Business News

In Business News this week: foreign investment eases; complications hit Budvar sale preparations; bankruptcies hit a five year high; the auto sector earns less for more; and the Finance Ministry sees no role for film perks.

Foreign investment edges lower in 2008

Foreign direct investment in the Czech Republic slipped slightly last year to 182.8 billion crowns from 185.3 billion crowns in 2007, according to figures released by the Czech National Bank. The biggest single investor by a long way was Germany with around 60 billion crowns. Meanwhile, Czech investment abroad last year rose to 32.4 billion crowns from 27.1 billion a year earlier. The Netherlands – where many Czech companies are based for tax reasons – was the target for around a third of that investment.

Budějovický Budvar transformation hits problems

Photo: Budějovický Budvar

Newspapers reported this week that preparations for the privatisation of the last major brewery in state hands – Budějovický Budvar – has hit problems. The first step in the privatisation process would be transforming the country’s fourth biggest brewer from a national business into a shareholder company. That has been delayed by checks on the legal impact of the transformation on the Czech brewer’s worldwide trademark dispute with US beer giant Budweiser. Czech officials now concede the change might not be ready until the second half of 2010. By then, a new government could already have called time on the controversial sale.

Bankruptcies soar in first quarter

Bankruptcies rose in the first quarter by 60 percent to 707 compared with the first three months of 2008, monitoring company Cribis reported this week. The figures divided around half and half between individual and company bankruptcies. The first quarter figure is a five year high for bankruptcies. The Czech Chamber of Commerce said there was no cause for alarm over the rise. It described bankruptcies as a healthy cleaning out of the market.

Auto sector growth eases for first time

Figures this week have provided good and bad news for the country’s car manufacturers. Turnover last year fell by 3.8 percent compared with a year earlier to 707 billion crowns according to the Czech Auto Industry Association. It is the first time the Czech auto industry has shrunk in 14 years. The fall occurred in spite of a small rise in the number of cars produced. On the sales side, latest figures for May record a 20.5 percent rise in purchases compared with a year earlier.

Finance Ministry sees no part for film industry tax perks

The Czech Finance Ministry has taken a stand against special tax incentives for shooting films in the country. It has spelled out that offering such advantages go against its plans to simplify the tax system. Czech-based film production companies say film makers are choosing other locations such as Hungary and Romania to shoot films because of the tax perks there. Some of them now say they will follow the foreign film makers abroad if local film incentives are not forthcoming.