TOP INTERVIEWS

Mr. Milan Urban Interview with
Mr. Milan Urban

Minister of Trade and Industry of
the Czech Republic

Prague, the 7th of April, 2003
Q.1. My first question will be regarding the industrial zones; lately there have been major changes in the development of this issue. Could you tell us more in detail?

A.1. The most visible development was that we have decided together with Czechinvest that it would be useful to train and appoint people at the heads of the already existing industrial zones. We will definitely continue our policy of preparing of industrial zones for foreign investors and also we have passed the Act for Investment Incentives. I will visit one of the biggest investments in the Czech Republic today, which is a factory in an industrial zone of Toyota-Peugeot-Citroen. It is an investment of 1.5 billion USD. I am very glad that the progress of this investment is very successful from both sides- state and contractual partners. We are preparing other huge industrial zones that will be financed from the public fund of the Czech Republic. We will also prepare new incentives in the form of income tax relief, support of new employment possibilities and requalification of labor force. The Ministry of Industry and Trade also supports subcontractors' activities through its programs. We mainly support sophisticated products with higher added value. In this field we would welcome other massive investments in the Czech Republic. We have perfect experience with this kind of investors.

Q.2. Another sector of the economy where the investments are welcome is the energy sector. Could you tell us about the progress in the creation of the energy policy?

A.2. At the moment we are preparing an energy concept of the Czech Republic on the level of the Government, we want to present it for approval to the Government in the second half of the year. In this concept we will define precisely the share of different types of energy on the market, define the further steps towards the liberalization of this market and also define the importance and role of energy in the production for our own needs and import. We are also considering privatization of some energy producers. At the moment we are working on the stabilization of CEZ to strengthen its competitiveness and position on the European market. That is the merger of CEZ with the four major regional distribution companies which was finished recently, of course this step was approved by the Antimonopoly Office and the Constitutional Court. This step is also directed towards the aim of privatization of CEZ in the distant future of three to five years. Concerning the lignite (brown coal) companies we are preparing the privatization of those companies, either this year or the beginning of next year. Of course all the privatization processes will be organized in a transparent way on the basis of public tender and in accordance with other precisely defined criteria.

Q.3. The companies mining black coal is among the ones to be privatized, do you think it would be appropriate to sell them ahead of the creation of the national energy concept?

A.3. We have only one company left, OKD that is active in the sector of black coal mining. At the moment this issue is under discussion whether to sell the minority stake directly to a partner chosen by governmental resolution, however this is still an open-end discussion.

Q.4. You have touched upon the subject of privatizing CEZ, but there is still a long road ahead. Could you tell us about the major challenges of the Government in order to create a competitive CEZ?

A.4. It is important that CEZ produces electric energy with highly competitive prices compared to the European giants. We need that the production of CEZ increases slowly but steadily, that means the part of export should follow this tendency too. We also need to increase the productivity of labor force and reduce the unnecessary costs for CEZ to be highly competitive and strong in the time of privatization. The whole idea must be in the context of providing energy of our own sources so that we have a secure, stable and independent supply of energy.
 
Q.5. As far as we know also EDF is one of the interested partners in privatizing CEZ. What do you think that would be the advantages that CEZ and the Czech Republic would gain from getting the investor from France?

A.5. It is hard to answer this question. The possible investor of CEZ, once privatized, will probably be an important European company and I can imagine it can be a French one. There is still a need to prepare the clear criteria for this public tender and the best one will win.

Q.6. There are already foreign investors in the automotive industry, in the energy sector, etc, What sectors do you thing would be the priorities of the investors in the upcoming years?

A.6. We would welcome investments into advanced technologies; products with high added value that will be competitive on the big European market, as we are a small open economy in the center of Europe depending mainly on the export. Also, for the reason that we have a good human capital - qualified managers and workers who are creative and flexible to learn sophisticated production.

Q.7. Many of the investors cooperate with research and development institutes in the Czech Republic. Do you have any plans from the part of the Ministry to support such cooperation?

A.7. We are already supporting this area of cooperation. At the moment there is a revision of the different programs that are going on. These programs are directly financed from the state budget and are carried out through the Ministry of Industry and Trade. We have many programs supporting mainly three fields: innovation, development and research in IT.

Q.8. You have been recently appointed and I believe you have a busy schedule. When talking about your international agenda, what are your priorities?

A.8. I decided to assign my department to work on National Economical Strategy for the entrance of our economy to the European Union. That includes an analysis of the existing programs and projects of Ministry of Industry and Trade where we will search for possibilities to offer to the Czech business sector to participate in. We are working on it in the context of the public finance reform going on in the Czech Republic and in the context of the National Plan of Employment. It is very important for us that the citizens say "yes" in the referendum about the EU accession, and we believe that by developing further our strategy we will contribute to the better understanding of entrepreneurs and citizens of the EU. The aim is that every single entrepreneur at the time of the decision will be informed about what to expect in the EU, he will know also about the strategic decisions of the Czech Republic. That is why we are using the context of the public finance reform, we also included there the taxation issues. I believe there exist certain doubts and fears especially among small and medium enterprises and our aim is to clarify those doubts.

Q.9. You will have the job of leading this ministry into the European Union, what is the biggest challenge for you?

A.9. The biggest challenge is to retain the growth of the economy in this difficult era. Our big ambition is that the GDP grows a little bit faster than the average of the EU and to reach as soon as possible the level of 75% of GDP of the average of the EU. If this will be reached in the time of my work I will be very satisfied.
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