The Czech Economy in 2006

A Few Comments on Taxes

The Most Important Changes in Czech Law in 2007

Liberec Region

03-04 2007 CONTENTS

Ministry of Industry and Trade

INTRODUCTION CZECH BUSINESS Question of the Month for Martin Říman, Minister of Industry and Trade ...... 4 AND TRADE ECONOMIC POLICY Economic Bi-monthly Magazine with a Supplement is Designed for Foreign The Czech Economy in 2006 ...... 5 Partners, Interested in Cooperation Foreign Investors Acquire Mainly New Tangible Assets in the ...... 7 with the Czech Republic HOW TO DO BUSINESS IN THE CZECH REPUBLIC Issued by: A Few Comments on Taxes ...... 9 The Most Important Changes in Czech Law in 2007 ...... 11 PP AGENCY s.r.o. Myslíkova 25, 110 00 Praha 1, Czech Republic Distance Contracts Subject to Special Rules...... 13 PP Agency Company with the ISO 9001 certified quality CZECH TOP management system for publishing services Sapeli Operates on Foreign Markets ...... 14 EDITORIAL BOARD: Merko CZ is Focused on the Balkan Market...... 15 Martin Tlapa (Chairman), Ivan Angelis, Success of Biomass ...... 15 Zdena Balcerová, Jiří Eibel, Zbyněk Frolík, Růžena Hejná, Alžběta Honsová, Josef Jílek, Ivan Jukl, Zdeněk Kočárek, Marie Košťálová, REGION Marie Pavlů, Pavla Podskalská, Josef Postránecký, NUTS 3 – Region ...... 16–29 Libor Rouček, Jiřina Semanová, Jarmila Škvrnová INVESTMENT MANAGING EDITOR: Jana Vápeníková 2006: Largest Foreign Investment in the Czech Republic ...... 30

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A Few Comments on Taxes Foreign Investors Acquire Mainly New Tangible Assets in the Czech Republic

3 | INTRODUCTION

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

a decree on health aptitude for driving The Programme Declaration of the motor vehicles, and others. It is clear that new Czech Government promises the simplification of laws and decrees is a number of changes for not a matter of a few months - it takes entrepreneurs. Which changes do more than half a year on average to you consider the most important amend a law. The process is gradual, but and most beneficial to its results will simplify communication entrepreneurs? And why? with the authorities and reduce The Government’s Programme Declaration paperwork. For example, the number of lays special emphasis on improving statistical reports many companies are conditions for sole traders and small obliged to fill in and the number of entrepreneurs. Most of the changes we institutions will be reduced. are preparing will facilitate the operation of all companies, both large and small, but it is the latter that we want to pay the Which measure will be particularly most attention to as large companies helpful to Czech entrepreneurs? Are manage to cope with various you, for instance, still considering administrative obstacles one way or tax holidays for sole traders? another. A principle example of the simplification We plan, on the one hand, to simplify of the business environment will be the business environment and to modify a major amendment to the Trades the tax system. In both these areas our Licensing Act. This Act has undergone aim is to create an environment where the several dozen amendments since the early state burdens sole traders and the self- 1990’s and it has more than doubled in employed neither by unnecessary size. This is why the changes we are paperwork nor by excessive taxation and preparing will be aimed at deregulation. social and health insurance payments. An For example, some trades will be merged environment that rids those who or transferred to other categories and the contribute significantly to the wealth of possibility to perform unregulated trades society of the feeling they are victimised will be broadened. For instance, we know by the state for their activities. there are 138 craft categories in the Czech Republic. In comparison to Austria, where there are several dozen more, our What progress has been made with situation is not so bad. Sweden, however, the project you launched last year recognises only 62 such categories, which to cut the paperwork burden for is, of course, inspiring. Merging certain businessmen? trades and reducing their number will One of the main tasks of the Ministry is at make life easier for those who want to present to simplify legislation governing start a new business. They will need fewer business activities. The aim of the project trade licenses, which will save them is simply to remove unnecessary passages money. Launching a business will thus no from all business laws and decrees. For longer involve searching a long list of MORE AT: this reason, we have created a chart recognised trades. Applicants will, for mapping all regulations concerning instance, no longer have to contemplate www.mpo.cz entrepreneurship. So far, there are over whether to register as a blacksmith or 150 and more will yet be added. It should a hammer-smith. www.czechtrade.cz be noted that not all of them fall under As far as the introduction of tax the competence of the Ministry of holidays for sole traders is concerned, www.ceb.cz Industry and Trade. Specially identified I am happy to say that it is included in the areas are thus the subject of consultations Government‘s Programme Declaration. www.egap.cz with other ministries. We can already However, it is clear that the Government report the first results, such as an will first need to debate the issue. I will do www.export.cz amendment to the decree on hygiene my best to persuade my colleagues and requirements for restaurants, ongoing especially the finance minister of the preparations for an amendment to benefits of this proposal.

| 4 CZECH BUSINESS AND TRADE

The Czech Economy in 2006

The Czech economy has GDP GROWTH WAS recent years was the economic recovery evidently experienced another BASED ON DOMESTIC of the EU countries, to which most Czech DEMAND exports are heading – 84% of total very favourable year. Economic As in 2005, last year’s economic growth exports in the first 11 months of last year growth remained near 6% as it within the Czech Republic rested on as it had been in 2005. Statistics confirm was in 2005, inflation increased sound ground and created no potential that exports to the common market are only slightly, unemployment problems which could have an adverse increasing at a two-digit rate – expressed effect on the economic stability in the in CZK, it would be 14.3% and in EUR, declined, and the balance of coming years. Whereas the 2005 GDP which gives a better idea of the value of trade was apparently the best growth was primarily due to increasing Czech exports owing to the steady since the beginning of the exports accompanied by a noticeable strengthening of CZK, as much as 20.2%. improvement of the balance of trade, last Last year’s increase in exports to the independent Czech Republic. year’s growth was based mainly on common market was mainly due to The continued growth again domestic demand, specifically on machinery and transport equipment, and narrowed the gap in the investment followed by household so it is not surprising that clearly the most economic standard between the consumption. Investment (creation of successful Czech export commodity on gross fixed capital) is certainly a positive the EU market were road vehicles – their Czech Republic and the most trend, as it raises the economic potential. export increased by one quarter in EUR. developed EU countries. But we should not overestimate last The automobile industry accounted for Economic growth in 2007 is year’s figures because transport the major part of the surplus in the Czech expected to be lower and equipment accounted for almost one half balance of trade. In the annual cumulated of the increase in investment (data for the expression, the road vehicle surplus was inflation slightly higher and yet first three quarters of the year are CZK 187 billion and EUR 6.6 billion, it should be a favourable year. available at this time). A decline in respectively, in November. The Czech economy is doing unemployment coupled with the rise in real incomes was partly responsible for CZECH GROWTH IS ABOVE well, its potential is soaring, and the improvement in the consumer mood, THE EURO AREA so the only serious problem is which was followed by bigger inclination While the Czech economic growth the long-term deficit in public to purchase and thus to consumption. remained at approximately 6% last year, budgets, which is delaying the A boost to this trend was the increasing the economy of the EU, and especially the indebtedness of the population, but old member countries, has been gaining introduction of the EUR. households are still giving much bigger momentum. These countries’ 2000 record preference to mortgages than to of 3.9% was still remote, but the result consumer credits. However, the expected was better than had been expected (2.6% economic growth of 6% was also due to in the first three quarters of last year). The foreign trade, although not as much as in spring prognosis of the European the previous year. Commission expected the EU GDP to increase by 2.3%, and the previous only STRENGTH IN MACHINERY by 2.1%. A big surprise came in Germany AND TRANSPORT EQUIPMENT – its economic growth increased from less EXPORTS than 1% in 2005 to an estimated 2.5% in One of the reasons for the favourable contrast to the 1.7% expected in the performance in the Czech economy in mentioned spring prognosis. The strong performance of the German economy was very good news for Czech exporters, Economic growth (in %) as some 32% of 2006 Czech exports

7 went to the German market, which thus continued to be the most important 6 foreign market for Czech enterprises. Czech Republic EU-25 According to Eurostat estimates for last 5 year, the Czech Republic retained its place in the group of five EU countries with the 4 fastest growing economies. It is no 3 surprise that the ten countries with the

year-on-year, % year-on-year, highest GDP growth include seven of the 2 new EU members (not counting Bulgaria and Romania, which acceded to the 1 Union this year).The noticeably higher

0 economic growth of the Czech Republic than the overall growth of the EU, and

2001Q1 2001Q3 2002Q1 2002Q3 2003Q1 2003Q3 2004Q1 2004Q3 2005Q1 2005Q3 2006Q1 2006Q3 especially the old members, has again Source: Czech Statistical Office, Eurostat brought the Czech economic standard

5 | ECONOMIC POLICY

In 2006, the Czech Republic remained in the group of the five most rapidly growing economies in the whole EU, according to Eurostat estimates nearer the EU average. We estimate that competitiveness on the single market. give the Czech economy good prospects. the per capita GDP in the Czech Republic Foreign direct investments, the total value The economic boom will not be as was approximately 76% of the EU of which exceeded EUR 55 billion at the exceptional as it was in the last two years average last year and only 72% two years end of last September, had a large share (at least until production begins in the ago. The Czech Republic probably could in the good results. Industry, the main Hyundai automobile works in North reach 80% of the average of the drive of the Czech economy, is clearly Moravia), but GDP growth between 4 and European twenty-five in 2008. The Czech dominated by enterprises under foreign 5%, fairly low inflation around 3%, Republic is markedly behind the most control which have a share of more than declining unemployment, and a very developed countries of the Union, it now 50% in the revenues of the sector. The moderate increase in real wages can be has the seventeenth economic standard, importance of foreign enterprises in the expected in the next two years. but exceeded Portugal, the weakest Czech Republic is likely to continue member of the euro area, in 2004. growing due to the unflagging interest of investors. This is already indicated by BOOM SHOULD CONTINUE newly announced investment projects in The Czech economy had another very the electrical industry (such as the Petr Dufek successful year. The rapid economic manufacture of LCD monitors and Analyst growth is helping its convergence in the television sets). The growth in domestic Československá obchodní banka EU and reflecting its increasing and foreign demand and competitiveness (e-mail: [email protected]) Photo: www.orangedisc.cz

