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CzechInvest: Two-thirds of new investments in the Czech Republic have high value added

More investments are being appropriately placed in the regions

CzechInvest: Two-thirds of new investments in the Czech Republic have high value added Source: Adobe Stock
  • CzechInvest arranged 27 investment projects in 2020
  • Companies are planning to invest CZK 15.3 billion in the Czech Republic
  • The largest number of projects are in the Central Bohemia, South Moravia and Moravia-Silesia regions

The coronavirus pandemic has helped to accelerate CzechInvest’s efforts of recent years. Despite the crisis, there is a rising trend in the share of investments with high value added, i.e. investments focused on technology and research and development in strategic sectors. In 2020, this involved two-thirds of all investments arranged by CzechInvest, whereas only one-fifth of new projects in 2018 fulfilled the criterion of high value added. A quarter of last year’s projects are smart, i.e. localised so that they benefit the given regions, particularly those that are structurally disadvantaged. Near 80% of the arranged investments comprise expansions of companies that are already operating in the Czech Republic. The situation here thus also mirrors international trends.

“In 2020, we arranged 27 new investment projects in which the companies have pledged to invest CZK 13.5 billion in the coming years. Despite a certain decline associated with the coronavirus pandemic, investors remain interested in placing their projects in the Czech Republic. Furthermore, we anticipated a lower number of projects due to the stricter conditions arising from the amendment to the Investment Incentives Act. So, we are all the more pleased that in spite of these facts, two-thirds of the arranged investments will bring higher value added,” says Patrik Reichl, CEO of CzechInvest.

This is historically the largest share of projects with high value added, which include shared-services centres, technology and IT centres and manufacturing projects involving investments in digitalisation and automation. The new investment projects are focused particularly on production and development of software at business support services centres. The areas on which CzechInvest focused investment support last year included electromobility, software development, healthtech, data centres, artificial intelligence and advanced materials. The situation here thus mirrors international trends.

“A good example of an investment with high value added, which goes hand in hand with the trend of digitalisation, is the activity of the company Wandera CZ, which is planning to expand its software development centre with focus on security and administration of mobile data in the Brno-City district. rPET InWaste is planning its own research, development and processing of PET flakes into recyclable material that will subsequently be used in the production of new recyclable plastic bottles. I’m pleased that companies still have the desire to invest during this difficult time and are coming up with such interesting projects,” says Petr Očko, Deputy Minister of Industry and Trade for Digitalisation and Innovation.

Nearly 80% of the arranged investments comprise expansions of companies that are already operating in the Czech Republic. Besides domestic firms, American, Japanese and Finnish companies plan to invest the largest amount of money in the Czech Republic in the coming years. In terms of the number of projects, the biggest investors are the United States, Switzerland, Great Britain, Japan, Germany and China. CzechInvest recorded the greatest inflow of projects and expansions last year in the Central Bohemia, South Moravia and Moravia-Silesia regions. However, it cannot be said that the coronavirus pandemic did not have any effect on the investment market.

“Investors have to contend with the high level of uncertainty associated with the pandemic and thus often defer their final decisions on the placement of investments. Therefore, we are still negotiating and communicating with investors that we were in contact with last year and that had expressed interest in investing in the Czech Republic. To better illustrate – this refers to nearly 80% of the companies from last year,” explains Veronika Zajícová, head of CzechInvest’s Investment and Foreign Operations Division, adding: “In general, development of the market and of demand is expected. Companies are starting to look at their global operations, i.e. their activities in individual countries and on individual continents, in light of the pandemic and have to better consider their supply chains. That can be an opportunity to attract new technology firms to the Czech Republic.”

A certain role is being played in this by the amendment to the Investment Incentives Act of autumn 2019, the purpose of which is to support only projects with the greatest benefit for the state and for the given region. “It’s natural that investors are waiting for a certain period of time after the adoption of the amendment and familiarising themselves with the new conditions. We expected a lower number of investment-incentive applications, which, after all, is in line with the aim of the amendment. Furthermore, not all investors with which we are negotiating are applying for incentives. Such projects comprised not quite 50% of the total last year,” says Reichl.

Glossary of terms

Investment with high value added – investment focused on technology or connected with research and development, sometimes also referred to as high-tech investments, in key domains (AI & Digital, EcoTech, HealthTech, Creative Industries, Aerospace, Defence Industry and Advanced Manufacturing Technologies).

Smart investment – an investment that benefits the given region. Such an investment does not necessarily have to bring forth high value added, but rather helps to resolve a particular problem or situation in the given location (e.g. lack of job opportunities, outward migration of residents or revitalisation of a brownfield).

Pledged investment – an investment is pledged at the moment when an investor announces that it has decided to invest a certain amount of money in a particular type of activity in the Czech Republic and, as the case may be, will employ a certain number of people. This usually happens at the beginning of the implementation of an investment case in the Czech Republic. Last year, companies pledged to invest CZK 15.3 billion in the country. This involves investors that want to use investment incentives for their projects, as well as companies that are not applying for incentives.

Selected investments

Wandera CZ – This company is planning to expand its software development centre with focus on security and administration of mobile data in the Brno-City district. The government approved its investment-incentive application, as the project involves an investment with high value added, which is in line with current trends associated with digitalisation and the necessity of securing portable electronic devices. The company is planning to invest CZK 57.8 billion and to create 24 high-skilled jobs. Wandera CZ received an investment inventive in the form of corporate income-tax relief.

rPET InWaste – This company is planning to introduce the production of industrial regranulated rPET plastic in the Brno-Rural district. The government approved its investment-incentive application, as the project involves an investment with high value added. In connection with this investment, the company will implement its own research and development. The investment will have a highly favourable impact on the state budget, while also supporting the South Moravia region. Furthermore, it will contribute to strengthening supplier-customer relationships in the Czech Republic as a whole. The company plans to invest CZK 133.1 million and to create 18 new jobs. rPET InWaste received an investment inventive in the form of corporate income-tax relief.

About CzechInvest

CzechInvest plays a key role in the area of supporting business and investments in its comprehensive form. The agency’s unique combination of regional, central and international operations ensures the integrity of services and the ability to connect global trends with regional conditions in the Czech Republic. One of CzechInvest’s main objectives is transformation of the Czech Republic into an innovation leader of Europe. Established in 1992, CzechInvest is a state contributory organisation subordinate to the Ministry of Industry and Trade of the Czech Republic. More information is available on www.czechinvest.org or via CzechInvest’s Twitter, Facebook and LinkedIn accounts.

 

CzechInvest contact:
Jana Kohoutová
Spokesperson
+420 720 965 969
jana.kohoutova@zechinvest.org