* Czech 2009 FDI seen falling 50 pct to CZK 10 bln
* Projects steady, but now smaller, more value-added
* No investor flight seen - CzechInvest
By Jason Hovet
PRAGUE, Aug 18 (Reuters) - Foreign direct investment in the
Czech Republic will likely fall by half in 2009 on the tail end
of the country's worst economic slide in more than a decade, the
head of the state investment agency CzechInvest said on Tuesday.
The Czech economy shrank a record 4.9 percent year-on-year
in the second quarter due to dwindling foreign demand for the
Skoda cars and televisions it produces, a sharp contrast to
years of foreign investment fuelled boom earlier this decade.
Alexandra Rudysarova, general director of CzechInvest, said
foreign direct investment (FDI) had fallen to 5 billion Czech
crowns ($275.6 million) in the first half of this year and that
she expected another 5 billion from July to December.
That would put all FDI for 2009 at around 10 billion crowns,
a drop of more than 50 percent over last year's levels of
slightly over 20 billion crowns.
And a return to the peak years of FDI volumes was a long way
off as foreign companies cut back on new spending.
"(The second half) will be similar to the first half of the
year," she said. "It is the trend (that) the number of projects
is growing and the volume of investment is going down. So
projects are smaller and smaller."
CzechInvest mediated investment projects in 2008 worth 29.8
billion crowns, down from 70.9 billion the year before, with
around one third of that sum involving Czech-based firms.
In 2006, the agency oversaw investment projects worth 114
billion crowns that boosted employment by almost 35,000. It was
a peak year for FDI when the economy was humming along at annual
growth of around 6 percent.
10-YEAR SLOG AHEAD
"I don't think we will get back to the same levels anytime
soon," Rudysarova said. "It will take a long time to reach the
same levels. I think we have maybe 10 years in front of us. But
the economy will increase slowly but surely."
A 30 billion crown Hyundai Motor Co <005380.KS> investment
into the Czech Republic's third car factory in 2006 was the last
high-profile manufacturing project in the country, due to the
tightening supply of workers in the past two years.
Rudysarova said the agency had shifted its focus in that
time to go after more added-value investments such as research
and information technology centres, which now make up a bulk of
secured projects.
Some analysts have estimated that around a fifth of foreign
firms are considering an exit from the country in search of
cheaper production, but Rudysarova said the agency had not seen
any indications that that was the case.
Hitachi <6501.T> closed its Czech plant manufacturing plasma
televisions this year, taking 800 jobs with it in one of the
biggest moves by a foreign investor out of the country. However,
Panasonic <6752.T> has taken over the plant to recover 300 jobs.
CzechInvest estimates only a handful of firms could leave,
eliminating some 1,000 jobs. The agency expects projects to
create 12,000 more, down from 14,606 jobs last year.
Czech unemployment rose to a more than three-year high of
8.4 percent in July and is expected to grow.
But most analysts say the contraction felt by industry has
bottomed out, especially after positive signals from main
trading partner Germany.
(Editing by Jon Boyle)
