Czech town said to be close to clinching lucrative investment deal with South Korean tire maker

Triangle industrial zone, photo: David Hartl

Attracting foreign investment has become a much debated issue in recent months with the government working on a new strategy to promote the country’s business interests in far-flung destinations. Now the north Bohemian town of Žatec is reported to be close to signing a 20-billion crown investment deal that could provide over two thousand jobs is a region suffering from high unemployment.

Triangle industrial zone, photo: David Hartl
The Ustí region north of Prague has one of the highest unemployment rates in the country but according to well-informed sources there may soon be a light at the end of the tunnel. The South Korean tire manufacturer Nexen is looking for a suitable European location for a new factory and by all accounts the town of Žatec is close to clinching the lucrative investment deal.

The factory would be located in the industrial zone Triangle on the site of a former military airport, conveniently placed right next to the R7 motorway. According to Zdeněk Rytíř, spokesman for the Usti region, the infrastructure is in place, there are sufficient local energy sources and a waste water treatment plant is under construction in the vicinity. Another big bonus is a good road connection to Germany. The local authorities say nothing will stand in the way of the investment and since there are no bureaucratic hurdles in its way construction work on the new factory – estimated to cost a staggering 20 billion crowns - could start as planned in 2015.

Potential rivals –at least in the Czech Republic – appear to be out of the way. The Moravia-Silesia region which made a strong bid for the deal was clearly unsuccessful, despite the fact that it was ready to sell the requested 53 hectares of land severely underprice –offering a price of 150 crowns per square meter in place of the 360 crown price set by real estate agents. “If the investment comes to the Czech Republic it will not be to Moravia-Silesia,” the region’s governor Miroslav Novák told journalists a few days ago.

Meanwhile, Industry and Trade Minister Jan Mládek, who is just back from a business trip to South Korea flanked by a delegation of CzechInvest representatives, is tight-lipped. According to an anonymous source cited by Czech Television the deal is almost certain to go to Žatec. A final decision is expected to be made within two weeks which would allow the Czech government to offer Nexen investment incentives according to the old EU rules, i.e. before the tightened new rules on investment incentives come into force.

If Žatec wins the coveted contract it will have clinched one of the biggest investment deals in the country’s history. The South Korean tire manufacturer currently has factories at home and in China and has been considering offers from Poland, Hungary and Slovakia as well as the Czech Republic for its first location in Europe.