1. CZECH REPUBLIC – investment opportunity! 31 March 2005 Csaba Gyöpös Director, South East Asia Operations

2. Presentation Structure 1.Role of CzechInvest 2.General information about the Czech Republic 3.FDI into Central and Eastern Europe and the Czech Republic 4.Czech investment climate 5.CEE Electronics and Automotive Industries 6.Life in the Czech Republic

3. V Our Organization Chicago Silicon Valley Brussels London Cologne Paris Prague Yokohama Hong Kong Steering committee Marketing Minister of Industry and Trade CR Investment support Enterprise development SmesBusiness properties and regions Coordination of development programs The European investment promotion agency (IPA) of the year 2000 & 2001 Best IPA in the EU accession countries of the year 2002 CzechInvest - Investment and Business Development Agency

4. General information about the Czech Republic

5. Czech Republic: Basic Data Source: Ministry of Finance, Czech Statistical Office, 2004 POPULATION 04 10.3 million LABOUR FORCE 04 5.3 million UNEMPLOYMENT DEC 04 9.5 % GDP per capita (PPP) 03 USD 18 700 GDP growth 2.Q 2004 4.1 % INFLATION RATE (CPI) DEC 04 2.8 % AVERAGE MONTHLY WAGE 04 USD 716 1 USD = 23.50 CZK

6. SINGLE MARKET OF 455 million CONSUMERS CZECH REPUBLIC: EU MEMBER from MAY 2004

7. Foreign Direct Investment (FDI) into Central and Eastern Europe and the Czech Republic

8. FDI stock per capita in Central and Eastern Europe By the end of 2003, the Czech Republic had attracted more FDI per capita than any other country in Central and Eastern Europe (in EUR): Sources: WIIW, Wiener Institut für internationale Wirtschaftsvergleiche, February 2004

9. ….Attractive The Czech Republic is in the Top 10 for investment Source: Ernst &Young, Europe: The Opportunity of Diversity, 2004 1.China 2.USA 3.Germany 4.UK 5.Poland 6.- 7.Czech Republic, India 8.- 9. France, Russia 10. Hungary

10. Inflow of foreign direct investment Source: CNB, December 2004 2004 - 2008: Country Forecast, April 2004 Updater, EIU USD BN “2006-08: Compliance with EU regulations improves the business environment and sustains foreign direct investment (FDI) inflows of US$3.5bn-4bn annually“. Source: Country Forecast Czech Republic, EIU 1993 – Q3 2004 USD 42.1 BILLION Q1 – Q3 2004: USD 3.5 BILLION

11. Top 10 CzechInvest investments Toyota Peugeot Citroën Automobile Czech, s.r.o. Japan, Franceautomotive850.202.000March 2002Kolín LG. Philips Displays Czech Republic s.r.o. Netherlandselectronics628.843.250February 2000Hranice na Moravě Škoda Auto a.s.Germanyautomotive562.00600December 1998 Mladá Boleslav Nemak Europe s.r.o.Mexicoautomotive317.151.361November 2000 Havraň DENSO MANUFACTURING CZECH s.r.o. Japanautomotive254.53936May 2001Liberec BOSCH DIESEL s.r.o.Germanyautomotive237.481.458December 2000 Jihlava Panasonic Mobil & Automotive Systems Czech, s.r.o. Japanelectronics235.191.182December 2000 Pardubice DHL Information Services (Europe) s.r.o. United Kingdom IT190.25866March 2003Praha VDO Česká republika, s.r.o.Germanyautomotive178.991.900February 2002Brandýs nad Labem Matsushita Electric Works (CZ), s.r.o. Japanelectronics100.00900January 1996Planá Czech branchCountrySectorInvestment (mil. USD) JobsAnnouncedLocation Source : CzechInvest, October 2004

