The Polish cinema scene is one of the most vibrant in the world, but you’d be forgiven for not knowing that because it’s also strangely insular.

“You might say that the blessing and the curse of a domestic audience of 38 million is the same: Your films do not have to travel,” says Michal Chacinski, artistic director of the Gdynia Film Festival, which acts as a showcase for local films. “The case until recently was that Polish filmmakers catered mostly to our local audience because that was enough to make a production profitable.” Local filmmakers can also rely on a generous and reliable supply of support and coin from the Polish Film Institute and a network of regional film agencies, each with its own pot of zloty, the local currency.

Nikolaj Nikitin, the Berlinale’s delegate for Eastern Europe and founder of the recently launched School of Film Agents, a film biz training program based in Wroclaw, can see a host of reasons to be cheerful about the prospects for Polish cinema: “A big diversity in style and stories, a stable funding system, dedicated directors, gifted actors, amazing d.p.’s, and a good geographical position in the middle of Europe,” he says. “It’s a very vivid and developing film industry.”

The second-biggest movie at the Polish box office this year is a local film, Wojtek Smarzowski’s crime thriller “Traffic Department”; it’s also been a hit on the festival circuit, with San Sebastian its next berth. Smarzowski was selected as one of Variety’s Ten Euro Directors to Watch. The film was financed entirely out of Poland, as is his next film, “The Mighty Angel.” (pictured) It is unlikely to be easy viewing, however, dealing with a man’s struggle with alcoholism, but neither was “Traffic Department,” a realistic depiction of police corruption.

Given that Poland has a string of co-production treaties and is a member of European co-production fund Eurimages, Polish filmmakers have the luxury of choosing to fund their projects with or without foreign co-producers attached. Veteran helmer Andrzej Wajda, whose latest film “Walesa. Man of Hope,” screens at Toronto, chose to avoid the co-production route so he could retain total creative freedom.

“A co-production would mean making ‘Walesa’ on the basis of a previously agreed upon screenplay,” he says. “A solely Polish production gave me the opportunity to tackle the subject matter, and introduce numerous changes that improved the film in terms of its dramatic composition.”

That’s not to say that Polish filmmakers are not interested in attracting a foreign audience. The producer of “Walesa,” Michal Kwiecinski, sees the story of the pro-democracy activist as having great relevance to international audiences today. “Walesa is a symbol of the fight for the freedom of our nation. His fight came from the organic need for freedom, which is a need connecting everybody around the world, especially nowadays, when so many people in so many countries are fighting for their own freedom,” he says.

The situation is so favorable that emigre Pawel Pawlikowski, who has worked mostly in the U.K. since leaving Poland as a child, returned recently to shoot his first Polish film, “Ida,” which also screens at Toronto. The film’s British producer, Eric Abraham, is confident that subtitled fare like “Ida” can still attract international sales as long as it is of sufficient creative strength.

“The originality of films like ‘Ida’ will find a sizable enough audience that is bored with the current surfeit of formulaic films and hungry for meatier fare. Happily there are still a handful of excellent theatrical distributors committed to films like ‘Ida,’ who have access to European subsidy funds for distribution,” he says.

Polish films have also started to attract the attention of international sales agents, such as Berlin-based Films Boutique, which picked up world rights to “Walesa” and Tomasz Wasilewski’s coming-out drama “Floating Skyscrapers,” which has played at a host of fests, including Tribeca and Karlovy Vary, where it won the East of the West competition.

The international exposure of Polish cinema has been held back to a certain extent by the lack of homegrown sales agents, but it has one now following the launch of Jan Naszewski’s New Europe Film Sales, which reps Joanna Kos-Krauze and Krzysztof Krauze’s Karlovy Vary competish player “Papusza.”

Naszewski says it is important to place Polish cinema within an international context, and he is confident that the best of Polish cinema can match the best in the world, and that Polish filmmakers are eager to break out internationally.

“The right mentality is already there — a wave of young producers working internationally that are very open-minded and ready for cooperation,” he says.

Although the Polish Film Institute is committed to putting coin into international co-productions, its priority is to invest in local talent and develop local projects, so that foreign co-producers and buyers will be drawn by the quality of the talent and the projects, rather than financial incentives alone.

“The best way to enhance co-productions is to promote talented filmmakers, and having well-developed projects with big festival potential. The PFI supports many activities aimed at project development,” says Robert Balinski, a senior exec in the PFI’s international relations department, who reels off a list of international programs that the institute uses to attune Polish producers, directors and writers to the needs of the international market and hone their skills.

The only thing that’s missing, say industry observers, is a tax rebate for international production. “Tax incentives would help to bring more production to Poland — that could add to the know-how and technical facilities that are already in place,” Naszewski says.

Nikitin hints that help may be at hand on this front. “The main thing missing is the tax refund, but I know that some of my Polish friends are eagerly working on it and talking to politicians,” he says.