| 6 CZECH BUSINESS AND TRADE

Foreign Investors Acquire Mainly New Tangible Assets in the Czech Republic

During 1995-2004, major THE ECONOMY GREW During 1995-2004, investment changes occurred in the FASTER THAN spending by foreign companies in the INVESTMENT IN THE Czech economy increased approximately participation of the different DECADE six times, as expenditures on fixed assets sectors in investment volumes In 1995-2004, the Czech economy grew formation went up from CZK 32.2. billion in the Czech Republic – faster nominally on average than (EUR 1.1. billion) in 1995 to CZK 183.2 substantial increases were investment expenditures. GDP in current billion (EUR 6.2 billion) in 2004. This prices increased by 7.4 % annually on investment growth (+ 463 %) is recorded especially by foreign- average in that period, while the volume of substantially higher as compared to the controlled companies. Over investment, defined as gross fixed capital increase recorded by national private non- a relatively short period of time formation and representing an important financial corporations (+ 52 %) and GDP component, rose on average only by substantial decline on the part of the so- these companies gained, and 5.3 % annually. called public non-financial companies are still gaining, ever larger which are controlled by the state (- 60 %). shares in sales, incomes from SHARE OF COMPANY exports, profits of the company INVESTMENT STAGNATING FOREIGN COMPANIES WERE AT TWO THIRDS THE MOST DYNAMIC sector, and employment. Their Investment of the company sector grew INVESTORS … weight in the volume of a little slower in the 1995-2004 period The annual increases in investment by investment and gross fixed compared to investment dynamics in the foreign firms operating in the Czech capital formation in the Czech economy as a whole, but basically its share economy were extraordinary in the 1995- in total investment in the economy did not 2004 period – their expenditures on fixed economy is logically growing as change. assets rose by almost one quarter on well. However, two aspects In 2004, compared to 1995, the average every year. need to be distinguished in this investment volume in the economy soared Investment by foreign-controlled non- by 58 % and amounted to CZK 729.3 financial companies in the Czech Republic development – one being the billion (EUR 24.5 billion). The company increased by an average annual rate of capital expenditures of foreign sector recorded a relatively less steeper rise 23 % in the 1995-2004 period, a figure which companies connected with their (by 54 % to CZK 451.7 billion, or EUR 15.2 stands out especially in comparison with acquisitions in the Czech billion). A more robust investment the growth in the volume of investment by dynamics was recorded by the government domestic private companies that rose on Republic, and the other the sector (+ 77 % to CZK 136.4 billion, or average by 5.5 % annually. However, in investment expenditures proper EUR 4.6 billion) and the fastest growth of both cases this was a higher average rate connected with their investment in fixed assets was that of than the average rate of the overall subsequent operation in the households (+ 94 % to CZK 123.9 billion, investment made in the Czech economy or EUR 4.2 billion). This was mainly the (5.3 %). The cause of the lower average market. Investment spending is result of heavy investment by households rate of investment by non-financial essential to acquire machinery, in the form of purchases of houses and companies compared to the average in the buildings, or other types of flats at favourable interest rates of whole economy can be found in the above mortgage loans with the aim to acquire mentioned fall in investment by public fixed assets. An analysis of the their own dwellings. non-financial companies, which went size of these fixed assets shows Although the growth in company down on average by 8.9 % annually. that in 2004 foreign-controlled investment was slightly slower than the The average 5.3 % year-on-year growth companies operating in the growth in overall investment in all the of the investment volume in the economy economic sectors, the 61.9 % share of the as a whole was the result of two Czech economy spent six times company sector in the total investment in antagonistic trends. On the one hand, more money on investment in the Czech economy in 2004 remained there were the above-mentioned lower these assets than in 1995. almost the same as in 1995 (or declined dynamics of investment by the sector of slightly by1.5 p.p.) non-financial companies (+ 5.1 %), and Purchases of new fixed assets the average 5.4 % fall of investment by predominate in most cases. MASSIVE INVESTMENT financial institutions every year. On the BY FOREIGN-CONTROLLED other hand, these were the distinctly COMPANIES higher average dynamics of investment in The strong capital entries into the Czech the governmental institutions sector and economy from abroad in the form of direct the distinctly higher dynamics of fixed investment, apparent especially at the end assets acquired by household investment. of the 1990s, were generally reflected not only in the transferred know-how, … ACQUIRED ESPECIALLY strategic visions of the new owners, and NEW ASSETS … subsequent restructuring of companies, Companies under foreign control acquire but also in the volume of investment in mostly new tangible fixed assets. In 2004, fixed assets. investment in fixed assets by foreign-

7 | ECONOMIC POLICY

controlled companies in the Czech Republic totalled CZK 183.2 billion, (EUR 6.2 billion), and new tangible fixed assets accounted for CZK 179.1 billion (EUR 6 billion) of this amount. These companies spent CZK 13.8 billion (EUR 0.5 billion) on purchases of used tangibles. New tangible fixed assets thus make up more than 97 % of the volume of investment by foreign- controlled companies. The acquisition of used tangible fixed assets represents less than one-tenth of the value of new fixed assets acquired by foreign companies in the Czech Republic, and this ratio has remained basically unchanged throughout the 1995-2004 period. According to the OECD, some countries import considerable volumes of used fixed assets operable by other manufacturers (e.g. New Zealand, Mexico, and some countries in central Europe). However, the overall predominance of new fixed assets in the annual volumes of The Czech Republic is a preferred destination of foreign direct investors investment by companies with foreign property interest in the Czech economy adequate comparison would be investment by this sector made up only shows that the Czech Republic does not represented by the ratio of their 2.2 % of GDP (10 % of GDP on the part of rank among countries where foreign investment to the gross value added domestic private-owned firms), in 2004 investors have made massive purchases of created by them – but the share of the this share of foreign companies rose to used machinery and equipment for their invested amounts and the biggest 6.6 % of GDP (8 % of GDP for domestic local acquisitions. macroeconomic aggregate shows companies). interesting trends as well. According to … AND SIGNIFICANTLY calculations, 1995 investment of the WEIGHT OF INVESTORS IS INCREASED THE SHARE OF company sector accounted for 20 % of INCREASING THEIR INVESTMENT IN CZECH GDP, in 2004 only for 6.2 %. Financial The Czech Republic is a popular GDP institutions contributed with their destination for foreign direct investors. At Foreign companies have been the only investment to 1.8 % of GDP at the the turn of the century, up to 2002, it was segment in the Czech economy that has beginning of the 1995-2004 period, and one of the economies with the highest significantly increased its share of the merely to 0.5 % at its end. Similarly, inflow of direct investment per capita. volume of invested resources relative to investment by the government sector Acquisitions in the form of equity were GDP over time. represented 5.3 % of GDP in 1995, and combined with subsequent investment in Investment to GDP ratio is an important 4.9 % of GDP in 2004. The share of the tangible fixed assets, mostly in the indicator monitored in international household sector basically stagnated manufacturing industry, where investment comparisons – it is the rate of investment (respectively 4.3 % and 4.5 % of GDP). in machinery predominates. in an economy which signals an expected Compared to these figures, the shares Major structural changes in the acceleration of future economic growth. In of foreign-controlled companies are again company sector in the Czech Republic can the case of the different sectors, an exceptional – while in 1995 the volume of be observed also in the volumes of resources invested in fixed assets. It is this investment (through its multiplication Investment rate in the Czech economy and in the sector of foreign-controlled companies effects) that further increases the weight (investment volume/gross value added volume, in % of data in current prices) that the sector of foreign companies has 90 investment rate in economy gained in the Czech economy by most key 80 investment rate in foreign-controlled companies sector characteristics.

70

60 Drahomíra Dubská Analyst 50 Macroeconomic Analyses Department, 40 Czech Statistical Office

30 (e-mail: [email protected])

20 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 *Editor’s note: EUR figures converted by

Source: Czech Statistical Office the 2006 average CZK/EUR rate of 29.874 Photo: www.orangedisc.cz

| 8 CZECH BUSINESS AND TRADE

A Few Comments on Taxes

The Czech Republic’s accession DEFERRED TAXATION member state or, if it imposes tax on these to the European Union also The chief effect of the Mergers profits, it enables the parent company to Directive 90/434/EEC is the possibility lower the tax base by the tax on profit paid by means adaptation of the Czech to defer taxation of capital gains arising from the subsidiary in another member state. legal system to the legislation of mergers or divisions of companies, transfers A significant amendment by Directive the European Communities. This of assets, or exchanges of shares. The Directive 2003/123/EC has also brought provisions process of transposing allows the restructuring of companies within reducing the minimum shareholding the European Union regardless of state percentages of the parent companies for the Community law includes the borders. This can produce tax advantages that rules to apply. commitment of gradual adoption have been impossible to date. The Mergers Directive 2003/48/EC on Taxation of of the European directives. The Directive has been amended by Directive Savings Income in the Form of Interest 2005/19/EC, which contains provisions Payments ("Savings Directive") applies only to knowledge of at least general concerning the introduction of new legal natural persons. The tax aims at preventing information concerning directives forms of entities - the European Company tax avoidance by persons who have income in the area of direct taxes may and the European Co-operative Society, and from interest payments in other member help investors to save allows the registered offices of these new states. The Interest and Royalties Directive types of companies to be transferred without 2003/49/EC introduces a common system of considerably on taxes. possible tax disadvantages. taxation applicable to interest and royalty Harmonisation of direct taxes in payments between associated companies. the European Union is by far not ELIMINATING DOUBLE Together with other rules on the protection of so consistent as is the case of TAXATION OF PROFITS intellectual property effective in the European The Directive on the Common System of Communities, it provides new opportunities value added and consumer taxes. Taxation Applicable in the Case of Companies for structuring intangible property. The causes can be found above and Subsidiaries of Different Member States all in the different accounting 90/435/EEC (Parent-Subsidiary Directive) EXEMPTION OF DIVIDEND eliminates double taxation on profits INCOME AND INTERESTS ON systems of each member state distributed by an associated company CREDITS and in the reluctance of member registered in one member state to a parent Three of the four above-mentioned directives states to proceed further with company registered in another member state. of the European Communities - the Mergers harmonisation, which they The Directive rules that the member state of Directive, the Parent-Subsidiary Directive, and the parent company either exempts the the Interest and Royalties Directive - were consider as interference in profits of the subsidiary registered in another transposed into the Czech Act 586/1992 Coll. sovereign affairs and in internal policies, with the possible use CHARACTERISTICS OF DIRECT TAXES IN THE EUROPEAN UNION especially of corporate taxes as AS OF 31ST DECEMBER 2006 European Union PERSONAL INCOME TAX CORPORATE PROFITS TAX tools of economic policies. member state The European Commission thus Highest rate (%) Number of tax brackets Nominal rate (%) Austria 50 4 25 continues to prioritise the Belgium 50 5 33 elimination of double taxation of Bulgaria 15 4 24 Cyprus 30 4 10 cross-border revenue flows, and Czech Republic 32 424 in the area of direct taxes Denmark 59 3 28 Estonia 23 1 23 recommends only the Finland 32.5 5 26 implementation of measures that France 48.09 7 33.3 Germany 42 4 25 are essential to ensure the Greece 40 4 29 functioning of the common Hungary 36 2 16 Ireland 42 2 12.5 market. Different tax rates in Italy 43 4 33 European Union member states Latvia 25 1 15 Lithuania 33 2 15 thus remain a reality, but mostly Luxembourg 38 17 22 they say little about the effective Malta 35 6 35 Netherlands 52 4 29.6 (actual) taxation (see Table). Poland 40 3 19 The key regulations of the Portugal 42 7 25 European Communities Romania 16 1 16 Slovakia 19 1 19 concerning direct taxation Slovenia 50 5 25 are thus not numerous Spain 45 5 35 Sweden 25 3 28 and are presented on page 10. United Kingdom 40 3 30 Source: European Tax Handbook 2006

