H1 2009: Every third investment focused on IT

• With CzechInvest’s assistance, 140 new investment projects were initiated in first half of 2009, 16 more than in the same period last year
• Over 85% of new investments in the first half of 2009 involved services or research and development
• One-third of investors are focused on software development, 19% on mechanical engineering and 9% on electronics
• A total of 2,916 jobs will be created, one-third of which will be filled by university graduates
• The value of new investments exceeds CZK 10.5 billion

Thanks to CzechInvest, in the first half of the year the Czech Republic gained 140 new investment projects – 16 more than in the same period last year. Software-development firms led the way, as projects focused on information technologies accounted for one-third of all new investments, i.e. 45 projects. In total, 2,916 new jobs will thus be created in the Czech Republic, one third of which will be filled by university graduates. The value of these investments is in excess of CZK 10.5 billion. This is according to statistics on the inflow of investment projects for the first half of the year recently published by CzechInvest.

“Particularly in this period of economic downturn, the direct support that we can offer investors is very important. In comparison with older member countries of the European Union, for example, we have a big advantage in that we can support, also from EU structural funds, modern and prospective sectors. Specifically, the Operational Programme Enterprise and Innovation, for which CzechInvest is responsible, contains programmes that are tailored to meet the needs of researchers, developers, designers and other such specialists. Our focus on these fields is paying off for us,” says Alexandra Rudyšarová, acting CEO of CzechInvest.

“Services along with research and development have surpassed manufacturing investments for the first time, which marks a growing trend that emerged last year,” explains Rudyšarová. “The Czech Republic offers a high quality of life for top experts, and we have high-quality, reliable infrastructure that we can be proud of. Both of these factors are absolutely vital for investors in services, and the Czech Republic makes excellent use of them.”

Most researchers active in the automotive industry

After information technologies, the second most prominent sector is mechanical engineering with 27 projects, followed by electronics and electrical engineering with 13 investments. Investors in the automotive industry prepared only six new investments in the first half of the year and thus that industry fell to sixth place in the ranking of sectors. In spite of this, the greatest number of new jobs is being created in the automotive industry. Newly opened business support services centres are close behind in second place in terms of the number of newly hired workers.

However, the greatest number of jobs being created in the automotive industry is in the area of research and development. In the first half of this year, the Czech Republic gained four new development centres, which announced plans to employ three hundred specialists. “Now investments in research and development are naturally building on the success of previous big manufacturing projects in the automotive industry, which CzechInvest often attracted to the Czech Republic. These most frequently arise as expansions of existing manufacturing plants or as separate enterprises that begin as suppliers for particular manufacturers,” explains Rudyšarová.

“EU aid programmes are vital particularly for research and development and for business support services,” Rudyšarová emphasises. “The possibility to obtain aid from these programmes for investors in services opened fully in 2008 and our statistics have shown immediate and dramatic growth in investments in these sectors. Sixty-two companies are receiving aid from the Potential Programme, part of the Operational Programme Enterprise and Innovation, while 51 firms are taking advantage of the ICT and Business Support Services Programme.”

The Potential Programme provides support for investments in applied research, whereas the ICT and Business Support Services Programme is focused on expert solution centres, high-tech maintenance centres and business support service such as software development.

Central Bohemia returns to the forefront

The greatest number of new investment projects announced in the first half of this year will be implemented in Central Bohemia. After a long time the region, with 17% of all new investments, is thus returning to the peak of popularity among the country’s individual regions. Second and third place belong to the champions of recent years – South Moravia with a 14% share of the overall number of new investments and Moravia-Silesia with 12%.

Comparison: H1 2009 and H1 2008

In the first half of 2008 CzechInvest assisted with bringing 124 investments to the Czech Republic in the total value of CZK 19.7 billion. By comparison, in the same period this year the agency brought in 12% more projects, though the investment volume declined by 45%. “This is definitely due to the current economic downturn; thought the declining absolute volume of investments is a long-term trend. In the composition of investments, there is an ever growing share of services, which reached 85% this year. When starting operations, services require significantly less money than do industrial enterprises,” adds Rudyšarová.

“Another reason for the long-term decline in the volume of investments is the fact that investors are more often choosing to rent buildings, rather than building their own production facilities,” Rudyšarová continues. “In the first half of this year, interest in rental properties exceeded demand for prepared land plots in industrial zones for the first time; six out of ten new investors are seeking rental facilities and one-third of them want their own property including land and structures.”

 Resurgence at the end of the year

“In the second half of the year we expect to see slightly resurgent interest in investing in the Czech Republic also from companies investing in the manufacturing industry. Besides the fact that the economies of the Czech Republic’s most  important trading partners are very slowly starting to show signs that the downturn is at least easing somewhat, in recent months two more prospective parties interested in doing business in the Czech Republic have turned to CzechInvest than at the beginning of the year,” says Rudyšarová.

“Because of the economic recession, in the coming months the direction of new investors will change for some time,” Rudyšarová predicts. “Regions such as Plzen and Central Bohemia will return to the forefront for a while, as these areas have been experiencing rising unemployment in the past several months. Even though they have outstanding infrastructure, new investors were dissuaded from investing there by the difficulty of finding new employees.”

This is confirmed by the statistic on demand for business properties, which shows a two-fold increase in demand for the Plzen region. “One of CzechInvest’s objectives is to steer investors mainly to regions with higher unemployment. Nevertheless, in recent months areas such as the Plzen region and Brno’s surroundings have begun to attract greater interest from investors,” says Rudyšarová.

The Investment and Business Development Agency CzechInvest, was established in 1992 and mediated its first investment project for the Czech Republic a year later. Since that time, the agency has taken part in 1,310 investments worth CZK 659 billion. Projects mediated by CzechInvest have resulted in the creation of 203,485 jobs. Thousands of other jobs have been created in related investments.

H1 2009: type of new investment projects

total: 1993-2008

For more information please contact the CzechInvest Press Centre

Lucie Kocourková, spokesperson, phone: +420 296 342 538, lucie.kocourkova@czechinvest.org