80

01-02 2008 CONTENTS

CZECH BUSINESS AND TRADE

Economic Bi-monthly Magazine with a Supplement is Designed for Foreign Partners, Interested in Cooperation with the Czech Republic INTRODUCTION Questions of the Month for Martin Říman, Minister of Industry and Trade ...... 4 Issued ECONOMIC POLICY by PP AGENCY s.r.o. as an exclusive commission Progress in Approximation to Most Developed European Countries ...... 5 for the Ministry of Industry and Trade of the Czech Republic FINANCE The Most Significant Changes in Income Tax Act as of 2008...... 8 EDITORIAL BOARD: Milan Hovorka (Chairman), Ivan Angelis, BUSINESS AND PRODUCTION High Economic Growth Accompanied by Falling Unemployment...... 10 Zdena Balcerová, Ivana Divišová, Jiří Eibel, Zbyněk Frolík, Růžena Hejná, Josef Jílek, LEGISLATION Zdeněk Kočárek, Tomáš Kopečný, Marie Pavlů, New Legislation on Insolvency in the Czech Republic...... 12 Pavla Podskalská, Josef Postránecký, Libor Rouček, Jiřina Semanová, Jarmila Škvrnová CZECH TOP INGOS Triumphs in Macedonia ...... 14 MANAGING EDITOR: Bobcat Opens a New Plant in Europe ...... 16 Jakub Havel Panasonic Celebrates 10th Anniversary of Its First Investment in the Czech Republic ...... 16 EDITORS: SERVICES Jaroslava Bradová, Naďa Vávrová Healthcare System in the Czech Republic ...... 18 REGULAR COLLABORATORS: REGION Eva Tomášková NUTS 3 – Plzeň Region ...... 22 – 34

TRANSLATION: PRESENTATION OF FIRMS Vlasta Benešová, Alena Kenclová, Nemocnice na Homolce...... 2 Robert Krátký, Lucie Pavlíčková, Dagmar Šímová, Böttcher ČR , k.s...... 15 Halka Varhaníková Selectra spol. s r.o...... 17 Léčebné lázně Jáchymov a. s...... 19 Ústřední vojenská nemocnice Praha ...... 21 READ: J. Blažek Sklo Poděbrady s r.o...... 25 Mathew Booth, Ivana Kadlecová, LOGURAN a.s...... 33 Zuzana Pavlíčková PLASTIK HT a. s...... 33 Tisk Horák a.s...... 35 GRAPHIC DESIGN: BAEST, a.s...... 36 Miloslav Bucvan, Helena Dvořáková, Lobby Česká republika

DEADLINE: 22/11/2007

PP Agency Company with the ISO 9001 certified quality management system for publishing services

ADDRESS: Myslíkova 25, 110 00 Praha 1 Czech Republic Phone: +420 221 406 623, +420 221 406 626 Fax: +420 224 930 016 e-mail: [email protected] www.ppagency.cz www.mpo.cz/cbt Press run: 13 500 copies. The number of printed and sold copies of the magazine is verified by auditor, HZ Praha, s.r.o., member of PANNELL KERR FORSTER Worldwide. It is not allowed to reproduce any part of the contents of this journal without prior consent from the editor. Attitudes expressed by the authors of articles carried by CBT need not necessarily be consistent with the standpoint of the Publisher. MK ČR E 6379, ISSN 1211-2208 „Podávání novinových zásilek povoleno Českou poštou, s. p., odštěpný závod Přeprava, č. j. 3468/95, ze dne 24/10/1995“

3 | INTRODUCTION

Questions of the Month for Martin Říman, Minister of Industry and Trade

established new firms start to compete furiously. The basis of this innovative What is your opinion on the price idea lies in America at the turn of the cuts in mobile roaming, which the 20th century, when the so-called European Commission enforced in antimonopoly legislation was established the summer? against the monopoly of the railways. Everyone knows today that the railway I am not one of the people who monopoly in public transport was broken enthusiastically welcome the cut in the not by these laws, but by the new roaming charges. I do not think that the technology – cars. The same situation is European Commission should instruct valid for other fields too. Especially operators what should and should not telecommunications have been in recent be done under the pretext of better years an irrefutable proof to this fact. service. I understand in a way that the Yes, fifteen years ago we all relied on the price cut in calls from abroad was hailed telephone lines of the half state-owned for instance by the members of the Telecom; not only in the post-communist European Parliament, for they have Czechoslovakia, where the installation of experience with the expensive roaming. a phone line was a question of life and Yes, for those who have breakfast in death for any business activity, but Athens, lunch in Brussels and dinner in everywhere in Europe. Thus there were London it might look as a victory. For orders when, from where, and to where, SINCE THE MIDDLE OF 2007 those who make 99% of calls inside a line should be installed. Fortunately, YOU HAVE BEEN IN CHARGE their country this victory must look OF ELECTRONIC regulators were not able to see that COMMUNICATION, WHICH HAS suspicious. As the saying goes: what is parallel to this an industry of entirely BEEN TRANSFERRED FROM not visible, works; the regulation of the new technologies is being created, THE DISSOLVED MINISTRY roaming tariffs will result in the increase which at a certain point made the OF INFORMATICS TO THE of local tariffs. Who would consider the monopolistic fixed phone line or a dial- MINISTRY OF INDUSTRY increase of a fraction of a percent related AND TRADE. SHOULD THE up internet connection a thing of the STATE OR MUNICIPALITIES to this ingenious idea? past. SUPPORT THE SPREADING The idea that in this highly OF INTERNET ACCESSIBILITY? competitive environment we should introduce regulations, such as destroying The internet market today is telecommunication companies, is The European Commission has not absurd. Our not wanting a single divided among dozens of small introduced only roaming European regulator is a result of precisely or larger competing companies regulation. In November it these deliberations. If European which use different technologies. introduced a package of further commissars think in this manner, then I am convinced that the only changes for the electronic their obtaining new powers would only enemy of this rapid and communications sector. How do enhance them. successfully developing internet you view these propositions? market is the politician – an activist who tramples down two Roaming regulation is only a small small providers in a local town prelude. Current proposals of the because he starts to offer Commission are a reflection of a wider municipal internet for free. This movement, which has been resonating is my own experience from the victoriously in the heads of the elites for region I live in. Neither the state, many years. In simple words, network monopolies in power industry and nor the authorities should try to telecommunications will be destroyed if compete with private companies. we tell them to destroy themselves; of course, all this within the framework of market economy. This way we reach a situation in which these forcedly

| 4 CZECH BUSINESS AND TRADE

Progress in Approximation to Most Developed European Countries

The Czech Republic has recorded But more important than the the slow growth at the beginning of the a very fair rate of economic nominal convergence is the real decade, the EU 15 economy revived and approximation to the average EU recorded a year-on-year growth of 2.8% growth with low inflation and level – the Czech Republic has reached in 2006, which was the best result since strengthening currency since almost four fifths of the European 2000. Even so, the Czech economy May 2004, when it entered the average taken by the per capita GDP in increased almost 2.5-fold of the EU 15 the purchasing power parity. The fairly growth. Eurostat estimates last European Economic Area. With rapid approximation of the Czech year’s growth of the Czech GDP at 5.8%. the exception of meagre success Republic to the level of the developed Nevertheless, the revised data of the in the fiscal area, the Czech European countries stems from the rate of Czech Statistical Office for the first three Republic has been achieving growth of the Czech economy in quarters of the year indicate a growth of comparison with the rate of the EU 15, 6%. With a slight weakening of the EU15, good stability in prices and especially in the last three or four years. the Czech Republic will take another stable convergence according to But let us look at the rate of important step in the approximation to long-term interest rates in the approximation in productivity or the wage the developed European countries in fulfilment of the Maastricht and price level. 2007. criteria of economic CZECH REPUBLIC’S RATE OF PER CAPITA GDP – FOUR approximation to the economic GROWTH IS THREE-FOLD THE FIFTHS OF EU AVERAGE and monetary union in Europe. EU 15 GROWTH The wealth of a country measured by per When the Czech Republic acceded to the capita incomes is macro-economically The criterion of monetary EU together with nine other countries in expressed by per capita GDP in stability cannot be assessed 2004, its GDP rose almost twice as rapidly purchasing power parity, i.e. the indicator formally, as the Czech Republic as that of the old Union members – in that which excludes differences between has not yet decided to join the year, the EU 15 and the Czech Republic countries stemming from their price levels recorded a year-on-year GDP rise of 2.3% and thus allows meaningful comparison. ERM II system, the stage and 4.5% respectively. In 2005, the Czech It is thus logical that due to the high rates preceding the euro adoption. rate increased to 6.4%, whereas the EU of economic growth in the Czech 15 rate declined to 1.6%. This four-fold Republic, the per capita GDP in acceleration against the economic purchasing power reached 81.5% of the development in the old countries of the EU 27 average in the first quarter of 2007 Union was a shift in the real convergence according to Czech Statistical Office of the Czech Republic, which continued in calculations, and will evidently climb to 2006 with a rise of 6.4%, but following the 83.7% predicted by Eurostat for 2008. This is lower than Cyprus had before accession to the EU, but better than the 1999 position, for example, of Greece. The ten countries which entered the EU in May 2004 were a greatly heterogeneous group in terms of per capita GDP. The difference between countries with the highest and lowest economic performance in the pre- accession year 2003 was huge – a difference of 45.6% between the relative per capita GDP of the most developed Cyprus with 89.1% of the EU27 average, and the least developed Latvia with 43.5%. With its 73.5% of the EU 27 average, the Czech Republic was fourth after the mentioned Cyprus, Slovenia, and Malta. The Czech Republic was also fourth in comparison with the economic standard of the EU 15 in the calculation according to indexes. In the period after accession to the EU, the gap between the highest and lowest relative per capita GDP has been gradually closing. Countries in this group are converging towards the EU average as When the Czech Republic acceded to the EU in 2004, its GDP rose almost twice as rapidly as that of the old well as towards each other. Union members Photo: Photocombo archives

5 | ECONOMIC POLICY

PRICE LEVEL CONVERGENCE The comparative price level shows whether a country is "more expensive" or "cheaper" against the EU average (the ratio between the purchasing power parity and the market exchange rate calculated from the final consumption of households published by Eurostat). In 1995, the Czech Republic ranked among the cheapest countries in Europe (39.2% of the comparable price level of the EU15 and 41.5% in relation to EU 27), and still has a relatively lower comparative price level (60.7% of the EU 27 level in 2006), as do Slovakia (58.2%) and Hungary (60%). Although the Czech comparative price level has risen by 6.2 percentage points since 2003, it is still below the average of the ten new EU countries. Consumer prices have not been growing at a high rate in the Czech Republic and the movement was primarily due to the strengthening CZK/EUR exchange rate, which has been the main channel of convergence. Euro adoption at this time would eliminate the positive influence of the CZK exchange rate on convergence towards the developed countries. The same applies to the per capita GDP comparison of the whole group of new members from 2004 – their comparative price levels are approximating the average of the whole EU as well as each other at different speeds. Consumer prices have been growing slowly in the Czech Republic due to the strengthening CZK/EUR exchange rate NOTICEABLE GROWTH IN HOURLY WAGES... The average hourly costs of work (i.e. total Since the accession of the Czech 15. However, the nominal hourly wage is costs in EUR divided by the number of Republic to the EU, its average hourly fundamental, as it makes thus understood hours worked) are the basis which allows wage in EUR has been increasing most convergence greatly relative: whereas the comparison whether wages in a particular rapidly among the ten new EU countries – hourly wage in the EU 15 increased from country approximate the wage level of the it was up by 30.5% in 2006 against 2003 EUR 19.62 in 1997 to EUR 25.11 in 2005, old member countries and the average of after a growth from EUR 5.47 to EUR i.e. by EUR 5.49 (topical data of this group the whole Union. The hourly basis also 7.14. The rise was as high as 123.2% are not available), the increase was only eliminates the difference in working hours against 1997, when the average hourly EUR 3.66 in the Czech Republic. in the different countries. wage increased by a mere 28% in the EU ... BUT THE SCISSORS CONTINUE TO OPEN Development of the productivity of labour per one employee in the Czech Republic, The scissors were also opening in the EU 15, and EU 25 (in %, EU 27 = 100) shorter 2003-2005 period – the hourly 120 wage rose by EUR 1.97 in the EU 15 and by EUR 1.67 in the Czech Republic. Wage 110 convergence measured only by the rates of 100 wage increases is questionable. If we take 90 into consideration the above mentioned nominal categories of the average hourly 80 wage and not the percentage growth, the 70 Czech Republic actually diverged from the 60 EU 15. The same applies to the whole group of the ten new members – the 50 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 difference between the hourly wage in the EU 27 EU 25 EU 15 Czech Republic EU 15 and the average of the ten new Photo: Photocombo archives

| 6 CZECH BUSINESS AND TRADE

countries was EUR 15.93 in 1997 and EUR and services was EUR 9 250 for men and Republic’s rate of productivity 18.62 in 2005. EUR 6 642 for women. Compared with the approximation is not as high as would be As to the monthly – not hourly – wage two sectors in Germany, this was 4.8-fold desirable, and some of the new countries measured by the average monthly labour less for men and 5.3-fold less for women. have been making better progress (for instance, Slovakia with 71.4% of the EU 27 average as compared with 63.2% in Per capita GDP in purchasing power parity in relation to the EU 15 average 2003). The biggest relative increases in (in %, 2007 Eurostat estimate) productivity per one employee have been 90 2003 attained by countries with high 2007 80 Average in 2003 unemployment. This indicates a good 70 influence of structural changes in 60 companies which increased profit, GDP, 50 and productivity. 40 30 POSITIVES AND RISKS 20 Irrespective of the productivity inadequacy, 10 the Czech Republic has been 0 approximating the standard of the developed countries of the EU to an Latvia Malta Czech Poland Cyprus Estonia Slovakia Slovenia Republic Hungary