9 | HOW TO DO BUSINESS IN THE CZECH REPUBLIC

Knowledge of regulations concerning direct taxes brings tax savings to investors and other payers on Income Taxes as of the Czech credits, loans, bonds, certificates of deposits, residence is in other member states of the Republic’s accession to the European Union. and bills of exchange have been exempt from European Union. This duty involves The remaining Directive on Taxation of income tax since May 2004 if payable to mandatory notification about these Savings Income in the Form of Interest a company which is a tax resident of the payments. This notification shall include Payments came into effect in the Czech Czech Republic or another European Union identification of the person (by name, place Republic on 1 July 2005. member state by a company - tax resident of of residence, and date and place of birth or As of 1 May 2004, the Mergers Directive a European Union member state, based in the tax identification number where possible), enables successor companies to carry over Czech Republic. A similar exemption of and the amount of the interest income. reserves and provisions created by a company royalties will come into effect on 1 January that is winding up, and its possible loss that 2011. has not yet been used as a tax deductible The Directive on the Taxation of Savings Jan Široký item by the company winding up, as well as Income in the Form of Interest Payments has Faculty of Economics, VSB-Technical to carry over other items that have been introduced a new duty for entities paying University of Ostrava deductible from tax base by the winding-up interest income to natural persons whose tax (E-mail: [email protected]) company, but have not yet been deducted by this company. The Directive on the Common System of Taxation of Parent Companies and Basic European Communities regulations in the area of direct taxation Subsidiaries exempted dividend income received by a parent company which is a tax EC legislation resident of the Czech Republic or a resident of concerning direct taxes another European Union member state from a subsidiary - a resident of the Czech Republic or a resident of another member state. Czech law also determines the minimum share of Directive Directive Directive Directive registered capital decisive for companies to be 90/434/EEC 90/435/EEC 2003/48/EC 2003/49/EC defined as parent and subsidiary. It must amount to a minimum 10% continuously for a period of at least 12 months. Directive Directive Due to the transposition of the Interests 2005/19/EC 2003/123/EC and Royalties Taxation Directive, interests on Photo: www.orangedisc.cz

| 10 CZECH BUSINESS AND TRADE

The Most Important Changes in Czech Law in 2007

Several major pieces of The new Act on Sickness Insurance common for all the methods. Besides legislation approved last year (Act No. 187/2006 Coll.) was bankruptcy, the Act introduces a new basic originally scheduled to come into method of resolving insolvency based on have come or will come into force on 1 January 2007, but was restructuring - reorganisation. New effect during 2007. On 1 January postponed until 1 January 2008. The duty methods also include debt discharge and it was the new Labour Code (Act of employers to pay wages to their minor bankruptcy. The insolvency of employees for the first 14 days in which financial institutions is subject to special No. 62/2006 Coll.) and the new they are temporarily unable to work (this rules. Debtors are given a chance to Building Act (Act No. 83/2006 duty is set out in the new Labour Code) has overcome threatened insolvency by the Coll.) and on 1 July it should be been postponed to the same date. Certain principle of a moratorium, replacing the Insolvency Act (Act No. changes in legislation concerning the a protective period that did not formerly assessment basis for the payment of prove very practical. 182/2006 Coll.), replacing the contributions to social security and general The new Act extends the rights of still valid Act on Bankruptcy and health insurance have been introduced by creditors and amends the overall concept Composition, which is based on a law accompanying the Labour Code (Act of their participation in the proceedings. different principles. No. 264/2006 Coll.), and several changes Creditors will have a direct influence on the have also taken place in tax law. choice of the method of resolving the It has to be noted that on Another change in effect as of 1 January debtor’s insolvency, of the person of the 5 February 2007, the is the amount of the minimum wage, insolvency administrator, and the Government approved a bill where the basic rate for the stipulated 40 monitoring function of creditors’ working hours per week is now CZK 48.10 committees will be enhanced. The law also which postpones the effect of (ca EUR 1.6) per hour or CZK 8,000 (ca EUR introduces an insolvency register kept by the Insolvency Act from 1 July 266.6) per month (Government Regulation the Ministry of Justice, which is to inform of 2007 to 1 January 2008. The No. 567/2006 Coll.). insolvency proceedings and thus ensure reasons for the postponement their transparency. The register will include INSOLVENCY ACT a list of insolvency administrators, whose include a delay in legislative and As insolvency proceedings in the Czech position is determined by a special Act on technical work for the Republic are considered among the longest Insolvency Administrators (Act No. establishment of the insolvency and most questionable in Europe, the 312/2006 Coll.). register, which is part and parcel adoption of new and modern bankruptcy legislation was long overdue. The new Act BUILDING ACT of the law and the reform of on Insolvency and Methods of Resolution A major aim of the new Building Act is to bankruptcy legislation cannot be (the Insolvency Act) is to accelerate accelerate and simplify the approval launched without it. The bill proceedings and make them more efficient process, especially for small buildings that by creating a scope for a differentiated may now be constructed on the basis of must now undergo a standard approach, eliminating some of the phases a mere notification instead of the former legislative procedure (i.e. it must of the proceedings as well as steps that planning permission. The new legislation be adopted by both chambers of facilitated intentional procrastination, and should also significantly reduce the the Czech Parliament, be signed allows for shortened proceedings. The paperwork connected with the preparation legislation still in force has a number of of large construction projects. by the president and published drawbacks. Liquidation procedures for The Act drops the requirement for in the Collection of Laws). resolving insolvency take precedence over a standard procedure of final approval for restructuring procedures. Creditors have no completed structures being put into use, influence over the choice of procedures for while check-ups at construction sites are to resolving insolvency nor over the selection be all the stricter and more systematic, even of an insolvency estate administrator, and after completion. The law enables persons their possibilities to oversee the conducting check-ups to take operative administrator are limited. The law measures on site. In addition, the new Act insufficiently defines the relation of the introduces approved inspectors and gives administrator to the creditors’ committee, them certain powers of building the method of selecting the administrator is authorities. Besides changes in building not optimal, and the qualification permission proceedings, the law also requirements for the exercise of this introduces a number of amendments in function need to be made stricter. planning permission and decision-making. The new law replaces two different According to the author of the Act, the procedures, bankruptcy procedure and Ministry for Regional Development, the composition procedure, with one new legislation is expected to enhance insolvency procedure that is differentiated legal certainty and facilitate decisions for only after the ruling on insolvency, in such investors on the placement of an a way that there is a special procedure for investment. Only practical application will each of the methods of resolving show whether this intention will insolvency. Some of the regulations are materialise.

11 | HOW TO DO BUSINESS IN THE CZECH REPUBLIC

Several important legal regulations took effect in 2007

LABOUR CODE uneven distribution of working hours. The admitted as tax deductible expenses of The new Labour Code, replacing the set weekly working hours must not exceed employers. former Labour Code that was in effect from 30 hours per week for employees under 18, An amendment to the Act on the the mid-1960’s, is to liberalise labour law even in the case of several labour Administration of Taxes and Fees (Act No. relations. However, it neither simplifies nor relationships. Another novelty is that wages 337/1992 Coll.) has changed the streamlines the former legislation. Though shall not be negotiated with a view to penalisation of taxable persons for late to a limited extent, on the general level it possible overtime work. The notice period payments of taxes. On an audit conducted sets out the principle of "that which is not is unified to 2 months, severance pay is by the tax authority, the penalty as of prohibited is permitted", and at the same increased to three times average earnings 1 January 2007 is set at 20 % of the time respects the principle of equal (in case an employment relationship is additionally assessed tax liability (or 5 % in treatment. The law also enhances the terminated because an employee may not case of tax loss decrease). At the same time, contractual freedom of parties (e.g. by continue performing his/her work because interest will always be charged on late allowing the conclusion of innominate of a work injury or occupational disease it is payments, calculated on the basis of the contracts in accordance with the Civil Code twelve times average earnings). The Code repo-rate declared by the Czech National in labour law relations), but at the same abolishes the duty of an offer of another Bank and increased by 14 percentage points. time contains a number of regulations from position to an employee before dismissal. It which they may not depart. also changes the rules for contracts on CHANGES IN As regards employment relationships, work done outside of an employment CONTRIBUTIONS TO SOCIAL the new law does not differentiate relationship. SECURITY AND HEALTH between the so-called main and subsidiary INSURANCE employment relationships. It also brings CHANGES IN TAX RULES A substantial change in the social security changes concerning the probation period An amendment to the Income Taxes Act and health insurance system is represented (the period of impediments to work is no (Act No. 586/1992 Coll.) reacts to the by the new definition of the assessment longer included in the probation period adoption of the new Labour Code, which base of employees for both types of even in a limited extent). Appointment may now includes regulations on the contributions, which now mirrors the establish an employment relationship only reimbursement of travelling expenses. In income tax base. The assessment base in the case of specified entities from the the case of employees of businesses, includes the taxable income of individuals non-business field, other employment travelling expense reimbursements up to that are not exempt from tax and are relationships established by appointment the limit of reimbursements set out by the carried by the employer to the before 31 December 2006 are Labour Code for "civil servants" are not employee’s account. There are only a few automatically considered from 1 January taxable income. For employers it is a tax exceptions to this rule. 2007 as established by a contract of deductible expense whenever the travelling employment. expense reimbursement is paid in The Code contains a new definition of accordance with the Labour Code. In Alena Břicháčková, Lawyer working hours and stand-by work and addition, benefits paid by employers to Dita Malíková, Tax Adviser introduces the so-called working hours employees beside salaries under the PETERKA & PARTNERS account as a possible method for an conditions stipulated by law shall newly be (e-mail:[email protected]) Photo: www.orangedisc.cz

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Distance Contracts Subject to Special Rules

