Business News

Finance Minister Bohuslav Sobotka, Photo: CTK

Czech Republic records first trade surplus in 18 months. Government to change VAT rates again. UK's International Power bids for a Czech coal-mining company. Sharp increase in Czech imports of used cars. Aircraft manufacturer Aero Vodochody to lay off 10 percent of staff. Czech Republic sees drop in number of foreign visitors.

Czech Republic records first trade surplus in 18 months

The Czech Republic recorded its first trade surplus in 18 months in September thanks to weaker imports and a jump in seasonal exports as firms cleared warehouses after the summer holidays. According to data provided by the Czech Statistics Office on Wednesday, the balance of trade showed a 0.8 billion crown surplus (or 30 million USD), beating analysts' expectations of a monthly deficit. The trade balance returned into the black for the first time since February 2002, after a 7-billion gap in August and a deficit of nearly 4 billion a year ago. The statistics office said the improvement of the trade balance was primarily due to lower imports of crude oil, both in terms of value and volume, and a strong growth in exports of manufactured goods. Manufacturers traditionally boost export shipments in September to clear out stockpiles of goods accumulated over the summer.

Govt approves new VAT law

Finance Minister Bohuslav Sobotka, Photo: CTK
The government has approved a new VAT law aiming at bringing Czech legislation in line with the European Union's internal market rules. The draft law raises the tax for selected services, such as hairdressers, cleaners, and laundry. These businesses will pay the standard VAT rate, as opposed to the preferential lower rate, from May 1 when the new law is expected to come into force. The upper rate stays at 22 percent as does the lower, five percent rate. The Finance Ministry said the new law would get the country ready for the removal of customs and tax barriers after EU entry. The Finance Ministry expects the new law, along with an earlier approved hike of VAT on a wide range of goods and services to the 22 percent tax bracket from January 1, to bring more than 13 billion crowns into state coffers. The new bill is yet to be approved by parliament.

International Power bids for Czech coal mine

British electricity producer International Power is reportedly among six bidders for the Czech brown coal mine Sokolovska Uhelna. International Power will compete for Sokolovska with dominant Czech producer CEZ, the black coal mining company OKD and Sokolovska's own management company in a government tender for a 50 percent stake. The sale, scheduled to be completed late this year, is expected to raise two to three billion crowns. The British firm is already a leading player in the Czech electricity market through its ownership of power station Elektrarny Opatovice. Sokolovska Uhelna mined over 10 million tones of coal last year. It also operates two power plants, which sold 2.6 terawatt-hours last year. The government is also planning to sell its stake in a larger coalmine, Severoceske Doly, in a separate tender.

Czech used-car imports jump 20 % in Q1-3

Czech imports of used cars rose by almost 20 percent year-on-year to more than 112,000 units in the first three quarters of this year. The Association of Automotive Industries said that in the same period, official importers and Czech producers sold about the same amount of new passenger cars. The Association predicts that imports of used cars for the whole of 2003 will be absolutely the highest in the Czech Republic's history, breaking the record of nearly 137,000 cars in 1996. Used cars are imported mainly from Germany, France, Italy and Belgium.

Aero Vodochody to lay off 200 staff by end of year

Czech aircraft manufacturer Aero Vodochody will reportedly dismiss some 10 percent of its more than 2,000 employees, mostly white-collar workers, by the end of the year. The job cuts are a part of efforts at reducing costs within which 180 people left the company this spring. Downsizing at the military and civilian aircraft producer is due to a lack of new contracts. Actually, Aero is finishing the final batch of L-159 light combat aircraft for the Czech Air Force, but has no new jobs in sight. Aero also assembles Sikorsky helicopters and produces components for US Boeing that controls one third of Aero. The Czech government holds a majority stake in Aero Vodochody.

Czech Republic sees drop in number of foreign visitors

The number of foreign visitors coming to the Czech Republic decreased 6 percent to 63 million in the first eight months of 2003. The end-year figure is expected to fall to 95 million from almost 98 million in 2002. The Czech Republic suffered from a global decline in tourist industry in the first three months of the year due to anticipation of the war in Iraq and the spread of the SARS disease. In summer, the strong Czech currency in particular made the Czech Republic a relatively expensive destination. Moreover, Germans who represent the largest number of foreign visitors to the Czech Republic, have been reluctant to travel for a few years because of their country's economic problems. On the other hand, the lower number of tourists should be compensated for by higher revenues due to the strong currency. The largest number of visitors come from Germany, Poland, Great Britain, Italy and Slovakia, whereas tourists from Japan are believed to be the biggest spenders.