Business News

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In this week’s Business News: the government seeks to get to grips with corruption; deflation at factory and farm gates; car makers buck the trend with production figures; clothes producer seeks to stave off collapse; and take over fever at Prague’s heating company.

Government seeks to stamp out corruption

Photo: Barbora Kmentová
The Czech government this week adopted a package of measures aimed at countering one of the country’s biggest business problems: corruption. The three-pronged attack will allow the use of undercover police agents, offer protection against prosecution for key witnesses and introduce screening of those making decisions about major public tenders. Reports now say the government also wants tax changes to make it more difficult for private firms to establish slush funds for paying bribes. The package looks like facing a fierce battle to get through parliament before elections in May.

Record price drops at factory gates and for farmers

Illustrative photo: archive of Radio Prague
The Czech Statistical Office has unveiled the extent of the prices revolution that occurred in the country over the last year, at least at factory and farm gates. Agricultural producer prices collapsed by around a quarter in 2009, while goods left factories on average around 3.1 percent cheaper than a year earlier. The latter is a record decline since figures started to be compiled in 1991. But prices paid by shoppers and other purchasers were still on average 1.0 percent higher in 2009 compared with 2008.

Czech car production hits record in 2009

Photo: European Commission
Czech car makers boosted production to a new record in 2009, bucking the crisis in the industry worldwide. Output increased by 2.85 percent compared with 2008 to just over 975,000 cars according to figures released by the Association of Automotive Industries. The main factor was a full year of production by the Hyundai plant in the east of the country which launched at the end of 2008. The joint venture plant between Peugeot-Citroen and Toyota also upped output by 8,200 cars last year. But the country’s largest producer, Škoda Auto, saw production slip by 84,000 units to just short of 520,000 with some manufacturing shifted to factories abroad.

Clothes making giant seeks to stave off collapse

The country’s biggest clothes maker is fighting for its survival. OP Prostějov demanded protection from its creditors last week and has announced the closure of a third of its 100 outlets in the country and neighbouring Slovakia. Workers are also on a four day week. The company’s main problem is that it owes around 1.2 billion crowns to banks. That sum is about equal to its annual revenues. The crisis manager in charge at the company is hoping that the current uncertainty will not scare off orders for Spring collections.

Some like it hot

One of the hottest issues in the Czech energy sector at the moment is the future of Prague’s heat and power company Pražská Teplárenská. Czech electricity giant ČEZ agreed to buy a 48.7 percent stake in the business last year but is still waiting for clearance from Brussels. Originally rumours were rife that ČEZ was set to sell on the stake to the country’s biggest heating company, Dalkia. Now though, ČEZ says that it want to keep its stake. But the plot appears to have thickened with the boss of mining company Czech Coal now reported to be in talks with Prague city council over a last minute bid to snatch the heating company stake away from ČEZ.