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Factba.se: Australia DFAT Country Briefs - Czech Republic
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COUNTRY BRIEFS


OVERVIEW

The Czech Republic and the Slovak Republic were created as separate States on 1 January 1993 on the territory of the former Czechoslovakia. The Czech Republic is bordered by Poland, Slovakia, Austria and Germany and has a land area of 79 thousand square kilometres. In 2006, the Czech population was estimated at 10.3 million. The Czech Republic celebrates its National Day on 28 October.

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POLITICAL OVERVIEW

The Czech Republic is a pluralist, multi-party parliamentary representative democracy with the Prime Minister as Head of Government. The Parliament (Parlament České republiky) is bicameral, where the Chamber of Deputies or Lower House (Poslanecká sněmovna) has 200 members elected for 4 years and the Senate or Upper House (Senát) has 81 members elected for 6 years, with one-third of senators replaced every two years.

The President of the Czech Republic, Václav Klaus, is a former Prime Minister (1993-1997) and chairman of the Civic Democrats (ODS). President Klaus won a second Presidential election in the parliament on 15 February 2008. He will retain office until 2013. The President of the Czech Republic is selected by a joint session of the parliament for a five-year term, with no more than two consecutive terms. Although the President performs mainly representational functions, he also holds some important legal powers, including the appointment of the Prime Minister and members of the government, appointing members of the Czech National Bank Board, and signing or vetoing legal acts passed by the Parliament.

The last legislative elections held in the Czech Republic took place on 28–29 May 2010. The country was governed by a caretaker administration between May 2009 and May 2010, following a vote of no-confidence in the previous ODS-led coalition government. The May 2010 elections resulted in a coalition of 3 centre-right parties - the Civic Democratic Party (ODS), and two newer parties, TOP09 and Public Affairs (VV). The parties won a combined 118 seats in the 200-seat Chamber of Deputies. The President appointed the coalition government on 13 July 2010, with Petr Nečas, leader of the ODS party, appointed as Prime Minister.

The Czech Republic joined the Organisation for Security and Cooperation in Europe (OSCE) in 1995, the North Atlantic Treaty Organisation (NATO) in 1999 and the European Union (EU) in 2004.

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ECONOMIC OVERVIEW

Since abandoning communism in 1989, the Czech Republic has made significant economic progress and the country now has a solid market economy. The global financial crisis has affected the largely export-oriented Czech economy as export orders to the rest of the EU have declined.

According to The Economist Intelligence Unit, the governing coalition's priority is to reduce the budget deficit, which measured 5.9% of GDP in 2009 and is expected to be 5.3% of GDP in 2010. The coalition aims to bring the deficit down to 4.8% of GDP in 2011 and to 3% of GDP or less by 2013.

The Economist Intelligence Unit also predicts 1.4% GDP growth in the Czech Republic in 2010, following a -4.1% decline in GDP in 2009 during the financial crisis.

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BILATERAL RELATIONS

Australia has a positive and constructive relationship with the Czech Republic. We are like-minded on many international policy issues and we share strong people-to-people links.

Since the Second World War, there have been two major waves of immigration: after the communist takeover of Czechoslovakia in 1948, and following Soviet occupation in 1968. According to 2006 census figures, around 21,000 Australians identify themselves as having Czech ancestry. The largest proportion of the Czech-born population (around 40 per cent) resides in New South Wales.

Responsibility for diplomatic relations with the Czech Republic rests with the Australian Embassy in Warsaw. Australia's Ambassador to Poland is also accredited to the Czech Republic. Visa and migration issues are handled by the Department of Immigration and Citizenship office in Vienna. Australia maintains an Austrade managed Consulate in Prague, headed by an Honorary Consul. The Czech Republic maintains an Embassy in Canberra, Consulates-General in Sydney and Melbourne and Consulates in Adelaide, Perth and Lewisham (Tasmania).

The Hon Alexander Downer MP, then Minister for Foreign Affairs, visited the Czech Republic from 14-15 September 2005. This was the first visit by an Australian Foreign Minister to the Czech Republic since its formation in 1993. In Prague, Mr Downer met with then Foreign Minister Svoboda, Speaker Zaoralek, then Defence Minister Kuhnl and Mayor of Prague Bem. NSW Governor Marie Bashir AC, CVO visited Prague in September 2007.

The framework for Australian commercial relations with the Czech Republic include an Investment Promotion and Protection Agreement and a Double Taxation Agreement, signed in 1994 and 1995 respectively. The Agreement between the Government of Australia and the Government of the Czech Republic on Cooperation in Peaceful Uses of Nuclear Energy and the Transfer of Nuclear Material entered into force in 2002.

Australia and the Czech Republic have finalised negotiations on a bilateral Social Security Agreement, which is currently awaiting ratification.

The Australian Transaction Reports and Analysis Centre (AUSTRAC) signed a Memorandum of Understanding with its Czech counterpart in May 2008 to allow Australian law enforcement and other Government agencies to receive vital financial intelligence from the Czech Republic.

