During the last few years Russia has become more attractive for Czech investors.
According to research carried out among 809 managers from the biggest international corporations, Russia holds fifth place in the rating of countries that are most interesting for investments. Experts believe that by 2025 Russia will be the fourth biggest economy in the world and the second biggest financial market after London. The intensity of its economic growth can be compared to the post-war development of Germany and Japan.
After a cooling in economic relations in the 1990s, the Czech Republic is again looking toward Russia. Based on geographical proximity and stable historical connections, Czech investors feel more confident in Russia than their western colleagues. Of course, working in Russia is not so simple, and has its “hidden agendas.” Among the problems encountered by foreign businessmen, the biggest are corruption, ineffective bureaucracy, and the influence of policy on the economic situation. However, specialists are confident that the well-informed businessman, who is acquainted with local conditions and legal aspects, can make significant profits in this market.
The insurance systemexisting in the Czech Republic for foreign financial deposits also contributes to the accumulation of investment volume.
In 2007 the volume of commodities circulating between the two countries showed a growth of 27%. Exports of Czech goods to Russia between January and October, 2007 grew by 32%, whereas imports from Russia into the Czech Republic increased by 25%. During just 10 months last year trade between the two countries reached 2.2 billion USD – 0.4 billion more than for the whole of 2006.
Visits byVladimir Putin to the Czech Republic in March 2006 and the Czech President Vaclav Klaus to Russia in April of last year also contributed to the creation of a favourable investment climate.
The heads of both countries have given special priority to the question of investments.
Today Russia supplies primarily energy, which makes up about 80 percent of its export volume to the Czech Republic, whereas the latter has increased exports from its mechanical-engineering sector. There is thus a certain imbalance in the structure of Czech-Russian foreign trade. In Russia today there are about 80 functioning collaborative and Czech enterprises. However, while the total volume of investments in Russia now reaches about 30 billion euros, 3 billion of which come from the European Union, the Czech Republic’s share is just 0.8 percent of European investments.
These figures show that the potential for cooperation between the two countries in the investment area is far from exhausted.
Russia, for its part, is also interested in activating commercial and investment projects in the Czech Republic. The industrial group “OMZ” (United Machine Plants), which owns the machine enterprise “Pilsen Steel”, and “Skoda JS”, a company producing equipment for the atomic industry, are examples of large Russian investments in the Czech economy.
Currently, plans by Russia’s “Aeroflot” to purchase “Czech Airlines” are being widely discussed.
Leading Czech investors also include the automobile maker “Skoda”, pencil manufacturer “Koh-i-Noor”, and the food company “Hame.” A recent example of large Czech investments is the Czech company “Mat Mineral”, a member of “CBPS” holding, which contributed about 35 million euros toward the creation of an industrial complex manufacturing building materials south-east of the Urals. The total volume of contributions for construction of the complex will reach 750 million euros.
The Ural lime-cement plant will produce 2.4 million tons of cement, 1.5 million tons of crushed stone and 150,000 tons of dry mixtures annually.
Specialists say that when planning future investments in Russia, businessmen should take into account that opportunities in the two Russian capitals –Moscow and St. Petersburg – are largely exhausted, which is why investors should look more toward Russia’s regions, the local governments of which are taking significant steps to improve investment climate and ease conditions for investments in the local economy. Commercial projects in Russia can be much more easily realised on the regional level than on the central one. In the Russian Federation a special state structure for attraction of foreign capital has been created, the main task of which will be to support foreign investors in the initial stage of their activity in Russia, and to help in solving legal questions and clarifying the procedure of Russian taxation.
