In this week’s Business News: World Bank releases upbeat growth forecast; deal nears on refloating Czech shipyard; ministry seeks to raise real estate taxes; new law for landlords and tenants ahead of expected New Year clash; and charter flight marriage smacks of shotgun wedding.
The World Bank has produced an upbeat prediction of Czech economic growth next year of 2.6 percent compared with this year’s 2.0 percent in its regular survey of the region. That figure is significantly higher than the local Finance Ministry’s figure of 2.0 percent and the central bank’s even gloomier prognosis of 1.2 percent. Even so, the World Bank still sees Czech growth in 2011 trailing the 3.2 percent average for central and south-east European countries which joined the European Union in the last six years.
One of the Czech Republic’s oldest and most distinguished shipyards ―Děčín-based České Loděnice ―appears to have been thrown a lifeline. Dutch-based multinational shipbuilder VeKa is reported to be on the verge of signing a deal to take a stake in the Czech shipyard which ceased production in the summer. Even before laying off its around 200-strong workforce, the shipyard had been reduced to producing just the hulls of ships at considerable losses. VeKa’s four year construction plan is said to count on producing almost five entire vessels.
Czech real estate taxes are amongst the lowest in Europe, with no distinction drawn between local charges on a square metre of land occupied by luxury villas and rundown apartment blocks. That fact has often been lamented by international financial institutions seeking ways for the government to raise taxes and cut debt. Now the Ministry of Finance appears willing to take action and link real estate taxes to the real market value of property or land. Plans being drawn up at the ministry would give local councils the power to create land value maps of their territory and pocket the extra income from taxes. But caution still appears to shadow the approach to property taxation with the ministry saying overall real estate tax revenues should not more than double as a result of the change.
The government this week sought to create more certainty in the relations between landlords and tenants by adopting a new law setting out their rights and the procedure to follow if they fail to agree on rent rises. The law has been passed, less than six weeks ahead of rent deregulation for just under half a million households in the country as part of a staged rent reform. The amendment gives landlords more rights to veto who can live in rented flats if they are not immediate members of the family, and also clarifies transfer rights to next of kin. But the main plank of the amendment calls for judges called in to settle disputes over rent rises to base these on local rental values. Nonetheless, thousands of legal cases still look likely at the start of the year with some of the country’s biggest landlords saying they will seek threefold increases in rents.
Marriages between companies are often talked about but few deals actually try to take on a conjugal form. That was not the case however of a three year tie-up between Czech Airlines’ charter unit and one of the country’s biggest travel agencies, Blue Style. A wedding ceremony, witnesses, celebrations and speeches marked the deal for the state carrier’s charter unit to annually transport around 100,000 Blue Style holidaymakers to destinations offering sand and sun. But the late timing of the deal, long after winter schedules are usually announced, has led industry insiders to speak of a shotgun marriage, with Czech Airlines desperately attempting to grab a slice of the market from the biggest Czech charter airline Travel Service.
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