What is your
assessment of the current situation of the
Czech economy?
I first of all want to stress that the floods
are not the only criteria I am using to assess
and evaluate the Czech economy. On the other
hand, it would be a big mistake to overlook
this horrible event.
I believe that during the past 12 years the
Czech Republic has made a big progress towards
prosperity. As I have been working in the
economy and business for 30 years, I can make
comparisons. I am glad to see that after some
periods of small mistakes and hesitations,
the Czech Republic is entering an era of dynamic
progress. I hope that the future discussions
about the GDP will not be about whether it
will be increasing or decreasing, but about
how much it will be increasing. As the Czech
Republic is not the only EU accession candidate,
there is a dynamic progress which should make
development fast.
From this point of view, I must admit that
I am only partially satisfied. Good foundations
have been built and basic elements successfully
completed. Many policies have been pushed
through and many tasks were accomplished in
the energy sector. Each policy has been built
in a solid manner so that it will not be affected
by any change of government. Our ministry
has been working like this for more than ten
years.
The floods were a really unpleasant event
and the compensation for the damages will
have to be carried out by cutting the expenses
of other departments and projects. When I
see the billion Crowns which are needed to
for compensation and reconstruction of inhabited
areas instead of being invested into the industrial
sphere, I feel a little sad. On the other
side, we can see many people suffering and
it is our duty to help them.
I am an optimist and believe that, even if
it might sound weird, the floods are also
an opportunity for further investment. I believe
that the Czech Republic is on the right path.
Does this mean that the effects of the
floods will be shortlived?
I think that it will be short term when looking
at the slowing down of industrial production
and there will not be a big impact concerning
the medium and long term visions.
If the metro in Prague will not be working
for more than half a year, it will have a
negative impact on the population, but it
will not paralyze the whole city. There is
also a limited access to our ministry, but
so far I have not been forced to cancel any
meetings or appointments.
You met with Mr. Janota this morning to
have the final discussion about your ministry's
budget. How will your budget be next next
year and what are the major activities that
will be financed?
As I am in charge of the budget for our ministry,
I can speak about it very openly. First of
all and this is very important in my opinion,
I approved a very sober view of the budget.
I refused any proposals on doubling or increasing
too much the budget for certain expenses because
I know that ministries and authorities are
likely to be spending more money than is needed.
We reached an agreement with the Ministry
of Finance that certain support programs will
continue as before. For example, we will be
supporting very intensively small and medium
sized enterprises for two reasons: this is
the sector, which creates the dynamics of
the Czech economy; furthermore, a support
system is very common in the EU member states,
where there is a complete regulation on this
and our steps are made exactly in accordance
with EU regulations.
We also want to support the charter of industrial
research. From my own experience, I can tell
that there are many engineers and technicians,
who would be able to cooperate on projects
in the European Union and worldwide as we
are not a country, where automotive components
will only be produced though it looked like
this in the beginning of the transformation
process.
Another category we would like to support
is Czech export. There are no donations of
course, but loans with lower interest rates
by EGAP, a Czech export insurance company.
An insurance conference will be held tomorrow
and I am very glad that one third of its activities
will be carried out on the same level as well
established European institutions. This proves
the good position of EGAP. We thus want to
support small exporting enterprises, so that
they can have it easier to compete abroad.
We help to organize missions for our entrepreneurs
to set up their foreign operations. We also
have a company called CzechTrade, which gathers
information for Czech entrepreneurs to create
proper conditions for Czech entrepreneurs.
There is also a support system of investments
through investment incentives and I think
that this system has been successful so far.
The influx of foreign direct investments into
the Czech Republic is fairly good at USD 4
to 7 billion annually. I believe that we have
already taken over our competitors, Poland
and Hungary. Our mistake was to start this
relatively late compared with Poland and Hungary.
Our investment incentives policy is going
in the right direction and it is based on
the following principles, which are fully
compatible to those of the EU apart for one
issue. The system has been non political from
the very beginning and approved by the parliament
as one voice. We now want to try to propose
another improvement of the system to get rid
of the only exception, which is not in accordance
with the EU. Our Antimonopoly Office is much
stricter than the relevant bodies, which are
functioning in the EU. We want to improve
certain issues, which form an obstacle, such
as residence permits for foreigners, customs
declaration, registration of companies into
the trade register and also some social advantages,
which are much too high in our country. We
should tell these issues aloud to show that
the government knows about it and that some
people are working on it.
These are our basic development programs.
Our budget also comprises one other item,
which is the reduction of mining activities.
This takes up almost 40% of the whole budget
of the ministry as there are many problems
associated with the mining industry and its
reduction such as social upheavals and unemployment,
but also gas leaks and technical problems.
I feel a little ashamed that 40% of the budget
is being used for reduction because what we
should be doing is to support development
and not reduction. However, on the other hand,
when I see that industrial zones are being
set up in the regions, which used dedicated
to mining, I feel happy about it.
