Speeches

24. 3. 2016 22:06

Prime Minister B. Sobotka’s speech during the meeting with representatives of French companies from the employers’ association MEDEF

Madam Ambassador, Your Excellency,

Ladies and gentlemen,

I am very pleased to have the opportunity to meet with business representatives. Unfortunately, I am only visiting France and Paris for this one day as tonight I am returning to the Czech Republic. However, my visit today is very intensive and I am glad that I can now begin meeting businessmen, because trade and investment relations between the Czech Republic and France are very strong and I am glad that they are developing very well.

In the two years of my work as Prime Minister, today will be the third time I meet with the French Prime Minister, and I am convinced that we have managed to significantly intensify relations at the political level over the last two years, and I think that is good because France is our traditional partner and I am pleased that we have been able to build on this traditional partnership since 1989.

The Action Plan for the years 2014-2018 in the framework of the Czech-French strategic partnership was singed during Prime Minister Valls’ visit to Prague in December 2014, when we also had the opportunity to meet. Relations between the state authorities of both countries as well as our economic and trade relations unfold in the framework of this action plan.

Permit me now to explain in detail various aspects of our relations, prospects and possibilities, and also let me comment on the current economic and political situation in the Czech Republic.

Foreign investment

In terms of investment, our Action Plan in the economic sphere is focused on activities related to the creation of a favorable environment for trade and foreign investment. Foreign investment in the Czech Republic is appreciated because we know that it is crucial for economic growth and employment. Our government is committed to supporting new investments and the creation of jobs. There is a large interest in investing in the Czech Republic. In the first 18 months of our government’s tenure we have managed to secure 196 new investment projects totaling 108 billion Czech Crowns.

We have made certain legislative changes that allow for better targeting of investment, we are also striving to accelerate the construction of transport infrastructure and to create better conditions for investment in our industrial zones. We have amended the law on investment incentives, and it is still possible to acquire investment incentives in the Czech Republic, we are strengthening them in areas of technology centers and strategic service centers, enabling us to satisfy more subjects.

French investment has always been important for the Czech Republic. As I have already mentioned, France has been around the top positions in the overall ranking of foreign investment into the Czech economy. French companies have invested in the Czech Republic in various fields i.e. the automotive industry, electronics, engineering, construction, the banking sector and urban infrastructure, so these French companies are perceived positively in the Czech Republic. In my opinion, they have contributed to the quality of economic growth and in many cases they have also contributed to the economic transformation of the Czech Republic.

Our government does not plan any changes in tax rates in the coming years. We do not belong among the countries that are raising tax rates, the tax rates will be stable for the whole period of our government and in terms of tax adjustments we will focus on limiting tax evasion. This means that we will introduce measures to improve the options of the tax administration to reduce tax evasion especially in the area of cash payments.

Science and research

In the area of science and research, I would like to emphasize, and this is really one of the key priorities of our government, that we have a strong interest in collaboration in science, research and innovation. Our government has declared a strong line in our approach to enhancing the competitiveness of the Czech economy and we are striving to encourage agreements on specific international collaboration projects. Collaboration in the field of science and research in relation to the transfer of results into production and practice is an important part of the Action Plan we have within the Czech-French strategic partnership.

In connection with the Czech Republic, it is important to stress that we have recently invested heavily in the construction and modernization of research and development infrastructure. In recent years, over 50 completely new research and development centers have been built in the Czech Republic, which have modern infrastructure and modern instrumentation, and at the moment these facilities, which are equipped with cutting-edge technologies, seek project partners, which means there is space for collaboration. We have strived to utilize European funding, which means investing in increasing opportunities for supporting science and applied research in the Czech Republic. So in my opinion there is a large scope for collaboration with the private sector.

