RES also requires the dispersion of the balancing market. Local zone tariffs and development of a local balancing market may also be a mechanism supporting real changes.

In the opinion of the digital community, the recently announced Energy Policy of Poland until 2040 (EPP2040) is inconsistent and will not contribute to the accelerated development of distributed energy based on RES.

Investments in nuclear energy will further increase electricity costs and result in a loss of competitiveness of the Polish manufacturing industry. It was stated that EPP2040 is based on erroneous economic assumptions regarding the growth potential of investments in renewable energy sources. It does not take into account the decline in the cost of electricity from renewable energy sources below $ 20 / MWh and the actual costs of nuclear energy by 2040. Importantly, EPP2040 does not take into account the dynamic decrease in the costs of short- and long-term electricity storage, which means that after 2040 nuclear energy is likely to hamper the country’s economic development. Furthermore, the work on EPP2040 did not take into consideration the economic efficiency of digital balancing mechanisms (DSR and local balancing).

By 2040, the impact of electricity costs on the total production costs will be many times higher than today. The basis for digital development, industry 4.0, electromobility and the hydrogen economy is cheap, digitally managed electricity generation based on renewable energy sources and energy storage. It must rely on consistent use of network technologies at the production, distribution, technological and system levels.

If the nuclear generation plan is implemented, we will begin to fee its negative economic effects soon after 2040. Importantly, EPP2040 does not take into account the fact that Poland has access renewable energy production technologies and an industry that is prepared to manufacture electronic power systems. We will have to buy nuclear technology abroad, depriving Polish manufacturing plants of the prospect of developing the production of hardware and software for the entire energy sector based on RES.

In essence, EPP2040 stands in opposition to the digital development strategy and will not be fully implemented. On the declarative level, it is a harbinger of a breakthrough and a shift towards renewable energy, but in its essence it gives only a prospect for a reduction in greenhouse gas emissions. On the network level, it constitutes a continuation of the current policy based on a centralized energy management system. EPP2040 strongly relies on the argument of the need to ensure energy security, but in fact, the presented strategy leads to a dramatic reduction in the level of security thereof.

Most of the panel discussions on infrastructure issues indicated that network digital technologies constitute effective and all-available tools that should be used for economic transformation and solving the impending crises: climate, ecological and subsequent pandemics. It was pointed out that the key problems of the present day are global in nature and require much closer international cooperation in all areas of socio-economic life.

EU Economy 2030

In its Programme Presentation, KIGEiT shed some light on the main challenges which we must face to maintain the current growth rate. The members of the Chamber noted that successful digitization is one in which the generated revenues are higher than the costs. To maintain the competitiveness of the Polish economy, it is necessary to open the energy system to private investments, in particular SMEs and prosumers. Only then will the expenses on Smart Grids be balanced by revenues. We would like to point out that the time of large industrial plants and related extensive power plants has passed. Modern industry is based on network solutions and complex value networks. They are created mainly by highly specialized companies merging into multinationals and operating under a common brand. The process of networking SMEs is starting in the EU. Poland has the chance and possibilities to be among the world leaders in this process. The condition for success is to increase the level of communication between the high-tech enterprise community and the state administration. Through a substantive discussion, we should agree on a list of regional specializations and a strategy for their construction. Enterprise networks can only unlock their competitive potential after reaching an appropriate scale that no other EU country, including Germany, has so far.

The EU economy needs a new philosophy of distribution of competences and responsibility for actions taken. The law regulating economic activity should favour the integration of network ecosystems. Politics-stemming ideas such as the two-speed Europe or the Europe of nation-states disregard the realities of economies of scale. Such ideas can only result in further development slowdown, a decline in the competitiveness of Europe and a loss of digital sovereignty (and more). As globalization advances, the short-term interests games of politicians of the EU Member States are becoming more and more harmful to all EU economies. This conclusion should be followed by changes in the environment shaping the interests of the ruling groups, mainly inside EU countries.

