In this week’s business news: Finance Minister Miroslav Kalousek has presented three different options for state budget cuts, the Labor Ministry has announced a tender for the new welfare payment cards, direct flights between Prague and Abu Dhabi will be launched in September, for the third time this year, a Czech travel agency files for bankruptcy, and a Czech daily writes that Vietnamese small business owners are often blackmailed into paying protection money.
Finance Minister Miroslav Kalousek has devised three possible options for cutting the 2012 state budget. One possibility would be to cut expenses across all portfolios by five percent. This would save a total of 18 billion crowns. Another could take the form of ten-percent cuts, amounting to 32 billion crowns, which would allow for a 14-billion-crown grant towards the construction of new highways. The third option has been described by the minister as “drastic cuts in the social sector.” The government coalition is expected to decide on the exact method of how next year’s state budget will be cut within the next two weeks. In 2012, the state budget has to be cut by 32 billion crowns, and for 2013, cuts of 55 billion crowns are planned.
The Labor Ministry on Thursday announced a tender for the new welfare payment cards, which will be issued from the beginning of 2012. Some 800,000 such cards will be issued next year. The winner of the tender will be authorized to collect a one percent transaction fee. In addition, at least 1000 new ATM machines from which welfare recipients can withdraw their benefits should also start operating. Social welfare recipients will be able to use the new card at a minimum of 300 different shops in each region of the Czech Republic. While the new cards will not be mandatory at first, the ministry is planning to transform its payment system and will be promoting the use of such cards over wire transfers and other methods of payment.
Czech Airlines and the United Arab Emirates’ Etihad Airways have signed a new code-share agreement, and direct flights between Abu Dhabi and Prague will be launched in September. Four weekly connections are planned. Their number may be increased depending on demand. In addition, global connections through Etihad’s network are expected to include cities in the Middle East such as Kuwait and Bahrain, as well as Sri Lanka, Bangkok and Singapore, and destinations in Australia. According to Czech Airlines director Miroslav Dvořák, the markets in eastern Asia are currently booming, which is one of the reasons that the airline is seeking to expand its connections to those countries.
According to the daily Lidové noviny, Vietnamese small business owners pay up to 40 percent of their profits to organized criminals as protection money. Citing a 2010 report from the organized crime unit of the Czech police (ÚOOZ), the daily writes that Vietnamese owners of convenience stores and other small businesses are often blackmailed or threatened with murder by so-called Vietnamese “soldiers”, who collect such payments. The report states that such criminal acts are very hard to investigate, due to the closed-off nature of the Czech Republic’s Vietnamese community. According to the report, the problem also exists in other communities in the country.
The travel agency CK Parkam Holidays filed for bankruptcy on Friday. Clients who were supposed to fly to Bulgaria and Greece, the two destinations that the agency specializes in, will be unable to travel as planned. Some one hundred clients of CK Parkam Holidays are currently stranded abroad and have been advised to contact the travel agency’s insurance company for help. This is the third travel agency in the Czech Republic to go bankrupt this year. Some 1400 travel agencies operate on the Czech market; with 3000 clients a year, CK Parkam Holidays was among the smaller ones.
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