1. Corruption and FDI Robert Hejzák / CzechInvest 31st November 2005

2. Corruption and FDI Robert Hejzák / CzechInvest 31st November 2005

3. Corruption --- abuse of public authority for personal benefit --- real corruption environment vs. perception of corruption

4. 5% 3% 0% 3% 21% 10% 18% 23% 31% 36% 46% 49% Generally lower costs Available workforce Stability of the environment Geographical conditions Investment incentives Educated and skilled workforce Inexpensive workforce Source: PricewaterhouseCoopers, 2001, Survey on Investment in the CR Three most important factors The most important factor Decision Factors to Invest in the CR

5. 012345678 9 Size of domestic market Corruption Bureaucracy Telecommunications Land availability Political stability Quality of local management Sufficient infrastructure Favorable tax climate Economic stability Investment incentives Production and labor costs Experience: Performance of CR (1= very poor, 10=excellent) Expectations: Decision criteria (1=unimportant, 10=critical) Expectations vs. experience

6. Investors’ confidence (1.) 1.China2.03 (2.) 2.USA1.45 (6.) 3.India1.40 (7.) 4.Great Britain1.25 (5.) 5.Germany1.17 … (4.) 12.Poland0.96 (13.) 14.Czech Republic0.93 (17.) 19.Hungary0.88 FDI Confidence Index (scale of 0 – 2,5) Source : A.T.Kearney, 2004

7. Threat to the competitiveness of the Czech Republic Most serious threats to the competitiveness of the new EU 10 (% of responses) Source: A. T. Kearney, 2004

8. CzechInvest’s Experience ---small (administrative corruption) vs. large (political) corruption --- type of corruption depends on the kind of investment

9. CzechInvest’s Experience Source: Transparency International Global corruption barometer 2004

10. Administrative corruption ---granting entry visa ---master planning / building permitting and licensing ---founding new companies (entry into the Company Register) ---customs clearance …

11. Negative Impact of Corruption ---volume of FDI --- “high taxation” effect ---“country risk” and “credit rating” ---return on investment --- lack of transparency of the business environment – corruption image

12. Thank you for your attention robert.hejzak@czechinvest.org www.czechinvest.org © Copyright, CzechInvest 2004. All rights reserved.