Alpha News

Monthly newsletter October 2005

( 15 / November / 2005 )

Headline News

The world's largest personal computer manufacturer, American firm Dell, is planning to build a new plant worth EUR 100 mln (roughly CZK 3 bn) in Central Europe. The Czech Republic, as well as Slovakia, Hungary, and Poland are potential locations.

Citizens of the wealthy European countries live longer, an OECD study shows. The CR with a median life expectancy of 75 years and an annual income of EUR 8,265 per capita hovers in the middle of the list above Germany and below Slovakia.

Politics & Legislation

Yesterday parliament passed the draft of the bill that would allow tax cuts for individuals with monthly income below CZK 30,000 into its third reading.

Yesterday MPs approved the draft of the bankruptcy bill in its first reading; the bill strengthens the position of creditors, allows individuals to get rid of debt by reaching agreements on instalment payments with banks, and also means that a firm's bankruptcy will not always result in its liquidation.

The Politician's Ethical Code stipulates that politicians may only meet with representatives of registered lobby and interest groups, that family members may not be employed as assistants, that gifts as well as advantages gained while exercising one's mandate must be announced, and that salaries and compensation must be published.

Economy

This year's public finance deficit could total 3% of the GDP even though a total of 4.7% of GDP had originally been expected.

Last year 202% of the national GDP average was apportioned to each Prague resident. The Central Bohemian and Southern Bohemian regions follow far behind with 94% of the national average apportioned to each resident. The Olomoucko region fared the worst with only 78%.

The current account deficit was 12.3 bn CZK for H1 2005, which was 39.3 bn CZK less year-on-year, and was due to higher growth in income over expenses. The lower deficit positively influenced the trade balance most noticeably. The financial account surplus of 90.4 bn CZK for H1 2005 was 40.2 bn CZK greater y/y and represented 6.3% of GDP. This increase had the most positive influence on the net influx of foreign direct investment, which increased 112.3 bn CZK year-on-year. Privatization of state assets had the biggest effect on this result (sale of stake in Český Telecom and Unipetrol to foreign investors).

Business & Miscellaneous

Japanese bearing manufacturer Daido Metal has chosen to build its new facility in Brno's Cernovicka Terasa. Yesterday the firm's representatives signed a contract for the purchase of the lot with the municipality. Daido Metal will invest almost CZK 400 mln in the location and will employ roughly 100 individuals in the first phase. Production should be launched at the beginning of next year.

Korean automobile manufacturer Hyundai officially announced that it will build a new production facility with an annual capacity of 300,000 vehicles in Central Europe. The Ostravsko region is the most likely location for the new EUR 1 bn facility; Hyundai plans to begin production in the second quarter of 2008.

German energy concern RWE Energy officially confirmed that it created its European headquarters for natural gas purchases in Prague at the start of October. It will employ tens of other sellers in Prague within two years. The new headquarters will also be responsible for purchases of transport and storage capacities. The Prague headquarters will purchase natural gas for the RWE concern's firms in the Czech Republic, Germany, Austria, Hungary, and the Netherlands. Subsidiary RWE power in Great Britain will be the only one to keep an independent purchasing department. Frank-Detlef Drake will be the director of the headquarters.

Spanish automobile component manufacturer CIE Automotive has decided to increase its investment into the construction of a rear automobile axle production facility in the Lesna industrial zone in the municipality of Valasske Mezirici from the originally announced EUR 20 mln to EUR 34 mln. This is due to a contract from German automobile manufacturer Opel, which wants 600,000 axles delivered for its Astra, Zafira, and Meriva models.

The Osram concern has invested more than 1.3 bn into the Bruntalsko region in the five years that it has been doing business there. It could invest a further CZK 150 - 300 mln in the coming years. Osram is currently transferring production from its American affiliate to the Czech Republic.

In November pharmaceutical firm Walmark intends to begin producing tablets in its new Trinec plant. Annual production should immediately increase by 50% to 600 mln tablets. Production should increase by a total of 100% over the course of 2007.

Japanese concern Kyocera commenced production of solar panels in its new plant worth CZK 200 mln in the Kadan municipality of northwestern Bohemia; it will hire up to 300 individuals within 3 years.

Chinese firm Lenovo, which purchased IBM's computer division this year, will open its first European contact and service center in Prague in October.

America OnLine, the largest Internet access provider in the USA, intends to build a call center for its German-speaking clientele in the municipality of Liberec. A definitive decision should be made soon. The firm is already using the services of personnel agencies in its search for employees.

German writing utensil manufacturer Faber-Castell has decided to expand its logistics center in the Hluboka Nad Vltavou municipality to include a cosmetic pencil division. The total investment will increase by CZK 7 mln to CZK 57 mln.

According to the OECD, the average Czech works 1,986 hours per year, which is roughly 250 hours more than the average Slovak. According to analysts, fewer part-time employees and longer work loads in comparison to most OECD states are the result of legislation.

About 60% of Czechs are capable of conversing in foreign languages, according to a Eurobarometer survey. 31% of the Czech population have a command of German, 24% of English, and 19% of Russian.

Air carrier Lufthansa started flying between Prague and Hamburg on 15th October. There are two daily flights on the route. In late October, also low-cost airline Smartwings launched new, four-times-a-week flights from Prague to Stuttgart. Last but not least, budget air carrier easyJet will begin flying between Prague and Basel in the spring 2006.

According to an international survey published in Science magazine, Czechs are one of the friendliest cultures in the world. They also ranked very high in terms of humbleness and altruism.

The Czech film "Something Like Happiness" (Stesti) directed by Bohdan Slama has won the main award for the best film at the 34th international film festival in Montreal. The Festival du Nouveau Cinema in Montreal focuses on new trends in cinema and its competition presents directors' second and third feature films and documentaries. "Something Like Happiness" won in a competition of 20 films. "Something Like Happiness" has already received awards at international film festivals in San Sebastian, Spain, and Athens.

Most of the next James Bond film will be shot in Prague. It is the first time that the four decades old Bond series will be mostly shot on foreign soil. Landing most of the work on the next 007 blockbuster underlines Prague's credentials as a global movie centre.

Exchange Rates

Averages for the 1st half of 2005
EUR 1 = CZK 30.071
GBP 1 = CZK 43.845
USD 1 = CZK 23.42

Sources: Czech News Agency, Prague Daily Monitor, Radio Prague, dailies Hospodarske noviny, Pravo, MF Dnes and Lidove noviny

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