czech republic

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In-depth Business Intelligence 

Key Economic Data 
  2003 2002 2001 Ranking(2003)
Millions of US $ 85,438 69,590 56,800 39
GNI per capita
 US $ 6,740 5,560 5,250 66
Ranking is given out of 208 nations - (data from the World Bank)

Books on Czech Republic


Area ( 





Vaclav Klaus

Private sector 
% of GDP 

Update No: 097 - (26/05/05)

From borrower to lender status
An event of more than symbolic significance has taken place in the Czech Republic. It has moved from being a recipient of World Bank finance to being a contributor to it for other countries, so vibrant has its economy become since joining the European Union (EU) last year in May.
Czechoslovakia was a founding member of both the World Bank and the IMF, but had to withdraw in 1954 after the communist take-over in 1948 made life difficult all round. It rejoined in 1990 after the Velvet Revolution of 1989 and all that.
The statistics since 2003 speak for themselves. GDP at $120bn is up 4% on 2003 and the average wage is up 3%. The reasons for the buoyancy are undoubtedly external, with foreigners flocking to the country, the number of tourists up by 19% since 2003 and, vital to the success of the economy, FDI at $4.9bn is up a staggering 94% on 2003, bringing the accumulative stock of FDI to around $42bn, or $4,200 per capita, the highest in the former communist world, although the highest FDI in toto has been into Poland at $73bn, of course a much larger country with nearly four times the population.
Prague is a truly marvellous city, with outstanding architecture of every epoch of European history from the last one thousand years, Romanesque, Gothic, Renaissance, Baroque, Rococo, Classical and Art Nouveau. It unfortunately also has some Soviet-style brutalism too, but in the suburbs. Even the communist bosses knew that they had a jewel of a capital city in Prague and did not want to spoil it.
One can think of few better places for a visit or for setting up office. It is not generally realised that Prague is to the west of Vienna, right in the heart of Europe. The UK premier in 1938, Neville Chamberlain, who called Czechoslovakia " a faraway country about which we know nothing," was making an ass of himself and showing how unfit he was to hold the office he did. He was fit to be, as Lloyd George caustically said, "the mayor of Birmingham in an off-year," instead of the steward of the British Empire at the most critical moment in its history and of the West.

The mavericks
With all this history behind them, the Czechs are ambiguous in their attitudes to Europe. They were glad to be rid of the Slovaks in 1993. They are now in two minds about integrating with the rest of Europe.
Their experience has taught them to be wary of other Europeans. The British and the French sold them down the river to Hitler at the infamous Munich Pact in 1938, witness Chamberlain. They and the US did nothing to stop the Russians foisting a communist regime on them in 1948 and did not lift a finger to prevent the Soviet invasion of 1968. A sorry record, indeed.
To most Czechs their EU attitudes are sufficient and easy to understand. But to others they seem stuck in the past and unfriendly to foreigners, including neighbours from EU member countries with whom the Czechs, as they say in Brussels lingo, have been "integrating" since enlargement.
Czechs recognise there's no turning back from enlargement. Voters approved EU entry, and they call their country "the heart of Europe."
Taxes rose to western levels, foreign retailers and manufacturers quickly moved in, and the four-lane between Prague and Berlin is under construction.
Yet rue integration - in their minds and hearts - is another matter. Indeed, provincial attitudes can surprise visitors to this former communist country. Like citizens in other EU countries, Czechs have so far remained rather un-European Europeans.
Two thirds of Czechs think any foreigner who wants to live in their country "possibly" or "certainly" should not be allowed to do so, according to a February survey by Prague's Centre for Public Opinion Research. Moreover "only 3 per cent surveyed think that anyone who comes to the Czech Republic should be allowed to live there," said the centre's Gabriela Samanova.
Such attitudes can be blatant in politics. President Vaclav Klaus himself is staunchly opposed to the EU constitution. Eurosceptics are common in parliament, and the Senate recently rejected plans to open a EU gender equality institute in Prague.

Extremism persists
Moreover, communists still wield clout in local governments in the country's east, while neo-Nazis hold music festivals in the west. Five years ago a Czech publisher of Hitler's "Mein Kampf" sold 90,000 copies of the book, dissemination of which is illegal in Germany. After being charged with promoting extremism, the publisher was acquitted by the Czech Supreme Court in March.
Czechs scoffed at integration before EU entry. Recent court decisions shed light on the prejudice faced by the Roma minority, who are refused jobs and restaurant service. Unlike culturally diverse Amsterdam and Paris, dark skin is rare in central Prague save for the African men hired to hawk for strip clubs.
Dave Jones is a black American who immigrated to the Czech Republic several years ago. He is still amazed by the attitudes. "Even the young people have grievances against the Germans because of the war (World War II)," Jones said. "They have a lot of preconceived, wrong ideas. For example, if you're an American they say you must be rolling in money."
Some attitudes stem from bitter memories of foreign occupation. Before the 1989 Velvet Revolution, the Czech Republic (then Czechoslovakia) was occupied by Nazi Germany and later by Soviet troops. Schoolchildren were forced to learn German, then Russian. Under communism they were told Westerners are evil.
Czechs also resent modern western misconceptions, such as the idea that East Europe is "backward." They were particularly irked by the post-enlargement labour restrictions imposed to prevent a supposed "flood" of cheap workers from new EU members.
"Maybe Czech people are angry because we are not allowed to work in Western Europe," said Petr Mach of Prague's Centre for Economics and Politics. "In Western Europe there is negative sentiment toward people from the east." Czechs are actually more tolerant than it seems, Mach argued, noting that the nation's labour market has been open to Ukrainians and Poles for years.
But Jones is less forgiving. "They think that they should be able to go somewhere else to work," such as Western Europe or the United States, he said. "But for someone else to come here and make a living - that's a 'no.'" 