Lithuania important extent also in the very short period since the beginning of its Changes in the comparative price levels (2006/2003, in percentage points, membership. This is particularly apparent from EU 27 = 100) from the aggregate per capita GDP indicator. In the fulfilment of the 10 Change in the comparative price level 2006/2003 in percentage points Maastricht criteria, its image of a "model 8 pupil" has been marred by the problem of public budgets. But strong economic 6 growth and tax revenues have been reducing the deficits in the last few years. 4 Governmental finance and economy are living organisms also in the Czech Republic 2 and without reforms could complicate Cyprus 0 Slovenia fulfilment of the criteria of nominal convergence in the budget area, and Latvia -2 Malta

Czech possibly through risky premiums and the Poland Estonia Slovakia Republic Hungary

Lithuania present development of consumer prices also in the area of long-term interest rates. costs per one employee (converted into full BIGGEST GAP IN working hours), the monthly wage thus PRODUCTIVITY defined exceeded EUR 1 000 (EUR 1 027.6) The productivity of labour in the Czech for the first time in the Czech Republic in Republic – measured as GDP in purchasing Drahomíra Dubská 2006. Compared with EUR 777.1 in 2003, it power parity produced per one employee Analyst was higher by 32.3%. This ranks the Czech – was 66.5% of the EU 27 average in Economic and Statistical Analyses Republic among the most rapidly converging 2003, and 71.2% in 2006. Department new EU countries in terms of percentage rate The productivity of the EU 15 was Czech Statistical Office of growth together with Slovakia (+ 37.2%) 110.1% of the EU 27 average. The Czech (e-mail: [email protected]) and Hungary (+ 24%) which, however, has a wage level according to the average monthly wage lower than the Czech Republic Increases in hourly wages in EUR (in %, 2005/2003, and 2005/1997) (EUR 775.4 and EUR 947.1 respectively). 140% Despite the growth in monthly wages, 2005/2003 120% the distance from the developed European 2005/1997 countries is great – for example, the 100% average monthly wage in 2006 was EUR 80% 3 868 in Germany, EUR 2 203 in Spain, 60% and EUR 1 618 in Portugal. The "gender pay", which shows the 40% difference between the remuneration of 20% men and women, has not changed in the 0% Czech Republic in the period after its Latvia Malta EU 27 EU 15 Czech Poland Cyprus accession to the EU. For example, the Estonia Slovakia Slovenia Republic Hungary Lithuania annual gross wage in the Czech industry Source: Eurostat, the author’s calculations

7 | FINANCE

The Most Significant Changes in Income Tax Act as of 2008

The Income Tax Act is one of the The most significant changes in be liable to taxation. most amended tax laws. The respect of legal entity income taxes, which will influence the tax THE FIELD OF THIN amendment to the Income Tax environment in Czech economy the most, CAPITALISATION MADE MORE Act, which came into force at the are namely the change in the legal entity STRICT beginning of 2008, brings the tax rate and withholding tax, participation In the case of signing new credits and greatest change in this law in its exemption, a change in the field of thin loans or adding appendices to already capitalisation and an amendment of existing contracts it is necessary to take history. The alterations concern finance lease. into consideration new rules for thin all the parts of the law. The capitalisation. Financial expenses (costs), objective of the amendment was LEGAL ENTITY INCOME TAX i.e. credit and loan interests and related to fulfil the government The amended Income Tax Act introduces expenses (costs) including the a phased reduction in legal entities income arrangement and administration of loans declaration in the tax field, tax rates, from the former 24% to 21% in and guarantee fees will not be considered above all to decrease taxation of 2008, 20% in 2009, and 19% in 2010. tax deductible if: natural and legal entity income, to increase the reduced VAT rate WITHHOLDING TAX RATE 1. their total amount for the taxation As of 1 January 2008 the withholding tax period exceeds the amount determined from 5 to 9% and to implement rate on income paid to non-residents was as unified interest rate plus four changes of some excise taxes. unified at 15%. The only exemptions will percentage points multiplied by the be the withholding tax rate for cross- average state of credits and loans border finance lease, which will be during this period increased from 1% to 5%. Further 2. they arise from credits and loans which decrease of withholding tax rate to 12.5% are subordinated to other tax payer’s will take effect on 1 January 2009. debts 3. they arise from credits and loans where the interest or maturity of financial PARTICIPATION expenses depends on the trading EXEMPTION income (profit) of the tax payer The Legal Entity Income 4. the total of credits and loans during the Tax Act newly includes taxation period exceeds six times the the so-called particip- equity (four times the equity from 2009) ation exemption, which 5. the total of credits and loans (if the means tax exemption related person is either a creditor or for income from share a guarantor for the credit or loan [Art. transfer in companies 23 par. 7]) exceed in the respective who are based in the period two times the equity of the Czech Republic, the debtor. European Union, or are resident of other An aliquot part of financial expenses countries with which (costs) connected with credits and loans, or the Czech Republic has their parts cannot be considered as tax signed a double deductible if they fulfil at least one of the taxation prevention above-mentioned conditions. Each treaty. The law condition is considered separately. stipulates other Credits and loans or their part, if the conditions for the related financial expenses (costs) are part exemption (for instance of an acquisition cost of assets, and also the legal entity income demonstrably granted interest-free credits tax rate in the country and loans are not considered as credits and in which the sold loans for the purpose of this regulation. company is based has This above-described regulation does not to be minimum 12%; apply to financial expenses (costs) which in the legal forms of this total do not exceed CZK 1 million during company; the length of the taxation period, but only if the debtor ownership, and the is an unrelated person. share in the company). Transitory measures regulate the delay Apart from dividends, of the effectiveness of the new rules for other types of income credits and loans concluded before the related to financial coming into force of the law amendment The law defines new terms or financial leasing

investment will thus not until 2010. As of 2010, the new Photo: Photocombo archives

| 8 CZECH BUSINESS AND TRADE

The amended law on income tax introduces a gradual reduction in the rate for corporate bodies to 19% in 2010 regulations will be used for all credits and acquisition cost of passenger cars acquired respect of the method of determination of loans. They represent a considerable after 31 December 2007. At the same time prices and the possibility to apply tax loss toughening of the conditions for tax the special depreciation group for cars is in the case of a significant change of the deductibility of financial expenses and being cancelled and the depreciation owner, it will now be possible to ask unfortunately practical methods for the period will extend from four to five years. among other things for an assessment of calculation of the level of non-tax- whether changes made to assets deductible financial expenses are not clear RECEIVABLES AND DEBTS concerned should be treated as a repair or yet. Tax deductible allowances for receivables technical improvement, or whether with a value higher than CZK 200 000 will expenses incurred in respect of research FINANCE LEASE be allowed only if the respective and development projects qualify as tax- As of 1 January 2008, a new amendment arbitration, administration, or court of deductible items. Applicants must submit of finance lease also comes into effects. proceedings have started. Unpaid debts a number of data for the tax authority The special lease depreciation will be more than three years overdue will assessment and they also have to prepare cancelled. The minimum duration of the increase the income tax base. With the proposal of the tax authority’s decision. finance lease will be equal to the period of subsequent liquidation of the liability, the Afee of CZK 10 000 is charged for the tax depreciation, this is e.g. minimum 30 tax base will fall. assessment. We believe many companies years in case of real estate. Financial costs will use this possibility despite the fact that of 1% of lease instalments of over CZK 1 OTHER CHANGES it is clear that the whole process of million per taxation period will not be The law amendment introduces the "clarification and documenting" for the considered tax deductible. possibility to obtain from the tax proposed solution will be laborious. authorities the so-called binding ruling on CHANGES RELATED TO some issues which have to be dealt with in Michaela Thelenová PASSENGER CARS practice. Apart from the already existing Senior Tax Manager The amendment cancels the maximum possibilities to ask for a binding ruling in KPMG Czech Republic Photo: Photocombo archives

9 | BUSINESS AND PRODUCTION

High Economic Growth Accompanied by Falling Unemployment

In 2007 the Czech economy According to the labour force sample 2006, when the number was half of what it experienced a period of strong survey methodology which is is today. It is no coincidence that the comparable on an international scale, greatest number of jobs available are economic growth with low the Czech economy was still struggling with created in regions experiencing great inflation implications. In the last high unemployment at the end of the last economic prosperity, especially Central three years, growth regularly decade, when the rate of unemployment Bohemia, the Pardubice and Plzeň Regions, peaked at 9.6%. Since then we have seen where approximately a third of all available exceeded the 6% mark and was a trend of falling unemployment, which job vacancies are concentrated. These are positively reflected on the labour came to a halt only in 2002 as a result of regions characterised by the presence of market. Thanks to the rapid a considerable slackening of economic large investors who tend to follow up growth of the economy and, growth. The acceleration of the Czech primary investments by further expanding economy in subsequent years made it and extending production capacities. The subsequently, the significant rise possible for the situation on the labour appeal of these areas is secured in particular in the number of newly available market to quickly pick up again. The rate of by their relatively good transport workers, the problem of unemployment thus began to drop again accessibility, i.e. the vicinity of the western relatively high unemployment until reaching 5.2% in the third quarter of borders of the Czech Republic, the 2007. Expressed in figures, it is the lowest availability of qualified labour, and the was mitigated quite value recorded in the last ten years: the positive inclination of the local considerably. The current number of unemployed persons has administration towards business situation on the labour market is decreased by 45% in comparison with the development. On the other hand, it is record high in 2000. This is a great shift in becoming increasingly difficult to find an characterised by falling the right direction, which the Czech adequate response to growing demand for unemployment on the one hand Republic owes especially to the rapid labour in prospering regions. Businesses are and a record high availability of growth of its economy, fuelled in particular thus forced to seek workers from other new job vacancies on the other. by foreign investments. It is worth noting regions or, alternatively, become dependant that the influx of foreign direct investment on foreign employees arriving in particular In certain regions the problem of on a large scale only began after 1998. Only from Slovakia, Poland, and the Ukraine in unemployment is practically since then has the Czech Republic obtained search of higher earnings. The total number extinguished altogether and the overwhelming majority of the almost of foreign workers in the country has local businesses are beginning to EUR 59 billion FDI received to date. already surpassed the two hundred Decreasing unemployment has to a minor thousand mark. The situation in the struggle due to a lack of extent also been influenced by construction industry is very specific. This qualified labour. In spite of the demographic developments, i.e. the industry sector is experiencing a strong situation on the labour market, introduction of early retirement subject to boom and could hardly manage without no sanctions, the possibility of which was engaging foreign workers. which is improving constantly, taken up by tens of thousands of people. In spite of the highly favourable trend on salary demands have not the labour market, great differences increased rapidly (such demands RECORD HIGH AVAILABILITY continue to prevail among individual could pose a threat to the OF JOB VACANCIES regions in the Czech Republic. More than The current economic boom is the chief a third of the country's regions and districts competitiveness of Czech factor behind decreasing unemployment in face above-average long-term un- companies). the Czech Republic. This is very clearly employment. Two regions, i.e. ten districts, demonstrated by the growing availability of display double figure unemployment. The job vacancies, which reached a record high affected areas carry the burden of a one- in August 2007 at 133.4 thousand. The sided focus of past industrial production on sharp rise in the number of new jobs has mining and traditional heavy industry or, only been apparent since the beginning of alternatively, on agriculture and, as such, they fail to attract the attention of large Rate of unemployment according to sample survey (%) investors. Such areas are located in the

12,0 north-west of Bohemia, and in North and South Moravia. The aforementioned two 10,0 regions (i.e. ten districts) with the highest unemployment account for just under one- 8,0 third of all jobseekers. Although the situation here is gradually improving, no 6,0 radical turn for the better is expected until their greatest handicap – poor accessibility 4,0 by transport – is alleviated.