Digitalization

The third theme that I would like to mention is the area of digitalization of industry. The Czech Republic has an economy still significantly linked to industrial production. Foreign investment in the past 25 years has meant that the industrial character of the Czech economy has not decreased but rather strengthened. At the moment a great challenge for us is the digitalization of industry; the government is striving to support this area, we are working on the multinational initiative Industry 4.0, we are hoping to develop and support solutions that accelerate the transfer of modern technologies and comprehensive integrated solutions, not only in industry but also services. We are focusing on supporting investment, standardization, applied research, and also the area of cyber security, the application of innovative technologies in energy and transport, including the concept of Smart Cities. I am convinced that collaboration with French companies in these areas can bring positive synergies.

Energy

I think that the energy sector is an important area that obviously cannot be ignored. It is again part of the Action Plan of the Czech-French strategic partnership and goes hand in hand with sustainable development. The Czech Republic has long emphasized that in terms of electricity production in the European Union the source mix should remain the full responsibility of the national states, so that Member States can decide individually on the use of instruments of energy production that are appropriate for the given specifics of the country.

In recent months the Czech government has approved an updated state energy concept, which foresees that in the future the largest share of electricity production should come from our existing nuclear power plants, in second place in terms of the Czech energy mix production of energy should move from renewable sources and in other positions production of electricity will move from coal and gas.

We are currently going through the transformation of energy like other countries. The coming years will see a decline in coal mining in the Czech Republic and greater use of renewable resources, and we expect to continue with the development of nuclear energy in the two Czech nuclear power plants.

I will mention this during the meetings I have today, but I want to also remind those here now of how France’s large commitment has contributed to the positive outcomes of the international climate conference in December.

I think it is clear that the question of the transition to a low carbon economy creates great potential for the development of renewable energy sources, but it should go hand in hand with reducing energy consumption, increasing energy efficiency, innovation in the field of utilities, and the effort to also implement environmental elements in the field of public transport. In the Czech Republic we have long experience in the enforcement of legislation dealing with the energy efficiency of buildings and with large building insulation projects and, of course, we see further potential for collaboration with French partners.

I think we can expect discussions to be held in our country on how to encourage investment in new energy sources, on smart energy networks and, of course, we are following technological developments in the production of batteries with great anticipation because they can significantly contribute to the decentralization of energy sources and this, in my opinion, will have an effect on investment in conventional large sources of electricity production. I think it is also a topical theme in France, both of our countries use nuclear energy and in my opinion, we await a discussion on how to ensure that the restoration or maintenance of these resources will be economically viable in the future.

The situation in the Czech Republic

At the end of my speech, let me briefly comment on the economic and political situation in the Czech Republic. In terms of the economy, we have a successful two years behind us. The Czech Republic was still in recession in 2012 and 2013. In 2014 and especially in 2015 there was a significant acceleration in economic growth and in 2015 the Czech Republic was among the three fastest growing economies in the European Union. Last year, economic growth in the Czech Republic exceeded 4.3% and there was a significant reduction in unemployment, which according to Eurostat is currently between 5-6% in terms of national unemployment.

Last year’s high economic growth was due to natural external factors such as the decrease in oil prices, and was also influenced by internal factors, a certain level of support from household consumption, and was also strongly influenced by EU funds. Our government was able to accelerate the spending of EU funds and we were able to almost entirely exhaust these funds by the end of 2015. Approximately 1% of the 4.3% of last year’s economic growth was given by spending EU funds.

Given that this year we are starting to utilize funds in the framework of the new perspective of European funds, we expect the Czech economy to slow compared to last year; however, economic growth this year should be around 2.7% and we would like to reach 3% growth in 2016.

The Czech Crown will continue to be the valid currency of the Czech Republic, but the Czech National Bank has implemented a policy aimed at stabilizing the exchange rate of the Czech Crown against the Euro, which means that for the second year running we have essentially a fixed exchange rate of the Czech Crown against the Euro, which is somewhere around the level of 27 CZK per Euro. So, that is all for the macroeconomic parameters of the Czech economy.

Regarding the political situation, we have a coalition government made up of three parties, we manage to fulfill the governmental program and at this point we should be holding parliamentary elections in the Czech Republic in the autumn of 2017. That is all for information about the situation in our country.

Thank you for your attention and, of course, I am ready to answer your questions

Thank you.

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