Forewords

Dear Readers,

The Czech Republic is renowned for its exceptional safety, the tradition of high-quality education, and robust industries, from automotive to IT. To keep up with new trends and many global challenges of our time, my government is now restarting the country with long-term strategic investments. This includes advancing critical fields such as AI research, chip production, and electromobility. We are also set to become a major player in areas such as new nuclear-power technology and lithium mining and processing.

The ongoing move towards a higher-value economy can be seen everywhere. Our transport infrastructure is experiencing the largest influx of funding in the last decade. Significant reforms are shifting the education system towards a stronger focus on STEM subjects, fostering a future-ready workforce. We are also catalysing innovation through partnerships linking universities, research institutions, and the private sector.

At the same time, we continue in our steps towards energy security and resilience. Over the past two years, we have been successfully reforming the energy sector, making it fully independent of Russian resources and preparing it progressively for the green economy, which includes the development of hydrogen solutions.

As a free and open economy in the heart of Europe, our future growth depends on working in partnership with the companies that choose to do business and invest here. That is why we are striving to make life easier for them: We have streamlined tax laws, sped up construction procedures, and introduced attractive investment incentives. Businesses can now operate in major foreign currencies, and it is easier for them to attract skilled global talent.

The Czech package offers a rare combination of a strategic location, quality production, and growing investments in modernisation. I am proud of what we have done so far, and more is yet to come.

Dear Readers,

I have the greatest pleasure of bringing you already the ninth edition of the Business Guidebook, Czech Republic. We have chosen a new motto for this year: Stability without stagnation.

Various types of crisis that hit Europe and entire world in last years, like covid pandemic or the Russian aggression in Ukraine have not only distorted many industrial supply chains and led to troubles across several sectors of industry, but also brought very high inflation, very expensive energy costs and other extremely unpleasant consequences for both companies and citizens.

Nevertheless, last months have brought big relief to all thanks to inflation rate getting back to 2% and energy prices going significantly lower, so we can say loud and clear: stability is back! And for this year 2024 we expect to get back to growth too. Czech economy is supposed to expand again and some promising investment projects are on the way. It is not surprising, as Czechia provides an ideal mix of good return on investment, reasonable costs, strong ideas, potential for future development, superb human capital and an enthusiastic working environment.

This guidebook is a very special publication, as it provides substantive and sought-after help to international investors and their advisors searching for the most suitable place for investments globally and in Europe in particular. We present contributions of leading experts and institutions in each of their respective fields in Czechia.

The next two years will bring about a restart of investment activity and our country will be at the forefront of it. Our well-educated people, institutional and political stability, excellent access to major European markets, safe environment, and high quality of living – none of that has disappeared, nor will any of it disappear any time soon. All of these factors will still be here to ensure a stable return on your existing or future investment, which is something that you may not see in many other countries.

Europe needs more reinvestment on the continent and there are few places that are better suited for that than Czechia. Vast sums of money will be spent on recycling and other parts of the circular economy, investment in energy independence and new energy sources, as well as in modern technology in general.

And I wish to highlight one particular area. The European Green Deal policy is changing as you read this article, but it is here to stay and will have a massive impact on our economy. There are many fields where investing in Czechia may start a continent-wide venture utilising the Green Deal challenges.

For all of these reasons, I remain optimistic about our future and your future with us as well. Our Association for Foreign Investment will be here to help you succeed, working hand in hand with our institutional partners including CzechInvest, the Ministry of Industry and Trade and the Ministry of Foreign Affairs.

Finally, I would like to thank everyone who played a role in creating this publication. We highly value your support.

I am convinced that this unique guidebook (and its sister platform, www.czechbusinessguide.com) will serve as a trustworthy source of information that you find useful in your strategic decision-making. We will welcome your feedback, opinions, and suggestions on how to improve it. Please get back to me at kamil.blazek@afi.cz with any ideas or comments you may have regarding this guidebook, or the topics covered or not covered in it.

Dear Readers,

Situated in the heart of Europe, Czechia has been a prosperous country throughout its modern history. As a developed country with an open, trade-oriented economy, Czechia is one of the twenty most advanced and competitive countries in the world, with an excellent position in the index of economic freedom. It is also the twelfth safest country in the world. Having an effective legal environment, healthy banking system, and stable political culture, Czechia is the sixth most complex economy in the world, which provides you with favorable conditions for investments.

Our country’s accessions to the EU and NATO celebrating its 20th and 25th anniversary in 2024, are undoubtedly important historical milestones on our path to democracy. At the end of the year 2022, we have symbolically closed the door behind a successful presidency of the Council of the European Union. All these events have had a significantly positive impact on the Czech economic development and have shaped Czechia’s position in other countries.

