Monthly Newsletter - December 2006

HEADLINE NEWS

Majority of US investments in CR related to R&D in 2006

American investments in the Czech Republic announced this year and directly related to research and development account for roughly 60% of all investments made by US firms. Twelve of the newly announced investments were in R&D. Almost 80% of the 21 projects recorded by CzechInvest's California office are related to R&D. Roughly one third of these projects are from small Silicon Valley firms that develop software or semi-conductors.

BUSINESS

Siemens opens R&D centre in Frenstat pod Radhostem

The Siemens concern has opened a centre for the research and development of automobile sensors in the municipality of Frenstat pod Radhostem in the northeast of the country. The centre will expand gradually - the firm intends to employ roughly 50 top developers and designers by the end of 2007. The sensors developed in Frenstat will be produced around the world. Siemens employs 16,000 people in the Czech Republic and by the end of 2007 intends to increase this number by an additional 1,500 new employees.

Czech Republic to be home of aviation centre for CEE region

The largest aviation service centre in Central and Eastern Europe will be established in Ostrava (Moravia-Silesia region). The Czech company Central Europe Aircraft Maintenance a.s. (CEAM) will invest approximately EUR 35 million in its construction. The company plans to perform repairs and maintenance of large aircraft at the centre, which is to begin operating within one year.

Skype to open development centre in Prague

Skype, which offers cost-competitive internet telephony services worldwide, will open a development centre in Prague. The firm selected the Czech Republic from among twelve Central and Eastern European countries. The local centre will be the first one outside of Skype's hometown of Tallinn, Estonia. Thirty Czech programmers should find employment at the centre by the end of 2007.

Faurecia opens its third facility in Pisek

The French automobile-component manufacturer Faurecia has invested more than CZK 2 billion in three new production plants in Pisek. Two facilities are already operational and manufacturing exhaust systems and automobile door panels. The third facility will begin manufacturing automobile seat frames at the start of 2007. The company will employ more than 1,000 workers once the three plants in the Cizovska industrial zone are operating at full capacity.

Bureau Veritas Certification opens new international centre in Prague

Bureau Veritas Certification Czech Republic has opened an international certification centre at its headquarters in Prague 4. The centre is to improve the efficiency of issuing foreign accreditation certificates to clients in the Czech Republic and other European countries. Bureau Veritas Certification is the independent certification body of the international corporation Bureau Veritas, which provides services in quality, hygiene, security, the environment and other sectors.

Global Trade Centre to build complex near Sazka Arena

Global Trade Centre (GTC), a leading Polish developer, will build a retail and office complex worth roughly EUR 265 million near Prague's Sazka Arena. The project is a joint venture of GTC, the Israeli firm Scorpio BSG, and the real estate fund RREEF, which is part of Deutsche Bank. Construction of the roughly 40,000 m2 of retail space and 80,000 m2 of office space will begin in the last quarter of 2007. The project developer is C&R Developments, a member of the international Lighthouse Group.

Solectron to build high-tech service centre in Plzen

The American firm Solectron will build a high-tech service centre in Plzen-Borska Pole. The firm will invest more than CZK 100 million and expects to open the facility in the spring of 2007. Solectron will employ 50 university students and will create even more support service positions at the centre. This is Selectron's first investment of this type in Central and Eastern Europe.

CzechAircraft is new owner of Moravan-Aeroplanes

CzechAircraft, which is owned by the Irish firm QucomHaps Holdings, is the new owner of aircraft manufacturer Moravan-Aeroplanes located in the Otrokovice municipality of the Zlin district. The firm offered more than CZK 50 million for the aviation firm. The plant employs roughly 170 people.

R&D

Czech Republic becoming microelectronics incubator

A new integrated-circuit development centre has been opened at the Faculty of Electrical Engineering of the Brno University of Technology in cooperation with the companies ON Semiconductor and Cadence. This is the first step toward implementation of ChipInvest, a joint project of leading global firms operating in the field of microelectronics. The goal of the project is to create an incubation environment for development of integrated systems in the area of aviation and space programmes and medical technology. ChipInvest is focused on analog and mixed signal domain and embedded systems.

Czech Biotechnology on the rise

A new biotechnology centre of the Academy of Sciences of the Czech Republic is to be built in Vestec near Prague. The centre will be focused on two areas - molecular biotechnology and regenerative medicine. Bio-technology incubators intended for the establishment of firms will be linked to the centre, which will focus particularly on basic research. The centre is expected to begin operation in 2011. Funding for the establishment and operation of the centre will be drawn from EU structural funds, specifically from the Research and Development for Innovation programme.

Science and technology centre to be established in Hradec Kralove

A centre for small and medium-sized firms engaged in development of technologies and research will be established on the site of the airport in Hradec Kralove. The centre will include a business incubator for start-up companies, a science and technology park with ties to the University of Hradec Kralove, and a technology-transfer centre. The first firms will be able to move to the centre at the beginning of 2008. The project is being supported from the European Regional Develop-ment Fund.

ECONOMY

Prague Stock Exchange reaches new record

The Prague Stock Exchange reached a new record yesterday - for the first time in its history, the PX Index overcame the psychological barrier of 1,600 points when it rose by 0.91% to 1,600.4 points. According to analysts, the increase is primarily the result of developments on foreign markets and the interest of foreign investors. The index could increase by 8% this year, down from roughly 40% last year.

POLITICS & LEGISLATION

CR to enter Schengen zone on 31 December 2007

The Czech Republic and other EU newcomers will enter the Schengen zone, in which there are no inspections at internal EU borders, on 31 December 2007. This decision was made by the Interior Ministers of EU member states. Airport controls on flights to most EU states will end in March 2008. The new member countries faced the possibility of having to until 2009 wait to join the zone due to the introduction of the second version of the database that stores data on wanted persons and stolen vehicles. The newcomers have however promised to help defray the costs of expanding the current system.

Government approves national strategy programmes for 2007- 2013

The government has approved the national strategy and operational programmes that allocate European funding for the 2007-2013 period. According to the Regional Development Ministry's draft, the money will primarily be spent on the development of transport infrastructure, the environment, and regional development. Subjects in the Czech Republic could receive a total of up to CZK 750 billion for this period. Government approval is required for the Czech Republic to be able to formally submit the documents to the European Commission.

MISCELLANEOUS

New airline connections from Prague

The low-cost airline SkyEurope will add a flight connecting Prague and Brussels to its summer schedule. The carrier will join Czech Airlines and SN Brussels Airlines on this route. SkyEurope will fly to Brussels three times each week. Smartwings, a Czech low-cost carrier, is planning to expand to the east - the airline plans to fly between Prague and Moscow four times per week.

Schools to collaborate with carmakers

An educational project called IQ AUTO is being launched in the Hradec Kralove region. Within the project, up to twenty secondary and professional schools will collaborate with companies in the automobile industry. The aim of the project is to enable students to gain experience and to find employment upon finishing their studies. It will be possible within the project to tailor the curricula in schools according to the needs of individual firms, thus bringing the experience of graduates closer to the needs of the work environment.

_{Exchange Rates
Averages for the 1st half of 2006
EUR 1 = CZK 28.491
GBP 1 = CZK 41.466
USD 1 = CZK 23.199
Source: Czech National Bank; July 2006}

_{Sources: Czech AM by Czech Information Agency, Prague Daily Monitor, Radio Prague, dailies Hospodarske noviny, Pravo, MF Dnes and Lidove noviny}