Czech agency lures $5.3 bln in investment in 2006

...year, the state-run CzechInvest said on Thursday.

Officials said the number was a record thanks to a pledge by South Korean carmaker Hyundai Motor Co to spend up 1 billion euro ($1.30 billion) on a new factory that will start production next year to help Hyundai expand in European markets.

Domestic companies accounted for about a quarter of the investment projects handled by CzechInvest.

An investment boom in the European Union member helped sustain economic growth of about 6 percent annually last year. But it has also taken its toll as foreign investors have begun to take home profits on maturing projects.

"Last year was a record one ... It is not possible to repeat such volume, there will be a sharp drop (in 2007)," CzechInvest chief Tomas Hruda told Reuters after a news conference.

CzechInvest said uncertainty stemming from seven-month-long political crisis and a rising share of investment into less capital intensive service and technology sectors were likely to keep the overall investment volumes below last year's levels.

CzechInvest is an agency arranging state investment aid, such as tax holidays, training and land subsidies, for companies setting up business in the central European country.

Foreign direct investment (FDI) inflows, including both CzechInvest and other private projects, totalled 134.3 billion crowns in January-November 2006, according to the most recent central bank data.

[PRAGUE/Reuters/Finance.cz]