Doing Business in the Czech Republic 2017 by PP AGENCY

Doing Business in the CZECH REPUBLIC

2017

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machinery in Central Europe

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic

DOING BUSINESS IN THE CZECH REPUBLIC 2017 for foreign business partners compiled by PP Agency s.r.o. in cooperation with Ministry of Foreign Aﬀairs Ministry of Industry and Trade Ministry of Regional Development Czech Trade Promotion Agency/CzechTrade Czech Export Bank Export Guarantee and Insurance Corporation, a.s. Czech Tourist Authority – CzechTourism International Chamber of Commerce/ICC Confederation of Industry of the Czech Republic Czech National Bank Centre for Regional Development of the Czech Republic - Enterprise Europe Network Czech Centres Czech Chamber of Commerce Confederation of Employers’ and Entrepreneurs’ Associations of the Czech Republic Editorial Board: Vladimír Bärtl, Jiří Hansl, Marcela Havlová, Jaromír Kohlíček, Dagmar Kuchtová, Martin Lukáš, Karel Machotka, Marie Pavlů, Tomáš Seidl, Miroslav Somol, Jarmila Škvrnová, Jan Špunda, Martin Tlapa, Jan Wiesner Editor-in-Chief: Pavla Podskalská Prague

Editors:

Jana Pike

Graphic design: Graphic designer: Stanislava Podaná Production: Stanislava Podaná Cover:

Stanislava Podaná

Issued by: PP Agency s.r.o. Myslíkova 25, 110 00 Praha 1, Czech Republic www.ppagency.cz, e-mail: journal@ppagency.cz Deadline: 27 October 2016 Copyright: PP Agency s.r.o. ISSN 1211-0949

Photo: CzechTourism archives

It is not allowed to reproduce any part of the contents of this book without prior consent from the Editor.

2017

DOING BUSINESS IN THE CZECH REPUBLIC 2017 CONTENTS Foreword by Bohuslav Sobotka, Prime Minister of the Czech Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Foreword by Jan Mládek, Minister of Industry and Trade of the Czech Republic. . . . . . . . . . . . . . . . . . . .8

I. CZECH REPUBLIC  ECONOMIC POLICY Useful Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Inflation Will Increase to the CNB’S 2% Target in 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 This Year Czech Exporters Will Once Again Help to Boost the Economy. . . . . . . . . . . . . . . . . . . . . . . . . . 14 CzechInvest Mediated Investment Projects Worth CZK 45 Billion in 2015 . . . . . . . . . . . . . . . . . . . . . . . . 17

II. CZECH INDUSTRY Economy Is Dominated by Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 The Energy Industry in the Czech Republic – Stable and Prospering Sector . . . . . . . . . . . . . . . . . . . . . . .23 Current Trends in Czech Mechanical Engineering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .27 200 Years of Czech Railway Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .32 Czech Automotive Industry Also Fared Very Well in 2015 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37 Chemical Industry – Good Results in Rubber and Plastics Processing. . . . . . . . . . . . . . . . . . . . . . . . . . . .39 Top Quality and Exquisite Design of Bohemian Glass and Ceramics . . . . . . . . . . . . . . . . . . . . . . . . . . . . .43 Czech Building Industry . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .49

III. HOW TO DO BUSINESS IN THE CZECH REPUBLIC Legal News for Entrepreneurs in 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .52 Forms of Business Activities in the Czech Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .53 Incorporating a Limited Liability Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55 Incorporating a Joint-Stock Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .56 Steps for Acquiring a Czech Trade Licence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 58 Investment Incentives – Rules and Conditions in 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .59 Lease of Business Premises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 61 The Czech Republic: New Act On Public Procurement About to Take Eﬀect . . . . . . . . . . . . . . . . . . . . . . .63 Changes to Czech Employment Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .65 Labour Code Lays Down the Rights and Obligations of Employers and Employees . . . . . . . . . . . . . . . . .67 Employment of Foreigners: Employee Card. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68

IV. FINANCE 2015 Confirmed the Stability and Profitability of the Banking Sector. . . . . . . . . . . . . . . . . . . . . . . . . . . . .72 Changes in Tax Legislation Concerning Businessmen, in Eﬀect From 2016 . . . . . . . . . . . . . . . . . . . . . . .74 Entrepreneurship of Foreign Entities and Its Taxation in the Czech Republic . . . . . . . . . . . . . . . . . . . . .76 Employees – Taxation, Social Security, and Health Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .78

V. REGIONS Prague Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82 Central Bohemia Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .87 Plzeň Region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89 South Bohemia . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .93 Karlovy Vary Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .96 Ústí nad Labem Region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101 Liberec Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .104 Hradec Králové Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .106 Pardubice Region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .108 Vysočina Region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 South Moravia Region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114 Zlín Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117 Olomouc Region. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 121 The Moravia-Silesia Region . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 125

2017

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic

Křivoklát Castle

Photo: CzechTourism archives

VI. USEFUL ADDRESSES AND INFORMATION Ministry of Foreign Aﬀairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .128 Ministry of Industry and Trade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .128 Ministry of Regional Development . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .129 Czech Trade Promotion Agency/CzechTrade . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .129 Czech Export Bank. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .130 Export Guarantee and Insurance Corporation, a.s. (EGAP). . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .130 Czech Tourist Authority – CzechTourism. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 The International Chamber of Commerce/ICC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 131 Confederation of Industry of the Czech Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .132 Czech National Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .132 Centre for Regional Development of the CR - Enterprise Europe Network . . . . . . . . . . . . . . . . . . . . . . .133 Czech Centres . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .133 Czech Chamber of Commerce . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .134 Confederation of Employers’ and Entrepreneurs’ Assotiations of the Czech Republic . . . . . . . . . . . . . .134 Central and Other Key Bodies of the Czech Republic . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .136 The Most Important Websites . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 137

2017

Doing Business in the Czech Republic 2017 COMPILED BY PP AGENCY, S.R.O. IN COOPERATION WITH Ministry of Foreign Aﬀairs

Ministry of Industry and Trade

Ministry of Regional Development

Czech Trade Promotion Agency/CzechTrade

Czech Export Bank

Export Guarantee and Insurance Corporation, a.s.

Czech Tourist Authority – CzechTourism

International Chamber of Commerce/ICC

Confederation of Industry of the Czech Republic

Czech National Bank

Centre for Regional Development of the Czech Republic - Enterprise Europe Network

Czech Chamber of Commerce

Confederation of Employers’ and Entrepreneurs’ Associations of the Czech Republic with compliments

2017

Photo: Government of the Czech Republic archives

Czech Centres

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic

Upon assuming the oﬃce, our government has fundamentally changed the concept of economic policy, which helped us renew the economic growth. The economic, political, and social stability is essential for new domestic as well as foreign investments and new high-quality jobs. Stability has become our main goal and after three years of our government, I am convinced that we have largely contributed to it. With 4.5 % real GDP growth and 5.1 % unemployment rate in the last year, the Czech Republic ranks among the top EU member states. After all, the highest employment rate since the foundation of the independent Czech Republic is an obvious proof of the favourable business environment and increased employment opportunities. Our country has had a long industrial tradition. We have always belonged to the countries with qualified employees and developed industrial manufacture. Nothing of this has changed and the Czech Republic still has a strong potential for development and a great potential for investments. In order to support new investors, we concentrate on the transformation of brownfields into industrial zones and on the development of subsequent transport infrastructure. We focus mainly on investments with a higher added value, where we may adequately use the potential of our country and thus ensure the sustainable growth. At the same time, we support science, research, innovations and new technologies. We are not only facing the challenge of the so-called Industry 4.0, i.e. fast modernisation of industrial manufacture with the focus on digitalisation and usage of information and communication technologies. The dynamic development of new technologies and their application in manufacturing require an active approach. We pay intensive attention to the timely realisation of this “fourth industrial revolution” to keep the position of the Czech Republic as a prosperous country with an attractive environment for business activities. The Czech Republic is situated in the centre of Europe, which is one of our important advantages that we are able to profit from thanks to our good environment for business and investments. We have very quickly managed to integrate the Czech Republic into the European as well as global markets with goods and services. Also with regard to the rapid technological changes, I consider the intensive international cooperation in the field of research and development and sharing of experience as an important condition for successful development not only in the Czech Republic. An important aspect for us is that the investments in the Czech Republic are of a long-term nature and contribute to the sustainable growth and usage of our comparative advantages. Only the harmonic economic development in its entirety may create suitable conditions for business activities and employment. From my point of view, a satisfied employer and a satisfied employee are two sides of the same coin. I firmly believe that the Czech Republic has entered the stage of stable development which provides companies as well as people with the necessary certainty and good basis for technological development and also for international cooperation. We are aware of strong as well as weaker sides of the business environment in the Czech Republic. The legislative changes we have already made and also the planned ones, e. g. simplifying tax payments or building permits, confirm the business-friendly orientation of our policy. I consider the current “Doing Business in the Czech Republic” as a confirmation of the set trend and as a clear sign that the Czech economy is heading in a positive direction. BOHUSLAV SOBOTKA Prime Minister of the Czech Republic

2017

JAN MLÁDEK Minister of Industry and Trade

2017

Photo: Ministry of Industry and Trade archives

Every year since 2003, “Doing Business”, a publication of the World Bank, has been comparing the business environment enjoyed especially by medium-sized and small firms in different countries worldwide. This year it evaluated 190 economies, i.e. nearly all countries the world over. We are naturally pleased that, over the past six years, the rating of the Czech Republic on this prestigious scale has steadily been improving, despite the relatively great changes made in the evaluation method used by the World Bank. In the latest evaluation, the Czech Republic is placed 27th worldwide, a position which in our opinion it richly deserves. And I believe that the legislative changes in the area of building regulations, which the business sphere rightly expects, will bring about a significant simplification in this economically important area and where the difference between our procedures and the procedures used by the highest-ranking countries was the most apparent, could result in further improvement in the position of the Czech Republic in this important international comparison. Naturally, I am glad that the indicators coming under the competence of the Ministry of Industry and Trade have been showing very good results in the past few years, partly due to the intensive efforts by the Czech Republic. For the second year running, we have been the global best with regard to the conditions created for foreign trade. This, among other things, confirms that our membership of the European Union and the Schengen Area, and our strong involvement in the EU single market, are fully justified. We have also moved up on the scale with regard to the electrification indicator, where we currently occupy 13th position, ahead of, for example, the UK and all the other Visegrád Four states. We have further improved the tax payment discipline, where we have moved from the uncomplimentary 122nd to 53rd place. The improvement concerns not only the shortening of the terms, but also, thanks to the new specifications of the method, the procedures to be followed after filing the tax return, for example in the case of VAT refunds and overpayments. In the overall evaluation, we occupy 27th position, ahead of the Netherlands and Switzerland, countries whose business environment certainly cannot be considered as unfriendly towards businessmen. In 2014, we were placed 75th. Our country is not evaluated as we would imagine in all the basic criteria. Our placing within the first 20 best rated countries, according to the World Bank, is hindered primarily by bureaucracy in the area of building regulations, where the Czech Republic occupies the unacceptable 132nd position. I am firmly persuaded that the legislative changes currently being prepared in the area of building regulations, whereby the business sphere rightly expects a significant simplification of this economically important area, could bring about the expected and greatly desired breakthrough. In this connection, however, we must draw attention to the fact that nearly all countries worldwide are intensifying their efforts to improve the conditions for doing business. Therefore, the Czech Republic is aiming at a moving target, and even in the case of indicators, where our evaluation is good, we must strive for continuing, albeit evolutionary change. That is why last year I called on all the guarantors, i.e. colleagues in other ministries, to take steps to lead to the further improvement of the position of the Czech Republic in this prestigious evaluation, to the greater competitiveness of the Czech Republic in international comparisons and to enhancing the attractiveness of our country for foreign partners and investors.

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D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic I . C ze c h R e pu bl i c – Ec o n o mic Po l ic y

USEFUL INFORMATION State Symbols of the Czech Republic Large State Coat of Arms

State Flag

The Czech Republic is a landlocked state situated in Central Europe, neighbouring on Germany, Austria, Slovakia, and Poland.

BASIC DATA Population

10,564,866 (1. Q. 2016) Area 78,864 sq.km Capital Praha (Prague) State system Republic Language Czech Highest elevation Sněžka (Snow Mountain), 1603 metres above sea level Time zone Central European Time GMT + 1, Summer Time GMT + 2 Currency 1 koruna česká/ Czech crown (Kč/CZK)=100 hellers EUR 1 = CZK 27.283 (average, 2015) USD 1 = CZK 24.6 (average, 2015) Internet domain name: .cz

TWELVE CZECH UNESCO WORLD HERITAGE ITEMS The UNESCO World Heritage List includes the following cities and sites: Prague, Český Krumlov, Kutná Hora, the Litomyšl Château, Telč, the Lednice-Valtice area, Zelená Hora – the Church of St John of Nepomuk (in Ždár nad Sázavou), Holašovice, Kroměříž (chateau and gardens), the Holy Trinity Column in Olomouc, the Tugendhat Villa in Brno (architect Ludwig Mies van der Rohe), the Basilica of St Procopius and the Jewish Cemetery in Třebíč. Intangible UNESCO monuments: Slovácko Verbuňk (Slovácko Verbuňk belongs to male saltation dances. It is an impromptu dance, which is not bound by exact choreography rules), Lent (Descriptions of Shrovetide processions and masks in the Hlinsko Region have been documented since the 19th century), Falconry (Falconry is one of the oldest relationships between man and predator, which has lasted for more than 4,000 years. It is the traditional activity of hunting using trained birds of prey in a natural environment), Kings’ Ride (The Ride of the Kings is a folk tradition of yet unknown origin, mostly associated with the traditional Christian holiday). More information at www.unesco-czech.cz.

NOTABLE PERSONALITIES Czechs are described as a very cultured nation, which has given the world a number of prominent figures. The most significant rulers and heads of state have included Emperor Charles IV and the Presidents T. G. Masaryk and Václav Havel. Figures of world renown include the scientists Jaroslav Heyrovský (Nobel Laureate in Chemistry), Otto Wichterle, a Czech chemist who invented contact lenses, and Antonín Holý, who discovered a drug treatment for AIDS. World renown was also gained by the entrepreneur Tomáš Baťa, as well as by Madeleine Albright, former US Secretary of State. The list of famous people in the cultural sphere includes the composers Smetana, Janáček, Dvořák and Martinů, the writers Franz Kafka, Karel Čapek, Jaroslav Seifert (Nobel Laureate), Jaroslav Hašek, Bohumil Hrabal, and Milan Kundera. Winners of the American Academy Award are Czech film directors Miloš Forman (born in the Czech Republic), Jiří Menzel, and Jan Svěrák. Others worthy of mention are the artists František Kupka, Alfons Mucha, and the unique-style photographer Jan Saudek. Famous Czech-born sports people are, for example, Emil Zátopek, Věra Čáslavská, Martina Navrátilová, Jaromír Jágr, Petr Čech, and Petra Kvitová.

President of the Czech Republic: Miloš Zeman

MEMBERSHIP The Czech Republic is a member of the European Union, the United Nations, NATO, WTO, the International Monetary Fund, the International Bank for Reconstruction and Development, the European Bank for Reconstruction and Development, the OECD, and many other organisations.

For additional practical information on the conditions of transport to the Czech Republic and stay in the CR, see www.czech.cz

PRACTICAL INFORMATION Country dialling code: +(420). Details on telephone numbers are available on the websites www.zlatestranky.cz Licences for Mobile telephone network covering the territory of the Czech Republic have been granted to the following companies: O2 Czech Republic, a.s., T-Mobile Czech Republic a.s., Vodafone Czech Republic a.s. The most widely used credit cards in the Czech Republic are: Eurocard/Mastercard and Visa.

2017

INFLATION WILL INCREASE TO THE CNB’S 2 %TARGET IN 2017 The exchange rate floor at 27 CZK/EUR adopted by the Czech National Bank in November 2013 has prevented deflation to emerge and has been instrumental to a subsequent strong economic growth. However, domestic inflation has remained low until now due to persistent fall of producer prices abroad partly related to the last year’s drop in global commodity prices. Inflation will increase to the central bank 2% target during 2017. Therefore, a need to maintain expansionary monetary conditions at least to the current extent persists. The Czech National Bank will not therefore discontinue the use of the exchange rate as a monetary policy instrument before 2017. This article describes developments in the Czech economy from the central bank’s perspective, including the outlook for the next two years.1 EXCHANGE RATE COMMITMENT IN A NUTSHELL The Czech National Bank (CNB) started to use the exchange rate of the crown as an additional instrument for easing monetary policy in November 2013. The CNB’s exchange rate commitment is one-sided, i.e. the CNB will not allow the crown to appreciate to levels it would no longer be possible to interpret as “close to CZK 27/EUR”. The CNB prevents such appreciation by means of automatic and potentially unlimited interventions, i.e. by selling the crown and buying foreign currency. If the exchange rate departs from CZK 27/ EUR on the weaker side, the CNB allows the crown exchange rate to move according to supply and demand in the foreign exchange market.

INTEREST RATES AT ZERO AND EXCHANGE RATE SLIGHTLY ABOVE THE FLOOR In line with the ongoing use of the exchange rate as a monetary policy instrument, monetary policy interest rates remain at technical zero (where they have been since November 2012). With an exception of the first few days after the introduction of exchange rate

LAST YEAR’S ROBUST ECONOMIC GROWTH IS SLOWING DOWN IN 2016 The Czech economic growth accelerated sharply in early 2015 and reach 4.6 % for the year as a whole. All components of domestic demand, and in particular investment and household consumption, contributed to the annual growth in GDP. Economic growth continued to be supported by easy monetary conditions via the weakened crown and by exceptionally low nominal interest rates. Growth in 2016 was also stimulated significantlyby government investment, linked chiefly with the drawdown of EU funds from the previous programme period. Falling oil prices and rising external demand also acted in the same direction. At the beginning of 2016, the economic expansion slowed down to 3 % due to a drop in government investment stemming from only a gradual start to the new programme period for EU funds. The ongoing economic growth has gone hand in hand with a continued labour market improvement. Many new job positions (vacancies) have been created and employment has been growing steadily. Unemployment rate has dropped to 4 % in recent months, i.e. to the historically lowest level over the last twenty years (meaning simultaneously the lowest figure in the EU as well). Both nominal and real wages have been pickingup significantly, supporting the households’ appetite for consumption.

2017

Photo: www.sxc.hu

LOW INFLATION UNTIL NOW Despite these favourable developments in the Czech economy, inflation has remained exceptionally low until now, fluctuating well below the CNB 2 % inflation target. The low-inflation environment has been largely due to external supply-side/cost-push factors, most notably low prices of oil, other energy commodities, as well as non-energy commodities in the global markets. By contrast, core inflation, which mainly reflects domestic inflation pressures, has increased above 1% as a result of the growing economy and accelerating wage growth.

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic I . C ze c h R e pu bl i c – Ec o n o mic Po l ic y

commitment in November 2013, there was no need for the CNB to be active in the FX market till summer 2015, as the exchange rate was markedly weaker than CZK 27 to euro. However, in summer 2015, the exchange rate appreciated to levels just slightly above the central bank floor and since then the CNB has started to intervene automatically to maintain its commitment by buying euro on the foreign exchange market.

SOLID GROWTH AHEAD FORESEEN FOR NEXT TWO YEARS The latest CNB’s forecast from its Inflation Report III/2016 expects that – after temporary deceleration of the GDP growth this year – the economy will accelerate again, reaching 3 % growth in both 2017 and 2018. All components of domestic demand will contribute positively to the growth, the only exception being inventories. The recent decision of the United Kingdom to leave the European Union will have only limited impact on the Czech economy, mainly related to the deteriorated economic sentiment in the euro area, which is the country’s major trading partner. The rising economic activity will manifest itself in a continued improvement in the labour market situation. The number of employees will continue to rise, although at a slower pace. This will result in further (although only slight) decrease in unemployment. Nominal wage growth will increase noticeably, reaching roughly 5 % in years 2017 and 2018.

INFLATION WILL REACH THE TARGET DURING 2017 The growth of domestic economy and accelerating wages will foster higher consumer prices over the next two years. Simultaneously, currently already fading anti-inflationary eﬀects stemming from import prices will subside. Against this backdrop, inflation will increase, slightly exceed 2 % target at the monetary policy horizon (currently second half of 2017) and then return to it from above.

COMMITMENT IN PLACE AT LEAST UNTIL 2017 The forecast assumes that market interest rates will be flat at their current very low level and the exchange rate will be

used as a monetary policy instrument until mid-2017. Consistent with the forecast is an increase in market interest rates thereafter. At its policy meeting in August 2016, the CNB’s Board assessed the risks to the forecast at the monetary policy horizon as being balanced. The main uncertainties of the forecast include the impacts of the outcome of the UK referendum on external demand, the eﬀect of the domestic election cycle on public expenditure growth and the depth of the fall in government investment this year. At the same time, the uncertainty surrounding the impact of the long-lasting low inflation on the anchoring of inflation expectations has declined somewhat. In this context, however, the CNB still stands ready to shift the exchange rate commitment to a weaker level if there were to be a systematic decrease in inflation expectations manifesting itself in nominal variables, especially wages. At the same time, the Bank Board stated that the CNB would not discontinue the use of the exchange rate as a monetary policy instrument before 2017. The Bank Board still considered it likely that the commitment would be discontinued in mid-2017. The Board also repeated any exchange rate appreciation following the discontinuation of the exchange rate commitment would be dampened, among other things, by hedging of exchange rate risk by exporters during the existence of the commitment, by the closing of the crown positions by financial investors and by possible CNB interventions to mitigate exchange rate volatility. TOMÁŠ HOLUB Executive Director, Monetary Department Czech National Bank E-mail: Tomas.Holub@cnb.cz www.cnb.cz This article was written in August 2016. Updated forecasts of the CNB are available at www.cnb.cz.

2017

THIS YEAR, CZECH EXPORTERS WILL ONCE AGAIN HELP BOOST THE ECONOMY 2015 was an exceptional year for the Czech economy. In terms of the year-on-year real GDP change, the economy grew by 4.3%, the fastest since 2007. Last year thus deﬁnitely surpassed the pre-crisis economic level. This year, the growth of the economy will slow down, mainly because of the year-on-year decline in the supply of EU money. Nevertheless, the growth rate is expected to exceed 2%, enough for Czech ﬁrms and households to remain optimistic. While last year net exports added a negative sign to the growth of the Czech economy, this year the sign will be positive.

2017

LAST YEAR, THE CZECH ECONOMY PROFITED FROM A COMBINATION OF SEVERAL ONEOFF FACTORS, WHICH WILL BE ABSENT THIS YEAR The first factor was the final possibility of drawing the remaining EU funds from the 2007-2013 programming period, which went primarily into infrastructural investment. The result, among other things, was investment in construction engineering, which showed a 17.1 per cent growth. In consequence, construction as a whole showed a growth for the second year running, which last year amounted to 7.1 %. The final drawing from EU funds in that period had an unequivocally negative eﬀect on the economic results of the first few months of this year. Between January and May, building production dropped by nearly 9 % year-on-year. The second important phenomenon in 2015 was the dramatic decline in fuel prices in connection with the plummeting oil prices on global markets. As expected, the cheaper fuel prices ultimately resulted in the growth of free disposable income of households and firms, and, thanks to the second wave of the oil and fuel price decline at the turn of last and this year, this factor also stimulated the Czech economy in the first half of 2016.

DOMESTIC ECONOMY CAN RELY ON STRONG DOMESTIC DEMAND Last year, investment activity and household consumption showed the

Photo: www.sxc.hu

The two main characteristic features of the country’s economic performance last year and in the first few months of this year were the stability of foreign demand on the part of Czech trade partners, in particular those in the eurozone, and the calm exchange rate development due to the intervention regime policy pursued by the Czech National Bank. In 2015, the balance of trade surplus (in the national context) amounted to CZK 140.2 billion, just CZK 5.8 billion less than the year before. This year, the economy is targeting a historic high. The development is a clear indication of the strong position of Czech exporters, who last year managed to more than balance out the higher imports resulting from greater investment activity. On the other hand, the dampening of investment activities this year has resulted in the slower growth of imports in comparison with the growth of exports. For the whole of last year, exports grew by 5.9 % and imports by 6.4 %. The results for the first five months of this year indicate that this year exports will grow at approximately half the rate of that of last year, and that imports will grow only minimally. Last year again, the most important export destination was the European Union, accounting for 84.0 %, and specifically the eurozone, towards which 65.2 % of all exports were targeted. Among the individual states, the number one country is Germany with a share of 32.5 % of total Czech exports. Exporters as a whole managed to surmount the problems linked with Russian sanctions, although exports to Russia in 2015 dropped by 32.8 % and the share of exports to Russia fell to 2.0 % of total Czech exports. On the import side, the concentration of the EU and the eurozone is lower, where the share of imports from those territories of total Czech imports last year amounted to 68.9 % and 52.6 %, respectively. German imports accounted for 27.4 %, and those from Russia for 3.3 % of total imports. Traditionally, the unfavourable balance of trade with Russia is due to the import of commodities, specifically gas and crude oil. The exceedingly good performance of exporters is reflected in the current account balance of payments. In 2014, for the first time since 1993, the current account showed a surplus, which amounted to 0.2 % of GDP. Last year showed further improvement, with a surplus of 0.9 % of GDP. In the first quarter of 2016, the surplus climbed to 1.4 % of GDP. Besides the good export performance of the Czech economy, the improvement in the external position of the Czech economy is due to the lower deficit of primary and secondary income. Last year’s higher domestic investment is reflected in the higher reinvestment activity of foreign investors at the expense of profit repatriation. In addition, Czech investments abroad, too, are beginning to bring in benefits. Last year, the balance of secondary income was supported by EU sources. In the final analysis, the significant surplus of the current account balance of payments means a tangible improvement of the country’s continuing unfavourable investment position.

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic I . C ze c h R e pu bl i c – Ec o n o mic Po l ic y

fastest growth rates since 2007. With regard to gross added value creation, industry was once again pulling the economy up, with a 4.4 per cent growth of production in real terms. The automotive industry was mainly responsible for the growth of industrial production, with an output increasing by 11.5 %, followed by rubber and plastics production, which improved by 9.8 %, the pharmaceutical industry (+8.9 %) and the metalworking industry (+6.7 %). On the other hand, the decline in energy commodity prices and the temporary shutdown of one reactor of the Dukovany nuclear power station had a negative eﬀect on the electricity, gas, heat, and conditioned air production and distribution sector, whose output declined by 2.2 % last year. The chemical industry also did not fare too well. Chemical production in 2015 dropped by 5.7 % (in consequence of a breakdown of the Litvínov chemical plant) and the mining industry showed a 1.7 per cent decline.

MASSIVE ECONOMIC GROWTH REDUCES UNEMPLOYMENT After seasonal adjustment, unemployment followed a downward trend throughout 2015. At the end of last year, the unemployment rate was down to the eight-year minimum level of 4.5 %, according to the International Labour Organisation (ILO). Along with the German unemployment rate, this level was among the lowest within the entire European Union and was 1.3 percentage point lower yearon-year. The highest unemployment rate recorded in the Czech Republic from the beginning of the time range measurement occurred in 1993, when it was at the level of 70.8 %. In 2015, the unemployment rate fell to such a low level that nominal wages began to grow at an accelerated rate. This, together with a low inflation rate, prompted the growth of real wages. The growth of disposable domestic

income in combination with high consumer confidence resulted in the growth of retail revenues, which, excluding the motor industry segment, last year increased by 5.9 % in real terms. In the motor industry segment, last year’s growth of real revenues increased by as much as 11.5 %. The total revenues of the entire services sector in 2015 were up by 2.6 % in real terms, with all the services branches showing a growth. While the slight slowdown of economic growth in the first months of this year was partly responsible for arresting the trend towards declining unemployment (after seasonal adjustment), the high consumer confidence nevertheless prompted the further growth of retail revenues and consumer consumption as a whole.

THE YEAR 2015 SIGNALLED A LOW INFLATION RATE AND DISINFLATIONARY TRENDS In December, consumer prices rose by a mere 0.1 % year-on-year, with the all-year inflation rate being at the level of 0.3 %, the lowest since 2003 and historically the second lowest. The decline in the price of fuels and food was most responsible for the low price increases. On the other hand, core inflation reflected growing domestic demand and climbed to roughly 1.5 % at the end of last year. So far, this year’s inflation development has shown no change. In the first six months of 2016, inflation did not break away from the “positive” zero.

THE FAVOURABLE MACROECONOMIC IMAGE LEFT AN IMPRINT ON EXCHANGE RATE DEVELOPMENT In the first half of 2015, the crown had a tendency to strengthen in relation to the euro while, in the second half, its development settled. The strengthening of the domestic currency below the 27.00 CZK/ EUR was prevented by the Central Bank with its automatic interventions. The Czech National Bank was obliged to use these actively from the middle of the year, with the aim of meeting its foreign exchange commitment, and continued using interventions in the course of the whole of 2016.

THIS YEAR THE CZECH ECONOMY CONTINUES TO FOLLOW LAST YEAR´S FAVOURABLE MACROECONOMIC TRENDS Summing up the prospects for this year, we may state that, after last year’s exceptional 4.3 per cent economic growth, this year’s increase will be approximately two percentage points lower. The first months of this year showed clearly that last year’s boom in public investment co-financed with EU money was augmented, significantly but only temporarily, by the drawing of the residual European funds from the previous programming period. Now, a new programming period has begun, in which the volume of the funds made available remains practically the same. Once again, however, the start of the administrative process is rather slow, in which calls for financing projects are made. What is even worse is that complications are beginning to appear in connection with obsolete environmental impact assessments (EIAs), which do not allow European funds to be used for co-financing investments. Regrettably, this will radically affect the investment process in the public sphere this year. Signs of this can already be seen in the volume of public tendering in the first months of this year. For construction engineering, 2016 will also be a difficult year. Other problems are facing building construction, where builders will have difficulties in connection with regional plans, which often prevent all types of projects from being realised, for example in Prague. JAN VE JMĚLEK Chief Economist, Komerční banka,E-mail: jan_vejmelek@kb.cz University of Economics Prague, E-mail: jan.vejmelek@vse.cz

2017

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic I . C ze c h R e pu bl i c – Ec o n o mic Po l ic y

CZECHINVEST MEDIATED INVESTMENT PROJECTS WORTH CZK 45 BILLION IN 2015 In 2015, CzechInvest Agency mediated 106 domestic and foreign investment projects. As a result, nearly CZK 45 billion will ﬂow into the country and 14,040 new jobs will be created when completed. Of this number, 2,500 projects will be located in the Moravia-Silesia and Ústí Regions, areas aﬄicted by high unemployment on a long-term basis. However, attracting investors to the country is being greatly hampered by the reduced investment support introduced in 2014 by a European Commission regulation. “In the light of this reduction, it is remarkable that CzechInvest has managed to negotiate investments that will create more than 14,000 new jobs, a number comparable with the preceding record year of 2014,” notes the Minister of Industry and Trade, Jan Mládek. “Looking two years back, we see that the country, under the rule of the current government, which ranks investments among its highest priorities, managed to attract more than CZK 130 billion and to create more than 30,000 new jobs,” the Minister points out.

I N V E S T M E N T P R O J E C T S M E D I AT E D B Y C Z E C H I N V E S T I N 2 0 1 5 , BY COUNTRY OF ORIGIN 7%

Switzerland

Korea

Taiwan

CZK 1 billion

Czech Republic Germany USA

22%

18%

Others under CZK 1 billion France

 reduction of ﬁnancial support of investments from 40 % to 25 %  106 mediated investment projects to the aggregate value of nearly CZK 45 billion  30 % hi-tech projects  more than 14 000 new jobs, 2 500 of which in the Ustí and the Moravia-Silesia Regions

India

21%

Japan

Source: CzechInvest

greater activity,” Karel Kučera, Managing Director of CzechInvest, says. In comparison with the past we have fewer investors relying on investment incentives. More than 30 % of investors did not apply for them, while in 2014 the number was nearly one-half. Apart from domestic investments, the largest volume of contracted investments comes from the United States, Germany, and Taiwan,” Kučera adds. Massive growth was shown by investments made by China. In the past, CzechInvest mediated a maximum of CZK 500 million worth of investments from that

Photo: Cushman & Wakefield archives

“The proportion of hi-tech projects with higher value added and that of unique products is increasing. Another good news is that the loss of interest caused by radical cuts of financial support in 2014 is being made good by

China

2017

NUMBER OF PROJECTS

AGGREGATE AMOUNT OF INVESTMENTS CZK MILLIONS

NUMBER OF JOBS CREATED

2010

14 615.16

7 037

2011

33 015.49

10 702

2012

20 369.55

8 530

2013

108

47 937.15

10 412

2014

147

86 956.14

16 842

2015

106

44 969.56

14 040

MEDIATED BY CZECH INVEST, 2010  2015 PERIOD

country a year, while in 2015 the sum was more than CZK 1.1 billion. Traditionally, the largest proportion of investments goes into the motor vehicle production sector, followed by the metalworking and electronic industries. The growth of investment can also be observed in the area of ICT, technological centres, and shared services centres. Investors, who announced their plans in 2015, place most of their investments in the Ústí Region, the capital of Prague, and the Central Bohemia Region. Most jobs will be created in the Pardubice Region, especially thanks to investments to be made by the companies of INA Lanškroun and Foxconn, which are at the same time the largest investment projects mediated last year. Along with them, figuring among the top ten, are the enlargement of production by MD ELEKTRONIK spol. s r.o. in the Plzeň Region and the expansion of Devro in the Liberec Region. CzechInvest will carry on its eﬀorts to locate more hi-tech investment projects in the Czech Republic. This year, for example, GE Aviation announced its plan to build a turbo-prop engine centre of excellence here. “Currently, about 100 new projects are in the pipeline,” says Karel Kučera, Managing Director of CzechInvest. “Some of them are really of great importance, and are among the sectors we want to focus on still more in future, namely the aviation industry and electrical engineering,” he adds.

2017

SHAREDSERVICES CENTRES ARE SUCCEEDING IN THE CZECH REPUBLIC According to an annual survey conducted by the Association of Business Service Leaders (ABSL), the Czech Republic has attracted more than two hundred major global firms that have established their services centres here. The shared business services segment is enjoying year-on-year growth of 19 % and comprises 3 % of the Czech Republic’s GDP. The Czech Republic has long ranked among the top-ten most popular global destinations for establishing and operating sharedservices centres. The results of the survey indicate that 2017 will bring forth an even greater expansion of this sector. Even though companies in this field offer above-standard wages, it is increasingly difficult for them to find suitable candidates to fill the growing number of positions. In addition to expert knowledge, candidates must also have perfect command of English and other European languages. According to the survey, business services comprise the biggest Czech employer of university graduates, who begin their careers in such centres. The shared-services centres in the Czech Republic employ 50,000 graduates focused on fields such as IT, human resources, logistics, accounting, finance, and marketing. In total, firms operating in this area employ 75,000 people.

Photo: Cushman & Wakefield archives

INVESTMENT PROJECTS

II.

CZECH INDUSTRY

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D o i n g B u s i n e s s i n t h e C ze c h R e p u bl ic I I. C ze c h In du s tr y

ECONOMY IS DOMINATED BY INDUSTRY The Czech economy did unexpectedly well in 2015 and the trend remains positive also in 2016. Although there is no chance of surpassing last year’s record 4.6 % growth, overall economic performance is still very good due to growing domestic and foreign demand. The manufacturing industry, the country’s largest employer, continues to be the main motor force of GDP growth. In addition, the industry continues to participate significantly in the creation of new jobs, leading to an accelerated growth of real wages, without there being any signs of overheating in the form of growing inflation. The position of the Czech economy in relation to other countries is significantly improving, while internal imbalances are receding. The state debts are being reduced and there is a good chance that this year again public budgets will be nearly balanced. The exchange rate regime, which does not allow for any strengthening of the crown beyond the 27 CZK/EUR limit, remains in force and both the official and market interest rates remain at a record low level. CZECH ECONOMY IN 2015 AND 2016 The Czech economy maintained its very brisk growth rate until the end of the year, when, however, signs of a slowdown of the previously very strong investment activity began to manifest themselves. Even so, investment (gross fixed capital formation) was the most important factor on the demand side of the economy, being responsible for nearly one-half of last year´s GDP growth. Total investment in the economy increased by more than 7 % in real terms, with the growth being distributed practically evenly between buildings and structures, machinery and transport vehicles. This time, large amounts were also invested by the public sector, using money from EU funds for financing transport and environmental structures. This year, investment is decreasing mainly due to lower public spending, with fewer projects being co-financed with EU funds in comparison with last year’s boom. On the other hand, company and household investment continues to grow at a very satisfactory rate. Last year, investment aimed at promoting economic growth was greatly supported by household consumption. Consumers’ positive mood, together with the rapid decline in unemployment rate and growing wages, prompted the willingness of households to spend more. Retail revenues were at a record high in nearly all segments, including durable goods, such as cars. A similar trend can also be observed this year, where consumption, together with foreign trade, has been at the top of the demand side of the economy. The supply side of the economy in 2015 was topped by the manufacturing industry, which accounted for nearly

one-half of last year’s economic growth. Largely responsible for this was the automotive industry, which further strengthened its position as the largest domestic industrial manufacturer with a nearly 25 % share of the manufacturing industry as a whole. In addition to car manufacture, other sectors, such as plastics and rubber production, electrical equipment, metal products and engineering, took credit for the favourable results. In 2016, industrial production continues to grow, although less intensively in view of the record high comparative base, and industry remains one of the most important vehicles of the country’s economic growth.

CONSTRUCTION SLIPS INTO RECESSION The situation in the Czech construction sector is completely diﬀerent in comparison with 2015. After more than five years of recession, the production of building firms began to recover rapidly, making good the production pitfalls of previous years. This was partly due to public investment, as mentioned above, and revived construction activities by the private sector, which could be seen especially in housing construction. The growth of this sector, however, was very closely linked to projects financed with EU funds and the completion of those projects cut short the boom period in this sector. To date, not even the booming real estate market, benefiting from low interest rates on the one hand and the readiness of consumers to invest in housing on the other hand, has been able to change much about the situation. Finally, the result of those trends is not only the growing number of transactions in the market, but also the accelerated growth of prices which, in the case of apartments, have exceeded the historic highs of 2008. A positive contribution to the Czech Republic’s economic growth can be found in most of the services sectors, especially trading, transport, catering and accommodation, and information technologies. In fact, with only two exceptions, no sector has shown any decline in created added value, either in 2015 or 2016.

SITUATION IN LABOUR MARKET IS STEADILY IMPROVING In 2015, the country’s economic growth had a favourable effect on the development of the domestic labour market. Selective surveys have shown that the unemployment rate dropped to 5.1 % in comparison with the previous year, when it was 1.1 percentage points higher. This year, unemployment continued to decline, ending below the 4 % mark. Moreover, monthly statistics of the Ministry of Labour and Social Affairs show that the offer of vacancies is steadily increasing, even in regions affected by long-term above-average unemployment. However, along with the impressive improvement of the situation in the labour market, a number of firms have got into difficulties due to a lack of

2017

ECONOMIC GROWTH WITHOUT INFLATION While the economic growth, boosted by a revival of domestic demand, brought along lower unemployment and higher wages, it had practically no eﬀect on inflation. At the end of the year, the inflation rate was only 0.1 % year-on-year, far below the 2 % inflation target set by the Czech National Bank (CNB). This time, the reason was the massive decline in fuel prices, triggered by the sharp price drop of crude oil in world markets. Another reason was the continuing downward trend in food prices, supported by agricultural commodity surpluses in the European market. This year, inflation is slowly beginning to reverse the trend (in August it was 0.6 %), but the rate is not what the Central Bank would like to achieve. The same applies to other price indices under review (for example, currency policy and core inflation), which leads CNB to continue its policy based on record low interest rates and an exchange rate regime that does not allow the crown to strengthen below the 27 CZK/EUR limit. This means that, since July 2015, CNB has been obliged to intervene regularly nearly each month on the foreign exchange market to maintain the crown above that limit. The result of those steps has been a considerable increase in foreign exchange reserves on the one hand and the growth of CZK liquidity in the Czech financial sector on the other. The Central Bank has kept its commitment to not allowing the crown to strengthen. In view of the low inflation rate, CNB has several times postponed the termination of the current foreign exchange regime but, unlike the European Central Bank, did not introduce negative interest rates. At the same time, however, it can be said that credits granted by domestic banks are the cheapest and at the same time the most easily available in history.

THE CZECH REPUBLIC AS ONE OF THE LEAST INDEBTED COUNTRIES Owing to massive economic growth, moderate fiscal policy and the positive economic performance of the regions, the public budget deficit in 2015 decreased significantly to fall from -1.9 % of GDP in 2014 to last year´s -0.6 %. The state budget, too, ended oﬀ better than expected. The public sector debt dropped to 40.3 % of GDP in relative terms, which ranks the Czech Republic alongside the least indebted countries in the EU. In view of the favourable development of the state budget in the first nine months of this year, it can be expected that this year again the Czech Republic’s fiscal position will further improve. The positive development of state finance, marked by a strong excess of CZK market liquidity allows the government to refinance the current debt cheaply and even to issue negative yield bonds.

2017

For more than two years, the current account balance of payments has been in black figures. Last year, its surplus came close to 1 % of GDP and this year the result has further improved (1.9 % of GDP in the second quarter cumulative). The greatest credit for this development goes to commodity trading, with car exports reaching historic highs. The raising of the surplus in the current account is assisted by services, especially in the form of higher revenues from business services, in telecommunications and construction and also due to greater saving in financial services. After the fading away of extremely strong stimuli, the Czech economy has entered the phase of a moderate slowing down of its growth based on household consumption and export. In spite of this, unemployment is most likely to continue decreasing, with wages growing faster in both the private and public spheres. It is nearly certain that this year car manufacture and export will reach a new record. In the latter half of the year, construction is expected to become stabilised with a surge of new contracts. Despite the expected growth in GDP, inflation remains damped, with the prospect of reaching the inflation target only in 2017, which will allow the Central Bank to depart from its current exchange rate regime. In this connection, it cannot be ruled out that the Czech National Bank will not temporarily introduce negative interest rates to deal with any deluge of speculative capital flowing into the economy. The risks of the Czech Republic’s future economic development traditionally rest on European demand, in particular the interest of consumers in buying new cars, which have been this country’s most important export items on a long-term basis. PETR DUFEK Analyst, ČSOB E-mail: pdufek@csob.cz

Photo: www.freeimages.com

skilled labour, which seriously hampers their further growth, especially in industry. In 2015, the labour shortage was one of the reasons why wages began to grow more rapidly, especially in the latter half of the year. The increase involved not only average wages, but also median earnings. This trend continues this year, when median wages in the first six months rose by 5.5 %.

D o i n g B u s i n e s s i n t h e C ze c h R e p u bl ic I I. C ze c h In du s tr y

ENERGY INDUSTRY IN THE CZECH REPUBLIC  STABLE AND PROSPERING SECTOR The energy industry is one of the most important sectors in the Czech Republic. Traditionally, we are very strong in the area of engineering and the manufacture of power generating facilities, which the industry can build and operate eﬃciently, including nuclear power sources. The Czech Republic is self-suﬃcient in electricity production, based predominantly on domestic brown coal deposits and nuclear power sources. On the other hand, natural gas and oil are imported from politically unstable countries, which may endanger safe and reliable supplies in future. The adequate capacity of national and international transmission facilities creates prerequisites for international trade in electricity. The energy sector is a stable branch in the Czech Republic, which attracts foreign investors and creates good prerequisites for the further development of Czech industry. GAS INDUSTRY Europe is more than 80 % dependent on primary energy sources from politically unstable areas. None of the four Visegrad countries (V4), including the Czech Republic, can do without Russian natural gas. It is therefore unconditionally necessary to seek new, alternative transport routes, in addition to facilities carrying gas from east to west, ensure reverse flow from west to east and complete the Czech section of the Stork II gas pipeline that will connect Polish harbour liquefied gas terminal with the important junction in Baumgarten, Austria. Investment activities aimed at interconnecting European gas pipeline systems must be stimulated at both the EU and national levels. In this respect, positive news is the fact that the Czech Republic has approved the updated State Energy Concept, although it was expected to give more support to the gas sector in comparison with other energy sources.

