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CZECH REPUBLIC


 



In-depth Business Intelligence 

Key Economic Data 
 
  2003 2002 2001 Ranking(2003)
GDP
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)

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REPUBLICAN REFERENCE

Area (sq.km) 
78,866

Population 
10,246,178 

Density 
(per sq.km) 
132.2

Capital 
Prague 

Currency 
Koruna 

President 
Vaclav Klaus

Private sector 
% of GDP 
80%



Update No: 104 - (01/01/06)

Paroubek expects CSSD to win elections with 35 per cent of vote 
It is election year in the Czech Republic. It is astir politically, with several elections looming and political demonstrations being made in Prague.
The Czech Prime Minister, Jiri Paroubek, the only candidate for the chairmanship of the Social Democrats (CSSD), is expected to be elected by a CSSD extraordinary conference next May. He would then be their candidate in the next parliamentary elections only weeks later. These, he said, he had no doubts that the party would win with 30 to 35 per cent of the vote. 
At a press conference after a meeting of the CSSD central executive committee, Paroubek said that the party leadership's promise to resign if the election result was under 30 per cent, made at a conference this spring, remains valid. He said he considered it absolutely logical that the extraordinary conference that will be held a few weeks ahead of the elections to the Chamber of Deputies would be part of the party's election campaign. 
A programme conference will be held at the end of January, while the Social Democrats will hold district conferences in February and regional conferences in March and the results of their discussions will be announced at the extraordinary conference at the beginning of May, Paroubek said. 
Paroubek, who is the CSSD chief election leader, said he considered it correct that the CSSD would complete its leadership that had been incomplete after the resignation of Stanislav Gross. It will also be appropriate to combine the post of the party chairman and its election leader, he said. 
Paroubek will also present his future ministers at the extraordinary conference who will talk about their ideas. He had no doubts that it would be he who would form the new government after the elections. 
Paroubek will probably have no opponents at the conference. CSSD acting chairman, Bohuslav Sobotka, has announced that he will not run for chairman. "Someone more experienced and older should be chairman," he said, adding that he would support Paroubek. 
Labour and Social Affairs Minister, Zdenek Skromach, who contested the post of chairman with Gross at the CSSD national conference last spring also said he would not run in May. 
Paroubek said it did not matter for him that he would not have any opponent. If someone has courage let him run, he said. 
The central executive committee decided that apart from the extraordinary conference which will take place on May 10 or 13, 2006, in Prague, a regular national party conference will be held at the end of March, 2007, in Brno, south Moravia. It will elect the entire new leadership. 
The Social Democrats decided that future deputies would sign a commitment to support the party. Paroubek pointed out that the CSSD also defined the criteria of the assessment of candidates and the politicians' code of ethics. 
However, some Social Democrats say that the criteria are not taken into consideration in the composition of lists of candidates for the mid-2006 elections. 

Opponents of police crackdown on CzechTek demonstrate in Prague 
Young people in the Czech Republic really like to enjoy themselves. The police have traditionally been rather quick to nip trouble in the bud and this is causing controversy ahead of the elections.
About 300 people in December gathered on Prague's Kampa island near Charles Bridge to demonstrate for the proper investigation into the police crackdown on the participants in the CzechTek 2005 techno music rave that took place in Mlynec, west Bohemia, in late July. They pointed out that not a single policeman had been charged so far, while 18 ravers are being prosecuted. Some demonstrators marched towards the Government Office after the short meeting. 
The organisers distributed slogans with the portrait of Prime Minister, Jiri Paroubek, (senior governing Social Democrats, CSSD) and the test: "It will be you who will be beaten tomorrow." 
One of the participants in the July rave said that when she testified at the Interior Minister's Inspection she had a feeling that it was she who committed a crime. "The questioning was carried out in such a way that people took fright and withdrew their complaints," she said. 
The event was organised by people from the Police State for Unbiased Investigation into Police Crackdown. 
Several dozen ravers and police officers were injured during the police operation in July, in which water canons and tear gas were used. Charges have been brought against three participants and another 13 ravers have been accused. 
None of the policemen has been accused. Several demonstrations have already been held against the police operation that provoked sharp criticism of some politicians and civic associations and cost about 31 million crowns ($1=24.719 crowns). 