Directive 97/7/EC on the INFORMATION information will result in penalisation by protection of consumers in PROVIDED PRIOR the law - an extension of the period for TO THE CONCLUSION contract withdrawal. respect of distance contracts has OF A CONTRACT been implemented in the Czech The consumer will be provided with the WITHDRAWAL FROM system of law in § 53-54 of the following information in good time prior to CONTRACT Civil Code (Act No. 40/1964 of the conclusion of a contract: The consumer has the right to withdraw – information about the supplier (e.g. from a contract concluded by means of the Coll.). This regulation applies business company, company registration distance communication within 14 days of to contracts concluded by means number, contact information, etc.); performance. Where information required of distance communication – information about the competent by law has not been provided, the period inspection authority (in case the for withdrawal is extended to three which, without the simultaneous supplier's business falls under permission months from the time of performance. If physical presence of both the regime); the required information is supplied within supplier and the consumer, may – the name and main characteristics of the this three-month period, the 14-day period be used for the conclusion of goods or services; shall begin to run from that moment. The – the price of goods or services; law explicitly states that the consumer has a contract between contractual – delivery costs; the right to withdraw from a contract parties. Means of distance – arrangements for payment, delivery or without penalty and without giving any communication include, for performance; reason for withdrawal. The only charge example, unaddressed printed – information about the existence of the that the consumer may be asked to settle right to withdraw; if the right of withdrawal is exercised is the matter, addressed printed matter, – the cost of using the means of distance direct cost of returning the goods. This standard letters, press communication; usually means that the consumer returns advertising with use of order – the period for which the offer or the the goods at his/her own costs. The price remains valid. supplier is obliged to reimburse the forms, catalogues, telephone amount paid by the consumer within 30 with (human) intervention, Upon submitting an order by means of days of withdrawal from the contract. telephone without (human) distance communication, the supplier is intervention (automatic calling obliged to immediately confirm receipt of The law states that the consumer may not the order by any of the mentioned means exercise the right of withdrawal in the case machines, audiotext), radio, of distance communication. This is most of contracts concluded by means of electronic mail, facsimile frequently accomplished by e–mail or by distance communication: machines (fax), television means of a form in the case of Internet – for the supply of goods or services the (teleshopping), or public shops. Using other means (telephone, price of which depends on fluctuations mail, etc.) is, however, also permitted. Prior on the financial market beyond the communication networks, eg. the to submission (sending) of an order, the control of the supplier; Internet. The purpose of the consumer shall be enabled to check and – for the supply of goods made to the implemented provisions is clear change input data entered in the order. consumer's specifications or clearly personalised or which, by reason of their – to guarantee consumers the INFORMATION PROVIDED nature, cannot be returned or are likely same degree of information as UPON CONCLUSION to deteriorate or expire quickly; when a contract is concluded OF A CONTRACT – for the supply of audio or video directly in a store in the physical Upon conclusion of a contract by means of recordings or computer software, if the distance communication, but prior to the consumer has broken the original presence of both parties, where performance of the contract, the packaging; consumers are able to learn in consumer must be provided with the – for the supply of newspapers, detail about the properties of following written information: periodicals, and magazines; purchased goods. – information about the supplier, i.e. – for gaming and lottery services. business name and identification number, seat in the case of a legal entity, and the home address in the case of natural persons; – information on the conditions and procedures for exercising the right of withdrawal from a contract; – information on after-sales services and guarantees; – the conditions for cancellation of a contract, if the duration is unspecified Jana Luhanová or it exceeds one year. Consumers Defence Association (SOS) Failure to provide the specified www.spotrebitele.info

13 | CZECH TOP

Sapeli Operates on Foreign Markets

Sapeli ranks among the important HUNGARY Czech exporters – ACCOMPLISHMENT IN COMPETITION of veneer-coated doors and door Sapeli took its first steps on the Hungarian frames. Its foreign trade policy is market by individual supplies in 2002. The focused on Slovakia, Hungary, real start came in March 2005, when Poland, and newly also on Sapeli presented its products to Hungarian builders and dealers under the aegis of Germany. CzechTrade at the Czech Embassy in Slovakia has been the primary Budapest. The company focused its export recipient of Sapeli exports since policy on the Hungarian market in 2006. Radim Vyskočil, who is responsible for 1994. Their marked increase came exports to Slovakia and Hungary, says: in the last three years, during "We wanted to give maximum support to which Sapeli built a very strong our trade in Hungary, where the position on the Slovak market and competition is huge. There is no dominant Hungarian producer of doors who would sales were rising by dozens of per regulate the market, and imports come cent annually. Sapeli’s general almost from all Europe. Manufacturers representative on the Slovak from Slovenia, Austria, Germany, Poland, market is Don Interiér Servis, s.r.o., Slovakia and, of course, the Czech Republic are represented in Hungary." In which offers doors and door addition to marketing, advertising and frames in its thirty sample rooms Sapeli presentation at fairs and exhibitions, and forty partner shops support is given to logistics of the transport of goods to places which are throughout Slovakia. A new Sapeli distant more than 500 km. A contract on sample room, which displays general representation has been concluded doors and door frames on an area with the Budapest-based company of 250 sq. m, was opened in WESTDOOR, which has a network of forty branches throughout Hungary. This Bratislava in September 2006. The brought orders, including state- most interesting destinations of guaranteed ones. One of the latter was the Sapeli products included VÚB supply of 950 non-half-slot anti-fire doors to the cardiovascular clinic in Debrecen. Sapeli is a prominent supplier of interior doors Bratislava, the hotels Holiday Inn Full non-half-slot doors passed as fireproof and door frames Bratislava and Hubert Vysoké in a test conducted by the Hungarian state prefabricated houses in Hungary this year. Tatry, Coca Cola Bratislava centre testing laboratory last autumn. Glassed-in It is a hard nut to crack by our and many housing estates, such anti-fire walls are to be tested in 2007. development department, but I trust that "Last but not least, we are preparing to our designers will cope with it", Radim as Koprivnica Bratislava. overlay wooden door frames in Vyskočil added.

POLAND – COMPLICATED MARKET Sapeli became involved on the Polish market in 1998 by its first presentation at the BUDMA 98 fair in Poznan. Since then, presentations of Sapeli doors and door frames have been regular with a pause in 2005, when Sapeli changed its policy of exports to Poland. "The Polish market is very complicated due to the incredibly large competition of local small manufacturers of doors, both veneer- coated and the cheaper foil-coated products", according to František Blažek, who is responsible for Sapeli exports to Poland and Germany. In order to meet the requirements of Polish clients, a special model of the "Komfort" glassed doors has been made since the middle of 2006. Sapeli’s main trade partner is the DUBREX

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company based in Gliwice. Connection said that "Interest in our doors and door German manufacturers competed for the with the LEROYMERLIN chain, which frames was shown at this presentation by position, but our company offered terms operates twenty markets in Poland, is BayWa, one of the most important and products which BayWa assessed as intended in 2007. companies in Germany, which operates best and the contract was concluded", some 180 building material shop". František Blažek added. In the next three GERMANY – THE YOUNGEST Complicated talks on possible co- years, Sapeli will supply interior doors and RECIPIENT operation were conducted with BayWa door frames for almost EUR 6 million. Sapeli entered the German market in 2005 throughout last year. The negotiations through ICC – Czech Export Centre under were mediated by the ICC. The main the aegis of CzechTrade. Sapeli doors and objective of the talks was to meet the door frames were presented during Czech requirements of BayWa which sought Export Days at the Franz Joseph Strauss – a suitable supplier of a new series of München Airport Centre. František Blažek interior doors. "The most important More at www.sapeli.cz

Merko CZ is Focused on the Balkan Market

MERKO CZ a.s. is a joint-stock The company ranks among the with potential clients in Serbia and company engaged in the largest producers of this equipment Macedonia. The 2007 the objective of the in the Czech Republic. It has two company is to build up a base for the construction of plants and the branches abroad - MERKO SK s.r.o. Balkan market. The 2006 successes include production of technologies for and MERKO-Polska Sp. z o.o (in Slovakia an order in Russia where MERKO CZ put the manufacture of concrete and and Poland), and official representation in into operation a concrete mixing plant and Bulgaria. MERKO CZ has been closely co- equipment for the recycling of concrete mixtures thereof. operating with the CzechTrade office in residues. Croatia for several years and as a result of this, has realised a large order in that country. Negotiations are now being held More at www.merko.cz

Success of Biomass

Biomass is becoming cheaper Starting in 1990, the company began Černý. The company's wood briquettes, than gas or furnace oil – to focus on biomass processing pellets, and fire-lighter wood can be had technologies and subsequently from, for example, Austrian Interspar and especially considering that turned to production of machines for Billa chains, or the German OBI. The traditional fuels will be more briquetting and pelleting of wood and success of the small company has also expensive as their sources run vegetable waste used for creating biomass. been acknowledged by the CzechTrade Later it also started to sell the fuels. agency; the Uničov company took the first low. BIOMAC Ing. Černý, s.r.o. is Today it offers wood briquettes from place in the DHL Export Award, category one of the highly regarded Czech soft and hard wood, pellets (granules from The Most Successful CzechTrade Client producers of biomass. It has pressed wood), and fire-lighter and fuel (twofold year-on-year increase in export). already established 24 plants for wood. The briquettes are made of chaff, sorrel, and straw. Almost all of the biomass production using its own production is intended for export with the technology (www.biopaliva.cz). main markets being Austria, Germany, Italy, France, and Denmark. "We have succeeded in direct sales, with no intermediaries", notes the owner Zdeněk More at www.biomac.cz

15 | REGION

NUTS 3 –

TERRITORIAL DIVISION, LOCATION, POPULATION

The Liberec Region is situated in Liberec the north of the Czech Republic and its northern fringe forms Jablonec n. Nisou âeská Lípa 20 km of the Czech state border with the Federal Republic of Germany and then continues with 130 km of the Czech-Polish border. The Liberec Region, together with the Hradec Králové The Region is mostly mountainous. The position due to a slump in recent years. and Pardubice Regions, constitute territory comprises the north of the In agriculture, which has basically the NUTS 2 - North-East Bohemian Basin, the Jizerské hory a complementary role, the main crops are territorial statistical unit. The Mountains, the west of the Krkonoše grains and feeds related to cattle farming. (Giant Mountains) with the foothills, and After 1990, the new market conditions Region includes the territories the eastern part of the Lužické hory have brought about great development in of four districts: Liberec, Jablonec Mountains. The highest point of the small and medium-sized businesses, nad Nisou, Česká Lípa, and Region is Kotel, 1 435 m high, near especially those connected with Semily, which are further divided in the , the lowest manufacturing for the automotive industry, point is 208 metres above sea level in the the construction industry and services. The into 215 municipalities, 38 of , at the place where the effect of the inflow of foreign companies, which have the status of towns. Smědá River leaves the territory of the which have built on the tradition and 78% of the Region’s inhabitants Czech Republic. The best-known mountain qualified labour force of the Region, is Ještěd, at 1 012 metres, it is the highest became apparent mostly in the second half live in the towns. The chief centre point of the Ještěd Ridge (www.jested. of the 1990’s. A stronger position has been of the Region is the town of liberec.cz). Waters from the Region are gained in recent years by the trade and Liberec (www.liberec.cz) with drained into three rivers. The west is the catchment area of the Ploučnice, the east 101 000 inhabitants, the second Employment by sectors (in %) of the Region is drained by the upper Labe, largest town is Jablonec nad and the north forms the catchment basin Nisou (www.mestojablonec.cz) of the Odra (Nisa) Rivers. The Region also Other 24% Industry 44% with 46 000 inhabitants. has sources of mineral waters and medicinal peat. Services 9% ECONOMIC Farming and CHARACTERISTICS forestry 2% Construction Trade 10% The Liberec Region forms only 4.0 % of 11% the Czech Republic’s territory and, if the Source: Czech Statistical Office Capital City of Prague is exempted, its 3 163 sq. km make it the smallest region of transport sectors, and a major role in the Krajský úřad Libereckého kraje the country. Farmland covers 44.5 % of Region’s economy is played by tourism. The (Regional Office of the Liberec Region) the Region’s area, and the share of arable Region has accounted for 12.2 % of overall U Jezu 642/2a land (22 %) is considerably below the revenues from tourism, for 4.6 % of 461 80 Liberec 2 national average. On the other hand, revenues from the Czech Republic’s Czech Republic a high proportion of the Region’s territory industrial activities, and for 2.7 % of phone: +420 485 226 111 is formed by forest land (44.2 %). building works. In 2005, the gross domestic fax: +420 485 226 330 The predominant raw materials in the product per inhabitant recorded 80 % of e-mail: [email protected] Region are quality sands for glassmaking the average level of the gross domestic www.kraj-lbc.cz and foundries. In the past, the Region was product per inhabitant of the Czech an important area for stone mining and Republic. Categories making the highest Turistické a informační centrum working for decorative and building contribution to Czech exports are Babylon purposes. The Liberec Region is mostly an machinery and transport equipment (48%), (Babylon Tourist and Information Centre) industrial area. The branches that have manufactured goods classified chiefly by Nitranská 1 developed here are glassmaking and material (29.8%), and miscellaneous 460 12 Liberec fashion jewellery manufacture, plastics manufactured articles (15.7%). phone: +420 485 249 202,212 production and processing, engineering fax:+420 485 249 946 and manufacturing sectors closely linked TRANSPORT e-mail:[email protected] with car production. The traditional textile The development of business activity www.centrumbabylon.cz industry has lost its former dominant greatly depends on access to transport