Industry 4.0

Widespread digitization has resulted in an increase in technological productivity, which, thanks to the EU’s economic policy, may translate into an increase in the productivity of small enterprises. The participant’s discussions on industry 4.0 prove that both the authorities and companies are aware that in Poland its development must be embodied by accelerated digitization of SMEs. The presentations delivered emphasized the key importance of 5G electronic communication infrastructure development and the availability of cheap energy determining the profitability of investments in IoT in the SME sector. It seems that the new EU legal system will have an actual system of incentives for connecting SMEs within European industrial networks. Hence the postulate to use the accelerated development of 5G and appropriate legal facilitations, to make the EU network market more accessible to Polish SMEs. We call for support for:

  • construction of interoperable IT systems encompassing databases, information and knowledge – necessary for the implementation of circular economy systems;
  • harmonization of standards that guarantee interoperability, availability and adjustment of 4.0 industrial networks to the needs of the SME sector;
  • creating conditions for European consolidation of telecommunications networks on a scale appropriate to the needs of industry, infrastructure and universal services;
  • modernization of the innovation ecosystem, which must be based on easy access to information and facilitation of the procedures for applying for aid;
  • supporting innovative enterprises within industrial networks and lifelong learning organized within I 4.0 platforms provided by Member States;
  • developing uniform curriculum and adult education systems, promoting innovative approach and building a civic culture embracing lifelong learning.

The participants of the session focused on:

  • using the industry 4.0 development program to build Polish industrial specialization – special attention was paid to drones, 3D printing technologies and power electronics,
  • taking advantage of new business opportunities offered by the EU Green Deal,
  • providing industry with cheap energy by switching to the system of supplying the economy with renewable energy sources and energy storage throughout the EU;
  • launching a program of strengthening competences in the field of building digital twins.

The industry-related topics discussed during this year’s TIME EC have also been summarized by the Future Industry Platform Foundation. The representative of the Platform highlighted the issues of cybersecurity and its importance for seamless operation of industry 4.0 plants.[1]

Digitization of health care services

On the third day of the event, dedicated to the issues of financial sector participation in digitization, the speech given by Prime Minister Morawiecki was broadly discussed. The Covid-19 pandemic suddenly, unexpectedly and probably for a period of at least 1.5 to 2 years hampered the development of the national, European and global economy (including the financial sector.) At present, it is impossible to predict how the economic recovery process, the contribution of the financial sector, and the resulting shape thereof will look. That is why it is so important to launch transparent and partner consultations with the community of economic and financial professionals, also under the National Recovery Plan. The consultations should rely to processes and procedures used to get back to the path of economic growth, but also – which is very important – take into account the new climate and civilization challenges (including digital transformation), generally referred to as the Green Deal.

Funding for the development of industrial technologies is an indispensable element of economic recovery from the pandemic. In the context of the Green Deal, in the next 30 years, it is especially recommended to develop and consistently use new technologies (such as AI, blockchain or cloud solutions) and find their new applications . In the perspective of the next 30 years, the emergence of new ICT technologies should also be foreseen and forecasted. These innovations should be supported, to the possible extent, from the state budget, as they are the prerequisite for maintaining the pace of country development and increasing productivity.

The presentation given by Michał Polasik, Ph.D., representing the Nicolaus Copernicus University in Toruń, was the first public display of the results of his pan-European banking sector research, which showed the development potential of “open banking” and the importance of this type of services for companies and consumers. It is important to support such research to allow for their practical use and having in mind the approaching elaboration of the 3rd European version of the Payment Service Directive, but also to strengthen the technological aspects of the development of the Polish financial system.

The financial sector participates in three equally important processes:

  • economic recovery after the pandemic,
  • abandoning the financing of the energy sector based on the extraction industries,
  • converting economic activity into processes and production in a manner consistent with the objectives of the EU’s Green Deal.

In order not to perpetuate the existing solutions and business models, it is advisable to focus on achieving strategic, long-term goals, based on updated legal regulations and new technologies and new social behaviours resulting from the pandemic.

Thanks to the technological maturity achieved, the Polish financial sector is already capable of adopting many modern technologies, such as AI, cloud solutions, and blockchain. However, the order and scope of implementation of these and subsequent technologies in individual institutions and companies in a situation of declining profitability of the financial sector remains a structural problem. A chance for further technological modernization of the sector is legislative and financial support for boosting competitiveness, e.g. through projects referred to as fintechs. A natural catalyst for changes will also be modification in the behaviour of retail and corporate clients in the financial sector.

With regard to the financial sector, traditionally strongly controlled by a system of rigid regulations, we observe, on the one hand, symptoms of over-regulation in the scope of traditional (but constantly modernized) banking, and on the other hand, the need to create strong and effective new regulations, e.g. in relation to cybersecurity or risk analysis in matters related to climate challenges.