Extremists demonstrate outside Austrian embassy in Prague 
A demonstration of a very different kind also occurred in December. Some 50 far-right extremists staged a demonstration outside the Austrian embassy in Prague to express their support to British historian, David Irving, who has been recently arrested in Austria for denying the Holocaust. 
Opponents of the demonstration, that was permitted by the authorities, tried to thwart the protest by ringing bells. There were Jewish community representatives and former concentration camps prisoners among them. 
"There is the Vltava River here and not Jordan," neo-Nazi David Machacek, the organiser of the protest, said. He asked the police to take a group of about ten people away from the premises designated for the demonstration. 
"You are protecting Nazis although you know why they are demonstrating," the opponents called on the police. Police then separated the demonstrators from their opponents with police tape. 
Irving, 67, who ranks among the most ill-famed authors who deny the Holocaust, denied, for instance, the existence of gas chambers in Nazi extermination camps. According to extremists, he "merely questioned certain historical dogmas." 
After the demonstration, the extremists inserted a note in the embassy mailbox in which they expressed their disappointment at the Austrian authorities' approach to Irving. 
They later moved to the Slovak embassy where they protested against Slovak police crackdown on the ultra-nationalist Slovak Community-National Party, whose leader Marian Kotleba and a number of members have recently been charged with support to extremist movements. 

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AUTOMOBILES

Hyundai faces environmental challenge for Czech plant
 

A Czech environmental law group that successfully fought auto projects in the past has challenged preliminary plans for Hyundai's first European assembly plant, New Europe reported.
Czech government officials expect the South Korean automaker to announce firm plans in the near future to build a US$1.2 billion auto plant in Nosovice, an eastern Czech Republic town near Poland and Slovakia.
But in a letter to Hyundai Chairman, Chung Mong-Koo, lawyers with the Environmental Law Service (EPS) asked the company to "reconsider" the Nosovice site, claiming the project would violate the company's social responsibility policy as well as Czech law. EPS, which also fought a Toyota Peugeot Citroen factory and a Nemak auto parts plant, agreed to represent local landowners including more than 350 people who signed a petition against Hyundai's development. 
The 262-hectare tract is near a protected nature area in the Beskydy Mountains and is currently used by a farm cooperative for growing cabbage. "Your decision to direct your investment towards Nosovice would bring with it disproportionate social and environmental impacts, and would be in marked opposition to your declared philosophy and policy of social responsibility," the EPS lawyers said.
"It is a serious matter that the Hyundai Motor Company expects to begin construction in May 2006," the lawyers said. "Attaining this aim is only possible by breaking the legal provisions of the Czech Republic." 
Chung and other Hyundai officials toured the site in September. Nosovice-area government officials travelled to South Korea in October and later said they were sure their area would be picked for the 3,000-job factory. 

Skoda Auto to secure knocked-down car supplies 

Czech carmaker, Skoda Auto, is building a new centre with an area of 5,500 square metres to secure knocked-down car supplies to its plants abroad, spokesman Jaroslav Cerny said. This year, Skoda Auto will assemble over 21,000 cars from components produced in the Czech Republic and exported abroad, reported New Europe.
It should boost infrastructure and the working conditions of Skoda staff, and make material transport more transparent.
Skoda has seen a remarkable increase in this segment owing to a fast growth of production in its facilities in India and Ukraine. The largest Czech carmaker also assembles cars in Bosnia and Herzegovina and Kazakstan.
In 2007, Skoda Auto plans to launch production in a plant in Shanghai, China, with output projected at 40,000 Skoda Octavias a year at first, with a possible increase to 50,000-80,000 units.
Skoda Auto plans to raise output in its foreign plants by quarter to 21,700 this year. It wants to produce 2,200 cars in Bosnia, 10,000 in Ukraine, 9,000 in India and 500 in Kazakstan. 

