Business and Investment Opportunities

in the Czech Republic

31-03-2009Petr Pavlík

2

General View

The Czech Republic is a small and highly open economy.

Foreign trade is a decisive factor for economical growth. (In 2008 compared to 1993 the trade balance turnover was app five times higher)

Presently Czech Republic exports three fourth of its production has become one of the most export-oriented countries in the EU

(exports more than Finland o Greece, Luxembourg and Slovak Republic together)

is one the most attractive country in EU for foreign investors

Czech firms get more and more stabile position on the world markets

3

Sectors with the highest share of exports

Machines and transport vehicles road vehicles industrial machinery electrical devices / appliances

Energy generation technologies biomass boilers, generators, hydraulic turbine

Chemical products Tires, plastic and rubber products

Metallurgy products iron and steel semifinished materials

Trade and Investment – Institutional Framework

Ministry of Industry and Trade

* Trade Promotion CzechTrade Agency

* Investment Attraction CzechInvest Agency

4

5

Trade Promotion - CzechTrade

CzechTrade is a pro-export organization, the subsidy of the Ministry of Industry and Trade of the Czech Republic.

• Established in 1997

• 33 Offices worldwide

• Services → Exporting from the Czech Republic

• ISO 9001 certified as from october 2002

6

Doing Business - CzechTrade

MISSION

To contribute to the export growth of our clients through our professional services.

VISION

To be the first choice for Czech companies when penetrating and developing international markets.

7

Export success

Individual assistance

abroad

Consultancy and Education

Export Information

Structure of CzechTrade services

8

CzechTrade services

Free of charge and confidential services to help your company find Czech suppliers and

business partners Represent a reliable and time and money-saving way of building your business relationships Encouraging alliances of SMEs Supporting industrial design and innovation Promoting czech industry through fairs and exhibitions

9

Your Czech Supplier

Are you looking for a new supplier? Your Czech Supplier is an exclusive on-

line service that links you direct with suppliers in the Czech Republic.

Information and registration forms on

www.czechtradeoffices.com/supplier

10

Czech Industrial Partner Search

Are you interested in outsourcing or long-term business cooperation?

CzechTrade saves you time, money and help you select the right business partner. We carefully research your requirements, offer you a portfolio of reliable industrial partners and help you establish long-term partnership.

www.czechtradeoffices.com/cipas

11

Business Visits

Follow-up service of YCSupplier service and CIPASearch.

CzechTrade can organise an individual or a group buyers´ visit in the Czech Republic.

We will set up meetings, arrange itineraries and help you with planning your business visit.

Contact our headquarters in Prague or your nearest CzechTrade office abroad for further details.

12

Czech Exporters Directory

Company database Regularly updated Search by name, region, sector

products,services EN, DE, RU version available on-line

http://exporters.czechtrade.cz

13

Export Alliances

Partnership for complex solutions. CzechTrade initiates formation of Czech exporters

´ field alliances.

Czech Water Alliance Czech Water Technologies Czech Extraction and Mining technology Czech ICT Alliance Czech NBC Team Czech Space Alliance Czech Health & Safety Alliance

http://alliances.czechtrade.cz

Fashion Point Alliance Czech Surfacing

Alliance Czech Valves Alliance Czech Energy Team

14

Business Information

Government business portal provides a wealth of information for companies that are looking for guidance, assistance and business in the Czech

Republic.

www.BusinessInfo.cz/en

15

Czech Republic: On-line

Oficial website of the Czech Republicwww.czech.cz

Business Infowww.businessinfo.cz

National Statistics Institutewww.czso.cz

Companies Registerwww.justice.cz

Fairs of Brnowww.bvv.cz

The Czech Republic is one of the most successful transition economies in terms of attracting foreign direct investment. Over 130,000 Czech firms across all sectors are supported by foreign capital. Since 1993, more than USD 50 billion in FDI has been recorded.

Strategic Location Stable Economic Performance Educated Workforce Competitive Infrastructure Investment Incentives Supplier Base Developed Real Estate Market Quality of Life CzechInvest's Support

Why Invest in the Czech Republic

Main objective = to advise and support existing and new entrepreneurs and foreign investors in the Czech Republic.