OIL AND PETROCHEMICAL INDUSTRIES Another risk commodity is crude oil. An alternative to the conventional transport route carrying Russian oil across Ukraine is the TAL Transalpine Oil Pipeline, making it possible to supply the Czech market with crude oil carried by tankers to Trieste, Italy, or via the Adria Oil Pipeline, which links Omišalj harbour in Croatia with the Slovak part of the Druzhba pipeline. Currently the facilities on the alternative oil pipelines are used at nearly 100 %, but the volume of oil transported by the “national” Druzhba oil pipeline is declining in both the Czech Republic and Slovakia. The reason is the excess refinery capacity in Europe and potential national interests in the case of the Polish owner

of Czech oil refineries. A solution is to build an all-European transmission system that will enable reverse flows and higher deliveries via the Druzhba pipeline, for example through the IKL oil pipeline to German refineries, or more intensive cooperation of Slovakia’s Transpetrol with ÖMV in the construction of facilities enabling reverse supplies from Bratislava to Schwechat, Austria.

PRODUCTION OF ELECTRICITY FROM CONVENTIONAL SOURCES Conventional production of electricity from coal and nuclear material has a very strong position in the Czech Republic. The updated State Energy Concept supports the use of those sources, which we can operate very eﬃciently. A key issue is the enlargement of the nuclear power plants by adding new blocks to the existing plants in Dukovany and Temelín. Here, however, a stronger incentive must come from the state, as we can see, for example, in the UK, where measures have been taken to support investment in new facilities, irrespective of the type of production source. This motivates firms to long-term investment which, considering current energy prices amounting to EUR 25/ MWh, appears to be rather risky. These prices are below the level of the turning point of conventional energy sources production. The main reason for the decline in electricity prices is the growing proportion of renewable sources in the energy mix, the priority connection of those sources, state support and, in the final analysis, the excess of supply over demand.

RENEWABLE SOURCES After the solar wave, energy production in the Czech Republic from renewable sources is stabilised. Water sources are being used at 99 %, and as regards solar energy development, good prospects exist in the operation of facilities with a capacity of under 10 kW. Opportunities for development also exist in biofuel incineration. As it is hard to predict possibilities of developing production from renewable sources, the idea of electricity “storage” has come to the fore. This role can be played by pumped-storage power plants, which can pump water to the upper reservoir when there is a surplus of electricity and the price is very low, or even negative. There are localities in the Czech Republic suitable for this type of power station, but their construction would be expensive and demanding as regards both finance and administration, which reduces their potential in the future. The question is whether other electricity storage technologies (batteries, fuel cells) should be developed, or whether a more active management of demand should be ensured. Here, however, technological development has not made enough progress to enable their massive development in the conditions of the Czech market in the next five years.

2017

D o i n g B u s i n e s s i n t h e C ze c h R e p u bl ic I I. C ze c h In du s tr y

Photo: www.freeimages.com

DEVELOPMENT OF ELECTRICITY PRICES Electricity prices will not go up markedly in the wholesale market in the course of the next three to five years. The reasons are the large number of production facilities and at the same time the low price of primary sources as a result of OPEC’s price policy and the theoretical possibility of “alternative supplies” of primary sources (shale gas or coal) to Europe. Therefore, oscillation of wholesale electricity prices at the level of 20–25 EUR/MWh can be expected. Will this price become a new standard? If so, further investment in production will not be possible without state support. This will bring along a change of the market model and maybe the return to the single electricity supplier model. The price for final users is experiencing a permanent paradigm. Prices in the wholesale market are declining, but since 2008 the prices for final users – households and small enterprises – have been increasing. In spite of this growth of prices for final clients, however, the change is very low, ranging around +-3%. This growth is linked with the need to support the financing of investment in renewable sources, in certain cases their preferential connection to the system, and the need to finance projects to increase the capacity of existing transmission and distribution systems. There is also the problem of compensation payments for gas-fuelled plants temporarily being put out of action and acting as a standby source to ensure the reliability of electricity supplies. Investments are also needed to build facilities enabling

the interlinking of the electricity markets, as required by EU legislation. This will concern not only the energy infrastructure, but also the area of information technologies. The benefit will be easier availability and greater reliability of electricity supplies, but no price reduction for final users can be expected. On the other hand, there is a risk that electricity will become unavailable because the transmission and distribution facilities will be unable to handle such large volumes. Some countries, similarly to the Czech Republic and Poland, will put their protective systems in operation on their cross-border transmission lines for case of crisis.

CHANGES IN THE CONSUMPTION AND BEHAVIOUR OF CUSTOMERS Energy consumption is pulled by growing industrial production, household consumption, as well as by energy saving programmes and other factors, such as the weather, which is especially true of the gas industry. The last two mild winters in the Czech Republic did not do much good to the industry as regards revenues. The price, the same as consumption, which in the past correlated with gross domestic product, was stagnant. In the 1st half of 2016, the Czech economy grew, in the 1st quarter by 2.5 %, while energy consumption is not showing such dynamic growth. The reason is higher energy eﬃciency in a number of industries on the part of small and medium-sized enterprises and households. It can therefore be expected that energy consumption will not increase massively in the next three to five years, but, on the contrary, may decline by 3–5 % a year.

ENERGY STABILITY IN THE CZECH REPUBLIC AND ATTRACTIVENESS FOR FOREIGN INVESTORS The Czech Parliament recently passed a new Energy Act Amendment, updated its State Energy Concept and adopted rules for the new regulation period in the area of distribution to be in force until 2018. From the foreign investors’ point of view, the Czech Republic is very attractive as regards the energy sector, both as concerns legislation and future development. More investment can be expected to go into production facilities, cross-border installations and protection against electricity spilling across the border, especially from Germany, investment in the infrastructure in the area of distribution and the completion of the backbone gas pipeline running from north to south. The parameters of the updated State Energy Concept and the draft to regulate the pipeline system create good conditions for ensuring a reasonable payback period for the capital invested.

2017

KEY ACTORS IN ELECTRICITY AND GAS MARKETS IN THE CZECH REPUBLIC The most significant actor in the Czech market is the ČEZ Group, currently figuring among the ten most important actors in the European market. ČEZ is a vertically integrated company, operating in the area of coal mining, conventional and renewable energy sources production, trading, electricity and gas sale, electricity distribution, energy services and telecommunications. The ČEZ Group has the capacity to flexibly react to changes in the energy sector which, according to EBITDA, ranks it alongside the best energy companies in Europe. The second most important actor in the Czech market is the RWE Group, which concerns itself with gas transmission, distribution and sale, and energy services. The RWE company is one of the most successful entities within the RWE Group. The stability, efficiency, and adequate profit rate of the Czech energy market has attracted foreign investors, who have entered the segment or regulated activities – gas transport and distribution. Other important actors in the Czech market include the E.ON Group, selling and distributing electricity and gas and providing energy services. The group’s portfolio also comprises smaller manufacturing facilities. Another company with a similar structure is Pražská energetika, operating on the territory of the capital city of Prague, which also invests in renewable energy sources outside its own distribution area. There is also a number of alternative electricity and gas suppliers and energy service providers in the Czech Republic. Energy services are another step towards broadening the activities of vertically integrated companies and a segment with great potential for future development.

IMPACTS OF NEW TRENDS IN ENERGY SECTOR ON INDUSTRIAL PRODUCTION IN THE CZECH REPUBLIC For industrial production, prospects of more investment in the energy systems are a good signal. Such investment will ensure good energy supplies, thanks to the opening of alternative transport routes, the risk of non-deliveries from politically unstable countries will be eliminated and a high quality and reliability of deliveries will be guaranteed. For the period of the next three to five years, the prices are expected to remain stable. The only risk is a change of the market model and switching to payment for connection. With the help of state support for raising energy eﬃciency, a reduction of the energy intensiveness of industry is expected. This, however, is the concern of the industrial enterprises themselves. The outcome of these eﬀorts should be an overall reduction in energy-related costs and higher competitiveness of Czech enterprises at home and abroad. DEAN BRABEC Managing Partner CEE, Arthur D. Little E-mail: brabec.dean@adlittle.com; www.adlittle.cz

8th International Fair for Transport and Logistics

59th International Engineering Fair MSV 2017 Measuring, control, automation and regulation technology

ENVITECH

International Fair for Environmental Protection Technologies

9–13 October 2017 Brno – Czech Republic w w w.b v v.c z/ms v 163x123_AJ.indd 1

2017

15.11.16 15:22

D o i n g B u s i n e s s i n t h e C ze c h R e p u bl ic I I. C ze c h In du s tr y

CURRENT TRENDS IN CZECH MECHANICAL ENGINEERING Analysis of the economic situation in the machinery and engineering sector in 2016 anticipates noticeable growth of around 2.7 per cent. In engineering, automakers are currently the driving force of the Czech economy, bringing about many exciting innovations, as are tooling machine manufacturers. Czech engineering has always been export-oriented and in the future this will be the same. Engineering production has historically been an inseparable part of the Czech Republic and boasts many successes which are not easy to build on today. The demand and situation of the market are dynamically changing and therefore it is absolutely necessary to offer a lot of flexibility, to deal with small production batches, and with the requirements for precise and comprehensive production. It is necessary to invest into modern technology, to have productive machines and an attractive production programme based on the company’s final products. Engineering must continue to grow and consider its future. The Czech Republic has a traditional advantage in the sufficient number of outstanding technical universities able to educate technicians capable of maintaining, expanding and modernising our existing engineering capacity. It is no wonder that we find three major technical universities and several vocational schools among the members of the cluster. The trend is therefore to support technical education. Czech engineering companies are facing and gradually will face increasing competition from companies previously unknown and coming from more distant destinations. For us, this means not only a continual re-evaluation of overall costs, but also the imperative of maintaining the technological edge that distinguishes us from our competitors.

Photo: www.freeimages.com

CZECH MECHANICAL ENGINEERING WILL GROW IN 2016 Predictions of the development of Czech engineering are similar across individual segments. Directors of large companies expect that this year, average growth should reach 2.2 %; growth has been predicted by the majority of companies in the given segment (81 %). Small/medium-sized companies are slightly more optimistic in their predictions, expecting a growth in the output of engineering in 2016 by 2.9 % (confirmed by 81 % of directors). Czech engineering should be able to maintain a positive trend also in 2017 (confirmed by 83 % of companies). Company directors predict that growth in 2017 should on average reach 2.5 % (compared to 2016). A look at individual segments indicates no large diﬀerences in the predictions of these segments.

In the area of sales of engineering companies, there is also an apparent anticipation of growth, which companies are linking to the improving state of the economy not only in the Czech Republic, but also in countries where their products are exported. This development should, logically, have a positive influence on sales. In total, 83 % of company directors agree that sales of engineering companies in 2016 should grow by 5.0 %. There are some apparent diﬀerences between the sales development plans of individual companies. The larger variety of the responses reflected primarily specific problems some of the companies are currently dealing with (one of the impor-

2017

PILLAR DRILLING MACHINES

The manufacturer of heavy duty pillar and bench drilling machines from Czech Republic. We are a family company and have had more than 20 year experience with manufacturing, selling and servicing of drilling machines. Our drilling machines are high quality and designed for everyday uses in metalworking production lines.

A well-known manufacturer of pillar and bench drilling machines from Taiwan. They have been in this field since 1979. Heltos would like to offer you Linmacâ&#x20AC;&#x2122;s quality drilling machines now. European customers will get full package of technical services and supports from HELTOS.

w w w. h e l t o s . c z EUROPEAN CENTRE OF DRILLING MACHINES Jana Zizky 252 | 378 81 Slavonice | Czech Republic Phone: +420 384 493 135 | E-mail: heltos@heltos.cz

contact person: Pavel Kolman Phone: +420 724 801 987 | E-mail: pavel.kolman@heltos.cz

D o i n g B u s i n e s s i n t h e C ze c h R e p u bl ic I I. C ze c h In du s tr y

tant influences is, for instance, geopolitical development, the situation in Ukraine, relationship with Russia, etc.). If we look at the development of sales in 2016 through the lens of categorising companies based on their size, we can observe certain diﬀerences between the predictions of the directors. Representatives of large companies predict a growth in sales on average by 4.1 % in 2016. In small/medium-sized companies, the situation is seen more favourably – on average, this year’s growth in sales in small/medium-sized companies is predicted at 5.3 %.

BROADENING EXPORT TERRITORIES NOT ONLY IN EUROPE Based on analysis, revenue from export in engineering companies in 2016 will grow on average by 4.3 %. Almost one-half of large companies (45 %) is concerned about the negative eﬀects of sanctions against Russia might have on their revenue. The companies are trying to resolve the situation mainly by searching for new markets. In this eﬀort, the companies are limited above

all by tough competition and the administrative issues in entering some of these new markets. Engineering companies’ revenue from export should also grow in 2017, on average by 3.8 %. Growth in 2017 is expected mainly by large companies (5.6 %). Representatives of small/medium-sized companies are less optimistic (3.1 %). More than two-thirds of all directors (71 %) confirm that they are planning on expanding their export territories. This expansion should take place primarily in Europe, but will also head to more distant destinations (mostly Asia and the Middle East). The expansion of export territories is planned mostly in large companies (confirmed by 80 % of directors). Aside from the above-mentioned regions, they are also drawn to North America.

MAJOR IMPORTANCE OF ENERGY ENGINEERING An important part of the Czech manufacturing industry is the production of machines and devices with classification CZ-NACE 28, which include a wide array of devices that aﬀect materials either mechanically or thermally, or perform production processes on these materials (handling, spraying, weighing, or packaging), including the production of their mechanical components which generate and use force. These also include parts manufactured specifically for these machines and devices. This section also includes fixed, mobile, or manually-controlled devices regardless of whether these are designed for industry, crafts, construction industry, agriculture, or use in the household. Also included is production of special devices for passengers or freight. One of the important components of the Czech general engineering is energy engineering, which is currently experiencing growth thanks to the increasing world-wide demand for power.

own development and production of machinery for coal mining for Russia, Ukraine, Vietnam, Spain

custom production of nonmining technological units for customers from Germany, Italy, Czech Republic

Asphalt rubber blending machinery equipment for road building

www.tmachinery.cz/en Batovka 1285, 696 02 Ratíškovice, Czech Republic, obchod@tmachinery.cz, phone +420 518 391 510

2017

QUALITY OF CZECH PRODUCTS IS COMPARABLE TO EUROPEAN STANDARD The high standard of quality of Czech products is evidenced by the fact that, for business reasons, European ﬁelds and stables make use of many machines and devices developed in the Czech Republic but painted in the colours of the foreign business partners. While not every company is willing to accept this model, it is a widespread trend, and if such a cooperation oﬀers employment opportunities for Czech manufacturers and allows their products to reach foreign markets, there is nothing to protest against. The main items in imported machinery are products which are not manufactured anywhere in the Czech Republic. These are mainly high-performance tractors (over 120 kW), combine harvesters, and presses. Unfortunately, today the list also includes forage harvesters, which the Czech Republic used to produce and even export, but whose production was terminated. Machinery for harvesting sugar beet was met by a similar fate: the Czech Republic is now fully dependent on import..

2017

Recently, Czech energy engineering, as a key factor in renovation and development of Czech power engineering, has been once again making its way to the forefront, while still maintaining its traditional customers in Russia, post-Soviet republics, China, India, Pakistan, Egypt, Turkey, Vietnam, Cuba and other countries. The inclusion of Czech manufacturers of power-producing systems in supplier consortia is often aided by their membership in supranational companies, whose connections and influence open the door to contracts from abroad. At the same time, a number of purely Czech companies are successful exporters of power-producing systems thanks to their long-standing tradition and rich references. Improvement in competitiveness on foreign markets is the purpose of the Czech Power Engineering Alliance, an association of thirteen major Czech engineering companies under the leadership of Škoda Praha. The Alliance unites engineering companies Alta, Doosan Škoda Power, Elektro Kroměříž, I.B.C. Praha, Královopolská RIA, Modřany Power, MSA, OSC, Sigma Group, Škoda JS, ZAT, Vítkovice Holding, and ZVVZ Group.

Photo: PhotoCombo

AGRICULTURAL MACHINERY IS ONE OF THE TRADITIONAL CZECH EXPORT COMMODITIES In the Czech Republic, there is approximately one hundred manufacturers of machinery for agriculture and forestry. Based on a survey by the Association of Importers of Agricultural Machinery (SDZT) and the Agricultural and Forestry Machinery Association, 2, 253 tractors were sold in 2015 compared to the previous year’s 2, 453, i.e. an 8 % drop; in the same period, 163 combine harvesters were sold compared to the 166 of the year before, i.e. a yearon-year drop by almost 2 %. However, the reality is that sales decreased significantly overall in 2009 and 2010. Therefore, the numbers from 2015 are approximately on the same level as sales numbers from 2006. Long-term statistics show that the sale of versatile tractors is rather stable, holding steady at ca. 2, 300 units since the beginning of the decade. We can observe a less favourable development in combine harvesters, where we estimate a market capacity of approximately 200 units due to the conditions of the machinery in use and the need for machinery renovations; however, sales have been slightly dropping year-on-year, with last year’s numbers being approximately 20 % below the anticipated values. Important exporting companies include Farmet from the town of České Skalice in the Náchod area, and BEDNAR FMT Praha, followed by OPaLL AGRI Dolní Životice and SMS CZ Rokycany, all focusing on manufacturing machinery for working the soil; AGRIO MZS Křemže is gaining ground with its sprayers, ZDT Nové Veselí successfully exports trailers and semitrailers. Other export articles include reaping machines, front end loaders, manure spreaders, and a wide range of small agricultural machinery and tools. Also successful is the production of specialised machinery such as stump cutters or refineries for processing oily seeds. FARMTEC Jistebnice, BAUER TECHNICS Tábor and AGE České Meziříčí belong among the foremost exporters of stable mechanisation. We are glad to see that the Zetor brand of tractors is successfully making its way back onto major foreign markets. The company exports almost 90 % of its production and sells the rest in the Czech Republic and in Slovakia. The presentation of a new design direction Zetor by Pininfarina – a concept created in cooperation with the famous design firm – was one of the big attractions of fairs in Hanover and Brno. The new look of the product impressed all the attendants and will be gradually applied to all model series of the Zetor brand over time

200 YEARS OF CZECH RAILWAY INDUSTRY The present successful development of rail transport has been enabled thanks to the more than 200-year tradition of the Czech railway industry. The former Ringhoffer wagon plant in Prague, the wagon plant at Kopřivnice, the first Czech-Moravian machine works in Prague – later ČKD – the ŠKODA plants in Plzeň, together with a range of other manufacturers have always been at the top of their professions. The quality of their products is shown by the large export trade. This long-standing tradition is successfully linked to the present representatives of the Czech railway industry, who do not rely only on tradition but invest significantly in the development of new products, in the use of new technologies, renewal of production plants and higher labour efficiency. This has secured for the industry a stable position within the European region. Currently the ACRI member companies employ 21,000 people in the Czech Republic and their annual turnover is more than CZK 94 billion (approx. EUR 3.5 billion), of which exports account for 56 %. ACRI companies contribute significantly to employment and GDP creation in the Czech Republic. The quality of Czech railway products is demonstrated by extensive export throughout the world. This long-standing tradition is successfully linked to the present representatives of the Czech railway industry, who are investing significantly in the development of new and innovative products. Regarding the percentage – almost all the significant players are members of our Association.

ACRI members export their products and services in particular to the member states of the European Union, the Balkan countries, Turkey, and Russia. Their products, such as train control systems, locomotives, and tramcars, are of the highest European standards. The Czech railway industry is at the top of all European manufacturers, and Czech companies are in a position to compete with Europe’s railway giants. Among its export achievements, worth mentioning is the recent contract for the delivery of six sets of carriages and six locomotives from ŠKODA Transportation to Germany for Deutsche Bahn Regio, and the delivery of tramcars from the

PRODUCER OF FORMING MACHINES OVERHAUL AND MODERNIZATION OF FORMING MACHINES TOOLS ENGINEERING PRODUCTION

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2017

TRADITIONAL CZECH MANUFACTURER OF CABLES: ; =JsD ยฃย ยตร Vร ย ร ร ร ร ฤ ฯ รฆฯ รขฯ ร ฯ ร steckรก 840/33 | 405 33 Dฤ ฤ รญn | Czech Republic Phone +420 412 706 111 | E-mail sales@kabelovna.cz

www.kabelovna.cz

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KDP assembly, s.r.o. ร steckรก 840/33 | 405 02 Dฤ ฤ รญn | Czech Republic Phone +420 412 706 211 | E-mail info@kabelovna.cz

www.kdpassembly.com

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FIBRE OPTIC CABLES TELECOMMUNICATION CABLES SIGNALLING CABLES INSTALLING CABLES DATA CABLES POWER CABLES HEATING CABLES AND MATS

CONNECTORING, MANUFACTURE OF CABLE BUNDLES, VARIOUS CONNECTING, CABLES ACCORDING TO CLIENTSโ NEEDS.

EXAMPLES OF EXPORT ACHIEVEMENTS ROLLING STOCK ŠKODA Transportation will supply 39 single-deck electric units to Germany; 10 electric train units will be manufactured for Lithuanian railways. The new 109E Emil Zátopek locomotive from the Czech manufacturer, ŠKODA Transportation, has obtained approval to be put into operation on all German railways. Prior approval had already been obtained in 5 other countries, namely Austria, Poland, Hungary, Slovakia, and the Czech Republic. Moreover, it was just the second locomotive in the world to obtain the TSI High Speed RST certificate, necessary for the European interoperability of a high-speed railway system. ŠKODA Electric is now supplying drives and motors for 40 Metro sets in the Chinese city of Suzhou. This is a proof that Czech know-how can succeed in even the most demanding markets. The new tramcar follows the successful development of these cars in the ŠKODA factory. The company is currently producing tramcars for the Slovak capital city of Bratislava, is already completing the second contract for the Turkish city of Conya, and is continuing in the manufacture of tramcars for Prague, which will feature a new design. The latest contracts: to deliver 20 ForCity tramcars to Latvian Riga and 14 ForCity tramcars to the German city of Chemnitz. The Latvian national operator, LDz, has selected CZ LOKO to remanufacture 14 Type 2M62U twin-section diesel locomotives used by its freight subsidiary, LDz Cargo. The 14 locomotives remanufactured by CZ LOKO will retain only the bogies and underframes from the donor units, which will be extensively reconditioned and mated with new engines, traction equipment, and body shells developed by the Czech builder.

SIGNALLING AŽD Praha has equipped the 13.3 km long loop at the Velim test centre with ETCS Level 2. Another significant contract with Belarusian Railways was con-

2017

cluded by the Czech producer and supplier of control and signalling equipment, the company of AŽD Praha. Signalling equipment amounting to approximately CZK 350 million will be supplied by AŽD Praha for the Žlobin–Gomel railway line in Belarus, such contract being already the eighth significant contract of this purely Czech company in this specific region. The Czech company of AŽD Praha signed a contract for work amounting to EUR 3.1 million for the delivery and installation of EUR signalling equipment for the Kumanovo-Beljakovce railway corridor in Macedonia.

COMPONENTS In 2013, BONATRANS India Pvt. Ltd was founded. In 2016 BONATRANS’ plant for the wheel and axle machining and assembly of complete wheelsets was opened officially in Aurangabad, India. The production lines in Aurangabad are equipped with cutting-edge axle and wheel machining and coating technologies. Development and manufacturing of brake systems for Metro vehicles has been a major part of DAKO-CZ activities. The company has successfully completed many projects, mainly in co-operation with the Siemens AG company. In 2016 the company celebrated 200-year anniversary of its founding by Jan Zvěřina in 1816, who – at the Golden Stream valley – founded a smithery, foundry, and other small workshops manufacturing various agricultural and stove components.

Photo: AŽD archives

same manufacturer to a number of European and non-European cities. CZ LOKO is busy trading with the Baltic states, Belarus, and the Balkan states, and AŽD Praha is modernising railways in Slovakia, the Balkans, and Turkey, while railway wheels from Bonatrans can be found practically all over the world, and the same is true of anti-friction bearings from ZKL.

AĹ˝D Praha Rail Transportation Road Transportation Telecommunications

Traditional Czech supplier of modern control and signalling systems

Safely to your destination www.azd.cz

TESTING AV ENGINEERING is the first company in the Czech Republic to introduce what is known as the “Accelerated” life expectancy tests of individual components and units. This type of accelerated test permits the test duration to be cut by even five times, and clears the way for carrying out life expectancy tests of five different product modifications. In this case, such a benefit also results in cost saving when implementing developmental and control tests. VÚKV — The railway vehicle research institute offers not only design work and technical calculations, but also expert consulting and testing of dedicated components. Recent activities include supporting the development of trams for Istanbul and Kayseri, fatigue tests of bogie frames, and testing of the Rgns freight wagon. VUZ (Railway Research Institute) offers expert services and comprehensive solutions in the field of assessment, testing activities, and consulting for the railway system and rail transport.

PROSPECTS FOR THE CZECH RAILWAY INDUSTRY The Czech railway industry has tremendous potential. Investment in this sector will have a multiple eﬀect on domestic economic development. Specifically, it will have a favourable impact on employment, will improve the quality of transport services and lead to a higher culture

ACRI represents the Czech rail manufacturing industry. The Association gathers over 50 of the Czech Republic’s leading large and SME rail supply companies active in the design, manufacture, maintenance, and refurbishment of rail transport systems, subsystems and related equipment. ACRI represents its members’ interests at the national level and via membership of UNIFE also at the European level.

Polská 48, 790 81 Česká Ves, Czech Republic Phone: +420 584 488 111, Fax: +420 584 428 178 E-mail: export@retezarna.cz

of travel, while also raising the export performance of enterprises. In general, Czech railways will require considerable investments in the next few years to attain the desired standards. In particular, this means investment in the development of the railway infrastructure, in addition to the completion of the railway corridors and the modernisation of key railway junctions. Nor must we forget about regional railway lines. To be competitive, we must fit the main corridors with the ERTMS/ETCS European train control system, modernise freight corridors passing through the Czech Republic, harmonise the costs of all types of transport, invest in the modernisation and purchase of new carriages and, last but not least, start preparations for the construction of high-speed lines that will make the conventional lines available for freight transport. MARIE ALŽBĚTA VOPÁLENSKÁ General Director ACRI – Association of Czech Railway Industry E-mail: vopalenska@acri.cz www.acri.cz

Řetězárna a.s. is a ﬁrm with a tradition going back more than one-hundred years. Its core programme is the manufacture of welded chains and chain accessories. Its skilled workers, long-term experience, modern machinery, and equipment using the ISO 9001:2008, ISO 14001:2004, and OHSAS 18001:2007 quality management systems give its customers a guarantee that the products they will buy from us are of a high-quality standard. The quality is further guaranteed by the X 45 certiﬁcate, which only a few dozen companies the world over can pride themselves on.

The company´s current production range comprises: a) mining chains grade 6, 8, 9 and D, dimensions 10,14,18,19,22,24,26,30,34 and 38 mm b) tested chains grade 2 and 3 c) tested chains of higher strengths, quality grades 4,5,6,7,8 and 10, dimensions from 4 to 36 mm, for pulley blocks, ﬁshing, suspensory d) lifting chains grade 2, 8 and 10 e) alloyed steel forgings up to 4 kg, carbon steel forgings up to 7 kg f) tyre chains (snow chains, protective chains, ground-gripping chains) We make these products in accordance with the ČSN, DIN, EN and other standards. Currently the ﬁrm exports more than 90% of its output to more than 48 countries the world over.

2017

www.retezarna.cz

D o i n g B u s i n e s s i n t h e C ze c h R e p u bl ic I I. C ze c h In du s tr y

CZECH AUTOMOTIVE INDUSTRY ALSO FARED VERY WELL IN 2015

Photo: ŠKODA a.s., ŠKODA AUTO a.s. archives

The manufacture of motor vehicles reached a record level, placing the Czech Republic among the world’s top countries in terms of the manufacturing output of cars and buses per capita. According to the Automotive Industry Association (AIA), its member firms achieved historically record values not only in the manufacture of motor vehicles, but also in their aggregate financial results. Their year-on-year growth was especially reflected in the 7 % growth of their revenues, and a more than 7 % growth of export, with the number of their employees increasing by more than 4 % year-on-year. In 2015, altogether 1.3 million cars rolled oﬀ the lines and average wages surpassed the CZK 33,000 limit. The automotive industry continues to be the country’s most important economic sector and, the same as the domestic economy as a whole, showed an exceptionally high growth in 2015. While the world output of motor vehicles increased by only 1.1 % (to 90.8 million cars), Czech domestic motor vehicle manufacture grew by 4.2 %, which means that last year more than 1,298,000 cars rolled oﬀ the production lines in the CR. Three manufacturers participated in the manufacture of cars in 2015: ŠKODA Auto with a share of 56.8 %, HMMC Nošovice with a little under 26.4 %, and TPCA Czech with more than 16.9 %. In 2015, another historical record was achieved in bus manufacture, of which more than 4,000, specifically 4,517, an all-time record, were made. Iveco Czech Republic increased its production by 13.4 % (82.5 % of the total manufacturing output) in comparison with the previous year and SOR Libchavy made 33.9 % more buses than in 2014 (16.4 % of the total output). The remaining domestic manufacturers’ share of total bus output was 1.0 %. TATRA Trucks in Kopřivnice made 850 vehicles last year, 3.5 % more than in 2014. AGADOS company made 21,668 O1 and O2 trailers, 9.5 % less than in 2014. The manufacture of this category of vehicles has been monitored since 1998 and last year’s output is the second best since that year. JAWA Moto manufactured 1,727 machines, 60.6 % more than in 2014.

In the export business, too, the situation was favourable. Export continued to grow, bringing in 85 % of the automotive industry’s total revenues. Czech export as a whole increased by 7.1 %, with AIA’s firms raising their export by 7.2 % (the member firms’ share of Czech export thus remained practically at the same level of 20.1 %). The destinations of their export were mainly the European markets. Export to European markets accounted for 84.3 % of total export in comparison with 83.0 % in 2014. AIA firms also showed a favourable development in the volume of their revenues, which last year rose by 7.0 % to a record CZK 912 billion, so that the share of AIA firms increased from 21.1 % to 22.0 % of the industry’s total revenues.

MANUFACTURE OR ROAD VEHICLES IN THE CZECH REPUBLIC IN 2015/2014 Vehicle category

Production Jan. 2015

Dec. 2014

increase/decrease 2015/2014

1,298,236

1,246,506

4.15 %

850

821

3.53 %

Buses (M2+M3)

4,517

3,893

16.03 %

Motorcycles (L)

1,727

1,075

60.65 %

1,305,330

1,252,295

4.24 %

Trailers and semitrailers (03+04

1,790

1,633

9.61 %

Trailers and semitrailers (O1+02)

21,668

23,949

-9.52 %

TOTAL TRAILERS AND SEMITRAILERS:

23,458

25,582

-8.30 %

1,328,788

1,277,877

3.98 %

Cars + small utility vans (M1+N1) Lorries, tractors, undercarriages (N2+N3)

TOTAL MOTOR VEHICLES:

TOTAL ROAD VEHICLES:

2017

NEW DEVELOPMENT CENTRE The Czech Republic affirms its position as an automotive superpower also in another field, namely the development of autonomous vehicles. In December 2016, the Valeo company will open a completely new R&D centre in Prague´s Hostivař District, where it will develop, among other things, the most up-to-date safety and assistance systems. This affirms the Czech Republic´s position as a global automotive superpower, also in the development of autonomous vehicles. Valeo is one of the most important employers in the Czech Republic in the automotive industry, providing employment to some 3,000 people. This supranational company has been present in the Czech Republic since 1995. In its three plants, in Rakovník, Žebrák, and Humpolec, it manufactures complete air-conditioning and heating units for cars including control panels. A milestone in Valeo´s history was the year 2002, when it opened its own Development Centre in Prague. Originally, the Centre specialised in products ensuring thermal comfort in cars. In 2013, the Centre became one of the key workplaces of the Valeo concern for the development of sensors and cameras for assistance and safety systems in cars. The Assistance Systems division, of which the Prague Centre is a part, concerns itself with autonomous control development focusing on three technological areas: automatic cars, connected cars, and intuitive control inside the car. Valeo´s R&D Centre in Prague concentrates on comprehensive development, from processing the customer´s requirements to the development of software and hardware, to preparing the mechanical design, building the systems into the cars and thorough testing on the polygon and in real road traffic. Currently more than 300 people from all over Europe are working in development, and their number is continuously rising. However, the capacity of the existing premises in Prague Hloubětín is no longer sufficient, and so the company has decided to invest more than CZK 600 million in a new modern complex near the Depo Hostivař underground station. More than one-third of the total office area of 9,000 sq. m will be occupied by laboratories (3,200 sq. m) fitted out with top equipment. Part of the complex will be a testing surface, where parking assistance systems are to be tested. The new complex will employ some 640 people, with the possibility of its enlargement and the employment of more people.

2017

era of digitalisation and connectivity of vehicles, the Czech automotive industry is boosting its competitiveness. Average wages also increased. In the past decade, they increased dramatically by a full 47 %, from CZK 22,591 in 2006 to CZK 33,274 in 2015. This growth was made possible by massive restructuring and the resulting high productivity of labour in the automotive industry. That is why average monthly wages in the industry amounting to CZK 33,274 were 28.5 % higher than the national average of CZK 25,903.

YEAR 2016 IS ALSO SHOWING A GROWTH The following are some of the figures concerning the manufacture of vehicles from January to April 2016, published by AIA. A total of 741,906 motor vehicles were manufactured in the Czech Republic between January and April 2016. This is over 10 % more than in the same period of last year. Car manufacturers are most responsible for this growth, but the utility vans and motorcycles categories also showed a favourable development. Domestic car makers benefit from the fact that the markets in all the member states of the European Union and the European Free Trade Association are also growing. The ŠKODA trademark benefited particularly from the growth in Western and Central Europe, and exceptional demand can also be seen for the new generations of its Superb and Fabia models. As regards TPCA, growth is continuing in the main markets, specifically the UK, France, Italy, and Germany, where customers are attracted by the new generation of the Kolín ‘trio’. The Hyundai plant in Nošovice is showing a permanently dynamic growth in the volume of its production, partly thanks to the new Tucson model, Hyundai’s best-selling model in Europe.

Photo: ŠKODA AUTO a.s. archives

The number of employees in AIA member firms rose, year-on-year, from 110,712 in 2014 to 115,351 in 2015, i.e. by 4.2 %. All categories – final manufacturers, suppliers and other firms and organisations – showed a favourable development. In the supplier category, the number of employees increased by as much as 5 % and exceeded the 75,000 mark. A very dynamic development was noted by the electrical and electronic equipment suppliers sectors, which report a more than 9 % increase in the number of employees. This is a signal that, in the new

D o i n g B u s i n e s s i n t h e C ze c h R e p u bl ic I I. C ze c h In du s tr y

CHEMICAL INDUSTRY ď&#x161;ť GOOD RESULTS IN RUBBER AND PLASTICS PROCESSING The results of the Czech chemical industry in 2015 were aďŹ&#x20AC;ected by the development of both external and internal factors. The exogenous factors included especially the continuation of the positive trends in the European and global economies, and low crude oil prices. Internal factors mainly comprised the accident of the ethylene unit in ZĂĄluĹžĂ in August 2015. The domestic consumption of chemical industry products decreased year-on-year in 2015 by 2 % to CZK 712.7 bn (in 2014 â&#x20AC;&#x201C; CZK 727.1 bn). Turnover is given by sales for domestic trade and export. Production volume can be derived from constant price sales dynamics. RESULTS: ď Žď&#x20AC; T ď&#x20AC; he highest dynamic in 2015 (in cur-

rent prices) was reached in the pharmaceutical industry (in current price index = 107.2) and in rubber and plastics products (+5.7 %). The decrease was huge in petroleum refining (index = 64.5), and in rubber and plastics processing CZ Nace 22 was also high (+5.7 %). Because of the accident in ZĂĄluĹžĂ and a lower domestic demand, the sales of the chemical industry decreased by 6.2 % and in petroleum refining by 35.5 %. However, in the manufacturing industry, the dynamics were high â&#x20AC;&#x201C; increasing by 4.2 %. ď Žď&#x20AC; T ď&#x20AC; he aggregation of rubber and plastics products was for many years a very dynamic sector, but in 2009 decreased because of lower demand and lower sales in automotive tyres, plastic parts, the electrical industry, construction, etc. The decrease of sales in 2009 was more moderate than in other sectors (excluding

pharma). In 2010, sales increased by almost 13 % and in 2011 by 7 %. This trend did not continue in 2012, mainly due to problems in the automotive and electrical industries. The dynamic was only 0.1 %, but in 2013, an increase by 2.8 % was registered, in 2014 by 10.8 % and in 2015 by 5.7 %.

KEY INDICATORS OF CZECH CHEMICAL INDUSTRY IN 2015 Indicator

Index 15/14 % Chemical Manufacturing Industry Industry

Unit

2014

2015

Sales (current prices)

CZK bn

603.9

561.0

92.9

104.2

Number of employees

Thous. persons

115.7

120.4

104.1

103.2

Export

CZK bn

438.4

435.2

99.2

107.3

Import

CZK bn

561.7

587.0

104.5

115.1

Book value added

CZK bn

128.9

139.2

108.0

110.4

The Czech chemical industry includes the following aggregations: ď Žď&#x20AC; petroleum refining (CZ Nace 192), ď&#x20AC; ď Žď&#x20AC; chemicals and pharmaceuticals (CZ Nace 20 and CZ Nace 21), ď&#x20AC; ď Žď&#x20AC; rubber and plastics processing (CZ Nace 22). ď&#x20AC; In 2015, the share of chemicals in the processing industry decreased in two key indicators (sales and export). The share of the sales of the

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2017

chemical industry decreased from 15.9 % in 2014 to 14.2 % last year, due to a huge decrease of sales in petroleum refining (-35.5 %) and in chemicals (CZ Nace 20 – minus 6.2 %). The number of employees in the same period increased (+ 4,707 persons or 4.1 %), mainly due to rubber and plastics processing (in 2015 increasing by 5.1 %, or 3 ,980 persons) and the chemical and pharmaceutical industries (+2.3 %, or 640 persons). In the manufacturing industry, employment increased by 3.2 % to 1,097,096 (+ 33,896 persons). The share of exports decreased year-on-year by 0.9 p.p. to 11.8 %. The share of book value added increased by 0.4 % to 14.1 %.

EXPORT In 2015, the export of chemical products decreased by CZK 3,117 m year-on-year:   crude oil products decreased by CZK - 3,761 m   chemicals and pharmaceuticals decreased by CZK - 10,765 m   rubber and plastics increased by CZK +11,409 m   total by CZK - 3,117 m

EXTERNAL TRADE

IMPORT

International trade in 2015 was affected by the global economic development, but the final results were favourable. The turnover of the international trade (export + import) in chemical products increased from CZK 999. 9 bn in 2014 to CZK 1,022. 2 bn in 2015 (+2.2 %). In 2015, the year-on-year dynamic of the export of chemicals was weak (index= 99.2 ), especially in petroleum refining (-10.0 %) and in the chemical industry ( -7.1 %). On the contrary, in the pharmaceuticals industry, CZ Nace 21 was favourable (+2.4 %) and CZ Nace 22 (+6.7 % ). The negative trade balance of the chemical industry increased by CZK 28.5 bn. to minus CZK 151.7 bn.

In 2015, the import of chemical products increased by CZK 25,380 m. The share of the key product groups in import is as follows:   crude oil products decreased by CZK - 8,591 m   chemicals and pharmaceuticals increased by CZK + 21,200 m   rubber and plastics increased by CZK +12,771 m   total by CZK +25,380 m

SEC TORAL BREAKDOWN OF EXPORT, IMPORT, AND TRADE BAL ANCE IN 2014 AND 2015 2015

Petroleum reﬁning

2014

2015

15/14

2014

2015

15/14

2014

2015

Chemical industry

172,479

160,316

92.9

249,548

264,762

106.1

-77,069

-104,446

57,355

58,753

102.4

96,851

102,837

106.2

-39,496

-44,084

170,857

182,276

106.7

154,010

166,781

108.3

+16,857

+15,495

438,357

435,240

99.2

561,574

586,954

104.5

-123,217

-151,714

3,445

3,697

107.3

2,887

3,187

110.4

+558

+510

Rubber and plastic products Chemical industry products total External trade CR, total, CZK bn

2017

Index % 15/14

Trade balance CZK million 2014 2015

2014

Pharmaceutical industry

Import CZK million 2014 2015

Index % 15/14

Photo: www.freeimages.com

Export CZK million

Aggregation/branch

Czech Business and Trade

PROFESSIONAL ECONOMIC QUARTERLY WITH A LONGER THAN 80-YEAR TRADITION, WHICH INFORMS ABOUT THE STANDARD AND PROSPECTS OF THE CZECH ECONOMY IT IS DESIGNED FOR FOREIGN PERSONS INTERESTED IN BUSINESS IN THE CZECH REPUBLIC CONTENTS: topical information about the business environment, the industrial sectors and the different regions, and presentation of prominent Czech firms with good prospects

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EXTERNAL TRADE BALANCE The external trade balance of chemical products in 2015 was largely passive (by CZK -151.7 billion) and increased year-on-year by CZK 28.5 bn. Rubber products with a huge trade surplus (+CZK 15.5 bn) maintained its positive trade balance in 2015, mainly due to the tyre industry. In 2015, the trade balance of pharmaceuticals (-CZK 44.1 bn) and the balance of chemicals (-CZK 104.4 bn), with a stable huge deficit in all the observed years, were not favourable.

TERRITORIAL STRUCTURE OF EXTERNAL TRADE In 2015, the EU-28 member states were key territories for export and import. The share of this territory increased after EU enlargement from 64 % in 2004 to 82 % of the total turnover of external trade in Czech chemical products in 2015. The table below lists the data for an objective comparison of EU-28 (including 13 new member states) with the world total:

EXPORT, IMPORT, AND BALANCE OF INTERNATIONAL TRADE BY MAIN TERRITORIES

Territory

Products of Chemical Industry total

Petroleum Reﬁning 2015 Index in CZK 15/14 %

Products of Chemical and Pharmaceutical Rubber and Plastics 2015 Index 2015 Index bn CZK 15/14 % bn CZK 15/14 %

2015 bn CZK

Index 15/14 %

EU – 28 Export Import

368.4 464.0

117.1 113.2

35.8 59.1

117.4 105.5

190.2 277.8

119.2 115.1

142.4 127.1

114.5 112.9

Balancex)

-95.6

- 7.2

-23.3

+2.2

-87.6

- 5.9

+15.3

- 3.5

World Export 68.6 103.0 1.9 105.5 38.4 Import 95.5 113.0 2.1 190.9 67.2 Balancex) -26.9 - 3.8 -0.2 -0.9 -28.8 x) Index of Balance is given as diﬀerence year-per-year in CZK bn.

102.9 109.8 -4.9

28.3 26.2 +2.1

102.9 118.0 - 3.2

 International trade with the EU-28 increased in all groups of the

chemical industry in export and import by double digits  T he import dynamics of the World were higher than the export

VALUE ADDED In 2015, the book value added (VA) in the chemical industry year-onyear increased by 8 %, due to increasing in all aggregations, mainly in CZ Nace 19.2 (+8.2 %), and CZ Nace 20 and CZ Nace 21 groups (+9.1 %) and in rubber and plastics processing (+7.3 %). In the Czech manufacturing industry, the dynamics of this indicator were also favourable (+5.1 %). The VA-to-sales ratio in the chemicals industry increased by 3.5 percentage points and was higher in all the chemicals’ aggregations. In 2015, in the manufacturing industry, CR VA-to-sales increased by 0.2 percentage points.

EMPLOYMENT, PRODUCTIVITY, AND WAGES Employment in the chemical industry in 2015 increased year-onyear by 4,707 persons (+4. %) and in the Czech processing industry as a whole by 3.2 % (+33,896 persons). An increase in employees was recorded mainly by the rubber and plastics processing industry (+3,980 persons), but petroleum refining recorded a decrease by 106 persons. In the manufacturing industry, this indicator increased by 3.2 % (+39,982 persons). Labour productivity derived from sales decreased in all sectors, except in rubber and plastics processing, i.e. in petroleum refining (-42 %) and in chemicals and pharmaceuticals (-22 %). However,

2017

on the contrary, labour productivity derived from value added increased in all sectors, because of the favourable development of the economy. The same situation was recorded in wage development.

