Business News PM Sobotka and President Zeman meet with construction industry chiefs
On Thursday, Czech Prime Minister Bohuslav Sobotka and President Miloš Zeman attended a major one-day meeting of construction firm heads held at the Czech National Bank in the centre of Prague. More than 450 business leaders were in attendance, including Václav Matyáš, president of the Association of Building Entrepreneurs of the Czech Republic (SPS) and Robert Pergl, Chairman of the Chamber of Public Contract Administrators (KAVZ). Several cabinet members also joined the Prime Minister at the forum, including Regional Development Minister Věra Jourová and Minister of Trade and Industry Jan Mládek.
Three key issues dominated the talks: proposed governmental legislative changes related to the construction sector, transport infrastructure spending and finally how better to source EU funding for construction projects in the Czech Republic.
In his opening remarks, President Zeman called on the government to significantly increase investments, instead of, as he put it, merely giving lip service to the issue. Zeman called for stalled expansion efforts at the Temelín and Dukovany nuclear plants to be completed, and also used the opportunity to tout a long-supported pet project, a hugely expensive idea to connect the Elbe, Danube and Odra rivers via a series of canals.
He also warned that this year has so far seen a negative construction investment trend, with total spending levels down by 16 percent. During his address, the president had some tough words for the government, criticizing new proposals that would allow contractors to up the permitted share of cost-overrun work from today’s 20 percent of the contracted amount to 50 percent. Such a reform, argued Mr. Zeman, would merely open the door to more corruption. Exceptions to such tough public tender rules, he added, should only be permitted in the case of major emergencies such as a recent landslide, which blocked off the D8 motorway near Litoměřice. But the president also had some positive words for the coalition government, praising its overall proposed efforts to reform public tender laws – an issue which has been at the centre of countless corruption scandals for many years.
Meanwhile, in his prepared remarks, PM Bohuslav Sobotka noted that the overall economic crisis which hit the Czech Republic had also had a major impact on the construction sector. “We have experienced five long years of decline and stagnation,” Sobotka argued, pointing the finger at the former government. “...in those policies, short term accounting triumphed over a strategic economic vision.” The PM promised that 2014 would see a turnaround for the beleaguered industry, and also touted governmental reform proposals, which would, he argued, help to revive the industry. Most importantly, he added, the Ministry for Regional Development was presently drafting new public tender legislation. The PM expressed his hope that such a law would be passed by year’s end.
From 2008, the Czech construction sector has lost 443 billion crowns as a result of the economic crisis, or one entire year’s worth of activity, according to ČTK. During that time, 41 larger construction firms have folded with 50,000 jobs lost. However, recent months appear to suggest something of a positive turnaround for the sector, with construction activity up 8.4 percent during the first three months of 2014.