2,0 LOW LABOUR FORCE 0,0 MOBILITY 2000 Q1 2000 Q4 2001 Q3 2002 Q2 2003 Q1 2003 Q4 2004 Q3 2005 Q2 2006 Q1 2006 Q4 Decreasing unemployment is on the one

| 10 CZECH BUSINESS AND TRADE

Acceleration of the Czech economy in recent years has reduced unemployment to 5.2% in the third quarter of 2007

hand a very favourable outcome of the Rate of unemployment vs. job vacancies economic boom as it has a direct and 160 000 12 positive impact on the living standards of 140 000 people. On the other hand, it raises the 10 question whether the lack of qualified 120 000 8 labour will not become a factor limiting 100 000 further economic growth and whether 80 000 6 eventually it may not lead to a sharp increase 60 000 in salaries in years to come. Although in 4 a long-term perspective these threats may 40 000 2 be real, the Czech Republic still has sufficient 20 000 reserves allowing it to avoid such a scenario. 0 0 I.05 IV.05 VII.05 X.05 I.06 IV.06 VII.06X.06 I.07 IV.07 VII.07 The chief remaining obstacle, both on the Number of job vacancies (left axis) part of jobseekers and on the part of Number of unemployed persons per job vacancy (right axis) businesses, is the poor flexibility of the labour market. The state is also in part to blame. In short, the unwillingness to relocate In certain regions, falling unemployment reflect the change in personal income tax. in order to secure a job is closely related to and the resulting lack of labour is already In view of the expected slackening of the the rigidity of the overregulated housing beginning to have an impact on rising economic growth rate to 4 - 4.5%, a sharp market. Moreover, there is but a marginal salaries. During the first three quarters of reduction can be foreseen in the growth of availability of part-time work, incomparably 2007, the average salary increased in real employment, which should result in lower lower than in the overwhelming majority of terms by 5.3% as compared with the same pressure on salaries to rise. In view of the EU countries, and, last but not least, there period of the previous year, whilst growth expected rise in inflation, the average real are deficiencies in the existing generous of labour productivity was roughly one salary can be expected to rise in 2008 by social system. Certain obstacles are gradually percentage point lower. In view of the approximately 4%. being mitigated. These include the mobility opposite trend in previous years and in of labour, which is generally higher among comparison with the salary levels in the the young. The removal of other obstacles majority of EU countries, this trend does will, however, require interventions on the not pose a threat to the competitiveness of part of the state (deregulation of the the Czech economy vis-`a-vis other housing market, support for weaker regions, countries of the EU. The Czech Republic Petr Dufek elimination of abuse of the social system and will presumably experience a similar trend Československá obchodní banka, a. s. so on). next year, when salaries will, in addition, (e-mail: [email protected]) Photo: Photocombo archives

11 | LEGISLATION

New Legislation on Insolvency in the Czech Republic

On 1 January 2008, new UNIFIED INSOLVENCY Observance of the reorganisation plan is legislation on insolvency and its PROCEEDING reviewed by the creditors. Nevertheless, the Under the original Bankruptcy and resolution of insolvency by means of resolution, the Insolvency Act, Composition Act, the proceedings were split reorganisation is lengthy and expensive and entered into force in the Czech in two separate proceedings: bankruptcy it can be assumed that this institute will not Republic. The awaited new legal and composition. The new act introduces be applied in practice often, and despite the form replaced the outdated and unified insolvency proceedings. During the efforts of lawmakers to preserve the first phase, the solvency or insolvency of the entrepreneurial activity of debtors, often criticised Bankruptcy and debtor is ascertained and ruled on. After insolvency resolution by liquidation method, Composition Act of 1991, that a decision that a debtor is insolvent is issued, i.e. bankruptcy, will prevail. It is possible to was accompanied by the creditors are invited to file their claims in the decide to turn reorganisation into proceedings and to hold a creditors’ meeting bankruptcy during the proceedings, Insolvent Trustees Act of 2006. to vote on the method of resolving the especially if the obligations related to the The general ambition of the new insolvency. In the second phase, a court reorganisation plan are not being met, or if legislation is to adapt insolvency issues a decision on the method of resolving it is proposed by a creditor who had proceedings in the Czech the insolvency, which generally must follow originally submitted a proposal on the basis the method chosen by the creditors. of which the reorganisation was permitted. Republic to the 21st century with The third basic method of resolving respect to the requirements for METHODS OF RESOLUTION insolvency, which is, however, only for transparency and effectiveness OF INSOLVENCY AND debtors who are not entrepreneurs, is the of proceedings as well as the DEFINITION OF INSOLVENCY discharge from debts. The new legislation The Insolvency Act newly distinguishes the defines two forms of discharge from debts: application of modern following three insolvency resolution payment according to a five-year payment technologies. It is a complex methods: bankruptcy, reorganisation, and schedule and on-the-spot composition, i.e. and, as opposed to the discharge from debts. Apart from some by realising the debtor's assets. The second common provisions, a separate procedure is form is loosely connected to the previous Bankruptcy and Composition Act, established for each of these three methods institute of composition; the basic difference a significantly more detailed and the unified insolvency proceedings are is that after the discharge from debts the legislation that includes new thus differentiated. outstanding payables are not extinguished terminology which is, after all, The first method of resolving insolvency, automatically but rather by a court decision. and likely the one to be used most Insolvency of financial institutions is dealt apparent when you compare the frequently, is bankruptcy, which is based on with separately under the Insolvency Act. names of the previous and new the former bankruptcy proceedings under mainly due to the mass effects of their laws. the Bankruptcy and Composition Act. The insolvency. The most significant features of principle is the same, i.e. to satisfy the A so-called impending insolvency is creditors from the proceeds of the sale of another innovation that enables a debtor to the new insolvency legislation the debtor's assets, but it is now more file an insolvency petition if insolvency is are the introduction of unified thorough. In this regard it is necessary to imminent, i.e. in cases when it is justified insolvency proceedings, note that the new legislation allows for a so- to assume, "with a view to all the called inconsiderable bankruptcy, which circumstances of the case, that the debtor emphasis on non-liquidation represents a simplified and therefore more would be unable to satisfy a substantial methods of insolvency rapid bankruptcy option which may be portion of their monetary debts in a due and resolution, strengthened role of ordered only if a debtor is an individual who timely manner". creditors, introduction of is not an entrepreneur, or if the debtor’s total The Insolvency Act includes a new turnover in the last accounting period definition of insolvency itself. Two situations procedural instruments to did not exceed CZK 2 000 000 and simult- are described: insolvency and over- accelerate proceedings, and aneously the debtor did not have more than indebtedness. A debtor is insolvent if the transparency achieved through 50 creditors. following three conditions are fulfilled electronic access to individual Inspired by the American Bankruptcy Act, cumulatively: a) the debtor has multiple reorganisation represents another method creditors (it is now stipulated that the insolvency files in the insolvency to resolve insolvency; namely a gradual second creditor may not be purpose-tied), registry. satisfaction of creditors’ claims against an b) has due and payable monetary insolvent debtor-entrepreneur in accordance obligations overdue by more than 30 days with a court-approved reorganisation plan, (this particular period is specified compared while maintaining the operation of the to the previous vague definition of "for debtor’s business. This method of insolvency a longer period"), and c) is unable to satisfy resolution is preferred due to its their obligations (the Act on Insolvency rehabilitative nature. However, defines four alternative situations to be reorganisation is permissible only if the understood as the fact that a debtor is debtor is an entrepreneur with a minimum unable to satisfy their obligations; compared total turnover of CZK 100 million or employs to the original definition "if the payments at least 100 full-time employees. were ceased by the debtor" the new

| 12 CZECH BUSINESS AND TRADE

definition is more accurate). The debtor is commenced prior over-indebted, if they have multiple creditors to the effect of and their payables exceed the value of their the Insolvency Act assets (compared to the definition under the will continue for previous legislation, which defined it as several years in a summary "of due payables", the new compliance with definition is more comprehensive). the transitory provisions POSITION OF THE effective under CREDITORS the legislation Furthermore, the new legislation that was in effect significantly strengthens the status of until 2007. creditors, mainly by enabling them to affect Therefore, the the selection of the method of the expected debtor’s insolvency resolution, to remove the acceleration of insolvency trustee from office immediately proceedings may after the review proceedings and appoint not be reflected a new insolvency trustee, and to affect the in practice for method of liquidation of the assets. The quite some time. Insolvency Act also defines other The limitation The new legal adjustment of bankruptcy adapted insolvency proceedings in the Czech Republic to the 21st century from the view of requirements for transparent mechanisms in favour of creditors and of the possibility and effective management as well as the use of modern technologies unambiguously stipulates the principle of to contest claims equal opportunities of creditors of identical submitted by creditors is another significant Czech insolvency law that will be maintained or similar status. On the other hand, the new change which should result in the by the Ministry of Justice of the Czech legislation imposes penalties on creditors for acceleration of proceedings. From now on Republic. The insolvency registry will mainly overestimating their claims. A claim whose only the insolvency trustee and the debtor include a publicly accessible list of insolvency real value ascertained during the review may contest claims, not the other creditors. trustees and debtors and insolvency files, proceedings is less than 50% of the amount In addition, if the insolvency trustee but the Act provides for publication and applied for is not only not taken into appointed by the court contests certain delivery through the insolvency registry too account, but the creditor is also obligated to claims, a potential insolvency trustee (for example, the court is obliged to publish pay the difference between the real value of subsequently appointed by the creditors may an insolvency petition in the registry within 2 the claim and the amount that has been not change position on such claims. This hours of its filing). However, an amendment applied for to the assets. The law thus should result in a reduction of disputes of the Insolvency Act from November of impedes purposeful increase of value of initiated to uphold claims, which were 2007 adds a temporary provision that, until submitted claims – an activity which could among the main reasons for delays in the end of December 2008, limits the be witnessed when the previous legislation proceedings under the previous legislation. contents of the Insolvency Registry explicitly was in effect. In addition, such disputes will now be to the list of insolvency trustees, the list of decided within insolvency proceedings, not debtors, and the publicly accessible ACCELERATION OF THE in separate court proceedings as before. documentation and information from PROCEEDINGS Nonetheless, should such dispute lead to insolvency files. The lengthiness of bankruptcy proceedings, delays in the insolvency proceedings, the This is another instrument which should which on average lasted several years, was dispute may be transferred to another judge accelerate proceedings and contribute to one of the major problems of the previous of the same insolvency court. transparency. The insolvency registry legislation. The new legislation attempts to represents the first important step in the eliminate this deficiency by means of MORATORIUM planned electronisation of justice in the introducing time limits for judges and The institute of moratorium corresponding Czech Republic and therefore is one of the insolvency trustees and for certain to the former protection period is another current priorities of the Ministry of Justice. procedural acts of the proceedings' new development. A debtor may file Its introduction was also a major reason for participants. The question is whether judges a motion for a moratorium within relatively postponing the effect of the Insolvency Act will be able to adhere to the defined time short periods from the day when the from 1 July 2007 to 1 January 2008 and of limits. Especially the requirement for the insolvency petition was filed. If the court the reasons for another amendment as of court to publish the insolvency petition satisfies the motion of the debtor and orders November of 2007. within two hours after its delivery is a moratorium, no decision on the insolvency As implied from the above, the Insolvency considered a short reprieve. The legislators of the debtor may be issued during the Act sets major goals in the area of insolvency are obviously aware of this, as the last moratorium period. The purpose of this law. However, only practice will show which amendment modified this requirement so institute is to enable the debtor to satisfy of these goals will be achieved and what the that until the end of 2008 it would not apply their obligations to their creditors before real impact of this new legislation. to cases in which the delivery of the insolvency proceedings commence. insolvency petition occurred during holidays Markéta Heřmanová or outside of the court's working hours. INSOLVENCY REGISTRY Lawyer Furthermore, it must be considered that The new Insolvency Act introduces a central (in cooperation with the law firm bankruptcy proceedings that have publicly accessible insolvency registry to the Peterka & Partners) Photo: Photocombo archives

