The Czech Republic needs to restart its economy – and that requires high-quality foreign investments

Wednesday, April 21, 2021

This year, the Association for Foreign Investment is commemorating the 25th anniversary of its establishment and presenting 25 proposals for change

Prague, 21 April 2021 – The main objectives of the Association for Foreign Investment (AFI) are to increase the Czech Republic’s attractiveness for investors, enhance the financial self-sufficiency of municipalities and motivate them to support business through tax revenues, and to develop industrial research and the green economy. In comparison with other EU countries, there are few high-quality foreign investments in the Czech Republic. The state lacks an ambitious long-term investment strategy and, as the AFI points out, the country’s transport, data and education infrastructures are insufficient. The coronavirus crisis may offer new opportunities, changing the property market, access to education and labour-market conditions. At the same time, the state should purposefully support only prospective sectors in the future.

This year, the Association for Foreign Investment is commemorating the 25th anniversary of its establishment. On this occasion, it is presenting 25 topics and the same number of changes, which are divided into five key areas:

  1. A more competitive Czech Republic for attracting new investments
  2. Investment in municipalities and regions
  3. Crisis as an opportunity: In defiance of COVID
  4. The Czech Republic as a driver of the Green Deal
  5. Research and development as the driving force of investments

“The government’s decision-making in handling the coronavirus crisis does not give foreign investors the impression that the Czech Republic is a trustworthy country. At the same time, COVID can be an opportunity to change and restart the Czech economy, which had long been in good condition until last year,” says Kamil Blažek, chairman of the Association for Foreign Investment, who has led the AFI since 2010.

Even though the Czech Republic has good infrastructure, including healthcare, last year was worse than it could have been. The Czech Republic lacks direction and as the pandemic comes to an end, it is necessary to restart the country’s economy. The Association for Foreign Investment wants to help the Czech Republic recover from the crisis situation and is thus presenting 25 change proposals,” Blažek adds.

The Czech Republic needs to change conditions for investors

The Czech Republic needs investors and investments. Therefore, it must take a maximally helpful approach toward investors and change its existing, less active approach. It has to create tools that will enable the Czech Republic to compete with countries such as Poland, Germany and Spain for prestigious global investment projects. The Czech Republic has to be more flexible in terms of incentives and capable of formulating competitive offers – support programmes, investment agreements, joint ventures, and partnerships between the public and private sectors. In short, the country must act innovatively in every respect.  

The Czech Republic also lacks well-developed transport and data infrastructure, and is lagging behind in the area of cybersecurity. “It is necessary to build high-quality, modern infrastructure that will form the country’s backbone for economic development. Over the past decade, others have caught up with and surpassed us,” says Blažek. In connection with the impacts of the coronavirus crisis, a new building code could become a key aspect. The AFI considers this to be the first major conceptual change in the building-permit regulations in the past two decades that will help to accelerate the permit processes. The AFI also supports the use of brownfields and the green economy for the development of investments and construction. At the same time, the state should use tax revenues from local business development, i.e. budgetary tax assessment, to motivate municipalities and regions to be proactive in their approach to investors.

Another important area is support for industrial research, which should involve greater cooperation with universities and academic facilities. The state should provide foreign investors with better conditions for establishing research and development centres in the Czech Republic. It should also focus on specific areas of research that have potential for development in the future. This particularly concerns the areas of artificial intelligence, nanotechnology, aerospace, the arms industry, energy and future energy sources, such as hydrogen, synthetic methane and advanced nuclear technologies.

“Another major task is helping local investors expand on the Czech market and abroad. The AFI’s strength lies in its membership base and its broad coverage of issues in areas that are important for investments, such as manufacturing, development, technology and shared services. We have overlap into all key sectors including, for example, manufacturing, IT, energy, finance and real estate,” says Marta Šťastná, vice-chairwoman of the Association for Foreign Investment.

The AFI’s meaning and history

The AFI is an organisation whose purpose is to provide comprehensive support for investments and investors in the Czech Republic. It was established in 1996 as a platform for cooperation between the public and private sectors with the aim of continuously improving the Czech investment environment, conditions for investors, legislation, communication and exchange of information. The AFI’s membership comprises forty companies that are focused on supporting premium investments and have a long history of assisting all types of investors newly entering the Czech market.

Domestic investors, from the biggest global brands to medium-sized Czech companies with Czech owners, are also always on the AFI’s radar – from accession to the EU through the economic crisis of 2008 to the COVID-19 pandemic. The AFI has mediated a number of key foreign investments including, for example, those of Honeywell, Toyota, Johnson Controls, NEXEN Tire, Denso, Yankee Candle, Canpack and A123.


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