ISSUE #100

LEGISLATION: Municipal dilemmas
Despite many errors in the past and the growing indebtedness of municipalities, current laws do not allow independent institutions to control their economic management. There are 6,200 cities and towns in the Czech Republic, and they manage property worth around CZK 900 billion. According to finance ministry data, this year their budgets will total nearly CZK 200 billion. The state contributes 25% of these budgets, and this money is subject to independent control by, for example, the Supreme Control Office. The rest is completely under the jurisdiction of the municipalities. While a law is being drafted that would allow towns such independent asset control, it isn’t expected to take effect any time soon. There is the risk that funding to the Czech Republic from the EU could be cut off due to the system’s opacity.

RESEARCH & DEVELOPMENT: More R & D needed to compete
According to Czech Republic Economic Chamber data, Czech firms are investing only 2% of their revenues in the development of new products and technologies. Within the EU this figure ranges between 5 and 8%. “It is normal in developed countries for applied research to be far better organized, since colleges and other institutions also pursue such research,” explains Jaromír Drábek, president of the Economic Chamber. The Czech government provides domestic companies with nearly no research subsidies at all, so firms that are not competitive enough may be unable to expand beyond the local market or may fail completely. “Without support for research and development, the Czech Republic could become a sort of manufacturer for Europe, competing with the other countries only temporarily, due solely to its less expensive labor force,” Drábek warns.INTERNATIONAL COMMERCE: Protect your trademarks
Experts recommend that Czech firms register European trademarks, thus minimizing the risk of conflicts following EU accession. When this country enters the EU, Community Trade Marks (CTMs), which have been in use since 1996 in the EU, will become valid in this country. These trademarks will be protected in the same way as are trademarks entered in the Czech registry. So starting on 1 May, Czech companies will face the danger that trademarks that are identical or can be confused with domestic trademarks will start appearing. Disputes relating to conflicts with CTMs will be governed by a special court that will go into operation in May 2004. Costs for applying and entering trademarks in the international register will run about CZK 120,000.

Back to top