INVESTMENTS The value of tangible investments in the Czech chemical industry in 2015 increased by CZK 4.1 bn to CZK 28.1 bn (+18.6 %), considering the huge increase in investment activities in the chemical and pharmaceutical industries (+CZK 3.8 bn or + 43.4 %).

MORE AT: www.schp.cz

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dynamics

D o i n g B u s i n e s s i n t h e C ze c h R e p u bl ic I I. C ze c h In du s tr y

TOP QUALITY AND EXQUISITE DESIGN OF BOHEMIAN GLASS AND CERAMICS Glass- and ceramics-making is a traditional sector of the Czech manufacturing industry. During its long existence, this sector has undergone periods of ups and downs; nevertheless, it can be said that the domestic glass and ceramics industry has overcome the past transformation problems and the impacts of the global economic recession with honours. The Czech glass industry has changed signiﬁcantly over the past few years. The sector is now stabilised and the ﬁrms have won new contracts. The result is overall stabilisation, with the glass sector being inspired with new life. Moreover, Bohemian glass is winning recognition for its very interesting design. In 2015, the industry continued to increase its revenues and maintain the upward trend started after the 2013 decline. This was mainly due to a growing demand for products designed for construction and the automotive industry in the Czech Republic and the manufacturers’ success in winning new markets. Revenues from the sale of own products and services increased by 5.7 % over 2014. As a result, the productivity of labour from sales rose by 1.4 %. Revenues from direct exports rose by 4.0 % year-on-year, as did overall exports (by 1.4 %). Both values reached the levels of the year 2008. The foreign trade balance rose by 4.6 %. The Czech glass and ceramics industry is export-oriented, and is therefore directly influenced by global economic changes, in particular those in the European Union, to which 70 % of the exports of the manufacturing sectors under review are targeted. Following the decline of the sector in 2008 and 2009, in 2010 exports began to grow. In comparison with 2014, direct exports in 2015 rose

by 4.0 %, with overall exports rising by 1.4 %. In 2014, direct export of the sectors under review amounted to CZK 34.30 billion, with overall exports totalling CZK 45.85 billion. These results are good news for the development of the glass and ceramics industry, but they must not be overestimated. Its export orientation and dependence on a number of follow-up industrial sectors to which it supplies its products make the glass and ceramic industry vulnerable. Its future will greatly depend not only on domestic demand, but also on the future economic development especially in Europe, which is the largest export territory of the Czech glass and ceramics industry.

THE GLASS AND CERAMICS INDUSTRY WITHIN THE MANUFACTURING INDUSTRY SECTOR IN 2015 Revenues Glass and ceramics industry In CZK billion (current prices)

Direct export 41.46

33.04

Share in other non-metallic mineral products (%)

0.41

0.62

Share in the manufacturing industry (%)

1.30

1.62

100.85

53.45

3.16

2.63

3,188.55

2,035.40

Output of other non-metallic mineral products In CZK billion (current prices) Share in the manufacturing industry (%) Manufacturing industry In CZK billion (current prices)

Blažek Glass, s.r.o. is a glass company owned by the Blažek family. Seven generations of the family produced and decorated crystal and their tradition dates back to the 18th century.The ﬁrst company was established by Josef Blažek as early as 1933 in Novy Bor and later moved to Poděbrady. There, since 1939, regardless of the unfavourable war years, he managed to develop his business until 1948, when his company was nationalized. X In 1992 the glass works were given back to Blažek´s family, who succeeded in restarting the company in spite of the long pause. The tradition of manually decorated crystal was reestablished and continues up till nowadays under the name Blažek Glass. X New products and décor lines are continuously

www.blazek-glass.cz

developed in the range of manually decorated crystal and both manual work and new technologies are now used for their manufacture and decorating. X In 1997 the company introduced a new product to the domestic and foreign markets - original glass ﬁle. This unique product received several awards both in the Czech Republic and abroad and it is patented in many countries of the world. X Blažek Glass s.r.o. manufactures and supplies all over the world original glass ﬁles, traditional decorated crystal, crystal urns, trophies, lamps, glass jewellery and other glass goods. The most successful markets include Germany, USA, France, Great Britain, Japan etc..

Blažek Glass, s.r.o. Olbrachtova 600 X 290 01 Poděbrady X Czech Republic Tel.: +420 325 603 206 X e-mail: secretary@blazek-glass.cz

2017

The only manufacturer of large-size flat glass in the Czech Republic is AGC Flat Glass Czech, a.s., member of the AGC Group, based in Teplice. This company is currently the largest manufacturer of flat glass and its applications in Central and Eastern Europe. The one-hundred per cent owner of the company is Asahi Glass Co. Ltd., Japan. The production programme of AGC Flat Glass Czech, a.s. comprises the manufacture of basic flat float glass, either transparent or in shades of green. By further processing, the glass is made into low-emissive glass adjusting light and energy emission, safety glass, glued or tempered, sound insulated, matted or varnished glass for exterior and interior use, and mirrors. In the Czech Republic, a large quantity of flat glass is processed by the AGC automotive division, specifically AGC Automotive Czech, a.s., based in Chudeřice u Bíliny. AGC Automotive Czech, a.s. makes tempered and layered safety glass mainly for cars, lorries and buses, including additional applications, or extruded plastic profiles and applications of additional components (scuﬀs, pins, connectors, holders, etc.). AGC Automotive Czech, a.s. makes and sells some 25 million car glass pieces a year and is one of the largest and most comprehensive manufacturers in this line of production in Europe. Many more firms processing flat glass into special products operate in the Czech Republic, such as: Saint-Gobain Sekurit ČR, spol. s r.o., Hořovice, making car glass; Pilkington Czech, spol. s r.o., Noviny pod Ralskem, making construction glass, Amirro, s.r.o., Čelákovice, specialising in making mirrors and furniture glass; ERTL GLAS, s.r.o., Říčany, manufacturing energy-eﬃcient layered safety glass; WMA–Glass, s.r.o. Chrastava, making insulating glass; Bepof spol. s r.o. Hranice u Aše, processing flat glass and mirrors; etc. In addition to the above-mentioned companies, there is a large number of wholesale firms selling products and providing services concerning refined flat glass.  PACKING GLASS

Dominant manufacturers of packing glass in the Czech Republic are the companies O-I Manufacturing Czech Republic, a.s. with the trading company O-I Sales and Distribution Czech Republic, s.r.o., Dubí u Teplic, which are members of the Owens-Illinois (USA) multinational group, and VETROPACK MORAVIA GLASS, a.s., Kyjov, which is a part of the Vetropack Holding AG multinational group based in Switzerland. These two groups hold an approximately 80 % share of the packing glass market in the Czech Republic.

2017

G LASS FIBRES AND PRODUCTS THEREOF

The only manufacturer of textile glass fibres and products thereof in the Czech Republic is SAINT-GOBAIN ADFORS CZ, s.r.o. Litomyšl. The only Czech manufacturer specialising in the manufacture of glass fibre thermal and sound insulation products in the form of mats and panels (ROTAFLEX Super(R) trademark) is Union Lesní Brána, a.s., Dubí u Teplic. Insulating material based on glass wool in the form of panels and rolls is made by KNAUF INSULATION, spol. s r.o., Krupka u Teplic. The plant in Krupka is one of the most advanced plants making mineral insulation products based on glass wool in Europe. UTILITY GLASSWARE

In the Czech Republic, there are about 30 firms with more than 20 employees whose core business is utility glass production. The largest of these are Crystalex CZ, s.r.o. with its manufacturing plant in Nový Bor (machine production of utility soda potassium glass), Crystal BOHEMIA, a.s., Poděbrady (lead crystal), and CRYSTALITE BOHEMIA s.r.o., Světlá nad Sázavou. There is also a number of smaller firms with a rich and varied production programme – art glass, cut lead crystal, utility glass decorated with paint, pen-and-ink drawing, glazing, high enamel and engraving, hand-made utility glass, historical replicas, blown glass, etc., such as the firms of Ajeto spol. s r.o., Czech Glass Craft, Lindava, Blažek Glass, s.r.o., Poděbrady; CAESAR CRYSTAL BOHEMIAE, a.s., Světá nad Sázavou, SKLÁRNA SLAVIA, s.r.o., Nový Bor,

Photo: Bomma archives

SOME OF SUCCESSFUL CZECH FIRMS:  FLAT GLASS

Manufacture, decoration,

from Czech crystal

We are a production company that specialises in the manufacture of exclusive glass of high quality. Our portfolio includes mainly drinking glass, vases, doses, ashtrays, dishes with stem, bowls, carafes, etc., both from Czech crystal and coloured glass, decorated with cutting and gold. We work on artistic collections in small batches.

Magdalena Dworokovรก - NIKร , Dukelskรก 109, 739 91 Jablunkov, Czech Republic phone: +420 558 340 084 | E-mail: nikeglass@nikeglass.cz | www.nikeglass.cz

KrĂĄlovskĂĄ HuĹĽ, s.r.o., Doksy, EGERMANN, s.r.o., NovĂ˝ Bor, BOHEMIA MACHINE, s.r.o., SvÄ&#x203A;tlĂĄ nad SĂĄzavou, and many others.

ď Žď&#x20AC; TECHNICAL AND SANITARY CERAMICS

ď Žď&#x20AC; OTHER GLASS

The dominant Czech manufacturer of technical and laboratory glass, tubes and apparatus made of borosilicate glass is KAVALIERGLASS, a.s., SĂĄzava. Other technical and laboratory glassmakers are TECHNOSKLO, s.r.o., DrĹžkov, EXATHERM, s.r.o., Ĺ˝eleznĂ˝ Brod (glass thermometers and densimeters), Detesk, s.r.o., Ĺ˝eleznĂ˝ Brod (borosilicate technical glass) and other smaller firms. From among optical glass manufacturers, the best known is, for example, ECOGLASS, a.s., Jablonec nad Nisou, specialising in the manufacture of precision pressed components for electro optical instruments. VITRABLOK, s.r.o., Duchcov makes glass blocks for construction. ď Žď&#x20AC; UTILITY PORCELAIN AND CERAMICS

This category of utility porcelain comprises a whole range of products, from items for everyday use to luxury porcelain, utility and decorative pink porcelain, porcelain with the blue onion pattern and figural porcelain. Important porcelain makers are the companies Thun 1794, a.s., NovĂĄ Role, Ä&#x152;eskĂ˝ porcelĂĄn, a.s., DubĂ, G. Benedikt Karlovy Vary, s.r.o., Rudolf KĂ¤mpf s.r.o., NovĂŠ Sedlo, and KĂśnig-Porzellan Sokolov, spol. s r.o., Sokolov. A number of more specialised smaller manufacturers make utility ceramics. The largest among them is the KERAMO cooperative in KoĹžlany making interior artistic ceramics and Keramika KrumvĂĹ&#x2122;, spol. s r.o., KrumvĂĹ&#x2122;. Ceramic tiles are made by KERAMIA, s.r.o., Znojmo.

Two major Czech sanitary ceramics manufacturers are LAUFEN CZ, s.r.o. (with manufacturing plants in BechynÄ&#x203A; and Znojmo), a member of the Roca Group, and Ideal Standard, s.r.o., Teplice. Both manufacturers are strongly export-oriented and consequently their marketing success is considerably dependent on how the building industry in Europe is faring. Important manufacturers of technical porcelain are ElektroporcelĂĄn Louny, a.s. making insulators for the power industry, JizerskĂĄ porcelĂĄnka, s.r.o., DesnĂĄ in the JizerskĂŠ Hory Mountains, which manufactures laboratory porcelain and porcelain tubes, and ELPOR, s.r.o., Krupka Bohosudov. ď Žď&#x20AC; OVENS, MACHINES, AND EQUIPMENT

PLUS EXPERT SERVICES FOR THE GLASS AND CERAMICS INDUSTRIES There are approximately 40 to 50 independent firms in the Czech Republic making furnaces, machines and equipment, glass moulds and instruments used in glass- and ceramics-making,

www.teplotechna-prima.com

High standard of glass melting technology, available to all

Various Glass Furnaces Steel structures Design Service - . 7\OD 7HSOLFH &]HFK 5HSXEOLF 3KRQH )D[

2017

D o i n g B u s i n e s s i n t h e C ze c h R e p u bl ic I I. C ze c h In du s tr y

for automatic packing glass production, SKLOPAN LIBEREC, a.s., which specialises in flat glass processing, and SKLÁŘSKÉ STROJE ZNOJMO, s.r.o. supplying various glassmaking machines. Machines and equipment for glass fibre production and processing are manufactured by TRIMA, spol. s r.o., Turnov. Important foreign activities in the area of design and control systems for glass melting machines are pursued by GLASS SERVICE, a.s., Vsetín, and DITES, spol. s r.o., Teplice (automated technological process control systems). Gas-based melting furnaces and auxiliary furnaces for manual glass production are manufactured by EGT servis, s.r.o., Hradec Králové.

Photo: Bomma archives

INNOVATION AND ORIGINALITY OF CZECH MAKERS

and firms providing services, project designing and expert consulting for those sectors. Companies developing their own production and business activities significantly exceeding the country’s borders include several machinery manufacturers, such as Sklostroj Turnov CZ, s.r.o. making machines and equipment

The firm Lasvit, founded by Leon Jakimič in 2007, specialises in the manufacture and installation of lighting fixtures, glass artworks, art elements and objects. Its collections, winners of a number of prizes, have made a breakthrough in the world of design and revived the famous Czech glassmaking tradition. The company’s aspirations are to make exquisite lighting fixtures and glass objects for a discerning clientele all over the world. Lasvit has added new freshness to its products and started a new era of Czech glassmaking. Lasvit combines authenticity and tradition with innovative technologies, creativity and precision craftsmanship, augmented by its close collaboration with famous glassmakers and designers, such as Nendo, Ross Lovegrove, Daniel Libeskind and Maarten Baas, as well as Czech legends, specifically René Roubíček and Bořek Šípek. In a relatively short time, the firm has managed to build a perfect reputation for itself and win the respect of the expert community, as shown by the long list of its important foreign clients. Original glass installations and sculptures bearing the Lasvit trademark are to be seen in public places and spaces of prestigious hotel chains and business complexes (e.g. The Ritz-Carlton Residences in Singapore, Hyatt Capital Gate in Abu Dhabi, The Shangri-La Bosphorus in Istanbul, Four Seasons in Moscow, Quadrio in Prague, Sake No Hana Restaurant in London, The New York Palace Hotel, etc.), as well as in luxury and private residences all over the world. One of the best known designers in the Czech Republic is Rony Plesl, famous for his innovative glass design and interesting stone sculptures, as well as interior designs and drawings. Currently Plesl’s attention is focused on uranium glass, the production of which has been suspended in most European glassworks. Besides uranium glassmaking, Plesl collaborates with glass manufacturers, such as Moser, Barovier, Ajeto and Květná and with the German firm of Sahm. As designer, he collaborates with Denizli by Pasabahce, Turkey, and Preciosa, Czech Republic. Evidence of his brilliance in the area of glass design is the fact that his art is represented in a number of art collections. His works are to be found all over the world, including, for example at Walt Disney World, where many glass sculptures by Rony Plesl are installed, or Hamburg, Germany, where a glass tower designed by Plesl is to be seen. The BOMMA trademark of the Bohemia Machine company represents high quality cut glass products from real Bohemian crystal by leading Czech and foreign designers. Its crystal products are incomparable with machine-made glassware and are the highlight in the area of cut crystal design. Bohemia Machine collaborates with the best designers not only in the Czech Republic, but also in other countries. It uses its own modern machines, which it combines with manual work and perfect cutting. This and the use of absolutely pure molten glass and final finishing, including polishing, results in high light refraction comparable with that of the diamond. BOMMA collaborates with important Czech and foreign galleries, such as Judistka Teatern in Stockholm, Hauser and Wirth in Zurich, Encore Glass in California, Bulthaup Gallery in St. Petersburg and others.

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producer of the stainless steel helical bars and helical piles Specialised masonry repair systems for damaged houses after earthquake or soil settlement. Solution for wall and foundation. Restoration of structural integrity in buildings.

Main oÍŚce:

Statical s.r.o. OhradnĂ 1087/61a CZ 140 00 Praha 4

Phone: +420 475 208 222 Fax: +420 475 208 220 E-mail: statical@statical.cz

www.statical.eu

D o i n g B u s i n e s s i n t h e C ze c h R e p u bl ic I I. C ze c h In du s tr y

CZECH BUILDING INDUSTRY After the boom years of 2007 and 2008, the performance of the building industry in the Czech Republic slowly continued a downward trend. This lasted until 2013. In 2014, the industry began to pick up and in 2015 building production continued its growth. What will the ﬁgures for 2016 be like? 0.8 % year-on-year, to CZK 187.3 billion. New contracts for building construction were worth CZK 70.7 billion, 2.4 % more than in the preceding year, and in civil engineering the value of new contracts was CZK 116.6 billion, 0.2 % less than in 2014. The average value of one building contract in 2015 was CZK 3.9 million, which is 3.8 % less than in the preceding year.

HOUSING CONSTRUCTION ROSE IN 2015 2015 was another year when housing construction continued its upward trend. In that year, construction of 26 378 apartments started, 8.3 % more than in the preceding year. The greatest growth in year-onyear comparisons was noted in the category of apartments created by the reconstruction of non-residential space in houses (+10.3 %). Most new flats were built in apartment houses, 14.7 % more than in 2014. A decline in the number of completed apartments built in 2015 was witnessed in the one-family house category and senior citizens’ homes, where, however, the 50 % decline equalled a diﬀerence of a mere 137 apartments. In the course of the year, however, development foretold the likelihood of a year-on-year growth. The 3rd quarter was the only period in which a year-on-year decline was observed.

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Building production in 2015 grew by 7.1 % year-on-year, according to the Czech Statistical Oﬃce. Better performance was shown by civil engineering, which increased its output by 17.1 % year-on-year, and building construction grew by 2.6 %. Starting in 2014, after five years of decline, the building industry as a whole continued its upward trend. Of key importance for the further development of industry will be the activity of private investors and the eﬀects of new legislation, specifically the Public Contracting Act and the Environmental Impact Assessment (EIA) legislation. In 2015, building enterprises with 50 and more employees concluded 48,400 contracts with domestic investors, 4.7 % more than in the preceding year. The overall value of the contracts rose by

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UNCERTAIN OUTLOOK FOR 2016 In the first quarter of 2016, the building industry did not do too well. The output of the building industry as a whole fell by 8.8 % year-on-year, with building construction declining by -9.9 % and civil engineering by -5.0 %. According to civil engineering company directors (CCEC analysis), the performance of the Czech building industry in 2016 is expected to be lower than in 2015. The directors predict a 1 % decline on average. Big building companies in particular fear the postponement of large transport construction projects, which did not obtain an exception from the EIA Act Amendment, and cuts in the area of public contracting. The building industry is undergoing a complicated period. While the transport construction sector is still doing relatively well, building construction, especially as regards new housing construction projects, falls far below expectations.

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MOST INVESTMENTS WENT INTO ADMINISTRATION BUILDINGS Altogether 668 administration buildings were completed in the period from 2006 to 2015. The investment costs amounted to nearly CZK 51.5 billion, and the average floor area of one building in the entire period under review was 3 000 sq. m. The highest number of all the structures were administration buildings which had on average more than three floors. The proportion of energy-saving administration buildings also increased – more than one-half of the buildings falling into Category A or B were completed in 2015. The most frequently used were brick load-bearing structures or combined material structures. Half of these were connected to the gas supply system. Most buildings have their own heating boilers. In the same period, altogether 1,834 commercial buildings were completed, at a cost of CZK 51.5 billion. Their floor area amounted to 3.1 million sq. m. Their construction took a relatively short time – about three years on an average. Most of them are single- or two-storey buildings. In this category, too, brick load-bearing structures were used, with about 50 % of them being connected to the gas supply system.

Photo: Profesia archives

YEARONYEAR DECLINE IN PUBLIC CONTRACTS In 2015, building enterprises with 50 employees and more concluded 48,400 building contracts in the Czech Republic, a 4.7 % year-on-year increase. The aggregate value of the contracts rose by 0.8 % year-on-year and amounted to CZK 187.3 billion. In the area of building construction, enterprises entered into new contracts worth CZK 70.7 billion, which in year-on-year comparisons means a 2.4 %. growth. New contracts in civil engineering amounted to CZK 116.6 billion, 0.2 % less than in 2014. The average worth of one building contract in 2015 was CZK 3.9 million, 3.8 % less than in the preceding year.

III.

HOW TO DO BUSINESS IN THE CZECH REPUBLIC

LEGAL NEWS FOR ENTREPRENEURS IN 2016 The greatest beneﬁt for foreign investors and Czech entrepreneurs is the reduction of fees associated with founding a new company, eﬀective in the year 2016. The notary’s reward, set by a regulation of the Ministry of Justice of the Czech Republic, has dropped to ½ and the court fee has been removed completely. The costs for founding a limited liability company (s.r.o.) with basic capital of CZK 1 (4 euro cents) have decreased, in the case of founding a company without further professional aid, to the very keen price of ca. EUR 150. The lawmaker’s intent was to reduce the costs for founding an s.r.o. company to a EUR 100 limit, which is the European Commission’s goal. The amendment also eliminates fees for entries associated with natural or legal persons whose bankruptcy or impending bankruptcy is being resolved in insolvency proceedings, during which a bankruptcy declaration has already been issued, and for entries where a person is being removed from the public registry.

EUROPEAN CERTIFICATE OF SUCCESSION NOW ALSO IN CZECH LAW The European Certificate of Succession was introduced by EU regulation No. 650/2012 on jurisdiction, applicable law, recognition and enforcement of decisions and acceptance and enforcement of authentic instruments in matters of succession and on the creation of a European Certificate of Succession. The institute of European Certificate of Succession, which presents the evidence on the eligibility of the successor, testamentary successor or legatee and the powers of executor or administrator in another member state, is also mirrored by the Czech law since 7 June 2016. The regulation introduces the principle that decisions regarding the property of the same testator should always be made within the same inheritance proceedings to eliminate the now common duplicity of hearings. With this, the regulation unifies the governing law for the succession itself with the law for the place of inheritance proceedings. This institute is important particularly for managers, entrepreneurs, and other persons operating within EU who may be aﬀected by inheritance proceedings depending on where they currently reside.

OUTOFCOURT SETTLEMENT OF CONSUMER DISPUTES On 1 January 2016, an amendment of the law on consumer protection came into force, introducing out-of-court settlements of consumer disputes into Czech law. Out-of-court settlements of disputes are held from the consumer’s initiative, with the seller having no option to deliberately refuse this institute or terminate the proceedings. During an out-of-court settlement of disputes, the seller is obligated to provide an authorised entity with the necessary cooperation for the out-of-court settlement to proceed eﬀectively. However, the seller is not obligated to accept the deal proposed within these proceedings and the authority

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for out-of-court settlement can only issue a non-binding and substantiated opinion, which the consumer can then use in any other potential steps taken to secure his claim in court. The proposal for initiating out-of-court proceedings can be filed 1 year at the latest from the moment the consumer first exercised his right with the seller, and only under the condition that no court proceedings have begun regarding the issue or a legally eﬀective verdict was passed by a court. Out-of-court settlement of disputes must be concluded within 90 days of its initiation. If the case is especially complicated, this deadline may be extended by further 90 days. Out-ofcourt settlement ideally concludes with an agreement between the parties, or a unilateral declaration by the consumer of ending his or her participation in the proceedings, the death or termination of one of the parties, the expiration of the deadline within which the dispute was to be resolved, or by refusal of the proposal by an authorised entity. If the parties reach an amicable settlement to the dispute, this agreement must be concluded in written form. Though this agreement cannot be directly enforced, it can serve as good foundation for the parties’ positions should the case go to court, where the parties will then be able to seek enforcement of this agreement.

PENAL LAW AMENDMENT Since 1 June 2016, the Czech law once again, after almost six years, makes it punishable to prepare the criminal act of tax evasion, or evasion of any obligatory fee or payment. The preparation of this criminal act may lie in preparatory steps before filing a tax return which would allow the perpetrator to (i) not pay the tax at all, (ii) pay the tax in a lower

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NEW RULES FOR REAL ESTATE TRANSFER TAX PAYMENT Since 1 November 2016, the new amendment of the Statutory Measure of the Senate No. 340/2013 Coll. on Real Estate Transfer Tax (the “RE Transfer Tax Act”) came into force. Since this date, the 4 % RE Transfer Tax shall be paid by the purchaser only. Until this date, the RE Transfer Tax Act allowed the transferor and the transferee to stipulate in the transfer or exchange agreement who will pay the RE Transfer Tax and if the parties did not agree explicitly, the transferor was the tax payer and the transferee statutory guarantee. The change of taxpayer is not the only change introduced by the amendment of the RE Transfer Tax Act. For example, the new buildings and flat unit taxation concept was changed, the tax obligation on extension of building rights was broadened, changes and other transformations of legal entities were exempted from tax, and the taxation concept for the acquisition of utility networks was changed.

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic III. How to Do Business in the C zech Republic

amount, or (iii) obtain benefits from the state for which the perpetrator is not eligible (such as excessive value added tax deduction). Otherwise, the preparation of this criminal act was punishable only if (i) the diﬀerence from the real tax liability was at least CZK 5 mil. or (ii) tax evasion was perpetrated within an organised group which operates across multiple states. As a result, this change will allow the Czech police primarily to intercept communication, follow persons and objects, secure and open packages, perform searches of premises used for business, or begin prosecution earlier, which also results in interrupting the period set for assessing a tax. It will thus be necessary for entrepreneurs to assess whether their so-called tax optimisation does not exceed the limits of the law and cannot be considered the preparation of a criminal act. The line between the legal and illegal interpretation and application of tax regulations may

be thin, and in the case of making preparation illegal, this thin line may in the future cause entrepreneurs and their professional consultants significant problems. MOJMÍR JEŽEK rutland ježek, advokátní kancelář s.r.o. E-mail: mjezek@rutlandjezek.com

FORMS OF BUSINESS ACTIVITIES IN THE CZECH REPUBLIC Czech or foreign natural persons or legal entities can perform business activity in the Czech Republic if they comply with the Czech law. The condition is generally the issuance of a Czech trade license regulated by the Trade Licensing Act or another specific permit regulated by a number of specific acts, depending on the type of business activity. The exception from this condition applies to entrepreneurs from another EU member state in case of temporarily provision of services based on the trade licenses issued in such member state. NATURAL PERSONS AS ENTREPRENEURS A natural person or entrepreneur is, according to Czech law, a person who conducts business on the grounds of a trade licence, a person who conducts business using a special licence, or a person who practises agriculture and is registered according to a special regulation. Citizens of other countries are allowed to conduct business in the Czech Republic under exactly the same conditions and to the same extent as Czech citizens, unless the law says otherwise. For this purpose, the term “foreign person” applies to a natural person whose permanent residence is outside of the Czech Republic. Therefore, it is the permanent residence, and not the citizenship, that is decisive here. Visa are required in certain cases.

CONDUCTING BUSINESS WITH A TRADE LICENCE According to the Trade Licensing Act (Act No. 455/1991 Coll.), the business activity is conducted systematically, individually, using one’s own name, on one’s own responsibility, with a view to make profit and under the conditions laid down under this law. The different professions requiring a trade licence are listed in appendices 1- 4 of the Trade Licensing Act. The Trade Licensing Act differentiates between notifiable trades, where the licence is granted once the agreed conditions are met and the Trade Office is notified, and concessionary trades, which require state permission – i.e. the granting of a concession; this is not accorded automatically. Notifiable trades are further divided into skilled, restricted, and free trades. Every natural person who is considering pursuing a trade must meet a set of general conditions, including being 18 years old and above, having legal capacity, and being a person of good character. In the case of restricted, skilled, and concessionary trades, a natural person is additionally obliged to meet special conditions — a professional qualification or other competence as defined by the law for each profession. In case of non-compliance with these special conditions, a natural person is obliged to conduct a trade through the intermediary

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 general partnerships  limited partnerships  co-operatives  Societas Europaea (European compa-

nies)  European Economic Interest Group-

ing (EEIG). The Czech Civil Code recognises also other forms of legal entities, such as trust and associations, which can also perform business activity, but this should not be the main purpose of their existence. A Czech legal entity is an entity that has its registered office in the Czech Republic. Commercial companies are formed in two stages. The first stage involves founding the company and the second stage involves establishing it as a legal person, as of the date of its entry in the Commercial Register. The Commercial Register is maintained by the courts. Only after registration in the Commercial Register is the company entitled to commence its business activity in the Czech Republic. Access to the Commercial Register is free and available online at www.justice.cz.

CONDUCTING BUSINESS USING A SPECIAL LICENCE The diﬀerent business objects for the given category are the professions listed in Section 3 of the Trade Licensing Act, and which are exempt from its provisions. First and foremost, this applies to professional services (doctors, advocates, expert witnesses, auditors, tax advisers, dentists, etc.). Conditions for each of these professions are specifically defined by separate laws.

PRACTICE OF AGRICULTURE The third type of natural persons encompasses persons who practise agriculture and who are registered under a special regulation — the Agriculture Act (Act No. 252/1997 Coll.). Agriculture includes forestry and water resource management. An agricultural entrepreneur is any person who practises agriculture for profit and meets the agreed conditions, including being at least 18 years of age, having legal capacity and Czech or EU citizenship – all other natural persons need permanent residence in the Czech Republic and a certification of a basic knowledge of the Czech language.

LEGAL ENTITIES The Act on Business Corporations recognises the following types of business entities:  limited liability companies  joint-stock companies

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BRANCH OFFICE A branch office is merely an organisational unit of the founding company and it is not regarded as a separate legal entity and does not have its own legal capacity. It is an entity legally dependent on its head office, although it has an independent management and their own accounts. The branch office must be registered in the Commercial Register and the founder must appoint a director of the branch office, who acts on behalf of the founding company, but this is only in relation to matters concerning the branch office. In case of commencement of any business activity in the Czech Repubic (i.e., continuous business activity carried out independently and aimed at generating a profit) it is important to ensure that the respective trade licenses or other permits in the Czech Republic are obtained and registration with the Czech Commercial Register is performed. MOJMÍR JEŽEK rutland ježek, advokátní kancelář s.r.o. E-mail: mjezek@rutlandjezek.com

Photo: www.sxc.hu

of a responsible representative, who is obliged to meet both the general and the special conditions pertaining to the given type of trade. Access to the Trade Register is free and available online at www.rzp.cz.

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic III. How to Do Business in the C zech Republic

INCORPORATING A LIMITED LIABILITY COMPANY The limited liability company is the most common form of business corporation in the Czech Republic. How to establish such a company?

includes only management of own property, letting of real estate, residential units and non-residential units or a special permit is required. The administration fee for obtaining the trade license at the Trade License Oﬃce amounts to CZK 1,000 (EUR 40).

A limited liability company is established by a Memorandum of Association, which is signed by all the founders, i.e. the future shareholders or just one future shareholder. In both cases, it is essential that it is executed in a form of notarial deed of a Czech notary. The notary fee usually does not exceed CZK 5,000 (EUR 180) and depends on the amount of the registered capital. In case of basic Memorandum of Association which contains only the mandatory provisions required by the Civil Code and Business Corporations Act and if all contributions to the registered capital will be monetary and registration of the company to the Commercial Register will be performed by the notary, the notary fee has been decreased to CZK 2,000 (EUR 75). The founding deed must contain basic information about the company, e.g. the business name, registered address, identification of the shareholders, types of business interests (shares) held by each shareholder and specification of rights and obligations attached to such business interests (assuming various types of business interests are allowed), list of the company’s business activities, number of executives and how they will act on behalf of the company, amount of registered capital, amount of contribution of each shareholder to the company’s registered capital, identification of the initial executives and appointment of contribution administrator. The business name must not be interchangeable with any already existing name of another company registered in the Commercial Register. This is why the business name being considered by the founders should be checked out in this regard in advance at the website www.justice.cz. If the company’s business name contains the name of a living natural person, the founders must obtain the consent of such person.

The founding deed of the limited liability company may allow formation of various types of business interests (shares) held by shareholders of the company. Furthermore, the business interest of the shareholder could be represented by a common certificate issued as registered security. Shareholders of the limited liability company can own more than one business interest in the company.

BUSINESS INTERESTS

OBTAINING A BUSINESS LICENCE Once the founding deed was drawn up, the initial executives need to obtain the trade license at the Trade License Oﬃce, unless the company’s business activity

REGISTERED CAPITAL AND PAYMENT OF CONTRIBUTIONS INTO THE REGISTERED CAPITAL The minimum requirement for the registered capital of the limited liability company is CZK 1. However, it is recommended that founders agree on the higher amount of the company’s registered capital than the minimum amount. A shareholder’s contribution into the registered capital is either in monetary or in-kind form, whereas all contributions of founders are administered by the contribution administrator, who is usually one of the founders. Monetary contributions are deposited to a special bank account established for this purpose. The in-kind contributions must be appraised in the expert’s opinion drafted by the expert choosen by the founders from the oﬃcial list of experts. Before submitting the application for the entry of the company into the Commercial Register, any in-kind contribution must be fully paid up, while at least contribution premium (if any) and 30 % of each monetary contribution must be paid.

ENTRY OF THE COMPANY INTO THE COMMERCIAL REGISTER The application for the entry of the company into the Commercial Register has to be submitted either by all executives of the company on the prescribed form with their officially verified signatures or the registration can be performed through a notary, who can register the company into the Commercial Register directly. The application must be submitted to the competent court depending on the location of the company’s registered office within 6 months from the foundation of the company; otherwise the founding deed is considered as withdrawn. The founding deed may stipulate another period. The registration court fee amounts to CZK 6,000. The fee amounts only to CZK 2,700 (EUR 100), if the registration is performed by the notary on the basis on the notarial deed which would contain only mandatory provisions and all contributions to the registered capital of the Company would be monetary, the registration of the company is for free. Irrespective of whether the application is submitted by the company’s executives or through the notary, the following documents must usually be presented:  a notarial deed containing the founding deed,  a trade licence or licence for other type of business activity,  a deed attesting the legal basis for the use of the premises at which the company’s registered office is situated, e.g. a written consent of the owner (such consent may not be older than 3 months and signatures on the document must be legally certified), together with the decision of the company’s statutory body on the company’s registered office location,  a document attesting the fulfilment of the obligation to pay prescribed contributions into the registered capital. This fact could be proved by a declaration of the contribution administrator and

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confirmation from the bank that the relevant monetary sums have been credited to the bank account of the company,  documents attesting the fact that persons who are to be registered as members of the company’s bodies satisfy the requirements set forth by law, i.e. that they are at least 18 years old, have legal capacity, are without a criminal record related to the business, and that there are no impediments to their operating of a trade in accordance with the Trades Licensing Act and other legal regulations (such as an aﬃdavit concerning such facts and an extract from the criminal record or equivalent document issued by the relevant authority of the EU Member State in which they were last residents in the case of citizens from another than EU Member State)  the consent of the person being registered to their registration in the Commercial Register. The necessary forms for entering the company into the Commercial Register can be found in Czech on the website of the Czech Ministry of Justice https://or.justice.cz/ias/iform/index.html?0. Documents presented to the Commercial Register must be in Czech, including all their attachments; any deeds in a foreign language must have a legally certified translation unless it is drawn up in one of the oﬃcial lan-

guages of the European Union (in that case, a simple translation is suﬃcient). For certain types of foreign deeds (e.g. an extract from a criminal register or commercial register) a special form of higher authentication is required, one that certifies the authenticity of the issuing authority, generally identified as an apostille or ‘super-legalisation’, depending on whether the country issuing the deed is a signatory to the so-called Hague Apostille Convention. The statutory deadline for registration of the company is five working days from submission of the application. If, within this period, the court does not register the company or request additional documents from the applicants, the company is considered as registered. The notary can register the company into the Commercial Register almost immediately. In order to submit an application to the Commercial Register or Trade Register, it is not mandatory to be represented by a lawyer. Nonetheless, with respect to fulfilment of formal requirements, we recommend that an attorney-at-law is engaged. The average amount of time needed to establish a limited-liability company in the Czech Republic is approximately 19 days but registeration within a couple of days is also possible. ROMAN MACHÁČEK rutland ježek, advokátní kancelář s.r.o. E-mail: rmachacek@rutlandjezek.com

INCORPORATING A JOINTSTOCK COMPANY A joint-stock company is established at least by one founder on the basis of Articles of Association, which are executed in the form of a notarial deed of a Czech notary and signed by all the founders. The notary fee usually does not exceed CZK 16,000 (580 EUR) and is depending on the amount of the registered capital. The founding deed must contain basic information about the jointstock company, such as business name, registered address, list of the company’s business activities, number of shares and their nominal value, specification of shares and whether the company issues registered shares or bearer shares, amount of the registered capital, number of votes attached to an individual share, total number of votes in the company and estimation of costs related to the establishment of the company. The business name must not be interchangeable with any already

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existing name of another company registered in the Commercial Register. This is why the business name being considered by the founders should be checked out in this regard in advance at the website www.justice.cz.

OBTAINING A BUSINESS LICENSE After the founding deed has been executed, the members of the company’s statutory body need to obtain the trade license at the Trade License Oﬃce, unless the company’s business activity includes only management of own property, letting of real estate, residential units and non-residential units or a special permit is required. The administration fee for obtaining the trade license at the Trade License Oﬃce amounts to CZK 1,000 (EUR 40).

Photo: www.sxc.hu

The joint-stock company is the second most common form of business corporations in the Czech Republic. How to establish such a company?

CORPORATE GOVERNANCE The founders can choose between the monistic and dualistic model of corporate governance. In case of the former, the company establishes a Board of Directors and a Supervisory Board. The Board of Directors is in charge of the management of the company’s business. The Supervisory Board supervises the exercising powers by the Board of Directors. In case of the latter, the company has only an Administrative Board that determines the basic orientation of the management of the company’s business and supervise its proper execution. The Administrative Board elects a statutory director, who is responsible for the management of the company’s business. The chairman of the Administrative Board could also be the company’s statutory director. All the above-mentioned company bodies may have only one member.

SHARES There are two types of shares in the joint-stock company, i.e. shares with no special rights (ordinary shares) and shares with special rights (such as different or fixed profit shares or diﬀerent vote weightings shares). The so-called no par value shares are shares that have nominal value.

REGISTERED CAPITAL AND PAYMENT OF CONTRIBUTIONS INTO THE REGISTERED CAPITAL The minimum amount of the registered capital of the joint-stock company is CZK 2,000,000 (EUR 73,000). A shareholder’s contribution into the company’s registered capital may take either monetary or in-kind form whereas all contributions are administered by the contribution administrator, who is usually one of the founders. Monetary contributions are deposited to a special bank account identified in the Articles of Association. The value of in-kind contributions is determined by the expert chosen by the founders from the oﬃcial list of experts. Before submitting the application for registration of the company into the Commercial Register, each founder must pay up at least the share premium and all the founders must further pay up in aggregate at least 30% of nominal value of the subscribed shares. All in-kind contributions must be fully paid.

ENTRY OF THE COMPANY INTO THE COMMERCIAL REGISTER The application for the entry of the company into the Commercial Register could be either submitted by all the members of the company’s statutory body on the prescribed form with their officially verified signatures or the registration can be performed through the notary, who can register the company into the Commercial Register directly. The application must be submitted to the competent court, depending on the location of the company’s registered office within 6 months from the foundation of the company; otherwise the founding deed is considered as withdrawn. The founding deed may stipulate another period. The registration court fee equals to the amount of CZK 12,000 (EUR 450). The fee amounts to CZK 8,000 (EUR 300) only, if the registration is performed by the notary. Irrespective of whether the application is submitted by the company’s members of the statutory body or through the notary, the following documents must usually be presented:  a notarial deed containing the founding deed,  a trade licence or licence for other type of business activity,  a deed attesting the legal basis for use of the premises at which the company’s registered office is situated, e.g. a written consent of the owner (such consent may not be older than 3 months and signatures on the document must be legally certified), together with decision of the company’s statutory body on the company’s registered office location,  a document attesting the fulfilment of the obligation to pay at least statutory minimum contributions into the registered capital. This fact could be proved by a declaration of the contribution administrator and confirmation from the bank that the relevant monetary sums have been credited to the bank account of the company,  documents attesting the fact that persons who are to be registered as members of the company’s bodies satisfy the requirements set forth by law, i.e. that they are at least 18 years old, have legal capacity, are without a criminal record related to the business, and that there are no impediments to their operating of a trade in accordance with the Trades Licensing Act and other legal regulations (such as an affidavit concerning such facts and an extract from the criminal record or equivalent document issued by the relevant authority of the EU Member State in which they were last residents in the case of citizens of an other than EU Member State)  the consent of the person being registered to their registration in the Commercial Register (members of the company’s statutory body),  the decision on the appointment of the chairman of the Board of Directors, chairman of the Supervisory Board, chairman of the Administration Board or statutory director, if applicable. The necessary forms for entering the company into the Commercial Register can be found in Czech on the website of the Czech Ministry of Justice https://or.justice.cz/ias/iform/index.html?0. Documents presented to the Commercial Register must be in Czech, including all their attachments; any deeds in a foreign language must have a legally certified translation, unless it is drawn up in one of the official languages of the European Union (in that case, a simple translation is sufficient). For certain types of foreign deeds (e.g. an extract from a criminal register or commercial register) a special form of higher authentication is required, one that certifies the authenticity of the issuing authority, generally identified as an apostille or ‘super-legalisation’, depending on whether the country issuing the deed is a signatory to the so-called Hague Apostille Convention. The statutory deadline for registration of the company is five working days from the submission of the application. If, within this period, the court does not register the company or request additional documents from the applicants, the company is considered as registered. The notary can register the company into the Commercial Register

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almost immediately. In order to submit an application to the Commercial Register or Trade Register, it is not mandatory to be represented by a lawyer. Nonetheless, with respect to fulfilment of formal requirements, we recommend that an attorney-at-law is engaged. ROMAN MACHÁČEK rutland ježek, advokátní kancelář s.r.o. E-mail: rmachacek@rutlandjezek.com

STEPS FOR ACQUIRING A CZECH TRADE LICENCE Trades are divided under the Czech Trades Licensing Act (Act No. 455/1991 Coll.) into notifiable trades, which can be obtained based on notification, and concession trades, which can only be pursued on the basis of a special business licence – a concession. Notifiable trades are categorised into three further groups: vocational, professional, and unqualified.

GENERAL CONDITIONS FOR PURSUING A TRADE The general conditions applying to a natural person pursuing a trade are: to have reached the age of 18 years, to have full legal capacity and a clean criminal record. According to the Act, a person with a clean criminal record is someone who has not been finally convicted of intentionally committing a criminal act, if it was committed in connection with business activities, or with the business object for which they are applying or notifying, unless they are now considered as not having been convicted of such oﬀence.

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PROFESSIONAL ELIGIBILITY Alongside the form, in the case of professional or vocational trade or concession, the notifier or applicant must submit a document attesting its professional eligibility for the relevant trade, or of the appointed responsible representative, together with his/her signed declaration that he/she consents to the appointment. The signature on the declaration must be oﬃcially certified. If documents are in a foreign language, they must be translated into Czech by a sworn translator (a list can be found at http:// datalot.justice.cz/justice/repznatl. nsf/$$SearchForm?OpenForm), with the exception of documents submitted by nationals of EU Members States or by a legal entity with its registered oﬃce, central administration or principal place of business activities in an EU Member State, unless there are doubts as to the translation’s correctness.

