“We are standing on one leg” – leading business representatives want to transform Czech economy
“We are standing on just one leg” – leading business representatives want to transform Czech economy
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On the occasion of the 32nd anniversary of the Velvet Revolution, 32 leading representatives of Czech business, including top figures within Škoda Auto, Avast and ČEZ, signed a four-page declaration last week that urges a “second economic transformation” for the Czech Republic. To find out more about what such a transformation would entail and whether it has garnered any feedback, I spoke to one of the signatories – the Vice President of the Czech Confederation of Industry Radek Špicar.
“The first transformation of the Czech economy started after the Velvet Revolution in 1989. We are of the opinion that it was a successful one. It enabled us to join the Western democracies, free market economies and catch up at least with the south of Europe when it comes to economic performance.
“However, we are also arguing that the model on which the first economic transformation was based has been exhausted. It was based around the openness of the country and a massive inflow of foreign capital. It was based on cheap labour and our geographical position in Europe. The only thing that we still have now is the geographical position, but that’s about it.
“That is why we are saying that it is time for a second economic transformation whose aim it should be to catch up with the West, with the most competitive and successful economies in Europe, such as the German one.”
You said that during the first economic transformation there was a massive influx of foreign capital. Of course many Czech companies that were previously state owned got bought. Today many major Czech businesses are owned by foreign companies and that also means that the Czech economy is often just a supplier to larger companies [who have their R&D facilities abroad]. So do you think it is realistically possible to escape the fate of just being that supplier?
“There is nothing wrong with foreign investors. They helped us enormously during the previous economic transformation and we should be glad that they came 30 years ago and that they are still here doing successful business in the Czech Republic.
“However, we are standing just on one leg as an economy – these foreign companies and their Czech daughter businesses. What we are saying is that we should be standing on two legs which should be equally strong. The one which we should make stronger represents Czech companies who are final producers with strong internationally recognised brands, because that is where the highest value added is being created.
“If you look at Germany and what is behind the success of their economy in Europe, you see that one of the reasons is the German brands. They have the cars, the computers, the machines – German brands. That is exactly what we need as well.
“It will not be easy to establish a successful brand that will dominate in its sector worldwide. However, there are many Czech examples which show that it is possible even when you start from scratch. Look at Avast, the most popular anti-virus programme in the world, which set up in Czechoslovakia even before the revolution. Look at Linet, the hospital bed producer, which also started from scratch 30 years ago and is now the fourth largest hospital bed manufacturer in the world. It’s not easy, it takes time, but it is possible.”
It’s been a week since your initiative’s four page call for an economic transformation was published, how exactly do you want to achieve this radical change in the economy? Is this a purely business-led change that you are calling for, or will you need support from the state and, if so, have you had any response from politicians yet?
“I think that we, all of those 32 people who signed this document 32 years after the Velvet Revolution, understand that this is a job mainly for us. We have to do it. We have to show that this is the way [forward] and we have to become living examples that this is the right direction.
“But of course there will be a huge space for politicians, for example, or other institutions which will want to become active and if they join us it will be easier, faster and cheaper. So yes, we will be talking to the government about it as well and, although you said it is just a week since we published it, we already have received quite some positive feedback from some of the most important figures in the incoming government.
“[Future Prime Minister] Petr Fiala said that he likes the declaration. He said that, in a number of cases, it corresponds with what will be written in the coalition government programme. Other people who might become ministers also said that this is a reaction they like, so we hope that it will be a partnership with the new government which would make it easier to fulfil the goals that we identified.”
You have published this call for a transformation of the economy and you say that it is mainly the task of business to help initiate this vision. Are you already working on some projects that will help make this a reality?
“There are two issues that we will start working on immediately. These are the legislation concerning employee shares in companies, because the relevant legislation, and especially the taxation, does not work well in the Czech Republic. This is one of the first things [that we want to tackle].
“Second, we will focus on digitisation and specific proposals on how to improve it not only in the private sector but also in the public sphere.”
The website of the initiative can be found here: https://druhaekonomickatransformace.cz/