In Business News this week: foreign investment in the Czech Republic rises to pre-crisis levels; the country’s grey economy amounts to 565 billion crowns; the Transport Ministry plans to raise road toll by 25 pct next year; decrease of new cars’ prices in the Czech Republic are among fastest in Europe; debts of Czech household keep rising and are more difficult to collect; and the famed Czech distiller Rudolf Jelínek is moving its headquarters to Holland.
The volume of direct foreign investment in the Czech Republic amounted last year to around 113 billion crowns, or more than 6.67 billion dollars, which was 56 percent more than the year before, according to a report by the United Nations Conference on Trade and Development released on Friday. Meanwhile, Czech firms invested some 28.4 billion crowns abroad in 2010, according to the Czechinvest agency. Among the four Visegrad nations, the Czech Republic was only surpassed by Poland. Czech Industry and Trade Minister Martin Kocourek said the volume of foreign investment returned to pre-crisis levels. However, the UN agency warned that future investment in the country might be threatened by inflation and fiscal imbalance.
Grey economy in the Czech Republic amounts to 565 billion crowns, or over 33.3 billion US dollars, which represents a 17 percent share in the country’s economy, the Czech business daily E15 reported on Friday quoting a study by Visa Europe and the consultancy A.T. Kearny. Despite the high numbers, however, the country’s unofficial economy is smaller than the EU average of 20 percent. The study expects the grey economy to grow in the coming years, mainly due to hikes in VAT and income tax as well as decreasing social benefits.
The Transport Ministry is planning to increase the toll on Czech roads by 25 percent next year, the daily Hospodářské noviny reported on Thursday. The increase should bring another two billion crowns into the ministry’s budget, affected by the government austerity measures. The ministry also plans to raise the price of the annual highway pass for personal vehicles, from 1,200 to 1,500 crowns, or over 88 US dollars. That should generate additional 700 million crowns for the ministry. However, the Czech Automobile Association called the plan “a provocation” as Czech roads are among the worst in Europe.
Prices of new cars in the Czech Republic decreased by 9 percent last year, which was among the biggest drops in Europe, the European Commission said on Tuesday. In the whole of the European Union, new cars prices declined on average by 2.5 percent. However, cars makers have warned prices would not go down any more; the Czech-based, German-owned manufacturer Škoda Auto announced a 1 percent hike in the prices of their Fabia, Octavia, Superb and Yetti models which is to take effect in August.
Debts of Czech households with banks and other financial institutions rose by 7.3 billion crowns in June to 1.081 trillion crowns, or more than 63.7 billion US dollars, the Czech National Bank said on Friday. Over the past year, the households’ debts rose by 69 billion crowns. The Czech Statistical Office has warned that expenses of most Czech households grow faster than their incomes; only 40 percent of them would be able to pay an unexpected expense of 8,500 crowns. It is also becoming increasingly difficult to collect debts from those unable to pay; several large Czech debt colleting agencies have complained about a sharp increase in cases that end up in court.
The largest Czech distiller Rudolf Jelínek is moving its headquarters to the Netherlands, the daily E15 reported on Tuesday. The head of the company’s board, Zdeněk Chromý, said the main reasons behind the move included a higher level of protection, a better position for negotiations with the company’s partners on supplies and acquisitions, as well as a more stable legal environment. Rudolf Jelínek follows several large and medium-sized Czech firms including PPF, NWR and Zentiva who have also established their headquarters in the Netherlands. Last year, the firm adopted a holding structure and now owns distillers in Bulgaria, Romania and Chile. However, the firm says it has no plans to close down its original plant in the Moravian town of Vizovice.
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