OTHER TERMS AND CONDITIONS Further, a document attesting the legal basis for use of the premises on which the trader has located its place of business (e.g. a lease contract) must be submitted, and also a receipt for payment of the administrative fee, which is CZK 1,000 (EUR 40) for a notifiable trade (if multiple trades are notified simultaneously the fee is charged only once) must be sumbitted. A foreign natural

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Notifiable trades are characterised by the fact that the authorisation to trade becomes valid immediately at the very moment of notification (not later when the trade licence is issued). To illustrate the various types of trade, here are a few examples. Trades categorised as vocational include carpentry, bakery and confectionary, bricklaying and plastering, brewing, etc. Professional trades include activities such as providing or brokering consumer credit, work as an optician, or animals trading. In order to acquire the concession for concessionary trades, it is necessary to demonstrate the relevant professional eligibility and in some cases also to meet some additional requirements. Trades that require concessions include operating a travel agency, road freight transport, or a security firm employed to protect other people’s property. Those interested in a licence for a notifiable trade can obtain one by notifying the trade, while applicants for a concession can submit their application at one of the general Trade Offices – central registration points, by means of government administration contact points (Czech-Point) or do so electronically using the Trade Register web system. Trades are notified and applications for concessions are submitted using a standard registration form. Forms can be obtained at any trade office, and in most cases are freely available at the Ministry of Industry and Trade website www. mpo.cz/dokument77388.html for natural persons and www.mpo. cz/dokument77394.html for companies (forms must be completed in Czech).

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic III. How to Do Business in the C zech Republic

person, except for the nationals of EU Member States or of a State Party to the Agreement on the European Economic Area, or the Swiss Confederation, must attach to their notification of a trade or concession application a document corroborating that they have been granted a visa to stay longer than 90 days or have their long-term residency permit. A foreign natural person must further provide an extract from the criminal register or equivalent document issued by the relevant court or state authority of the country of which the individual is

a national; the extract must not be more than three months old. The Trade Office is obliged to make the entry into the Trade Register within 5 business days of receiving the notification and issue the entrepreneur an extract if the notifier meets the conditions set out in the Trades Licensing Act. Where concessions are concerned, the Trade Office shall decide the matter within 30 days of receiving the application, provided that all of the relevant particulars are met. Subsequently, within 5 business days of the decision granting the concession having come into effect, an entry is made in the Trade Register and an extract is issued to the entrepreneur. VOJTĚCH MAKOVEC rutland ježek, advokátní kancelář s.r.o. E-mail: vmakovec@rutlandjezek.com

INVESTMENT INCENTIVES  RULES AND CONDITIONS IN 2016 As of 1 May 2015, an amendment to the Czech Investment Incentive Act (the “Act”) came into force. Its aim was to make investment incentives more attractive for investors even despite the reduced maximum level of state aid (25 % from the previous up to 40 %). What about investment incentives in 2016? How do the rules and conditions look like? FORMS OF THE INVESTMENT INCENTIVES AND SUPPORTED ACTIVITIES All forms of investment incentives, such as income tax relief, cash grant for new job creation and employee training, and support for strategic investment activities are still available. Beside this, the incentive in the form of an exemption from real property tax in concessional industrial zones, which have been

proposed by the Ministry of Industry and Trade has been introduced. Moreover, there is also an opportunity to draw cash grant on the territory of these zones for creating new jobs in the amount of CZK 300,000 per a new job created. Within the manufacturing projects, there are three types of supported activities defined, i.e.expansion of production by increasing production capacity, diversification of production and a fundamental change to the overall production process. Investment incentives can also be requested for projects involving construction or expansion of centres for shared services, data centres, and customer support centres.

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How can I find out whether I can qualify for incentives for investments in production? If you plan to invest at least CZK 100 million (in some regions only CZK 50 million) in establishment of production or in expansion of current production, and at least half of the investment will be spent on acquisition of new machinery equipment and at least 20 new jobs will be created, all of it within three years, you can obtain investment incentives in the form of a ten-year tax relief. In selected Czech regions there is also an opportunity to receive cash grant of up to CZK 300,000 per created new job or support for training and re-qualification. There is a basic condition that all investment projects areenvironmental friendly. I don’t manufacture, but I am involved in development or strategic services. How can I receive an investment incentive? In the case of technology centres, the basic condition for acquisition of an investment incentive is that at least 20 new jobs are created and at least CZK 10 million is invested, of which CZK 5 million must be spent on new machinery equipment. When the conditions specified above have been fulfilled, it will again be possible to draw a tax reliefand in selected regions also cash grant for new job creation and employee training and re-qualification How long isit necessary to keepthe investment and new jobs? Long-term assets for which an investment incentive has been drawn and the newly created job positions must remain for the whole period of the tax relief claiming and at least five years from the completion of the investment project or from the establishment of the first employment for each new job position. Moreover, the above stated condition will be fulfilled even in situations when it is necessary to replace supported asset due to its failureor obsolencewith assetof the same or a greater value if it serves the same purpose. I don’t meet the qualification conditions for investment incentives. Can I apply for a different type of support? And can I draw from multiple types of support? Besides investment incentives, there is also a whole range of opportunities to receive direct cash grants for investments and for selected operating costs. It often occurs in practice that a company plans more investments during the same period and questions arise about the option of combining different types of state aids. In general, it is possible to use several types of subsidies and even different types of investment incentives. In such situation, it is necessary to divide individual investments among various support programmes, particularly in view of the need for fulfilment of the specific conditions of each grant programme or investment incentives, while simultaneously maximising the potential benefit. For all types of support, there is a basic rule that each cost may be supported only once. Therefore, individual combinations need to be considered optimally prior to filing of anapplicationor an investment plan.

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centres diﬀer based on the type of the centre. Basically, there is always a minimum amount of new jobs (20 – 500) to be created and in the case of technological centres the minimum amount of CZK 10 million to be invested.

STATE AID LEVEL The general level of public support is 25 % of eligible costs. Financial support for the creation of new jobs and for employee training or retraining in the regions with the unemployment rate higher than 25 % is as follows:  Financial support for creation of new jobs of CZK 100,000 – 300,000, depending on the region  Financial support for training and staﬀ retraining of 25 % - 50 % of training costs, depending on the region Financial support for acquisition of tangible and intangible assets for strategic investment (500 new jobs created and investment of at least CZK 500 million in manufacturing industry; 100 new jobs created and investment of at least CZK 200 million for a technology center) is in the amount of 10 - 12.5 % of the eligible costs. There is also one important rule related to the accumulation of support in a three-year period preceding the filling of the investment incentive application. Large investment projects over EUR 100 million need to be granted an individual exemption from the restriction to receive state aid by the European Commission. The process of approving such an investment project is administratively and time demanding.

SELECT PROVISIONS OF THE INCOME TAX ACT. Since the investment incentives especially involve corporate income tax relief, there are some special conditions to be met stipulated by the Income Tax Act (“ITA”). The special conditions basically include tax base minimising, rule of the first ownership of the assets in the Czech Republic, merger/liquidation restriction, transfer pricing restriction, transfer of assets (or part thereof) owned by related parties restriction, etc. Regarding the tax base minimising, the start of the period when it is necessary to begin complying with the tax base minimisation requirement (i.e. claiming tax depreciations, adjustments to receivables and items deductible from

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SELECTED CONDITIONS The general conditions which must be met in order to qualify for the incentive are diﬀerent based on the type of the supported activity. Among others, for the manufacturing projects following general conditions apply:  At least 20 new jobs must be created that are related to the investment project  Investment of at least CZK 100 million and at least half of the investment must be spent on acquisition of new machinery equipment  The company cannot start any work on the project prior the submission of the application  Condition of non-terminating the same/similar activities in the European economic area within 2 years before the submission of application.  Fulfilment of the conditions until 3 years from granting of investment incentives The conditions in the case of technological centres and strategic service

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic III. How to Do Business in the C zech Republic

the tax base pursuant to Section 34 of the Income Tax Act), expressly begins with the taxable period in which the general conditions in accordance with the Investment Incentive Act were met. ITA also sets conditions for the calculation of tax relieft hrough the S2 comparable tax base(tax base benchmark) in the case of expansion projects. The S2 base is equal the arithmetic mean of the tax amount calculated for the tree taxable periods immediately preceding

the taxable period for which the tax credit may be claimed for the first time. And another important rule introduced by the amendment stipulates that the payer may decide not to claim the tax relief in subsequent taxable periods commencing with the taxable period in which the taxpayer announced the decision to the tax authority. However, it is necessary, among other things, to assess the fulfilment of selected conditions so that the already utilised tax relief is not put at risk. KARIN OSINOVÁ KPMG Česká republika s.r.o. E-mail: kosinova@kpmg.cz

LEASE OF BUSINESS PREMISES The New Czech Civil Code regulates the lease of premises for business purposes, even in relation to lease agreements entered into prior to this date. Compared to general types of property leases, lease of business premises has several specific features. Landlords, property developers and their tenants who are leasing business premises in the Czech Republic should certainly be aware of them. REQUIREMENTS OF A LEASE CONTRACT The essential requirement of a lease contract is now simply an agreement concerning the object of the lease and the amount of rent. The purpose of the lease no longer needs to be specified in the contract. If, however, the object of the lease will not be used at least predominantly for the operation of business, then no specific conditions shall apply. Neither is it required to have the object of lease approved by the occupancy permit for the contract to be valid. The regulation of leases in the Czech

Civil Code is not mandatory. Parties therefore have the opportunity to manage their mutual rights and obligations according to their own specific requirements and needs. The lease contract does not need to be renegotiated and rewritten due to the adoption of the new legislation, although in practice the parties prefer this option to exclude application of certain newly introduced provisions of the Czech Civil Code.

TERMINATING A LEASE OF BUSINESS PREMISES Unless the contracting parties agree otherwise, the notice period for a lease with an indefinite term is six months, and three months for a fixed term lease. The notice on a fixed term contract must state the reason for terminating the lease, otherwise the notice is not valid. Unless the parties set out other reasons, tenants are entitled to give notice on a fixed term lease before the lease expires, inter alia if (i) they

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breach has to be specified in the notice and a possibility to remedy the breach before the notice has to be given.

SIGNS REGULATION The tenant is entitled to furnish, to the appropriate extent, the real estate in which the object of the lease is located with various types of signage, provided the landlord has given his consent. The landlord may only withhold his consent for serious reasons. If the tenant requests the landlord in writing to be given such consent and the landlord does not respond within 1 month, it shall be taken that consent has been given. On the other hand, a failure to obtain the consent constitutes a gross breach of the lease agreement by the tenant.

COMPENSATION FOR TAKING OVER A CUSTOMER BASE One entirely new legal mechanism is the payment of compensation for taking over a customer base, i.e. a group of customers who were regular clients of the tenant, provided that such base was created by the tenant himself. The tenant is entitled to compensation for the take-over of a customer base in cases where the lease is terminated by notice of the landlord and at the same time the customer base is taken over by the landlord or a new tenant. However, the tenant will not be entitled to compensation for the takeover of a customer base if the landlord gave a notice to the tenant for the reason of the tenant’s gross breach of obligations. MICHAL DOBIÁŠ rutland ježek, advokátní kancelář s.r.o. E-mail: mdobias@rutlandjezek.com

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have lost the capacity to carry out the activity for which the business premises were intended, (ii) the leased premises have ceased, for objective reasons, to be eligible for carrying out the activity for which they were intended and the landlord does not provide the tenant with equivalent alternative premises, (iii) the landlord has grossly breached his obligations in respect of the tenant, and (v) the circumstances on the basis of which the parties concluded the lease agreement have changed to such an extent that it would be unreasonable to require the tenant to continue the lease. The landlord is entitled to give notice on a fixed term lease contract, inter alia if: (i) the real estate in which the business premises are located is to be demolished or rebuilt in such a way that prevents the leased premises from being used any further, provided that the landlord did not and could not have predicted such situation when entering into the contract, or (ii) the tenant has grossly breached his obligations in respect of the landlord (e.g. the tenant is more than 1 month in delay with the payment of rent or services connected with the use of the business premises), (iii) the tenant is convicted of an intentional criminal act committed against the landlord, a member of his family, or a person who lives in the building in which the business premises are located, or against another person’s property situated in such building, (iv) the business premises need to be vacated due to a reason of public interest protection, or (v) some other similarly serious reason exists. The lease agreement passes over to the new owner in case of the sale of the premises. If the new owner had no reasonable cause to doubt that he was buying the premises free of any lease, he is entitled to terminate the lease within three months after he became or must have become aware that the premises are leased and who the tenant is. Objections can be raised against a termination notice. These must be made in writing and notified within one month of the relevant party having received the notice. If the notice is not withdrawn by the terminating party within one month from the delivery of the objections, the party who raised the objections may ask the court to examine the legitimacy of the notice within the period of another two months. If, however, the tenant vacates the business premises in accordance with the notice, then such notice shall be regarded valid and as having been accepted by him without objections. In particular cases termination without the notice period is possible; by the landlord in cases of particularly serious breaches of the lease agreement by the tenant, by the tenant if the landlord fails to provide the tenant with suﬃcient protection against claims of a third party, who asserts the right of ownership or another right in a thing or claims that the premises be surrendered or vacated. Nevertheless, the

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic III. How to Do Business in the C zech Republic

THE CZECH REPUBLIC: NEW ACT ON PUBLIC PROCUREMENT ABOUT TO TAKE EFFECT In April 2016, the Czech Parliament enacted the new Act on Public Procurement. The bill was subject to heated discussions on both the governmental and parliamentary level. The opposition criticised the regulation for alleged relinquishment of state control over public procurement, potential for corruption, and overall complexity of the rules. Government parties, on the other hand, rejected the objections and praised the legislation as a flexible tool for effective procurement. It remains to be seen in the coming years which side was right. The new Act on Public Procurement entered into force on 1 October 2016. Regardless of the diﬀering opinions on the future eﬀects of the new Czech legislation, the act for the larger part reflects the new European Directives of 2014. The Directives themselves give considerable freedom to the contracting authorities with the aim of relaxing the rules and simplifying procurement procedures for the benefit of both the authorities and suppliers. The changes introduced by the Czech legislator concern mainly the public procurement regime for contracts which are below thresholds specified by the Directives and, therefore, out of their scope. This article pinpoints some of the major changes which the new act brings.

I. IMPROVING MARKET ACCESS FOR SMES One of the key goals of the new Directives as well as of the Act on Public Procurement is to open more procurement procedures to small and medium-sized enterprises (i.e., companies with 250 employees at most). To understand the importance of this aim, it is good to look at the numbers: In the Czech Republic, SMEs currently perform 70 % of public contracts, representing about 50 % of the public procurement market value. Despite their size, small firms are a vital part of the economy: they employ a substantial number of people, generate GDP growth, and promote entrepreneurship and innovation. Small enterprises, however, often lack the economic or personal resources or know-how necessary to compete for larger contracts. Furthermore, a number of bureaucratic burdens increase the cost of sole participation in the public procurement process. The new Act on Public Procurement adopts the following measures in an attempt to make public contracts more accessible to SMEs. Firstly, the new public procurement rules

encourage the contracting authorities to divide the contract into lots where possible. Even though the former Public Procurement Act also allowed this practice, the new law makes it apparent that it should be the preferred approach. The contracting authority is obliged to assess whether a separation is possible. If the contracting authority decides to procure the contract as a whole, it must explain its choice in the individual report or procurement documents (the so-called apply or explain principle). Nevertheless, the division of the contract into lots has not been made mandatory in the Czech Republic, even though the Directives allow such possibility. Secondly, a turnover cap has been imposed in relation to the financial capacity of the suppliers: the required minimum annual turnover must not exceed twice the estimated value of the contract. Thirdly, the new act removes some of the administrative obstacles related to the proving of a supplier’s qualification. Under the former regulation, all suppliers had to provide the contracting authority with various certificates issued by public authorities concerning, for example, the non-existence of grounds for exclusion or fulfilment of selection criteria. Under the new act, suppliers may replace such certificates by a so-called European Single Procurement Document, which is an aﬃdavit stating that the supplier meets the required qualification. The ESPD is a standard form available online and serves as preliminary evidence. Only the selected supplier is obliged to provide the contracting authority with physical evidence. Finally, the new law aims to protect subcontractors (especially SMEs) from secondary insolvency by allowing them to demand and receive direct payments if provided for in the procurement documents. The contracting authority may lay down conditions under which it will transfer due payments for the contract directly to sub-contractors.

II. REFORMING THE PROCUREMENT OF SERVICES: NEW EXCLUSIONS AND “LIGHT” REGIME Along the lines of the European Directives, the new Act on Public Procurement abolishes the distinction between the so-called priority and non-priority services. Formerly, priority services contracts had to be published in the Oﬃcial Journal of the European Union, whereas non-priority services contracts were not subject to obligatory publication. The new rules considerably simplify the procurement of certain contracts for services. Apart from services subject to the full procurement regime, the Act on Public Procurement distinguishes between the following types of services:  Services exempt from the public procurement regime. The contracting authority can procure certain services outside the procurement procedure prescribed by law. For example, specific legal services (e.g., representation by an attorney in legal proceedings), financial services and R&D services fall into this category.

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 Social and other specific services subject to a so-called “light” regime.

A number of services, a good part of which is similar to the former non-priority services, can be procured in a simplified procedure. The “light” regime provides the contracting authority with great freedom in shaping the procurement procedure and the procurement documents. The contracting authority may also negotiate with the bidders and change the elements of the procurement during the procurement procedure. Services in this category include, for example, legal services, social, educational, healthcare and cultural services or hotel and restaurant services.

III. FLEXIBILISATION OF THE BELOWTHRESHOLD REGIME

V. CONCLUSION The present Act on Public Procurement introduces greater flexibility and new options, which should enable the contracting authorities to adapt the procurement to their individual needs. However, some warn that this might turn out to be a double-edged sword. By providing wide discretion to the contracting authorities, the new rules naturally place increased requirements on their expertise and cautiousness. Nevertheless, the new rules have the potential to streamline public procurement procedures; if they are in the right hands. LENKA KRUTÁKOVÁ Senior Associate Attorney-at-Law WOLF THEISS E-mail: lenka.krutakova@wolftheiss.com

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The European Directives only regulate the procurement of contracts with an estimated value exceeding the stipulated thresholds. In the Czech Republic, even the below-threshold contracts for supplies or services worth over CZK 2 million (approx. EUR 74 000) and works contracts worth over CZK 6 million (approx. EUR 222 000) must be procured in a procurement procedure. Such contracts are, however, subject to a less strict below-threshold regime which has been further relaxed by the new Act on Public Procurement. Among others, the Act has introduced the following:  Unlimited access to negotiated procedure with publication. The contracting authority can use the negotiated procedure without publication regardless of the conditions prescribed for above-threshold contracts.  Simplified below-threshold procedure. The contracting authority can procure all below-threshold supply and services contracts in a simplified below-threshold procedure. The financial limit for the use of the procedure for works contracts has been increased from CZK 10 million to CZK 50 million (approx. EUR 1.8 million). The procedure newly allows the contracting authority to use customised qualification criteria and to pick suitable rules from the above-threshold regime. Important procurement decisions are deemed to be delivered by their publication on the contracting authority’s web page.  Shorter time limits for submission of tenders.

IV. OTHER MEASURES The new Act on Public Procurement also contains:  Extensions of the options for the use of negotiated procedures with publication and of a competitive dialogue.  Permission of preliminary market discussions.  Award of contracts on the basis of the Most Economically Advantageous Tender.  Ability of contracting authorities to stipulate an abnormally low bid as grounds for rejection of a supplier.

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D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic III. How to Do Business in the C zech Republic

CHANGES TO CZECH EMPLOYMENT LAW Changes to the Czech employment law are ongoing and usually have a significant impact on all Czech employers. I. CHANGES EFFECTIVE AS OF JANUARY 2016 MINIMUM SALARY AND SALARY DEDUCTIONS Based on the amendment of Govt. Regulation on Minimum Salary No. 233/2015 Coll., as of 1 January 2016, the minimum monthly salary increased to CZK 9,900 and the minimum hourly salary to CZK 58.70. On the basis of Govt. Regulation No. 395/2015 Coll., salary deductions in 2016, coming into effect for the first time in February (for January salaries), are affected by the following crucial figures:  CZK 6,178.67 is the basic amount per employee (obligor) immune from deductions,  CZK 1,544.67 is the amount immune from deductions per every person that the employee must provide maintenance to, For any amount over CZK 9,268, the remainder of the net salary is subject to deductions without limitation.

TRAVEL ALLOWANCES AND CATERING SERVICES Eﬀective as of 1 January 2016, the new Ministry of Labour and Social Aﬀairs (MoLSA) Decree No. 385/2015 Coll. has changed business trip rates, in particular the rate for fuel and the amounts of domestic catering fees. The average price of fuel for the purpose of providing travel allowances in 2016 decreased, and is now as follows:  Gasoline (95 oct.) - CZK 29.70 per litre,  Gasoline (98 oct.) - CZK 33.00 per litre,  Diesel - CZK 29.50 per litre. The rate of basic compensation for the use of a motor vehicle in 2016 is:  for cars - CZK 3.80 per kilometre,  for one-track vehicles - CZK 1 per kilometre. The minimum rates of catering fees provided to employees for every calendar day of a domestic business trip in 2016 are as follows:  business trip lasting from 5 to 12

hours - CZK 70,  business trip lasting more than 12 hours - CZK 106,  business trip lasting more than 18 hours - CZK 166.

The tax-deductible amount of catering services paid for by the employer also depends on the new rates of catering fees. In 2016, employers may provide their employees with tax-deductible contribution for catering services amounting up to CZK 58.10. Such an amount may, at most, make up for 55 % of the price of one meal. Therefore, the ideal, fully tax-deductible maximum value of one meal ticket in 2016 is CZK 105. In Decree No. 309/2015 Coll., issued on 16 November 2015, the Ministry of Finance established new basic rates for food allowances abroad in the year 2016. Whereas the 2016 allowance for business trips in Europe will more or less remain unchanged, for business trips in the US, Canada, or, for example, China, allowances for traveling employees went up (by approx. USD/EUR 5).

SALARY COMPENSATION DURING TEMPORARY INCAPACITY TO WORK At the beginning of the year, the reduction limits for sickness insurance benefits were changed by the issuing of MoLS Announcement No. 272/2015 Coll. As a result, the average hourly earnings of an employee for the purpose of the calculation of salary compensation during temporary incapacity to work are reduced in 2016 as follows:  Up to CZK 157.68 – 90 % included,  CZK 157.69 to CZK 236.43 – 60 % included,  CZK 236.44 to CZK 472.68 – 30 % included,  CZK 472.69 and more – not included.

INSURANCE PAYMENT All employers continue to be responsible for paying “their own” social security contributions at the uniform rate of 25 % of the assessment base. Further important figures for employers regarding their insurance in 2016 are as follows:  The maximum annual assessment base for employee social security is CZK 1,296,288,  The decisive income for participation in sickness insurance remains at CZK 2,500 per month,  Health insurance contribution from minimum salary (e.g. paid by the employer when an employee is on unpaid leave for a whole month) makes for CZK 1,337.

CANCELLATION OF THE 2ND PENSION PILLAR The new pension savings system – the so-called second pillar of the pension system – was only officially introduced in 2013. However, the first step towards its cancellation came into effect already on 1 July 2015 (since this day, it was not possible for new participants to enter into the second pillar), and was later followed by the complete cancellation of the system effective as of 1 January 2016.

II. CHANGES ADOPTED IN 2016 GOOD FRIDAY  A NEW HOLIDAY An amendment to the Public Holidays Act has been passed, which added Good Friday (as a part of Easter) as a new public holiday to the Czech calendar. The new holiday increased the number of days oﬀ each year by one, and this is to be true without exceptions – as the name of the holiday itself implies, it will always fall on Friday.

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FORMAL POLICY GUIDELINES OF STATE LABOUR INSPECTION OFFICE The State Labour Inspection Oﬃce issued new formal policy guidelines laying out the principles for the evaluation of comparable labour and wage conditions of agency employees and those employers who use their services (users). These guidelines are the first oﬃcial document that explicitly states how comparable conditions should be defined. In practice, the guidelines are going to be a practical tool not only for employment agencies, but especially for those employers who use the services of these agencies, and who will also be responsible for ensuring compliance with maintaining comparable wages and working conditions. The newly issued formal guidelines are binding for all labour inspectorates in their carrying out of inspections and in this sense can thus be useful in deciding how comparable conditions should be defined. It should be noted that some of the conclusions of these guidelines may still be re-evaluated in court.

Moreover, sale will be also limited on 24 December in the way that it will be forbidden from 12:00 (noon) to 24:00 (midnight). Concerning the further content of the regulation – it is very brief (and so is the explanatory report attached to the act). Beside the enumerated holidays, during which sale is either forbidden or limited, the Act states listed exceptions which do not fall under the prohibition/ limitation of sale: 1. shops with floorspace less thean 200 sq.m 2. gas / petrol stations with fuels and oils 3. pharmacies 4. shops at airports and bus / train stations 5. shops at medical facilities General exception the an applies to sale in both retail and wholesale during the time of state of danger, emergency state, state of imperilment or state of war. On the contrary, the Act explicitly prohibits any sale during the listed holidays in pawn-shops, premises with sale of used goods, collection centres and buyouts of garbage – no matter what the extent of floorspace of these premises is. NATAŠA RANDLOVÁ Randl Partners member of Ius Laboris E-mail: randlova@randls.com www.randls.com

2017

Photo: Profesia archives

NEW ACT ON SALES HOURS IN RETAIL AND WHOLESALE The Act newly regulates sales hours in both retail and wholesale, which has not been regulated so far in any way. The regulation enumerates 8 bank (or other type of) holidays during which any sale is forbidden / limited. Selection of the below stated 8 holidays (out of the 13 holidays as listed in the Act No. 245/2000 Coll.,on bank holidays, other type of holidays, significant days and days of rest) has not been specified any closer. According to the new regulation, sale (in both retail and wholesale) will be completely forbidden in the following days:  1 January  Easter Monday  8 May  28 September  28 October  25 December  26 December

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic III. How to Do Business in the C zech Republic

LABOUR CODE LAYS DOWN THE RIGHTS AND OBLIGATIONS OF EMPLOYERS AND EMPLOYEES The rights and obligations of employers and employees in the Czech Republic are defined mainly by Act No. 262/2006 Coll., the Labour Code. Every employee is entitled to receive a written employment contract. The employment contract can be written in any language, provided that both parties to the contract fully understand the language. The employment contract must include only three obligatory definitions: the type of work, the place of work, and the date on which the work commences. In addition, the employee must be notified in writing of other details concerning the employment, particularly about working hours, paid leave, the notice period, etc., either directly in the employment contract or within one month of commencing the employment relationship.

EMPLOYEE’S SALARY A feature of the Czech legislation, which is not common in countries of the European Union and outside the EU, is that the employee’s salary does not need to be specified in the employment contract (although it mostly does contain this specification). The salary can be agreed upon in a separate contract, but it can also be set unilaterally in a salary assessment or in an internal wage regulation. The salary assessment entitles the employer to define the employee’s salary. In any case, the minimum wage must be respected (currently CZK 9.900 per month, i.e. approximately EUR 366, as of January 1, 2017 shall increase – at present in legislative proceedings) but the employer must also respect the lowest guaranteed wage set for the diﬀerent groups of work).

PROBATION PERIOD An employment contract with a new employee can include a probation period, during which the employment can be terminated without giving a reason and without a notice period. The length of the notice is limited to 3 months for ordinary employees and to 6 months for managerial employees. It is therefore

possible to conclude a longer probation period with managers, which reflects the longer time needed to evaluate the competence of a manager.

WORKING CONDITIONS As in most European countries, the weekly working hours must not exceed 40 (with some exceptions). The employer can order an employee to work overtime, but no more than 8 hours per week and 150 hours in a calendar year. Any additional overtime work must be agreed upon with the employee. The total overtime work must not exceed an average of 8 hours per week, which means approximately 416 hours per year. For each hour of overtime work, the employee is entitled to his/her regular wage plus 25 % of the average wage. It can be agreed that 150 hours of overtime work in a calendar year are included in the contracted salary. For managerial employees, all allowed overtime work, i.e. up to 416 hours of overtime per year, may be included in the agreed wage. Each employee is entitled to a minimum of 4 weeks of paid leave during a calendar year. The Czech Republic has 13 national holidays (from the year 2016, one more was added – Good Friday). Some of these coincide with weekends (such national holidays are not shifted to workdays, as in some countries).

WAGE COMPENSATION IN THE CASE OF TEMPORARY WORK INCAPACITY When an employee falls ill and his/her temporary work incapacity is recognised in consequence, the law provides for the entitlement to wage compensation in the first 14 calendar days, paid by the employer. However, wage compensation in these 14 days is due only for working days with the exception of the first 3 working days (or the first 24 hours of scheduled shifts) when the employee has no entitlement to wage compensation. From the fourth day, wage compensation amounts to 60 % of the average earnings of the employee, reduced in keeping with the law, with a maximum hourly limit of CZK 156,02. After the 14 calendar days of temporary work incapacity, the employee receives sickness benefits from his/her sickness insurance for every calendar day, paid by the state.

TERMINATION OF EMPLOYMENT RELATIONSHIP The Czech provisions for the termination of employment relationship diﬀer noticeably from provisions in many countries. Most importantly, employers may terminate the employment relationship only for reasons defined in the Labour Code, which are: organisational changes, health reasons, failure to meet prerequisites prescribed for the agreed work, and breach of duties by the employee. The employer may not terminate an employment relationship arbitrarily (i.e. without stating one of the reasons defined by the Labour Code).

STATUTORY NOTICE PERIOD A shortcoming of the Czech legal arrangement is the absence of any relation between the length of the notice period and the length of the duration of the employment relationship, although this arrangement is common in many countries. The statutory notice period is at least 2 months and can be prolonged by agreement of the parties.

STATUTORY SEVERANCE PAY If the employment relationship is terminated for organisational reasons, the employee is entitled to statutory severance pay, based on the length of the employment: one average monthly wage if the

2017

employment has lasted less than one year, two average monthly wages if the employment has lasted more than one year but less than two years, and three average monthly wages if the employment has lasted more than two years. If the employment relationship is terminated for reasons of health or due to an industrial injury, an occupational disease or due to threat of such disease, the employee is entitled to severance pay of at least 12 times the amount of the average monthly earnings. A collective agreement, internal regulation, or mutual agreement (contract of employment or agreement

on the termination of an employment relationship) can increase the severance pay, or lay down other conditions of the employee’s entitlement to higher severance pay. NATAŠA RANDLOVÁ Randl Partners, lawyer´s oﬃce, member of Ius Laboris E-mail: randlova@randls.com

EMPLOYMENT OF FOREIGNERS: EMPLOYEE CARD

In the case of EU citizens, the employer is obliged to inform the relevant regional department of the Labour Oﬃce about such employment. The EU citizen is then required to report the place of his or her residence to the Foreign Police, unless the provider of his/her accommodation has already done so. Therefore, this article only provides information concerning the employment of third-country citizens, and, for simplifying the terminology, refers to them as “foreigners”. Foreigners may be employed in the CzechRepublic only if they have obtained a Work Permit and a Residence Permit for employment purposes. The most usual way of obtaining them since June 2014 has been getting the employee card. The Employee Card has dual character, which means that it comprises both the Employment Permit and the Residence Permit. In this connection we would like to point out that the so-called Green Cards have been completely abolished, but the Blue Cards remain for highly qualified foreigners.

EMPLOYEE CARD I. EMPLOYER´S DUTIES  REPORTING Before hiring a foreigner, the employer is required to report to the relevant Labour Oﬃce department the vacant position and

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its characteristics, i.e. type of work, place of work, qualifications required for the vacancy, basic information about working and salary conditions, whether the job is for a determined or an indeterminate period of time and its expected duration. If the vacancy is not filled within 30 days of its being reported and the work is to be done under an Employment Contract or an Agreement on working activity, where the weekly working time will be at least 15 hours, and the monthly remuneration will be corresponding to at least the minimum salary (CZK 9 900 = approx. EUR 366/USD 408), irrespective of the length of the weekly working time, the vacancy will be included in the list of vacancies to be filled by Employee Card holders.

Photo: Profesia archives

For the purposes of employing foreign nationals, citizens of the EU, the EEA, and Switzerland (hereinafter EU citizens) are not considered as foreigners under Czech law. Therefore they have the same position as citizens of the CzechRepublic and the Work / Residence Permit is not requested in the matter of their employment in the CzechRepublic.

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic III. How to Do Business in the C zech Republic

In contrast to the former practice, the employer is no longer obliged to report to the regional department of the Labour Oﬃce to consult with them the intention of giving the job to a foreigner. In this respect, the current legislation is a simplification.

II. THE FOREIGNER´S DUTIES  FILING AN APPLICATION Applications for Employee Cards are filed with the relevant CzechEmbassy in the country of which the applicant is a national. In the case of the citizens of specified countries (under Decree No. 429/2010 Coll.), the application may be filed with any Czech Embassy. If the foreigner is already staying on the territory of the Czech Republic (only based on long-term visa or long-term residency permit, i.e. NOT short-term Schengen visa), he/she may file his/her application with the relevant department of the Ministry of the Interior of the Czech Republic. The application must be presented in person. Besides the foreigner’s identification data, the application must contain the number and description of the vacancy listed in the central register of job vacancies available to Employee Card holders. Together with the application, the foreigner is required to present his/her passport, a document showing the address at which he/she is accommodated, two photographs (unless the foreigner’s photo record has been made), his/her Work Contract or Agreement to perform work (or a letter of intent), documents showing the foreigner’s skills (e.g. educational documents, qualification documents, document showing that the conditions for performing a regulated profession have been met – upon request the documents should be validated by Czech authorities). Upon request, the foreigner is required to present a document analogous with a copy of an entry in the criminal records and a medical report confirming the foreigner is not suﬀering from a serious disease. The time period for deciding regarding the application is 60 days; 90 days in especially complicated cases, or in the case of the Department for Asylum and Migration Policy of the Ministry of Interior of the Czech Republic having requested the Labour Oﬃce of the Czech Republic for a binding decision. The administration fee for filing the application is CZK 1,000 (approx. EUR

37/USD 40).Usually, the Employee Card is valid for the duration of the Employment Contract, but not longer than two years, with the possibility of its repeated prolongation. This means that the Employee Card is always linked to the specific working position (there may be several concurrent positions) for which it was issued, or a working position which was approved by the relevant authorities in connection with a change of the working position of the foreigner – Employee Card holder. In the event of the foreigner’s application for the issue of the Employee Card being settled favourably, the Czech Embassy will confirm this in the foreigner’s passport. The foreigner is further required to submit a document confirming he/she has concluded travel health insurance that covers the time from the date of the foreigner’s arrival in the Czech Republic to the day he/she enters employment, which will entitle him/her to public health insurance.

III. EMPLOYEE CARD EXTENSION The validity of the Employee Card may be extended several times on the same terms as those under which the Employee Card was issued, for the length of time for which the Employment Contract or the Agreement on working activity was concluded, but in each case, for no longer than another two years. Applications for the extension of the validity of the Employment Card are filed with the Ministry of the Interior of the Czech Republic. Applications may be filed not sooner than 120 days before and not later than 30 days before the expiry of the existing Employee Card. Newly there is a clearly set fiction principle that a foreigner is entitled to perform his working activity, for which the Employment Contract or the Agreement was concluded, while the employee card extension is being processed.

IV. SPECIAL CASES  NONDUAL MODE OF EMPLOYEE CARD In specific cases, the Employee Card is not of a dual character, but only comprises a Residence Permit to stay on the territory of the CzechRepublic, not a Work Permit. The first such case is the situation in which the foreigner has free access to the labour market in the Czech Republic (Section 98 of the Employment Act), i.e. such foreigner does not require the Work Permit. This concerns, for example, foreigners having a Permanent Residence Permit in the Czech Republic, the family dependants of members of a diplomatic mission or consular oﬃce, foreigners granted asylum, foreigners studying for a secondary, tertiary, or university education in daily form and at an accredited education facility of the Czech Republic, accredited persons working with the news media, foreigners who received secondary or tertiary or university education at an accredited education facility in the Czech Republic and others. When filing an application for the issue of an Employee Card (of a non-dual character), the foreigner is required to prove that he/she has free access to the Czech labour market. On the other hand, he/she is not required to provide a document proving his/her expert capabilities or his/her education in the meaning of required qualification of specific job. Neither must his/her job be included in the register of vacancies available to Employee Card holders. The other example, where the Employee Card is of a non-dual character and only comprises a Residence Permit, is the situation in which the law stipulates that the foreigner must have a separate Work Permit, for example if he/she was seconded by his/her foreign employer based outside the EU/EEA or in Switzerland to perform work in the Czech Republic, or if he/she is a seasonal worker doing work dependent on changing seasonal conditions, which may not last for more than six months in the calendar year, and trainees (arriving to gain special skills and qualifications) for no longer than six months. In those cases, the foreigner must first obtain a Work Permit

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18 months´ legal stay, the possibility of including the period of stay on the basis of the Blue Card in the case of the person concerned applying for a Permanent Residence Permit in the Czech Republic, and more favourable conditions applying to their family dependants in seeking permission for their stay in the Czech Republic.

CHANGES IN 2016

BLUE CARD Also the “Blue Card” concept is a combination of the Work Permit and Residence Permit, however, only for highly qualified foreigners. The high qualification requirement is fulfilled if university or higher technical education for the duration of at least three years is required for the working position concerned. Blue Card applications may be filed with a Czech representation oﬃce abroad, alternatively with the Ministry of the Interior, provided the foreigner is already staying in the Czech Republic on the basis of a permit issued by a Czech authority, or if he/she holds a Blue Card issued by another EU state and his/her application has been filed within one month of his/her entry to the territory of the Czech Republic. The application for the issue of a Blue Card must be supported by an Employment Contract for work requiring high qualification, for the duration of at least one year, for statutory weekly working hours. The Employment Contract must further stipulate the amount of the contracted gross monthly or annual salary, which must be at least 1.5 times the average gross salary in the Czech Republic. The Blue Card is valid for the duration of the Employment Contract plus three months, but no longer than for two years. The Blue Card may be extended. The time limit for the decision on the issue of a Blue Card to be delivered to the applicant is 90 days within the filing of the application (in specific cases, the time limit may be prolonged or interrupted). Blue Cards have several advantages for their holders, e.g. the possibility of free movement within the EU after the lapse of the

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ONDŘE J CHLADA Randl Partners, member of Ius Laboris E-mail: chlada@randls.com

MORE INFORMATION CONCERNING THE EMPLOYMENT OF FOREIGNERSCAN BE FOUND ON THE FOLLOWING WEBSITES: www.mpsv.cz – Ministry of Labour and Social Aﬀairs of the Czech Republic www.mzv.cz – Ministry of Foreign Aﬀairs of the Czech Republic www.mvcr.cz – Ministry of the Interior of the Czech Republic

Photo: Profesia archives

(or at least have filed an application for one to be issued) and after that apply for an Employee Card as a permit to stay. However, even in the above-mentioned cases, the foreigner must always inform the Labour Oﬃce of the Czech Republic, the same as EU citizens.

There is a proposed amendment to an Act No. 326/1999 Coll., Aliens Act that came into effect on 1 September, 2016. This amendment introduces a new institute of long-term visa for seasonal workers doing work dependent on changing seasonal conditions. Such permit shall be issued on the supposition that the seasonal worker has been properly issued a work permit by the relevant Labour Office department in the maximum length of 6 months. For those seasonal workers who come back to work in the Czech Republic, the proceedings for issuing their permit will be simplified and their applications will be processed in preference. For internally transferred employees the amendment introduces a new type of a long-term residence – a card of internally transferred employee. The card will be designed for those foreigners who will be temporarily internally transferred within the supranational companies to the branch oﬃces in the Czech Republic. The card as a unified permit will be covering residence permit and work permit for the position of manager, specialist or employed intern. The card will be issued for the maximum of 3 years for managers and specialists and in the maximum of 1 year for the interns.

IV.

FINANCE

2015 CONFIRMED THE STABILITY AND PROFITABILITY OF THE BANKING SECTOR In 2015, Czech economy was counted among the fastest growing countries, not only in the European context. Czech economy grew by 4.6 %, y/y, while global economic growth attained the rate of 3.1 % in 2015; US economy grew by 2.4 % and Eurozone countries by 1.6 %. The Czech Republic grew fastest also compared to the neighbouring countries - Germany’s economy recorded a growth of 1.7 % in 2015; Slovakia and Poland have both grown at the same rate of 3.6 %. The external environment created a relatively favourable climate of demand for Czech economy, which has been additionally intensified by the influence of other factors.

BANKING SECTOR: BASIC OVERVIEW The structure of the banking sector remained virtually unchanged in 2015. Towards the end of 2015, a total of 46 entities held banking licenses. The structure of the banking sector was created by 4 large banks, 8 medium-sized banks, 6 small banks, 23 branches of foreign banks and 5 building societies. 37 entities were controlled by foreign owners including 15 banks and 22 branches. Domestic owners controlled 8 banks, two of which were banks co-owned by the state. Towards the end of 2015, the total value of the banking sector’s assets amounted to CZK 5,470 bn., which is a year-on-year increase of 3.0 %. The banking sector’s assets represent 122.2 % of GDP. Four large banks (i.e. banks with assets exceeding CZK 250 billion) accounted for 59 % of the total volume of assets. The Czech banking sector has long been well capitalised. In 2015, capital ratios have risen further. Year-end capital adequacy ratio reached 18.41 %. Furthermore, most of the capital consists of a high quality Tier 1 capital (Tier 1 capital adequacy ratio stood at 17.95 %). Net profit for 2015 increased by 6 % and reached CZK 66.9 billion. Return on assets reached 1.21 % and 16.84 % relative to Tier 1 capital.

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THE BANKING SECTOR AND THE REAL ECONOMY The situation in the banking sector is closely interlinked with the situation in the real economy: just as the improving economic situation has helped the profitability of the banking sector, the banking sector backed the economic growth by oﬀering loans. The total volume of loans provided by banks grew by 5.6 %, year-on-year, to CZK 2,782.9 billion at the end of 2015. The unique position of the Czech banking sector, where there is excess of deposits over loans, thus continues to persist. Overall, the volume of deposits exceeded the volume of loans by 26.5 % by the end of 2014. The excess of deposits over loans is generated by the household sector, where households have saved 52.3 % more funds on deposits in domestic banks than they drew in loans. In the corporate sector, the volumes of deposits and loans are more or less balanced. While this means a low banks’ reliance on the Central Bank and on interbank market funding, the monetary policy, however, has at the same time a lower eﬃciency in supporting the economic activity. By the end of 2015, households had CZK 1,235.3 billion in loans from banks, 8.2 % more than a year ago. Housing loans dominated – at the end of the year, the volume of bank housing loans reached CZK 971.8 billion, representing a y-o-y growth of 8 %. Unlike consumer loans, people borrow loans for new housing almost exclusively from banking institutions. During 2015, households drew new loans of CZK 418.7 billion, which was 19.3 % more than in 2014. Seventy per cent of new loans in 2015 went to housing, where the total volume of CZK 294.8 billion represented an increase of 22.8 %, y-o-y. Towards the end of 2015, households

Photo: www.sxc.hu

Czech banking industry confirmed its irreplaceable role in funding domestic economic growth, which, for domestic banks, resulted in opening broader opportunities for business activities. On the other hand, healthy banks were fully prepared to service growth of both investment and consumer demand.

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic IV. Fin a n c e

had deposited CZK 1,881.5 billion with banks, i.e. 5.5 % more than the year before. Two-thirds of household deposits were non-term deposits. On the contrary, the volume of term deposits fell at the end of the year by 4.9 % to CZK 631.4 billion. With low interest rates, people prefer the immediate availability of deposited funds. Towards the end of 2015, the volume of deposits was CZK 97.7 bn. higher than a year ago, while the volume of loans to households was higher by CZK 94.1 billion. By the end of 2015, businesses had taken CZK 920.9 billion in bank loans, i.e. 5.3 % more than at the end of 2014. During the year, businesses drew new loans in the total volume of CZK 607.8 billion, which represents a y-o-y increase of 11. 6 %. More than three-quarters of loans are denominated in CZK, but during the past two years, clients have been gradually increasingly interested in loans in euros. The volume of loans denominated in euros reached CZK 200.6 billion by the end of 2015, i.e. a y-o-y increase of 6.9 %. In terms of the individual sectors, the most loans have been drawn by businesses dealing with real estate activities – at the end of 2015 their volume reached CZK 326.9 billion, which was 5.6 % more than a year earlier. The context of the high appetite for mortgages and of the real estate market recovery is evident. Next in line is the manufacturing industry, with total loans of CZK 245.2 billion, a y-o-y increase of 1.8 %. Thanks to the good condition of the Czech economy the quality of the loan portfolio of Czech firms and households continued to improve in 2015. In the corporate sector, the share of bad loans decreased to 5.7 % at the end of 2015 (compared to 6.6 % at year-end 2014). In the household sector, the overall share of bad loans decreased y-o-y to 4 % (4.7 % at end of 2014). Best quality loans were mortgage loans, where the share of bad loans stood at only 2.2 % at the end of 2015.

