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Wednesday, December 20, 2000
Protests, land deals give foreign investors headaches
By Leah Bower
Some might say it's not the nicest way to welcome your two most generous new friends.
Getting a start in the Czech Republic has been an uphill battle for a pair of the country's largest foreign investors -- Mexican car component manufacturer Nemak and Dutch-based Philips Electronics. They have found the reception downright chilly as they try to start pumping billions of crowns into the economy.
"We wish we had been warned by the people who invited us here," said Pavel Kucera, Nemak's spokesman.
The company had planned to start construction on a 6 billion Kc ($150 million) aluminum-parts plant in Plzen (Pilsen) in mid-2000, but has been held up for months by environmentalists. "It's just unfortunate we didn't have this information at hand when we made our decision [to build here]."
Philips is also experiencing headaches, as the city of Hranice battles with a landowner over the site where the company wants to build a $192 million (76.8 billion Kc) television screen facility.
Big business
It's all enough to make Martin Jahn, CEO of foreign-investment agency CzechInvest, wince. Even though the majority of projects glide into the Czech Republic with no problems, Jahn acknowledges he's worried the two high-profile delays might have a chilling effect on future investment.
Nemak's plant represents one of the largest foreign investments in the country's history.
The company, the largest producer of aluminum car components for carmaking giants Ford, General Motors and Daimler Chrysler, is planning to bring more than 1,300 jobs to Plzen by 2011.
Deputy Mayor Miroslav Kalous said the plant will solve the region's unemployment problems, which is why the city gladly gave the company the land almost for free.
"We appreciate the presence of such a significant investor," he said.
But neighbors and environmentalists quickly mobilized this spring, concerned that Nemak's method of processing aluminum would be too large a burden for the nearby environment. They gathered about 7,000 signatures in opposition.
"When you say aluminum or metal foundry people think they are like old Czech factories," Jahn said. "But new projects are extremely clean."
While residents like Jan Rovensky acknowledge the plant's emissions are within minimum standards set by Czech law, they say it's still too much for the surrounding neighborhoods, which include vineyards and homes.
Nemak agreed to install additional thermal oxidizers -- machines that remove dioxins from gas emissions and come with a price tag of several hundred million crowns -- even though the plant met Czech regulations, Kucera said.
The company submitted a new environmental impact report to the Environment Ministry. But neighbors like Rovensky say they're not convinced it's enough to guarantee the safety of residents, and they're wary.
"I think [Nemak] will not give the state and public the full information," he said.
Jahn said CzechInvest is scurrying to find a solution that will satisfy Nemak, the city of Plzen and neighbors. He said a similar situation arose when Showa Aluminum, a Japanese auto components manufacturer, wanted to build a plant near Kladno. The conflict there was resolved after several meetings.
"The environmentalists there were just not as stubborn as they are in Plzen," Jahn said.
Property problems
CzechInvest can never guarantee neighbors won't protest plants, but Jahn said the situation brewing at the Philips site won't be repeated.
In the period since the Philips project began 18 months ago, CzechInvest has created a system of specific industrial zones for foreign plants. The land will have clear ownership structures before any work begins.
But the Philips project started before the system was in place. Fifty hectares (123.5 acres) that cut right through the Philips site are still held by a private owner.
The city is negotiating with Marketa Regecova to purchase the property, but according to Czech media reports, she's demanding 25 million Kc for the property.
Radka Ondriasova, head of the Hranice department of city development, couldn't confirm the figure, but said other landowners on the site were paid up to 150 Kc a square meter. The city offered Regecova 200 Kc a square meter as of Dec. 4, an offer that hasn't been accepted.
Regecova declined to comment.
Fortunately for Philips, construction at the site has not been slowed because Regecova's property isn't slated for either buildings or a road, said company spokesman Andre Manning.
But he says such a dispute -- even though it doesn't directly involve the company -- could have other impacts.
"Investors might look over their shoulders and say 'that's interesting,'" he said. "It might influence the willingness of foreign investors to invest in the Czech Republic."
Leah Bower's e-mail address is
lbower@praguepost.cz
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