13 | CZECH TOP In this section, we present and follow interesting success stories of export projects implemented by Czech businesses from a variety of industry sectors; success that is, for the most part, founded on remarkable feats of research and innovation. We also introduce examples of important foreign investment projects carried out in the Czech Republic. INGOS Triumphs in Macedonia

INGOS was established in 1995 as As far as exports are concerned, the a developer and manufacturer of most progressive area is that of the power industry. Here INGOS focuses laboratory instruments. Later on, it above all on comprehensive deliveries of expanded by creating the REA electrotechnological components for use in construction division, which provides hydraulic power plants, i.e. conduction of power from the generator to the design, engineering, and supplier distribution network, power supply for the services, and the ENERGO division, power plant’s own consumption, control which focuses on design, systems including remote management engineering, and supplier-assembly and electrical protection. "Although it is the domestic market that is of chief services for heavy-current devices, importance to the company, we are also measuring, control and regulation striving to succeed on foreign markets," technology in investment says Petr Vrátil, Executive Head of INGOS. construction projects, especially in Company activities focus especially on the dynamically growing markets of the former areas such as water management, Eastern bloc and on third world countries. the power industry, and construction "In terms of hydro energy, we have engineering. The company seat is completed a number of successful projects in Poland, Lithuania, Indonesia, and the located in Prague. INGOS has Democratic Republic of Congo. At present approximately 50 employees and we have projects ongoing in the Philippines, in India, and in Russia. INGOS supplies complete control systems for the generates an annual turnover of just hydroelectric power industry under EUR 7 million. Furthermore, we are involved in intensive negotiations on emerging opportunities in Bosnia and Herzegovina," explains Jiří include GEOtest Brno, operating in Peška, Director of the ENERGO division. geology and ecology in Asia and the The most highly valued achievement of Middle East; Strojírny Brno, a manufacturer INGOS is its success in Macedonia, where it of hydraulic turbines and hydromechanical will put into operation its third and fourth equipment; ÚVP Brno, which focuses on hydraulic power plants by the end of the the manufacture and processing of biogas; year. "We also supply control systems for and PS PROFI, a diving group. Specific use in waste water examples of CREA’s success include, for treatment plants and instance, the winning of an international water supply engineering. tender for the construction of a small In addition, we are hydraulic power plant in Sevilla in the reconstructing the power Philippines, where Strojírny Brno a.s. are control systems of the contributing by manufacturing the turbine Prague underground," Mr and delivering the machine parts, while Vrátil adds. INGOS s.r.o. acts as the supplier of the entire electrotechnological part – power ALLIANCE installation, control system installation, OFFERS turbine regulation and so on. COMPREHENSIVE A separate business focus of INGOS is DELIVERIES the development and manufacture of INGOS is a founding laboratory instruments, especially amino member of the CREA acid analyzers and liquid chromatographs, (Czech Renewable Energy instruments used for analyses in the Alliance), which focuses on medical industry, agriculture, and for food operations in the hydraulic inspection purposes. INGOS is also power industry sector. a manufacturer of rotary vacuum "The reason behind the evaporators for use in chemical plants for founding of the Alliance the preparation of samples. The majority of was the effort of a number production is exported to countries of of Czech companies Europe and Asia. operating in the renewable energies sector to penetrate and succeed on new foreign markets," means Mr Peška. Other The company is scoring great succes in Macedonia, where it has put into operation four hydroelectric power plants members of the Alliance More at www.ingos.cz

| 14 CZECH TOP

Bobcat Opens a New Plant in Europe

The American Bobcat company The manufacturing area of the new Europe, says: "The decision to place the is opening its first new plant of more than 20 000 sq. m is Bobcat construction, technical, and used for the manufacture of small manufacturing centre in the Czech manufacturing plant outside the and medium-size compact loaders, mini Republic was prompted by the exceptional USA in Dobříš, 35 km south-west of excavators of up to 2-tonne operating technical and manufacturing skills and Prague. The plant will supply weight, and a wide assortment of experience of local people. With our accessories. Currently, the plant employs investment here, we want to make sure markets in Europe, the Middle East, about 500 people and it is planning to that the construction of our products and Africa (EMEA). increase its workforce by taking on 100 will fully meet the EMEA market The decision to build a new more. requirements." manufacturing plant and training The initial investment nearing USD 32 Together with the existing million includes a new training centre, manufacturing plant in France, which centre in the Czech Republic was which will link up with the manufacturing makes telescopic manipulators, the new preceded by a detailed study plant. It has four schoolrooms, a service manufacturing plant in Dobříš will provide of the markets of North America workshop, and an outdoor training area of important manufacturing possibilities for and EMEA. The outcome, among 5 000 sq. m. Bobcat in Europe. The company is expecting that, by the end of 2008, the other things, is the location of the NEW DEVELOPMENT CENTRE Dobříš plant will cover 80% of its sales new manufacturing plant in Dobříš. The research, development, and within the EMEA region. Its construction made it possible construction of small loaders, mini- Bobcat Europe is undergoing a period of excavators, telescopic manipulators and rapid growth. In 2006 alone, its sales grew for the company to use the accessories, all bearing the Bobcat by nearly 25%. Its expectations are that its capacity of its plants in Gwinner trademark, which are placed on EMEA plants located in Europe will boost sales of and Bismarck in North Dakota for markets, has been entrusted to the Bobcat Bobcat compact machines still further and the manufacture of compact Europe Development Centre, located in significantly cut down its delivery terms in the vicinity of the new manufacturing this area. loaders and medium and heavy- plant in Dobříš. The centre employs more duty excavators, as well as new than 40 constructors and analysts, along products, such as the Toolcat utility with more than 20 testing and technical specialists. machine. More at www.bobcat.com Scott Nelson, president of Bobcat

Panasonic Celebrates 10th Anniversary of Its First Investment in the Czech Republic

Matsushita Electric Industrial The Panasonic factory in the Borská CZK 4 billion in Plzeň and produced more of Japan, known for its pole Industrial Zone in Plzeň employs than 10.5 million TV sets. The company more than 5 000 workers and ranks initially manufactured standard vacuum Panasonic products, is one among the largest manufacturers of TV screens with diagonals of 37 and 55 of the best known developers sets in Central Europe. It is a model centimetres. Today manufacture focuses and manufacturers of electronic example of successful foreign investment exclusively on plasma and LCD screens. where initially plain manufacture was, The revenue of Panasonic, the largest equipment for consumer within a matter of years, followed by manufacturer of TV sets in the Czech and industrial use. research and development of modern Republic, reached a record CZK 44 billion To realise its long-term technologies, and close co-operation with in 2006, up CZK 14 billion against the expansion in the Czech Republic, universities. As of 1999, the Plzeň plant previous year, when the company operates its own research and manufactured 1.24 million TV sets. Matsushita Electric worked development department. It works closely Panasonic’s chief market is Europe, closely with CzechInvest, the with the University of West Bohemia primarily Germany, the United Kingdom, Investment and Business providing it with TV sets for measuring France, and Scandinavia. In addition to the Development Agency and teaching purposes and CZK 500 000 site in Plzeň, the company also operates each year for laboratory equipment. a factory in Pardubice, where it (www. czechinvest.org). Furthermore, it opens five to eight manufactures Panasonic car radios. dissertation topics each year. Over the ten years of its operation in the Czech Republic, Panasonic has invested More at www.panasonic.cz

| 16 SERVICES

Healthcare System in the Czech Republic

The Czech Republic is striving to OUTPATIENT HOSPITAL CARE establish a stable, broad, and TREATMENT If the character of the patient’s illness When falling ill, patients usually requires it, the primary care physician or modern healthcare system. go to "primary care" physicians in the specialist recommends or arranges hospital Future changes should be made vicinity of their home, i.e. general treatment. In addition to hospitals, especially to its financing. The practitioners, paediatricians, dentists, and inpatient care is also provided by further improvement of medical gynaecologists. They must choose specialised medical facilities, such as a doctor who has signed a contract on the terminal patients’ homes, mental hospitals, and pharmaceutical services is provision of medical care with their health rehabilitation institutes, sanatoriums, naturally also among set insurance company. facilities for the treatment of tuberculosis objectives. If the patient’s state of health requires and respiratory disorders, and spas. special care the primary care physician is Both state-run and private unable to provide, he/she recommends ACCIDENT AND EMERGENCY medical facilities exist in this a relevant medical facility which has SERVICES country. Majority of them a contract with the patient’s health Medical care is also provided in cases of an conclude contracts with health insurance company. In such cases, too, the acute illness or accident out of the patient may freely choose the specific doctor’s visiting hours or in his absence. insurance companies on the medical facility and physician. The This service depends on local conditions – provision and payment of specialist informs the primary care in small towns, physicians co-ordinate and medical care, and provide care physician of his findings and of the substitute one another. Elsewhere the to their patients without direct treatment performed, and may also emergency service is operated at special recommend further treatment. Patients in surgeries or in hospitals. This also applies payment. the Czech Republic do not necessarily to acute dental care. need a recommendation by a primary care physician to visit specialists. 2008 REFORMS The Czech Republic has considerable Healthcare reforms designed to boost the shortcomings in home care. Nursing patient’s position in the system came into services, help with the development of force at the beginning of this year. The self-reliance, alleviation of the suffering of reforms are designed to prevent wastage, incurable patients, and home visits by to reinforce the position of the patient as family physicians are still limited to above- a client, to define the availability of standard care and are not readily medical care in terms of time and place, to available. determine the extent of public health insurance coverage so that patients know where, when, and who provides care covered by insurance, to establish independent supervision of health insurance companies, and to guarantee the quality and safety of medical services. The reforms introduce regulatory fees charged for visits to doctors, for hospital stays, and prescriptions. On average, the Czechs visit doctors thirteen times a year, double the EU average. At the same time, the Czech Republic ranks first in the volume of medication collected at pharmacies, and fourth in the EU in the number of hospital stays. Instead of a trend towards reducing the number of days spent in hospital in favour of outpatient treatment, stays in medical facilities are growing longer.