A new moderation appears
Signs of change have appeared, however. This year, for the first time, five Czech towns participated in a United Nations campaign against racial discrimination. Elsewhere, courts have started prosecuting employers and restaurants that discriminate against Roma.
More foreign workers arrived in the past year, sent by companies with Czech branches, such as Japan's Toyota and Germanys DHL. New budget airlines are bringing more British visitors than ever.
Mach said integration with other Europeans "has never been felt as a serious question until now." He's confident Czechs will rise to the task, although "there is a transition period." Jones expects attitudes to mature alongside EU membership.
Czechs "can change," he says. "They are willing to listen, and as more foreign people come here, they may be able to get rid of some of their prejudice." 

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Skoda targets Czech expanision

Czech carmaker Skoda Auto (SA) will invest three billion Czech crowns to expand its Eastern Bohemia plant, where the new Skoda Roomster will be produced, Interfax News Agency reported.
The company has received government investment incentives to develop infrastructure and expand production capacity, according to state agency CzechInvest. SA's incentives will take the form of a tax relief worth 15% of the total investment. SA can use the tax relief during the next 10 years. The expanded Kvasiny plant will employ 2,000 extra workers. The plant currently produces the Superb model and employs over 1,200 workers. Production is to begin early next year; the new car will be presented to the general public for the first time at the Geneva Motor show in March 2006. SA's product portfolio currently includes the compact Fabia, the mid-sized Octavia and the Superb sedan. SA is 100% owned by Germany's Volkswagen. It sold 451,675 cars on the global market last year.

Skoda to produce cars in China

Czech car manufacturer Skoda Auto signed a deal with Shanghai Volkswagen to start producing its Octavia model in China by 2007, said company spokesman Jaroslav Cerny, New Europe reported recently. 
German manufacturer Volkswagen AG own Skoda Auto. Skoda Auto is the country's largest and most profitable exporter. The company is planning to produce 40,000 vehicles in the Shanghai plant by 2007 and hopes to increase the annual production to about 80,000 cars in the following years. In China Skoda Auto currently sells 2,000 cars each year. Cerny said, "At the beginning, the cars will go to the Chinese market, but we hope we could later export them also to the neighbouring countries."

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Czechs welcome 6 supersonic Gripens

The first 6 supersonic Jas-39 Gripen fighters leased from Sweden by the Czech Republic arrived at the tactical air force base in Caslav recently, New Europe has reported. 
Prague leased 14 of the fighters for 10 years for 19.6bn Czech crowns with an option to buy them after the lease period ends. The Czech Republic will use the planes to defend its airspace and in NATO operations. Czech pilots piloted 3 planes and the other 3 had Swedes in the cockpits. The Gripens will replace older MiG-21s, whose lifespan ends this year. The planes were accompanied by an An-26 military transport plane and an L-39 Albatros training plane.

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McDonald's boosts Czech sales

McDonald's, the global fast food network, raised its Czech sales 3% year-on-year to 489m Czech crowns in the first quarter of 2005, according to results released by the company, New Europe reported recently. 
McDonald's raised its Czech sales 3% year-on-year to over 2.1bn crowns last year. The firm predicts 5% growth for 2005. McDonald's raised prices 8% on average last year in reaction to an increase in the value-added tax (VAT) on restaurant services that followed the Czech Republic's admission to the EU in May 2005. At present, the company has 71 restaurants in the Czech Republic and expects to open one more this year. McDonald's entered the market in 1992. The firm employs 3,600 people. Its biggest rival on the Czech fast food market is KFC with 31 outlets.

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Vitkovice wants iron from Mittal

Vitkovice steel plant may face an acute shortage of supply of pig iron, Eva Kijonkova, spokeswoman for Osinek, the group that controls Vitkovice Steel, said recently, CTK News Agency reported. 
Mittal Steel group, its monopoly supplier of pig iron, has threatened to stop its supplies to the company from May 1st, 2005. This move would cause a loss of some 700 jobs. Pig iron is essential for Vitkovice Steel that uses some 700,000 tonnes of it every year. The two companies have been in a long-standing dispute over the prices charged by VPO for supplies of pig iron to Vitkovice for over 2 years. The government says the supplies are overpriced and it has turned to court demanding 1.08bn Czech crowns in compensation. According to the anti-monopoly office UOHS, the prices charged by VPO are standard. Mittal argued that VPO had the right to stop the supplies to Vitkovice.

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BlackBerry enters Czech Rep

Research In Motion (RIM) and T-Mobile have expanded the reach of BlackBerry with the introduction of the BlackBerry 7290 wireless Handheld ™ and BlackBerry Enterprise Server ™ v4.0 in the Czech Republic, New Europe reported.
Research In Motion is a leading designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile communications market. T-Mobile International, a wholly owned subsidiary of Deutsche Telekom, was established in December 1999. Deutsche Telekom, within the group, holds direct or indirect investments in mobile communications companies in Europe and the US, including T-Mobile Czech Republic Telecommunication Company Limited.

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