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facilities. The Liberec Region has railway BRIEF CHARACTERISTICS OF THE REGION lines in a total length of 543 km and its NUTS Area (sq. km) Population Municipalities Population density railway transport density exceeds the (persons/sq. km) national average almost by half. The NUTS 4 – Liberec 925 160 790 57 174 Liberec Region is situated in a sector NUTS 4 – Jablonec nad Nisou 402 88 639 34 220 between two motorways, the D8 Prague - NUTS 4 – Česká Lípa 1 137 106 266 59 93 Ústí nad Labem - Dresden, and the D11 Prague - Hradec Králové - Lubowka - NUTS 4 – Semily 699 74 590 65 107 Legnica. Its transport artery includes the NUTS 3 – Liberec Region 3 163 430 285 215 136 high-speed road from Prague, which NUTS 1 – Czech Republic 78 867 10 280 968 6 248 130 provides a quality connection of the Source: Czech Statistical Office, 3rd quarter 2006 data Region with the heart of the country. Another route in the north-south direction is the I/9 road Svor - Česká Lípa - Mělník, studded with numerous lakes and ponds, houses), especially in the Districts of Česká and in the west-east direction the I/13, 35 the best known being the Mácha Lake Lípa and Semily (www.liberecky-krajcz/ roads Děčín - Nový Bor - Hrádek nad Nisou (www.machovojezero.cz). Visitors can cz/turist_service). Tourism is developing - Liberec - - Hradec Králové. choose from a total of more than 50 000 also thanks to road and railway border beds in various categories of accommod- crossings, and many pedestrian border EDUCATION, CULTURE, ation. In addition, there is a high crossings operated within the framework TOURISM concentration of individual recreational of local border traffic rules (www. The Region has a qualified labour force, homes and facilities (cottages, holiday mvcr.cz/doprava/prechody/nemeck.html ). thanks to the existence of a number of specialised technical and vocational Average gross monthly wages 2001–2005 (EUR) Unemployment rate 2001–2005 (%) schools and training facilities. The most Liberec Region CR Liberec Region CR important of them is the Technical 655 700 602 641 587 12 10.31 8.22 % EUR 575 9.81 9.47 University of Liberec with the faculties of 600 521 559 9.48 499 536 8.9 8.88 10 8.68 Mechanical Engineering, Textile 500 467 7.7 7.35 Engineering, Economics, Education, 400 8 Architecture and Mechatronics (www. 300 6 tul.cz). About 700 students graduate from 200 4 the University every year. 100 2 The Liberec Region has a rich cultural 0 0 and historical tradition, which is reflected in 2001 2002 2003 2004 2005 2001 2002 2003 2004 2005 a large number of architectural and EUR exchange rate as of 31 December 2005 (29 CZK). historical monuments and cultural facilities. Prominent cultural institutions include the F.X.Šalda Theatre with its Small Theatre stage, the Naive Theatre in Liberec, and the Zoological and Botanical Gardens in Liberec VACANT AREAS FOR INVESTORS (www.botanickazahradaliberec.cz). Name District Area ha/sq.m Contact Geographic diversity also makes the Cvikov Česká Lípa 11/110000 [email protected] Liberec Region very attractive for tourism. Thousands of tourists arrive every year to Dubá Česká Lípa 17/170000 Zdeňka Šepsová, enjoy the opportunities it offers for hiking, phone: +420 487 870 201 cycle tourism, and winter sports. The Frýdlant v Čechách, Industrial zone I. Liberec 67/670000 [email protected] Region includes five protected landscape Frýdlant v Čechách, Industrial zone II. Liberec 25/250000 [email protected] areas (České středohoří Highlands, Jizerské Hodkovice n. Mohelkou, Pod nádražím Liberec 2.4/24000 [email protected] hory and Lužické hory Mountains, and the Hodkovice n. Mohelkou, Za Horkou Liberec 12.3/123000 [email protected] Český ráj (Bohemian Paradise) and Kokořín Hrádek n. Nisou Liberec 25/250000 [email protected] areas), as well as 43 natural reserves and – Hrabačov Semily 9.9/99000 [email protected] 68 nature monuments, 7 and 8 of them respectively of the national level category. Jilemnice – Javorek Semily 6.5/65000 [email protected] There are two spa towns (Lázně Libverda, Jilemnice – Industrial zone Semily 7.4/74000 [email protected] Lázně Kundratice), which treat diseases of Liberec – Růžodol Liberec 65/650000 [email protected] the locomotive apparatus, heart, blood Mimoň, Industrial zone I. Česká Lípa 33.5/335000 [email protected] circulation, and rheumatism (www. Mimoň, Industrial zone II. Česká Lípa 21/210000 [email protected] laznelibverda.cz, www.laznekundratice. Nový Bor Za Crystalexem Česká Lípa 21/210000 [email protected] cz). Many visitors come to see the Okrouhlá Česká Lípa 26/260000 [email protected] Region’s sites of historical value, which include its castles and chateaux (Bezděz, Stráž pod Ralskem - Industrial zone Česká Lípa 29.2/292000 [email protected] Zákupy, Lemberk, Frýdlant, Sychrov, Hrubý Turnov – Vesecko Semily 5.4/54000 [email protected] Rohozec, Valdštejn). The country is Available in all vacant areas: electricity, sewerage, water, gas, communications

17 | REGION

The Liberec Region – An Attractive European Region

I believe the Liberec Region has proven in the right direction. At this point itself an able partner even before our (February 2007), the negotiations with admission to the EU. Not only because of the European Commission are beginng the utilisation of pre-accession funds, and our representation plays an but also because of its working cross- important part. We also use our border cooperation. Today it is presented representation to try to influence the as a dynamically developing region with future of cross-border cooperation a beautiful countryside and numerous programmes in favour of municipalities cultural landmarks. From a regional and other applicants. development viewpoint, there are many Our representation's list of important employment opportunities, industrial tasks also includes the monitoring of zones for new investors, and possibilities current "Brussels" appeals for the for research and development activities. disbursement of monies from the so It also offers a broad range of called community programmes educational possibilities – from grammar (managed directly by Brussels). In respect Due to its strategic location, schools to the Technical University of of the fact that there are over 300 the Liberec Region has always Liberec. With so many art schools, we regional representations in Brussels, our played an important role in hold a European, if not world, record. presence provides great opportunities for a European context. Important With the accession of the Czech the exchange of experience. We have, trading routes from the Republic to the European Union, a new for example, arranged cooperation with path has been opened for the Liberec Scottish schools. The Liberec Region has northern parts of Europe to Region leading to a united Europe. also become an active participant in the inland have led through this I would like to point out that we network of Innovating Regions in Europe region since ancient times. To presented our Region in Brussels as early (IRE) which yields valuable information the north, the Region borders as April 2004, so that we could for the creation of our own innovation Poland and the Federal Republic introduce it to EU representatives strategy. We are also active participants of Germany. Thanks to the (officials of the European Commission, in Open Days. In Brussels, we have close the European Parliament, and the ties to our partner regions of Saxony and Velvet Revolution of 1989, it Committee of Regions). A very important Lower Silesia with which we organise has been given an entirely new step was taken in September 2005, joint presentations. European dimension. With the when the Liberec Region decided to During the past few months, our return of democracy to the establish a representation in Brussels to Brussels representation has actively Czech lands, a whole new form be able to gather and utilise information participated in the preparations for the of cross-border cooperation directly at the centre of European affairs. Czech presidency of the European We thus became one of the first regions Council for the first half of 2009. We began to develop. It is not in the Czech Republic that realised the have already identified meetings of the a coincidence that the first need for active participation in Brussels Council, its committees, and working Euroregion was established in as an effort to best utilise European groups which we would like to take our Region, as the Nisa policies. The Region's representation place in the Liberec Region so that it can Euroregion, associating cooperates with other European regions present itself to member states even municipalities from the Czech to influence some of the EU's regional more comprehensively. policies to its advantage. Thanks in part to its representation, Republic, Poland, and Germany Attention is particularly paid to the Liberec Region is perceived as an dates back to 1991. preparation of EU regional policies for active European region which is open to There was thus cross-border the next seven-year financial term, cooperation. cooperation in our region long during which the Czech regions will be before the country joined the EU. entitled to the greatest amount of subsidies to date. I am very glad we have managed to see through the existence of decentralised regional operation programmes. In practice this means that the disbursement of funds from these programmes will be decided directly in the regions. I also consider the fact that these programmes will be administered in the regions and that we succeeded in Petr Skokan increasing programme allocations a step President of the Liberec Region

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Support for Company Cross-Border Cooperation

The Labe/Odra Chamber Union is A special task for the Chamber Union presentation in three languages served as a cross-border alliance of 29 is the improvement of infrastructure in a communication platform for all this cross-border area. For this participants. The programme was successful German, Czech, and Polish trade purpose, the Doprava (Transport) Work beyond expectations, as over 2000 and economy chambers; it will Group have elaborated a catalogue of companies participated in it, of which over celebrate six years of existence in demands, which now also plays a role in the 90 % were small or medium-sized negotiations with ministries. As its title entrepreneurs. We do not avoid other issues 2007. implies, its main focus is the Labe River as an such as the question of the free movement The main function of the important transportation route. of services and labour, which plays an Chamber Union is to represent The Labe/Odra Chamber Union naturally important role especially in European border the common economic interests supports the interests of entrepreneurs as regions. That is why Czech and Polish well, especially small and medium-sized chambers openly support our efforts for of companies from the Labe and businesses. In 2005, with the help of the a fast arrangement of this mobility. For their Odra regions. PRINCE programme, it realised the European cross-border cooperation, companies in our Chambers Campaigning Europe region need clear perspectives and certainty (ECCE@KEO) informational project, which for planning ahead. was aimed at businesses in the three countries and supported their cross-border Jaroslav Kopta activities. During the project, there was President of the Labe/Odra Chamber Union direct contact with over 600 000 companies located as far and wide as Prague, Hamburg, www.uniekomor.cz Poznan, and Magdeburg. An internet www.khkliberec.cz