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BILATERAL ECONOMIC AND TRADE RELATIONSHIP

Australian merchandise exports to the Czech Republic in 2009 were valued at A$53 million, down from A$81.6 million in 2008. Although wool remains by far Australia's largest single export item (A$37 million), Australian firms have begun to diversify the export mix in health products (including veterinary), measuring and analysis instruments and alcoholic beverages. Imports from the Czech Republic over the same period totalled A$233 million, and included passenger motor vehicles, prams, toys, games, sporting goods, wood products, and electrical circuits equipment.

Australian investment in the Czech Republic has reached a reasonable level (aboutA$200 million), but there remains ample room for further development in this strategically located market.

Export opportunities

All sectors

As the Czech Republic has entered the EU, the range of trade and investment opportunities has grown. Expectations are that exporters will continue to profit from the Czech Republic's economic transformation, as major upgrades of pollution control equipment, telecommunications equipment and services, energy production and distribution, housing and municipal infrastructure and medical services continue.

There should be increasing opportunities for Australian business in IT (smart card applications, e-government, e-business), automotive industry (components and spare parts, R&D), wine, consumer goods and tourism.

Provision of developed business services, especially in franchising, appears to be a promising sector with high interest from local entrepreneurs.

Foreign investment has played a major role in the development of the Czech economy by providing both management expertise and the capital needed to restructure many Czech firms. The most promising sectors for deepening Australia's commercial investment involvement are infrastructure, energy and coal gasification, the high technology sector (especially in the living environment area), and industrial services.

Education and Training

The Czech Republic is a significant market for Australian education exports. There were around 2455 enrolments in Australian education institutions by Czech nationals in 2008 – a considerable number given the small Czech population and the distance involved. The majority of Czech student enrolments were in the English language sector, followed by or combined with vocational education and training (VET). The Australian Government's International Education Network works in partnership with Austrade (Prague) to promote Australia as a quality provider of education services.

During the last two years there has been a trend of growing enrolments in postgraduate courses. From July 2010, Austrade has taken on the role of promoting Australia as a quality provider of education services.

Wine

The availability of Australian wine in the Czech Republic is increasing, along with consumer interest. Wine exports have increased significantly in recent years and in 2009 stood at A$1.7 million. However, as the market saturates, growth has slowed.

Automotive

The Czech Republic is the largest automotive producer in the Central/Eastern European region. There are opportunities for Australian automotive suppliers of components, spare parts and after-sale products and, importantly, in cooperative research and development focussed on the Green Car project.

In July 2010, the Australian Automotive Industry Envoy, Steve Bracks, visited the Czech Republic and emphasised the interest of the Australian automotive sector in cooperating with Czech partners in R&D and manufacturing.

Infrastructure

There are ongoing opportunities in this sector for Australian companies. Best prospects include projects involved in highway, road and bridge construction, sewage treatment plant rehabilitation, and waste water system reconstruction. Other opportunities lie with commercial and storage building construction, construction of houses for senior citizens and industrial park development. There are significant opportunities for PPP projects focussed on infrastructure development.

The quality of Czech transport networks and systems, as well as rolling stock and vehicles, is generally below the standards of advanced European countries. All transport sectors, including railway, highway, inland waterway and air, have been targeted for infrastructure upgrade. Projects currently include a US$3.5 billion modernization of the rail system; a plan to modernise and extend the country's network which reached 1,000 kms and is planned to be doubled by 2014; and plans to develop the river transport system for intensive usage by the container hauling industry. A plan for the construction of a second international airport in Prague is being developed.

Aerospace and Defence

Procurement from abroad is crucial to military development since the Czech Republic does not produce telecommunications equipment, nonferrous metals, plastics, chemicals, transport machinery, or specialized metalworking equipment specifically designed for military use.

E-commerce

E-commerce in the Czech Republic continues to grow. Potential for exports is strong in both services and equipment. All banks now offer on-line banking and many Czech internet sites accept payment using this method. Electronic signature is also being accepted in the Czech Republic and a number of public portals have been launched with more expected.

The Czech Republic is a market of more than 10 million people with stable political, legal and economic systems. Czech banks have significant potential in the area of general banking services. All 36 banks in the Czech Republic have been privatised. However, Czech banks face numerous challenges arising from full harmonisation of domestic laws with EU legislation.

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TRADEWATCH CONTACTS

If you would like more information on trade and economic conditions in the Czech Republic, please e-mail the Department of Foreign Affairs and Trade. If you would like more information on specific export opportunities in the Czech Republic, or more information on export assistance, follow the link to the Austrade website (http://www.austrade.gov.au) .

-- Melbourne-based company, Neo Products, has signed a significant deal with the Czech Ministry of Labour and Social Affairs and has installed touchscreen computer technology in the first 100 information kiosks in employment and social welfare offices across the Czech Republic. This business was extended by another 150 kiosks in September 2007

-- Cochlear has provided hearing implants for their 350th surgical procedure, and is introducing upgraded implants for recent patients following recent technological innovations.

-- Successful Australian golfer Graham Marsh's course design company won a tender to develop a golf course close to Prague.

-- Airport noise management company Lochard won a €5 million tender to provide noise pollution monitoring and measuring services to Prague International Airport.

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Last Updated: September 2010

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