12. Source: Czech National Bank, March 2004 Cumulative FDI inflow by country 1993 - 2003 Sweden 1% Other 11% France 9% United States 7% Switzerland 5 % Belgium 6 % Austria 11% Netherlands 13% Germany 32% United Kingdom 4%Japan 1% Total EUR: 37.818 billion

13. Cumulative FDI inflow by sector 1993 – 2003

14. Czech investment climate

15. 1004 respondents Source: FESSEL-GfK Omnibus Survey in Central and Eastern Europe, 2003 Language levels

16. Source: Progress towards the common objectives in education and training, EC 2004 Percentage of those aged 22 who have successfully completed at least an upper secondary education in selected countries, 2002 Completion of upper secondary education

17. Czech university students Source: Institute for Information on Education, Statistical Yearbook, 2004 Bachelor’s programme Master’s programme Postgraduate Total number of students 259,674 Opava 1,845 Prague 96,692 Brno 55,181 Ostrava 25,331 Olomouc 14,925 Plzen 14,594 H. Kralove 8,496 C. Budejovice 7,900 Usti n. L 7,578 Liberec 6,851 Pardubice 6,332 Zlin 5,622 Karvina 1,900 Cheb 1,597 Vyskov 1,195 J. Hradec 1,109 Lednice 893 K. Vary 587 Kunovice 526 M. Boleslav 266 Litomysl 61 Trebic 10 Kladno 183

18. Intellectual capital - Czech Universities Source: Institute for Information on Education, 2004 Prague Plzen Hradec Kralove Třebíč Opava Ostrava 2,135 9,394 57,830 15,020 2,015 1,675 9,202 10 112 1,916 6,522 26,051 104,530 total students: 274,192 IT students: *21,863 * The figures are based on location of faculty Brno Ostrava

19. Unemployment Source: Czech Ministry of Finance, April 2004 forecast ** * %

20. Source: Czech Statistical Office, 2004 Average Exchange rate 2003: 31, 844 CZK/EUR Average monthly wages in the Czech Republic in 2003

21. Transportation -- strategic location in the centre of Europe -- current 518 km of motorways represent about 50% of planned highways in 2010 -- the best transport network in Central and Eastern Europe Infrastructure Density (km/km²) Czech. Rep. SlovakiaHungaryPoland Roads 161.435.632.0118.8 Railways 12.07.58.27.3 Motorways 0.6 0.50.1 Source: Ministry of Transport, 2004

22. Investment incentives available in the Czech Republic  Manufacturing  Business Support Services & Technology Centers  Job creation in regions of high unemployment

23. Minimum investment - according to regions (Manufacturing) GroupMinimum Investment A 100 mil CZK / 3 mil. EUR / 4 mil. USD B 150 mil CZK / 5 mil. EUR / 6 mil. USD C 200 mil CZK / 6 mil. EUR / 8 mil. USD D Valid: January 1 – June 30, 2005

24. Tax incentive (Manufacturing) ╌ New firms: corporate tax relief for max. 10 years ╌ Existing companies: partial tax relief for max. 10 years ╌ Current corporate income tax rate = 26 %

25. Job creation and training grants (Manufacturing) ╌ Offered in regions with high unemployment only ╌ 200 000 CZK (app. 6 600 EUR / 8 000 USD) per each new job created in regions „A“ and 100 000 CZK (app. 3 300 EUR / 4 000 USD) per each new job created in regions „B“ ╌ 35% of total training costs in regions „A, B, C“

26. Job creation and training grants (Manufacturing) Valid January 1 – June 30, 2005 GroupJOB CREATIONRE-TRAINING A 200,000 CZK35% B 100,000 CZK35% C 0 CZK35% D 0 CZK 0%

27. Business Support Services and Technology Centres Framework Programme for Support of Technology Centres and Centres of Business Support Services

28. Types of supported projects ╌ Development and innovation activities with the close linkage to production of high-tech products and technologies, including development of specific software, in the following fields: ╌ aerospace ╌ computers and machinery ╌ electronics and microelectronics ╌ telecommunications ╌ pharmaceutics ╌ motor vehicles ╌ etc. Technology Centres (TC)

