Monthly Newsletter - November 2006

HEADLINE NEWS

Computer Sciences Corporation to open centre in Prague

Computer Sciences Corporation (CSC), one of the world's largest suppliers of information technology services, will open its centre for Central and Eastern Europe in Prague. The firm intends to hire roughly 160 employees next year. The Prague centre will focus on the development of software applications. CSC will also create an on-site call centre and advisory services centre.

BUSINESS

Ingersoll Rand to open pan-European training centre in the CR

US firm Ingersoll Rand has decided to build a new training centre for its Bobcat brand in Dobris, approximately 35 km south of Prague. The centre will be intended for training users from Europe, the Middle East and Africa. Investment in the expansion of the existing Dobris production plant will reach USD 32 million. Up to 300 workers should find employment in the plant. Ingersoll Rand will thus have a comprehensive site in the Czech Republic which will enable production and training, as well as research and development in one location.

New Skoda Auto technology centre

Skoda Auto has begun construction of its new technology centre in Mlada Boleslav. The project will cost the carmaker over CZK 1.1 billion. In the technology centre the company will develop electronics, chassis and engines. The centre in Mlada Boleslav will be equipped with latest technologies and should reach the level of the Volkswagen concern's 18 existing development centres around the world. Preparations for the entire project began two years ago. Since then, the company has hired roughly one-third of the planned 360 developers, whereas over the next three years the total number of employees should increase to 1,700 from today's 1,400.

Procter & Gamble to manage European support operations from Rakovnik

The American company Procter & Gamble, one of the world's two largest producers of cosmetics and dry goods, is expanding and increasing production in Rakovnik, to which it is also transferring its engineering centre. This centre will be opened in March next year and will provide technical support not only to the Rakovnik branch but to other Procter & Gamble enterprises in Central and Eastern Europe. The centre will begin with ten employees, with more to be hired in coming years. A team of specialists will prepare and implement projects in Russia, Ukraine, Turkey and Romania and will make decisions on investments in the region.

AMI Semiconductor design centre in Brno celebrates its 10th anniversary and expansion

The IC design centre of one of the world's leading semiconductor companies located in the city of Brno celebrated its 10th anniversary on 9 November 2006. AMIS entered the Czech Republic by acquiring the mixed-signal business activities of Alcatel Microelectronics, which established a design centre in Brno in 1996. AMIS's positive experience in Brno convinced the company's management to expand its local activities. The centre currently has 50 employees developing state-of-the-art IC solutions primarily for automotive and industrial applications. By 2009, over 60 should be employed at the centre.

AFI Europe and ProDelta create joint venture

Developers AFI Europe and ProDelta have created the joint venture National Technological Park for the joint D8 European Logistics Park project in the Kozomin municipality of the Melnicko district. The investment is expected to total EUR 45 million (CZK 1.26 billion). The storage area will be 90,000 m2. Construction of the first building will begin in January of next year and it should be available for use in the third quarter of 2007; the other two halls should be completed in the first quarter of 2008.

Elmarco awarded US military contract

Liberec-based Elmarco has been awarded a contract for the American military. The firm delivered a line for the development of nanofiber materials. Nanopeautics, a joint enterprise with Irish pharmaceutical firm Alltracel, will begin delivering bandages with nanofibers to the market at the beginning of next year. This material should also be implemented as sound insulation in automobiles. It is currently being tested by Skoda Auto

WTCA branch to open in Prague in January

In January the Economic Chamber of the Czech Republic will open a branch of the World Trade Centres Association (WTCA) in Prague. The branch will help foreign entrepreneurs network with Czech firms and rent office space and conference rooms. The WTCA's members include 289 private firms and non-profit organizations from 85 countries.

Pharma Nord begins construction of new centre in Odolena Voda

The pharmaceutical firm Pharma Nord has begun construction of a new international education centre in Odolena Voda. The centre will focus on the production, storage, use, and logistics of food supplements and medicinal preparations. The project is worth roughly CZK 100 million. The centre is to begin operations in May 2008.

Synthon to invest more than CZK 0.25 billion in Blansko

The Dutch firm Synthon is planning to invest more than CZK 0.25 billion in the conversion of its plant in the Blansko district. The former Lachema chemical plant should be converted into a facility for the production of pharmaceuticals by 2009. Synthon will then provide 25 to 30 high-skilled jobs in the region's pharmaceutical industry.

