Czech Business & Trade 3/2018

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INTRODUCTION Questions of the Month for Marta Nováková, Minister of Industry and Trade What are your priorities as Minister of Industry and Trade regarding the support of export, business and investment in 2018? For our open economy, export is a key prerequisite of success. With its volume of 4.2 billion, export last year surpassed the magic four-billion crown limit. This year, however, Czech exporters will hardly be able to catch up with this record high limit, owing to external aspects. In this respect, a certain role is played by exchange rate differences and the activities of the Czech National Bank. But even if the final figures are not at last year´s record level, it is clear that Czech exporters are doing well, on the long-term basis, in the European markets, to which the overwhelming majority of Czech production is targeted, as well as in other countries, such as China, the USA, Russia and India. I am glad that these good results are also largely due to our economic diplomacy, which we share with our colleagues from the Ministry of Foreign Affairs. At the moment, Czech producers are hindered in their further upswing by the labour shortage. We are a country with the lowest unemployment rate within the EU on a long-term basis, which naturally has its social benefits. The current labour shortage, however, is too big to be saturated by our own resources. Our Ministry is therefore working on programmes, which are already bearing fruit, to bring skilled workers to the Czech Republic from other countries. With regard to the business sphere, you know that I myself come from the business environment, and this explains why my clear priority is to radically reduce the administrative burden of our businessmen. My principle is that not businessmen, but papers should be making the rounds of the offices. That is why I place such emphasis on the digitalisation and electronisation of State administration. And, concerning the investment environment, it is unequivocally targeted towards projects with high value added and based on a high proportion of research and development work. Inferior projects have no chance. We do not want to and we shall not be a country of assembly, using journalism terminology. We´ll be a country of research, development, investment and higher pay for employees doing skilled work. This is my objective. You said that you wanted to focus on digitalisation and robotisation and on getting the decision on the construction of additional blocks in the Dukovany or Temelín nuclear power stations. Can you give us more details? Yes, I see no reason why today, when State institutions are equipped with the most sophisticated technical facilities, businessmen should be obliged to do the rounds of public authorities. They should be doing business and not be queuing at the doors of all sorts of institutions, wasting their precious time. I see tremendous opportunities in the further digitalisation of State administration that will make our enterprises, especially small and medium-size businesses, more efficient. This is my first priority – less red tape and more work... I know from my own experience what the situation in the offices is like and what needs to be done in this area. With regard to the development of our nuclear programme, the priorities are clearly given, and we are working on their specification together with our colleagues from the Permanent Nuclear Energy Commission. In future, our country will not be able to do without nuclear energy. And our task today is to create the optimum conditions for its sound development in the coming decades and to find a suitable model for its financing. This is our responsibility, which we accept, although from time to time we are criticised for not seeking other ways. The truth is that we are seeking them, but at the moment the first priority for our economy, based on industrial production, as well as for households, is to unequivocally ensure future energy security based on nuclear power. Can you see any major trend or expectation influencing the Czech economy and industry in the year 2018? In 2018, we celebrate the centenary of the existence of the independent Czechoslovak Republic. This year we also mark the 60th instalment of the International Engineering Fair in Brno. These are natural highlights we can be proud of, regarding both the more than two-century-long industrial tradition, which is the basis of our current prosperity, and the Brno Trade Fair, which has successfully stood the test of keen world competition. Nevertheless, if you ask me about the activities that should influence our economy, my unequivocal answer is digitalisation and a resolute reduction of bureaucracy in business. We have a self-conscious sector of big firms, but a well-balanced economy must be formed by medium and small enterprises, including family firms. This is our family silver and the salt of our business and enterprise. So far, our State has not been too friendly towards these respectable people. This is what I want to change. We have at our disposal digitalisation, electronisation of State administration and other means of reducing superfluous administration, which unnecessarily stifles creative and active people. So that if I really wish and expect anything, it is the creation by the State of a fair environment also for small and medium enterprises. When this is achieved, the Czech economy will rise still further above the level at which it now stands. Photo: Ministry of Industry and Trade archives ; www.freeimages.com | 4
CZECH BUSINESS AND TRADE Challenges for Czech Engineering According to the latest Study of the Czech Engineering Industry, the overwhelming majority of firms (97 %) agree that Czech engineering is expected to grow by 3.4 per cent this year. Next year, however, companies forecast a slowing down of the favourable growth trend and expect stagnation (a mere 0.5 % growth). Nearly half of the firms (42 %) even predict a decline. “I am expecting the industry to grow, but its growth will depend on the situation in foreign markets, in particular as regards the automotive segment, which has the greatest impact on Czech industry. For energy and raw material engineering, the most important factor will be the development of commodity prices, which conditions the investment decisions of raw material extractors and processors,” says Antonín Růžička, Managing Director of Wikov Industry, a.s. This is confirmed by Robert Keil, Business Development Manager for Advanced Engineering, CzechInvest, who adds: “Czech engineering has a very good reputation around the world. However, in spite of its relative stability and the prediction of just a moderate decline, it is faced with a relatively complicated task. If it wants to keep its position at the very top of technological advancement and participate actively in the technological revolution of the Internet of Things and smart factories, it must be able to apply the new technologies in practice without delay. This, of course, will depend on the education we are able to offer students and prospective workers, who will have to master new and continuously developing sophisticated skills and knowledge. Of key importance in this connection will be the availability of a sufficient supply of experts.” • INNOVATION AS A PRIORITY Under pressure of the labour shortage, Czech firms actively innovate by using the latest inventions in the area of automation and robotisation. Potential reserves in production can be spotted by production IT (MES) systems, which in digital factories can control a part of the manufacturing operations. Some Czech enterprises already use digital factory applications with Industry 4.0 characteristics. Foreign demand is expected to continue growing significantly, even though the risks are now more acute in connection with the slower growth of the economy than at the beginning of 2018. Czech exports will benefit from this favourable outlook, as indicated by export expectations, which, if fulfilled, would be an indication of a more massive growth of exports than in the first quarter of 2018. The greatest risks are geopolitical issues in connection with another potential escalation of business wars or greater slowing down of the Chinese economy, which would probably affect even German exports. The stronger crown and higher wages are additional risks, although not unmanageable at the moment. “Czech engineering plays an irreplaceable role in the country´s exports and it will be most important for it to maintain its position in the traditional markets, while seeking ways to expand to new territories. In view of the steadily growing competition, mainly from China and other Asian countries, a very important role will be played by active government support in financing and insuring export projects through the Czech Export Bank (CEB) and the Export Guarantee and Insurance Corporation (EGAP). An important question is how the sanctions issue will be solved in connection with exports to the Russian Federation, Iran, etc. Another important task will be to ensure the supply of qualified labour, especially as regards technical professions, where the shortage of labour is critical. One 5 |
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Czech Business & Trade 3/2018

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