Cluster Initiatives in the Liberec Region

The Cluster Programme, Besides, there are successful development entering foreign markets is easier, cheaper, announced as a part of the and innovation workplaces in the Czech and ultimately more successful with a strong Republic which can offer new ideas and group than for an individual small and Industry and Business Operational which have experience with integrating into medium-sized companies. This fact is closely Programme for the years 2004- European programmes and grants (for related to CGC’s membership in the Czech- 2006, have started to prepare and example the Textile Faculty at the Technical Arabic Chamber of Commerce, whose aim is University of Liberec). That is the reason why the support and development of business realise an enquiry regarding in 2006 a cooperation group was founded. relations between the Czech Republic and companies’ readiness to meet Clutex – a cluster of technical textiles, is an Arabic countries, while creating a basis for their potential in areas which association of 17 founding companies who new business opportunities. Negotiations in would help them retain their have decided on cooperation in four main Liberec with the organisers of the World areas: marketing and promotion, education Nordic Skiing Championship in 2009 have identity, while sharing some of – developement of human resources, been established regarding the their activities with others. development and innovation, and cluster’s participation in the design and information support of the cluster activities. awarding of prizes at the organised events. CLUSTER OF TECHNICAL One of the cluster’s other aims is to TEXTILES GLASS CLUSTER participate in scientific research activities, The choice of the field of technical The members of CGC – Czech Glass Cluster both in the effective use of energy in glass have decided to preserve the Czech glass production, design or other fields of which textiles as a main focus seemed tradition. This cooperative of seven there are many in the glass industry. An obvious even on the basis of members started its activities in October innovative approach is the most important objective future prognosis. 2006 in cooperation with the Technical weapon against the ever growing University of Liberec, University of J.E. competition of cheap products, especially Production and consumption of Purkyně in Ústí nad Labem, and many from Asia. technical textiles not only in the secondary schools of applied arts. The world, but also in the Czech priority activities of the cluster include the Republic, is constantly growing presentation of products of CGC members at world fairs and other marketing support and it will continue to grow by also organised in the Liberec Region. The More at: approximately 5 % per year. members of the cluster are convinced that www.clutex.cz, www.glasscluster.cz

19 | REGION

World Manufacturer of Production Technology to Invest in Liberec Industrial Zone

The Germany-based TRUMPF "We chose the Czech Republic, or more umbrella of the controlling company: Group, Europe's largest machine precisely the town of Liberec, primarily Machine Tools, Laser Technology, because of its outstanding infrastructure. Electronics and Medical Technology, and tools manufacturer and a leading It is located near our Saxon production Power Tools. The core of its business lies in world producer of industrial plant in Neukirch, where machine tool flexible sheet metal processing for lasers, is to invest CZK 446 automation systems are manufactured. punching and forming, laser processing, The Liberec plant will supply Neukirch. and bending. The company is a leader in million (approx. EUR 14 million) Besides, the proximity of the Technical the field of industrial lasers and laser and create about 80 new jobs in University of Liberec also offers systems. With 45 subsidiaries and branch the process. The company is advantages when it comes to hiring offices, the Group is represented in almost going to set up production in the qualified employees in the future," says every European country, in North and Ingo Schnaitmann, Trumpf’s Press and South America, as well as in Asia. Czech Republic within two years Public Relations Director, adding: "The Production locations can be found in and is building a new factory in Czech Republic is a traditionally Germany, France, Austria, Switzerland, Doubí u Liberce. TRUMPF Group important market for the TRUMPF Group China, Taiwan, and the USA. intends to manufacture a new – a fact supported by the 15-year history of our Prague subsidiary." product line, which will complete With sales totaling 1.4 billion EUR for the company’s product portfolio the fiscal year of 2004/05 and more than 6 of machine tool automation 500 employees, the TRUMPF Group ranks among the leading manufacturing components. companies worldwide. The following four business divisions are combined under the More at: www.trumpf.com

University’s Significance Exceeds Both the Regional and National Borders

The Technical University of There are well equipped laboratories as well their utmost in offering jobs to TUL Liberec (TUL) is a medium-sized as high-quality teams of scientists working in graduates. Most graduates can choose humanities. The significance of TUL exceeds from several job offers with the dynamic university combining not only the Liberec Region, but the Czech technical education with a form Republic, too. It has been actively of university education. Its six participating in the joint European Educational Area and the European faculties (Mechanical Scientific Innovation Area. Engineering, Textile Engineering, Economics, Education, COOPERATION WITH CZECH Architecture and Mechatronics, AND FOREIGN COMPANIES The University provides accredited and Interdisciplinary Studies) bachelor, master, and post-graduate study and its Institute of Medical programmes. Study programmes are to an Studies provide their students extent prepared in cooperation with with a wide spectrum of technical and economic practice and on the basis of the needs in the field of education in exact scientific science and research. That is one of the disciplines as well as in reasons why the number of applicants who humanities. want to study at the Technical University of Liberec is always growing. TUL utilises its knowledge of the needs of the Czech Republic as well as the border regions. In cooperation with companies, scientists and students deal with specific scientific assignments. Companies assign the theme The discovery of the technology of nanotextile in- of diploma theses, offer scholarships, while dustrial production, which is unique worldwide, ranks Czech and foreign companies literally do among the greatest successes

| 20 CZECH BUSINESS AND TRADE

opportunity of further professional Research of the Ministry of Education, the Czech Academy of Science as well as growth. Youth, and Sports. It is currently realising with prestigious universities and scientific the Advanced Remedial Technologies institutions around the world, where WORLD PRIMACY Scientific Centre and the Textile II Research students are also members of scientific The Technical University of Liberec has Centre. Scientists from Liberec University teams. Students can also spend a part of significant results in the field of science are also members of teams in other their studies abroad. and research. One of its greatest research centres through other institutions. achievements is certainly the unique In 2006, the sixth European Nanodiam discovery of the technology for industrial centre was opened at TUL as a part of the production of nanotextiles. TUL has also Excellence Centre. It works in the field of been successful in the field of Scientific nanomaterials, mainly the application of More information: www.tul.cz Centres in the National Programme for thin carbon layers. TUL cooperates with

The Long Tradition of Sklostroj Turnov CZ

Sklostroj Turnov CZ is an The sophisticated and engineering company, reliable products bear witness to the success- specialising primarily ful work of 300 in glassworks, glass lines, employees. Moreover, machines, glass moulds, and the the ingenuity of technology for the production 40 designers (CAD/ CAM Unigraphic) gua- of container glass. rantees a unique Having been established in 1950, technical solution and it has a long tradition in its field unique features of of production. A new phase of its every product. history began in 1994, when the NEW ownership of the company was MARKETING transferred to the present STRATEGY The marketing strategy owners and it is necessary of Sklostroj changed to mention that the company is 12 years ago, when its 100 % Czech owned. The current main goal became not management system is certified just to produce and sell machinery, which is the according to the ISO 9001-2000 heart of the container standard, whereby the quality glass production, but of production and of customer also to provide Glass line produced by the company Sklostroj Turnov CZ services is assured. complete services in connection with the construction or modernisation of to many countries of the world, for glassworks for container glass, including example to Russia, the Ukraine, Germany, all the necessary or supplementary China, Poland, Italy, and the USA and equipment, staff training, repairs, technical other countries. assistance, complete factory construction and of course, the taking over of the responsibility for all these activities. The company’s turnover in 2006 was over EUR 75 million, which confirmed the growing tendency of recent years. 95 % of More information: www.sklostroj.cz Sklostroj’s turnover comes from its export

21 | REGION

Liberec District Liberec

The Liberec District is one of the most BRIEF STATISTICS Městský úřad Liberec northern districts in the Czech Republic. Its Indicator District Region territory has a considerably broken (Liberec Municipal Office) Area (sq. km) 925 3 163 Nám. Dr. E. Beneše 1 morphology – the central part is made up Population 160 790 430 285 460 59 Liberec 1 of the Jizerské hory Mountains, which is Czech Republic a protected landscape area of 355 sq. km. Inhabitants / sq. km 174 136 Phone: +420 485 243 111 It includes some unique preserved Source: Czech Statistical Office (as of 3rd quarter of 2006) Fax: +420 485 243 113 ecosystems that form independent natural e-mail: [email protected] preserves (www.jizerky.cz). In the west www.liberec.cz there are the Lužické hory Mountains (www.luzicke-hory.cz) with their dominant peak at Ještěd (1012 m), which is of Liberec (www.liberec.cz) lies in a fold connected with the city of Liberec by between the Jizerské hory Mountains and a cableway. In the District's northern area, the Ještědský hřeben Ridge. It is the there is the Frýdlantská pahorkatina Hills, region's economic, educational, and whereas the south belongs to the cultural centre. Its position is strengthened Českodubská pahorkatina Hills. The town by the nearby town of Jablonec nad Nisou.

SELECTED FIRMS Name Based in Sector Contact HPQ-Plast, s.r.o. Český Dub plastics processing www.hpqplast.cz Lites, a.s. Liberec electrical industry www.lites.cz Ferex ŽSO, s.r.o. Liberec metallurgy www.ferex-zso.cz Syner, s.r.o. Liberec building industry www.syner.cz Vulkan, a.s. Hrádek rubber industry www.vulkan.cz nad Nisou CZ Sklopan Liberec, a.s. Liberec engineering www.sklopan.cz Bohemia Crystalex Trading, a.s. Liberec glass industry www.bct.cz Intex, a.s. Liberec carpet manufacture www.intex.cz Interlana, s.r.o. Liberec textile industry www.interlana.cz Lenam, s.r.o. Liberec development laboratory www.lenam.cz for automotive industry MSV Systems, s.r.o. Liberec mechanical constructions www.msv-systems.cz Omar AS, s.r.o. Liberec machines for textile industry www.omar.cz Liberec – Town Hall building

FOREIGN INVESTORS Investor Country of origin Czech partner Sector Contact Denso Corporation Japan Denso Manufacturing Czech, s.r.o. automotive industry www.denso.cz Tarmac International Holding United Kingdom Tarmac Severokámen, a.s. stone production and www.tarmac.cz processing Knorr-Bremse Germany Knorr Autobrzdy, s.r.o. automotive parts www.knorr-bremse.cz Meritor LVS USA Arvin Meritor LVS Liberec, a. s. automotive industry www.arvinmeritor.com Benteler Automotive International GmbH Germany Benteler ČR, k.s. automotive industry www.benteler.cz CiS Electronic GmbH Germany CiS Systems, s.r.o. electrical and electronic www.cis-electronic.de components Damino Gmbh Germany Damino CZ, s.r.o. textile industry www.damino.de Grupo Antolin Spain Grupo Antolin Bohemia, a.s. automotive industry www.grupoantolin.es Steinel Elektronik GmbH & Co. KG Germany Steinel Elektronik, k.s. electronics www.steinel.cz F.S.Fehrer International Germany Fehrer Bohemia, s.r.o. automotive industry www.fehrer.de Holding, GmbH Shimizu Industry Co.,Ltd. Japan Liplastec, s.r.o. plastics processing www.liplastec.com TRW Automotive USA Lucas Varity, s.r.o. automotive parts www.lucas.cz Laird Technologies United Kingdom Laird Technologies, s.r.o. electronics www.lairdtech.com Trumf Group Germany Trumf Liberec, s.r.o. engineering www.trumpf.com

| 22 CZECH BUSINESS AND TRADE

automotive industry, and the production and processing of plastics are among the most important industries. The importance of the textile industry is gradually declining. Besides industry, there are other notable sectors, such as building, transportation, and communication, and the tertiary sector. A significant number of companies have some foreign capital. Thanks to its geographical location, the Liberec District is suitable for year-round recreational activities.