STANDARD OF CZECH HEALTHCARE In the Czech Republic, basic medical care is provided to all citizens free of charge on the basis of health insurance. In general, the prices of medical treatment are considered to be below the European average. The high standard of Czech medical facilities makes it possible to introduce the latest methods into practice

| 18 CZECH BUSINESS AND TRADE

Czech healthcare as a whole is particular medication is suitable for acute myocardial infarction. Doctors at gradually being upgraded. Preventive care a particular patient. It greatly reduces the these facilities can easily treat a blocked is provided from an early age and so very risk of undesirable effects or inaccurate artery and thus prevent even minor harm few people contract tetanus for instance. dosage. to the heart. Furthermore, mitral and Czech healthcare has already tricuspid heart valves and chamber accomplished a number of feats of world SUCCESS IN MANY AREAS partitions, as well as heart rhythm and European importance. The high Oncology – the Na Homolce Hospital in disorders are newly operated using the standard of Czech medical and research Prague uses the so-called hybrid PET catheter technique. In 2003, the Czech institutions allows the introduction of the camera, which is able to detect a tumour Republic was the first country in East very latest methods into practice serving in its early stages. Physicians from the Europe to use a "mechanical heart" – patients both in the Czech Republic and whole of Europe visit the hospital in order a temporary heart replacement which other countries. to gain experience. Several countries helps the patient overcome the period Many medical establishments in the including the Czech Republic are until a suitable organ for transplant is Czech Republic meet the requirements of conducting clinical tests of a vaccine available. the highest medical standard comparable which should prevent cervical cancer. Surgery – since the end of last year, with top centres in Europe and the USA. Interesting treatment of uterine muscular physicians in the Czech Republic have These facilities include, for instance, the tumours was introduced in the Czech been conducting refractive surgery, which Institute of Clinical and Experimental Republic in 2002 – laparoscopy and the reduces the number of the Medicine in Prague, the University ultrasonic scalpel are used to completely patient’s dioptres by thirteen. A special Hospitals in Prague-Bulovka and Prague- close the uterine arteries, which also feed contact lens is inserted and ingrows in Motol, the Central Military Hospital in the tumours. An advantage of this highly front of the iris. Prague, and the Masaryk Oncological effective method is the possibility of Major progress in practical medicine Institute. The General University Hospital future pregnancy. was made by employing the Da Vinci in Prague was the first in Central and East Cardiology – the Czech Republic boasts robot. The apparatus has several Europe to acquire the Ampli Chip device, Europe’s best network of facilities "tentacles" controlled by the surgeon, which determines precisely whether providing care to people suffering from allowing him to enter the patient’s body

19 | SERVICES

via a small incision. Moreover, the surgeon country. This payment entitles them to countries with which the Czech Republic can direct the operation more precisely medical care. In some cases, insurance has bilateral agreements on the provision and move around inside the body with contributions are paid by the state (for of free medical care, but only to the extent greater dexterity. In future, this method is students up to the age of 26, dependant defined in such agreements (medical to be applied in as many as 500 children, pensioners, etc.) or by the treatment to the necessary extent only). operations a year. employer. The law on public health In April 2005, doctors in Brno insurance defines precisely what is and HEALTH INSURANCE simultaneously transplanted three organs what is not covered by health insurance. COMPANIES – the heart, kidney, and liver – from Health insurance companies conclude a single donor. In 2004, Czech doctors HEALTH INSURANCE FOR contracts with physicians and medical treated an eye damaged by concentrated FOREIGNERS facilities. Physicians report every treatment acetic acid using a special eye replacement Foreigners resident in the Czech Republic of a particular patient to the relevant (so-called biocompatible kerato- are provided with medical care: health insurance company which covers prosthesis) allowing the patient to see up a) free of charge (on the basis of the treatment on the basis of insurance. to a distance of two metres. In 2005, international agreements and bilateral The single health insurance company orthopaedists in České Budějovice were agreements between certain countries – managed by the state – the General the first in Central and East Europe to use for example within the European Union), Health Insurance Company (VZP) - has the a new method of hip replacement surgery. b) without direct payment on the basis of largest overall number of clients. The Furthermore, Czech doctors are testing public health insurance (compulsory extent of care covered by insurance is a small intestinal transplant, which they health insurance), regularly defined by the Ministry of Health expect to introduce within two years. In c) requiring direct payment (for example of the Czech Republic. Other commercial November 2006, ophthalmologists at the foreigners from countries outside the EU). health insurance companies define their Sokolov hospital used an improved Foreigners permanently resident in the own extent of coverage, thus creating technique of cornea transplantation which Czech Republic are legally entitled to competition on the market. reduces the risk of the new cornea being insurance cover under the system of public The new law on health insurance rejected. health insurance. Foreigners who are not companies unifies the status, rights and permanently resident in the Czech duties of all health insurance companies, NEW PHARMACEUTICALS Republic but are employed in this country and boosts their autonomy and A new medicament for the treatment of are insured via their employer who is competition among them by transforming cancer is being tested clinically in the based in the Czech Republic (if the them into joint-stock companies. The Czech Republic. It functions on the employer is a natural person, he/she must transformation is to motivate towards principle of exact targeting, i.e. the be permanently resident in this country). economical conduct. substance takes effect at the very location Insurance paid by the employer lasts only A list of hospitals is available on the of the tumour. Preparations derived from for the period of employment, and the website of the Ministry of Health of the the Czech principle are also being foreign person has the same rights and Czech Republic (www.mzcr.cz), as is developed in the USA, Japan and the duties as a permanently resident foreign information on medical clubs and United Kingdom. person. Foreign persons who are not associations, medical faculties in the Hepsera is a unique medicament permanently resident or employed in the Czech Republic, medical schools, and designed for the treatment of the very Czech Republic cannot be covered by the health insurance companies. dangerous hepatitis B. Introduced by its system of public health insurance, but can author, Antonín Holý, in 2004, the sign up for contractual health insurance, medicament is based on an effective which is independent of the public health substance, originally developed for the insurance. Foreigners with no health Pavel Přecechtěl treatment of AIDS. It is currently being insurance may receive medical treatment Ministry of Health verified and manufactured in the USA. without direct payment if they come from www.mzcr.cz Antonín Holý also has a large share in the work of a team of Czech and US scientists who have developed Truvada – CZECH HEALTHCARE RANKS 15TH a medicament for the treatment of AIDS. This medicament radically suppresses the The Czech Republic placed 15th in the patient-friendly category of the Euro Health HIV virus in its early stages, thus Consumer Index (EHCI) which compares healthcare in 27 countries of the European prolonging and improving the quality of Union, Switzerland, and Norway. In 2006, the Czech Republic ranked 22nd among 26 life. countries behind Estonia and Spain and immediately ahead of Ireland, the United Kingdom, and Italy. The study assesses healthcare and the approach to patients on the HEALTHCARE FINANCING The healthcare system is financed from basis of 27 questions divided into five categories, such as waiting time for treatment, the state budget through public health its outcome, and access to pharmaceuticals. The study showed that the Czechs wait insurance. Regular payment into the in line for planned surgery longer than other Europeans. On the other hand, the study system is compulsory for all citizens of the appreciated the timeliness and good availability of cancer treatment. According to the Czech Republic, and for foreigners authors and the results of the study, diabetes is also fairly well treated in the Czech permanently resident in the CR or Republic. employed by companies based in this

| 20 CZECH BUSINESS AND TRADE

Central Military Hospital Prague

The Central Military Hospital ÚVN Praha provides a comprehensive Prague (Ústřední vojenská range of medical care, with the exception of paediatrics, obstetrics and cardio nemocnice Praha – ÚVN) is surgery. ÚVN Praha also operates five a top-standard medical facility, educational facilities at medical faculties which has been providing high- that carry out highly specialised surgery and treatment, especially in the following standard medical services since areas: its founding seventy years ago. The Internal Clinic provides specialised This fact was affirmed in 2004, gastroenterological and cardiological examinations and treatment. when the Hospital was awarded The Neurosurgical Clinic is the leading the JCI (Joint Commission medical facility in the Czech Republic for International) accreditation and brain tumour and blood vessel surgery. The Surgical Clinic specialises in surgery thus became the first hospital in of the digestive tract, liver, and pancreas. The urological department team uses the the Czech Republic, and indeed The Ophthalmological Clinic carries out robot for radical prostatectomy in prostate carcinoma patients. The success of ÚVN’s in all Central and East Europe, to highly specialised outer and inner-eye surgery with a specialisation in cataract, urological department was highlighted in obtain this prestigious glaucoma, vitreoretinal operations and 2006, when it was declared the most International Accreditation transplantations (the Clinic operates its productive robotic department in the CR in that year. More than 200 robotic Certificate awarded to hospitals own eye tissue bank), as well as all types of laser treatment. urological operations have been that provide patients with The Otorhinolaryngological (ORL) Clinic performed to date. medical care and safety of the diagnoses outpatients and treats them for ÚVN Praha also functions as a training, educational, and medical treatment facility highest possible standard. The otological, otoneurological, rhinological, endocrino-surgical and oncological for the Army of the Czech Republic, Certificate is valid for three years conditions. It is fitted with the most providing medical care both to the civilian only. In 2007, ÚVN Praha modern technical equipment and facilities population as well as examining the condition of active servicemen and those successfully defended its statute in the whole of the Czech Republic. In November 2005, the Da Vinci robotic applying for military service in the Army. of an accredited hospital. surgical system was put into operation at Furthermore, ÚVN Praha trains medical ÚVN Praha. It is used for urological, personnel for missions undertaken abroad gynaecological, and surgical operations. in the services of the Czech Army. –PR–

Contact: ÚVN Praha, U Vojenské nemocnice 1200, 169 02 Praha 6 – Střešovice, Czech Republic Information service – 24 hours/day, +420 973 208 333, +420 973 208 334

21 | REGION

NUTS 3 – Plzeň Region

LOCATION, TERRITORIAL GERMANY PlzeÀ-North DIVISION, POPULATION POLAND Tachov Rokycany The Plzeň Region is situated in PlzeÀ-City the south-west of the Czech PlzeÀ-South Republic. In the west the DomaÏlice regional boundary is formed by the state border with Germany Klatovy (Bavaria). The Region has an SLOVAKIA advantageous geographical AUSTRIA position between the Czech capital city, Prague, and From the geographical viewpoint, the Plzeň ECONOMIC countries of West Europe. With Region can be subdivided into several CHARACTERISTICS its 7 561 sq. km, it is the third areas: the Plzeň Uplands, part of the Brdy The share of the Plzeň Region in the Czech Highlands, and the Bohemian Forest Republic’s GDP is 5.2% and ranks second largest region of the Czech (Šumava and Český les). These areas have per capita after the Capital City of Prague. Republic. a different climatic, geological, and Its significant position among other The territory of the Plzeň Region hydrological character. regions is influenced by the high economic (NUTS 3) comprises seven The Plzeň Region is characterised by performance of the City of Plzeň, which a high number of small, unevenly produces two-thirds of the Region’s districts (NUTS 4) – Domažlice, distributed towns and villages, there are no industrial output. Klatovy, Plzeň-South (Plzeň-jih), medium-sized towns, and the structure of The Plzeň Region is relatively self- Plzeň-City (Plzeň-město), Plzeň- inhabited areas is not typical of the Czech sufficient economically, certain sectors and North (Plzeň-sever), Rokycany, Republic. companies operate on a national, Europe- The Plzeň Region comprises 53 towns, wide, or even world-wide basis (Plzeňský and Tachov. whose inhabitants account for 72% of the Prazdroj, a. s., Škoda Holding a. s.). The The Plzeň Region combines total population of the Region. centre of the Region is economically strong, with the South Bohemia Region The City of Plzeň, with 164 000 the border districts of Klatovy and Tachov inhabitants, contrasts with small towns and and the northern fringe rank among to form the NUTS 2 - South- villages. It is the second most important economically weaker areas. West territorial statistical unit. centre of Bohemia, its population accounts The most important industrial sectors in Its seven districts are territories for 30% of the Region’s inhabitants. the Plzeň Region include engineering, differing greatly in the nature of landscape, the size and structure of their population, their economic potential, size, and population density.

