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Books on Czech Republic
REPUBLICAN REFERENCE
Area (sq.km)
78,866
Population
10,249,216
Density
(per sq.km)
132.2
Capital
Prague
Currency
Koruna
President
Vaclav Klaus
Private sector
% of GDP
80%
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Update No: 092 - (01/01/05)
The Bohemian Thatcher
President Vaclav Klaus of the Czech Republic remains the EU's highest-positioned
critic. His main model is Margaret Thatcher no less, not exactly an enthusiast
for European cooperation.
While in Germany recently, the president spoke against the European
constitution; in Bulgaria soon afterwards, he challenged local Euro-enthusiasm
by saying that Brussels needs a Velvet Revolution. Such radical stands are
somewhat unusual from a head of state -- particularly a state where the majority
of citizens voted in favour of the EU in a referendum. It is also notable that
it was Klaus who submitted the country's EU admission request. He is in favour
of a Europe connected by liberal economic relations, but little more. Europe has
allegedly taken a step into the darkness of a bureaucratically governed
federation, and this is what Klaus is fighting.
It takes courage for the head of a relatively small state to go against the
majority of Europe. However, such an attitude is nothing original. Even the
biggest Euro-optimists know all the bureaucracy traps and deficits of democracy.
They work hard to make things better and most people would like to see Europe as
more than just a free-market structure.
A caretaker government
Last year saw a political crisis in the Czech Republic, with Klaus appointing a
new premier, Stanislav Gross. In July Klaus appointed the 34-year-old Gross as
prime minister. Gross keeps a low level of public backing in the Czech Republic,
according to a poll by STEM. Only 40 per cent of respondents have a favourable
opinion of the prime minister.
Gross is the interim leader of the Czech Social Democratic Party (CSSD).
Gross-who had acted as the country's interior minister-now leads a coalition
government, which also includes the Christian and Democratic Union - Czech
People's Party (KDU-CSL) and the Freedom Union - Democratic Union (US-DEU).
The governing CSSD has trailed the Civic Democratic Party (ODS) and the
Communist Party of Bohemia and Moravia (KSCM) in recent voting intention polls.
The next election to the Chamber of Representatives is tentatively scheduled for
June 2006.
Klaus in controversy
President Vaclav Klaus has bestowed Banana Republic status on the Czech Republic
by doing something presidents in democratic countries are not supposed to do: He
criticized the decision of an independent court. It so happens that the court
made a ruling that went against the right-wing Civic Democrats (ODS), the party
Klaus headed for 13 years.
The Supreme Administrative Court on Dec. 3 invalidated November's Senate
elections for the Prague 11 seat. The court agreed with a complaint from a
Christian Democratic candidate who said voters were unfairly influenced by
slanderous town-hall bulletins accusing him of preferring his private interests
to his public post. The candidate then narrowly lost the first round of the
election to an independent, who was then defeated in a run-off by the ODS
candidate.
Klaus, who reportedly never read the court verdict, called the court decision a
"precedent that intervenes in political freedom."
The problem is that a president erodes the rule of law who even hints that the
judiciary is not to be abided by, something that is taken pretty seriously in
these parts. Hence the reaction of Lubomir Zaoralek, a Social Democrat and
chairman of the Chamber of Deputies: "The president has challenged one of
the pillars of [democracy], the rule of law. Politicians, and even less so
constitutional officials, should not enter into polemics with independent
courts. The president has challenged the verdict without knowing the
justification for it. He therefore acted hastily and irresponsibly."
The Supreme Administrative Court's decision marks the first time the post-1989
judiciary has invalidated an election, although as Prime Minister Gross points
out, election law allows for "such a corrective tool."
Flat tax works
Klaus said last year that a flat tax like the one Slovakia recently
implemented would not be likely to work in the Czech Republic. Now, however,
deputies in the front-running opposition ODS, his old party, are saying
Slovakia's record shows that a flat tax does work. And with Slovakia competing
next door, implementing a flat tax in their own country may be a necessity
rather than an option, they say.
"I see it as the only way for the Czech Republic," ODS shadow finance
minister Vlastimil Tlusty said. "If a [neighbouring] country such as
Slovakia, where it's easy for companies to move, has such an attractive tax
system, it's a necessity for us to follow suit."
There's no way of calculating how much investment Slovakia has siphoned from its
neighbours in the past year. Yet data shows Slovakia's Foreign Direct Investment
(FDI) growth - 222 percent this year, according to figures from ING Bank - is
much higher than that of neighbours Hungary, Poland and the Czech Republic.
Czech FDI growth, in second place, is expected to double, according to ING Bank.
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AVIATION
More passengers via Prague
Prague's Ruzyne international airport could clear up to 9.8 million
passengers for all of 2004, accounting for an increase of 30 per cent over 2003,
Martin Kacur, CEO of the Czech airport Authority (CSL), said recently, Interfax
News Agency reported.