Informační centrum (Information centre) Nám. Dr. E. Beneše 1 460 59 Liberec 1 View of Ještěd Hill Czech Republic Phone: + 420 485 101 709 Together they form an agglomeration with etc. The Liberec District is, by character, an Fax: + 420 485 243 589 approx. 150 000 citizens, sharing the industrial district. Machine building, metal e-mail: [email protected] economy, human resources, civil amenities, working, production of parts for the www.infolbc.cz

23 | REGION

Liberec: The Dynamically Developing Town Below Ještěd

The regional capital of Liberec Another large project is just is experiencing a large-scale getting underway - "FORUM Liberec" - building boom – especially in the a business and social area of business and service complex of 39 000 sq. development. It is also targeted m for shopping malls, administrative and for many development plans. residential areas, 120 The sole focus of the business units, areas for construction companies does not entertainment, sport, just lie on the outer parts of the relaxation, restaurants, and 850 parking places. The town. They are also interested in site of the demolished the centre, where new structures Textilana textile factory is have recently risen, or are home to a project worth Several multifunction centres will be constructed in the central part of the planned. DELTA, a multi- more than CZK two billion town (approx. EUR 67 million); the so-called INVESTMENT INTO SPORTS functional centre by Amadeus Promenade – a shopping and In view of the fact that Liberec is going to Real, has been built in the entertainment centre. There is a new be hosting the World Nordic Ski central part of the town. It has development in the business-industrial Championships in 2009, there are zone next to the airport in the borough of intensive works going on to prepare two 5 450 sq. m for new business Růžodol – a Globus hypermarket (10 000 venues for this championship: a ski areas and 750 sq. m of office sq. m), shopping alley, and a mall with jumping complex at Ještěd and a cross space. more than 50 stores. It is due to open country complex at Vesec. In 2011, Liberec during the autumn of 2007. NISA Liberec, will also play the host to participants of the with 4 million customers per year the most eighth winter European Youth Olympic visited and most popular shopping centre Festival. The Ještěd Sports Centre has been in the region of Liberec, is undergoing an rented to Snowhill s. r. o., which has extensive reconstruction of its interiors and invested into new ski-lifts, chair-lifts, and exteriors with plans for a significant snow-making systems. These massive enlargement. Upon completion in 2008, changes saw it become one of the best the shopping centre should offer twice the equipped skiing centres in the Czech capacity, including an 8-screen cinema. Republic. There really is a great amount of There are plans for a shopping and investment going into sports in Liberec. entertainment multi-functional complex The swimming pool at Tržní náměstí has PLAZA in the central part of the town, in been given a 150 m stainless spiral chute in Šaldovo Square. 2006 – one of the longest in Europe. The largest turf field in Liberec and the region of Liberec is being built next to the new Tipsport Arena. Thanks to its size, it will even allow for staging of American football matches.

INDUSTRIAL TRADITION Liberec is, however, also a town that develops its industrial traditions. A second industrial zone is being built. It will be connected to a four-lane road from Liberec to Prague, with plans for a connection to the German border. The Technical University of Liberec has also seen a great deal of new development. Applicants are offered new fields of study and classrooms and laboratories with top equipment.

Jiří Kittner Liberec will be the venue of the 2009 Cross-country Skiing World Championships Mayor of Liberec Photo: Regional Office

| 24 REGION

Česká Lípa District âeská Lípa

the most visitors, and the well-known BRIEF STATISTICS Městský úřad Česká Lípa chateaux are Lemberk, Zákupy, and Indicator District Region Houska. Sloup – the biggest rock castle in (Česká Lípa Municipal Office) Area (in sq. km) 1 137 3 163 Nám. T.G. Masaryka 1 Bohemia – was cut into the sandstone Population 106 266 430 285 470 36 Česká Lípa massif of a table mountain (www. Czech Republic zamky-hrady.cz). The history of glass Inhabitants/sq. km 93 136 Phone: +420 487 881 111 making is presented by the glass museums Source: Czech Statistical Office (as of 3rd quarter of 2006) Rax: +420 487 521 829 in Nový Bor and Kamenický Šenov (www. e-mail:[email protected] novy-bor.cz/sklarske_muzeum/). the Mácha Lake area, but cycle tourism www.mucl.cz Summer recreation in the District is and horse riding have developed as well connected with water-related activities in (www.machovojezero.cz).

The Česká Lípa District, with an area of 1137 sq. km, is one of the largest in the Liberec Region. It has 57 municipalities, 10 of them with the status of a town. The District’s biggest and most important centre, the town of Česká Lípa (www.mucl.cz), has 40 186 inhabitants. In terms of age composition of the population, the District is one of the youngest in the Czech Republic, with an average age of about 37 years. It can be characterised as an industrial and agricultural district. Agricultural production is operated by privately owned farms. The Česká Lípa District has a tradition of widely spread industry, employing almost 43 % of the economically active population. The most important industrial Summer recreation activities are connected with the environs of Mácha Lake branches in the area are glass manufacture and newly developing productions of car parts and accessories. Glassmaking, with SELECTED FIRMS some unique technologies in the District, Name Based in Sector Contact has a tradition of many years and is Polydekor, s.r.o. Česká Lípa textile industry www.polydekor.cz concentrated especially in Nový Bor and Crystalex, a.s. Nový Bor glass www.crystalex.cz Kamenický Šenov (www.novy-bor.cz, Diamo, s.p. Stráž pod uranium mining, chemicals www.diamo.cz www.kamenicky-senov.cz). The raw Ralskem materials produced in the area are sands Sauer Gruppe, a.s. Žandov compressors www.sauerzandov.cz and aggregates. Mitop, a.s. Mimoň textile industry www.mitop.cz The Česká Lípa District is a popular Slévárna hliníku, s.r.o. Nový Bor aluminium alloys www.slevarnahliniku.cz recreational area. Bezděz Castle ranks Egermann, s.r.o. Nový Bor glass www.egermann.cz among its historical monuments attracting Falcon Mimoň, a.s. Mimoň furniture production www.falconmimon.cz Slévárna Žandov gray iron castings www.slevarnasz.cz SZ Žandov, s.r.o. Městské informační centrum MEGA, a.s. Stráž pod membrane technologies www.mega.cz (Municipal Information Centre) Nám. T.G.Masaryka l Ralskem 470 36 Česká Lípa Provimi Pet Food phone: + 420 487 881 106 CZ, s.r.o. Česká Lípa feeds www.propesko.cz e-mail: [email protected] Fol-Obal, s.r.o. Vrchlabí packaging foils www.folobal.cz

FOREIGN INVESTORS Investor Country of origin Czech partner Sector Contact Johnson Controls Int. B. V. USA, Netherlands Johnson Controls Czech, s.r.o. automotive industry www.johnsoncontrols.com Varta Automotive AG USA Autobaterie, s.r.o. automotive industry www.varta.cz Festo Tooltechnic GmbH Germany Narex Česká Lípa, a.s. engineering tools www.narex.cz F.S.Fehrer International Germany Fehrer Bohemia, s.r.o. automotive industry www.fehrer.com holding, GmbH Delphi Automotive Systems USA Delphi Packard automotive industry www.delphipackard.com Electric CR, s.r.o.

| 26 REGION

Jablonec Jablonec nad Nisou District n. Nisou

mestojablonec.cz), Železný Brod BRIEF STATISTICS Městský úřad Jablonec nad Nisou (www.zeleznybrod.cz), and Tanvald Indicator District Region (www.tanvald.cz). There are 34 (Jablonec nad Nisou Municipal Office) Area (in sq. km) 402 3 163 Mírové nám. 19 communities, 8 of which are towns. Over Population 88 639 430 285 467 51 Jablonec nad Nisou 80 % of the District's population live in the Czech Republic towns. Inhabitants/sq. km 220 136 Phone: +420 483 357 111 The Region is noted for the high level of Source: Czech Statistical Office (as of 3rd quarter of 2006) Fax: +420 483 357 353 economic activity of its citizens, which e-mail: [email protected] stems from the traditionally high the Jizerské hory Mountains, which offer www.mestojablonec.cz employment rates of women in the glass some good skiing grounds during the and imitation jewellery industries. Machine winter season. building, electrical engineering, and The Jablonec nad Nisou District is a border processing rank among the District's most district – one whose northern border important industries. There are many Informační centrum (Information centre) doubles as the state border with Poland. suppliers for the automobile industry as Mírové nám. 19, 467 51 Jablonec nad Nisou Jablonec nad Nisou is, with its 402 sq. km, well. There is not much agriculture. Due to Czech Republic one of the smallest districts in the Czech the broken terrain, there are no large Phone: + 420 483 357 335-7 Republic. It, however, has a high industrial zones. Fax: + 420 483 311 370 population density of 220 persons per sq. The District is an attractive tourism area e-mail: [email protected] km. The main settlements include the and ranks among the leading districts with www.mestojablonec.cz/cs/turisticke-informace /informacni-centrum.html towns of Jablonec nad Nisou, (www. high numbers of foreign visitors. There are

SELECTED FIRMS Name Based in Sector Contact Liglass, a.s. Železný Brod crystal lights www.liglass.cz Desko, a.s. Desná v Jizerských horách glass moulds www.desko.cz Jablonex Group, a.s. Jablonec nad Nisou imitation jewellery manufacture www.jablonexgroup.com BTV plast, s.r.o. Jablonec nad Nisou plastic processing www.btvplast.cz Detoa, s.r.o. Albrechtice v Jizerských Horách toys, gems www.detoa.cz Preciosa, a.s. Jablonec nad Nisou glass www.preciosa.com Legnex, s.r.o. Jablonec nad Nisou band saws www.legnex.cz Unitherm, s.r.o. Jablonec nad Nisou automobile components www.unitherm.cz Ornex, s.r.o. Jablonec nad Nisou Christmas decorations www.ornex.cz Jablotron, s.r.o. Jablonec nad Nisou security systems www.jablotron.cz

FOREIGN INVESTORS Investor Country of origin Czech partner Sector Contact TRW France Holding France Lucas Autobrzdy, s.r.o. automobile components www.lucas.cz Hans Riegelein . Germany Riegelein, k.s. food processing www.riegelein.de Schurter Holding AG Switzerland Schurter, s.r.o. electrical engineering www.schurter.cz Valeo Electronique et Systémes de Liaison France Sylea Tchéquia, s.r.o. automobile cables www.valeo.fr TI Group Automotive Systems Belgium TI Automotive AC, s.r.o. automobile industry www.tiauto.com

