Business News

In this week's Business News: The global financial squeeze affects the Czech Republic; businesses also feel the effects; a Czech language version of Youtube is to be launched; eyebrows are raised as terrorism legislation contains giveaways to the gambling industry and how big pharmaceutical companies are trying to buy Czech doctors.

Czechs markets suffer from global economic crisis

The Czech Republic has not been insulated from the effects of the financial crisis across the globe with the Prague bourse closing at a three-year low on Thursday. The headline PX index fell 0.81 percent to 1,178 points by the end of trading. Companies involved in housing and development have suffered the most, with Orco company shares plummeting by 20.33 percent to Kc337. The Prague Stock Exchange also suspended trading for some time in shares of the ECM real estate developers due to their sharp fall. Real estate companies have announced that they will resist issuing new shares at present, due to the current economic situation. Friday’s trading saw shares across Europe recovering after a similar rise in US shares.

Companies also hit by global woes

The Czech Republic’s relatively strong economy has been stretched in recent months by rising commodity and energy prices, a strong crown and rising inflation. Now Czech businesses are beginning to feel the pinch. Steel manufacturer ŽDB has expressed concerns after falling demand, while manufacturers of small planes are also complaining that the strong crown and weak dollar are affecting their profits. Of the 14 light aircraft manufacturers in the Czech Republic, all are reportedly in trouble, with some facing bankruptcy as demand for “luxury” items, particularly from the US, declines. Car manufacturers such as Škoda are buffered by relatively strong sales, but they too are warning that they are in the midst of a slowdown.

Czech Youtube will launch by year’s end

A Czech-language version of the popular Youtube video-sharing website will be launched by the end of the year say its owners Google. The internet giant has been operating in the Czech Republic for almost two years, in that time refining its Czech-language search engine, as well as launching the Google news service and the Google Chrome internet browser. But it faces stiff competition from local search engine Seznam, which remains more popular in the country. Seznam also offers a video-sharing site called Stream.cz, but even without the language support in place, it appears that many Czechs are already well aware of Youtube, with one Czech clip called “Šílený Ota” or “Crazy Ota” featuring a teenager’s gravity-defying fall onto a vertical wall having garnered an astonishing two and a half million views worldwide.

Anti-terrorist law contains windfall for betting companies

A new law designed to combat terrorism and money-laundering also contains a provision set to save betting companies hundreds of millions of crowns in taxes, according to media reports. The amendment was added by Civic Democrat MP Pavel Hrnčíř and somewhat surprised betting companies immediately welcomed the move, despite the fact that the clause appears unrelated to the rest of the bill. Mr Hrnčíř defended the move saying that the taxes in question, so-called “manipulation fees” are not a proper form of taxation and that this is the best way to get rid of them. On Wednesday, a different law designed to overhaul and tighten the country’s gambling laws failed to pass. Some analysts have long argued that the gambling industry exercises an unhealthy influence over Czech politics.

Big pharmaceuticals companies bribing small doctors

Big pharmaceutical companies continue to bribe doctors with gifts and even holidays in order to get them to prescribe their drugs to patients, according to the business daily Hospodářské Noviny and other media investigations. The Health Ministry has already pledged to investigate these practices, although very little appears to have been done. Last year, it emerged that a leading drugs company had taken doctors on a safari in Kenya in order to lull them into providing patients with their drugs. A recent story has also emerged about Czech doctors being taken on an all-expenses-paid trip courtesy of a leading drug company. The Czech drug market is worth an estimated 40 billion crowns a year, leading to fierce competition to sell products - often focused on doctors themselves. In many cases, drug companies organize dubious conferences or research trips with the simple aim of buttering up doctors to prescribe their drugs rather than their competitors’. Analysts say that current legislation is insufficient to crack down on these practices.