Business CzechInvest says foreign investment interest strongest for six years

20-06-2014 14:02 | Chris Johnstone

CzechInvest is enjoying a revival on the back of a surge of foreign investment interest in the Czech Republic with the agency saying that a lot of the prospective enquiries cover research and development facilities and not just assembly plants.

Photo: archive of NexenPhoto: archive of Nexen State agency for promoting foreign investment in the Czech Republic, CzechInvest, says it is experiencing a strong revival in interest in the country. The agency says investment interest is at its strongest level for six years with projects in the pipeline which, if realized, could lead to the creation of around 10,000 jobs.

One of the biggest projects was sealed this week with the announcement that South Korean tyre producer Nexen will establish a plant at an industrial zone in the north-west of the country near Žatec. The 20 billion crown investment creating 1,000 jobs could eventually double in size.

As well as the investment incentives, some of the factors which appear to have clinched the decision appear to be the proximity to West European markets and the positive experience of around two dozen South Korean companies, many of them sub-contractors for the Hyundai car plant in Moravia-Silesia, which have sited in the Czech Republic over the last decade.

What’s more, the agency says that while first time investors are part of the comeback, many projects stem from companies already present in the Czech Republic. And a growing proportion of these are not looking merely to site assembly plants in the country but are seeking to exploit local skills and know-how.

The country’s biggest car maker, Škoda Auto’s evolution in one of parent group Volkswagen’s key research and development centres is perhaps the flagship example of how production and research and development are going hand in hand. Škoda Auto already opened a technology and innovation centre in 2008 to focus on engine, airbag, light and crash test developments.

That has been followed by a tailor-made engine centre which started operation in 2013 with 15 test areas aimed at analyzing the results of new engine and fuel developments.

The results from these centres are fed into the whole Volkswagen group not just the Czech car maker. The volume of technical work for non- Škoda parts of the group rose by 374 million crowns to reach 894 million crowns in 2012.

Škoda Auto is not an exceptional case. US-based global technology and systems company Honeywell set up in the Czech Republic in 2003 and 10 years later sited one of its main worldwide technology and innovation centres in the second city of Brno. Honeywell Technology Systems is currently, for example, working on equipment that allows pilots to see clearly in foul weather conditions. The equipment could be crucial for landings in heavy rain and fog. Altogether, Honeywell now employs around 4,000 people in the Czech Republic.

CzechInvest and the Czech government had feared that the attractiveness of the country would be diminished for foreign investors as a result of new European regional aid rules which from this year will curb local investment incentives while allowing more generous offers in Slovakia, Poland, and Hungary.

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