Czech Republic attracts record amount of foreign direct investment

The Czech Republic is a leader in Central and Eastern Europe in the inflow of per capita Foreign Direct Capital. The Czech government often boasts of this fact and highlights its generous incentive programme. It is of course more than the government's incentives that attracts foreign investors to the country. However, it's not only a welcoming hand that awaits them when they cross the border - there is also a number of bureaucratic obstacles which they are forced to deal with. Vladimir Tax talked to Martin Jahn, the director of the CzechInvest, an agency whose aim is to attract foreign investors and assist them in placing investments in the Czech Republic.

The total Foreign Direct Investment last year amounted to 4.6 billion USD and I the first quarter of this year it was 900 million USD. What makes the Czech republic so attractive?

"It is our position in the center of Europe from where you can supply both European Union countries and Central and Eastern Europe. It is also the quality and skills of Czech labour and the total lower costs in the Czech Republic, operational costs. We believe that we also have better infrastructure in terms of roads, railways and so on than the other countries in the region."

What about the government incentives?

"Government incentives play a very important role in this process. When we first introduced the incentives in 1998, that was the real start of the boom of inflow of foreign investments. They are not the reason why investors are coming to the Czech Republic but they play a major role when it comes to deciding between two or three final locations."

Some investors complain about administrative or legislative obstacles when investing in the Czech Republic. Are you, in cooperation with the government and parliament, doing anything to remove these obstacles?

"Yes, in most of the surveys that we have run in the past, bureaucracy was quoted as one of the main problems of the Czech Republic. But I have to say that the results recently showed that foreign companies do see improvement. CzechInvest is trying to be very active in improving the situation and we are trying to be helpful when legislation is amended, such as the Immigration Act for example, which was recently amended and hopefully, to the satisfaction of foreign companies and foreign employees. We have a long way to go but we see willingness on the government side an that's very important."

One day, some of the investors are likely to move their operations elsewhere but that may take several years. What's the outlook for the nearest future?

"Well, I don't think the inflow will stop, just some of the companies will move but others will come and we will see more and more in terms of re-investments and expansions of existing investors. The outlook for this year - we expect somewhere between four and five billion USD and the same figure for the next year. It very much depends on large privatisation cases, such as Komercni banka, CEZ, Czech Telecom, Ceske Radiokomunikace, and it also depends on whether the big projects like BMW will happen in the Czech Republic. But I am very confident that we will remain a leader in the region in terms of foreign direct investments per capita."