THE OUTLOOK FOR 2016 In 2016, certain extraordinary factors will wear out, leading to a slowdown in growth to around 2.5 %. The main factor of the expected weakening are investments, which in 2015 strengthened due to a combination of unique and one-oﬀ impulses significantly associated with the full implementing of the remaining EU funds. The expected increase in in-

OVERVIEW OF BANKS AND FOREIGN BANK AFFILIATIONS OPERATING IN THE CZECH REPUBLIC IN ALPHABETICAL ORDER Banks and foreign bank aﬃliations

www – address

Air Bank a.s.

www.airbank.cz

Bank Gutmann Aktiengesellschaft, pobočka Česká republika

www.gutmann.at

Bank of China (Hungary) Close Ltd. Prague branch, odštěpný závod

www.bankofchina.com

BNP Paribas Fortis SA/NV, pobočka Česká republika

www.bnpparibas.com

BNP Paribas Personal Finance SA, odštěpný závod

www.bnpparibas.com

Citibank Europe plc, organizační složka

www.citibank.cz

COMMERZBANK Aktiengesellschaft, pobočka Praha

www.commerzbank.cz

Česká exportní banka, a.s.

www.ceb.cz

Česká spořitelna, a.s.

www.csas.cz

Českomoravská stavební spořitelna, a.s.

www.cmss.cz

Českomoravská záruční a rozvojová banka, a.s.

www.cmzrb.cz

Československá obchodní banka, a. s.

www.csob.cz

Deutsche Bank Aktiengesellschaft Filiale Prag, organizační složka

www.deutsche-bank.cz

Equa bank a.s.

www.equabank.cz

ERB bank, a.s.

www.erbank.eu

Expobank CZ a.s.

www.expobank.cz

Fio banka, a.s.

www.ﬁo.cz

HSBC Bank plc - pobočka Praha

www.business.hsbc.cz/cs-cz

Hypoteční banka, a.s.

www.hypotecnibanka.cz

ING Bank N.V.

www.ingbank.cz

J & T BANKA, a.s.

www.jtbank.cz

Komerční banka, a.s.

www.kb.cz

mBank S.A., organizační složka

www.mbank.cz

Modrá pyramida stavební spořitelna, a.s.

www.modrapyramida.cz

MONETA Money Bank, a.s.

www.moneta.cz

MUFG Bank (Europe) N.V. Prague Branch

www.bk.mufg.jp/global

Oberbank AG pobočka Česká republika

www.oberbank.cz

Poštová banka, a.s., pobočka Česká republika

www.pabk.sk

PPF banka a.s.

www.ppfbanka.cz

PRIVAT BANK AG der Raiﬀeisenlandesbank Oberösterreich, pobočka ČR

www.privatbank.at

Raiﬀeisen stavební spořitelna a.s.

www.rsts.cz

Raiﬀeisenbank a.s.

www.rb.cz

Raiﬀeisenbank im Stiftland eG pobočka Cheb, odštěpný závod

www.rb-stiftland.cz

Saxo Bank A/S, organizační složka

cz.saxobank.com

Sberbank CZ, a.s.

www.sberbankcz.cz

Stavební spořitelna České spořitelny, a.s.

www.burinka.cz

Sumitomo Mitsui Banking Corporation Europe Limited, Prague Branch

www.smbcgroup.com

The Royal Bank of Scotland plc, organizační složka

www.rbs.cz

UniCredit Bank Czech Republic and Slovakia, a.s. Všeobecná úverová banka a.s., pobočka Praha

www.vub.cz

Waldviertler Sparkasse Bank AG

www.unicreditbank.cz

Wüstenrot - stavební spořitelna a.s.

www.wspk.cz www.westernunionbank.com/ de/home www.wuestenrot.cz

Wüstenrot hypoteční banka a.s.

www.wuestenrot.cz

ZUNO BANK AG, organizační složka

www.zuno.cz Source: www.cnb.cz;

Western Union International Bank GmbH, organizační složka

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vestment demand by 1.5 %, given the strong comparative base of 2015, is a good result. Investment demand will continue in 2016, supported by the willingness of banks to lend. Consumer demand will be the key source of growth and it will maintain last year’s momentum of approximately 3 %. Household demand will be supported by a strong labour market and by weak inflation. Unemployment should fall below 6 % on the average; companies will increasingly face a shortage of skilled labour. The growth of average nominal wage will accelerate to 4 %. Rising wages and declining unemployment will continue to support the appetite of households for spending. The growth in consumer prices will remain to be subdued and the real purchasing power of households will thus increase the most since 2007. In the first half of 2016, the situation in the banking sector remained broadly unchanged. Volume of loans amounted to CZK 2,886.9 bill, which represented a year on year increase of 6.7 %. The volume of housing loans exceeded the boundary of one billion (CZK 1,005 bill.). First half of 2016 saw also a recovery in consumer loans driven among other factors also by high consumer confidence. Along with expected weakening of investment demand the appetite for new corporate loans somewhat eased. Average annual growth of loans to households is expected at 7.2 % for 2016. The volume of corporate loans will increase by approximately 6 %. Banking sector will remain in a good shape; however, challenges for banking business continue to be rising. Domestic banks are

challenged by strong competition not only within the banking sector, but also with non-bank providers of certain financial services. Banks have to gradually cope with a very wide range of new regulatory requirements, when not only the precise impact of the individual measures, but particularly the impact of their overall resulting synergy, cannot be even accurately estimated. Another challenge for banks is that they must find a balance in a situation where the monetary policy stimulates them to a massive interest creation while on the other hand, the regulatory requirements and macroprudential policy encourage them to exercise prudence. EVA ZAMRAZILOVÁ MARTINA VYSTAVĚL Czech Banking Association E-mail: zamrazilova@czech-ba.cz www.czech-ba.cz

CHANGES IN TAX LEGISLATION CONCERNING BUSINESSMEN, IN EFFECT FROM 2016 In view of the fact that tax legislation in the Czech Republic is an area subject to frequent changes, we would like to use this opportunity to inform you about some of the changes introduced by tax laws and related legislation which are currently in force. This article is divided into four parts:

Acquisition Tax  E lectronic recording of sales

CHANGES IN THE AREA OF VAT 1. Control Statement As from 2016, VAT payers have the obligation to file Control Statements with their VAT returns. The filing must be done exclusively in electronic form, in the format and structure stated by the tax administrator. All electronic forms of filing complying with the tax regulations are permitted. The Control Statement must comprise essential data contained in all the tax documents received and issued. Juristic persons are required to file their Control Statements monthly, not later than on the 25th day of the following month, while natural persons have the obligation to file their Control Statements monthly or quarterly, each time in compliance with the period in which the tax return is filed. The first taxable period for which the VAT Control Statement was to be submitted was January 2016 and the deadline for submission was 25 February 2016. For natural persons – quarterly VAT payers – the deadline for the submission of their first Control Statements covering the 1st quarter of 2016 was 25 April 2016.

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2. Obligation to File the Tax Return Electronically Until the end of 2015, a natural person registered for VAT payment whose turnover for a period of not more than 12 consecutive calendar months did not surpass the amount of CZK 6 million was allowed to submit the VAT return in paper form. As of 1 January 2016, these payers too have the obligation to file their VAT returns exclusively in electronic form. This applies to all returns filed after 1 January 2016. The filing can be done in the form of a data message in the required format and structure, to be sent via the Financial Administrator’s tax portal or from the data box. For authentication, it is possible to use the acknowledged electronic signature or data box credentials, or to send the document without authentication and to confirm it later within the time limit allowed by law through the e-form.

Photo:www.freeimages.com

 C hanges in the area of VAT  P roposed changes in the area of personal Income Tax  P roposed changes in statutory measure concerning Real Estate

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic IV. Fin a n c e

3. Specification of the Term “Building Site” The term “building site” has been newly defined, valid as of 1 January 2016. The purpose of this change was not for fiscal reasons, but due to the need for more accurate specification and enlargement of this term to ensure a correct taxation of sites earmarked for building and to harmonise Czech law with EU legislation. When selling a building site, the basic VAT rate of 21 % continues to apply. As the previous definition of a building site provided scope for non-desired tax optimisations, it may happen that already in 2016 some sites which until now were not taxed due to previous legislation will now be subject to taxation. More details can be found in the addendum to “Information concerning the application of VAT to real property” published by the General Financial Directorate on the websites of the Financial Administration of the Czech Republic.

CHANGES IN THE TAXATION OF NATURAL PERSONS The following are the main changes concerning the natural persons’ income taxation.

1.Higher Tax Credits for the Second and Subsequent Child Tax credits for the second, third, and any subsequent child have been increased under the provisions of new legislation eﬀective as of 1 May 2016. In the case of the second child, the tax

credit has been increased from CZK 15,804 to CZK 17,004 annually, i.e. CZK 1,717 monthly. The tax credit for the first child and the maximum amount of the tax credit remain unchanged.

2.Higher Limit of Income for Tax Credit Eligibility The lower limit of income for becoming eligible to obtain a tax credit has been raised in connection with the raising of the minimum wage (six times the annual minimum wage). The amount was increased from CZK 55,200 (6 x CZK 9,200) to CZK 59,400 (6 x CZK 9,900). The limit has been increased correspondingly for becoming eligible to obtain a monthly tax credit (half of minimum wage, i.e. CZK 4,950).

3.Higher limit for becoming eligible to obtain a tax credit for placing a child in a nursery school or similar facility In connection with the raising of the minimum wage, eligibility to obtain the tax credit for placing a child in a pre-school facility has been raised, so as to cover proven expenses incurred in placing a child in a pre-school facility to the maximum amount of CZK 9,900 annually for each child.

CHANGE OF STATUTORY MEASURE ON REAL ESTATE ACQUISITION TAX The statutory measure on the Real Estate Acquisition Tax Amendment planned to become eﬀective on 1 April 2016 came into force on 1 November 2016. Its content is the provision that the person acquiring real estate shall be liable to pay the Real Estate Acquisition Tax. At the same time, the tax guarantor institute shall be abolished. This will enable an unequivocal interpretation of the provision and ensure its simplification, while reducing the related administrative burden. Current legislation, which provides the possibility of choice as to which of the contracting parties shall be liable for tax in the case of real estate purchase and sale, causes considerable problems in practice. Due to the frequently ambiguous wording of contracts, the contracting parties have no certainty as to who is liable for tax, which unnecessarily protracts tax liability proceedings. In addition, in several alarming cases, where the money deposited in custody for the later coverage of the tax was misappropriated, this resulted in the obligation of the guarantor to pay the tax for a second time. This clearly substantiates the need to appoint the acquiring person (buyer) as

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the person liable for the Real Estate Acquisition Tax. Thus, the buyer will be paying the tax directly, as part of the purchase price, and not through a mediator, and the risk of fraudulent action on the part of the mediator will be avoided.

ELECTRONIC RECORDING OF SALES The new Act on the Electronic Recording of Sales (EET) provides for the compulsory recording of sales first in the accommodation, catering, and hospitality industries, valid as of 1 December 2016. After that, from 1 March 2017, this obligation will further apply to retail and wholesale trading, and 15 months after the launch of the system, also to the remaining activities, such as freelance professions, transport and agriculture. Eighteen months after the launch, this obligation will apply to selected crafts and production activities. This shows that the electronic recording of sales system is being put into practice step by step, for diﬀerent groups of businessmen selling for cash, not as a generally applied measure. The electronic recording of sales is based on the principle that each and every payment transaction shall be registered and the buyer shall

obtain from the seller a receipt bearing a unique code. The procedure is that, immediately upon the payment being made, the seller shall send a data message online to the Financial Administration server, where the data will be stored and a unique code will be generated. That code will immediately be sent back to the seller´s terminal device, which will print it out on the receipt. This will involve millions of operations a day, a relatively revolutionary act. The discharge of the law shall be supervised by the Financial Administration and the Customs Administration Authorities. PAVEL ZACHARIÁŠ NEXIA AP, a.s. E-mail: zacharias@nexiaprague.cz

ENTREPRENEURSHIP OF FOREIGN ENTITIES AND ITS TAXATION IN THE CZECH REPUBLIC Entities that are not tax residents of the Czech Republic may become liable to income tax according to the Income Tax Act No. 586/1992 Coll., as amended, if they receive income derived from the territory of the Czech Republic. Although the basic level of taxation of this income is relatively low (corporate income tax 19 %, natural persons 15 %), it may become a fundamental complication for their business activities. It is essential to realise the fact that, in some cases, income tax of tax non-residents is withheld in a form of withholding tax from gross revenues (at the rate of 5 % or 15 %) and not from proﬁt. profit taxation is a basic complication. Under these conditions, it is appropriate to consider founding a subsidiary or branch used for doing business in the Czech Republic.

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Although the Czech Republic as a member of OECD has signed many international bilateral double-tax treaties regarding the avoidance of double taxation – currently with 88 states – these agreements mostly modify the rate of the withholding taxes, but the principle of withholding tax by retention tax from the whole income instead of

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D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic IV. Fin a n c e

1. TYPES OF INCOME TAXED BY WITHHOLDING TAX Among revenues of tax non-residents derived from the territory of the Czech Republic, on which 15 % withholding tax is levied (unless reduced/eliminated by a double tax treaty or unless a permanent establishment is created), may be included e.g.:

Republic, incomes exist which are subject to the standard 19/15 % Czech corporate income tax applied on profit. For these types of income, a standard income tax return shall be submitted (once a year until 1 April of the following year, or until 1 July of the following year if the tax return is prepared by a tax advisor/attorney at law on the basis of Power of Attorney) and the tax base consists of profit adjusted for attributable and deductible items. These revenues are typically represented by revenues from real estate or permanent establishment.

Revenues from :

Permanent Establishment

 services (except realisation of build-

Permanent establishment in the Czech Republic arises as a result of a fixed place of business, of a building site or construction or installation or assembly project carried out by a tax non-resident which has existed for more than six months within any twelve-month period, from the performance of professional services and of other activities of an independent character in the Czech Republic, if such activities are carried out on the territory of the Czech Republic for more than six months within any twelve-month period. Also, a dependent agent with authority to negotiate/conclude contracts in the Czech Republic binding on the non-resident may trigger a permanent establishment of this non-resident. These basic definitions of permanent establishment can be altered by wording of the relevant treaty on avoidance of double taxation.

ing site or construction or installation or assembly project) rendered on the territory of the Czech Republic,  consulting, management, and brokerage and similar professional activities provided on the territory of the Czech Republic,  i ndependent personal services rendered on the Czech territory,  i ncome of artistes and athletes for their performance in the Czech Republic.

3. TAXATION OF PARTNERSHIP INCOME Payments from Czech tax residents (or from permanent establishments of non-residents) for:  i ndustrial and cultural royalties,

including payments of any kind received as a consideration for the use of any industrial, commercial, or scientific equipment, except of financial leases,  d irector’s fees,  contractual penalties from business obligations,  d ividends,  o ther income derived from a capital asset interest. Revenues of tax non-residents obtained from the territory of the Czech Republic on which 5 % withholding tax is imposed are rentals from financial lease. We have to note that the Czech Republic has a broad system of capital gains (realised on sale of shares) tax exemption valid for Czech non-transparent companies with shares in Czech/EU non-transparent subsidiaries and for EU non-transparent companies with shares in Czech subsidiaries. The conditions are, in particular, that at least a 10 % share is held for at least a 12-month period (even sale of shares in a third-country subsidiary may qualify under certain additional conditions).

2. TYPES OF NONRESIDENTS’ INCOMES TAXED BY TAX IMPOSED ON PROFITS Besides income liable to withholding tax types of income derived by non-residents from the territory of the Czech

Czech general commercial partnerships (v.o.s.) and limited partnerships (k.s.) are regarded as tax transparent entities for the purpose of corporate income tax (the latter only with respect to the general partner(s)). The profits of a general commercial partnership are not subject to taxation at the v.o.s. level, but at the level of its partners. In a limited partnership, profits are divided into a part for the general partners (subject to taxation at the level of partners) and a part for limited partners, which is subject to taxation at the limited partnership level. The latter part, minus corporate income tax, is divided between limited partners in the form of dividends; dividends are generally liable to a withholding tax of 15 %. The income of v.o.s. partners or k.s. general partners or members of a civil association (without legal capacity) who are not Czech tax residents from participation in v.o.s. or k.s. or association and from loans granted to v.o.s. and k.s. is regarded as income derived through a Czech permanent establishment, taxable at the standard income tax rate (19 % for legal entities).

Carrying tax losses forward As of 2004, tax losses suﬀered in a tax period can be carried forward in the next five tax periods. Carrying losses backward, however, is not possible. There are restrictions on the deductibility of tax losses (shown in previous tax periods) which may result from a fundamental change in the composition of owners of the company concerned, or from its merger. As a rule, beginning from tax periods commenced in 2011, the tax administrator is entitled to check tax returns and assess tax liability in retrospect within three years from the end of the deadline for filing the tax return for the controlled tax period. But this is the minimum term, which can be prolonged. Considering the complexity of this problematic volume of judicature and statements of the Ministry of Finance of the Czech Republic, we recommend always to use the professional assistance of a tax advisor in identifying the possibility of the formation of the tax duty from revenues derived from the territory of the Czech Republic. JAKUB KOVÁŘ NEXIA AP, a.s. E-mail: kovar@nexiaprague.cz

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EMPLOYEES  TAXATION, SOCIAL SECURITY, AND HEALTH INSURANCE The extent of the individual’s taxation in the Czech Republic depends on the individual’s tax residency status. Czech tax residents are subject to tax on their worldwide income. Czech tax non-residents are subject to tax on Czech-source income only. Tax non-residents are taxed in the same way as residents on their Czech-source income, except for certain types of income.

INCOME SUBJECT TO TAX Employment income includes salaries, wages, bonuses, other compensation of a similar nature and most benefits in kind2). Employment income also includes fees paid to directors and shareholders of private limited companies and to limited partners of limited partnerships for work performed for the company or partnership. On the other hand, travel reimbursement within the Czech labour law statutory limits and various other qualified benefits, such as luncheon vouchers, cultural and social fund benefits, temporary accommodation of up to CZK 3,500 per month (approx. EUR 127) and private life insurance or supplementary pension insurance premiums annually of up to CZK 30,000 (approx. EUR 1,100) may be exempt from taxation if further conditions are met. The tax base for employment income equals the sum of the gross income of the employee and the employer’s portion of mandatory Czech social security and health insurance contributions3). For employees who are not subject to the Czech social security and/or health insurance system, the tax base for employment income equals the sum of gross income of the employee and the employer’s portion of deemed mandatory Czech social security and/or health insurance contributions. No expenses may be deducted from employment income.

TAXDEDUCTIBLE ITEMS The tax base from employment as described above is to be consolidated with all other partial tax bases (i.e. partial tax base from self employment and business income, from rent, investment income or from other income). The overall tax base can be lowered by tax-deductible items such as gifts to charities and other organisations for qualified purposes, mortgage interests, and contributions towards the individual’s private life insurance or supplementary pension insurance.

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TAX RATE The employee’s tax liability is computed from the tax base reduced by the above tax base deductions, using the 15 % tax rate. In case the gross income of the employee exceeds annual maximum assessment base for social security contributions, solidarity surcharge tax of 7 % should be applied on employment income exceeding the limit4). For non-residents from countries outside the European economic area with no treaty on exchange of tax-related information with the Czech Republic in place, income from dividends, capital gains, interest, royalties and remuneration to members of statutory bodies is subject to 35 % withholding tax rate.

TAX ALLOWANCES Tax payer may lower the annual tax liability through deduction of tax reliefs. The below tax reliefs, except for the personal tax relief, are available for tax residents and in general, also for tax non-residents if their Czech-source income accounts for at least 90 % of their total annual income. The annual personal tax relief is CZK 24,840 (approx. EUR 902). In addition, tax relief of CZK 24,840 is granted for a spouse living in the same household with the taxpayer, unless the spouse’s annual income exceeds CZK 68,000 (approx. EUR 2,462). Additional personal tax relief of CZK 2,520 (approx. EUR 92) is granted for partially disabled persons and of CZK 5,040 (approx. EUR 183) for fully disabled persons. Tax relief of CZK 4,020 (approx. EUR146) is granted to tax payers who are full-time students up to the age of 26 and tax relief of CZK 13,404 (approx. EUR 487) is granted for the first, CZK 15,804 (approx. EUR 574) for the second and CZK 17,004 (approx. EUR 617) for the third and each other dependent child.

Photo: www.sxc.hu

Czech-source income is, for instance, income for work performed in the territory of the Czech Republic, rental income from real estates located in the Czech Republic, etc. In addition, Czech tax non-residents may not qualify for certain tax deductible items and tax reliefs. The term “tax resident” includes any person residing in the Czech Republic for at least 183 days within a calendar year (continuously or over several periods) or having a residence (permanent home)1) in the Czech Republic. If an individual is treated as a tax resident in the Czech Republic and, at the same time, in another country, the final tax residency status is to be determined in accordance with the applicable double tax treaty. The Czech Republic concluded double tax treaties with nearly all European countries and a majority of other developed countries. If there is no double tax treaty in place between the Czech Republic and the other country, double taxation may arise.

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic IV. Fin a n c e

In addition, parents may apply for tax relief for children visiting kindergarten of CZK 9,200 (approx. EUR 334) per annum. In case of the taxpayer’s tax liability having been fully covered by tax reliefs, the child tax relief can also be used as a child tax bonus. In this case, the tax bonus increases the employee’s net salary or is paid to the tax payer by the tax authorities. Taxpayers can also claim proportionate amounts of tax reliefs, with the exception of the taxpayer allowance, if the applicable conditions are met for a part of the year only.

Czech companies), the tax payer is not obliged to file annual tax return. Consequently, the tax payer may ask the employer to perform annual tax reconciliation to apply tax base deductions or tax reliefs that cannot be applied within the monthly payroll (simplified annual tax filing). In other cases, the tax payer is obliged to file annual tax return. Also, if the tax payer’s income exceeds the annual threshold for solidarity tax, he is obliged to file annual tax return. The tax return for the respective tax period (calendar year for personal income tax) must be filed with the tax authorities by 1 April of the following year. The filing deadline may be extended until 1 July if the tax payer grants a power of attorney to a certified Czech tax adviser, or on the basis of a special application. Another extension of the tax return filing deadline until 1 November of the following year is available if the tax payer has income from abroad.

SOCIAL SECURITY AND HEALTHCARE INSURANCE PREMIUMS TAX COLLECTION The employer is obliged to operate monthly payroll to calculate monthly payroll tax withholding and remit the payroll tax withholding to the tax authorities. If the tax payer has only one employer at each time during the year and does not receive other income above CZK 6,000 (approx. EUR 218) (apart from income that is subject to the final withholding tax, e.g. interests and dividends from the

Employment income is subject to social security and healthcare insurance premiums. The assessment base for premium computation is derived from the employment income, where the assessment base is the sum of the income subject to personal income tax. The premium consists of a part to be paid by the employer and of a part to be paid by the employee. The payer of the premium is the employer, who withholds the premium from the employee’s monthly income. The employer pays both these parts to the social security and healthcare insurance authorities. The employer pays 25 % of the assessment base as a social security premium and 9 % of the assessment base as a healthcare insurance premium; 6.5 % of their assessment base for

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social security and 4.5 % for healthcare insurance are withheld from employees, members of statutory bodies and executives. A maximum annual assessment base5) is set for social security premiums. There is no maximum premium set for healthcare insurance contributions. For employees changing employment in the course of the calendar year, or working for several employers simultaneously, the maximum assessment base for social security premiums is calculated for each employer separately. If the amount of the employee´s social security premium exceeds the annual maximum, the employee may claim the return of the surplus after the end of the year. No premium overpayment arises to the employer. Employees coming from another EU country, or a country with which the Czech Republic has a bilateral treaty in the area of social security and/or healthcare insurance, may apply for an exemption from premium payment in the Czech Republic. On the basis of such an exemption, employees are not required to contribute to the social security and/or healthcare insurance systems in the Czech Republic, but remain covered by their home social security and healthcare insurance systems. As a member state of the European Union, the Czech Republic is bound by the EU social security regulations (currently applicable to all member states of the European economic area and Switzerland) and other EU law. In addition, to prevent double social security contributions and to assure benefit coverage, the Czech Republic has entered into social security agreements with several non-EU jurisdictions, including Australia, Canada, India, Japan, Korea (South), the Russian Federation or the United States.

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MARTINA KNEIFLOVÁ, EY ONDŘEJ POLÍVKA, EY Tax Services - Human Capital, Ernst & Young, s.r.o. E-mail: Ondrej.Polivka@cz.ey.com

1) Residence (permanent home) is a place where the payer has a permanent residence, i.e. an apartment which is available to him/her at all times, whether owned by him/ her, or rented, and where the payer intends to be staying (depending on his/her personal and family situation). The apartment may be rented to another person, but only in a form enabling the payer its use according to his/her needs. 2) Or in connection with a previous, current or future performance of dependent activity, regardless of whether the activity is carried out for the payer of the income or not. 3) In general, 34 % of income up to the amount of the social security premium from the maximum assessment base and 9 % above this maximum assessment base. 4) In force as of 1 January 2013 going forward. Only gross income above CZK 1,277,328 (approx. EUR 46,364) in 2015 is subject to the solidarity surcharge tax of 7 %. 5) For healthcare insurance premium, as of 1 January 2013, the annual ceiling is no longer applicable. For social security premiums, the annual ceiling amounts to 48-fold average wages; in 2015 it is CZK 1,277,328 (approx. EUR 46,364).

REGIONS

PRAGUE REGION

Prague is an important cultural and artistic hub, its centre with an area of 1,106 hectares is included in the UNESCO Cultural Heritage list, which makes the city one of the most sought-after tourist destinations in the EU.

ECONOMIC POTENTIAL The number of economic entities which came into being in the territory of the capital city of Prague between 2009 and 2014 is more than 150,000. These are entities with a varied organisational structure, both as regards their specialisation and legal forms. In addition, in 2014, 50.5 % of all the new trading companies in the Czech Republic had their registered places of business in Prague. Their prevailing legal form was the limited liability company (95.5 % of the new trading companies were of this legal form in 2014). Prague is traditionally the most popular destination for all visitors to the Czech Republic. Tourism is thus an important economic driving force of the capital city. During the whole of 2015, nearly 6.6 million guests visited the capital, 7.8 % (105,000 persons) more than in 2014. Passenger and air freight transport is operated in Prague mainly at the Václav Havel Airport. The volume of passengers and freight processed by this airport in the first half of 2016 confirm the continuing interest shown in Prague as a target destination. In the first half of 2016, the airport handled 5,588,971 passengers, 355,000 more than in the same period of 2015. Passengers coming to Prague from the UK, the Netherlands, Spain, France, and Israel are most responsible for this increase. Top destinations of passengers leaving Prague airport are the London airports of Gatwick, Stansted, and Heathrow, followed by Amsterdam, Tel Aviv, Helsinki, and Dubai. The increased volume of transport in the first half of the year is partly due to the opening of new flights, which were not in operation in the first half of last year (e.g. Peking, Liverpool, Eindhoven, Marseille, Toulouse, Luxembourg) and partly due to the increase in the capacity of existing flights, especially those to traditional destinations, such as London and Amsterdam.

INVESTMENT The British investment magazine, fDi Intelligence, has included Prague among the 25 best European regions of the future. According to a survey conducted by the European Cities and Regions of the Future, Prague is also the third best European capital as regards human resources and lifestyle, ranked after London and Paris. “For foreign investors, Prague is an attractive investment environment, especially due to the unique combination of the charm of its historical sites and the quality of life on the one hand, and the high concentration of talent and industrial potential on the other,” explains Karel Kučera, Managing Director of CzechInvest Agency, adding that, in addition, “strong international players such as Amazon, Google, Microsoft, and Honeywell have chosen Prague as a site for locating their headquarters. These companies employ both Czechs, whom they value for their professional skills and ardour, and foreigners attracted to Prague by its high standard of living, culture, healthcare and other benefits.” The large investments recently made include those of GE Aviation, the aviation division of General Electric, which announced its plan to build its new headquarters, the GE Turboprop Centre of Excellence for

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the development, testing and manufacture of turboprop engines, in the Czech Republic. It confirmed its intention to build the Centre in a joint memorandum with the Czech Government. Beginning in 2020, the Centre will manufacture GE’s advanced turboprop engine (ATP), powering Textron Aviation’s new single-engine turboprop aircraft launched in November 2015. Prior to opening the Centre, GE Aviation in the Czech Republic will design and test the engine. Its plan is to create more than 500 new jobs. “GE’s considerable investment is another proof that the Czech Republic is an attractive location for foreign investors. If realised, more than 500 new jobs will be created there in the next few years, a 125 % increase in the number of GE employees in the Czech Republic. Another important thing to note is that the Memorandum signed today will help increase the number of qualified people in the aviation sector and increase related mutual activities between the Czech Republic and GE Aviation,” said Prime Minister Bohuslav Sobotka. By this move, GE Aviation is combining the valuable expertise in its existing turboprop facility in the Czech Republic – which in 2012 began producing its H Series turboprop engines in the 750 to 850 shaft horsepower (shp) range – with ground-breaking technologies in its commercial jet engines, to pursue new turboprop engines in the 1,000 to 2,000 shp range, including the ATP engine for Textron. This new turboprop features an industry-best 16.1 overall pressure ratio, enabling the engine to achieve up to 20 % lower fuel burn and 10 % higher cruise power compared to competitor oﬀerings in Statistical Data Population Gross wage Unemployment

31 June 2016

1,272,774

1.–2. Q. 2016

CZK 34,827 (approx. EUR 1, 290)

31 August 2016

3.57 %

Source: Czech Statistical Oﬃce

Photo: CzechTourism archives, Martin Mařák

Prague is one of the most attractive and successful regions in Central Europe. It represents a relatively dynamically developing and successful region, repeatedly ranked by Eurostat among the ten wealthiest regions in the European Union (measured by gross domestic product per inhabitant). In terms of the number of inhabitants, it is the 15th largest city in the EU, and, regarding area, Prague ranks among medium-sized cities in the EU, with an area of 496 sq. km.

Czech bank for Czech Export

Czech Export Bank I I I I

Fully state-owned One of the pillars of the Czech pro-export policy Provides export financing to the riskier territories Bank clients are Czech exporters regardless of their turnover

Rating Standard and Poor’s AA– Moody’s Investors Services A1

Products Česká exportní banka, a.s. Vodičkova 34, 111 21 Praha 1 Czech Republic tel.: +420 222 843 111 e-mail: ceb@ceb.cz fax: +420 224 226 162 www.ceb.cz

I I I I I I

Pre-export Credits Supplier’s Credits Guarantees Purchase of Export Receivables Financing investments abroad Buyer’s Credits

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic V. Re gio n s

Prague – St. Vitus Cathedral

the same size class, with 4,000-6,000 hours between overhauls and class-leading performance retention. “The Czech Republic is an important technological and manufacturing hub for GE, with thousands of highly skilled employees supporting GE in markets around the world. In partnership with the government of the Czech Republic, this latest investment makes complete sense to GE. It will create hundreds of local jobs, will strengthen our regional capabilities and add to our global innovation network,” said John Rice, Vice-Chairman of GE. Since its launch in 2008, GE Aviation in Prague has achieved so much, most notably by leveraging the robust design of the alter M601 engine and incorporating GE’s 3-D aerodynamic design techniques and advanced materials to create a more powerful, fuel-eﬃcient and durable turboprop engine in the H Series,” said Brad Mottier, Vice-President of GE Aviation’s Business and General Aviation and integrated systems in GE Aviation. “In the form of the new Czech Centre of Excellence, ATP engines will join the current H Series engines, for the first time developed, tested, and manufactured outside the United States. The Centre will be fitted out with the best of our well-tried and tested technologies, suitable for the latest series of our turboprop engines powering new generation aircraft, such as Texon’s single-engine turboprop aircraft.” In 2008, GE Aviation acquired selected assets of

USEFUL CONTACTS: Prague City Council – www.magistrat.praha.eu Portal of the Capital City of Prague – www.praha.eu Tourist portal of the Capital City of Prague – www.praguewelcome.cz Economic Chamber of the Capital City of Prague – www.hkp.cz Walter Engines, a.s., a Czech company with a tradition of more than 90 years in the area of aviation, and founded the GE Aviation Czech s.r.o. company. GE Aviation Czech specialises in designing, manufacturing, and servicing turboprop engines in its integrated research and development facility in the Letňany District of Prague. Another interesting investment is the project of EPAM Systems, a leading world supplier of solutions for the development of products and software engineering, which in December 2015 opened its first office in the Czech Republic. The office, located in City Tower in Prague’s Pankrác District, one of the highest buildings in the country, offers wide-ranging possibilities for contact with European customers. In the first phase, it will employ 200 people. According to EPAM’s Senior Vice-President, Balazs Fejes, the Czech Republic is very important to the company not only as regards long-term collaboration and the building of supplier-customer relations, but also because the Central European region offers an abundance of refined talents. In October 2015, the American company of Pfizer celebrated the 1st anniversary of the establishment of its Global Financial Solution Centre (GFS) in Prague. It has invested more than CZK 180 million in the future of the Centre, where it currently employs nearly 50 financial and accounting experts, providing services in 5 countries: Russia, Hungary, Poland, Greece, and the Czech Republic. Pfizer only has five such centres worldwide. Moreover, the Prague Centre is the first in Central and Eastern Europe. Its plans, according to KyRic Tucker, Head of the GFS Centre in Prague, is to expand the Centre’s support to four more countries by 2018 and possibly to expand to more European countries. ESA BIC Prague is located in the Prague Startup Centre in Palác Adria. The ESA Business Incubation Centre (BIC) Prague opened in 2016 and is managed by CzechInvest (Business and Investment Development Agency CzechInvest), with support from the Ministry of Industry and

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Prague – Charles Bridge

INOVACENTRUM ČVUT www.inovacentrum.cvut.cz Innovacentrum is a part of the Czech Technical University (ČVUT) in Prague, the aim of which is to support technology transfer, promote cooperation between ČVUT and industry, and mediate the transfer of new technologies to practice. Inovacentrum ČVUT, with its Business Innovation Center (BIC) statute, is a member of the European Business Network (EBN). More at www.inovacentrum.cvut.cz.

VZLÚ PRAGUE SCIENTIFIC AND TECHNICAL PARK The VZLÚ Scientific and Technical Park in Prague focuses on the development of the aviation, space, defence and safety industries and the transfer of research and development results to practice; its services could be found useful by companies concerned with transport vehicles, power engineering, and construction. More at www.vzlu.cz/cz/spolecnost/vedeckotechnicky-park-vzlu-praha/vedeckotechnicky-park-vzlu-praha

INNOVATION BIOMEDICAL CENTRE ÚEM AV CR This is a business incubator for innovation firms concerned with biomedical sciences, and a centre for the support of the competitiveness of start-oﬀ firms concerned with biomedicine. More at bioinova.avcr. cz/o-nas/ibc.html. A new technological accelerator, to be named Prague Startup Centre, opened in Prague with the support of CzechInvest Agency and Czech ICT Alliance. The main programme of the Prague Startup Centre, which is being prepared in cooperation with the European Space Agency (ESA), will focus on space technologies, drones, etc. Further space activities are taking place in the Czech Republic. One of the institutions already in place is the headquarters for the Galileo navigation system. New technological firms will have the use of various equipment and facilities, from oﬃces to legal, administrative, and technical assistance. The Centre will assist firms in expanding to other markets.

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EDUCATION Prague is an important centre of science, research and education, a city in which one-third of the country’s public universities and one-half of private institutions of higher learning are concentrated. There are five large prestigious public universities in the territory of Prague – Charles University, the Czech Technical University, the Institute of Chemical Technology, the University of Economics, the Czech University of Life Sciences – and 12 private universities. The Academy of Sciences and its institutes also have their seats and main activities in Prague, which makes the city the centre of education with an importance reaching beyond the borders of the Czech Republic. There are more than 33 higher learning institutions in Prague, where more than 130,000 students have received education in all types of studies. This is 37.4 % of all university students in the Czech Republic. The number of foreign nationals, too, is rising. In the 2014/15 academic year, they accounted for 15.6 % of all students enrolled in Prague’s universities. Currently, a top robotics scientific centre opened in Prague. It is the most significant event occurring in the technological endeavours of Czech universities. The Czech Technical University opened its new Institute of Informatics, Robotics and Cybernetics (CIIRC), which associates top-level knowledge across IT sectors and will aid in the transfer of new scientific ideas and know-how to industry. “CIICR’s activities rest primarily in the area called Industry 4.0, a technological hit originating in Germany. For example, immediately after its establishment, the Centre representatives signed a Memorandum to participate in the research and technological projects of Hewlett Packard.”

Photo: CzechTourism archives, Libor Sváček

Trade, the Ministry of Transport and the City of Prague. The latest news is that Prague is becoming involved in the Space business. In May 2016, the European Space Agency opened a startup centre in Prague as part of the ESA Business Incubation Centre (BIC) project. This is the 13th business incubator in Europe, whereby ESA is attempting to link technologies used in outer space with business here on Earth. The aim is to create an incubation centre to support new enterprises focused on the use of space technologies and systems for terrestrial applications. There are several organisations in Prague concerned with giving support to business, in addition to three scientific and technical parks, including another eight scientific and technical parks located in the close vicinity of Prague.

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic V. Re gio n s

CENTRAL BOHEMIA REGION With its geographical position in the central part of the Czech Republic, the Central Bohemia Region forms a ring around the territory of the capital city of Prague, which is its only internal border. A speciﬁc feature of the Region within the regional system is the fact that, within its centre, it encloses the capital, which is a separate region. The Central Bohemia Region does not contain its regional city and the Region’s administrative centre does not lie within the territory of the Region. Together with the capital of Prague, the Region forms a natural agglomeration linked together economically, historically and culturally. The Region is divided into 12 districts with 10 district towns. The largest in area is the District of Příbram (15 % of the regional area), and the smallest is Prague-West (5 % of the regional area). There is a large number of historically valuable monuments and sights and several protected landscape areas within the territory of the Central Bohemia Region. The greatest concentration of historical monuments can be found at Kutná Hora (St. Barbara Cathedral, the Italian Court, Hrádek housing the Museum of Mining, the Ossuary, entered in the UNESCO List of World Cultural Heritage). Kolín is another town, besides Kutná Hora, figuring in the Czech list of urban historical reservations in Central Bohemia. The most famous castles in the Region are Karlštejn and Točník (Beroun District, Křivoklát (Rakovník District), Český Šternberk (Benešov District), and Kokořín (Mělník District).

ECONOMIC POTENTIAL Developed agricultural and industrial production is characteristic of the Region. Agricultural production benefits from the excellent natural conditions of the Region’s north-eastern part. The Region is especially successful in plant production, including the growing of wheat, barley, sugar beet, and, in suburban areas, the cultivation of fruit, vegetables, and flowers. Machine building, chemical and food-processing are pivotal industries. Besides traditional fields, new and demanding fields and services are being successfully developed. The most important industries in the Region are engineering, the chemical Statistical Data Population

31 June 2016

Gross wage

CZK 27,146 1.–2. Q. 2016 (approx. EUR 1,005)

Unemployment

31 October 2016

Source: Czech Statistical Oﬃce

1,323,064

4.20 %

industry, and food processing. The Škoda Auto factory has become an enterprise of nationwide significance. Other industries in the Region are glass and ceramics production and printing. The previously traditional sectors of coal mining, steel production, and the leather industry are on the decline. The intensity of economic activities is heavily influenced by the Region’s location and easy access to main transport corridors. In the Central Bohemia Region, this is especially true of places in the vicinity of the capital with connections to main roads, especially the highways. Another mode of transport is by water: some three-quarters of the Labe-Vltava waterway passes through the Region’s territory and is used for both domestic and international transport.

INVESTMENT The Region oﬀers a wide range of investment opportunities. Industrial parks make it possible for investors to realise their new projects in either vacant or partly occupied parks. There are several industrial parks in the Central Bohemia Region. A quarter of these occupy large areas of over 100 hectares, whereas the remaining parks consist of smaller surface areas. The parks in this Region are more densely occupied than in the rest of the country, as a result of the economic influence of Prague, the great density of transport networks and a well-developed technical infrastructure, plus the population density. In 2015, the Region attracted investments worth CZK 7,815.08 m in 13 investment projects, mediated by the CzechInvest Agency, which helped create 1,359 jobs. A strong position in the Central Bohemia Region is held by the automotive sector, owing to the presence of two major car manufacturers, Škoda Auto and TPCA. Investors in Central Bohemia have launched large projects. An important investor in the region is LEGO Production s.r.o., which employs 2,000 workers in its plant on the outskirts of Kladno. There, the company manufactures mainly decorations and assembles LEGO elements. Its other programmes include large-volume packing and the research and development of decoration and packaging technologies. Its distribution centre is located in Jirny. LEGO production, s.r.o. has been in the Czech Republic since 2000. Its factory is based in the Kladno-South Industrial Park. In April 2015, it opened its third manufacturing building there. In September 2015, the warehouse of the American Amazon online shopping site started full operations in Dobrovíz near Prague. The hall in Dobrovíz is the largest detached industrial building to be built in the Czech Republic after 1989. Its special feature is that it is fully air-conditioned and very well thermally insulated. It covers an area of 95,000 sq. metres. The industrial zone at Mladá Boleslav covers a surface area of 75,000 square metres. The international company, Faurecia, one of the world’s largest suppliers for the automotive industry, is another large company to have its manufacturing plant located in the Mladá Boleslav Industrial Park, besides the Škoda Auto car factory. The Eaton Company, which concerns itself with the control, use, and administration of hazardous energy, in 2015 enlarged its European

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USEFUL CONTACTS: Central Bohemia Regional Office – www.kr-stredocesky.cz Central Bohemia Region – European Office – www.stredocech-eu.cz/ Central Bohemian Regional Chamber of Commerce – www.khkstrednicechy.cz Innovation Centre – the new building is part of the scientific and technical park in Roztoky near Prague, a global research centre doing innovation work for Europe, the Middle East, and Africa. In the Innovation Centre, on a surface area of 650 sq. m, is where top research is carried out focusing on the development of new generation energy systems that will make possible the more efficient, safer and sustainable management and use of electric, hydraulic, and mechanical energy. The Czech workplace is one of Eaton’s five main innovation centres. Its Czech branch started operations in 1993, still under the name of Felton & Guileaume. Today it employs approximately 1,500 people in Prague, Suchdol nad Lužnicí, Pohořelice, and Chomutov. It serves local as well as global clients, including the VW Group, Volvo, E.ON, HP, IBM, and Czech Railways. Many investment parks benefit from favourable locations near international highways and main roads. These parks include, for example, the Průhonice and Čestlice-Nupaky Industrial Parks (both near D1, which connects Prague and Brno), Rudná-Nučice (near D5, which runs from Prague through Plzeň to Germany), and Hostivice-Jeneč and Tuchlovice. Many parks have been established in the vicinity of larger towns, such as Kladno, Slaný, Kutná Hora, Příbram, Nymburk, Rakovník. An important part of the efforts to raise the competitiveness of the Central Bohemia Region is research, development, innovation and technological development. The creation of conditions for the development of the innovative potential and a knowledge-oriented economy is one of the top priorities of the Central Bohemia Region. The following are some Centres and Parks active in this area:  C entre for Applied Research Dobříš – www.cavd.cz  T echnology and Innovation Centre – VÚK Panenské Břežany www.itcvuk.cz/  B usiness Incubator Nymburk – www.inkubator-nymburk.eu/  S cience and Technology Park in Řež – www.ujv.cz/cz/park.html/  S cientific and Technology Park Mstěnice – www.eurosignal.eu/  T echnology Park and Incubator, Ltd, Březno  S cientific and Technical Park Milovice – www.vtpmilovice.eu/ Technopark Kralupy of the Chemical Technology University in Prague opened in June 2015. Its laboratories will employ research teams composed of scientific workers and talented students of the University and will offer enterprises qualified services in the area of development and innovation, materials testing and analyses. A large scientific project located in the Region is the Biotechnological and Biomedical Centre of the Academy of Sciences and Charles University at Vestec (BIOCEV). Its full operations started in June 2016. The achievements of its scientific teams include the development of a unique vaccine for the treatment of infectious diseases, the historically first documentation of tooth development, which may aid in the treatment of cancer, and the revolutionary discovery of an organism

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EDUCATION The Region is home to the Faculty of Biomedical Engineering of the Czech Technical University (CTU) in Kladno. There are also private universities – the ŠKODA AUTO, a.s. University in Mladá Boleslav, and Academia Rerum Civilium – College of Political and Social Sciences, s.r.o. – in Kolín.

