Trend of Investment-Expansion Growth Continued in 2013

20 Feb. 2014 | CzechInvest | Last year CzechInvest mediated domestic and foreign direct investment worth nearly CZK 48 billion, which was twice the total in 2012.

The most active investors in the Czech Republic in 2013 included domestic companies and local branches of foreign investors that had come to the Czech Republic in previous years. CzechInvest’s statistics show that expansions comprised 78% of the 110 projects mediated by the agency in 2013. The domestic and foreign direct investments mediated by CzechInvest last year will bring nearly CZK 48 billion to the Czech Republic and help to create more than 10,500 new jobs.

Period	Number of projects	Investment amount (CZK mil.)	Number of jobs
H1 2012	31	1,764.63	2,274
2012	81	20,372.55	8,271
H1 2013	44	19,478.86	5,098
2013	110	47,949.38	10,519

“However, foreign investors are not lagging behind,” says Minister of Industry and Trade Jan Mládek. “Where investors’ interest in the Czech Republic is concerned, 2013 was the most successful year since the pre-crisis year of 2007. This is connected with the gradual revival of the whole European market.”

“Investment incentives also spurred investors’ activity in the Czech Republic,” says Ondřej Votruba, acting CEO of CzechInvest. “Since the amendment of the Investment Incentives Act in the second half of 2012, incentives have been far more helpful to investors, though this will not be the case for long. New rules issued by the European Commission will soon have an effect on our investment-incentives system; aid for large enterprises will be reduced from 40% to 25% of eligible costs. And that motivated investors to accelerate implementation of their projects.”

The largest number of foreign investments in the Czech Republic last year came from Germany, specifically 13 projects in the aggregate value of CZK 5.9 billion. This was connected with the traditionally dominant vehicle-manufacturing sector. Other active investors were the Swiss (eight projects in the total value of CZK 2.3 billion) and Americans (seven projects in the total value of CZK 5.2 billion). Domestic investment in 2013 comprised more than half of all investments mediated by CzechInvest (60 projects in the total value of CZK 24.7 billion). The other sectors with the biggest shares in the volume of investments in 2013 were mechanical engineering and the rubber and plastics industry.

South Moravia was the most popular location in 2013 in terms of both the number of investments and the number of jobs to be created. Sixteen out of the total of 110 investors chose this region for their investments, which will lead to the creation of 1,960 in future. Moravia-Silesia received the largest volume of investments last year, specifically CZK 9.7 billion. The Pardubice and Central Bohemia regions also appeared in the statistical rankings.

The biggest investment of last year was announced by the Danish company Fibertex Nonwovens, a.s., which is expanding its production of nonwoven textiles and textile materials in Svitavy in the Pardubice region. Thanks to its investment of CZK 2.6 billion, the company will create 45 new jobs. Biocel Paskov, a.s. is planning to invest nearly CZK 2.5 billion in the expansion of existing technology for production of viscous cellulose in Paskov in the Moravia-Silesia region. Thanks to its investment in the value of CZK 2.5 billion, Continental Barum, s.r.o. has undertaken to create the largest number of jobs, as it will expand its production of freight-vehicle tires in Otrokovice in the Zlín region and hire 293 people in the future.

Ondřej Votruba, acting CEO of CzechInvest, anticipates similarly positive development in the first quarter of 2014. “Investors’ interest is already starting to be impacted by the new state-aid regulations. However, in connection with those regulations we are preparing an amendment to the Investment Incentives Act that should partially compensate investors for the lower percentage of state aid, for example in the form of a reduction of contributions from total wages and a property-tax exemption,” Votruba says. “The new government’s declared support will also be a significant motivator.”