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CZECH REPUBLIC: Foreign companies invest in Czech expertise

PRAGUE: Foreign companies bet on Czech experts. Thirty-one international companies have built a development or distribution centre in the Czech Republic over the past year. These are mainly ICT development centres.

In 2006, new projects of Microsoft (Development Center for Mobile Technologies), Skype (Application Development Center, the company's first outside of its home country), CSC Corporation (IT center for European clients), Deutsche Börse (software development center) and RedHat (software development center) were added to the list of already successfully established centres in the country. One example is Oracle which has built a centre in the Czech Republic to supervise sale in the entire Central and Eastern European region.

In addition, companies such as Sun Microsystems, Monster Technologies, LogicaCMG and Infosys officially announced expansion projects based on the success of their operations in the Czech Republic. IBA Group, a global IT service provider, is expanding its development centre in Brno (South Moravia) this year.

About 60 percent of foreign direct investments announced by United States-based companies in the Czech Republic in 2006 are research-and-development projects in innovation industries. A high percentage of these projects were design projects in information technology and software.

New FDI record
In 2006 CzechInvest mediated for the Czech Republic a total of 176 investment projects worth USD 4.6 billion. The number of received projects and the volume of investments in 2006 were the largest in the agency's history.  Among the received projects, there is also a very large number of projects with high added value.

All over the country
CzechInvest data show that about 20,000 Czechs have been employed in the centres all over the country. Their number is going to grow further as the consultancy firm Accenture wants to double its staff numbers in the Czech Republic.  Accenture employs 160,000 people worldwide, and in the Czech Republic it has 1,900 employees. Accenture chief executive William Green says that it pays off to move a company to central Europe or India, for instance.

Foreigners are not interested only in Prague. Brno in southern Moravia has been picked by German air carrier Lufthansa for its client centre, and Infosys of India has launched a branch office in this city. Red Hat of the USA plans to launch one of its most important branches in Brno.

Bringing in specialists
For 2006 Czechinvest received a total of 44 projects involving technology centres and centres of shared services, which is the largest number of such projects in the agency's history. - In coming years CzechInvest will focus more intently on sophisticated investments with high added value. These projects are among the most attractive because they bring technological know-how, attract top-notch specialists and reinforce the Czech Republic's good name abroad, CzechInvest says.

Expansions are among the largest investments
The number and volume of received projects in 2006 far surpass the totals for 2005 (151 projects). Thanks to these projects, at least 34,824 new jobs should be created in the Czech Republic in the coming years. Expansions account for half of the ten largest investments on which the organization worked in the past year. - This indicates that investors have been successful in the Czech Republic and want to further develop their operations here, and are decidedly not planning to leave the country, CzechInvest points out.

Located to regions affected by structural problems
Most of the investment projects and the largest volume of investment (USD 2.2 billion) were directed to the Moravia-Silesia region. The second most attractive location was the Usti region, with a total volume of USD 0.6 billion). The Moravia-Silesia and Usti regions are among the areas worst affected by structural problems.

Largest investment projects in 2006 - manufacturing

 Largest investment projects i 2006 - SC and TC:

 _{SC: Shared services centre  TC: Technology centre,} 

Source: Czechinvest

Hyundai to use 65% Czech components
The Korean carmaker Hyundai has begun construction work on the largest investment project in the Czech Republic’s history. Hyundai’s total investment is estimated at more than EUR 1 billion (USD 1,221 million) and should create 3,500 new jobs.

“The Hyundai project will be beneficial for the entire Czech Republic. We estimate that full operation of the plant will boost the country’s nominal GDP growth by up to 2.5%,” Jakub Mikulasek, COO of CzechInvest said. And it is likely to attract Korean suppliers to the country.

A large proportion of components will be produced in the Czech Republic. While the proportion of Czech parts used by TPCA (Toyota Peugeot Citroën Automobile) in Kolin is roughly 50%, it is expected that 65% of the components used by Hyundai will be of Czech origin.

Since it was established in 1992, CzechInvest has been involved in 771 investment projects in the total value of USD 18.566 billion. Nearly 154 000 people have found direct employment in supported projects. Thousands of other jobs have been created in connection with supported investments.

Plan for implementation of the euro approved
The Czech Republic's national coordination group for implementation of the euro has approved the National Plan for Implementation of the Euro. The government discussed the national plan at the end of March 2007. The Finance Ministry believes that the euro could realistically be implemented in the Czech Republic in 2012. The national plan should correspond to this outlook.

Sources: Czech Invest and CTK