Photo: CzechTourism archives, Michal Vitásek, Biocev archives

Biocev

without mitochondria, referred to as the “powerhouses of the cells”. By 2020, the Centre will be employing some 400 scientific workers plus 200 students attending Master’s and Doctoral degree courses. Currently the Centre has 56 research groups working on 5 synergic programmes concerned with the detailed analysis of organisms at molecular level. Their findings will be used in applied research and the development of new methods of treatment for serious health problems. The final results of BIOCEV’s research work include, for example, accurately targeted drugs and protein and tissue engineering therapies. An important project to be located in the Central Bohemia Region (at Dolní Břežany) is the ELI (Extreme Light Infrastructure) superlaser project to be put into operation later this year. This is the largest scientific and research project in this country’s history, where scientists from all over the world will examine the simulation of processes taking place within the stars, study the history of the Universe, work on the development of new techniques for medical visualisation, develop new methods and study possibilities of cheaper and more considerate treatment of cancer. The Centre will be fully operational in 2018, when the world’s most eﬃcient laser will be installed there. The laser’s name will be Krakatit, reminiscent of the name of the powerful explosive in the Czech writer Karel Čapek’s novel of the same name, which is derived from the name of the Indonesian volcano, Krakatau. In a fraction of a second the laser will produce a volume of energy about 2,000 times higher than all the world’s existing power stations together could generate at one time. It will be able to “fire” its powerful laser beam only once per minute, but the volume of energy will be so huge that (if it had the capacity to “fire” continuously), it would bring all the water in the Lipno Dam (306 million litres) to the boil in 10 seconds and, in another 60 seconds, would cause all the water to evaporate.

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic V. Re gio n s

PLZEŇ REGION The Plzeň Region is the Czech Republic’s third largest region in terms of area. Since its origin Plzeň (Pilsen), a city founded by order of King Wenceslas II of Bohemia at the conﬂuence of the Radbuza, Mže, Úhlava, and Úslava Rivers in 1295, has been the natural centre of the Region. The industrial and technological development of Plzeň started in the middle of the 19th century, and step by step it became one of the most important cities in the country. At present, Plzeň is the fourth largest Czech city. It has 167,000 inhabitants, more than 30 % of the population of the Plzeň Region. Besides Plzeň, the function of district centres is performed by the towns of Klatovy, Domažlice, Tachov, and Rokycany. Given the low population density, also smaller towns, such as Sušice, Stříbro, Plasy, Kralovice, Horšovský Týn, Přeštice, and Nepomuk play an important role.

metallurgical works and forged products, heavy machine tools, equipment for rolling mills, equipment for sugar cane processing, hydraulic and vulcanising presses, gear boxes, rail transport vehicles, trolleybuses, complete electric drives, turbines for combined gas and steam cycles and extraction steam turbines. Škoda Plzeň also conducts its own research and business activities. Doosan Škoda Power is a member of the Korean group of Doosan, an important global manufacturer of equipment for

ECONOMIC POTENTIAL The most important economic sector of the Plzeň Region is the manufacturing industry. Traditional industrial branches include engineering focused on the power industry and transport systems. Other prominent sectors are the production of components for automobiles, mechanical and electrical engineering, electronics, plastics, and food industries (mainly beer brewing and wine and spirits production). The Region also supports investment in strategic services (high-tech services, research and development). Important food manufacturing enterprises in the Plzeň Region include: Plzeňský prazdroj a.s. (Pilsner Urquell), founded in 1843, the largest Czech beer exporter, which exports its products to nearly 50 countries worldwide and is a part of the SABMiller plc. international group, the world’s second largest brewing company; Stock Plzeň a.s., traditional spirits manufacturer, currently the largest manufacturer of spirits in the Czech Republic; Bohemia Sekt Českomoravská vinařská a.s. in Starý Plzenec, an important wine producer. The important industrial sectors of the Region include mechanical engineering, which is mainly associated with the name of Škoda. Its main product range is equipment for classical and nuclear power plants and petrochemical industries, Economic Data Population

31 June 2016

577,538

Gross wage

1.–2. Q. 2016

CZK 25,629 (approx.EUR 950)

31 October 2016

3.38 %

Unemployment

Source: Czech Statistical Oﬃce

Mariánská Týnice Chateau

USEFUL CONTACTS Plzeň Region Portal – Regional Office – www.kr-plzensky.cz Municipality of the City of Plzeň – www.plzen.eu BIC Plzeň – Business and Innovation Centre – www.bic.cz Chamber of Commerce of the Plzeň Region – www.hkplzen.cz Regional Development Agency of the Plzeň Region – www.rra-pk.cz CzechInvest, Regional Office for the Plzeň Region – www.czechinvest.org thermal power stations, especially steam turbines, whose manufacture in Plzeň has a tradition of more than 110 years. The firm is an important and responsible employer in the Region. Other important industrial enterprises with a major effect on the Region’s economy are: DIOSS Nýřany a.s., specialising in metal sheet and pipe products, Okula Nýrsko a.s., focused mainly on plastic materials processing, and LASSELSBERGER, s.r.o, which represents the ceramic industry, and is formed by the companies of Chlumčanské keramické závody, Keramika Horní Bříza, Rako Rakovník, Cemix Čebín and Calofrig Borovany. Regional development also benefits from cooperation with neighbouring Bavaria within the Euroregions. Taking advantage of the support for European Cross-border Cooperation Programmes in the Plzeň Region are the Districts of Domažlice and Klatovy in the Bohemian Forest Euroregion, and the District of Tachov in the Egrensis Euroregion.

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Congress Tourism is doing well in the Region. In 2015,546 conferences and congresses attended by 83,000 participants (6 % of the Czech Republic’s total) took place in the Plzeň Region. The Region’s centre of Congress Tourism is the city of Plzeň and environs, mainly because of its geographical position, easy transport availability and in particular the number of premises suitable for holding large events (hotels, university premises, etc.). Thanks to its rich cultural and social life, Plzeň can oﬀer congress and conference participants a wide range of cultural, social, and sporting programmes to accompany the main events. In the 1st quarter of 2016, the number of guests staying in the accommodation facilities of the Plzeň Region overnight, both domestic and foreign, was 9.8 % up on the previous year. As regards foreign clients, the largest number (22,400) of these came, traditionally, from Germany, followed by visitors from Slovakia (2,900) and South Korea (2,600). A significant increase in the number of foreign guests coming to the Region was witnessed in visitors from Taiwan (+111.7 %) and South Korea (+73.6 %).

INVESTMENT Over the past 20 years, foreign investment in the Plzeň Region mediated by CzechInvest, Czech Business and Investment Promotion Agency, amounted to nearly CZK 42.6 billion. The three biggest investments came from Japan, all in the area of electronics and electrical equipment. The biggest investment project of all, worth more than CZK four billion, was placed in the Region by Panasonic, renowned manufacturer of electronics. The second biggest project, which cost nearly CZK three billion, was realised by Daikin Industries, the Japanese manufacturer of air conditioning systems, and the third biggest foreign investment project in the Region was that by Matsushita Electric Works, another Japanese company, worth CZK 2.7 billion and situated in Planá, Tachov District. This company has common roots with Panasonic (originally Matsushita Electric Industrial Co.). After the Second World War, it separated from Panasonic to become an independent company, which in 2011 became Panasonic’s aﬃliation. In the past 20 years, CzechInvest has mediated 127 investment projects located in diﬀerent parts of the Czech Republic with Japanese firms, worth CZK 123 billion. In 2016, twenty years had passed since the cornerstone was laid in Plzeň for Panasonic AVC Networks Czech s.r.o., a manufacturer of colour television sets. The factory in Plzeň is Panasonic’s biggest manufacturing plant outside Japan. It is one of the biggest exporters in the Czech Republic and one of the largest employers in the Region. It started production in spring 1997 and has turned out 34 million TV sets since then. An important industrial park in the Region is Panattoni Park situated on the D5 motorway, the most frequented motorway in the Central and East European area, linking Bavaria with Prague. The German border lies a mere 45 kilometres away and can be reached in 20 minutes by car. Important firms having their facilities in the locality include the companies of Lear, Assa Abloy, Leoni, Ideal Automotive, and Gea. At the end of 2014, the KION Group started the construction of a new plant in the Park, where it will manufacture high lift trucks. Other attractive industrial zones in the Region include Borská Pole, situated in the south-western quarter of Plzeň near the campus of the University of West Bohemia. This is the industrial zone where the first foreign investor - Panasonic - settled in 1996. The Park, with an area of 105 hectares, is attractive for investment in the automotive industry, manufacture of precision engineering products, air-conditioning equipment, production of moulds and plastic prototypes, and research and development. CTPark Bor near the Czech-German border on the D5 motorway covers an area of 280,000 sq. metres. Most of the firms located in its seven giant halls are concerned with logistics. One of the facilities housed there is a warehousing terminal, the largest in the Czech Republic,

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covering an area of more than 71,000 sq. metres, owned by the leading world tyre manufacturer, Bridgestone. Other important firms are Maurice Ward from the UK, Germany’s DB Schenker, the American firm, Tech Data, which assembles and distributes information technologies across Europe, and another American firm, Ceva Logistics, which in Bor runs the Central European distribution warehouse for consumer electronics of the Dutch Philips company.

EDUCATION A great advantage of the Plzeň Region is the ample supply of skilled labour. The Region oﬀers a wide range of secondary institutions in the branches of electrical, mechanical and civil engineering, as well as transport. Another source of the qualified workforce is the University of West Bohemia in Plzeň (UWB – ZČU in Czech). The University seeks collaboration with the business sector and targets the specialisations of its branches of study to meet the demands of the labour market. UWB has night faculties (for example Mechanical and Electrical Engineering, Economics, Applied Sciences). In 2016, the University opened a new institution, the Regional Innovation Centre for Electrical Engineering (RICE). Its laboratories are equipped with state-of-the-art devices and unique technologies. For example, in its largest laboratory, the High Voltage Test Hall, it is possible to test transport vehicles and equipment of up to 31 kV and 4 MW. The ABB UNIGEAR Digital distribution switchgear and the General Electric MV6000 high voltage converter had their world premieres in it. In the course of the project, an exceptional research team was built. At the end of 2015, RICE employed nearly 200 people. During its existence, the Centre has participated in research and industrial projects involving a budget of more than two billion Czech crowns. RICE has achieved excellent results. In collaboration with industrial partners, it has developed sophisticated products, such as the REMCS modular control system and pixel detectors. RICE focuses its main scientific potential on “intelligent industrial systems”. It covers the complete research cycle, from basic research to applied research and the construction and testing of technological demonstrators and prototypes. The developed and fully tested technologies are then transferred to the Centre’s industrial partners.

Building your tomorrow today

Doosan Škoda Power • Member of the Doosan Group • Global leader in steam cycle design and high performance steam turbines • More than 110 years of experience as a steam turbine OEM • Wide range of steam turbines from 10 MW to 1200 MW • For all types of thermal power plant and other applications, including concentrated solar power (CSP) • High efficiency combined with extreme reliability and operational flexibility • Non OEM turbine retrofit and modernization • Cooperation with premier global EPC contractors Doosan Škoda Power is part of a powerful combination of companies united under the Doosan Group to deliver complementary technologies, skills and value to customers the world over.

Challenging global market is an excellent opportunity for us to showcase our rich experience.

Selected projects • • • • • • • • • • •

Empalme 280 MW, CCPP, Mexico – under execution Zarqa 182 MW, CCPP, Jordan – under execution Grati 198 MW, CCPP, Indonesia – under execution Red Dragon 354 MW, FPP, Chile – under execution Salalah 2x90 MW, CCPP, Oman – under execution Atacama I, 110 MW, solar, Chile – under execution Värö 64 MW, industry – biomass, Sweden Gummidipoondi 181 MW, FPP, India Dorad 2x140 MW, CCPP, Israel Salmisaari 175 MW, HPP – Non OEM modernization, Finland Stendal 46 MW, industry – biomass, Germany

Learn more at

www.doosanskoda.com

LARM a.s. is an engineering company with roots going back to 1906. The company is holder of an ISO 9001:2008 certiﬁcate. • manufacturer of optoelectronic and magnetic encoders • CNC machining • mechanical and electrical assembly

LARM a.s. Triumf 413, 384 11 Netolice Czech Republic Phone: +420 388 386 232 M: +420 773 070 313 E-mail: valhoda@larm.cz www.larm.cz

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic V. Re gio n s

SOUTH BOHEMIA The Region of South Bohemia used to be seen as an agricultural area with developed fish farming and forestry. Industrial development oriented towards manufacturing activities only started to appear in the Region during the 20th century. With its 10,057 sq. km, the Region takes up 12.8 % of the entire Czech Republic. More than 7,000 ponds, whose overall surface area today comprises over 30,000 hectares, were built within the Region’s territory in the past. A significant part of the Region’s border is formed by the state border with Austria and Germany (total length of 323 km). The Region’s border character provides opportunities for eﬃcient cross-border cooperation in the area of manufacture, as well as in the area of services, together with the development of the tourist trade, which utilises the overall attractiveness, unspoiled Nature and many cultural monuments of the Region. The Region is an important tourist and recreational area, attracting visitors who come to see its many beauty spots, unspoiled Nature dotted with lakes (Rožmberk, Svět) and the unique atmosphere of its historical towns (České Budějovice, Tábor, Jindřichův Hradec, Český Krumlov, Prachatice, Písek). Exceptional natural wonders can be seen in the Šumava National Park, where the greatest attractions are the Boubín and Žofín virgin forests. Those seeking recreation will appreciate stays in the vicinity of Lipno Dam and on the banks of the Vltava River. Of the Region’s seven districts, the District of České Budějovice, which is home to almost 30 % of the Region’s inhabitants, has the highest population density. This is mostly due to the concentration of population in the city of České Budějovice itself, which has 94,800 residents.

ECONOMIC POTENTIAL

Photo: CzechTourism archives

The Region of South Bohemia is not an area rich in raw materials. Most importantly, there are almost no sources of power-producing raw materials. Statistical Data Population Gross wage Unemployment

31 June 2016

638,397

1.–2. Q. 2016

CZK 24,047 (approx. EUR 891)

31 October 2016

3.68 %

Source: Czech Statistical Oﬃce

Holašovice

However, the expansive forests are an important natural treasure, especially the Bohemian Forest and forests in the Novohradské hory Mountains. The forests are mostly coniferous, spruce and pine. The greatest wealth of raw materials comprises deposits of sands and sandy gravels, brick clay, aggregate, and glass sands. Other important raw materials include peat and, in some locations, also limestone, diatomite, and graphite. There is a number of educational and scientific research institutions in the South Bohemia Region. The most important include the University of South Bohemia in České Budějovice, which comprises a public university-type institution. The Region has always had the character of a recreational area, rather than an industrially developed area. The eﬀorts to preserve the natural environment are reflected in the establishment of the Šumava National Park. In agriculture, crop farming is mostly oriented towards cereals, oil crops, and fodder crops. Animal breeding is dominated by cattle and pig farming. The Region has a long tradition of fish farming. The overall surface area of ponds used for fish farming is approximately 25,000 ha. The ponds supply more than half of the overall fish production in the Czech Republic. The Region also has a significant share in the farming of aquatic poultry (ducks and geese). Industrial production is mainly concentrated in the vicinity of České Budějovice, with significant portions of the industry also in the districts of Tábor and Strakonice. However, the Region is not a crucial industrial area for the Czech Republic. The manufacturing industry is the most prominent and, within it, the manufacture of motor vehicles (excluding motorcycles), trailers and semi-trailers, and food production. The Region’s construction firms specialise in new buildings, reconstruction and modernisation. South Bohemia is easily accessible from the northern and eastern parts of the Czech Republic and from neighbouring Austria by the E55 motorway (Prague-České Budějovice-Linz), to which local roads are linked. International railway lines pass through České Budějovice; Veselí nad Lužnicí is an important railway junction. An international airport is located at a distance of 6 kilometres from České Budějovice.

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Český Krumlov Chateau

In mid-2015, work began on its modernisation, with the aim of turning it into an airport offering the full range of services for charter, tourist, business, international and national cargo transport. Currently, the airport operator only holds a licence for non-public international flights, allowing it to receive and handle only medium-sized aircraft with a wingspan of under 36 metres (more at www.airport-cb-cz). Linz, Upper Austria, is the nearest public international civilian airport. The exhibition grounds in České Budějovice host various kinds of exhibitions throughout the year. The international “Bread Basket” agricultural fair and the “HOBBY” exhibition are the most popular. Many types of cross-border cooperation have developed in recent years. One of these is the Šumava/Bayerischer Wald/Mühlviertel Euroregion, which covers an area of 16,000 sq. km with 1.3 million people. The Euroregion associates 111 Upper Austrian, 107 Bavarian, and 95 Czech municipalities (of which 56 municipalities are from the South Bohemia Region). The South Bohemia Scientific and Technical Park, opened in 2014, offers equipped offices and laboratories, including laboratory instruments, technological halls, lecture and conference rooms and other facilities. The Park supports selected projects – an example of an interesting idea is the creation of control software for the optimisation of the operation of small hydroelectric power stations. The project

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was realised by Hydroservis Union pro s.r.o. together with the Technical University in Liberec, which developed a completely new method of controlling the revolutions of water-powered engines by means of a four-quadrant frequency converter. The new technology makes it possible to increase the output of water-powered engines without the need of any construction adjustments or major changes of the hydro-unit.

INVESTMENT In 2015, the Region attracted investments worth CZK 3,754.32 million with 8 investment projects, mediated by the CzechInvest Agency, which helped create 320 jobs. The Region has several industrial parks (locations at http://invest.kraj-jihocesky.cz) and cluster initiatives. One of the largest and most attractive industrial parks in the Region is the Písek-Čížovská Industrial Park. With its surface area of 50 ha, this is the second-largest Park in the Region and one with the best links to the motorway system. The largest Park, with a surface area of nearly 62 ha, is the Domoradice, Český Krumlov Industrial Park. Smaller

Photo: CzechTourism archives, David Marvan

USEFUL CONTACTS South Bohemian Regional Authority – www.kraj-jihocesky.cz South Bohemian Chamber of Commerce – www.jhk.cz South Bohemian for Support of Innovation Businesses – www.jaip.cz University of South Bohemia – www.jcu.cz City Authority of České Budějovice – www.c-budejovice.cz

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic V. Re gio n s

industrial parks in the Region can be found in other towns – České Budějovice, Milevsko, Protivín, Soběslav, Strakonice, Třeboň, Jindřichův Hradec, and Nové Hrady. In 2016, Yanfeng Automotive Interiors (YFAI) announced its plans to build a new plant in Planá nad Lužnici in the Tábor District. When completed, the firm will employ some 300 people, in a region with the second-highest unemployment rate in the whole Czech Republic. The plant in Planá is planned to launch production at the beginning of 2018 on an area of some 20,000 sq. m. It will manufacture parts of car interiors, including dashboards and door panels, mainly for German car factories. The company, with its headquarters in Shanghai, has other manufacturing plants in Central and Eastern Europe, specifically in Slovakia and Hungary. The new plant in Planá nad Lužnicí will make it possible for the firm to broaden its production networks in the growing markets of Central and Eastern Europe, while maintaining its firm position in Western Europe. In November 2016, the Czech govern-

ment supported the investment plan of Robert Bosch, spol. s r.o. to broaden its production of car parts and accessories and enlarge its Technological Development Centre. Currently, Robert Bosch is the largest engineering firm in South Bohemia. In the next three years, Bosch is planning to invest approximately CZK 1.3 billion in the enlargement of its production facilities and, at the same time, to spend another CZK 907 million in the enlargement of its Technological Centre in the next four years. These investment projects will create 625 new jobs. The company will employ design engineers, simulation and testing engineers, test mechanics and technicians, and other specialists.

EDUCATION With more than 11,000 students, the University of South Bohemia in České Budějovice (founded in 1991) is the largest educational and scientific institution in the Region (by national comparisons, it is a medium-sized university). The University oﬀers a wide range of study courses run by eight faculties – Economics, Philosophy, Education, Science, Fish Husbandry and Protection of Waters, Theology, Agriculture, and Health and Social Studies. The University participates in a number of international research projects. For example, its scientific workers helped to develop a method making it possible to accurately assess and evaluate data concerning biodiversity. The method will assist ecology specialists in finding answers to queries, for example, on how the functioning of the ecosystems is influenced by the current loss of natural diversity. The University of Technology and Economics in České Budějovice and the Department of Management and Economy of the Prague Technical University in Jindřichův Hradec are no less important educational institutions in the South Bohemia Region.

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KARLOVY VARY REGION The Karlovy Vary Region is one of the smallest regions of the Czech Republic in both area and population. Its geographic position, distant from the centre, makes it a periphery. However, thanks to this, the Region is open to foreign countries, especially Germany. The Karlovy Vary Region thus records the second highest number of resident or employed foreigners after Prague. The Region is formed by three districts – those of Cheb, Karlovy Vary, and Sokolov. The Karlovy Vary Region is mainly famous for its spa industry. It is not only the region of the Czech Republic’s best-known spa, Karlovy Vary, but also of Mariánské Lázně, Františkovy Lázně, Lázně Kynžvart, and Jáchymov spas. In addition to the springs of curative water, the Region is also rich in natural mineral waters, with Mattoni as the best-known of these. In addition, Karlovy Vary is also famous for its Becherovka herbal liqueur and the art of the glassmakers of the Moser company. The town of Chodov has achieved fame for its rose porcelain, which is exported throughout the world.

ECONOMIC POTENTIAL The structure of the Region’s economy is very diverse. A number of branches are traditional in the Karlovy Vary Region (production of porcelain, glass and ceramics, textile and clothing industry, car-making industry, production of food and beverages, engineering and metal production, chemical industry, and mining of minerals). The Region is also renowned for its long-standing and rich industrial tradition documented since the Middle Ages, among other things, for the existing mining of diverse raw materials (e.g. tin, silver, kaolin, brown coal), the oldest porcelain factory in Bohemia established in 1792, chemical and textile production started during the times of the Austro-Hungarian monarchy, etc. The best-known of the traditional industrial areas of the Karlovy Vary Region is the Sokolov District, with such important sectors as the energy industry and extraction of coal used for power generation, chemical and engineering industries, textile and clothing industry, and building material production. The territory of the Sokolov District is undergoing a gradual economic restructuring towards new industrial sectors (electrical engineering and electronics), and the environmentally-friendly use of energy sources. The transformation of the Sokolov District is represented by extensive favourable changes related to landscape renewal within the liquidation of the eﬀects of brown coal mining in used-up locations (e.g. recultivation and revitalisation of the landscape with lakes of sizes in the order of tens and hundreds of hectares, golf courses, parks, sites for housing, leisure, and new business activities). The manufacturing industry has a long-standing tradition in the area of the town of Ostrov (mechanical and electrical engineering and woodworking industries), the Cheb area (engineering, musical instruments’ production, production of ceramic and building materials), and the Aš area (textile and clothing industry, engineering). The plastic materials industry is a new development here. The area of Kraslice is well-known for its manufacture of musical instruments, e.g. the Amati and Strunal brands, and for engineering and textile industries. The Karlovy Vary Region has the only public civilian international airport in the Czech Republic west of Prague. The airport, situated 4.5 km from Karlovy Vary, has undergone extensive reconstruction and modernisation in recent years. The purpose of the modernisation was to increase its technical level to standards usual for airports of this category and to increase its capacity, including preparations for the operation and handling of passengers travelling within the Schengen Area, because passport control and customs checks of passengers are performed at the airport. Tourism continues to be one of the most important sectors in the

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Karlovy Vary Region. In 2015, a total of 860 875 people visited the Region. Visitors to the Karlovy Vary Region have a great choice of cultural and entertainment events, and opportunities to enjoy the beautiful environment with a number of historical sites. There is a spa symphonic orchestra in Karlovy Vary, where several festivals are also held each year. The best known of these is the Karlovy Vary International Film Festival. Other cultural and sporting events are, for example, the Cultural Summer in Loket, Chopin’s Festival in Mariánské Lázně and Kanoe Mattoni.

INVESTMENT The Region oﬀers a number of industrial parks and zones. For example, the Aš Industrial Park, on the territory of the town of Aš (13,090 inhabitants) is a ‘greenfield’ project. The land with a total area of 108 hectares is designated for sale or lease to companies which will engage in economic activities here in the areas of light industry, trade and crafts, without any negative eﬀect on the environment. The town of Aš and its surroundings is a traditional area for the textile industry. But there are also several major enterprises concerned with engineering production. The town is situated on the border with Germany (Aš – Selb border crossing). In 2002, a new bypass was built past the town’s western outskirts which improved access to the Industrial Park. Aš is connected with the new road bypassing the town of Cheb in the north (I/6 – E48 road) Nuremberg – Cheb – Prague, and the A93 Munich – Berlin motorway is within easy reach as well. The international airport in Hof, Germany, is about 35 km away, and the Karlovy Vary international airport Statistical Data Population Gross wage Unemployment

31 June 2016

297,212

1.–2. Q. 2016

CZK 22,782 (approx. EUR 844)

31 October 2016

5.25 %

Source: Czech Statistical Oﬃce

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CZECH MANUFACTURER OF INDUSTRIAL KILNS, OVENS AND PRODUCTION LINES • metalworking industry • automotive industry • ceramics and porcelaine • glass industry • arts and crafts

D ooii ng n g BBuu s in i n e ss s s iinn tthhhee C zzee ch c h RReepu e pu p u bbll iicc V . Re V. R e ggio ioo n s iion

Photo: CzechTourism archives

Karlovy Vary

is approx. 70 km distant. The Region’s advantage is a low-cost and experienced workforce, especially in mechanical and electrical engineering and textile production, in addition to having a good knowledge of the German language. The site of the 35-hectare Cheb Industrial Park is situated on the eastern edge of the town of Cheb, near a high-speed bypass, a mere 8 km from the Pomezí/ Schirnding border crossing to Germany. The plots, owned by the Cheb municipality, are designated for the siting of production facilities, logistics centres and commercial or service buildings, preferably for investors who will ensure production with a higher value added. A number of firms operate in the Park, e.g. HF-Czechforge s.r.o. (Germany) – a sister company of the Hammerwerk Fridingen firm – operates a modern drop forge specialising in steel forgings, JSP International s.r.o. (Japan, France) – plastic products processing, and Playmobil CZ spol. s.r.o. (Germany) – plastic and rubber products. In autumn 2016, the Chinese company, BWI, a manufacturer of car shock absorbers, opened a new plant in the Cheb Industrial Park. It will start production at the beginning of 2017. By 2020, it is planning to employ up to 350 people in the plant. The company chose Cheb for its location especially due to its geo-

USEFUL CONTACTS Karlovy Vary Regional Authority – www.kr-karlovarsky.cz Regional Chamber of Commerce for the Poohří Area – www.rhkpoohri.cz Internet portal for investors in the Region of Karlovy Vary – www.karlovyvary-region.eu District Chamber of Commerce in Cheb – support for entrepreneurial activities – www.ohkcheb.cz City Authority of Karlovy Vary – www.mmkv.cz graphic position, good transport availability and support from the town of Cheb and Karlovary Vary regional authorities. As a matter of interest, the Czech government is currently debating a new strategic Parks Plan for the entire Czech Republic, which also proposes the construction of another Park in Cheb, to be located just opposite the existing Industrial Park. Its surface area will be about 130 hectares. Tchibo is another big company to have chosen Cheb for the location of its project. The Logistics Centre it is building there will be the second largest logistics hall in the Czech Republic. Already in the first phase of its construction, it will be the largest structure in the entire Industrial Park. On completion of the 2nd phase, the rentable surface area of the building will be about as large as Charles Square in Prague, the largest square in the Czech Republic. LED lighting and air conditioning units with heat recovery ventilation will be installed in the interior of the Distribution Centre. More than 20 subcontractors have participated in the construction of the Centre so far. Tchibo is a German supermarket chain, which originally offered only coffee and coffee specialities. Today it also sells consumer goods. In 2015 it became the leader of online clothing sales in the Czech Republic. Online sales account for 30 % of its total revenue. The new Distribution Centre in Cheb, which will specialise in B2C online business, is expected to raise its revenue still further. The Staré Sedlo Industrial Zone is situated near Sokolov (24,177 inhabitants) and Staré Sedlo (820 inhabitants). The Industrial Zone, with a total area of 124 hectares, is ready for use in terms of planning

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Mariánské Lázně

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EDUCATION The Region is home to a number of secondary-level vocational schools, which have been focused for decades on education in local traditional sectors and branches, often specific to the Karlovy Vary Region. In cooperation with the Sokolov Municipality and the Karlovy Vary Region, the College of Information Management, Business Administration and Law oﬀers studies in Applied Informatics and Management Economics in Sokolov. The town also hosts the Faculty of Mechanical Engineering – an establishment of the University of West Bohemia in Plzeň. The Czech University of Life Sciences – namely the Faculty of Environmental Science and the Faculty of Economics and Management – has a distance centre in Karlovy Vary, as do the College of Banking (BIVŠ), and the Faculty of Economics as a branch of the University of West Bohemia in Cheb. The only university based in the Karlovy Vary Region is the College of Karlovy Vary. Its Bachelor’s programmes oﬀer studies in Criminal Law Activities, Business Law, Socio-Legal Activities, Judicial and Notarial Administrative Activities, and Public Administration.

Photo: CzechTourism archives, David Marvan

documents. Given the good transport links, the area is designated as a site of strategic importance for the Karlovy Vary Region. The town of Sokolov is situated in the central part of the Sokolov basin, at the foot of the Ore Mountains. The brown coal reserves of nationwide significance, and the related power production, make the Sokolov District a major energy hub of the national and international transmission systems. The town is situated on the R6 high-speed road, on the international Nuremberg – Cheb – Sokolov - Karlovy Vary – Prague international route. An important role is also played by the Cheb – Karlovy Vary – Ústí nad Labem regional railway. There is a number of secondary vocational schools in the town, focused on mechanical engineering and the building industry. At the end of 2014, three new surfaces suitable for industrial construction were added to existing investment opportunities in the Karlovy Vary Region. P anattoni Park Aš – located in the close vicinity of the German A93 motorway, not far from Saxon and Bavarian car factories. Owing to this fact and thanks to the good supply of skilled employees, Aš is an ideal location for suppliers to Germany. S kalná – locality suitable for investment construction in the area of industrial and small-scale production, within easy reach of existing engineering networks. The local authority is open to further investment and cooperation with the business sector. T he BSS Industrial Park of Báňská stavební společnost s.r.o., covering an area of 14.3 ha, is situated right in the city of Sokolov in Chebská Street linking Sokolov with Dolní Rychnov. The compound comprises administration buildings, halls and warehouses. It can be reached by local roads, with a link to the R6 road Cheb – Karlovy Vary. The Park has its own railway siding. It is suitable for public utilities, industrial production, or as a logistics centre, etc.

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic V. Re gio n s

ÚSTÍ NAD LABEM REGION The Ústí nad Labem Region, one of the Czech Republic’s most industrialised areas, has been the country’s main energy supplier for years. After the phasing out of intensive coal mining in the 1990s and the revitalisation of the countryside, the Region is regaining its reputation as an area of European significance with unique natural resources. Its efforts to improve the environment still further and to revitalise vast new areas are continuing. The city of Ústí nad Labem, a transport junction of national and international significance, where important European roads, railway lines, and waterways cross, is the centre of the Region. The Ústí nad Labem Region is divided into seven districts (Děčín, Chomutov, Litoměřice, Louny, Most, Teplice, and Ústí nad Labem). In addition, there are four areas in the Region which differ from each other significantly. One of these is the area in the foothills of the Ore Mountains with strongly developed industry, comprising the districts of Chomutov, Most, Teplice and a part of Ústí nad Labem. The dominant industries here are power generation, coal mining, engineering, the chemical industry, and glassmaking. The Ústí nad Labem Region has a number of attractive localities for tourists. The development of tourism is one of the Region’s priorities. The best-known natural attractions of the Region include the Bohemian Switzerland National Park, covering an area of 7,900 ha, established in the year 2000, the Bohemian Highlands, and the Labe Sandstones protected landscape areas, a part of the Kokořín area and the Lužické hory Mountains, the lovely pathway along the Labe with Porta Bohemica, the Tiská Walls rock formations, and many others.

known vine-growing district, where vines are cultivated especially on post-mining re-cultivated land. The Ore Mountains area is a sparsely populated, mountainous landscape with limited economic activities. The last area to be mentioned is that around Děčín, which has no heavy industry and no agriculture (its northern part around Šluknov is too far from the centre of the Region, not easily accessible and is a typical periphery area). The Region’s traditional industries are engineering and the chemical industry. Besides the Region’s typical engineering centres (Děčín, Ústí nad Labem, Roudnice nad Labem, Louny, Klášterec nad Ohří, Varnsdorf), engineering enterprises have settled in practically every new industrial park, which has resulted in a marked growth in employment in the sector. The chemical industry, too, has a long tradition in the Region. There are many good reasons for its location here: suﬃcient supply of water from the Labe River, which at the same time provides good transport opportunities, the vicinity of the North Bohemia brown coal mines (manufacture of liquid fuels from brown coal was the original production programme of the chemical factory at Záluží near Litvínov), and a good market for its products (fertilisers from Lovochemie in Lovosice supplied to the surrounding farming areas). There is also Nupharo, the new technological and innovation centre in the Region, situated not far from Ústí nad Labem. Its business incubator supports start-up firms by helping them in applying for grants from the European Union or obtaining advantageous loans for investment, innovation, research, covering working costs, and for marketing. The total surface area of the compound is 16,000 sq. m. The main investor is the Swiss company, ABB. The company has chosen this locality situated beside the D8 motorway near the border with Germany for its strategic position on the Prague–Dresden–Berlin route. The Park wants to cooperate with J.E. Purkyně University in Ústí nad Labem and other universities. The Faculty of Transport of the Czech Technical University, which has a branch in Děčín, is preparing three projects for Nupharo.

INVESTMENT ECONOMIC POTENTIAL The area extends around Litoměřice and Louny and is known for hop cultivation and the growing of vegetables. The Labe and Ohře valleys are famous fruit-growing areas, known as the “Garden of Bohemia”. The grape varieties grown around Litoměřice are also renowned. In recent years, another area, that around Most, has become a wellStatistical Data Population Gross wage Unemployment

31 June 2016

822,272

1.–2. Q. 2016

CZK 24,394 (approx. EUR 903)

31 October 2016

7.82 %

Source: Czech Statistical Oﬃce

The Ústí nad Labem Region holds great allure to foreign investors as a region with a lot to oﬀer investors, including strategic industrial parks (SIP). One of these is the Joseph SIP, located in Havraň, Most District, some 8 km from the city of Most with its population of 67,500. It covers an area of 196 ha. The companies located in the Joseph SIP and pursuing business activities there are, for example, Nemak Czech Republic, s.r.o. and AFSI Europe, s.r.o. The Triangle Strategic Industrial Park is located in an area whose boundaries overlap three districts – Chomutov, Most, and Louny. The locality adjoins the Prague – Chomutov – Hora Sv. Šebestiána/Reitzenhain, Germany expressway, which crosses the I/27 Most–Žatec–Plzeň road. The Industrial Park covers an area of 365 ha. In 2016, the industrial developer, Panattoni Europe, started the 4th phase of a project for the Chinese company, Yanfeng, the largest global manufacturer of car interiors. The existing production facility will be extended by another 11,000 sq. m, which will make it the largest industrial building in the Ústí Region with a total surface area of 45,000 sq. m. Owing to the expansion, Yanfeng Czechia Automotive Interior Systems s.r.o. will increase the number of jobs by approximately 200, to a final 1,500 by

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Photo: CzechTourism archives, Ladislav Renner

Teplice

the end of the year. Panattoni Europe is building the entire manufacturing compound to the order of the client-owner. More than 10 investors operate in the Žatec Triangle, where over 2,500 people are employed. In May 2016, the Kiswire Company started preparatory earthworks in the south-western part of the Triangle Industrial Park on an area of 20 ha, where it is going to build a plant for the manufacture of steel wire and cord fibre for tyres and the automotive industry. Trial operations are to be started at the beginning of 2017. The project will cost CZK 2.5 billion and will be completed at the end of 2020. By then it will be employing 300 people. This former military airport hosts a number of investors, for example, Solar Turbines EAME s.r.o., which specialises in turbine repair and revision, Gestamp Louny s.r.o. and Hitachi Automotive Systems Czech s.r.o., manufacturing components for the automotive industry. In 2014, the Korean company, Nexen, announced its plans to place a huge investment project – a car tyre manufacturing plant – in the Czech Republic, specifically in the Triangle Industrial Park, on an area of approximately 70 ha. It will start production in 2018. Other investors coming to the Ústí Region are the British firm, Regenersis, which repairs electronics, and the Japanese manufacturer of rubber parts, Fukoku. Regenersis is renting 3,000 sq. m. of surface in the CTPark Teplice, where a high-tech repair centre is being built. CTPark Teplice consists of three industrial halls. The total utility area of all the buildings taken together

USEFUL CONTACTS Ústí nad Labem Regional Authority – www.kr-ustecky.cz North Bohemian Association of Communities – www.seso.cz Regional Development Agency of the Ústí nad Labem Region – www.rra.cz Czech North – www.usteckonadlani.cz/ is 35,400 sq. m. The space is suitable for warehousing, logistics, light manufacturing and assembly. In October 2016, the American company, SSI Technologies, world leader in the manufacture of ultrasound sensors for the automotive industry, opened its new manufacturing plant in the Region. This is the company’s first manufacturing plant to be located in Europe. By 2018, some 200 people, workers as well as highly skilled technicians, will find employment there. The firm chose the Ústí Region and the locality of Pestanov for its activities, because of its close proximity to the frontier with Germany and connection to the main transport routes and the airport. Other industrial parks are to be found in Kadaň, Chomutov, Rumburk, and Klášterec nad Ohří. The Region can oﬀer a large number of unused industrial and commercial facilities to investors preferring already existing buildings.

EDUCATION Ústí nad Labem is also an important centre of tertiary education, led by Jan Evangelista Purkyně University. One of the undeniable assets of the University is that it is a classical type of university, with both traditional university faculties, such as the Faculties of Philosophy, Natural Science, Pedagogics, and Socio-Economics, and non-traditional, but very much needed faculties, such as the Faculty of the Environment, Faculty of Production Technologies and Management, Faculty of Arts and Design, and the Institute of Healthcare Studies. Hundreds of foreign students come to Ústí nad Labem each year to study at J. E. Purkyně University (UJEP). Students come from various countries, but most of them, on a long-term basis, come from the Russian Federation and Turkey. Another higher learning institution at which university education can be obtained in the Region is the College of Applied Psychology, Ltd., in Terezín. The Region also hosts detached workplaces of other public universities. For example, branches of the Transport Faculty and the Faculty of Nuclear and Physical Engineering of the Czech Technical University are located in Děčín, and branches of the Faculty of Chemical Technology of the Institute of Chemical Technology and the Faculty of Mining and Geology of the Mining University are located in Most.

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LIBEREC REGION The Liberec Region, situated at the northern tip of the Czech Republic and bounded by a 20-km-long stretch of frontier with Germany and a 130-km stretch with Poland, has easy access to the large industrial and administrative centres, Prague and Dresden, Germany, with developing links to the main European transport lines of Berlin–Prague–Vienna (Multimodal Corridor IV) and Leipzig–Dresden–Wroclaw (Multimodal Corridor IIIA). The large number of historical buildings and other sights, as well as cultural institutions, are witness to the Region’s rich cultural and historical tradition. Institutions of regional importance include a number of museums and galleries in diﬀerent parts of the Region. With respect to the glassmaking and fashion jewellery production in the area, tourists are invited to visit glassmaking museums in Nový Bor, Kamenický Šenov, and Železný Brod, and the Museum of Glassmaking and Costume Jewellery in Jablonec nad Nisou. The Bohemian Paradise District Museum in Turnov houses its own collections, covering the areas of Geology, Mineralogy, and Goldsmithery and Jewellery, which are unique, not only on the national, but also the European level. There are two spa resorts in the Region: Libverda and Kunratice. Besides cultural and historical sights, visitors can admire the natural beauties of the Region – its exceptional countryside and rock formations. From the natural science point of view, the Liberec Region is important for its great variety of natural ecosystems, a high concentration of protected areas and rare localities of great botanical and zoological importance. There is one National Park in the Region (Krkonoše National Park), as well as five Protected Landscape Areas (Bohemian Highlands, Jizerské hory Mountains, Lužické hory Mountains, Bohemian Paradise, Kokořín), seven National Nature Reserves, eight National Natural Monuments, 35 Nature Reserves and 56 Natural Monuments.

Statictical data Population

31 June 2016

440,108

Gross wage

1.–2. Q. 2016

CZK 24,889 (approx. EUR 922 )

31 October 2016

4.98 %

Unemployment

Source: Czech Statistical Oﬃce

The most important projects realised in the Liberec Region include projects for the development of a new research and innovation infrastructure supported by EU funding (The Institute for Nanomaterials, Advanced Technology and Innovation, The Research, Development and Tuition Centre for Advanced Technologies, and The Engineering Research Centre Liberec). According to the 2016 figures, an increasing number of tourists, both foreign and local, visit the Liberec Region. Local tourists account for nearly 80 % of visitors to the Region. Of the total number of foreign tourists (37,448) who spent time in the Liberec Region, 56.8 % were Germans, 12.2 % Poles, 6 % Slovaks, and 4.8 % the Dutch. From the beginning of 2016, 385,040 tourists visited the Liberec Region and used its accommodation facilities.

The diversity and natural character of the Liberec Region are characteristics influencing business activities. Great population density in the centres of industry, hilly terrain and restrictive environmental limits do not allow for the development of new large-size areas. The greatest concentration of business activities and foreign capital can be found in Liberec and its environs, especially in the sites of traditional industrial production. The development of various forms of collaboration between business firms and their link-ups with research and development facilities is of great importance for the strengthening of economic competitiveness. There are various professional associations operating in the Region, as well as clusters, as geographically close groups of linked-up enterprises, contractors, service providers and professionally related institutions, brought together by common and complementary interests. These include, for example, the CLUTEX “Technical Textiles” cluster, and the Czech Membrane Platform, o.s., based in Česká Lípa, associating experts and institutions focusing on the research, development, realisation, and use of membrane operations in technological processes. Scientific and technical parks are centres where research and development projects can best be developed. The Textile Machinery Research and Development Institute (VÚTS, a.s.) in Liberec has opened an innovation and technological centre and, in 2012, started the construction of a scientific and technical park in Dubá and a membrane innovation centre of the company, MemBrain s.r.o., at Stráž pod Ralskem.

