Business News

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Coming up this week - The Economist rates Skoda Auto as the most successful company in post-Communist Europe, but how long will Skoda continue to dominate the domestic Czech car market? But we start as usual with a brief round-up of the week's main business news.

Monthly unemployment rate up 0.3 percent

Unemployment rose by 0.3 percent in December, seeing out the year on 8.8 percent. There were just over 457,000 people out of work at the end of December, 15,000 more than in November, but 30,000 less than December 1999 - when the end-of-year unemployment rate stood at 9.4 percent. Analysts said trends in the labour market in recent months confirm the benefits of an active employment policy.

Central Bank undershoots net inflation target

Meanwhile the country's National Statistics Office announced on Tuesday that Czech consumer monthly inflation was 0.2 percent in December, confirming analysts' views that there will be no near term rate hike by the Czech National Bank. The Statistic Office released data putting year-on-year inflation at 4.0 percent in December and the average 12-month inflation rate at 3.9 percent. The Central Bank's net inflation, which is vital for monetary policy, rose 0.2 percent month-on-month and 3.0 percent year-on-year, meaning the Central Bank undershot its 3.5-5.5 percent end-year target.

Government's pro-investment policies begin to pay off

The government's pro-investment policies seem to be paying off: the state-run Czechinvest agency announced that it had succeeded in attracting some 1.5 billion dollars in direct foreign investment last year 2000, a rise of almost 120 percent compared to 1999. Czechinvest said the projects would create almost 18,000 new jobs in the country over the next few years. The agency says it wants to lure another billion dollars this year, but could end up doubling or even trebling that figure.

Audi, BMW both considering Czech Republic for new factory locations

And two companies rumoured to be eyeing up the Czech Republic are the German car-makers Audi and BMW. Czechinvest director Martin Jahn said that Audi would probably be scouring the Czech Republic for a location for its new European car plant, while BMW has included the Czech Republic in a shortlist of eight locations in four countries for its new plant - and it considered a total of 200 locations around the globe before narrowing it down to those eight. The other contenders include neighbouring Germany and Slovakia.

Japanese electronics firm Onamba to build cable factory in Olomouc

Staying with investment, and staying with the good news: Japan's electronics group Onamba has chosen the picturesque Moravian city of Olomouc for its new TV cabling factory. Local authorities say the factory will create some 300 hundred new local jobs, and that Olomouc, capital of Moravia's Hané region, might see the Onamba factory open its doors to eager local employees by the end of this year.

Trouble brewing for Phillips over Hranice land dispute

But it's not all good news: there was trouble brewing this week a few miles down the road in the town of Hranice na Morave. The decision last year by Dutch electronics giant Phillips to build a massive new TV assembly plant in Hranice saw the people of depressed North Moravia popping open the champagne corks - when completed the plant will employ more than 3,000 people. But this week saw a fierce dispute over the last hectare of land being bought by Phillips - owner Marketa Regecova is refusing to sell for the offered price, and a messy court battle could sour the happy relationship between Phillips and the local authorities, who promised to acquire the land.

March deadline for Komercni Banka sale

And the head of the National Property Fund (FNM), Jiri Havel, set a preliminary deadline this week for potential buyers of the state-owned Komercni Banka. Mr Havel said the last binding offers would probably have to be in by the end of March. Meanwhile, Komercni's Chief Executive Radovan Vavra said in an newspaper interview that the bank's goal for this year was to regain its market position in corporate banking.

Skoda still well ahead of the competition

Britain's Economist magazine recently rated Skoda Auto, owned by Germany's Volkswagen Group, the most successful company in post-Communist Europe. This week newly released sales figures showed Skoda increasing its share of the domestic car market by almost 8 percent - 78,000 of the 150,000 new cars sold in the Czech Republic last year were Skodas. The streets of Prague may seem choc-a-bloc with swanky new foreign cars, but Skoda are still well ahead the rest: Opel came second with just under 6 percent of the market, followed by Volkswagen, Renault and Peugeot. Skoda's unassailable position on the domestic market was thanks to best-selling brands such as the Octavia, the Felicia and the highly successful Fabia, which came fourth last year in the European Car of the Year awards. Journalist Petr Bucek writes for the motoring supplement of the leading Czech daily Mlada Fronta Dnes, and earlier this week he explained to me the secret of Skoda's success: Dukovany nuclear plant gets extended lease of life

Finally this week, most of you will have heard of the controversial Temelin nuclear power plant in South Bohemia, which was finally launched last year to a chorus of disapproval from neighbouring Austria. But how many of you have heard of Dukovany, the Czech Republic's first nuclear power station? Well on Tuesday the state-owned power producer CEZ, which operates both Temelin and Dukovany, announced that it would keep Dukovany running 10 years longer than previously planned.

The four 440 megawatt reactors at Dukovany, also just a stone's throw from the Austrian border, produce one-quarter of CEZ's output and around a fifth of the country's electricity consumption. Dukovany CEO Ales John told reporters this week that after 15 years of operation Dukovany's reactor was in such good shape that it could, in theory, be kept running for more than 100 years, compared to its original estimated lifespan of 30 years.

But Austria can relax - Mr John said that Dukovany's would probably be decommissioned in 2027, 10 years later than planned. Dukovany plans an upgrade in control and regulation systems between 2002 and 2007 which will raise its capital expenditures, and expects to spent almost 14 billion crowns in this period. The 2,000 megawatt Temelin plant, meanwhile, should go into full commercial operation in May.