Business briefs

Vitkovice Steel

Russia's Evraz Holding to pay $284m for control of Vitkovice Steel; CzechInvest announces new Japanese, French, and British investments; Aero Vodochody wins 'trial contract' with Airbus; Cabinet approves long-awaited bill on rent deregulation... will increase salaries of doctors, nurses, and civil servants

Russia's Evraz Holding to pay $284m for control of Vitkovice Steel

The Czech government has announced the results of a privatization bid for Vitkovice Steel, the country's largest producer of rolled steel products, steel plate and sheets. Russia's Evraz Holding is to take control of the Czech steelmaker within three months. The Russian coal and steel concern had bid 7.05 billion crowns ($284 million) in the tender in which nine companies competed. Evraz Holding pledged to invest roughly $100 million into Vitkovice Steel. The Russian company has also promised to promote the development of Ostrava, the industrial region of north Moravia that is home to Vitkovice Steel. The Ostrava region has among the highest rates of unemployment in the Czech Republic.

CzechInvest announces new Japanese, French, and British investments

Meanwhile, the government agency CzechInvest this week announced several high-profile expansions into the country by foreign companies. The Japanese concern Daikin Industries, which has already invested some 2 billion crowns in Czech operations, opened a plant in the Borska pole industrial park in Plzen. The plant will produce air conditioning units and employ some 1,200 local people by the end of next year. A major Japanese automotive component manufacturer, Koyo Seiko, also officially launched production in Plzen this week; that plant is eventually expected to employ 500 people. France's Saint-Gobain has also opened a new Czech plant, which will produce glass windows for luxury cars. The French company has invested $15 million into the Horovice plant, which will employ at least 100 people. And finally, the British-Japanese company Mi-King has launched production in a new Czech centre that will process rolled steel.

Aero Vodochody wins 'trial contract' with Airbus

Aero Vodochody
In other news, the struggling Czech aircraft maker Aero Vodochody has won a contract to assemble fuselage parts for Airbus planes. Details on the value of the "trial contract" have not yet been made public, and the agreement with the concern EADS is awaiting approval by the Aero Vodochody board. But a company spokesman said that finding a niche in the European aircraft supply chain was a long-term goal for Aero Vodochody, which is again in state hands after the withdrawal last year of the US aeronautics giant Boeing.

Cabinet approves long-awaited bill on rent deregulation...

In another major development this week, the Czech cabinet has approved a bill on regulated rent that calls for average annual growth of 9.3 percent. About one in five flats are now subject to rent control. Owners' associations have long complained of the distortion in the market, and this year filed several complaints with the European Court of Human Rights, seeking billions of crowns in compensation. Under the government's proposal, annual increases would begin in October 2006. The goal is to bring regulated rent up to 5 percent of the market value of the property. Rents would grow the fastest in the centre of Prague, with growth projected at an annual 17.8 percent until 2012. Landlords say the proposed increases still would not cover maintenance costs. A junior party in the governing coalition, the Christian Democrats, is pushing for the deregulation to be completed in four years, rather than six.

... will increase salaries of doctors, nurses, and civil servants

Photo: European Commission
And finally, the Cabinet this week agreed to raise the salaries of doctors and nurses working in state hospitals, by 2500 crowns and 1500 crowns per month, respectively. As of September 1st, doctors will earn roughly $1600 per month and nurses $760. Analysts say hospitals will have to make administrative cuts to make up the difference. The Cabinet also plans a cost-of-living pay raise for civil servants of about 2.5 percent.