Thermolast begins construction of new plant in Detrichov

Auto-parts manufacturer Thermolast of the Detrichov municipality in the Frydlantsko district, which belongs to investment group M.L. Moran, has begun construction of a new production hall that is to help triple the firm's revenues, which are expected to total roughly CZK 200 million this year. The firm intends to increase its labour force from the current 130 to 200 once production expands. Thermolast also intends to develop new plastic parts and employ new developers in Detrichov.

KOS Wire to build plant in the Lovosice industrial zone

Korean firm KOS Wire, which is part of KOS Group, will build a facility for the production of stainless steel wire, primarily for the automobile industry, in the Lovosice industrial zone on the site of a former sugar refinery. The firm will invest up to CZK 625 million in three phases and create roughly 90 jobs. Production will begin at the end of 2007. KOS will manufacture roughly 300 tons of drawn wire per month in the first phase. Starting in 2013 the firm intends to manufacture up to 1,000 tons per month. The products will be delivered to customers in Western and Central Europe, including the Hyundai's Nosovice plant.

ECONOMY

Foreign firms invested almost CZK 106 billion in the CR in the first three quarters of 2006

Foreign firms invested almost CZK 106 billion in the Czech Republic in the first three quarters of this year, mostly in the form of reinvestments of already established firms. Investments total roughly half of last year's total volume, mainly due to less privatisation projects. However, trends in the structure of FDI are positive - the share of technologically advanced projects, including technology and development centres and the like, increased to more than 30%.

CNB will leave rates unchanged until year's end

According to Czech National Bank (CNB) Vice-Governor Miroslav Singer, the Czech Republic's basic interest rate may increase later than planned. Singer's statement supports analysts' growing expectations that the CNB will not change interest rates before the end of the year. The CNB's original forecast expected a gradual increase in the basic interest rate, which at 2.5% is the lowest of all European Union states.

New services directive to benefit Czech economy

According to a KPMG analysis, the new EU services liberalization directive will, despite compromises, have a positive effect not only on entrepreneurs but also on the entire Czech economy. KPMG notes that Czech GDP will increase by between 0.69 and 1.59 percent (the equivalent of CZK 17.6 - 40.6 billion) thanks to the directive. Czech firms' export revenues should increase by CZK 12.5 billion and value added should increase by CZK 5.24 billion. A total of 18,700 new jobs should also be created in the Czech Republic; this is roughly 0.36% of the domestic workforce.

Czech crown still strengthening

The Czech crown continues to strengthen, again improving its record against the American dollar, trading at CZK 21.20/USD. This year alone the crown has increased in value by roughly CZK 3.30 against the dollar. Economists expect that the crown will continue to grow by two to three percent per year in the next year.

POLITICS & LEGISLATION

Necas: The Czech Republic will not close its labour market to new EU members

According to Labour and Social Affairs Minister Petr Necas, the Czech Republic does not have plans to close its labour market to Bulgarians and Romanians, whose countries will join the European Union in January 2007. The new members will be able to work in the Czech Republic without a permit. According to Necas, the country will prepare safeguards to protect its market if necessary.

MISCELLANEOUS

Ostrava's VSB to introduce degree in nanotechnology

Ostrava's Vysoka Skola Banska (VSB) will be the first university in the Czech Republic to offer a degree in nanotechnology. Research in this field is already being conducted at several universities in the country. Courses will begin in the next academic year. The university expects to create one or two study groups with 20 students each. VSB cooperates with other universities and firms in the nanotechnology sector.

CR shows positive trends in research and development

According to a new study by the Czech Statistical Office, in 2005 R&D expenditures in the Czech Republic increased by one-fifth (20.3%) in comparison with the previous year, reaching the total amount of CZK 42,198 million. The intensity of research and development (share of GDP) increased to 1.42% as compared to 1.26% in 2004. As of the end of 2005, 9.1 workers out of 1,000 were employed in research and development.

CR 30th in UN's HDI ranking

According to the United Nations Human Development Index (HDI), Norway is the best place to live with an HDI of 0.965. It is followed by Iceland, Australia, Ireland, and Sweden. The Czech Republic is 30th with an HDI of 0.885. Slovakia is 42nd. The HDI is a widely used comparative measure of human well being across countries worldwide based on life expectancy, literacy, education and GDP per capita at purchasing power parity.

_{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}