Semily District

Semily

The Semily District is in the south-east part BRIEF STATISTICS Městský úřad Semily of the Liberec Region. The Krkonoše Indicator District Region Mountains dominate the northern part of (Semily Municipal Office) Area (sq. km) 699 3 163 Husova 82 the District's rugged topography. The Population 74 590 430 285 513 01 Semily District is one of the lesser populated areas. Czech Republic The towns are mostly smaller and the Inhabitants/sq. km 107 130 Phone: +420 481 629 211 population density is low. There are 65 Source: Czech Statistical Office (as of 3rd quarter of 2006) Fax: +420 481 622 534 communities, 9 of which are towns. The e-mail: [email protected] most populous towns are Turnov respectively. 60 % of the District's popu- www.semily.cz (www.turnov.cz) and Semily (www. lation live in towns. semily.cz) with 14 680 and 9 360 citizens The traditionally strong textile industry

| 28 CZECH BUSINESS AND TRADE

SELECTED FIRMS our country. It was established in 1955. Name Based in Sector Contact Trosky (www. trosky.cz), a medieval castle, Granát Turnov, d.u.v. Turnov Jewelry manufacture www.granat.cz and Kozákov, a legendary hilltop with a field Eprona, a.s. Rokytnice nad Battery chargers www.eprona.cz of precious gems, are of great significance. Jizerou Rock climbers are frequent visitors to the AXL, a. s. Semily Engineering www.axl.cz sandstone rocks – another typical feature of Sklostroj Turnov CZ, s.r.o. Turnov Engineering www.sklostroj.cz Český ráj. Bozkovské jeskyně ( caves) Hybler Textil, s.r.o. Semily Textile industry www.hybler.cz (www.caves.cz) are a world unique natural Šroubárna Turnov, a.s. Turnov Engineering accessories www.sroubtu.cz monument. The District's natural conditions Nástrojárna Semily, s.r.o. Semily Hydraulics www.axl.cz/nastrojarna/ allow for the practice of new tourist trade Dioptra, a.s., Turnov Turnov Optics www.dioptra.cz entrepreneur activities. VyvaPlast, s.r.o. Semily Industrial packaging www.vyvaplast.cz Informační centrum has registered a significant decline. The tourists. The mountainous area of the (Information Centre) processing industries of an engineering Krkonoše is known for its skiing centres: Riegrovo nám. 68, 513 01 Semily character are now the predominant fields. Harrachov, , , Czech Republic An important spot is occupied by glass and Vysoké nad Jizerou (www.hory- Phone: + 420 481 624 721 food processing companies. krkonose.cz). Český ráj (Czech Paradise) Fax: + 420 481 624 721 e-mail: [email protected] The entire District is very attractive for was the first protected landscape area in

FOREIGN INVESTORS Investor Country of origin Czech partner Sector Contact Devro Group United Kingdom Cutisin, a.s. food packaging www.cutisin.cz Mehler Haku GmbH Germany Technolen technický textil, a.s. textile industry www.technolen.cz Ontex N. V. Belgium Ontex CZ, s.r.o. hygienic equipment www.ontex.cz Schnitzler und Vogel GmbH Germany Glanztex, s.r.o., textile machines www.glanztex.cz Linz Textil Holding Austria R T K, tkalcovna, s.r.o. textile industry www.linz-textil.at Aktiengesellschaft

29 | INVESTMENT

2006: Largest Foreign Investment in the Czech Republic

In 2006, the CzechInvest VERY MANY PROJECTS those hit by the most serious structural Agency mediated a total of 176 WITH VALUE ADDED problems. "One half of the ten largest "Investment exceeding USD 4.6 billion is projects on which we worked last years investment projects for USD 4.6 an absolute record. Just imagine – the sum were expansions. This shows that investors billion (CZK 114 billion) in the of money involved in all projects mediated are doing well in the Czech Republic, that Czech Republic. The number of in 2004 and 2005 is still less than the they want to develop their activities and projects and the volume of 2006 amount", Tomáš Hruda specified. certainly do not intend to leave the Czech "Many of the new projects have a high Republic", explains René Samek, Director investment in 2006 were the value added. In 2006, we had a total of 44 of the Division of Support to Investment highest in the Agency’s history. projects for technology centres and shared and Applied Research. "We are also Compared with 2005, the services centres – this, too, is the highest mediating orders for Czech firms. In 2006, number in the Agency’s history. In the companies in the Czech Republic increase was 25 companies and coming years, CzechInvest will focus even concluded with our assistance contracts on USD 2.5 billion. These projects more intensively on sophisticated deliveries for almost CZK 2 billion." should create at least 34 824 investment with a high value added. These jobs in the next few years. projects belong to the most attractive ones, as they bring technological know- Tomáš Hruda, CzechInvest how, draw experts, and give the Czech General Manager, has said that Republic a good name abroad." "Foreign investors seek in the Most projects and the highest Czech Republic highly qualified investment – USD 2.2 billion went to the Jana Strejčková Moravia-Silesia Region, and the second CzechInvest labour, advantageous largest amount – USD 0.6 billion – to the (e-mail: jana [email protected]) geographical situation, or Ústí Region. These two areas rank among www.czechinvest.org reasonable running costs. But those who profit from these advantages in the first place are domestic companies, which are gradually becoming LARGEST INVESTMENT PROJECTS IN 2006 – MANUFACTURE Investor Sector Country of Investment Jobs Region important players on the global origin (mil. USD) market." Hyundai Motor automobile South Korea 1222 3 000 Moravia-Silesia Company IPS Alpha electronic equipment Japan 120 2100 Ústí nad Labem Technology AGC (Glaverbel) glass Japan 115 71 Ústí nad Labem Automotive components for the Germany 106 632 Vysočina Lighting Reutlingen automobile industry Hitachi electronic equipment Japan 102 2000 Ústí nad Labem

LARGEST INVESTMENT PROJECTS IN 2006 – SHARED SERVICES AND TECHNOLOGY CENTRES Investor Sector Country of Investment Jobs Region origin (mil. USD) CCG aircraft repair centre Czech Republic 43 244 Moravia-Silesia SWELL other Czech Republic 10 52 Hradec Králové Stora Enso Timber IT, software Austria 9 63 Moravia-Silesia Emerson Copeland electronic equipment USA 6.5 48 South Moravia Alois Pottinger engineering Austria 5.75 43 Plzeň Maschinenfabrik equipment Gesellschaft

CzechInvest, the Investment and Business Development Agency, was established in 1992, and since then has participated in 771 investment projects worth a total of USD 18 556 billion. These project provided 153 871 jobs directly and thousands of others in connection with them.

| 30 SERVICES

Focus on the Environment in the Czech Republic

The Czech Republic’s core ENVIRONMENTAL have been delegated to selected environmental strategy is laid ASPECTS OF THE CR’S municipalities. MEMBERSHIP OF THE EU down in the State Environmental All Czech environmental legislation is fully RECOMMENDATIONS FOR Policy of the CR 2004–2010. compatible with that of the EU, and its NEW INVESTORS This document reflects the future development will follow in full Experience has shown that special objectives and priorities set by compliance with new EU regulations now attention must be paid to the choice of in the pipeline. In general, foreign locality. In 2002, certain parts of the CR the Sixth EU Environment Action investors can expect to find a legislative were labelled as areas with low air quality. Programme (Environment 2010: environment in the CR similar to that of In these cases local authorities are Our Future, Our Choice) and old EU member states. Some provisions of expected to apply stricter measures when Czech law, such as environmental impact issuing permits, especially if dust or defines four priority areas: assessment, in fact go beyond EU nitrogen oxide emitting technology is protection of nature, the requirements. In the 2007 to 2013 period, involved. Furthermore, at the end of 2004, countryside and biological a massive influx of funds from EU support certain localities were proclaimed as diversity, sustainable exploitation funds is anticipated. Drawing from these localities included in the NATURA 2000 funds will be largely regulated by the European nature protection network. In of natural resources, material Environment Operational Programme, such localities, investment activities will be flows and waste disposal, which reckons with almost EUR 5 billion, practically ruled out. A list of areas to the environment and quality approximately 40 % of which will be spent which stricter protection measures apply of life, and protection of the on water protection, about 25 % on is available at the Ministry of the protection of the climate and atmosphere Environment or at the regional offices Earth’s climatic system and and some 15 % on waste disposal. Further concerned (environment departments). limitation of the long-distance financial resources for environmental Environment impact assessment (EIA) in transfer of air pollution. Priority protection will be made available from the Czech Republic is a relatively other operational programmes (industry, complicated process and it is strongly targets are defined for each transport, and regional operational recommended not to underestimate it. of the priority areas, and partial programmes). Only recently, certain investment projects objectives and measures are were rejected due to incomplete or lacking outlined for each priority target. ENVIRONMENTAL PERMITS environment impact assessment Most permits are issued by the CR’s 13 documentation. Communication with the The priority of the new Czech regional offices (usually the environment local public concerned should be initiated Government formed after the and agriculture departments) and in at the very beginning of each investment 2006 elections is the protection Prague by the Prague City Council project, to spare investors problems at of the climate and the (Environment Department). Certain powers a later stage. atmosphere through energy saving and the use of renewable sources (including bio-fuels) as well as through stricter regulation of transport. As in the past, substantial attention will be paid to the prevention of water pollution (completion of sewage water systems and treatment plants) and the protection of nature and the countryside (especially flood prevention measures).

The environment in the CR has become largely stabilised in the past six years

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STATE OF THE Environment. The information at hand high greenhouse gas unit emissions, high ENVIRONMENT IN THE CZECH reveals that following a strong noise pollution, lacking landscape REPUBLIC IN 1990-2006 improvement between 1990 and 2000, the infrastructure, the unsatisfactory condition Detailed information on the development environment in the CR has become largely of forests and certain aspects of waste and state of the environment in the CR is stabilised in the past six years. The most disposal. contained in environment reports and acute problems include the overall "The Environment" statistical yearbooks pollution of the environment with dust Vladislav Bízek available in Czech and English on the particles, polycyclic aromatic DHV CR spol. s r.o., website of the Ministry of the carbohydrates and tropospheric ozone, Member of DHV Group

FURTHER INFORMATION MAY BE OBTAINED AT: Ministry of the Environment of the Czech Republic CENIA, Czech Environmental Information Agency (formerly www.env.cz the Czech Environmental Institute) (environmental policy, environmental protection legislation, www.cenia.cz detailed information on the current state of the environment, (information on integrated pollution prevention and control information on EU support funds) – IPPC, EMAS) The State Environmental Fund of the CR Ministry of Industry and Trade of the CR www.sfzp.cz www.mpo.cz (information on means of financial support available from (industrial policy, energy policy, EU support funds) domestic resources and EU funds) Czech Hydrometeorological Institute www.ippc.cz www.chmi.cz (website on integrated pollution prevention (information on atmospheric conditions in the CR) and control – IPPC) T.G. Masaryk Water Research Institute Ministry for Regional Development of the CR www.vuv.cz www.mmr.cz (information on water and waste) (regional policy, information on EU support funds)

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