Business News

Photo: Grant Cochrane /

In Business News this week: Czechs might lose up 33 billion in EU funds this year; Record volumes of investment registered in H1; Czech Republic increases numbers of economic diplomats; Bootleg liquor market shrinks after methanol scandal; and Prague City Hall launches probe into Uber taxi service.

Czech Republic could lose up to 33 billion in EU funds

Photo: Grant Cochrane /
The Czech Regional Development Ministry has increased its estimate of EU funds the country is likely to fail to draw this year to 33 billion crowns, the news agency ČTK reported this week quoting government documents. In July, the losses were estimated at between 19.4 and 24.4 billion. But since the start of the year, Czech operational programmes have fallen by some 6.2 billion behind their own timetable, and the ministry believes the gap will be even wider by the end of the year. The delays are mainly caused by poorly chosen projects as well as by inadequate management and supervision. The Czech Republic ranks worst among all EU member states in drawing of EU funds; last year, the Czechs failed to draw 10 billion crowns.

Record volumes of investment registered in H1

Photo: archive of Nexen
The state CzechInvest agency mediated a total of 116 investment projects worth 78 billion crowns in the first six months of the year, the highest volume on record, the agency said in a press release this week. The investments are expected to create around 14,000 jobs, most of them in the depressed Ústí and Moravian-Silesian regions. Most of the new projects come from Czech companies which expand or re-invest, according to the agency. The highest number of new foreign projects – 25 – comes from German investors, followed by the Netherlands and the US. The largest single investment came from the Korean tyre manufacturer Nexen which is set to spend some 22.8 billion crown on their plant in northern Bohemia next year.

Czech Republic increases numbers of “economic” diplomats

Photo: Radio Prague International
In its efforts to boost exports and limit the impact of sanctions between the EU and Russia, the Czech government is increasing the number of diplomats with an economic agenda at the country’s embassies in various countries of the world, State Secretary for EU Affairs Tomáš Prouza said. Agriculture experts will be sent to the embassies in Russia, Ukraine, the UAE, China and Vietnam, Mr Prouza said. The government is also considering sending diplomats with a trade and business agenda to Azerbaijan, Kazakhstan, as well as some Arab countries and possibly several Latin American countries. The final decision is to be made next week.

Bootleg liquor market shrank by 80 percent after methanol scandal

Photo: Filip Jandourek
The Czech market with bootleg liquor has shrunk by 80 percent in the wake of a large-scale methanol scandal which broke out in 2012, according to an analysis by the Next Finance consultancy released this week. The decline came as a result of stricter rules introduced after nearly 50 people died after drinking methanol-laced liquor in the Czech Republic. Before the scandal, the Czech state was annually losing an estimated 2.85 billion crowns in tax evasion, which represented 0.08 percent of the country’s GDP. That number has now decreased to between 0.01 and 0.02 percent, according to the study.

The scandal has also affected people’s attitude to liquor, a survey by the KMPG consultancy has found. Some 4 percent of Czechs said they stopped drinking spirits altogether while 41 percent of those polled said they now only buy spirits from renowned producers.

Prague City Hall launches probe into Uber taxi service

Photo: archive of Uber
Prague City Hall has launched a probe into the Uber taxi hire service which arrived in the Czech capital last month. The purpose of the move is to make sure the US company’s practices comply with Czech business regulations, a spokeswoman for the city hall said. The Czech Transportation Ministry said earlier this month that Uber’s business model could be in conflict with Czech legislation in that Uber cars do not have taximeters; in that case, providers of taxi services are required to conclude a written or electronic agreement with the client.