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There are eight industrial parks in the Liberec Region, with a total surface area of more than 450 hectares, according to the Centre for Regional Development of the Czech Republic. The parks are located in the vicinity of or directly on the territory of Liberec, Nový Bor, Hrádek nad Nisou, Turnov, Ralsko, and Stráž pod Ralskem. Most of these are utilised by investors. The majority of enterprises located here are in some way linked with the automotive industry. The largest investors include the Japanese manufacturer of air conditioning units, Denso Manufacturing, which invested approximately three billion Czech crowns in the Liberec compound. In 2015, Denso Manufacturing Czech decided to invest nearly CZK 400 million in the enlargement of its plant in Liberec, as its current manufacturing capacity is no longer suﬃcient to meet growing demand. By enlarging the hall, the firm will be able to adapt the manufacturing surface so as to ensure

Photo: CzechTourism archives, Libor Sváček

INVESTMENT ECONOMIC POTENTIAL

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic V. Re gio n s

Liberec – a hub of skiing

a continuous and eﬃcient flow of material and information. The Denso Manufacturing plant in Liberec is the largest employer in the Liberec South Industrial Park. Currently it employs 2,285 people, of which number 1,814 are workers. Another two large companies – Ontex, an important manufacturer of hygienic products, and SFS intec., manufacturing connecting materials – have chosen the Vesecko Industrial Park near Turnov. One of the largest investment projects mediated in the Region by CzechInvest Agency has settled in the Hrádek nad Nisou Industrial Park: Drylock Technologies, specialising in the manufacture of disposable hygiene items, which employs some 200 people. The aim of the regional authorities is not only to attract investors to existing industrial parks, but also to make use of the local brownfields for their business activities. In 2015, the Liberec Region obtained funds for investment mediated by CzechInvest Agency to the amount of nearly CZK 1,875.11 million. CzechInvest mediated invitations for bids involving four projects in the Region. The investment in Devro, amounting to nearly CZK 1.527 billion, is among the ten largest investment projects in the entire Czech Republic. The firm is planning to enlarge the production of collagen sausage skins for the food industry and

USEFUL CONTACTS: Liberec Region – www.kraj-lbc.cz Liberec Regional Oﬃce – www.liberec.cz Liberec Regional Chamber of Commerce – www.khkliberec.cz Technická univerzita Liberec (Liberec Technical University) – www.tul.cz to employ additional 120 new workers. The firm based in Jilemnice is a part of the Devro supranational group with its headquarters in Scotland. Devro is one of the largest employers in the Liberec Region, investing hundreds of millions of crowns in modernisation and new technologies each year.

EDUCATION A typical feature of the Liberec Region is the large number of secondary art schools of supra-regional significance located here. These are mainly secondary schools of applied arts, specifically schools of glassmaking and costume jewellery. Higher learning is represented by the Liberec Technical University, which runs 110 study programmes with more than 200 branches of study. In 2014, its enrolment was nearly 8,000 students. The study programmes have Bachelor’s, Master’s and Doctoral degree accreditation. Most of them are attendance or combined courses; some programmes are accredited for tuition in the English language. For example, in 2014 the Medical Studies Institute enlarged its Master’s degree studies with the addition of Biomedical Engineering courses. The University prides itself on a number of achievements in research; for example, its researchers have developed a new nano fibre material for artificial blood vessels. This material greatly reduces blood coagulation risks and post-cardiac surgery complications. Its great advantage is that, unlike the artificial blood vessels currently being used, it degrades in the body. The new material is being tested on animals. Clinical trials will be held in five years’ time at the earliest. In 2016, the project obtained the prestigious Théophile Legrand International Prize for Textile Innovation, awarded to innovations bringing benefit to mankind.

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HRADEC KRÁLOVÉ REGION The Hradec Králové Region is situated in the North-East of Bohemia. More than one-third of its boundary, a stretch of about 208 km, forms the Czech Republic’s state frontier with Poland. The region consists of ﬁve districts – Hradec Králové, Jičín, Náchod, Rychnov nad Kněžnou and Trutnov. As regards the number and importance of natural assets, the Region is one of the richest in the Czech Republic. Many areas and localities are extremely valuable and there is a large number of protected areas. From the point of view of areas of natural beauty, the most valuable are the Krkonoše National Park and the Orlické Hory, Broumov and Bohemian Paradise Protected Landscape Areas. The rich and varied natural and cultural wealth of the Hradec Králové Region, its attractive natural localities and the well-preserved environment are good prerequisites for the development of tourism. Especially attractive areas are those with a high natural potential, areas boasting a rich cultural heritage of historical sites, as well as several renowned spa resorts. To meet the requirements of the massive development of cyclotourism and its rising popularity in recent years, new cycle trails of regional and supra-regional importance are being built and marked. Hiking trails, too, have a long tradition in most areas of the Hradec Králové Region. The region also boasts several spa resorts, the most popular of which is Janské Lázně for the treatment of diseases and disorders of the nervous system and the motor system, and skin diseases. The spa is also a well-known winter sport resort.

ECONOMIC POTENTIAL

Statistical Data Population Gross wage Unemployment

31 June 2016

551,137

1.–2. Q. 2016

CZK 24,580 (approx. EUR 910)

31 OCtober 2016

3.57%

Source: Czech Statistical Oﬃce

Photo: CzechTourism archives, Ladislav Renner

The Hradec Králové Region can be characterised as being an agricultural and industrial area with well-developed tourism. Industry is primarily concentrated in towns, while agricultural production is thriving

on land bordering the River Labe. From the sectoral point of view, employment is high in branches such as car making, manufacture of electrical equipment, engineering, textile production, health care and the rubber and plastics sector. The main export items are products of the automotive and engineering industries and electrotechnical components. Exports are dominated by motor vehicle components and cars, which account for more than one-quarter of total exports. More than 3% of total regional exports is accounted for by rotating electrical machines and parts thereof, ferrous

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D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic V. Re gio n s

products, circuit switching and breaking devices, pumps, cisterns, textiles, and rubber products. Sectors with the highest sums spent on research and development in the Region include Information Technologies (software development) and architectonic and engineering activities (development and construction of components for the automotive and engineering industries, development and supply of technological complexes for the chemical industry, power engineering, coke production, and food processing, which together account for more than 30% of the expenses.) This is followed by the manufacture of components and accessories for motor vehicles and their engines (especially braking and windshield wiping systems), research and development in the area of natural and technical sciences (breeding, textile materials, and biotechnologies), manufacture of other special purpose machines (printing machines, mining and building machines, machinery for pharmaceutical and food processing plants, and power-generating equipment), manufacture of rubber products, medical devices, and other items. There are several clusters operating in the Region. The IT cluster in Hradec Králové focuses on the use of new information and communication technologies in the development of products manufactured by the cluster members, distributed backups, automatic control of the development of information systems, information systems safety, and the housing server. The Hradec Králové TECHNOLOGICAL CENTRE participates in the realisation of projects financed from EU funds, the aim of which is to raise the level of education and competitiveness in the Region and in particular to facilitate students’ entry into professional life. Within the framework of these projects, the Technological Centre cooperates with recognised research and educational institutions in the Czech Republic (Hradec Králové University, Masaryk University, the Association of Scientific and Technical Parks).

INVESTMENT Altogether 40 investment projects were realised in the Hradec Králové Region between 1993 and 2014 under the Investment Incentives Programme. More than CZK 36.2 billion was promised for investment and more than 10,000

jobs were created within the framework of this programme. Most of the investments concerned the manufacture of transport vehicles (including components), the electronic and electrotechnical industries, the chemical and pharmaceutical industries, engineering and the textile industry. In 2015, the Region attracted investments worth CZK 1,432,22 mil. in four investment projects, mediated by the CzechInvest Agency, which helped create 199 jobs. There is a number of industrial parks in the Region — for example in Kvasiny (Rychnov nad Kněžnou District) and Vrchlabí (Trutnov District). Further development is expected of the Kvasiny Industrial Park, where Škoda Auto has its manufacturing plant. The foundations of an exemplary success story were laid 25 years ago. The partnership between the Volkswagen Group and Škoda Auto began on 16 April 1991. From that point on, the traditional Czech brand evolved from being a regional market leader to an internationally successful vehicle manufacturer. ŠKODA AUTO will be investing CZK 7.2 billion into the location and creating more than 2,000 new jobs by 2018. ŠKODA is now one of the fundamental pillars of the Czech economy: In 2015 the manufacturer contributed around 4.5 % of the Czech gross domestic product, accounting for around 8 % of Czech exports. In 2015, ABB company opened a new manufacturing plant in the Krkonošská Industrial Park in Trutnov, which significantly increased the company’s production capacity and supported growth in the area of power network automation. The company also wants to strengthen its engineering centre, which among others concerns itself with the development of applications for intelligent networks and cybernetic safety.

EDUCATION The core programme of the Pharmaceutical Faculty of Charles University in Hradec Králové is the research and development of new drugs, drug forms, drug delivery systems, Biomedicine (Centre for the Study of Drugs and Other Biologically Active Substances from the Perspective of the Prevention and Treatment of Important Lifestyle Diseases, Centre for the Study of Toxic and Protective Eﬀects of Drugs on the Cardiovascular System, Centre of Drug-Dietary Supplements Interactions and Nutrigenetics), Clinical Pharmaceutics and Pharmacoepidemiology. For firms and research organisations, the Faculty carries out contract research and development, for example, of new drugs and drug forms. It has applied for several patents in collaboration with firms and research organisations. In its research activities, the Hradec Králové Medical Faculty collaborates with the Faculty of Informatics and Management (e.g. ICT application in industry /clever networks in power engineering/, multi-agent systems) and the relatively young Faculty of Natural Sciences (e.g. Applied Mathematical Physics, Sensors, Human Body Behaviour Scanning (cooperation with LINET, IKEM), Organic and Analytical Chemistry). The Medical Faculty of Charles University in Hradec Králové pursues a wide range of research activities, from basic research to practical research, for example in the area of civilisation diseases aﬀecting the cardiovascular and gastrointestinal systems. The Faculty’s research team comprises several hundred scientific workers and more than 250 doctoral students.

USEFUL CONTACTS: Regional Oﬃce of the Hradec Králové Region - www.kr-kralovehradecky.cz Hradec Králové Technological Centre - www.tchk.cz University of Hradec Králové - www.uhk.cz Regional Development Agency of the Hradec Králové Region - www.cep-rra.cz Regional Chamber of Commerce – North-East Bohemia - www.rhkhradec.cz Hradec Králové City Authority - www.hradeckralove.org Glacensis Euroregion - www.euro-glacensis.cz

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PARDUBICE REGION The Pardubice Region is located in the eastern part of Bohemia, and, together with the regions of Hradec Králové and Liberec, forms the North-East Cohesion Region (NUTS 2). A part of the Region’s north-eastern border also forms the border between the Czech Republic and Poland. The land area of 4,519 sq. km (5.7% of the area of the CR) makes the Pardubice Region the ﬁfth smallest region in the country. The Pardubice Region consists of four districts – Chrudim, Pardubice, Svitavy, and Ústí nad Orlicí.

ECONOMIC POTENTIAL The Region’s economy mainly depends on general engineering and electronics. The following industries are also represented: chemical, textile, clothing, leather manufacturing, and food-processing. However, the chemical industry, which has the highest share in national production, is the most important. The Region also has a tradition in the area of electrotechnical and electronic industries, linked with the Tesla trademark, on which a number of other companies also build. These companies have benefited primarily from the existing research and development base and skilled labour. Industry in the Pardubice Region is broadly diversified. The automotive sector also plays an important role, in addition to the IVECO bus manufacturers. Other important employers include AVX Czech Republic in Lanškroun (electrical engineering), Iveco Czech Republic in Vysoké Mýto, Synthesia Pardubice (chemical industry), Saint-Gobain Adfords CZ in Litomyšl (glassmaking), Rieter CZ in Ústí nad Orlicí (manufacture of textile machines and a sub-supplier to the automotive industry), OEZ in Letohrad (electrical engineering), KIEKERT-CS Pardubice with its centre of operations in Přelouč (automotive industry), Panasonic Mobile & Automotive Systems Pardubice (manufacturer of mobile phones and audio-visual equipment), Automotive Safety Components International in Jevíčko (sub-supplier to the automotive industry), and REHAU, s.r.o., in Moravská Třebová (automotive and plastics industries). Enterprises with well-known names include Paramo in Pardubice, Eta in Hlinsko, and Korado in Česká Třebová. Clusters

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play an important role in the development of modern technologies and in improving competitiveness. The Region hosts the “Nanomedic Medicine-Pharmaceutical Cluster”, which associates a number of firms, universities and research institutions to collaborate in the area of research, development, production, and commercial realisation in the medical and nanotechnological fields. The Region comprises approximately 20 industrial zones. Businesses can make use of “brownfields”, i.e. space that has lost its original economic use. Brownfields tend to be large premises in larger towns (most of them are available in Pardubice). The largest brownfields in the Region are usually former military areas.

INVESTMENT The Pardubice Region was ranked the best region among 468 rival localities in Eastern Europe in the European Cities and Regions of the Future 2014/2015 survey. This ranking was due especially to the number of important projects realised here recently, such as the campus and the overall development of Pardubice University and the linking of the Pardubice regional city to the D11 motorway by a four-lane trunk road, as well as its oﬀer of industrial parks. For example, the Pardubice City Industrial Park is situated in the western outskirts of Pardubice, some 6 kilometres from the city centre. It lies in the cadastre of Staré Čívice between the I/2 highway leading to Kolín and Prague and the Prague–Pardubice railway line, which is part of the Berlin–Prague–Vienna international high-speed rail corridor. The first large Statistical Data Population Gross wage Unemployment

31 June 2016

516,504

1.–2. Q. 2016

CZK 24,028 (approx. EUR 890 )

31 October 2016

3.57%

Source: Czech Statistical Oﬃce

Photo: CzechTourism archives, Ladislav Renner

The Pardubice Region is characterised by its diversity of natural conditions, population density, and industrial and agricultural production. Future development of the Pardubice Region will benefit from the Region’s advantageous location, which is good for transport links. There are 542 km of railway tracks in the Region, the most important railway hubs including the towns of Pardubice and Česká Třebová, which form a part of the international railway corridor, Berlin– Prague–Brno–Vienna. Pardubice Airport, which serves both military and civilian air traﬃc, is key to the regional air transport. The Pardubice Region has many prerequisites for the development of the tourist trade. The Region comprises beautiful landscape of both flat and mountainous character, a favourable climate and many opportunities for bathing, water sports, walking tours, cycling, and winter sports. Attractive tourist locations include the northern and eastern parts of the Ústí nad Orlicí District – the foothills of the Orlické hory Mountains, the Buková hora Ski Region, and Sněžník Dolní Morava Ski Resort. Agrotourism, especially with emphasis on traditional horse breeding, is developing throughout the entire Region (in the foothill areas). Every year, many visitors come to see the national stud farm in Kladruby nad Labem. Besides regular tours, the stud farm also organises various events for horse lovers. Tourist highlights in the Svitavy District include Svojanov Castle and Litomyšl Chateau, which has been on the UNESCO World Cultural Heritage List since 1999. The Pardubice racetrack, where the Velká Pardubická Steeplechase takes place, is the Region’s most famous sporting venue. In addition, the Region is the leader in many other sports.

MEMBER OF

USEFUL CONTACTS Regional Authority of the Pardubice Region – www.pardubickykraj.cz University of Pardubice – www.upce.cz Regional Chamber of Commerce of the Pardubice Region – www.khkpce.cz City Authority of Pardubice – www.pardubice.eu Regional Development Agency for the Pardubice Region – www.rrapk.cz project in the Park was an investment by Panasonic Automotive Systems Czech. The Park is home to the Pardubice Scientific and Technological Park. A great advantage of the Pardubice Industrial Park is its situation in the outskirts of the regional city, which provides a good social, cultural, and sporting background for its 90,000 inhabitants. There is a good supply of skilled labour, especially in the area of science and research. The Swiss company Ronal CR is another car-making firm which has settled in the Pardubice industrial park. It came to Pardubice in 2004. Its core business is the manufacture, research, development, and sale of components for cars, specifically aluminium wheels. Its exclusive clients are manufacturers of renowned car makes such as Audi, Ford, Chrysler, Opel, Porsche, Saab, Škoda, Volkswagen, and many others. The construction of the production compound on a ten-hectare plot began in December 2004 and serial production two years later, in 2006. One of the companies having its manufacturing plant in the Černá za Bory Industrial Park is FOXCONN CZ, s. r.o., Pardubice, which specialises in the manufacture of computer technology. In 2016, Foxconn Global Services Division (FGSD) has announced the launch of a new business line – a new Mobile Repair Centre for the Europe, Middle East, and Africa region in Pardubice. The FGSD investment creates up to 250 new jobs in Pardubice and expands the company’s competences into a fresh, lucrative area of business: mobile phone full life cycle management. The total investment into the Mobile Repair Centre is planned to reach up to USD 2 million (cca CZK 55 million). To satisfy the needs of the new centre, FGSD needs up to 250 new employees: up to 200 in the direct labour force and up to 50 in technical and administrative positions.

EDUCATION Pardubice University, the only university in the Region, is 66 years old. As far as the number of students is concerned, the University belongs, with its ten thousand students, to the middle-sized universities in the Czech Republic. The University consists of seven faculties. Faculty of Chemical Technology,

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Faculty of Economics and Administration, Jan Perner Transport Faculty, Faculty of Arts and Philosophy, Faculty of Restoration, Faculty of Health Studies, Faculty of Electrical Engineering and Informatics, Students can choose from different Bachelor’s, follow-up Master’s and Doctoral degree programmes in following fields:  Natural and Technical Sciences focused on chemistry, chemical technology, biotechnology and biochemistry, electrical engineering, informatics, transport and communication technologies and material engineering  Social Sciences focused on economics and administration, philology, history, philosophy, and sociology  Health Sciences including inter-disciplinary programmes  Arts in the field of historical preservation, art restoration, conservation techniques and technologies. The University offers more than sixty study programmes with almost 130 study specialisations. All are designed in accordance with the Bologna Declaration and modern trends in higher education. Most Bachelor’s study courses offer follow-up Master’s programmes. Full-time and part-time studies are available. Apart from teaching, the University of Pardubice is also renowned for its numerous scientific and research activities which contribute to an excellent national and international reputation. The numerous specialised departments and other organisations, institutions and associations operating at the university contribute to this fact.

Photo: CzechTourism archives, Ladislav Renner

Pardubice – Pernštýnské náměstí Square

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic V. Re gio n s

VYSOČINA REGION The Vysočina Region has an advantageous central location not only within the Czech Republic, but also in the whole of Europe. The D1 motorway, the E59 road and the Vysočina railway corridor offer the opportunity to reach important European transport hubs and major cities quickly. The closest airport, Brno Tuřany, can be reached by car from most of the towns in the Region in one to two hours, and Václav Havel Airport Prague can be reached in two hours. Vienna International Airport is 2.5 hours away. The territory of the Vysočina Region is administratively divided into five districts. The Region is characterised by its rugged terrain, high altitude, and low population density. The Region is attractive because of its comparatively low levels of air pollution and relatively healthy forests. The Vysočina Region also offers many fine opportunities for summer and winter stays, as well as the possibility of visiting a number of valuable historical and cultural monuments. There are three UNESCO monuments in the Vysočina Region. They are the historical centre of Telč, the Pilgrimage Church of St. John of Nepomuk on Zelená hora near Žďár nad Sázavou, and the Jewish Quarter with Cemetery and Basilica of St. Procopius in Třebíč. Besides urban tourism, the future of tourism in the Region will undoubtedly rest on various forms of tranquil, environmentally-friendly stays. This is supported by a dense network of tourist trails (approx. 2,900 km), the development of bicycle routes and the gradually emerging agrofarms providing accommodation.

ECONOMIC POTENTIAL Agriculture has traditionally held an important position in the Vysočina Region. Despite the fact that local conditions are below the average (altitude and the sloping nature of the land decrease the land’s production capacity), the Region’s territory is optimal for certain agricultural products and activities, especially for potato growing. The Region produces approximately one-third of the overall crop of potatoes in the CR. Livestock production in the Vysočina Region specialises mostly in cattle and pig farming. As regards economic growth, the Region’s Statistical Data Population Gross wage Unemployment

31 June 2016

509,155

1.–2. Q. 2016

CZK 24,442 (approx. EUR 905)

31 October 2016

4.61 %

Source: Czech Statistical Oﬃce

most important economic sector is industry. In the past few years, industrial production in the Region has been very dynamic and has favourably influenced the entire regional economy. Much credit for this is due to the intensive development of industrial parks along the D1 motorway (Jihlava, Humpolec, Velké Meziříčí), which was followed by massive direct foreign investment in industrial production in the Region. The most important industrial sectors in the Vysočina Region are metalworking, engineering, and the automotive industry, specifically the manufacture of car components. The leading industrial enterprise in the Vysočina Region is Bosch Diesel, which makes diesel fuel injection pumps for the automotive industry. It is the largest employer in the Region and the third-largest enterprise in the Czech Republic in the manufacturing industry sector (after ŠKODA AUTO and ArcelorMittal Ostrava). Between 1993 and 2006, the company invested EUR 650 million in Jihlava and, between 1999 and 2007, increased the number of its employees eight-fold. Another important engineering enterprise in the Region is Motorpal Jihlava, which has a similar production programme as Bosch Diesel. The Kostelecké uzeniny company is one of the largest meat-processing enterprises in the Czech Republic and the largest food-processing firm in the Vysočina Region. The largest clothing manufacturing enterprise in the Region is the traditional underwear manufacturing firm, PLEAS Havlíčkův Brod, owned by the international SCHIESSER GROUP AG based in Switzerland. The second-largest industrial employer in the Havlíčkův Brod District is Futaba Czech, the supplier of components for the automotive industry, which only started production in the Havlíčkův Brod-Baštinov locality in 2005. The construction of this plant on a greenfield site was the first investment project of the Japanese concern in continental Europe. Another foreign investor to locate a plant in the Region, specifically in the Pelhřimov District, is Valeo Compressor Europe — an important employer in the Region — manufacturing compressors for car air-conditioning units. The plant located in Humpolec was founded in 2002 as a joint venture of the German company Robert Bosch GmbH and the French firm Valeo Climatization S.A. Currently the company is 100 % owned by the Japanese aﬃliation of the French concern. Engineering is represented in the Pelhřimov District by the traditional manufacturer of agricultural machinery, AGROSTROJ Pelhřimov. In recent years, the firm has significantly broadened its production range and increased its output. Currently it employs more than 1,000 people. ŽĎAS company is a prominent industrial enterprise in the Žďár District and is the second-most important industrial employer in the Region. The Vysočina Region has the vastest timber reserves in the Czech Republic, with a well-developed woodworking industry. The most important enterprises in this area are Stora Enso, Kronospan, and Sapeli – the largest and historically the oldest door manufacturer in the Czech Republic. DDL – Dřevozpracující družstvo cooperative – is another large firm operating in the timber production and wood-processing sector, with a 60-year tradition in sawn wood and wood-based panel manufacture. The glass industry is a traditional manufacturing branch in the Region, represented by smaller export-oriented firms, such as CRYSTALITE

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TRADITION AND PROGRESS AGADOS s.r.o., the traditional Czech producer of trailers of total weight between 300 and 3500 kg; some of which can achieve speeds of 100 km per hour.

AGADOS s.r.o. • PRŮMYSLOVÁ 2081 • 594 01 VELKÉ MEZIŘÍČÍ • CZECH REPUBLIC • PHONE: +420 566 653 301 FAX: +420 566 653 368 • E-MAIL: OSTRY@AGADOS.CZ • WWW.AGADOS.CZ

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic V. Re gio n s

Vysočina – Stašov

USEFUL CONTACTS: Vysočina Regional Oﬃce – www.kr-vysocina.cz Jihlava Municipal Council – www.jihlava.cz Regional Chamber of Commerce – www.hkjihlava.cz Vysočina Regional Development Agency – www.rrav.cz BOHEMIA s.r.o. Another manufacturing firm is Bohemia Machina at Světlá nad Sázavou, the cradle of original Bohemian cut crystal glass. It is a recognised manufacturer and supplier of high-quality glassmaking machines, to which it has recently added the manufacture of luxury modern-style crystal products under the BOMMA trademark.

is Valeo Compressor Europe, which manufactures compressors for air-conditioning units in passenger cars. The Taiwanese company of Lemtech, manufacturing metal parts for the electronic and automotive industries, is about to open a plant in the logistic park near Jihlava, the company’s first plant outside Asia and the USA.

EDUCATION

,Photo: CzechTourism archives, Jaroslav Horák

INVESTMENT The Region has several industrial zones. One of these, the Jihlava Industrial Park, is situated in the northern part of the city of Jihlava, in the close vicinity of the D1 motorway, linking up with the city’s industrial agglomeration, in which important firms, such as Bosch Diesel, Automotive Lighting and Kronospan, have their manufacturing facilities. The Žďár nad Sázavou-Jamská Industrial Park lies in the south-eastern outskirts of the city, linked to important road and railway lines. The firms based there include Vamafil spol. s r.o. – technical yarns; Cooper s.r.o. – automotive industry; MteZ s.r.o. – model equipment; Unipres s.r.o. – printing, and Mibilbox s.r.o. – automotive industry. The Bystřice nad Pernštejnem Industrial Park is situated in the south-western outskirts of the town of Bystřice nad Perštejnem (10,000 inhabitants) in close proximity to the railway station. The Pelhřimov District also has a number of industrial parks. Among them, the CTPark Invest in Humpolec has a strategic position beside the D1 motorway between Prague and Brno. One of the important manufacturers sited there

Two universities (the Polytechnic University in Jihlava /VŠP/ and the West Moravia University in Třebíč) have their seats in the Vysočina Region. In addition, there are several detached workplaces of other universities located there. In the 2015/2016 academic year, there were 1,595 students enrolled at universities in the Region, studying in 15 different branches; 1,542 of these were students attending courses in 13 different branches at two universities based in the Region: the West Moravia University in Třebíč, o.p.s. (23 students) and the Polytechnic University in Jihlava (1 519 students). Two universities, the Czech University of Life Sciences Prague and the Institute of Chemical Technology Prague, have detached workplaces in the Vysočina Region in the 2015/2016 academic year. The following universities offer attendance courses of study for the Bachelor’s Degree: Polytechnic University Electrical Engineering and Informatics – branches: Computer Systems, Applied Informatics Economy and Management – branches: Finance and Management, Tourism Healthcare – branches: Midwifery, General Nursing Social Healthcare – branch: Healthcare Social Worker West Moravia University Třebíč, o.p.s.: Sustainable Development of the Region and the Countryside, Cultural Historical Studies, Applied Information Technology, Information Management, Public Administration Studies, Management and Marketing. Some detached workplaces of other universities also offer the attendance form of study for the Bachelor’s Degree, such as the Czech University of Life Sciences Prague – workplace Czech Agricultural Academy in Humpolec, Horse Breeding (three years) – and the Institute of Chemical Technology (Conservation, Restoration of Works of Art).

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SOUTH MORAVIA REGION South Moravia ranks among the regions with major economic potential. The created gross domestic product of the Region accounts for one-tenth of the Czech Republic’s gross domestic product, its area taking up 9 % of the CR territory. The Region’s territory is divided into seven districts (Blansko, Brno-City, Brno-Country, Břeclav, Hodonín, Vyškov and Znojmo). The natural catchment hub of the whole of South Moravia is the regional capital of Brno, situated at the confluence of the Svratka and Svitava Rivers. The city with an important regional position, at the junction of motorways in the directions of Prague, Vienna, Bratislava, and Olomouc, is the centre of traditional international exhibitions and trade fairs, which underscore its status as a busy international commercial hub. Two sites in the Region’s territory are included in the UNESCO World Cultural Heritage List. The most significant is the Lednice-Valtice complex as an example of an area of forests, meadows and lakes, splendidly complemented with Romantic structures of churches and gazebos, and primarily the Lednice and Valtice Chateaux. The other unique phenomenon is the Modernist architecture of Brno of the period between the two World Wars, represented by the singular Functionalist project of a family villa by German architect Ludwig Mies van der Rohe, who designed this house at the request of Greta and Fritz Tugendhat couple in 1928. Important areas of the South Moravia Region also include two UNESCO-listed biosphere reserves, namely Lower Moravia and the Bílé Karpaty Mountains. The eventful history of the South Moravia Region is documented by the local archaeological sites, chateaux, castle ruins, churches, and synagogues.

ECONOMIC POTENTIAL The South Moravia Region is noted for its great economic potential. Its created gross domestic product accounts for 10.9 % of the national gross domestic product. The size of the proportion of the Region’s GDP amounts to nearly the proportion of the Region’s population to the population of the Czech Republic, which is 11.1 %. In view of the industrial tradition of Brno and its environs, industry holds an important position in the Region’s economy, accounting for 30.4 %. Agriculture, another traditional sector, especially in the southern parts of the Region, accounts for just 2.9 %. Construction accounts for 6.8 %, while the developing services sector accounts for 59.9 % of GDP. The most important role in the economy is played by the engineering industry. The centres of the engineering industry are Brno, Blansko, Kuřim, Boskovice, and Břeclav. The electrical engineering industry has a tradition of more than 100 years in the Region, and is now developing in new industrial agglomerations on the outskirts of Brno, Blansko, Vyškov, etc. The food industry is based mainly in the south and east of the Region, in Znojmo, Břeclav, and Mikulov, where large agrarian enterprises linked to the local farm production are situated, such as fruit and vegetable canning companies. The northern and eastern parts of the Region are well-known for firms processing meat and manufacturing meat products and other foods from grain. There are four large breweries in the Region (Brno-Starobrno, Černá Hora, Vyškov, and Znojmo-Hostan) and numerous wine producers (Znojmo, Valtice, Čejkovice, Velké Pavlovice). The chemical and pharmaceutical industries in the Region are concentrated mainly in Brno and on the lower reaches of the Morava River, e.g. in Hodonín.

INVESTMENT In 2015, CzechInvest Agency mediated for the South Moravia Region CZK 1,080.81 million worth of investments by five investors. In 2016 again, the Region, in particular Brno, aﬃrmed its position as an ideal

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locality for a broad range of firms, not only for shared services centres or IT firms. A comparison of eight Central European cities shows that, in addition to the lowest level of rentals (approximately EUR 13/sq. m), the Region also offers the lowest wages for IT specialists. Rentals in the Region are the lowest in Brno and they are expected to remain so for some time, according to a study by the consulting firm Cushman and Wakefield. This is due to the prompt renting of newly built offices and the equally prompt renting of projects which are still under construction. According to the study, Brno is the most attractive locality not only because of the low rentals, but also due to the relatively low salaries in IT branches. The average pay earned by an IT specialist in Brno (average of three most common positions) is EUR 1,775 per month. The positions most sought after in Brno include Java developer, NET/C# developer, and Java Script developer. The Brno office market is very active and more office buildings with a total surface area of around 60,000 sq. m are expected to be constructed and offered for sale or rent soon, more than, for example, in Prague. In view of the high demand, the new surfaces, especially in the city centre, are expected to become occupied very quickly. The proportion of vacant offices in Brno keeps declining and is now slightly above 13 %. Of the 58,000 sq. m of office space rented in Brno in 2015, more than half (52 %) was occupied by IT firms. Most in demand are modern offices located at a prestigious address, where employees can be offered an attractive working environment, satisfying even top experts. Demand for the best offices comes from Statistical Data Population

31 June 2016

Gross wage

CZK 25,756 1.–2. Q. 2016 (approx. EUR 954)

Unemployment

31 October 2016

Source: Czech Statistical Oﬃce

1,177,120

5.69 %

beauty of glass Joint-stock company Glassworks Moravia, residing in Úsobrno is a traditional manufacturer from 1827 and dealer of packing glass: • • • • •

alcohol and liqueur bottles wine bottles bottles for food products laboratory glass (reagent bottles, powder bottles, dropping bottles, burette bottles) cosmetic bottles

All products in transparent, brown and black glass color, with capacity ranging from 30 ml to 2 500 ml, with maximum height of 390 mm. The core of our philosophy is customer-oriented service, stressing the fulfillment of customer‘s wishes and requirements in the first place. We specialize in producing bottles and glasses that are shaped originally according to customer‘s requirements. We produce these in series from 10 000 pieces. Our offer includes also a wide range of services: we provide devising new designs, drawing documentation, packaging according to specific requirements and other deliveries necessary for completing the products. In case our customer is not interested in investing into dies, we are able to offer standard models.

Úsobrno č. pop. 79, 679 39 Úsobrno CZECH REPUBLIC Phone: + 420 516 427 711 Fax: + 420 516 427 700 E-mail: info@sklomoravia.cz

www.sklomoravia.cz

USEFUL CONTACTS: South Moravia Regional Development Agency – www.rrajm.cz Brno Regional Chamber of Commerce – www.ohkbrno.cz South Moravia Innovation Centre – www.jic.cz South Moravia Regional Office – www.kr-jihomoravsky.cz Veletrny Brno, a.s. – www.bvv.cz Brno Business and Innovation Centre – www.bicbrno.cz Technology Park Brno – www.technologypark.cz Brno University of Technology – www.vutbr.cz Representation of the South Moravia Region to EU – southern-moravia.eu South Moravia Tourist Authority – www.jizni-morava.cz firms engaged in various businesses in addition to IT. An example of office space rentals in Brno in 2016 is the international firm Edwards, which has rented office space in the Spielberk Office Centre, where it can expand its services outside of Brno. The South Moravia Region, however, is not a region of large firms alone, but also one where a number of smaller interesting businesses have based their offices. This has been proved, for example, by an Innovator Competition organised by the Union of Small and Medium-sized Firms, supported by the South Moravia Region. The winner last year was FlowMon Networks, a.s., which helps firms all over the world to improve the administration of computer networks and their securing against modern cybernetic threats. Second place was won by STROJÍRNA OSLAVANY, spol. s.r.o., which manufactures shock absorbers for rail vehicles. The third position was occupied by ASIO spol. s.r.o., engaged in sewage water treatment. The ceremonial announcement of the competition results took place in the AdMaS Centre in Brno on 25 November. In the Best Small Firm of the Year category for firms employing under 50 people, the winner was MSR Engines s.r.o., manufacturer of the unique JetSurf, whose racing engine allows for amazing speeds of up to 55 km/h. The Jumper of the Year special prize was awarded to PLASMAMETAL, spol. s.r.o., for its plasma layering technology.

EDUCATION There are several public and state-run higher learning institutions in Brno: Janáček Academy of Music and Performing Arts, Mendel University in Brno, University of Defence, Veterinary and Pharmaceutical

The area south-east of Brno is densely interwoven with marked wine paths, a reminder of the region´s vine-growing fame of the past. The path running across the area, with several centres (Rajhrad, Židlochovice, Slavkov), oﬀers peaceful wandering through the open countryside with unique natural and architectural sights.

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,Photo: CzechTourism archives, Vladimír Kubík

Brno – Cathedral of St. Peter and Paul

University Brno and Brno University of Technology (VUT). In 2015, the South Moravia Region earmarked 3.8 % of its GDP for Science and Research, ranking it first among Czech regions in respect of R&D spending. The City of Brno in particular stands out for its support of Science and Research, especially as regards IT, which has earned it the nickname of the “Czech Silicon Valley”. In 2014, the Brno University of Technology (VUT) marked 115 years of its existence. For years, this institution has been figuring high in the best world universities’ rankings prepared each year by Quacquarelli Symonds Limited. VUT appears within the 4 % of the best world universities and in 2015 it did well especially in the Engineering – Civil and Structural category, where, in competition with remaining universities from all over the world which had entered the competition, it was placed in the 151st to 200th position. Brno is also the seat of the Centre of Scientific Excellence (CEITEC) in the area of life sciences, advanced materials and technologies. It is a joint venture of Brno’s six most important universities and institutions of higher learning, supported by the South Moravia Region and the City of Brno, specifically Masaryk University, Brno University of Technology, Mendel University in Brno, Veterinary and Pharmaceutical University Brno, Veterinary Medicine Research Institute and Institute of Physics of Materials, Czech Academy of Sciences. One of the Centre’s important projects in 2016 is, for example, the founding of the Neno Vision spin-oﬀ firm, which will be oﬀering an application for electron microscopes using the atomic forces microscopy principle to provide them with the possibility of 3D vision with in-depth analysis of the relief of the measured sample. CEITEC collaborates very successfully with the industrial sector. For example, in 2016, together with the AtomTrace start-up firm and Tescan Brno, its Sci-Trace venture won the Best Collaboration Project of the Year competition organised by AFI. Sci-Trace is an exceptionally advanced laboratory instrument, which can analyse any solid, gaseous or liquid sample without previous preparation in a matter of seconds. It is a globally unique instrument unrivalled throughout the world.

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic V. Re gio n s

ZLÍN REGION The Zlín Region, with its long industrial tradition, is linked with the name of Tomáš Baťa, a businessman who in the first half of the 20th century turned Zlín into a shoemaking empire. Still today, the Zlín Region is one of the most industrialised parts of the Czech Republic, at the same time boasting a healthy environment, a good prerequisite for the development of tourism. The Zlín Region is situated in the eastern part of the Czech Republic, stretching along the border with the Slovak Republic. Even though it is one of the Czech Republic’s three smallest regions (with a surface area of 3,964 sq. km.), it is quite unique among other Czech regions with its charming diversity of landscape, folklore, historical and technical sights. No other tourist area can simultaneously oﬀer visitors mountains, garden architecture, spas with healing mineral springs, vineyards, remnants of the Great Moravian Empire, numerous monuments and historically valuable buildings, and unique modern Functionalist architecture. Its three ethnographic entities – the fertile Haná, hospitable Statistical Data

ECONOMIC POTENTIAL

Population

31 June 2016

584,140

Gross wage

1.–2. Q. 2016

CZK 23,580 (approx. EUR 873)

31 October 2016

4.54%

Unemployment

Slovácko, and distinctive Valašsko – add to the originality of the Region. The beautiful Podzámecká and Květná Gardens and the Archbishopric Chateau in Kroměříž are world renowned, being on the UNESCO List of World Cultural Heritage Sites. The statutory City of Zlín is the natural industrial, business, and cultural centre of the whole of South-East Moravia. As a Garden City set harmoniously in a natural environment, it is a unique example of Functionalist and 20th-century urban architecture, the heritage of Tomáš Baťa. The city is linked with the existence of film studios, whose importance was enhanced by the success of animated films produced here in the latter half of the 20th century. Each year, the city is the venue for the International Film Festival for Children and Youth and the Barum Czech Rally motoring competition. An important aspect of Zlín are its cultural and educational endeavours. The materialisation of these endeavours are the Cultural and University Centre, built between 2006 and 2011 to the design of Eva Jiřičná, and the 14|15 Bata Institute – newly reconstructed factory buildings which were opened in 2013 as a new venue for the Regional Art Gallery, Museum of South-East Moravia, and Regional Library.

Source: Czech Statistical Oﬃce

The Zlín Region has always been looked upon as an economically strong area with a high concentration of industrial enterprises. The emergence and development of a large part of the industrial manufacturing plants are linked with the name of Tomáš Baťa. In the past, the main manufacturing sector was the footwear industry, with other allied sectors, such as the rubber industry and engineering developing in parallel with it.

Kroměříž – Květná Garden

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w w w. s tim zet.cz STIMZET, the production division of company M&V spol. s r.o. is focused on the production and sale of high quality cutting tools from HSS and HSSCo material. More than seventy years of tradition in modern production procedures and innovations ensures our stable and high quality. High quality tools for holemaking are supplied to professional, industrial companies and trade organisations.

The company’s production programme consists mainly of drill bits, core drills, reamers, countersinks and specialised STIMZET tools made from the highest quality high-speed steel HSS and HSSCo. Currently, the company is one of the most prominent European producers of tools of this type. Aside from the standard products, the company also manufactures specialised tools based on the customer’s requirements. M&V, spol. s r.o., Divize STIMZET Jasenická 2092, 755 01 Vsetín, Czech Republic

Tel.: +420 571 878 787 Fax: +420 571 878 788

E-mail: info@stimzet.cz

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic V. Re gio n s

The Region is also known for its aircraft industry and allied branches. These activities were traditionally primarily linked with Zlín, the centre of the Region, and its hinterland. In the course of time, other strong economic centres emerged in the Region, such as Vsetín, Uherské Hradiště, Kroměříž, Rožnov pod Radhoštěm, and Uherský Brod. The current industrial potential of the Region is based on the existence of the original key manufacturing enterprises and foreign investors in industry. The most important among these are suppliers for the automotive industry. e.g. rubber manufacturing companies (producing mainly car tyres), plastics companies (producing plastics and composite parts of vehicles), machinery, industrial forging and chemical companies (producing specialised parts for the safety of passengers). Another important branch is the aircraft industry, represented by prominent Czech aircraft manufacturers and their suppliers, companies focused on electronics (R&D and production of semiconductors, photovoltaic systems, and intelligent control systems), precision machinery (vertical and horizontal machining centres, special tooling for machine production), electrical and mechanical engineering (generators, motors and their components), production of weapons, initiation systems for blasting operations, as well as furniture manufacture. In the past few years, intensive development has been witnessed by the ICT sector, mainly in the field of safety (development of anti-terrorist safety systems, electronic transaction technologies, and road traﬃc technologies). The Zlín Region oﬀers skilled and flexible labour at very reasonable wage costs. The economic activity rate is 59.8 % and GDP per capita (in PPS- purchasing power standards) in the Zlín Region reaches 75.1 % of the EU-28 average, with the Region holding 5th position among the 14 Czech Republic regions.

INVESTMENT The most important foreign investors in the Zlín Region (according to the number of employees) are the companies of Continental AG from Germany and ON Semiconductor from the USA. In addition, there are numerous successful foreign industrially-oriented investors from Germany, Japan, the USA, the Netherlands, Spain, the UK, France, Canada, and other countries. One also finds significant investments in the Zlín

Region by local companies, mostly oriented towards R&D and innovation of their products. Potential investors are able to find suitable plots for their investment projects in a couple of industrial parks or in the database of mapped suitable brownfields in the Zlín Region. The most important development area is the Holešov Strategic Industrial Park, where the construction of infrastructure started in 2008. The chosen area to the south of the town of Holešov fulfils all the conditions for successful projects, positively influencing the future growth of the regional economy as well as that of the whole of the Czech Republic. With its 360 hectares, the Holešov Strategic Industrial Park is one of the largest prepared development areas in the Czech Republic. Investors can choose plots ranging from 0.5 to 100 hectares in size and may take advantage of perfect access to the Czech and European highway networks. There are a few public airports, including international airports, in close proximity to Holešov as well. The area has all the necessary technical infrastructure, with the backbone transport communications of the Industrial Park being connected with the regional transport network. The area is flat with good conditions for the establishment of basic structures. The competitive advantage of this locality is the industrial tradition of the Region and the Progress Technology Park situated in the heart of the area. This Technology Park significantly broadens the possibilities for investors, mainly those innovation-oriented or start-up companies for which the purchase of a plot and the construction of premises could be a distinctive barrier to starting a new business. Such companies may find their new address as well as the required services in the Technology Park.

EDUCATION As the majority of the population in the Zlín Region is employed in industry, the proportion of qualified secondary educated people in the population in the Region reaches 72.8%. The Region oﬀers a network of technically-oriented secondary and vocational schools, collaborating with regional companies. The proportion of the population with tertiary (university) education is 13.6%, with a slight increase annually. The important institution which significantly contributes to this number is the local Tomáš Baťa University in Zlín. With about 9,500 students, the University ranks among the medium-sized Czech universities. Tomáš Baťa University has six faculties – the Faculty of Technology, Faculty of Management and Economics, Faculty of Multimedia Communications, Faculty of Applied Informatics, Faculty of Humanities and Faculty of Logistics and Crisis Management. The University is a member of a number of international organisations. In addition, it is one of the most prominent centres of research in the Czech Republic and, in many respects, also abroad. An excellent reputation for research by the University has mainly been acquired with outputs in the area of Polymer Engineering, Chemistry and Automation and Technology Process Control. The University continues to strengthen its position in applied research with the development of new units where excellent research is concentrated (Centre of Polymer Systems and Centre for Security, Information and Advanced Technologies – CEBIA TECH).

