Incentives need change

In the last five years, the Moravian-Silesian Region has attracted investments of over CZK 75 billion, making it one of the most sought-after parts of the country. However, the 2009 figures were the worst in five years. In the first half of 2008, twenty investors began operating in northern Moravia, with projects totalling CZK 5 bn. However, 2009 brought only 18 new projects with a total value of CZK 209 million. Only one of these projects was in response to incentives; the rest were funded via the OP Enterprise and Innovation. None of the investments involved 100% foreign capital. In 2009, the M-S Region accounted for just 2 percent of total investment in the Czech Republic. Paradoxically, the mason behind this rapid drop in foreign direct investment is the Region's success in creating new jobs, bringing a dramatic fall in unemployment. Marian Lebiedzik, Deputy to the Regional President responsible for regional development, commented: "The drop in investments is partly caused by the recession, but also by the ineffectiveness of the current law on incentives.

The availability of incentives for foreign investors depends on the unemployment rate in the previous year - which in our Region fell so rapidly that foreign investors were unable to claim incentives." The Region has been pointing out the illogical nature of the law for several years - along with other ways in which foreign investors are disadvantaged (e.g. the shortening of the reduced tax period from 10 to 5 years and the lowering of the subsidy per new job from CZK 200,000 to 50,000). Lebiedzik added: "The Region is analyzing and assessing the law as it currently stands, and we plan to draft amended legislation. We have already begun to work towards this goal via the Association of Regions. Our aim is to re-invigorate inward investment and support the continued development of the Region."