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Monhtly Newsletter - August 2006

HEADLINE NEWS Prague ranks highest of all post-Communist in terms of standard of living In the past year Prague has managed to surpass Ljubljana, Slovenia, with which it has been competing for primacy in Central and Eastern Europe for the past few years. Overall, Prague ranked 41st on the list assembled by the Swiss bank UBS which ranks purchasing power parity; Zurich heads the list. Residents of Prague are, according to the research, able to buy for their salary more goods than citizens of any other city in the post-communist region.

14.09.2006

BUSINESS


Siemens VDO to invest CZK 1.2 bln in Trutnov
Siemens VDO intends to invest CZK 1.2 bln in a new production facility in Trutnov in the next five years. The company has opened a new automobile-electronics production hall in the former Infeon plant. Roughly 200 new jobs should be created in the facility by the end of this year; this number is to increase by several hundred in the future. Siemens VDO will manufacture high-pressure diesel engine pumps, emission management parts, and various electric motors in Trutnov. Siemens has been operating in the Czech Republic since 1990 and employs over 14,000 people here.

Swell planning to build development centre in Horice
Swell, a manufacturer of parts for the automobile industry, intends to build a new development service centre in the industrial zone in the Horice municipality of the Jicinsko district. Construction of the first part of the centre should begin at the start of next year and will cost roughly CZK 170 mil. Swell plans to continue with further expansion of the centre after 2010.

BenQ Corporation to open second plant this October
The Brno branch of Taiwanese LCD monitor, display, and television manufacturer BenQ Corporation will open its second plant in Brno-Turany in October. The plant will create 300 new jobs. The firm is also planning to build its own plant which would create an additional 1,000 jobs.

Second largest industrial zone in the Czech Republic
The second largest industrial zone in the Czech Republic should emerge in Brno-Turany in the years to come on an area of 300 hectares. The first investors could start to build their facilities in the new park in two to three years. Zone is being built due to the huge of the huge investment demand in South Moravia and especially in Brno.

Citic Tianjin forms joint venture with Marmest CZ
The Chinese firm Citic Tianjin has signed an agreement with the Czech firm Marmes CZ on the establishment of a joint venture for the assembly of bicycles. The bikes will be assembled from parts imported primarily from Asia, but also from Czech producers. The agreement is one of several contracts signed by the Czech firm with Chinese companies worth USD 18 mil. (CZK 396 mil.).

First Czech nanocluster founded in Olomouc
Five companies and one state institute, together with Palacký University as an associated member, have founded the first Czech nanotechnological cluster in Oloumouc. The Olomouc area boasts a long tradition of nanotechnology research, but
thanks to the foundation of the new cluster Olomouc is poised to become a centre for research and development of new applications.

Glaverbel investing nearly CZK 3 bln in expansion of production
Glaverbel Czech, which is the largest producer of flat glass and its applications in Central and Eastern Europe, is preparing an extensive expansion of production valued at nearly 100 mil. euros at its plant in Teplice (North Bohemia). At least 70 new jobs will be created there in coming years.

ECONOMY


Unemployment rate increased to 7.9% in July
The unemployment rate increased from 7.7% in June to 7.9% in July. The number of people without employment increased by more than 11,000 to 434,327. The worst unemployment figures are in the Most region, where roughly one fifth of the workforce unemployed; the unemployment rate is lowest in Prague (an average of 2.9%).

Czech IT market is worth roughly USD 3 bln
The Czech information technology market is worth roughly USD 3 bln and, according to the most recent Economist Intelligence Unit study, it is growing at a rate of more than 10% each year, which is twice the growth rate of the Czech economy. Western markets are growing at an average rate of 6%. When comparing domestic information technology investments and GDP, the Czech Republic fares roughly the same as average Western countries.

POLITICS & LEGISLATION


IT Ministry wants to launch register of state debtors
The IT Ministry wants to launch a register of debtors to the state beginning in early 2009. The register is to keep record of arrears on taxes, social and health insurance and tolls. The total costs of building and operating the IT system this year and in the following seven years are estimated at approximately CZK 151 mil. The register is expected to save the state CZK 235 mil. and entrepreneurs CZK 194 mil.

MISCELLANEOUS


Elmarco and Liberec's Technical University find new use for nano fibres
The firm Elmarco and Liberec's Technical University have found additional use for nano fibres - as noise insulation. As first in the world to do so, they set up a machine for industrial production of nano fibres that are three times lighter than existing materials. The fibres have a wide range of use, from aircraft manufacturing to the construction industry. Elmarco opened a branch in Japan this past spring.

Czech scientists to help in world fight against cyanobacteria
In September, the National Centre for Cyanobacteria and their Toxins in Brno will start building a worldwide UNESCO database of tools and methods to combat cyanobacteria damaging lakes and water reservoirs. The equipment to gather information on cyanobacteria was created by the Czech Academy of Sciences in cooperation with experts form Brno’s Masaryk University.

Media Lab Foundation to support skilled students
Czech scientists have laid a new foundation for research called ČVUT Media Lab, whose purpose is to support the most skilled students of Czech technical universities. The Media Lab’s main goal is to help such students successfully finish their projects.

SkyEurope to begin flying to Grenoble this Christmas
Budget carrier SkyEurope will introduce weekly flights from Prague to Grenoble, France this Christmas. No other carrier currently offers flights from the Czech Republic to this resort in the Alps.

Ostrava again hosts international Investment and Business Forum
The 7th annual international Investment and Business Forum to be held on 19-20 September will present offers of services for potential foreign investors in the Czech Republic. Part of the programme will be reserved for human resources development and the possibility of utilising resources from structural funds for this area. An indispensable part of the conference will be reverse presentations, which represent a unique opportunity for investors to meet with local suppliers.


Exchange Rates
Averages for the 1st half of 2006
EUR 1 = CZK 28.491
GBP 1 = CZK 41.466
USD 1 = CZK 23.199
Source: Czech National Bank; July 2006

Sources: Czech AM by Czech Information Agency, Prague Daily Monitor, Radio Prague, dailies Hospodarske noviny, Pravo, MF Dnes and Lidove noviny