The figure represents the most optimistic scenario, said Kacur, but the total is
certain to reach 9.5 million. Ruzyne has an official annual capacity of 6.5
million, but has built several new terminals and rescheduled flights to
accommodate the surge in passengers. In October, traditionally the last month of
the summer tourist season, Ruzyne cleared 900,000 passengers - more than in
August 2003. This August, the airport saw a record 1.07 million passengers. In
the first eight months of 2004, Ruzyne processed more passengers than in all of
2002. The numbers should continue rising as 10 airlines have applied to add
flights to Prague to their schedules, although all 10 will not begin flying to
the Czech capital immediately.
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BANKING
GE Capital Bank boosts profit
GE Capital bank netted 1.4bn Czech crowns by US accounting standards in the
first nine months of 2004, an 18 per cent year-on-year increase, Interfax News
Agency has reported.
Total assets grew by 1.3bn crowns to 57.4bn crowns. CEO, Gerard Ryan, attributes
the growth mainly to an increase in a volume of provided loans, especially
consumer and mortgage loans, as well as loans to small and mid-sized businesses.
In the monitored period, GE Capital Bank provided loans worth 34.5bn crowns, up
one-third year-on-year. The amount of provided mortgage loans increased 73 per
cent to 6.9bn crowns. Client deposits fell to 46bn crowns. GE Capital Bank is
the seventh largest bank in the Czech market and it has 727,754 clients. Capital
adequacy stood at 30.9 per cent in mid-2004.
Ceska sporitelna boosts profit
Czech bank Cestka sporitelna (CS) posted a consolidated net profit of 5.6bn
Czech crowns to international financial reporting standards (IFRS) in the first
nine months of last year, a 17 per cent increase over the same period in 2003,
CS spokesperson, Klara Gajduskova, said recently, Interfax News Agency reported.
The bank expects its net profit to rise by 10 to 15 per cent for last year over
2003. Return on equity (RoE) will top 20 per cent last year and should remain
above this level in 2005-7 as well, Gajduskova said. CS' cost/income ration
should amount to 58-60 per cent in 2004 and 55-57 per cent in 2005-2007.
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FOREIGN TRADE
Czech October trade results best in 10 years
The Czech Republic's trade is doing very well. The Czech Statistical Office has
announced that the trade deficit stood at 4.1bn Czech korunas in October; this
is the best October result in the past 10 years, Czech Radio1 reported.
Exports went up 17 per cent year-on-year, which was the slowest pace since
January, however. Czech firms were exceptionally successful in trading with EU
countries; they exported goods worth 17bn Czech korunas more than goods imported
to the Czech Republic from EU countries. The trade balance therefore went up
1.5bn Czech korunas.
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INFORMATION TECHNOLOGY
Symbol Tech division opens shared services centre in Brno
Enterprise Mobility Company, a unit of the IT firm symbol Technologies, opened a
shared services centre in the Moravian capital of Brno, the company announced in
a recent statement, Interfax News Agency reported.
The centre will cover the EMEA (Europe, Middle East and Africa) region. The
10,000sqm facility will serve as the hub for Symbol's EMEA customer support
services including a repair centre, multi-lingual customer call centre, finance,
contract administration and sales ordering operations. The centre was expected
to be fully operational by December last year.
"The Brno location was selected because the region offers a highly skilled
local workforce, a central location and proximity to Symbol's existing
operations and customer base in Europe," the firm said. Initially the
centre will employ 200 people, but that should rise to 500 in future.
Petr Herskovic, who went to Symbol from the Invensys Corporation, where he was
plant manager of Slovak operations, will manage the centre. Herskovic is a
graduate of Brno's Technical University.
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TELECOMMUNICATIONS
T-Mobile records profit rise
T-Mobile, the Czech Republic's second biggest mobile operator, saw its net
profit rise 19 per cent year-on-year to 3.4bn Czech crowns in the first nine
months of this year, according to results released by the firm on November 11th,
Interfax News Agency reported.
T-Mobile's revenues were up 8 per cent year-on-year to 19.4bn crowns in the
monitored period. Operating profit (EBITDA) went up by 7 per cent year-on-year
to 8.9bn crowns. T-Mobile customers use some of the firm's tariff programmes.
The firm's list of new corporate clients includes the State Environmental Fund,
the Czech Environmental Inspection Agency, the steel maker, Trinecke zelezarny,
the food company, Setuza, and Renault Trucks CR. The firm has seen interest in
its data services increase- the amount of data transferred rose by over 38 times
year-on-year. Voice services grew 15.5 per cent compared to the same period last
year.
Oskar Mobil ups operating income
Oskar Mobil, the Czech Republic's third and smallest mobile phone operator,
significantly raised its operating income in the third quarter of 2004, but the
result was distorted by the US dollar's depreciation against the Czech crown,
the parent company, the Montreal-based TIW, said, reports New Europe.
Oskar Mobil's operating profit before depreciation and amortisation (OIBDA) grew
to one billion crowns, or US$41.3m in the monitored period, from US$26m in the
same period last year. On the other hand, average revenue per user (ARPU) fell
to 633 crowns in the third quarter of 2004 from 660 crowns in the third quarter
of 2003. Oskar Mobil continues to attract new subscribers.
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