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Are you also participating in developing
these regions and attracting more investment
to these regions, where the need for investments
is higher?
The largest mining activities were carried
out in Northern Moravia and North Western
Bohemia. It is also in those two regions that
unemployment is the highest at about 20% and
that there is the biggest need for investments,
requalification of the people and communication
infrastructure. When we are building a new
industrial zone in one of these regions, we
are happy about it because of several reasons:
we are not making any animals flee because
the zones are ecological; we are helping the
region in a complex way because the infrastructure
is being built, the education is being supported,
the health management is being improved, and
I therefore hope that the industrial zone
around Kolin will be a good example of this
although we had to force some animals to flee.
One thing I am very happy about is that there
are about 130 companies, which are investing
in our country with support of investment
incentives and most of them would like to
support industrial research.
I am a member of many committees and supervisory
boards of Czech technical universities and
I know that many students are already being
prepared for working and cooperating in these
future zones. I am also very happy that many
engineers will be helping in the plants, as
for example in Plzen at the Matsushita plant
and also in Moravia at the Philips plant.
I must admit that I envy these students a
little bit because when I was finishing my
studies at a technical school in 1967, a friend
and myself were standing in front of the notice
board looking at job offers, and at that time
you did not have a choice, but were placed
in a position. We were thinking about where
we would go and my friend thought it would
be to a company in Nachod, which is a small
town in the Eastern part of Bohemia, and he
said: Nachod sounds fine as there are a lot
of girls there, so let's go there and we did
go there. It was not a mistake as the factory
was very interesting. I would like to stress
out by this story that the thinking was very
different 40 years ago. I do not regret working
there as it was a very interesting and good
experience, but there was as everywhere a
lot of paperwork.
Kolin and some other industrial zones have
also attracted foreign investors, including
French ones. What is your level of cooperation
with these foreign investors?
Direct contacts with foreign and domestic
investors are handled by CzechInvest - the
agency of the Ministry of Industry and Trade
specialised in the field of investment promotion.
However, when we reach the point when an investor
is likely to come and do business in the Czech
Republic, than the matter is transferred to
different organisations and ministries, but
we agreed that the Ministry of Industry and
Trade will remain the central point for all
requests from foreign investors to avoid that
these have to go from one place to another.
As an example, we simultaneously held talks
with Japanese and French investors and we
could see their different positions. Sometimes,
we negotiated only with the Japanese and sometimes
only with the French investors depending on
the issues.
However, there is no special department neither
in our ministry nor in Czech- Invest to specifically
deal with French, American or any other investors.
There is so far only one exception here, a
special adviser working in CzechInvest for
Japanese investors because the Japanese were
the first ones to contact us. This cooperation
functions very well and eases things to have
somebody who can explain everything to investors
in their mother tongue. Furthermore, if need
be, it would not be a great problem to set
up such a position for French investors. We
will also welcome some Russian experts in
the near future, but this will be a different
task, as they are also preparing an investment
incentives program in Russia and wish to apply
some elements from our investment incentives
scheme.
Looking ahead, what do you see as your
biggest challenge for the near future?
I believe that the most important is to go
back to Europe, to return to Europe, and this
includes both political and economical factors.
We have always belonged to Europe. When discussing
this with some foreign colleages, we agreed
that Prague is geographically more to the
West than Vienna. It was a pity that we were
following different rules for such a long
time.
The economy is of course the priority, but
I do not see this as only an economic issue,
but also a cultural one. I am not naive and
I know that it will be accompanied by big
problems and that not everybody will be expecting
us with open arms. However, from a human point
of view I am convinced that we belong to Europe
and we will show to all EU countries that
we belong with them.
During a recent visit in Poland, our Prime
Minister Mr. Spidla said that our country
was not in the waiting room for the EU, but
in the fitness centre, where we have to practice
a lot to be strong and ready. This training
will not be over when joining the EU. The
exact date of entrance is not the most important,
but the readiness is. This is because I think
that a country that wants to enter the EU
and be aimed of getting gifts only is mistaken
very much.
What would be your final message to the
investors, which will be reading this report?
Investors should not be afraid of the Czech
Republic and tourists are also always welcome.
Investors should realise that the investment
climate in the Czech Republic is going in
the right direction. We have a good package
of the investment incentives sceme, which
is incorporated in the special law acting
since 2000 and respecting relevant european
rules. Encouraging results which we have already
achieved and our long-term industrial and
technological tradition are the best challenges
for investors in our country. My secret wish
is that the reason for investors to come here
is not the cheap labourforce, but rather its
capability and effectiveness. Every smile
of an investor is a certain kind of appreciation
of my job, which he expresses openly and responsibly.
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V.I.P. INTERVIEWS