29. Forms of support (BSS & TC) ╌ SUBSIDY FOR BUSINESS ACTIVITY ╌ provided by the Ministry of Industry and Trade ╌ SUBSIDY FOR TRAINING AND RETRAINING ╌ provided by the Ministry of Labour and Social Affairs

30. Regions with average unemployment higher than 14% Valid for the period: January 1 – June 30, 2005 SM OV LN LB DC PH RA KD TP JC PV CV CL MB LT MO UL PR PE PU PJ NA ST ZR KO PM NB PI HB SU PB TU NJ OP SY RO AB BK BR UO KV JN VS JE CR BE RK DO KT KH PS ME OC TA PZ BN HK TC ZN JI BI CH SO BM TR JH PT CB BV CK KI KM UH FM VYZL HO

31. Eligibility criteria (Programme - regions) ╌ Min. amount of investment 10 mil. CZK (cca 0,3 mil. EUR / 0,4 mil. USD) within 2 years ╌ Min. of 10 newly created jobs within 2 years ╌ Min. 5 mil. CZK (cca 0,16 mil. EUR / 0,2 mil. USD) of the investment will be financed with own sources ╌ At least 25 % of the total amount of investment must be financed by resources, which do not include part of the State Aid

32. Investment risk rating Source: Czech National Bank, May 2004 Last update: May 2004 COUNTRY STANDARD AND POOR´S MOODY´SFITCH-IBCA SloveniaA+Aa3A+ Czech RepublicA-A1A- HungaryA-A1A- PolandBBB+A2BBB+ EstoniaA-A1A- SlovakiaBBB+A3BBB+ RomaniaB Ba3BB RussiaBB+Baa3BB+

33. Investment Opportunities in the Czech Electronics Sector

34. Contract electronics manufacturing European production trends 3.857 4.32 5.356 7.186 8.624 10.6 13.05 16.05 19 20.4 18.96 19.97 20.66 20.72 0.38 0.518 0.697 1.025 1.433 1.905 2.63 3.67 5.15 7.5 11.5 14.83 19.14 24.7 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 WESTERN EUROPE EASTERN EUROPE 4. 237 4.838 6.053 8.211 3.534 10.057 12.505 19.72 24.15 27.97 30.45 34.8 39.8 45.42 PRODUCTION IN BILLION USD Eastern Europe fuels growth Source: EMS Opportunity in Europe, MHM, 2003

35. The Czech Electric and Electronics Sector in 2003 ╌ 12.1 billion USD sales ╌ 11.4 billion USD exports ╌ 182,000 employees ╌ 15% of Czech manufacturing industry output ╌ 450 manufacturing companies ╌ 25% of foreign manufacturing investments ╌ 2.5 billion USD foreign investment since 1990 ╌ 16% of manufacturing exports BASIC DATA Source: EIA, 2004

36. Structure of the Czech Electronics and EE Industry Computer equipment, 23% Electronics components, telecommunication and consumer electronics, 21% Heavy-current technology, 44% Instrument and automation equipment, 12% Source: Czech and Moravian electrical and electronic association, 2004

37. COMPUTER ASSEMBLY Pilsen Prague Pardubice Ostrava 40% of European PC production is manufactured in the Czech Republic

38. 1. PANASONIC AVC NETWORKS CZECH – TV SETS 1996-97* 2. MATSUSHITA ELECTRIC WORKS COMMUNICATION RELAYS – 1998 3. MATSUSHITA ELECTRIC INDUSTRIAL – EXPANSION – 1999-2000 4. PANASONIC MOBILE & AUTOMOTIVE SYSTEMS CZECH – 2000 *5 millionth TV set produced in March 2003 PRAHA Ostrava Brno 2 1+3* 4 USD 250 MILLION TOTAL INVESTMENT “WHY DID WE CHOOSE THE CZECH REPUBLIC?” 1.QUALIFIED LABOR 2.STRATEGIC LOCATION 3.POLITICAL AND ECONOMIC STABILITY Mr. KIYOSUKE IMAI, PRESIDENT MATSUSHITA ELECTRIC WORKS, 1999

