Czech Republic flag

Czech Republic country brief

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 2010, the Czech population was estimated at 10.5 million. The Czech Republic celebrates its National Day on 28 October.

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 elections for the Lower House took place in May 2010. Between May 2009 and May 2010, the Czech Republic was governed by a caretaker administration, 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: ODS and two newer parties, TOP09 and Public Affairs (VV). The parties won a combined 118 seats. The next Chamber of Deputies’ elections will be held in 2014. The last elections for the Upper House were held in October 2010, with next elections scheduled for October 2012. Petr Nečas, leader of the ODS party, is the current 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.

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 of 2008-09 affected the largely export-orientated Czech economy, as export demand from the EU declined.  Real GDP fell by 4.7 per cent in 2009, mainly during the first quarter. By 2010, the Czech economy showed signs of recovery, with estimated growth of 2.6 per cent.  The Czech economy grew by 1.7 per cent in 2011 and the OECD outlook for 2012 is for a slight retraction of -0.5 per cent in growth, owing to a decline in domestic consumption. The auto industry remains the Czech Republic’s largest single industry, and, together with its upstream suppliers, accounts for nearly 24 per cent of domestic manufacturing. The Czech Republic produced more than a million cars in 2010, over 80 per cent of which were exported.

Bilateral relations

Australia has a positive and constructive relationship with the Czech Republic. We are like-minded on many international policy issues and 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. More recent high-level visits have included travel to Prague in 2007 by Her Excellency Professor Marie Bashir AC, CVO, Governor of New South Wales, and the July 2011 visit to Melbourne by Czech Deputy Trade and Industry Minister, Milan Hovorka.

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. 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. Australia and the Czech Republic implemented a bilateral Social Security Agreement on 1 July 2011.

Bilateral economic and trade relationship

Australian merchandise exports to the Czech Republic in 2011 were valued at A$114 million, rebounding strongly following a decline due to the global financial crisis. Although wool remains by far Australia's largest single export item (A$94 million), Australian exports are slowly diversifying; other export categories include: aircraft, spacecraft and parts; taps, cocks and valve; and alcoholic beverages. Imports from the Czech Republic over the same period totalled A$371 million and included: passenger motor vehicles; prams, toys, games and sporting goods; wood products; and electric plants and parts.

At the end of 2010, Australian investment stock in the Czech Republic was valued at approximately A$160 million, with inwards investment from the Czech Republic a much smaller A$4 million. 

Export opportunities

As a member of the EU, with an advantageous location in the centre of Europe, a relatively depressed cost structure, and a well-qualified workforce, the Czech Republic is an attractive destination country for foreign direct investment as well as for pilot projects prior to expansion to other Central and Eastern European countries. Prior to EU accession in 2004, the Czech government harmonised its laws and regulations with those of the EU.

Since the Czech Republic entered the EU, the range of trade and investment opportunities has been growing. 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.

Austrade reports increasing opportunities for Australian business in:

Education and Training

The Czech Republic is a significant market for Australian education exports. In 2010-11, 1,139 visas were issued to Czech students studying in Australia – 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.

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 2011 stood at A$1.5 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.  In July 2011, Czech Deputy Trade and Investment Minister Milan Hovorka visited Australia for the Australian International Auto Show.

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.

If you would like more information on specific export opportunities in the Czech Republic, or more information on export assistance, please contact Austrade.

Last updated July 2012