During the pandemic, the e-Commerce sector in Poland recorded an increase in turnover by approx. 30%. The entry of two global giants . (the Amazon.pl store and AliExpress parcel lockers) to the Polish market will additionally strengthen the Polish e-commerce market, but it will certainly also initiate many changes. Actions should be taken to maintain the development trend of e-commerce and to improve the previously used and improved business models, technologies applied, and infrastructure development. It is important to base this process as far as possible on the rules of competitiveness and transparency.

12 years after the emergence of bitcoin and blockchain technology, their presence in the global financial system cannot be ignored. Nevertheless, digital money still gives rise to strong emotions, doubts and is the subject of many, often opposing, opinions. CBDC (Central Bank Digital Currency) remains an important subject. Asian experts, led by the People’s Bank of China, are already very actively working towards the comprehensive regulation of the digital currency of central banks. Similar initiatives have been launched also in Europe (e.g. in Estonia or Sweden), but unfortunately not in Poland. NBP remains in the group of around 20% of central banks that are not involved in CBDC work, which is not likely to bring any positive results for the future. This is because the current developments in digital currencies and blockchain technology herald a new common phenomenon: tokenization of economic trading.

Digital services

The fourth day of TIME EC was devoted to the subject of services. The following issues were raised: the construction of the European data market, the future of the media market, digital sovereignty and certification, artificial intelligence in the economy, the role of digitization in the healthcare sector and the development potential of e-sport.

GAIA-X representatives presented the possible paths for development of the data sector in the federation model. Poland should join this European project of building data market sovereignty as soon as possible. Currently, GAIA-X has no polish members, although the organization already associates over 200 companies from Europe. Central administration projects, such as the Common State IT Infrastructure Program (WIIP), should take advantage of the synergies offered by the project.

During the discussion on the media market, the most important issue was the process of refarming the frequencies used for broadcasting TV programs in digital terrestrial multiplexes, consisting in the release of some of these frequencies for the needs of the 5G network. Therefore, considering the fact that the sale of liberated frequency resources will generate additional revenues for the State, in the opinion of the broadcasters it is reasonable to compensate the broadcasters for the full costs of refarming. At present, the Office of Electronic Communications is assessing the costs of this process and estimates the amount of specific compensation for broadcasters, the upper limit of which has, however, been subject to a statutory limit. An additional issue discussed was the must carry / must offer. As part of the current legal regulations, a new market standard has been developed in the field of must carry / must offer obligations to the benefit of viewers, operators distributing television programs on the Internet, and also for the broadcasters themselves.

In the context of cybersecurity and certification, the panellists supported the construction of certification centres in Poland and indicated that it is a necessary element of the National Cybersecurity System to ensure protection of the country’s digital sovereignty. It should also be introduced in an objective manner, respecting all parties to the dialogue. The panellists also pointed to the need to spend EU funds under the National Recovery Plan and the European Union’s multiannual financial framework for 2021-2027 on cybersecurity.

In terms of the development of artificial intelligence, the preliminary results of the latest State of Polish AI 2021 survey were presented. The market welcomed the adoption of the AI ​​Policy by the government. However, it was indicated both in the discussion and in the report itself that the objectives of policy implementation should be the determined KPIs and that budget funds for the development of the domestic AI market should be provided. Moreover, the companies stressed the importance of international promotion, supported by state funds.

 

Participants of the discussion on health care industry digitization pointed to new significant development opportunities, the emergence of a new area of ​​the economy, which is created by the digitization of the healthcare in Poland and abroad. The discussion also raised the issues contained in the call to the authorities entitled “It’s time for the digital economy”. One of the most discussed postulates was the issue of making available anonymised and described digital patient data sets for the purposes of artificial intelligence solutions (e.g. screening). The implementation of such solutions would shorten the queues for certain medical services.

In the e-sport block, industry representatives discussed the state of market development, emphasizing its very dynamic pace. The first teams sponsored by companies and business promoters have already emerged. However, the market is still in its early stage, and therefore has a very large development potential, both in Poland and abroad. .

[1] https://przemyslprzyszlosci.gov.pl/za-nami-forum-gospodarcze-time-cyberbezpieczenstwo-siec-5g-i-cyfryzacja-firm/