Q1 industrial statistics
The growth in Czech industrial production accelerated in March by 12 percent year-on-year from less than 9 percent in the previous month. The growth rate was influenced mainly by a sharp increase in foreign demand. Industrial sales grew by 10.3 percent year-on-year while wages grew by 4.2 percent. Industrial prices in April slowed down due to lower electricity prices for corporate customers.
Friday night was the deadline for submitting binding offers for privatisation of the remaining state-controlled bank, Komercni Banka. According to the Czech weekly business newspaper Euro, there are four bidders - France's Societe General and Credit Agricole, Italy's UniCredito, and Germany's Hypovereinsbank. An advisor for the privatisation project, Goldman Sachs, now has four weeks to evaluate the offers. The two best ones will proceed to the second round when they will be able to increase their bids. The minister of finance said recently that the Czech government does not expect less than 40 billion CZK for its 60-percent stake in Komercni Banka.
Gov't introduces unit prices to protect local producers
The Czech government has issued a directive on unit prices of shoes and some textile goods in an effort to curb illegal imports of such products to the Czech Republic from Asia and fight the widespread practice of custom duty fraud. Czech producers have complained about unfair competition mainly from Vietnamese and Chinese retailers who offer low-quality products for unbeatable prices. Asian importers reportedly declare prices that are much lower than the real value and thus evade paying customs duty. The new directive gives customs officers a tool to fight this wide-spread fraud, and protects local producers.
Prague hosts Czech-French business forum
Prague hosts a Czech-French business forum this week. The event is aimed at promoting French investment in the Czech Republic and is jointly organised by the French Centre for Foreign Business Activities and the Czech government's trade promotion agencies Czechtrade and Czechinvest. The forum is being attended by around 700 participants from both countries, including Czech Prime Minister Milos Zeman and other Czech and French government officials.
Czechs to analyse option of not putting Temelin into operation
Talks between Czech and Austrian officials on the controversial Czech Temelin nuclear power station resulted in a promise by the Czech side to include the option of not putting the plant into operation in the environmental impact assessment to be presented to Austria. However, the head of the Czech Nuclear Safety Office, Dana Drabova, said the idea of was purely theoretical.
Unions claim foreign companies abusing Czech labour rights
The Czech Chamber of Trade Unions have complained about malpractices used by foreign companies in the Czech Republic when dealing with trade union organisations. The organisation's head, Richard Falbr, said that some foreign companies do not respect the labour code and international agreements but employees are so afraid of losing their jobs they're reluctant to testify. Mr Falbr said some foreign companies try to prevent their Czech employees from establishing trade union organisations. In one case, Mr Falbr said, the situation went so far that the Czech Chamber of Trade Unions plans to complain about the company to the International Labour Organisation.
Free movement of labour to be resolved soon?
The European Union is nearing a compromise on the painful issue of whether to allow free movement of labour from East and Central European countries immediately after they join the union. EU members bordering on the candidate countries, especially Germany and Austria, are worried about wage competition and labour market disruption if large numbers of eastern European workers are allowed to enter the market.
On Monday, 14 out of the 15 members agreed on a compromise solution proposed by Sweden - a 2-year transition period with the option to prolong it if necessary. The only opponent is Spain, which is convinced that workers from Eastern countries should be able to seek jobs freely as soon as they join the EU. Compared to the original demands by Germany and Austria for a 7-year transition period, the latest proposal is quite close to an acceptable compromise, although analysts do not expect substantial numbers of eastern workers to seek jobs in the West.
Current problem: tax arrears and evasions
In the first quarter of this year, the state budget showed a gap of 10 to 15 billion crowns. The ministry of finance attributed the gap to ineffective tax collection. Tax arrears have been a long-term problem for the treasury, and although the situation has improved, taxpayers owe the treasury nearly 100 billion CZK, which is slightly less than 1/6 of the state budget. Some of the payments are more than 10 years overdue. Recently, the Supreme State Audit Authority urged the finance ministry to focus on big tax defaulters rather than individuals and small businesses and make tax collection more effective.
On the other hand, the Audit Authority admits that there are a number of loopholes in Czech legislation that make tax evasion possible. As an example, the head of the Supreme Audit Authority, Lubomir Volenik, mentioned a case when a company was due to pay 200 million crows on VAT but used various legal loopholes to shuffle it between several companies and the last firm which was supposed to pay the amount ended up in Madagascar. Is insufficient legislation all that's to blame? And what can be done about the situation? I spoke to former finance minister, now shadow finance minister for the opposition Four-Party Coalition, Ivan Pilip.