39. Investment Opportunities in the Automotive Sector in the Czech Republic

40. Automotive Investments In CEE - Trends ╌ Automotive sector will continue to be the leading industrial sector in CEE countries ╌ Knowledge and experience in this field remains an enticement of FDI ╌ Creation of “regional” suppliers in CEE

41. Attractivity of the Region Which countries or regions are you likely to consider investing in? Source: Trends in Advanced Engineering study, January 2004

42. 200 km 70% of CEE’s OEMs and suppliers are here Source: McKinsey&Company

43. LIVING POSSIBILITIES

44. GOOD QUALITY AT A GOOD PRICE! Quality of life Source: The World Competitiveness Yearbook 2003, IMD Cost of living index consumer goods, excl. housing, New York City = 100

45. WORLD CLASS GOLF COURSES and Karlovy Vary – established 1933 Marianske Lazne – established 1905 & inaugurated by King Edward VII

46. チェコの日本企業 製造業 合弁 and OEM´S PRAGUE 松下電器産業 MATSUSHITA ELECTRIC INDUSTRIAL Co. 東レ TORAY INDUSTRIES 京セラ KYOCERA(AVX) 昭和アルミニウム SHOWA ALUMINUM JAPAN METAL CHEMICAL-NIKOM 日本重化学工業 ASAHI GLASS 旭硝子 松下電工 MATSUSHITA EL.WORKS 日本化薬 NIPPON KAYAKU アルプス電気 ALPS ELECTRIC TESLA Y. S. MELCO 三菱電機 OPTREX 三洋電機 SANYO ASAHI BEER アサヒビール 大宝工業 DAIHO KOGYO JCCE オークマ OKUMA KAWASAKI H.I. 川崎重工 KOMATSU 小松 HITACHI SEIKO 日立精工 HITACHI METAL 日立金属 TATSUNO タツノ 豊田織機 TOYODA A.W. LOOMS SHIMANO シマノ AISAN 愛三工業 SIEMENS-MATSUSHITA シーメンス松下 松下通信工業 MATSUSHITA COMMUNICATION INDUSTRIAL Co. TOYODA GOSEI 豊田合成 KOITO 小糸製作所 KOYO SEIKO 光洋精工 ONAMBA オーナンバ DENSO デンソー FURUKAWA ELECTRIC 古河電工 Toyota Motor トヨタ自動 車 Tokai Rika 東海理化 TRIS ZEXEL-VALEO FUTABA IND. アイシン精機 AISIN SEIKI SHIMIZU IND. シミズ工 業 デンソーエアーズ DENSO AIRS 光洋精工 KOYO SEIKO

47. 5 PRAGUE Updated in March 2005 Taiwan 台灣 LG Philips Lite-On Enclosure 松喬實業股份有限公司 Hualon 華隆 Foxconn Honhai 鴻海精密工業股份有限公司 Daewoo AIDC 漢翔航空工業 股份有限公司 FIC 大衆電腦 Asustek 華碩電腦 Marwi 台萬工業股份有限公司 Korea 韓國 Malaysia 馬來西亞 Flex Design Centre Czech Singapore 星加坡 Tatung 大同公司 在捷克投資的亞洲商務公司 ( 日本除外 ) ASIA PACIFIC COMPANIES IN THE CZECH REPUBLIC (Excluding Japan) BRNO OSTRAVA Asustek 華碩電腦 Inventec 英業達 Chicony 群光電子 Beijing 北京 Amtek Kinloon 北京中海信業科技 Lite-On Technology 光寶科技股份有限公司 System Access Vivatek Shanghai 上海 Hudong-Zhonghua Shipbuilding (Group) 滬東中華造船 ( 集團 ) 有限公司

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