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Czech Business and Trade

Economic quarterly with a Supplement are Designed for Foreign Partners, for Use in Business, Financial and Manufacturing Circles, and by State Bodies and Institutions Interested in Cooperation with Czech Republic


How Much Will the European Union Contribute and What Projects Will It Support?

By joining the European Union, the Czech Republic has gained access to EU’s internal funds. The sum appropriated to it for 2007-2013 amounts to EUR 29.5 billion (EUR 4.2 billion per year on an average). Of the neighbouring states, only Poland will be receiving more: EUR 80.5 billion. The Czech Republic - the richest country of the Visegrád Four – is entitled to draw something below 3% of GDP per year on an average, Slovakia and Poland approximately 3%.

Members can draw money from the structural and cohesion funds intended for rural development, including agriculture and fisheries. The Czech Republic is receiving 90% of all European transfers from those funds, four-fifths of which goes for the development of the infrastructure and human resources, environmental protection, innovation and competition support.

The amount of committed money is one thing, however, and the ability to spend it rationally is quite another. In this sense, the Czech Republic has had to cope with two major handicaps: initial delay in drawing money from EU funds and a large proportion of investments in the transport infrastructure, which has a lower potential to raise the future production capacity of the economy in comparison, for example, with innovation and human resources development support. full article

Enterprises Reintroduce Employee Benefits

Luncheon vouchers, education and insurance contributions continue to be the most popular tax-preferred benefits. The most favourite tax non-preferred benefit is the mobile phone. With the improving economic situation, 95% of Czech enterprises are reintroducing employee benefits, according to a survey conducted by the ING company and the Confederation of Industry of the Czech Republic. Generally, the most favoured benefit is the mobile phone, provided by 80% of companies. Luncheon vouchers and company cars are offered by three-quarters of the responding firms. A permanent highlight among company benefits for several years now have been insurance products: 60% of employers offer their employees Pension insurance contributions and 30% Life Insurance contributions.

Education Benefits Are Becoming Increasingly Popular

While the provision of tax non-preferred benefits is stagnant, firms rather choose to invest in tax-preferred advantages. The fastest growing are education benefits, offered by 11% of firms. An interesting growth has been shown by Life Insurance benefits: 5% of companies are planning to raise their Life Insurance contributions or to introduce this system. In the case of complementary Pension insurance, this option has been chosen by 4% of respondents. “With the worsening of global economic conditions, firms became increasingly interested in insurance products. Besides guiding their employees towards greater responsibility for their future, these firms used their insurance contributions as motivation at a time when salary increases were not the order of the day. Consequently, employers have got used to regarding benefits as an important motivation for their employees and have decided to continue providing them, as interest in them keeps growing,” explains Jiří Běťák, Director of ING Employee Benefits. full article 

Foreign Investments Cautiously Pouring In

In 2009, the Czech Republic attracted foreign investments worth 2.7 billion Dollars. According to the United Nations Conference on Trade and Development, this was the 57th best result worldwide.

UNCTAD reports that, last year, global foreign direct investment declined massively, including in the Czech Republic. In 2009, foreign direct investment in the CR dropped by 42%. This result, however, is at least 2% better in comparison with the world’s other industrialised countries. However, Miroslav Krizek, CEO of CzechInvest Agency, whose task it is to attract foreign investors to the Czech Republic, adds one more reason why foreign direct investment is declining: “Last year, foreign owners borrowed a record three billion Dollars from their Czech branches,” he explains. “Although this added to the fall of the Czech Republic from its position on the list of the most successful recipients of foreign direct investment, it actually means that investing in the Czech Republic is rewarding – even to the extent that those investments may finance the loss-making operation of the investors’ own parent companies,” Krizek adds. full article

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