Business News

In Business News this week: It looks like the national bank will postpone cutting interest rates; Plans to privatise Prague Airport have attracted no small amount of interest; over a quarter of a million foreigners are currently working in the Czech Republic; the insurer Lloyd’s is set to enter into the Czech market, and the discord between piano makers Petrof and their former American distributor continues.

Singer: central bank may postpone cutting interest rates

The Czech central bank may delay cutting interest rates because the inflationary impact of economic growth may be stronger than the bank forecast last month, Deputy Governor Miroslav Singer said on Thursday. Scope for lowering rates has diminished because wages and employment are rising and exporters have weathered the strengthening of the crown. The inflation rate peaked at a decade high of 7.5 percent in the first two months of this year. In May, inflation held at 6.8 percent. Bankers have been ‘surprised’, Mr Singer said, by the gains of the crown in the last year – the Czech currency has advanced by 17 percentage points against the euro in the last twelve months alone.

Prague Airport privatization attracts 65 bidders

Prague Ruzyně airport

The Czech government’s plan to privatise Prague’s Ruzyně Airport has really taken off, attracting much more attention than ministers originally expected. Some 65 bidders have voiced their interest in the airport, Transport Minister Aleš Řebíček told Austrian paper WirtschaftsBlatt on Friday. The transport minister said he was not looking for a ‘purely financial investor’, but instead a ‘strategic partner’ for the airport, though he did admit that the airport was likely to be sold to the highest bidder. The government approved plans to sell Prague Airport at the beginning of June. They are hoping to find a buyer by the end of 2009 in a sale likely to raise over 100 billion CZK (6.36 billion USD) for state coffers.

Seventy thousand foreigners come to Czech Republic to work in last year

Foto: European Commission

Prague airport was most likely the first port of call for some of the 70,000 foreigners who have come to the Czech Republic to work in the last 12 months. The number of foreign nationals now legally working in the country totals around 268,000, though thousands more are thought to be here without a residency permit. Vietnamese nationals constituted the fastest growing group of labour migrants, while the number of Slovaks - traditionally this country’s largest group of immigrants - fell. Just 500 Slovaks have arrived in the Czech Republic to work in the first five months of this year, down from 3000 in the same period last year.

Lloyd’s insurers set to break into the Czech market

Another new arrival to the Czech Republic is set to be one of the world’s most important insurance companies, Lloyd’s, which will start selling its products on the Czech market as of next year. The European manager of the company, Enrico Bertagna, made the announcement on Wednesday. He added that Lloyd’s would apply for a licence in the last quarter of this year. The application should be processed within the following five months. Mr Bertagna said the company would offer above all liability insurance to companies and managers. It might also insure economic risks taken by government institutions in the Czech Republic. Lloyd’s has been present on the Czech market for a number of years, but it has only provided reinsurance so far. It is not clear how much money the insurers want to invest in their Czech business.

Petrof wins legal battle against GIC, but the war continues

The discord between Czech piano maker Petrof and US trading company Geneva International Corporation (GIC) continues, with the Czech firm winning the latest in a series of arbitration cases against its former American distributor. An arbitration court in Hradec Kralové, Eastern Bohemia, ruled that Petrof was right to terminate a year-long contract with its US distributor, after GIC refused to buy the instruments that Petrof was supplying. Following on from the verdict, Petrof’s lawyer Pavel Vidura said the victory showed that the Czech firm may win a similar case currently pending in the United States. GIC has already been forced by an American court to pay the piano producer damages to the tune of 134,000 USD in a dispute over supplied and unpaid for musical instruments in 2006.