3 August 2017

Local and foreign enterprises are planning on investing more than 64 billion crowns on the basis of negotiations concluded with the government organisation CzechInvest in 2016. That is about 20 million crowns more than in 2015. The largest prepared investment belongs to the new head office for the development, testing and production of turboprop motors of GE Aviation, the aviation division of General Electric. Plus the German automobile manufacturer Daimler is currently looking for a locality for the new distribution centre of spare parts for the Mercedes-Benz brand in Central and Eastern Europe. The Czech Republic and Poland are among the favourites. The scope of the distribution centre would be many times larger than Amazon’s investment in Dobrovíz near Prague. So far CzechInvest does not want to comment on the negotiations.

“As far as GE Aviation is concerned, at this time the company is defining the requirements on the basis of which the location for the planned
centre will be chosen. In light of the placement of the current activities of GE Aviation in the Czech Republic, the Central Bohemian Regions seems
most likely. The company plans to decide on the choice of the locality by the end of the year,” stated the spokesperson for CzechInvest, Petra Menclová.

GE’s Turboprop Centre of Excellence will start producing modern ATP (Advanced Turboprop) motors in the year 2020 to propel a new single-motor aircraft by the American company Textron Aviation, which was introduced in 2015. Before opening the centre, GE Aviation will be developing and testing this motor in the Czech Republic. The plans call for the creation of 500 new jobs here.

In 2008 GE Aviation acquired selected assets of Walter Engines, a Czech company with more than ninety years of tradition in the area of aviation, and it founded the company GE Aviation Czech. It specialises in the designing, production and service of turboprop motors in its research and development plant in Prague’s Letňany district.

As Czechinvest confi rmed, 84 out of 100 cases of negotiated investments are expansions of companies that already operate in the Czech Republic. Every fourth case is also a high-tech project, meaning a project with a high added value. Eighty percent of the investment plans want to use investment incentives. Those are also one of the criteria that motivates investors to invest more. The availability and quality of the work force, the quality of the suppliers and the degree of preparedness of the localities are starting to be more important. So far the Czech Republic is lacking a suffi ciently large and well-prepared locality where a completely new strategic investor could come. Plus, in comparison with Europe, new investors are put off by the disproportionately long approval process that the investor has to go through before it can start building.

Last year there were 16 entirely new negotiated investments. Foreign investors are behind 78 projects. In one case it is a joint venture project.
Most frequently companies from the sector of automotive manufacturing want to invest. This year Japan’s HI-LEX, for example, already announced a factory for door systems for automobiles. It will be investing 1.16 billion crowns in the factory in Most, which the company will complete in June 2018. Japanese investors are the second most important in the Czech Republic behind Germans.

“We are anticipating the increased interest of investors from the aviation sector, which will be following the example of GE Aviation on the supplier level. Negotiations with Czech suppliers are already underway. The revival of demand on the part of Japanese investors can also be expected, as can the relocation of companies operating in Great Britain to continental Europe,” predicted the General Director of CzechInvest, Karel Kučera. “In light of the Czech Republic’s orientation on investments with a higher added value, departures of purely manufacturing companies for cheaper manpower are also possible. That, on the other hand, would free up the work force that is in such demand these days for new investments and reinvestments and could lead to a rise in wages,” Kučera added.

CzechInvest negotiated the most foreign investment plans with investors from Germany (20 in a total amount of 9.3 billion crowns). This is followed by investors from Austria (10 in the amount of 8.1 billion crowns) and the United States of America (10 in the amount of 4.4 billion crowns). The amount of the Chinese investments increased year-on-year. Last year Chinese investors promised to invest 3.2 billion crowns, twice more than in 2015. CzechInvest is currently holding ongoing negotiations with 14 Chinese companies from the areas of the automotive, electronics and metal-working industries. “If we will be successful in all the cases currently under negotiation, it would mean investments of up to 60 billion crowns for the Czech Republic on the horizon of several years,” Kučera concluded.

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