Foreign investment influx grows

The CR should receive more foreign investments than Poland this year

Foreign investment influx grows

The CR can hardly come up with the present investment boom in West Europe. But the increasing dynamics in influx of foreign capital indicates the good times are yet to come.
Foreign investments to the CR between the years 1990 and 2000 are expected to greatly exceed 20 billion USD. Out of the sum more than 10 billions should stream in during the last two years only. There are many different reasons to invest here - from the revival in consumer demand through the newly re-started privatisation to the recently introduced investment incentives. We also should not forget the quite well-built infrastructure, cheap and skilled workforce, and lower input expenses.
The overall influx of foreign investment can be divided into two groups. To the first group belong investments linked to privatisation, while investments connected with new, so called greenfield projects, or to expansion of production, technical co-operation and joint-venture can be put into the second group. Until not a long time ago the first group investments prevailed, mainly due to privatisation in banking and telecommunication sectors, but the second group has been getting forward recently.
This year's forecast is very optimistic too. The influx of foreign investmets realised only through the government incentives could reach 1.5 billion USD, while the total sum of direct investments should be around seven billions. If this happens, the CR will out-distance Poland, the present leader in the Central-European region (in 1999 foreign investments in Poland reached 6.6 billon USD, while in Hungary it was 1.6 billion only).
The importance of foreign capital for the Czech economy is enormous and cannot be compensated with no matter how great revitalisation. Despite the existence and even possible extension of state incentives for investors investing into high-tec projects and sectors affected with high unemployment is in contradiction with the idea of lassez-faire, today it has become a useful standard in Central European economies, the CR inclusive.

Tomáš Reytt,
economist
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