Krajský úřad Plzeňského kraje (Regional Office of the Plzeň Region) Škroupova 18 306 13 Plzeň Czech Republic phone: +420 377 195 111 CzechTourism e-mail: [email protected] www.kr-plzensky.cz

View of the Berounka River valley Photo:

| 22 CZECH BUSINESS AND TRADE

metallurgy, the food industry, building BRIEF CHARACTERISTICS OF THE REGION materials and ceramics industry, production of alcoholic beverages, electrical industry, NUTS Area (sq. km) Population Municipalities Population density and car manufacturing industry (persons/sq. km) (manufacture of components). NUTS 4 – Domažlice 1 123 59 444 85 53 The Region accounts for 8.2% of the NUTS 4 – Klatovy 1 946 88 060 94 45 Czech Republic’s total exports; the largest commodities are machinery and transport NUTS 4 – Plzeň-City 234 179 724 15 768 equipment (65.5% of the Region's exports) NUTS 4 – Plzeň-South 1 017 59 100 90 58 and industrial consumer goods (16.6% of NUTS 4 – Plzeň-North 1 287 72 465 98 56 the Region's exports). NUTS 4 – Rokycany 575 46 467 68 81 In the first half of 2007, the number of business entities registered in the Plzeň NUTS 4 – Tachov 1 379 52 095 51 38 Region amounted to approximately 130 944. NUTS 3 – Plzeň Region 7 561 557 355 501 73 Most of them were based in the Plzeň-City NUTS 1 – Czech Republic 78 867 10 325 941 6 249 131 District. Compared to the country's other regions, Plzeň has a larger share of foreign Source: Czech Statistical Office (as of 30 June 2007) ownership of business entities (mostly those with German capital) than other regions of the Czech Republic. These Tachov District in the Euregio Egrensis A significant concentration of university include both 100% foreign-owned (www.euregio-egrensis.org) Euroregion. and secondary school graduates exists in companies as well as joint ventures. the City of Plzeň, the seat of two The most significant foreign investments TRANSPORT universities and a number of secondary and include those made by Panasonic AVC The Plzeň Region occupies an important training schools. University education is Network Czech of Japan, Daikin Industries strategic position on communication lines provided by the University of West Bohemia CR, and by Japanese-German Yazaki Wiring between the east and west of Europe, at its seven faculties (www.zcu.cz) and at Technologies Czech. In total, there are a crucial role is played by the D5 highway the Faculty of Medicine in Plzeň approximately 200 companies with foreign Praha – Plzeň – Rozvadov. A number of (www.lfp.cuni.cz) of Charles University in capital participation in the Region. road border crossings link the Region with Prague. Extensive deposits of non-ore mineral neighbouring Germany, the most important The Region boasts favourable resources offer potential for the of which are Rozvadov, Folmava, Lísková, conditions for tourism. The city of Plzeň development of related manufacturing and Železná Ruda. offers many cultural monuments and sites, industries. The most prominent mining Road transport also plays a vital role in including its interesting historical firms focus on kaolin extraction in areas the Region, taking over the dominant underground passages. Stretching a length surrounding Kaznějov, Horní Bříza, and position of railway transport. The transport of approximately 20 km, they are among Chlumčany, on limestone quarrying and on network in the Region (road and rail) has the most extensive in Central Europe. deposits of brick and ceramic clays. a distinct radial structure and the city of Natural sites in Plzeň include the Bolevec Agriculture is of high importance for the Plzeň is an important transport junction. Pond System, a unique Late Gothic Plzeň Region, especially in terms of Regional transport is serviced mainly by technical and landscape work of the 15th employment in areas lacking developed buses. An integrated transport system has century. Other frequently visited sites industrial manufacturing. The natural been introduced in the City of Plzeň area, include the zoological and botanical conditions in border areas (the Bohemian a dominant point of interchange in the gardens of Plzeň. Forest) mean these are suited rather for public transport of persons. A network of The Region's cultural monuments livestock production. Forestry is developed cycling tracks is being built in the different include the Baroque Manětín chateau, the mainly in the Bohemian Forest and in areas parts of the Region, including routes linked Convent at Plasy (National Cultural of the foothills in the north and north-west to international networks. Monument), Kašperk castle, the ruins of of the Region. The structure and distribution of the rail the castles of Radyně, Buben, Rabštejn nad A number of industrial enterprises are transport network is similar to that of road Střelou and Libštejn, the Švihov moated undergoing restructuring involving transport. The Plzeň rail junction is castle, the chateaux of Horšovský Týn, cutbacks in employee numbers. a convergence point of five railway lines. Kaceřov, Kozel, Nebílovy, Lužany, the Dependence on a single employer should Chief transit routes of international Kladruby Monastery, and many others be mitigated by the emergence of small importance are the Prague – Plzeň – Cheb (www.hrady.cz). Many visitors also visit and medium-sized enterprises. The existing – Germany and Plzeň – Domažlice – Česká Domažlice and its traditional annual socio-economic gaps are also being bridged Kubice – Germany railway lines. Chodsko Festivities held each August thanks to cross-border co-operation with (www.idomazlice.cz). neighbouring Bavaria at the Euroregion EDUCATION, CULTURE, With its many hiking trails and cycling level. Of municipalities in the Plzeň Region, TOURISM tracks, the Bohemian Forest offers excellent the European programme of support for In comparison to the Czech Republic conditions for both summer and winter cross-border co-operation is applied by the average, the Region has a lower share of recreation. Downhill and cross-country districts of Domažlice and Klatovy in the university educated persons and a higher skiers can take advantage of a great many Šumava /Bohemian Forest-Bavarian Forest proportion of those with completed prepared pistes and tracks (www. Euroregion (www.euregio.cz) and by the vocational education and training. sumavanet.cz).

23 | REGION

We Want an Active Part in Co-decision-making

Important companies are concentrated in to make use of or waste the opportunities the Plzeň-City agglomeration and in the offered to us and it is up to our own skill surroundings of the former district towns to sell the products of our work abroad (Klatovy, Tachov, and Domažlice), which and succeed in the face of global have an excellent connection to the road competition. It is necessary to draw on the infrastructure joining the Czech Republic hidden potential of the EU Structural Funds with the Federal Republic of Germany to develop infrastructure, strengthen our (Prague – Plzeň continuing to Rozvadov, competitive advantage, promote business, Folmava, or Železná Ruda). Greater enhance the qualification level of the attention is also being paid to the Region’s inhabitants and to address social promotion of science, research and problems. Since 2005, our region has development. An example of a joint a permanent representation in the Czech initiative of the City of Plzeň and the Plzeň House in Brussels. Region is the construction of the Plzeň The role of the Region is to guarantee Science and Technology Park. the proper functioning of all the The main virtues of the Plzeň Region are institutions under its competence (schools, its attractive location, the quality of the hospitals, social establishments, museums, infrastructure (both in terms of transport roads, transportation…) and, wherever The Plzeň Region ranks among Czech and technology), as well as the quality of possible, not burden fellow citizens with regions with an above-average level the labour force. Last but not least, regulations and budget deficits. The a significant role is played by the industrial budget of the Plzeň Region is permanently of economic development. In and entrepreneurial tradition of the balanced and free from debt. It is my belief comparison with other regions of its Region, the presence of the University of that in this way we serve the Region at our share in per capita GDP, it occupies West Bohemia in Plzeň offering high-tech best. second place, primarily due to the areas of specialisation, and the Medical Faculty of Charles University. high economic performance of the With our accession to the European City of Plzeň, where it is estimated Union, the overall economic, social, as well almost two thirds of the GDP of the as cultural area accessible to our citizens Plzeň Region are generated. has expanded. Naturally, it is up to each Petr Zimmermann, and every one of us whether we manage Governor of the Plzeň Region

Regioport Cross-border Business Portal

The INTERREG IIIA Community The approved "Regioport Cross- possibilities offered by interactive Initiative Programme has border Business Portal" project was programmes and databanks intended for entered in the InterregIIIA cooperation shall gradually increase. become an important EU programme by the Chamber of Commerce The aim of the project is to address the Community Initiative since the of the Plzeň Region. All the district following target groups: institutions for accession of the Czech Republic chambers of commerce in the Region are development, support of economic and participating in the project; the District local marketing, coordinators of network to the EU. In the period prior Chamber of Commerce in Klatovy has activities, businesses and institutions to the accession of the Czech become the project coordinator. The within clusters, co-operative businesses Republic to the EU, the Phare Regioport Cross-border Business Portal is seeking cooperation, as well as existing CBC programme was a mirror-project involving German partners regional educational establishments. and aiming to develop a joint business The project is co-financed from EU implemented on the basis of portal on the internet in order to establish funds and is implemented with significant a joint programming document, an information and business platform. At financial support from the Plzeň Region, which defined areas and the same time, the project aims to which considers the development of the conditions for cross-border strengthen the common economic area on cross-border economic area a great both sides of the border. Under the project necessity. cooperation in terms of content framework, an expansion will be carried and, to a large extent, procedure out to include a chapter on clusters, as well. a continuous update will be carried out of More at the database of enterprises and the www.regioport.cz, www.khkpk.cz

| 24 CZECH BUSINESS AND TRADE

Export of Unconventional Czech Metalworking Products

In terms of the scope of its A wide range of products, such as pliers, continue to grow in future as the production production programme hammers, wrenches, and chisels have been capacity of the forge has not yet been manufactured in ZBIROVIA, a.s. for over 145 exhausted. In 2008, total company revenue comprising over 100 product years. The origins of ZBIROVIA, a.s. of today is expected to rise well above CZK 200 types manufactured in 300 date back to 1860, when a nail and stud million. The greatest advantage of Zbirovia standard sizes, ZBIROVIA a.s., manufacturing workshop was established a.s. is its in-house construction and on the site of the present plant. In 1929 manufacture of swages as well as the is the largest and, in some ZBIROVIA, a. s. began to export its products possibility of subsequent heat treatment. ranges, also the only present under the new Zbirovia Zbiroh trademark Zbirovia, a. s. exports its products manufacturer of handicraft tools symbolised by the letter "Z" to many successfully, especially to countries of West in the Czech Republic. countries worldwide, including America, Europe with exports accounting for Africa, and Australia. approximately 30% of total company In addition to the turnover. As a manufacturer of manual manufacture of handicraft tools, Zbirovia continues to handicraft tools, the occupy an irreplaceable position especially production programme on the domestic market. of Zbirovia, a. s. has The chief objective of the present been expanded corporate management is to succeed in the significantly in recent face of competition by developing product years to include steel innovations, through price policy, and by drop forgings. This providing steady quality of the goods segment of production offered. will account for almost 45% of total company revenue this year and Handicraft tools produced its share should More at www.zbirovia.cz

25 | REGION

Plzeň – City of Opportunities

Thanks to its convenient location The City of Plzeň on the crossroads of trade has vast experience with channels, the City of Plzeň has foreign investment and always been an important support for incoming business and cultural centre of investors is embodied in the Plzeň Development the Plzeň Region. After the Programme. The founding of the Plzeňský City’s basic strategy is to Prazdroj brewery and the ŠKODA support companies that engineering company in the 19th have decided to invest in the city. The high century, the importance of the quality industrial base city further increased. Nowadays within Plzeň and in its it is the country’s fourth largest near surroundings city, the seat of two universities, offers vast opportunities for cooperation. Franciscan monastery and an important industrial Graduates of technical centre. Today, the city continues fields of study at the University of West programmes in the area of medicinal to profit from its convenient Bohemia, development and industrial technology are being prepared under the zones and Plzeň’s favourable location sponsorship of Plzeň Medical Faculty of geographical location in the between the western border and Prague Charles University in Prague. heart of Europe, its excellent are all factors that bring more investors to In Plzeň, there are a number of road connection to the capital, Plzeň and reinforce the city’s role of development areas for production and Prague, and to neighbouring a modern metropolis. The Plzeň Borská services, offering great potential for the pole Municipal Industrial Park is the focal creation of new jobs. The most significant Germany (the D5 motorway) and point where new investments are development zone is the CTPark Borská from its proximity to the Prague- concentrated – the most modern pole-West (with an area of 30 ha) and the Ruzyně international airport. electronics are produced here in the plants ŠKODA Entrepreneurial zone (brownfield of Panasonic AVC Network Czech (former regenerated areas 50 ha in size). Plzeň Matsushita Television Central Europe) and focuses not only on industrial production: Yazaki Wiring Technologies Czech (former thanks to public support, other localities Siemens Automotive Technology). It is, for are being prepared for the localisation of instance, also the seat of the development services projects – for example the public centres of MBtech Bohemia (former development zone Zelený trojúhelník Mercedes-Benz Engineering), Solectron (Green Triangle)–South, which similarly to Czech, and Panasonic. Furthermore, the other newly emerging localities provides Science and Technology Park Plzeň is under space for strategic services. In the construction here. New research immediate vicinity of the City a new quarter – the Plzeň-Jižní město (South Town) – is under construction. It should offer new housing possibilities and opportunities for entrepreneurial and free time activities. A number of smaller localities in Plzeň have also been prepared for use and are available. The city itself is involved in a number of large-scale projects aimed at the reconstruction of neglected buildings, the regeneration of city quarters as well as the creation of new urban areas. Its developed scientific and research- development base and high-quality educational infrastructure rank the City of Plzeň among the largest centres of education in the Czech Republic. Ongoing cooperation among schools, research and development centres, and the business sector is of a high level. CzechTourism

