Business News

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Moody's signs association agreement with Czech agency

The American rating agency Moody's Investors Service has signed an association agreement with its biggest Czech partner, the Czech Rating Agency or CRA. In an interview with the CTK news agency on Tuesday, CRA's Chairman Petr Vins didn't rule out the possibility of Moody's actually investing in the Czech partner in the near future. The agreement commits Moody's to providing technical assistance to its partner. Joint activities would include research and analysis of credit conditions in the Czech Republic. CRA is the sixth major rating agency to have signed this type of contract with Moody's Investors Service.

Czech Airlines to join Sky Team

The national carrier Czech Airlines has been formally invited to join the global air transport alliance Sky Team. The airline said this week that it would join at the start of its summer flight schedule at the end of March next year. Sky Team was established last June by Air France, Delta Airlines, Aero Mexico and Korean Air. Both Delta and Air France have indicated readiness to invest in Czech Airlines, but their share, to be purchased from the state, should not exceed 15 percent. Czech Airlines currently operates nine ATR regional turboprops, 17 Boeings and two Airbuses. Over 90 percent of its shares are held by the state.

Corruption biggest obstacle to Czech EU membership

According to the latest EU enlargement report, the Czech Republic has speeded up the process of implementing European legislation, but its weak and corrupt public service sector is an obstacle to the country's membership of the European Union. In its latest analysis, the EU's Brussels-based Union of Industries supports the entry of all 13 candidate countries. It says the Czech Republic meets the Copenhagen political criteria and can be viewed as a functioning market economy, which is able to compete within the EU's internal market. On the other hand, there is widespread expectation of illegal payments and other forms of corruption in the country, both inside and outside the government, the report notes.

Olesnice recognized in EU renewel competition

And finally, the South Moravian town of Olesnice has received an honourable mention in an EU-sponsored European Prize competition for country renewal projects. Members of the international awards commission visited the town last May. Olesnice was mainly awarded for the construction of a new sewage treatment plant and anti-flood barriers. The town also supported the development of a local dairy plant and meat-packing factory, in which dozens of jobs have been created, and helped improve transport services in the region. Olesnice, which has a population of 1,800, won the Czech Village of the Year title last year. Shortly after that, it was promoted to the status of town.

Czech firms look to invest in rebuilding Yugoslavia

With sanctions against Yugoslavia gradually being lifted, a new market has emerged for firms who want to take part in the reconstruction of that country. Martin Tlapa, director-general of the CzechTrade promotion agency, believes that Czech firms should play a part in the process: However, not everyone shares Mr Tlapa's optimism. Miroslav Singer of Expandia Finance warns Czech firms about the risks involved: Czech Air Force to receive VAT exemption, call tender for new planes

By the end of the year, the Czech Air Force was to have received its Czech-built advanced light combat aircraft L-159 ALCA, and within three years take delivery of Western-built supersonic jets. But because of funding problems, ALCA producer AERO Vodochody will only be able to deliver 14 planes instead of 21, and the rest will be supplied by the end of January.

The original contract from 1992 seems to have put the government in an inferior position, only minimal sanctions were envisaged. Manufacturing prices have rocketed since then and the latest news is that the Defence Ministry could be granted a VAT tax break of around 2.5 billion Czech crowns. VAT in this country amounts to a steep 22 percent for most goods. Defence Minister Vladimir Vetchy:

"The original contract stipulates that regardless of how many planes we will receive in a given year, we have to pay a set price, including value added tax. But we've now been granted a temporary payment exemption, a payments schedule that will make it possible to pay over a couple of years, including the VAT payments."

But the Czech Air Force also needs advanced new supersonic jets to replace its ageing fleet of Soviet-built planes. There have been too many accidents over the past few years and with the existing planes it is very difficult to meet NATO's compatibility and interoperability requirements.

After much vacillation, the government has now asked the defence minister to call an international tender by the end of November for a multi-role tactical supersonic jet. It should be clear by the end of October how many planes are needed. Western bidders will then be given five months to present their offers and by the middle of next year, the government should announce the winning bid. Minister Vetchy admits there'll be no contract if the government finds the bids unsatisfactory. The offset programmes, he says, should amount to 150 percent of the manufacturers' asking price. In the game, defence experts in Prague say, are the tried but proven American F-16s and F-18s, the innovative Anglo-Swedish Gripen, which hasn't seen combat yet, and the French Mirage 2000.