Infineon sells plant to Siemens VDO Automotive 

Infineon's plant in Trutnov will sell its facility to Siemens VDO Automotive in the Czech Republic from July 1, 2006. Until then both companies plan to work together at the site, where Siemens VDO plans to increase production volumes of electric motor drives, New Europe reported.
Infineon currently employs approximately 500 people in Trutnov, where its fibre optics manufacturing operations have been involved in restructuring; some elements of Infineon's fibre optics operations have been sold. Soon thereafter, the Plastic Optical Fibre (POF) business was reorganized to become part of Infineon's Automotive, Industrial and Multi-Market (AIM) Business Group.
In August 2005, Infineon sold the business with bi-directional components (BiDi) for FTTx applications to EZconn. In January, Infineon sold the Fibre Optics transceiver business to Finisar Corporation. Overall, the restructuring measures undertaken led to the elimination of operating losses in the fibre optics business. 
Siemens VDO intends to recruit its personnel primarily among the current Infineon workforce.

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AVIATION

RLP to raise fees at Ruzyne airport against CSA's wishes
 

Prague's Ruzyne airport will raise landing fees in 2006 for all companies including Czech national air carrier Czech Airlines, CSA, although CSA's head, Jaroslav Tvrdik, recently asked for them to be cut, daily Hospodarske noviny (HN) has reported. 
Spokesman for the Air Navigation Services (RLP,) Richard Klima, told the daily that fees will be raised by 1.6 per cent. As a result CSA's costs will rise by some 10 million Czech crowns. Tvrdik said that the company's loss will amount to several hundred million crowns this year due to the rise in the fees. According to the International Air Transport Association, IATA, lending fees in Prague are the highest in Europe.

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ENERGY

CEZ group raises profit by 27% in January-September 


CEZ, the Czech energy group announced that its net profit rose by 27 per cent to Czech Crowns 14.1 billion in January-September 2005. The company's operating revenues were 20 per cent higher at Crowns 87.84 billion. The profit rose on good operating results, CEZ said. Operating revenues grew faster than costs that added 14.8 per cent to Crowns 66.98 billion. Operating profit stood at Crowns 20.87 billion, a rise of 41.9 per cent, New Europe reported.

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FOREIGN DEBT

Foreign countries' debt to Czech Republic falls
 

The data received from the finance ministry showed that foreign countries owed Czech crowns 37.2 billion to the Czech Republic at the end of August 2005. Of the total CZK 37.2 billion, some CZK 13.8 billion is claims that the Czech state took over from the CSOB bank within the sale of the bankrupt bank IPB, New Europe reported.
However, the Czech Republic's debt abroad is considerably higher than its claims on foreign countries. Czech National Bank data revealed that it increased by Crowns 44 billion to Crowns 1,073 billion in the second quarter of this year. Government debt accounts for some 19 per cent of the sum. 
Patria Finance analyst, David Marek, told CTK, "The Czech state and the Czech economy as a whole is a net debtor at present." Finance ministry spokesman Marek Zeman said that if the debtor fails to meet its obligations and it is not possible to hold direct talks to resolve the debts with relevant bodies from the debtor countries, the ministry resorts to commercial ways of settling the debts, using services of specialised firms or mediators. As the nominal value of the claims is not clearly expressed, the total debt to the Czech Republic does not include debts of Kazakhstan and Ukraine. In November, Deputy Finance Minister Eduard Janota told Kazakhstan representatives that the debt excluding interest reached some Crowns 3.7 billion.

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MINERALS & METALS

Vitkovice Steel profit up in January-September
 

Vitkovice Steel (VS) showed a pre-tax profit up by 2.19 billion Czech crowns at end-September, from nearly 800 million crowns in the same period last year, spokeswoman Lenka Hatlapatkova said, New Europe reported.
She said that by the end of December the profit could reach 2.5 billion crowns. EvrazHolding, a major Russian metals and mining company, purchased a 98.9 per cent stake in Vitkovice Steel for 7.05 billion crowns, the largest sheet steel producer in the Czech Republic, the company's press service said recently. Vitkovice Steel produced 870,000 metric tonnes of steel products last year.

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TEXTILES

Denim production declines and exports shrink 


In the new post 2005 world, the Czech Republic has lost some of its competitive benefits in fabric production. This year has shown a sharp decline in the production of cotton fabric in Czech Republic. Cotton denim fabric was manufactured in the Czech Republic and exported to Turkey and Italy. The Czech Republic has abated this practice considerably. From January to September, denim fabric exports to Turkey have fallen by 77.9 per cent to only 145,610 kilograms and exports to Italy have shrunk by 45.2 per cent. Total exports dropped 60.4 per cent to only 463,351 kilograms, New Europe reported.

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