• Established in 1992

• 9 Foreign and 13 Regional Offices

• System of quality management was certified by Quality Austria in accordance with ISO 9001:2000

Services focused on:Investments with high added valueDevelopment of clustersResearch and development activities

Investment Attraction - CzechInvest

CzechInvest provides the following services free-of-charge:

Comprehensive services for investors full information assistance, handling of investment

incentives, business property identification, location of Czech suppliers,

aftercare services

Business infrastructure development

Access to structural funds

CzechInvest Services

National incentives scheme - the Act on Investment (n°72/2000 Coll.)

Tax incentiveCorporate tax relief for up to 5 years for new companiesPartial tax relief for up to 5 years for existing companies

Job creation grants Financial support for creation of new jobsTraining and retraining grantsFinancial support for training new employees

Site supportTransfer of public land at a favourable price

National Incentives Framework

Priority Sectors•Automotive Industry•Aerospace Industry•Precision Engineering•Electronics and Electrical Engineering•Life Sciences •Medical Devices and Engineering •IT and Software Engineering•R & DCzech Republic offers to investors:- strong industrial tradition- high-qualified workforce in the field of engineering-linguistic capacity and widespread knowledge of English

Financial Support for Investment

Support is directed to production activities in manufacturing industry (investment incentives) and to investments into progressive technologies and activities with high added value and strong export potential.

1/ Incentives for manufacturing industry

2/ Technology centres

Support is provided up to the amount given by the Regional Map ofState Aid Intensity. The actual amount therefore depends on investment’s location; small enterprises are awarded by 20% bonus, medium enterprises by 10% bonus.  

Financial Support for Investment

Regional Map of State Aid Intensity (% of deductible costs) 

Financial Support for Investment

Offered incentives

Corporate tax relief Full tax relief for 5 years (newly established companies) Partial tax relief for 5 years (expanding companies) Job-creation grants 50,000 CZK per employee in the regions worst affected by the unemployment

(A) Training and re-training grants 35% of training and retraining costs in the regions worst affected by the

unemployment (A)

The total amount of the mentioned investment incentives (with the exception of training and re-training grants) must not exceed 40% (50% in case of medium enterprises, 60% in case of small enterprises) of the investment made into long-term tangible and intangible assets.

Incentives – manufacturing industry

Eligibility criteria   A B C Minimum investment (mil. CZK) 50 60 100 Minimum coverage by own equity 25 30 50 (mil. CZK) Minimum % of the total investment 60 60 60 into machinery

Incentives – manufacturing industry

Supported through the system of programmes approved by a government resolution within the strategy of support to projects in progressive technologies and activities with high added value and strong export potential.

Technology Centers -focused on the development and innovation of high-tech products and

technologies, including the development of specific software and applications which are a part of these products and technologies

Business Support Services Centers - engaged in the selected activities of companies, which are characterized by

their close ties to information technologies and distinct international focus, in particular:

shared services centers, high-tech repair centers, software development centers, ICT expert and solution centers.

Incentives – Technology Centres and Business Support Services Centres

The most important investment projects

Company Country of OriginTotal investment

(in mil. USD) sector

Hyundai Motor Manufacturing Czech South Korea 1 222 automotive

Toyota Peugeot Citroën Automobile Czech Japan/France 850 automotive

Škoda Auto Germany 562 automotive

Mondi Packaging Paper Štětí a.s. Netherlands 394 paper

Nemak Europe Mexico 317 automotive

Denso Manufacturing Czech Japan 255 automotive

Bosch Diesel Germany 238 automotive

Panasonic Mobile and Automotive System Czech

Japan 235 electronics

Chemopetrol Czech 219 chemical

DHL Information Services Europe Great Britain 190 IT

Source: CzechInvest, 2008 From 1993 to 2007

CzechTrade Office in SpainC/Apolonio Morales n°6, 305-A28036 MadridTel.: 91 571 86 15Fax: 91 572 29 50E-mail: madrid@czechtrade.czwww.czechtrade.org.es

Petr Pavlík

Thank your for your attention.

Agencia de Promoción de la República Checa