USEFUL CONTACTS: Zlín Region – www.kr-zlinsky.cz City of Zlín – www.zlin.eu Regional Chamber of Commerce of the Zlín Region – www.khkzlin.cz Technology Innovation Centre Ltd. – www.ticzlin.cz/en Tomáš Baťa University in Zlín – www.utb.cz Holešov Strategic Industrial Zone – www.zonaholesov.cz

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Radiant panels ECOSUN

Radiant ﬁlm ECOFILM

MR and GR PANELS

Radiant ﬂoor ECOFLOOR

address: Slezská 2, CZ-790 01 Jeseník, Czech Republic foreign sales department phone: +420 584 495 302; fax: +420 584 495 303 fenix@fenixgroup.cz

Only The Sun Does It Better

www.fenixgroup.eu

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic V. Re gio n s

OLOMOUC REGION The Olomouc Region stretches along the Morava River. The Region itself consists of five districts: Jeseník, Olomouc, Prostějov, Přerov, and Šumperk. The Region’s administrative centre is the city of Olomouc situated 275 km from the capital, Prague. The Olomouc Region has a rich cultural tradition and is an important tourist centre with a large number of historical sites and unique natural features. The Region is known for its attractive countryside, with a large number of historical sights. One of the most popular places in 2014 was the Zoo on Svatý Kopeček, which was visited by nearly 357,000 people. The ten most visited places and attractions in the Region included the Flora Olomouc Exhibition Grounds, the Aquapark and the National History and Geography Museum in Olomouc, Bouzov Castle, the Olomouc Museum of Modern Art, Helfštýn Castle, the Archdiocesan Museum Olomouc, Šternberk Castle and the Hand Paper Mill and Paper Museum at Velké Losiny. Most visited by tourists is the regional city of Olomouc, with the second most valuable historical urban conservation area in the country, comprising a vast compound of historical buildings and architectural monuments situated on the well-preserved grounds of the medieval town.

ECONOMIC POTENTIAL The Olomouc Region has a favourable business environment, based on a strong industrial tradition with a wide range of well developed sectors and branches and a good supply of skilled labour. All this creates good

conditions for the pursuit of all kinds of business activities. Especially good conditions for industrial activities exist in what is called the local business triangle, formed by the cities of Olomouc, Prostějov, and Přerov and their environments. An advantage is their relative closeness – the distance between them being around 20 km. The Region’s other tradition is the processing of metals, which used to be mined there in the past. Over the years, metallurgy became a basis for the development of metalworking and engineering production. After 1989, most of the local manufacturing plants were taken over by foreign investors, who modernised them and incorporated them in their portfolios. The largest companies in this area are Miele technika s.r.o. (white goods), Edwards (pumps and vacuum systems), SSI Schäfer (logistic and warehousing systems) Honeywell Aerospace (aircraft engine parts) and MUBEA (suspension and lightening of vehicle bodies). Electrical engineering has become an especially rapidly growing industry in recent years. Other fast growing sectors are optics and precision mechanics, which include both traditional and new firms. The most important among them are HELLA AUTOTECHNIK (headlights), Siemens (electric motors and drives), Meopta (optical instruments) and EPCOS (magnetic parts). The food industry also holds an important position in the Region, where agricultural production plays a significant role in the economy. The largest com-

USEFUL CONTACTS: Olomouc Regional Oﬃce – www.kr-olomoucky.cz Olomouc land price maps and other information for businessmen, including information about industrial parks – www.olomoucko.cz Science and Technology Park, Palacký University, including information about the Business Incubator – www.vtpup.cz Czech Nanotechnology Cluster – www.nanoklastr.cz

Photo: CzechTourism archives, Jan Andreáš

Olomouc – Arion Fountain

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Jesenik – Bílá Opava River – Waterfalls

INVESTMENT The Olomouc Region offers potential investors a number of industrial parks, as well as modern office space. The Olomouc-Hněvotín Technological Park offers investors 950,000 square metres (95 ha) of development surfaces, designed for the location of investment projects, mainly in the area of pure innovative technologies, the manufacturing industry and light production, strategic services, shared services, administration, warehousing and storage surfaces. The Science and Technology Park of Palacký University in Olomouc has been renting offices and manufacturing spaces and providing consulting services since 2000, making it possible for its clients to use the instruments and know-how of Palacký University under advantageous conditions. The large industrial park in Hranice near Přerov, where LG. Philips Display used to manufacture its conventional television screens, now houses a number of firms, such as Etimex, Henniges Automotive, Medi-Globe, DAS, and Rolled Alloys. Other industrial parks in the Region open to investors and businessmen can be found, among others, in the towns of Šumperk, Jeseník, Šternberk, and Zábřeh. An advantage of these localities is the possibility of having the space adjusted to the specific needs of investors. One of the parks, named Šlechtitelů, which is already serving its clients, is situated on the southern outskirts of Olomouc. A new industrial park will open on the grounds of the former Bochoř Airport near Přerov. The total surface area of the park is nearly 395 ha, and another 250 ha is available for use as a subcontractor

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Statistical Data Population

31 June 2016

634,049

Gross wage

1.–2. Q. 2016

CZK 23,799 (approx. EUR 881)

31 October 2016

5.43 %

Unemployment

Source: Czech Statistical Oﬃce

park, or for potential expansion. Most structures are situated in the southern part of the park. The airport consists of a runway 2.6 km long, structures designed for air traﬃc, a reconstructed air traﬃc control tower, structures rented by private firms mostly concerned with aviation and various army facilities. In future, the locality will be connected to the planned D1 motorway. A railway station (Přerov) is located about 4 km from the compound, which makes it possible for the park to become connected to it by a railroad siding. The park is fully fitted with technical infrastructure networks. Special sections of the former airport are currently being revitalised. There are good conditions for the development of services in the centre of the Region, where new strategic centres (BSS centres) are coming into being. This is made possible primarily owing to the good supply of skilled workers with a knowledge of foreign languages and practice in the area of finance, accounting, economics, and IT. Most of

Photo: CzechTourism archives

panies located in the Region are SOUFFLET AGRO (cereal products), Nestlé Česko (sweets), OLMA (dairy produce), MJM Litovel (cereals) and ORRERO (cheeses). The textile and clothing industry, the Region´s traditional sector, maintains its position as an important manufacturer and supplier. Other traditional sectors are construction and building materials production based on the supply of local materials. Other large firms located in the Region include ŽPSV (concrete sleepers), Saint-Gobain Construction Products (insulating and building materials), Cement Hranice (cement and building mixtures) and TONDACH (roofing).

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic V. Re gio n s

the companies are based in Olomouc, a university city, with a population well versed in foreign languages and with new Type A office spaces. Ongoing new office space projects are being realised: the multifunctional CPI City Centre Olomouc, BEA Business Centre Olomouc, NOVÁ ENVELOPA Olomouc administration compound, LAFAYETTE OFFICES Olomouc. Projects currently under preparation include the OFFICE PARK ŠANTOVKA and the Silo Tower Olomouc, an interesting structure that will transform a former silo into modern offices. To help raise competitiveness, support innovation, and stimulate demand for the results of scientific and research work and their commercialisation, an institution – the Science and Technology Park – was established at Palacký University in Olomouc (VTP UP). Part of the Park is the Technology Transfer Centre, whose task it is to promote the commercialisation of the University’s scientific research and to provide patent services. Another workplace is

the Technological Centre with laboratories of the Applied Research Centre. There are several projects in the Olomouc Region whose task it is to support scientific research in the Region, such as BIOMEDREG – Biomedicine for regional development and human resources (the project concerns itself with the biomedical research of tumours and infectious diseases). On the basis of the research results, the Centre develops new medications and outlines individual therapy for patients (more at www.biomedreg.eu). One of the tasks of the Haná Regional Centre for Biotechnological and Agricultural Research is to transfer advanced plant biotechnologies to enterprises in the Region. As a part of this vast project, new facilities destined for scientific research will be built on a surface area of more than 7,000 square metres. More at www.cr-hana.eu or RCPTM – Regional Advanced Technology and Materials Centre (supports the start-up of new firms using sophisticated technologies and applied physical, optical, and chemical research with special regard to nanotechnologies).

EDUCATION There are three universities in the Olomouc Region. Palacký University in Olomouc with an enrolment of 24,000 has eight faculties: Theology, Philosophy, Law, Medicine and Dentistry, Education, Science, Physical Culture, and Health Science. The Medical faculty is linked with the University Hospital Olomouc, one of the ten largest hospitals in the Czech Republic. The remaining two universities are the Moravian University with 450 students oriented towards Economy and Management, and the University of Logistics, with 900 students focusing on Transport and Logistics.

ENGINEERING AND METALLURGICAL GROUP

Production portfolio: BUCKET WHEEL EXCAVATORS AND MINING EQUIPMENT STEEL STRUCTURES STEEL AND IRON CASTINGS DIE FORGINGS CUT PARTS

WWW.UNEX.CZ

UNEX a.s., Brníčko 1032, 783 91 Uničov, Czech Republic Phone: +420 585 071 111, E-mail: info@unex.cz

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CUSTOMISED MASS SERIES

METAL MANUFACTURING

member of INDUSTRIAL SYNERGY group

KOVONA SYSTEM, a.s. Průmyslová 2007 737 01 Český Těšín Czech Republic

www.kovona.cz

We have a long history in the area of metal manufacturing We offer: design, development, testing and manufacture of metal products completed with plastic or wooden parts, assembly, packing, and delivery

D o i n g B u s i n e s s i n t h e C ze c h Re pu bl ic V. Re gio n s

MORAVIASILESIA REGION The Moravia-Silesia Region has a very diverse geography. It is located in the North-East of the Czech Republic, forming one of the most remote areas of the country. Prague is approximately 300 km distant as the crow flies. Expressed in transport time, this distance is one hour by plane, three hours by train, and four hours by car. The Region’s border characteristics provide opportunities for efficient cooperation in the manufacturing sector, infrastructural development, cultural and educational activities, and especially in the area of tourism. For this purpose, four Euroregions are currently active in the Region – Praděd, Beskydy, Silesia, and Cieszyn Silesia. The Region has an area of 5,427 sq. km and consists of six former districts (from the West: Bruntál, Opava, Nový Jičín, Ostrava-Town, Karviná, and Frýdek-Místek). The regional city of Ostrava is considered the Region’s commercial and cultural centre. It has large shopping and exhibition centres, luxury hotels, pleasant cafés and theatres. The tourist trade also benefits from the extensive network of cycling tracks through the interesting surroundings. The Region’s traditional cultural centres are Ostrava, Opava, and the Těšín District, with the important Polish minority in Český Těšín. The internationally renowned Janáček Philharmonic Orchestra is based in Ostrava. The Region is characterised by its conditions for industrial tourism (Tatra Technical Museum in Kopřivnice, Museum of Wagon-Making in Studénka, Museum of Mining in Ostrava-Petřkovice, Dolní Vítkovice, National Cultural Heritage Site of Michal Coal Mine). The Region’s spa industry is based on utilising the curative effects of the iodine-bromine water in the Darkov Spa and Rehabilitation Centre. A new spa sanatorium with architecturally interesting buildings has been operating in Klimkovice since the beginning of the 1990s. Watersport fans enjoy boating down the Moravice and Odra Rivers, and those who prefer recreation on the water’s edge visit the Žermanice and Těrlicko Statistical Data Population Gross wage Unemployment

31 June 2016

1,211,396

1.–2. Q. 2016

CZK 24,526 (approx. EUR 908 )

31 October 2016

7.33 %

Source: Czech Statistical Oﬃce

dams, or, less frequently, the dam in Slezská Harta. There are golf courses of various levels of diﬃculty in the Moravia-Silesia Region, starting with courses featuring short holes, all the way to courses where championship tournaments are played. Whatever the course, you will always be playing in beautiful natural surroundings with the magical backdrops of the Beskydy Mountains or historical castles. The courses at Čeladná, Ostravice, Šilheřovice, Kravaře, and Ropice have won the favour of many local and foreign players.

ECONOMIC POTENTIAL The Region has been one of the most important industrial regions in central Europe since the 19th century. However, the orientation of its economic activities – the industrial structure – causes considerable problems in the restructuring of this Region and in attempts at dealing with social problems, especially with those related to the unemployment rate. The natural environment has improved significantly since the beginning of the 1990s, thanks to the decrease in industrial production, the use of technologies friendlier to the environment and significant investments in environmental measures. More than a half of the Region’s area is occupied by agricultural land, and another part of over 35 % is taken up by forests (especially in the mountainous areas of Jeseníky and Beskydy). Besides natural wonders, the Region has rich deposits of raw materials – mainly a crucial domestic deposit of hard coal – and deposits of natural gas, as well as other raw materials, such as limestone, granite, marble, slate, gypsum, sandy gravels, sands and brick clays. Since 1989, the Region’s economy has basically changed. New sectors came into being, such as the automotive industry, biotechnology, information and communication technologies, electrical engineering and the pure technologies sector within power engineering. The number of scientific and research workplaces, too, is increasing, with a corresponding increase in the number of expert workers.

INVESTMENT The Moravia-Silesia Region has a number of industrial parks. Two of the most successful industrial parks are the industrial park in Karviná-Nové Pole and in Kopřivnice, which together host the greatest number of investors. These locations also have the look of prosperous industrial parks. Another important industrial park is in Ostrava-Hrabová. The largest project, which was tied to the interest of a strategic investor operating in the automotive industry, was the preparation of a strategic industrial park at Nošovice. The surface area of the Park, limited by the zoning plan, is 260 ha. The Industrial Park was prepared for the investment project of the Hyundai motor company. The investors in the Industrial Park are Hyundai Motor Manufacturing Czech s.r.o., Logistics Park Nošovice a.s., Mobis Automotive Czech, HYSCO CZECH, s.r.o., Hyundai Dymos Czech, s.r.o., and Glovis Czech Republic s.r.o. The Ostrava-Mošnov Strategic Industrial Park is another unique investment opportunity for investors. Its advantage is not only a strategic position in the vicinity of the Ostrava International Airport, but also easy access to the trunk road and railway systems. The surface area of the Industrial Park is 200 ha. In 2015, The Czech government approved the award of a subsidy for

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the construction of the Nad Barborou Industrial Park. It is a brownfield in the location of a former coal mine between the towns of Havířov, Karviná, and Orlová. On completion, the Industrial Park will cover an area of 88 ha. The support of investment in the Moravia-Silesia Region is bearing fruit. For example, A123 Systems, a company concerned with the development and sale of advanced lithium-ion accumulators and systems, will broaden its activities in Europe. The new manufacturing plant to be opened by A123 Systems in Ostrava, with the support of CzechInvest Agency, will supplement the production programme of the company’s existing technical centre in Stuttgart, Germany. The plant will be sited in the CT Industrial Park. In the first phase, the plant’s output will be 600,000 batteries per year. The company is planning to employ 150 people. Its products, oﬀering environmentally friendlier systems using less fuel and thus generating fewer emissions, are an alternative to conventional technologies. The company also operates manufacturing plants in China and the United States. A123 has rented part of an existing building occupying a surface area of 7,000 sq. m, which will be put into service at the end of the year. Construction work will be carried out by CTP. A123 Systems is taking advantage of the growth of the car industry, not only in the Czech Republic, but also in Central and Eastern Europe. This trend is estimated to continue. In March 2016, the Swedish firm of Mölnycke Health Care started the construction of a factory on the site of the former Dukla mine in Havířov, with the ceremonial tapping on the foundation stone. The firm, manufacturing disposable surgical products, is the first large investor in the industrial zone. At the outset, the firm will employ 300 people, mainly female workers. Their number will

USEFUL CONTACTS: Moravia-Silesia Regional Authority – www.kr-moravskoslezsky.cz Ostrava City Authority – www.ostrava.cz The Regional Council of the Moravia-Silesia Cohesion Region – www.rr-moravskoslezsko.cz Ostrava Science and Technology Park – www.vtpo.cz Chamber of Commerce of the Moravian-Silesian Region – www.khkmsk.cz

YOUR ENTRY POINT TO CENTRAL EUROPE

www.airport-ostrava.cz

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later be increased. The factory will start operations in mid-2017. Its construction will cost CZK 1.6 billion. In nearby Kopřivnice, Röchling Automotive enlarged its manufacturing plant in 2016. The firm, producing plastic parts for cars, completed the construction of new manufacturing and warehousing facilities, where it will install additional manufacturing equipment. The enlargement has cost the firm EUR 8 million. The factory currently employs 130 people, and this number will further increase. There are several firms in the Region concerned with research and development. One of them is Varroc Lighting Systems. This global development Centre of Excellence is located in Nový Jičín and was opened in October 2016. It has special electronic laboratories with testing facilities, whereby the firm is responding to the growing need for electronic products in connection with the increase in car manufacture.

EDUCATION The Region prides itself on its very good educational opportunities. There are five universities in the Moravia-Silesia Region, with 16 faculties (Mining University – Technical University Ostrava, Ostrava University, Silesian University in Opava, Ostrava Business School and the Social-Administrative College, Institute of Lifelong Learning in Havířov). The enrolment is more than 38,000 students.

20 minutes from Ostrava city centre

VI.

USEFUL ADDRESSES AND INFORMATION

MINISTRY OF FOREIGN AFFAIRS

MINISTRY OF INDUSTRY AND TRADE

The Ministry of Foreign Aﬀairs is a central body of the state administration of the Czech Republic responsible for formulating foreign policy and protecting the rights and interests of the Czech Republic and its citizens abroad. Its competence is defined in § 6 of Act No. 2/1969 Coll. The Ministry of Foreign Aﬀairs also operates diplomatic missions of the Czech Republic abroad, including embassies, consulates, and delegations to international organisations. Mainly through this network the Czech Republic promotes its economic and commercial interests abroad and enhances the general awareness of the production and investment potential of the Czech economy.

The Ministry of Industry and Trade is the central body of state administration for the economic and commercial policy, the affairs of small and medium-sized enterprises and trades, the energy and raw material policy of the state, and coordination of the Czech Republic’s foreign trade policy in relation to the different countries and in support of export. Organisations directly managed by the Ministry of Industry and Trade: the Czech Trade Inspection, the Assay Office, the Office for Technical Standardisation, Metrology, and State Quality Control, the State Energy Inspection, the Czech Office for Weapons and Ammunition Testing, the Investment and Business Development Agency CzechInvest, the Czech Trade Promotion Agency CzechTrade, the Czech Metrology Institute, the State Research Institute for Material, the Ministry of Industry and Trade Services Administration.

Ministerstvo zahraničních věcí Loretánské náměstí 5, 118 00 Praha 1 Phone: +420 224 181 111 Fax: +420 224 182 048 E-mail: epodatelna@mzv.cz Detailed information about the Ministry of Foreign Aﬀairs of the Czech Republic and its role in economic diplomacy and export-promoting activities is available on the following website: www.mzv.cz

Ministerstvo průmyslu a obchodu Na Františku 32, 110 15 Praha 1 Phone: +420 224 851 111 Fax: +420 224 811 089 Politických vězňů 20, 112 49 Praha 1 Phone: +420 224 851 111 Fax: +420 224 221 575 E-mail: posta@mpo.cz More information at: www.mpo.cz

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MINISTRY OF REGIONAL DEVELOPMENT

CZECHTRADE  CZECH TRADE PROMOTION AGENCY

The Ministry of Regional Development is a central government authority of the Czech Republic in the matters of regional and housing policy, development of dwelling and housing stock, letting of flats and nonresidential premises, spatial planning, building rules, expropriation, investment policy, tourism, undertaking. It plays an important role within the state administration through the extent of its powers, competences and liabilities for the management of financial means. The Ministry also implements the regional and structural policy of the European Union, the so-called policy of economic and social cohesion. With the assistance of funding, it stimulates the development of weaker regions so that they do not lag behind the European average. These objectives are fulfilled in practice with help from structural funds. The Ministry of Regional Development also plays the role of the National Coordination Authority (NCO) for the utilisation of financial resources from the European Union (EU) funds. The National Coordination Authority provides a single framework for all operational programmes in the Czech Republic financed from Structural Funds and the Cohesion Fund. The management of the diﬀerent operational programmes is the sphere of authority of the relevant ministries. Apart from its national coordination role, the Ministry of Regional Development also functions in some programmes as the direct governing body responsible for their successful drawing.

CzechTrade is a trade promotion organisation founded by the Ministry of Industry and Trade of the Czech Republic. Our main objective is to promote the internationalisation of Czech companies by facilitating their cooperation links with foreign entrepreneurs. CzechTrade provides a wide range of business support and networking services including: introduction to Czech quality suppliers, assistance with local outsourcing, organisation of buyer’s visits and meetings with Czech companies, participation in trade fairs abroad, information about doing business in the Czech Republic.

ONLINE SERVICES Czech Business Partner Search Are you seeking a supplier of goods/services or business partner in the Czech Republic? Complete the on-line form. Select your country at homepage (www.czechtradeoﬃces.com) or visit the website of the CzechTrade oﬃce which is the nearest to your country and open the Czech Business Partner Search.

Czech Exporters Directory Czech Exporters Directory is the oﬃcial on-line database of Czech exporters and the easiest tool to help you find potential business partners in the Czech Republic. Directory is available on-line at http://exporters.czechtrade.cz/en.

BusinessInfo.cz/en Ministerstvo pro místní rozvoj Staroměstské náměstí 6, 110 15 Praha 1 Phone: +420 224 861 111 Fax: +420 224 861 333 E-mail: posta@mmr.cz

The government business portal provides a comprehensive source of information for companies that are looking for guidance, assistance, and business opportunities in the Czech Republic.

CzechTrade – Czech Trade Promotion Agency (Central Oﬃce) More information at: www.mmr.cz

Dittrichova 21, 128 01 Praha 2 Green line: +420 224 907 820 E-mail: info@czechtrade.cz More information at: www.czechtrade.eu

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CZECH EXPORT BANK

EXPORT GUARANTEE AND INSURANCE CORPORATION EGAP

Czech Export Bank provides export-related financial services. The bank has twenty-one year experience in supporting large export transactions conducted by Czech exporters, as well as export contracts for smaller projects and sub-deliveries. Today, the majority of the bank‘s products are offered under favourable conditions to foreign buyers – partners of Czech exporters, who thus find Czech goods and services attractive not only in terms of their price and quality. The bank focuses on offering a comprehensive range of products for the financing of exports. In addition to the financing of exports of goods and services, Czech Export Bank has recently progressed to see its role in the financing of construction works, especially infrastructure projects abroad. Furthermore, the bank offers a range of structured and project financing models. Czech investors are provided with favourable financing for their plans to build new production capacities abroad or for their plans to invest capital into foreign companies. Czech Export Bank has significantly expanded its services of financing the export-related activities of small- and medium-sized enterprises.

The Export Guarantee and Insurance Corporation (EGAP) is a specialised state-owned credit insurance company focused on the insurance of territorial and non-marketable commercial risks connected with exports of goods, services, and investments from the Czech Republic. It insures export credits, pre-export credits, investments abroad and credits for their financing, manufacturing risks, and bonds issued by banks, and thus covers a broad range of risks which exporters encounter in the preparation and realisation of export contracts. The corporation provides services to all Czech exporters and investors abroad irrespective of their size, legal form, volume of exports, and the extent of the investment. EGAP activities play the role of Export Credit Agency (ECA), which is guided by OECD and EU rules that restrict state support for exports only to products and territories in which commercial entities do not operate, i.e. primarily to medium- and long-term export credits and to risk-involving territories. These rules ensure that exporters from the diﬀerent countries do not compete due to the extent of state support, but exclusively in the quality and prices of goods and services.

Česká exportní banka, a.s.

Exportní garanční a pojišťovací společnost, a.s.

Vodičkova 34, 111 21 Praha 1 Phone: +420 222 841 100 Fax: +420 224 226 162 E-mail: ceb@ceb.cz

Vodičkova 34/701, 111 21 Praha 1 Phone: +420 222 841 111 Fax: +420 222 844 100 E-mail: info@egap.cz

More information at: www.ceb.cz

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More information at: www.egap.cz

D o i n g B u s i n e s s i n t h e C ze c h R epu bl ic VI. Useful Addresses and Information

CZECH TOURIST AUTHORITY  CZECHTOURISM

INTERNATIONAL CHAMBER OF COMMERCE/ICC

The Czech Tourist Authority – CzechTourism promotes the Czech Republic both at home and abroad as an attractive tourist destination. The agency works with a number of partners, including representatives of regional institutions, tourist regions, destination management organisations, cities, municipalities and the business community. All of its activities aim to stimulate interest in the Czech Republic’s uniqueness while inspiring foreigners to visit. CzechTourism objectives are to continuously increase number of incoming tourists and systematically encourage and develop domestic tourism. This year, all of CzechTourism marketing activities support a communication strategy that presents the Czech Republic as a land of stories – a land where travellers not only discover existing stories, but also experience, create, live, and share their own. The marketing theme for 2017 is “Baroque through All the Senses”. To achieve successful results, CzechTourism uses a network of 19 foreign representative oﬃces, actively cooperates with the media, and appeals to partners from the travel trade sector at trade fairs. The agency organises study tours to the Czech Republic for media representatives and tour operators. It systematically channels news, trends, and analyses from the tourism sector to the domestic tourism trade and media. In order to draw attention to and promote the Central European region on distant markets, CzechTourism is an active member of the V4 countries tourism group (the Visegrád Four: the Czech Republic, Slovakia, Poland, Hungary). CzechTourism is a state-funded organisation of the Ministry of Regional Development.

ICC is – and has been throughout its long existence – a steadfast rallying point for those who believe, like our founders, that strengthening commercial ties among nations is not only good for business but good for global living standards and good for peace. ICC was founded in 1919 in Paris. Today, ICC represents 6.5 million companies and associations in more than 130 countries and transmits their interests to high oﬃcial representatives including the UN, EU, WTO, OECD and G20, where ICC has been granted the highest level consultative status.

Czech Tourist Authority – CzechTourism Vinohradská 46, P.O.BOX 32, 120 41 Praha 2 Phone: +420 221 580 111 E-mail: info@czechtourism.cz More information at: http://www.czechtourism.com/trade-sites/

Prestige Being an ICC member is a question of prestige. Principles ICC creates rules and principles that are fully respected and used in everyday business and have become one of the most important pillars of international trade. Partnership ICC provides a large portfolio of services fundamental for foreign trade, such as educational and advisory services, as well as creating opportunities for establishing partnership with foreign business partners. Territorial workshops Main aim of these workshops is to support the eﬃciency of Czech economic diplomacy under the presence of Czech ambassadors to introduce trade and investment opportunities to Czech exporters, to help diversify Czech exports to perspective markets and to help establish useful business contacts. In the period of 2015/2016, these workshops were focused on e.g.: Italy and Malta, Singapore, Bulgaria, Armenia, Sweeden, Brazil, Indonesia, Ethiopia, Peru and Ecuador, China, Finland, and many others. Seminars, professional courses Our extensive range of educational programmes is targeted at specific topics associated with conducting international trade. Lecturers include experts and professionals with long-time experience or managers working in the given field – Incoterms 2010, Bank guarantees and experience with URDG 758, Documentary Credits and Standbys – International Standard Banking Practice and Practices in the USA, Terms of international sale contract in foreign trade, …

International Chamber of Commerce/ICC Na Florenci 2116/15, 110 00 Praha 1 Phone: +420 257 217 744 E-mail: icc@icc-cr.cz More information at: www.icc-cr.cz

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CONFEDERATION OF INDUSTRY OF THE CZECH REPUBLIC

CZECH NATIONAL BANK

It is a voluntary, non-political and non-governmental organisation that brings together employers and entrepreneurs in the Czech Republic. It is the largest alliance of employers and represents a predominant part of industry in the Czech Republic. It represents 31 branch or sectoral associations and 126 individual members, altogether more than 11,000 member subjects which employ around 1.3 million people. Its mission is to participate in shaping the Czech Republic´s economic and social policy and represent and promote common interests of its members in order to create optimum business environment. It promotes and defends the interests of its members in the Council for Economic and Social Agreement (Tripartite), which is the platform for negotiations between the government, employers and trade unions. It supports the establishment of trade and economic relations between Czech and foreign entities by means of trade missions, conferences, bilateral and multilateral negotiations, and through the participation of its members in trade fairs, exhibitions and professional seminars. The Confederation is a co-founder of the Czech Business Representation in Brussels (CEBRE) and of the Platform for Foreign Development Cooperation. As a member of significant European and international organisations of employers and entrepreneurs – BUSINESSEUROPE, BIAC, it enhances the position of Czech businesses.

The Czech National Bank is the central bank of the Czech Republic and the supervisor of the Czech financial market. The primary objective of the CNB is to maintain price stability. Achieving and maintaining price stability, i.e. creating a low-inflation environment in the economy, is the central bank’s ongoing contribution to the creation of conditions for sustainable economic growth. Central bank independence is a prerequisite for eﬀective monetary instruments conducive to price stability. In addition, the CNB fosters financial stability and sees to the sound operation of the financial system in the Czech Republic. To this end, the CNB sets macroprudential policy by identifying risks jeopardising the stability of the financial system and contributing to its resilience. Without prejudice to its primary objective, the CNB also supports the general economic policies of the government and the general economic policies in the European Union. In accordance with its primary objective, the CNB sets monetary policy. It also issues banknotes and coins and manages and oversees the circulation of currency, the payment system, and settlement between banks. It also performs supervision of the banking sector, the capital market, the insurance industry, pension funds, credit unions, electronic money institutions and bureaux de change. Since 1 December 2016, the CNB has also been the supervisor of non-bank credit providers. In order to undertake its tasks, the CNB processes and generates statistical information. As a central bank, the CNB provides banking services to the state and the public sector. It maintains the accounts of persons and organisations connected to the state budget. By agreement with the Ministry of Finance pursuant to the budgetary rules, the CNB conducts transactions relating to government bond issues and financial market investments.

Svaz průmyslu a dopravy České republiky Freyova 948/11, 190 05 Praha 9 Phone: +420 225 279 111 E-mail: spcr@spcr.cz More information about the Confederation of Industry and about professional associations can be found at: www.spcr.cz

Česká národní banka Na Příkopě 28, 115 03 Praha 1 Phone: +420 224 411 111 www.cnb.cz/en/public/contacts.html More information at: www.cnb.cz

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CENTRE FOR REGIONAL DEVELOPMENT OF THE CZECH REPUBLIC  ENTERPRISE EUROPE NETWORK Centre for Regional Development of the Czech Republic (the Centre) is the implementing agency for European programmes operating under the auspices of the Ministry for Regional Development of the Czech Republic. The Centre hosts one of the offices of the Enterprise Europe Network (EEN), a member of Europe’s largest network (with more than 500 partners) set up and run by the European Commission with the purpose of supporting business. Its consortium based in the Czech Republic (CR) is composed of six partners from four cities – Praha, Brno, Plzeň, and Ostrava. The mission of the network is to help especially small and medium-sized enterprises (SME) on entering the EU internal market and doing business there. Its officials provide comprehensive consulting services to businesses with the aim of broadening the international cooperation of companies, raising the innovative potential of enterprises in the EU and helping SMEs to become integrated more widely in EU framework programmes. To foreign clients the Centre – EEN offers: information about the Czech Republic, about the business environment in the CR, Czech legislation, about how to find Czech partners for co-operation, information about starting a business in the CR, sources of financing from Structural Funds and other information.

Centrum pro regionální rozvoj České republiky – Enterprise Europe Network U Nákladového nádraží 3144/4, 130 00 Praha 3 Phone: +420 225 855 312 E-mail: een@crr.cz More information on the Centre for Regional Development of the Czech Republic at: www.crr.cz More information on the Enterprise Europe Network in the Czech Republic at: www.een.cz

CZECH CENTRES WHAT IS CULTURAL DIPLOMACY’S ADDED VALUE? Cultural diplomacy is the application of creative and cultural industries to develop the soft skills necessary for diplomacy. We connect people around the world and broaden their awareness of the cultural values of the Czech Republic.

WHY SHOULD YOU TAKE PART? Good relations are fundamental for good business and we connect both. We create and support partnerships on a local and global level between both public and private bodies. The opportunity to connect, network and enhance both your outreach and reputation are provided through partnerships with Czech Centres.

WHO ARE WE FOR YOU? Czech Centres is the recognised representative of promoting national values of the Czech Republic abroad and we operate as a proven tool of public diplomacy. Not only will your business assist in the development of relationships between the Czech Republic and countries abroad, it will also increase the prestige and relevance in the Czech Republic.

WHERE DO WE OPERATE? We attain a global outreach through our Czech missions abroad. Our organisation provides a global network throughout three continents – Asia, Europe, and America - and 22 cities.   The EU is covered by Czech Centres in: Austria, Belgium, Bulgaria, France, Germany, Hungary, Italy, the Netherlands, Poland, Romania, Slovakia, Sweden, Spain and the UK   Eastern Europe: Russia and Ukraine   North America & Latin America: the USA and Spain   Africa and The Middle East: Israel   The Balkans: Bulgaria, Hungary, and Romania   Asia: Japan, Russia, South Korea We are also active members of EUNIC, the European Union National Institutes for Culture.

Česká centra Václavské nám. 816/49, 110 00 Praha 1 Phone: +420 234 668 211 E-mail: info@czech.cz More at: www.czechcentres.cz

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CZECH CHAMBER OF COMMERCE CONFEDERATION OF EMPLOYERS’ AND ENTREPRENEURS’ WHO WE ARE ASSOCIATIONS Independent public institution of entrepreneurial self-governance OF THE CZECH REPUBLIC Largest and most representative business association

   

in the Czech Republic including small, medium, and large companies, self-employed entrepreneurs, associations, unions, and craftsmen organisations  N etwork – regional (regional and district chambers) and professional (unions, associations, etc.)  P latform for 15 thousand members representing 60 % of GDP of the country and 66 % of employable population in the Czech Republic in non-compulsory membership scheme  M  ember of European and international organisations

WHAT WE DO  S upport of International Trade  Organisation of business missions targeting particu

lar territory or sector  S upport of International Trade  Organisation of business missions targeting particu-

lar territory or sector  Organisation of business missions accompanying

state and government oﬃcials on their visits abroad  Organisation of business forums, seminars, round

tables etc. targeting particular country or territory  Organisation of bilateral meetings between Czech

entrepreneurs and foreign business delegations

The Confederation of Employers’ and Entrepreneurs’ Associations of the Czech Republic (Konfederace zaměstnavatelských a podnikatelských svazů ČR – KZPS ČR) is an open, independent, special-interest association established according to Act No. 83/90 Coll., on association of citizens:  i t unites eight representatives of employer unions in the fields of construction industry, textile industry, small and medium-sized businesses, production and consumer co-operatives, agriculture, mining and oil industry, wood processing industry, education, health care, culture, and social services;  i t represents 22 000 bodies with over 1 300 000 employees;  i t supports the promotion of specific interests of its members in the legislative field and in other areas;  i t formulates common business and employer interests of its members and promotes them in cooperation with relevant state authorities, other employers’ organisations and trade unions and especially in various forms by consulting the government;  i t is one of the social partners representing the side of entrepreneurs in the Council of Economic and Social Agreement (Tripartite).

 Involvement in various European Commission’s

programmes  Support to foreign companies in finding suitable

business partners in the Czech Republic  Publishing foreign demands, oﬀers or tenders on

Chamber website  Czech Business Representation in Brussels (CEBRE)  C onsultancy & advisory services (subsidies, projects,

export & foreign trade, legal issues, etc.)  C ZECHPoints (registers, documents, certificates, servic-

es, etc.) over 50 one-stop-shops throughout the country  P rofessional Education – national certification pro-

KZPS’s members:  A ssociation of Textile, Leather and Clothing Industry  U nion of Czech and Moravian Producer Cooperatives  S yndicate of Businesspeople and Tradespeople of the Czech Republic  A ssociation of Entrepreneurs in Building Industries in the Czech Republic  U nion of Employers’ Associations of the Czech Republic  E mployers’ Association of Mining and Oil Industry  A gricultural Association of the Czech Republic  Union of Czech and Moravian Consumer Co-operatives

grammes (recognised occupation), skill competitions,  T hematic courses & seminars, etc.  O bligatory commenting point for new business legislation  L obbying at local, national, European & international

level  I ssuing own monthly magazine KOMORA.cz and

Konfederace zaměstnavatelských a podnikatelských svazů ČR Václavské náměstí 21, 110 00 Praha 1 Phone: +420 222 324 985 Fax: +420 224 109 374 E-mail: kzps@kzps.cz

weekly electronic news distributed directly to members More information at: www.kzps.cz (in Czech)

Hospodářská komora České republiky Na Florenci 2116/15, 110 00 Praha 1 Phone: +420 266 721 300 E-mail: foreigndpt@komora.cz More information at: www.komora.cz

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D o i n g B u s i n e s s i n t h e C ze c h R epu bl ic VI. Useful Addresses and Information

ARE YOU SEEKING

TRADE PARTNERS

IN THE CZECH REPUBLIC? DO YOU WANT TO PLACE GOODS/SERVICES ON THE CZECH MARKET? INTRODUCE YOURSELF IN THE ECONOMIC QUARTERLY LOBBY! DISTRIBUTION

5% 12%

5% 6% 52%

CHARACTERISTICS OF THE JOURNAL AUDITED CIRCULATION 15 000 COPIES PUBLISHED QUARTERLY TARGET GROUP CZECH ENTREPRENEURS AND MANAGERS

20%

SUBSCRIBERS AND ENTREPRENEURIAL INSTITUTIONS CLIENT BONUS COPIES FAIRS AND EXHIBITIONS SEMINARS, CONFERENCES, EVENTS FOR ENTREPRENEURS AND MANAGERS GOVERNMENT OFFICES AND REPRESENTATIVE BODIES OTHERS STRUCTURE OF SUBSCRIBERS OWNER/JOINT OWNER . . . . . . . . . . 40% TOP MANAGEMENT . . . . . . . . . . . . . 32% OTHERS . . . . . . . . . . . . . . . . . . . . . . 28%

More information at www.lobby.cz/en.html or

e-mail: marketing@lobby.cz 2017

135

CENTRAL AND OTHER KEY BODIES OF THE CZECH REPUBLIC SUPREME BODIES Oﬃce of the President of the Czech Republic Kancelář prezidenta ČR www.hrad.cz Parliament of the Czech Republic Parlament České republiky Chamber of Deputies Poslanecká sněmovna ČR www.psp.cz Senate of the Parliament of the Czech Republic Senát Parlamentu ČR www.senat.cz

Oﬃce of the Government of the Czech Republic Úřad vlády ČR www.vlada.cz

Ministry of Foreign Aﬀairs Ministerstvo zahraničních věcí www.mzv.cz Ministry of Industry and Trade Ministerstvo průmyslu a obchodu www.mpo.cz Ministry of Finance Ministerstvo ﬁnancí www.mfcr.cz Ministry of Transport Ministerstvo dopravy www.mdcr.cz Ministry of Agriculture Ministerstvo zemědělství www.mze.cz

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Ministry of Justice Ministerstvo spravedlnosti www.justice.cz Ministry of Defence Ministerstvo obrany www.army.cz Ministry of the Environment Ministerstvo životního prostředí www.env.cz Ministry of Labour and Social Aﬀairs Ministerstvo práce a sociálních věcí www.mpsv.cz Ministry of Health Ministerstvo zdravotnictví www.mzcr.cz

Ministry of Regional Development Ministerstvo pro místní rozvoj www.mmr.cz

Ministry of Education, Youth, and Sport Ministerstvo školství, mládeže a tělovýchovy www.msmt.cz

Ministry of the Interior Ministerstvo vnitra www.mvcr.cz

Ministry of Culture Ministerstvo kultury www.mkcr.cz

DIPLOMATIC MISSIONS OF INTERNATIONAL ORGANISATIONS Representation of the European Commission in the Czech Republic e-mail: comm-rep-cz@ec.europa.eu www.evropska-unie.cz, www.ec.europa.eu/ceskarepublika Organisation for Security and Co-operation in Europe Prague Oﬃce of the OSCE Secretariat e-mail: quest@osce.org www.osce.org United Nations Information Centre Prague e-mail: unicprg@osn.cz www.osn.cz European Parliament Information Oﬃce Prague e-mail: eppraha@europarl.europa.eu www.evropsky-parlament.cz

Photo: CzechTourism archives

MINISTRIES

D o i n g B u s i n e s s i n t h e C ze c h R epu bl ic VI. Useful Addresses and Information

THE MOST IMPORTANT WEBSITES General information on the Czech Republic

www.czech.cz

Oﬃcial site for the CR

BusinessInfo

www.businessinfo.cz

Oﬃcial site for professionals searching for information, assistance, or business contacts in the CR

Doing Business in the Czech Republic

www.doingbusiness.cz

General information about business climate, structure, and development of the Czech economy

Portal of the Public Administration

www.vlada.cz

The electronic gateway for the public to administration and government services

ARES

wwwinfo.mfcr.cz/ares/ares.html

Access to Registers of Economie Subjects/Entities

Business Register

www.justice.cz/xqw/xervlet/insl/ index

Public directory

Business Register

www.rzp.cz

Trade Licensing Register

European Databank

www.edb.cz

Information operator

Czech exporting companies

http://exporters.czechtrade.cz/en

Czech Exporters Directory

Zlaté stránky

www.zlatestranky.cz

Telephone and companies directory

Iuridika

http://iuridica.eunet.cz

Directory of legal services and oﬃcial bodies

Portal of Czech judiciary

www.justice.cz

Course of legal proceedings

www.cnb.cz

Monetary, ﬁnancial, and macroeconomic data

Company Contact Information

Legislation

Finance Czech National Bank Prague Stock Exchange

www.pse.cz

Prague Stock Exchange data

RM-System

www.rmsystem.cz

RM-System Czech Stock Exchange

Czech Insurance Association

www.cap.cz

Directory of insurance companies operating in the CR

www.cs.mfcr.cz/spd_internet/

Directory of taxpayers registered under individual tax identiﬁcation numbers (DIČ)

Chamber of Tax Advisers of the CR

www.kdpcr.cz

Database of tax advisers

www.czso.cz

Oﬃcial statistical data and information covering diﬀerent subjects

Statistics Czech Statistical Oﬃce Fairs and Exhibitions BVV – Brněnské veletrhy a výstavy/Trade Fairs Brno

www.bvv.cz

List of exhibitions in Brno and relevant information

Association of Fair and Exhibition Organisers of the CR

www.czechfairs.cz

Exhibition centres and companies organising trade fairs in the CR and abroad

Miscellaneous The Industrial Property Oﬃce

www.upv.cz

Patents, trade marks, utility models, and industrial designs

The Czech Science Foundation

www.gacr.cz

Awards grants to the best projects of basic research in all branches of science

The Register of Advertising Agencies

www.registrra.cz/rra

Expert assistance in choosing and working with advertising and communication agencies in the CR

Česká pošta (the Czech Post)

www.ceskaposta.cz

Incl. postcodes of municipalities and its districts (PSC), philately etc.

Residence of Foreigners in the CR

www.domavcr.cz

Advice for living in the CR

CzechInvest

www.czechinvest.org

Business and Investment Development Agency

Association for Foreign Investment

www.aﬁ.cz

Support for entry of foreign investors

Cadastre of Real Estate

www.cuzk.cz

Information system, contains data on real estate in the CR

Road toll in the CR

www.premid.cz

Information on toll and charges

Portal of the Regional Information Service

www.risy.cz

Information website on the regions

The Czech Association of Hotels and Restaurants

www.ahrcr.cz

Directory of hotels in the CR

2017

137

LIST OF ADVERTISERS AGADOS, spol. s r.o. AŽD Praha s.r.o.

122 35

BANES, spol. s r.o.

Blažek Glass s.r.o.

BVD PECE spol. s r.o.

Czech Aerosol, a.s.

Česká exportní banka, a.s.

Doosan Škoda Power s.r.o.

FANS, a.s.

109

EGÚ Brno, a.s.

139

FARMAK, a.s.

FENIX Trading, s. r. o.

TOS VARNSDORF a.s. UNEX a.s. Veletrhy Brno, a.s.

120

HELTOS, a.s.

Jihostroj a.s.

KABELOVNA Děčín Podmokly, s.r.o.

KOVONA SYSTEM, a.s.

124

KOVOSREAL s.r.o.

102

LARM a.s.

Teplotechna - Prima, s.r.o.

Letište Ostrava, a.s.

126

M & V, spol. s r.o., divize STIMZET

118

Magdalena Dworoková - NIKÉ

MV Technik, s.r.o.

OMNIPOL a.s.

Řetězárna a.s.

SKLÁRNY MORAVIA a.s.

115

SPEDICA, s.r.o.

STAR Czech s.r.o.

Statical s.r.o.

Šmeral Brno a.s.

T Machinery a.s.

29 Photo: CzechTourism archives

138

2017

46 24, 31 123 26