Plzeň – historical centre More at http://info.plzen-city.cz Photo:

| 26 CZECH BUSINESS AND TRADE

PlzeÀ-City Plzeň-City District

Plzeň Borská pole Municipal Industrial BRIEF STATISTICS Park, a unique locality which has drawn Magistrát města Plzně Indicator District the attention of many foreign investors (Plzeň-City Council) Area (in sq. km) 234 Náměstí Republiky 1 such as Panasonic, Daiho CZ, Koyo Population 179 724 306 32 Plzeň, Czech Republic Steering Systems Czech, Fuji Koyo Czech, Inhabitants/sq. km 768 phone: +420 378 031 111 Yazaki Wiring Technologies Czech, Daikin e-mail: [email protected] CR, and others (http://info.plzen-city.cz/ Unemployment rate (in %) 4.31 ukr/ boryfield/). Source: Czech Statistical Office www.plzen-city.cz (as of 30 June 2007)

Plzeň, the capital of West Bohemia, is situated in the very heart of the Region, on the confluence of four rivers. Its advantage is its location between the capital of the Czech Republic and the German border. Plzeň-City (Plzeň-město) is a district and the administrative, cultural, industrial, and commercial centre of the Region. It is considered to be the regional centre of education – in addition to many elementary and secondary schools, it is the seat of the University of West Bohemia (www.zcu.cz) and the Faculty of Medicine Historical gateway of Plzeňský Prazdroj brewery of Charles University (www.lfp.cuni.cz). Plzeň-City is the smallest but most SELECTED FIRMS densely populated district of the Region – Name Based in Sector Contact 32% of the Region’s population live on an Hannah Trading, a. s. Plzeň sports equipment www.hannah.cz area of 234 sq. km. TS Plzeň, a. s. Plzeň engineering www.tsplzen.cz Chief economic sectors include the MOVO, s. r. o. Plzeň modernisation of train coaches www.movo.cz traditional engineering and food industry Invelt Holding, a. s. Plzeň control systems for the www.invelt.cz power industry (primarily the production of beer, spirits, BB vytlačování plastů, s. r. o. Plzeň plastic products www.bbplasty.cz meat, and meat products), as well as the Schneider Group, a. s. Plzeň manufacture of meat and www.schneider-group.cz manufacture of electrical and electronic meat products apparatus and equipment, the chemical Stock Plzeň, a. s. Plzeň manufacture of spirits www.stock.cz and printing industries. Of all industrial Europap, s. r. o. Plzeň manufacture of paper www.europap.cz enterprises in the Region, 33% are located and cardboard products in this district. Construction (engineering, Typos, a. s. Plzeň printing and publishing www.typos.cz industrial, facility, and housing Styl Plzeň, v. d. Plzeň manufacture of sealing www.styl-plzen.cz construction) and the stone processing for machines and automobiles industry play an important role in the Invel Plus, s. r. o. Plzeň springs www.invelplus.cz city’s economy. The role of agriculture is Falco International, s. r. o. Plzeň construction systems www.falco.cz negligible. EBK ERET BERNARD, s.r.o Plzeň heatproof insulation, sealing www.ebk.cz Plzeň is the founder of the 100-hectare Setra Gear, a. s. Plzeň engineering www.setra-gear.cz

FOREIGN INVESTORS Investor Country of origin Czech partner Sector Contact Appian Group Netherlands Škoda Holding, a. s. engineering, manufacture www.skoda.cz of boats, trolleybuses MEA International holding GmbH Germany MEA Meisinger, s. r. o. engineering www.mea.cz Daiho kogyo, a.s., Mitsui & Co. Japan, Germany Daiho Czech, s. r. o. plastics processing www.mitsui.de Deutschland GmbH HP-Pelzer International GmbH Germany HP-Pelzer, k. s. automobile interiors www.pelzer.de Matsushita Electric Industrial Co. Japan Panasonic AVC TV sets www.matsushita.cz Networks Czech, s. r. o. Seele GmbH & Co. Holding AG Germany Seele CZ, s. r. o. manufacture of steel structures www.seele.cz SAB Miller, plc South African Republic Plzeňský Prazdroj, a. s. beer brewing www.pilsner-urquell.com Yazaki Wiring Technologies GmbH Germany Yazaki Wiring Technologies wiring for the automobile www.yazaki.de Czech, s. r. o. industry Daikin Industries, Ltd., Japan, Belgium Daikin Industries Czech, s. r. o. air conditioning www.daikin.cz CzechTourism Daikin Europe N.V. Elkamet Kunststofftechnik GmbH Germany Elkamet, s. r. o. plastics www.elkamet.cz Photo:

27 | REGION

PlzeÀ-North Plzeň-North District

engineering. Traditional sectors include BRIEF STATISTICS Město Kralovice the extraction of clays and the Indicator District manufacture of ceramics and building (Town of Kralovice) Area (sq. km) 1 287 material. The District is a typical e-mail: [email protected] Population 72 465 agricultural area. Farms take up some www.kralovice.cz Inhabitants/sq. km 56 80% of the area, while 40% is covered by Unemployment rate (in %) 4.49 forests. The cultivation of crops focuses on Město Nýřany Source: Czech Statistical Office (Town of Nýřany) green and silage maize, wheat, barley, and (as of 30 June 2007) e-mail: [email protected] rape, and livestock production on the www.nyrany.cz breeding of poultry, cattle, and pigs.

The Plzeň-North (Plzeň-sever) District lies in the north of the Region. The City of Plzeň is the regional capital and the centre of trade, services, education, banking, and culture. The 72 465 inhabitants of Plzeň-North District live in a total of 98 municipalities, 10 of which are towns. The most populous of them, Nýřany, has 7 150 inhabitants, while other towns in the District each have less than 4 500 inhabitants. Local admin- istration lies in the hands of Municipal Offices with delegated powers (www. obce.cz). Dominant branches include the chemical industry and electrical

Church of the Annunciation at Mariánská Týnice Manětín Chateau

SELECTED FIRMS Name Based in Sector Contact Best, a. s. Kaznějov concrete products and work www.best-as.cz ZT Metal, a. s. Kralovice metalworking www.ztmetal.cz Maro Kralovice, spol. s r. o. Kralovice trailer manufacture www.top.cz/maro Keramo, d. u. v. Kožlany ceramics production www.keramo.cz První plzeňská galvanovna, s. r. o. Dýšina grey cast iron castings www.slevarnahajek.cz OMGD, s. r. o. Kaznějov inorganic chemistry www.aktiva.cz Atmos Chrást, s. r. o. Chrást compressors www.atmos-chrast.cz Alltronic, s. r. o. Dýšina electronics www.alltronic-sro.cz AD Armaturka Dýšina, s. r. o. Dýšina engineering, foundries www.adarmaturka.cz Dioss Nýřany, a. s. Nýřany electro production www.dioss-ny.cz GTW Technik, s. r. o. Třemošná foundries www.gtw.cz Žárohmoty, s. r. o. Třemošná heatproof materials www.zarohmoty.cz ZUD, a. s. Zbůch stone mining www.zud.cz

FOREIGN INVESTORS Investor Country of origin Czech partner Sector Contact Lasselsberger GmbH Austria LB Minerals, a. s. ceramics production www.hob.cz CzechTourism Martin&Anton Ziegler Germany Ziegler Automobiltechnik, s. r. o. machine design and construction www.ziegler.de Epiq, N. V. Belgium EPIQ CZ, s. r. o. electronic assembly www.epiq.com Photo:

| 28 CZECH BUSINESS AND TRADE

Plzeň-South District PlzeÀ-South

lowest unemployment rate in the Region. BRIEF STATISTICS Městský úřad Blovice The strong influence of a large city has Indicator District given rise to a polycentric distribution of (Blovice Municipal Office) Area (in sq. km) 1 017 e-mail: [email protected] inhabitants. The six centres that have Population 59 100 www.mublovice.cz developed perform the functions of Inhabitants/sq. km) 58 a district town with the broader Unemployment rate (%) 3.37 Městský úřad Nepomuk surrounding areas of these centres under Source: Czech Statistical Office (Nepomuk Municipal Office) their influence. These towns are the e-mail: [email protected] (as of 30 June 2007) following, each with up to 6 500 www.nepomucko.cz inhabitants: Přeštice, Dobřany, Starý Městský úřad Přeštice Plzenec, Blovice, Stod, and Nepomuk (Přeštice Municipal Office) (www.obce.cz). The most important role in e-mail: [email protected] the District’s economy is played by www.prestice-mesto.cz industries based on the use of local raw materials, namely kaolin, siliceous sands, Město Stod (Town of Stod) brick clays, and wood, i.e. the building e-mail: [email protected] materials industry and the woodworking www.mestostod.cz industry. Engineering and electrical engineering of the giant Škoda Holding Městský úřad Dobřany (Dobřany Municipal Office) has given rise to the emergence of smaller e-mail: [email protected] cooperating manufactures in the same line www.dobrany.cz of business. The Plzeň-South District plays an important role in the Region’s Město Starý Plzenec agriculture. Approximately 60% of the (Town of Starý Plzenec) District’s area is used for farming. Crop e-mail: [email protected] production focuses mainly on wheat, www.staryplzenec.cz barley, potato, rape, and maize growing. Livestock production includes chiefly cattle, pig, and poultry breeding. Owing to The Plzeň-South District (Plzeň-jih), its character, clean environment and situated in the south-west of the Plzeň geographic location, the Plzeň-South Region, is one of the few districts in the District contributes to the development of Czech Republic without its own district recreation and tourism in the Region. town. The north of the District is an area Highlights include the town of Starý closely linked to the City of Plzeň and Plzenec with the ruins of Radyně castle, forms a strong foundation for it. The the Kozel chateau, Nebílovy Baroque northernmost sector is a part of the Plzeň chateau, Žinkovy chateau, and other sites conurbation. As a result, it boasts the (www.turistik.cz). Chateau in Lužany near Přeštice

SELECTED FIRMS Name Based in Sector Contact BOHEMIA SEKT, a. s. Starý Plzenec wines and spirits production www.bohemiasekt.cz Lekov, a. s. Blovice electrical equipment for railway vehicles www.lekov.cz Elitex Nepomuk, a. s. Nepomuk engineering www.elitexnepomuk.cz ComWa, s. r. o. Přeštice metal manufacturing www.comwa.cz Sybo Plus, s. r. o. Přeštice metal manufacturing www.sybo.cz Kovo Kasejovice, s. r. o. Kasejovice air conditioning equipment www.kovokasejovice.cz Průcha Metal, s. r. o. Nekvasovy air conditioning equipment www.pruchametal.cz

FOREIGN INVESTORS Investor Country of origin Czech partner Sector Contact Vishay Europe GmbH Germany Vishay Electronic, s. r. o. manufacture of electrical www.vishay.com equipment ProMinent Dosiertechnik GmbH Germany ProMinent Systems, s. r. o. plastic tanks and containers www.prominent.de PRESSOL-Schmiergeräte, GmbH Germany PRESSOL-Schmiergeräte, engineering www.pressol.de GmbH, Blovice representation KUVAG Kunststoffverarbeitungs, GmbH Austria KUVAG CR spol. s r. o. plastic insulation materials www.kuvag.cz Meg Murrelektronik, GmbH Germany Murr CZ, s. r. o. electrical equipment www.murrelektronik.de SWA Verwaltungs, GmbH Germany SWA, s. r. o. engineering www.swa.cz CzechTourism MAX STREICHER GmbH & Co. Germany Streicher, s. r. o. metal working www.streicher.cz Photo:

29 | REGION

Rokycany Rokycany District

the largest forest area returned under the BRIEF STATISTICS Městský úřad Rokycany restitution law in the Czech Republic Indicator District (Rokycany Municipal Office) (www.lesyzbiroh.cz). Masarykovo náměstí 1 The local metallurgical and engineering Area (sq. km) 575 337 20 Rokycany industries are being restructured in order Population 46 467 Czech Republic to raise the share of the plastic industry Inhabitants/sq. km 81 phone: +420 371 706 111 and increase the concentration of industry Unemployment rate (in %) 4.49 fax: +420 371 706 115 in the existing development corridor. Source: Czech Statistical Office e-mail: [email protected] Automobile components and rubber (as of 30 June 2007) www.rokycany.cz and paper products are also manufactured locally.

