In this week’s Business New: the Czech Republic to receive more funds from the EU; Home Credit starts off in China; Czech Railways plan record renovation; Czech food prices to go up in 2008; and CEZ Hungarian deal causes controversy.
Photo: European Commission
The Czech Republic is to receive another 64 billion crowns, or more than 3.5 billion US dollars, from the EU between 2007 and 2013. About 20 billion crowns will be spent on five programmes involving cross-border cooperation between the Czech Republic and its neighbouring countries. Most of the EU funds – almost 220 million crowns – will go to foster cooperation between Czech and Polish border regions. More than 44 billion crowns is set for the Integrated Operational Programme (IOP) which is focused on dealing with regional issues such as infrastructure, public administration, and regional development.
Home Credit, a part of the Czech PPF financial group, has started operations in China. It will initially focus on providing loans at retail chains in the Chinese province of Canton. Its loans are designed for purchases of consumer goods such as refrigerators and other household appliances. The company says this move will bring Home Credit more than 1.3 million potential customers. Home Credit’s Chinese division is based in the city of Shenzhen, and the company is planning to expand to the eight other Chinese provinces by 2010.
Czech Railways are planning to spend a record 3.6 billion crowns, or almost 200 million US dollars, on the renovation of their carriage stock in 2008, 900 million crowns more than this year. The Czech Railway transportation company will purchase 100 renovated personal carriages for long-distance transport that are to be used for the newly-introduced express trains between Prague and Brno. Czech Railways will also buy eight CityElephant trains for suburban transportation and renovate about 30 train units to be used in regional connections. Most of the funds needed for the renovation programme will come from Czech Railways’ own sources.
Food products in the Czech Republic will be 10 to 15 percent more expensive next year, according to the Czech Agrarian Chamber. The price rise which started this year will continue in 2008 but is not expected to be as steep. The increase in livestock products is expected to be the highest due to next year’s increase in VAT from 5 to 9 percent, among other factors. The rising food prices are expected to stop the falling rate of food expenditures in Czech families’ budgets. In the last ten years, the rate has fallen from 25 percent to just over 16 percent. In Western Europe and in the United States, the average rate of food expenditure is around 15 percent.
The Hungarian deal by the Czech energy provider CEZ of which we informed last week has caused ire. CEZ spent an estimated 28 billion crowns, or 1.4 billion US dollars, on a 7 percent share in the Hungarian energy company MOL. Its shareholders now claim that the transaction is only profitable for the Czech energy producer and the management of the Hungarian company. According to the complaints voiced by MOL shareholders, the deal is purely meant to stop another Central European power heavyweight, Austria’s OMV, from taking over the Hungarian energy giant MOL.