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CzechInvest, CzechTrade to join forces

Bureaucracies' overhaul marks shift toward export-focused model

By František Bouc
Staff Writer, The Prague Post
February 14th, 2007 issue

Industry and Trade Minister Martin Říman’s January announcement that he would merge the Czech Republic’s two major tools for economic diplomacy — CzechInvest and CzechTrade — marks a sea change, away from a reliance on foreign investment and toward pushing exports abroad.

Říman said the two agencies will be rolled into a new Council for Business and Investment as early as March. The council will drive Czech products abroad. CzechInvest’s current mandate is to bring international concerns into the country. CzechTrade’s goal is to facilitate international trade in general.
“The Czech economy is export-oriented, so the state must provide support to exporters, not only here, but also abroad,” he said. “This is what the council will be focusing on.”
He also has plans for CzechTourism and the business departments of Czech embassies. These separate agencies often have overlapping duties, but have little or no communication with each other. Říman’s plan would consolidate them, thus reducing costs and improving coordination.
“The council should make sure that Czech businesses receive a bigger amount of assistance and that redundancy is removed,” he said.
Eyeing exports
Říman made it clear that CzechTrade will get majority control over the newly formed organization.
“CzechInvest is losing its focus as an investment-luring agency, acting instead as an organization to administer EU grants,” Říman said. “The question is whether it is necessary for them to do so when the Industry and Trade Ministry still has the final say.”
Říman’s bias against CzechInvest stems from his disapproval of the number of incentives he says the agency has thrown at foreign investors.
CzechInvest helped bring in 176 investment projects worth 114 billion Kč ($5.26 million) last year alone. But Říman said incentives attached to the projects cost the state more than 52 billion Kč.
He has said that investment incentives should not continue. Last year, the government made 1 billion Kč in commitments to pay for training and creating new jobs, and another 44.6 billion Kč in tax holidays.
“This is not good news for taxpayers,” Říman said.
The Industry and Trade Ministry commissioned the University of Economics in Prague to carry out a study of the overall impact of incentives. The ministry is determined to decide on the future of such enticements after receiving the study in May.
Despite announcing the plan to merge CzechInvest with CzechTrade, the Industry and Trade Ministry has not yet worked out the details.
“There are no particular scenarios at the moment, but it is likely to happen throughout this year,” ministry spokesman Tomáš Bartovský said.
The state’s main concern is to build up a unified Czech busi­ness promotion network here and abroad, he added.
“We simply want to make our foreign-related business as efficient as possible,” Bartovský said.
Říman has hinted that the move means that some people will lose their jobs, but he has not yet said how many. The agencies currently employ some 270 people.
Neither CzechTrade nor CzechInvest officials would comment on the merger plan.
CzechTrade spokesman Aleš Řiháček hinted, however, that CzechTrade is in a better position to keep its employees because it is firmly involved in the government’s export policies.
“Our operations are based on the official export strategy approved by the Industry and Trade Ministry last October,” Řiháček said.
CzechInvest spokeswoman Alžběta Honsová acknowledged that her agency’s role has shifted since the boom years of foreign investment. It is now not only attracting foreign investors, but also cultivating the business environment by supporting educational projects, for example.
“Last year’s figures of foreign investments attracted show that our existence is justified,” Honsová said.
Still, she admitted, it’s up to the Industry and Trade Ministry to decide future strategies for the two agencies.

František Bouc can be reached at fbouc@praguepost.com


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