However, as important as it is to remind ourselves of our history and celebrate milestones, it is essential, especially concerning investments, to focus on the future. Even though the ongoing Russian aggression in Ukraine and the energy crisis as its consequence have affected Czechia and its economy, we can still rely on our modern export-oriented economy. Our companies focus on modern technologies, R&D and innovations in the long term. Our main goals include the cultivation of an effective start-up environment, innovation centers, smart investments, digitalization of the public sector, and more, all while profiting from the most industrialized environment in the EU. Our economic and scientific diplomacy builds on qualities such as scientific potential and advanced research, well-developed industry, favorable accessibility, and highly skilled people in various fields of industry.

Based on estimates for 2024, Czechia should continue to maintain the status of a country with favorable macroeconomic stability. For this year, Czechia's economy is expected to grow by 1,1%. It still keeps the lowest rate in the EU at around 2.6%. In terms of the world trade, Czechia maintained its position as an eminent world exporter based on the world trade rankings, where it was ranked as the 29th largest exporter and as well the 29th largest importer of goods worldwide.

Even though the aforementioned qualities draw a certain picture of the Czech economy, potential foreign investors need to analyze further many different variables before investing. The current government priority is to highlight Czech science diplomacy through a network of Czech embassies and to attract new researchers to our country. Our Ministry, together with institutions responsible for R&D&I progress, works hard on internationalization of Czech science in order to promote its achievements and capacities. This concerns attractiveness of the Czech higher educational system, extensiveness of research institutes, but also capacities of large research infrastructures, including those with international participation. Czech science diplomacy also opens the door to new opportunities for cooperation with an emphasis on export support, transfer of knowledge and technology into practice and commercialization of research results and innovative solutions.

This collaborative environment has shaped Czechia into one of the most successful transition economies in terms of attracting foreign direct investments. On behalf of the Ministry of Foreign Affairs, I highly appreciate all activities and initiatives that the AFI, CzechInvest, and other institutions are taking on to support companies based in Czechia. Thank you for your devoted work and we wish you a lot of success in the upcoming years.

Dear Readers,

Not only Czechia, but the entire world has faced many challenges in recent times: the ongoing conflict in Ukraine, new conflict in the Middle East, climate change. These challenges make us stronger, more resilient and more independent. Our society and economy have the opportunity to accelerate the inevitable development of engineering technologies. Czech businesses are seizing the opportunity to engage in modern supply chains and build a more resilient economy. And we can see it in investors who are eager to invest and innovate. This is giving Czechia a new charge.

It is clear that events of the year have deeply affected everyone, including our citizens and businesses, in particular by exposing a weakness in the economy - dependence on energy sources from an unreliable supplier. We can only address this by strengthening the resilience of supply chains, particularly - but not only - in the energy sector. To reduce the vulnerability of the economy, we need to diversify supply chains among our reliable partners and strengthen our own capabilities in strategic areas. Our businesses have a vital role to play in this, and we are here to support them by improving the business environment, including research and innovation. With some distance I can say that in many respects we are succeeding.

Competitive manufacturing in the EU, which is particularly important for capacity building in strategic sectors, can be supported by promoting digitization and the development of the digital economy. At the national level, we reflect this approach in our policies and also in concrete measures to encourage businesses to harness the power of digital tools. Despite the crisis, we are implementing the Resilience and Recovery Facility to financially support our digital economy objectives. More than 22% of the financial resources are focused on the digital transition, including the digital transformation of enterprises.

In the year 2023 there were many positive signs. For example, the Czech innovation ecosystem has continued to thrive even in these challenging times. CzechInvest, which promotes innovation in Czechia, has supported a significant number of high-quality innovative startups this year. These startups have the potential to bring new technologies and products to the Czech economy that can help it grow and strengthen its competitiveness. Our government is pro-investment: an amendment to the Investment Incentives Act has been approved, making it much more attractive to investors. A government committee on strategic investments has been established, where both the Ministry of Industry and Trade and CzechInvest are members, and we are addressing further measures to accelerate economic growth, including further investment in breakthrough technologies and innovation. Further, ammending the law on linear structures will simplify the processing of building permits not only for linear structures, including environmental impact assessments, it will secure simplified permitting process to strategic investments in transformation areas with positive impact on competitivness of Czech economy.

We are one of the leading innovators in Central Europe and the future looks good. Innovation can help overcome current challenges and create a better future for us all. The year 2024 will be challenging in many ways, but I am confident that together we can emerge from the current difficult situation stronger, more resilient, more competitive and more innovative.