The Rokycany District is located in the east of the Plzeň Region. The District comprises 68 municipalities, six of which are towns. One-third of the District population live in Rokycany (www.rokycany.cz). The other towns have up to 3 000 inhabitants (www.obce.cz). The District is an agricultural and industrial area. Grown crops include rape, grain legumes, potatoes, hops, and cereals. Late apple varietes are grown in orchards on an area of roughly 110 hectares. Cattle, pig, and poultry breeding is dominant in livestock production. Forests cover 43% of the total District area. Besides the state, forestry also rests in private hands, such as those of Jerome Colloredo-Mannsfeld Lesní a rybniční správa Zbiroh (LRS Zbiroh), which manages

Rokycany – Church of Our Lady of the Snows

SELECTED FIRMS Name Based in Sector Contact Železárny Hrádek, a. s. Hrádek metallurgy www.ferromet.cz Kovohutě Rokycany, a. s. Rokycany metallurgy www.kovohutero.cz Zbirovia a. s. Zbiroh tools, metal components www.zbirovia.cz for automobiles SC Servis, s. r. o. Rokycany band saws www.sc-servis.cz Ordo, s. r. o. Břasy metal palettes www.ordo.cz DCK Bohemia, s. r. o. Holoubkov switchboards www.dck.cz Forte Wespa Rokycany saw bands www.forte-wespa.cz Eta, a. s., závod Rokycany Rokycany electrical devices www.eta.cz Regotherm Servis, s. r. o. Rokycany measuring and regulation www.regotherm.com equipment SMS CZ, s. r. o. Rokycany mechanical machines www.smscz.cz production ELPLAST-KPZ Rokycany, s. r. o. Rokycany electrical devices www.elplast-kpz.cz Zbiroh Chateau

FOREIGN INVESTORS Investor Country of origin Czech partner Sector Contact Bontaz Centre, S. A. France Bontaz Centre CZ, s. r. o. automobile components www.bontaz-centre.fr EuWe Eugen Wexler GmbH Germany EuWe Eugen Wexler ČR, s. r. o. plastics processing www.euwe.de Co Vertriebsgesellschaft HUTCHINSON S. A. France HUTCHINSON s. r. o. rubber components for automobiles www.hutchinson.fr CzechTourism Borgers Projekt GmbH Germany Borgers CS, spol. s r. o. automobile textiles www.borgers.de Prowell GmbH & Co. KG Germany Prowell, s. r. o. paper and cardboard manufacture www.propapier.de Photo:

| 30 CZECH BUSINESS AND TRADE

Klatovy Klatovy District

grown in the District are mainly cereals, BRIEF STATISTICS Městský úřad Klatovy rape, and potatoes. Livestock production is Indicator District focused mostly on the breeding of cattle, (Klatovy Municipal Office) Area (in sq. km) 1 946 sheep, and goats. Náměstí Míru 62 Population 88 060 The abundance of forests, natural 339 01 Klatovy Inhabitants/sq. km 45 beauty and tranquillity create favourable Czech Republic Unemployment rate (%) 5.67 conditions for use of the Bohemian Forest phone: +420 376 347 111 Source: Czech Statistical Office e-mail: [email protected] for recreational purposes. The Bohemian (as of 30 June 2007) www.klatovy.cz Forest and its foothills are an area with one of the highest levels of quality of the territories with high potential for incoming environment in the Czech Republic. The tourism (www.npsumava.cz). There are District is part of the Šumava/Bohemian also a number of attractive cultural and The Klatovy District is the southernmost Forest - Bavarian Forest Euroregion historical monuments, the most interesting district of the Plzeň Region, its south-west (www.euregio.cz). among them being the castles of Rabí, boundary forms part of the state border Almost the full length of the Švihov, Klenová, Velhartice, and Kašperk, with Germany. Its area takes up 25.7% of District’s boundary with neighbouring and the chateau of Horažďovice the Region’s territory and, as such, Klatovy Germany is lined with large protected (www.hrady.cz). is the Region’s largest district. Inhabited areas comprise 94 municipalities, 12 of which are towns, the largest being: the district town of Klatovy with 22 820 inhabitants, Sušice with 11 648 inhabitants, and Horažďovice with 5 747 inhabitants (www.obce.cz). These centres concentrate most of the District’s industry, of which the decisive branches are: engineering, plastics processing, food processing, and breeding of fish. Traditional manufacture is represented by the production of matches in Sušice and wood processing. Agricultural land accounts for 46.3% of the District’s area and a significant share is also taken up by forests (43%). The trend in agriculture is towards reducing the size of intensely cultivated land at the foothills of the Bohemian Forest and focusing on ecologically clean food, especially as concerns livestock production. Crops Klatovy – town centre

SELECTED FIRMS Name Based in Sector Contact Okula, a. s. Nýrsko eyewear www.okula.cz Drůbežářský závod Klatovy a. s. Klatovy poultry products www.dzklatovy.cz Klatovské rybářství, a. s. Klatovy fish breeding www.klatryb.cz Dopla PAP, a. s. Sušice paper and plastic packaging www.pap.cz Typos, tiskařské závody, a. s. Klatovy printing production www.typos.cz Solo Sirkárna, a. s. Sušice production of matches www.solosirkarna.cz Solo Door, a. s. Sušice joinery www.dveresolo.cz Otavské strojírny, a. s. Horažďovice metal working www.otavstroj.cz Betonové stavby Klatovy, s. r. o. Klatovy concrete elements www.betonstavby.cz Klatovská stavební společnost, s. r. o. Klatovy construction industry www.kss.klatovynet.cz RYS, s. r. o. Klatovy engineering www.rys.klatovynet.cz Hapon, s. r. o. Horažďovice engineering www.hapon.cz 3KBH, s. r. o. Klatovy leather goods www.3kbh.cz SKDS, s. r. o. Měčín abrasive wheels www.skds.cz

FOREIGN INVESTORS Investor Country of origin Czech partner Sector Contact Optische Werke G. Rodenstock, k. s. Germany Rodenstock ČR, s. r. o. eyewear www.rodenstock.de CzechTourism HAAS Holzpprodukte GmbH Germany HAAS Fertigbau, s. r. o. wooden structures http://haas-fertigbau.de Holz Schiller, GmbH Germany Klatovské dřevo, s. r. o. wood processing www.ktdrevo.cz Photo:

31 | REGION

DomaÏlice Domažlice District

a rich cultural tradition. Towns visited by BRIEF STATISTICS Městský úřad Domažlice tourists include Domažlice, a Town Indicator District Monument Reserve, as well as the centre (Domažlice Municipal Office) Area (in sq. km) 1 123 of the Chodsko area that successfully Náměstí Míru 1 Population 59 444 maintains its style and folk traditions which 344 20 Domažlice Inhabitants/sq. /km) 53 it presents each year at the annual Czech Republic Unemployment rate (%) 4.61 Chodsko Festivities (www.idomazlice.cz). phone: +420 379 719 111 Source: Czech Statistical Office e-mail: [email protected] The Domažlice District joined the (as of 30 June 2007) www.domazlice.info Šumava/Bohemian Forest-Bavarian Forest Euroregion in 1993 (www.euregio.cz).

A border district with a 75km common frontier with Germany, accessible by four road crossings (Folmava, Všeruby, Lísková, and Železná Ruda), one railway border crossing (Česká Kubice), and five crossings for hikers (www.mvcr.cz/doprava/ hranice.html). Geographically, most of the District is occupied by rolling hills rising about 450 metres above sea level. The District is home to 11 nature reserves, one National Nature Reserve, and 13 natural monuments (www.npsumava.cz). The District comprises 85 municipalities, eight of which have the status of towns. The largest town, Domažlice, has 11 000 inhabitants, other towns have populations of less than 5 000. The District has an industrial-agricultural character. The main industries are engineering, the food industry, woodworking, and manufactur- ing. Industrial companies are concentrated primarily in Domažlice, Kdyně, and Klenčí pod Čerchovem. Agriculture is the traditional sector and farmland accounts for 54% of the District’s area. Crop production in the District is focused mainly on the growing of wheat, barley, oilseed rape, and green mass and silage quality maize. Livestock production primarily, includes the breeding of cattle, pigs, poultry, and sheep. Domažlice ranks among districts with Domažlice – the square

SELECTED FIRMS Name Based in Sector Contact Elitex Machinery, s. r. o. Kdyně machine manufacture www.elitex-kdyne.cz Kdynium, a. s. Kdyně metal casting www.kdynium.cz Steatit, v. o. s. Klenčí p. Čerchovem manufacture of porcelain and ceramic ware www.steatit.cz Kabelovna Kabex, a. s. Holýšov cables www.kabex.cz Kovobel, v. d. Bělá n. Radbuzou metal structures www.kovobel.cz Plastik HT, a. s. Horšovský Týn plastic products www.plastikht.cz Motolamino, Jakub Forst Staňkov motorcycle body parts www.motolamino.com Euroteplo, s. r. o. Domažlice stoves www.euroteplo.cz

FOREIGN INVESTORS Investor Country of origin Czech partner Sector Contact Niehoff Group Germany Niehoff Nábytek, k. s. furniture manufacture www.otm.cz CzechTourism Flabeg GmbH Germany Flabeg Czech, s. r. o. manufacture of mirrors www.flabeg.com Metzler International AG Germany Galí Optik, s. r. o. eyewear manufacture www.metzlerinternational.cz Photo:

| 32 REGION

Tachov Tachov District

phased out. There are stone quarries, BRIEF STATISTICS Městský úřad Tachov brickworks in Chodová Planá, and smaller Indicator District (Tachov Municipal Office) deposits of gravel sand and mortar sand. Rokycanova 1 Local carbonic water springs are used in Area (sq. km) 1 379 347 01 Tachov the Konstantinovy Lázně spa for the Population 52 095 Czech Republic treatment of heart diseases and blood Inhabitants/sq. km 38 phone: +420 374 703 111 circulation disorders (www.konstantinovy.cz). Unemployment rate (in %) 6.16 e-mail: podatelna@tachov-město.cz Source: Czech Statistical Office www.tachov-město.cz (as of 30 June 2007)

The Tachov District is located in the border area of the Plzeň Region. The Český les (Bohemian Forest) forms its natural border with Germany. It is the second largest and, at the same time, the most sparsely populated district in the Region. The District comprises 51 municipalities including eight towns. Tachov is the largest town and District centre with 12 825 inhabitants. The District has agricultural-industrial character. Local industrial sectors include the food industry, wood processing, plastic materials processing, and electrical engineering. 70% of agricultural land is used for farming. The main crops include maize, wheat, barley and rape. Livestock production is focused on poultry, cattle, and pig breeding. In terms of raw materials, uranium ore mining used to be significant, although since the early 1990s it is being gradually Monastery Church of the Assumption in Kladruby near Stříbro

SELECTED FIRMS Name Based in Sector Contact AGRO-TEX a. s. Tachov manufacture of textile fibres, agricultural primary production www.agrotex.com Technicplast, s. r. o. Tachov rubber, plastics production www.technicplast.com SHADOWS – Šedivec, s. r. o. Tachov manufacture of rubber and plastics http://web.telecom.cz/shadows/ QUATRO Dřevostyl s. r. o. Tachov joinery, assembly of structures www.quatrodrevostyl.cz Kermi, s. r. o. Stříbro heating elements www.kermi.cz Dagema, s. r. o. Tachov leather belts, accessories www.opasky.cz

FOREIGN INVESTORS Investor Country of origin Czech partner Sector Contact Matsushita Electric Works (Europe) AG Germany Panasonic Electric Works electronic items manufacture www.matsushita.de Czech, s. r. o. IDEAL Automotive GmbH Germany IDEAL AUTOMOTIVE Bor, s. r. o automobile components, interiors www.idealauto.com ROTAREX S. A. Luxembourg ROTAREX PRAHA, spol. s r. o gas valves www.rotarex.com BHS CORRUGATED Maschinen, Germany BHS CORRUGATED Fertigungs, GmbH Montage, Service, s. r. o. manufacture of paper processing machines www.bhs-corrugated.cz Alcoa Fujikura GmbH Germany Alcoa Fujikura Czech, s. r. o. manufacture of machines www.alcoa.com

and cables CzechTourism Nexans autoelectric GmbH Germany Elektrometall, s. r. o. automobile accessories www.nexans.com SUSPA Holding GmbH Germany Suspa CZ, s. r. o. automobile dampers www.suspa.com Photo:

| 34