One of the measures to overcome stagnation and to start up the growth trend in the production sphere of the Czech companies is also the system of concessions offered to foreign investors. It is an interesting fact as several business entities from Slovakia are operating in this country.

The state agency for investment promotion in the Czech Republic, Czechinvest, based on the proposal of the Czech government prepared a draft memorandum. It is a key document for investors, which will be signed with those companies, which decide to claim concessions approved by the government. The Government of the Czech Republic adopted a set of measures at the end of last year which determine conditions for establishment of foreign investors in the country on the level comparable to Hungary and Poland. The limit for giving the advantage to the foreign investor, if he invests within a period of five years, is lowered from USD 25 mil. to USD 10 mil.. Land released from the Land Stock of CR and the National Property Fund of CR will be offered to foreign investors for a symbolic price. The Government of CR will also support establishment of industrial zones, investments into machinery equipment of minimum 40% of overall costs, besides expansion of production, research and development, the government will subsidize one job with a volume of 100 thous. Korunas per person. According to Czech experts following these steps the Cabinet of the Prime Minister Mr. Milos Zeman can count with certainty with an influx of foreign investments. However, it will be important how fast these measures are put into practice. Influx of foreign investments to CR in the last year, compared to 1997, increased by 40%, but majority of investors avoided the industrial sector. Financing was directed mainly into the financial sector (32.2%), and into purchase of real estates (hypermarkets and shopping centers - 25%). According to the data of the Czech National Bank the mechanical engineering and production of metal constructions received Kc 3.5 bn (8.7%), and food industry Kc 3.28 bn. (8.2%). That was also the reason for the new system of concessions to attract investors into the area of processing industry. According to the data of Czechinvest they register definitely determined investors with the volume of investments amounting to USD 0.5 bn, and other potential investors with a potential of Kc 1.5 bn.. In the following years, according to the experts, the influx of foreign investments to CR should significantly increase also due to the expected privatization of Czech banks and important companies with a significant participation of the state. In order to increase the attractiveness of CR for foreign investors it is necessary to cultivate the legal environment, renewing the economic growth of the country, transparency of the capital market and functioning system of government concessions for investments.

Slovak Trade FORUM