Q Central Europe has been the subject of a considerable amount of investor interest in recent years, but a place like Ostrava is not an obvious destination. Can you tell us about your efforts, and your struggles perhaps, in trying to put your city on the map in terms of foreign investment?
A When you look at all of the factors that are driving investment in central Europe, Ostrava is quite an obvious destination and a select group of investors have come to understand this.
Since my administration took office in 2002, we have been extremely active in laying the groundwork to attract investment and to make doing business in the region easier. In 2004, we had a €100m bond issue that was three times over-subscribed. This is modest in western European terms but for a Czech city, issuing bonds marks a significant step forward. In the process, we solidified out ratings with Standard & Poor’s and Moody’s and let a lot of potential investors out there know that we are in the game.
The money from that bond issue will largely go towards infrastructure improvements, which we know form the foundations for attracting investor interest. When you visit the city today, you see a lot of building going on, of roads, bridges, the new D47 highway, residential and office buildings, the Ostrava Science & Technology Park and industrial zones.
I believe that we have taken the right steps towards putting Ostrava on the map of investor interest, and that effort is paying off as we speak.
Q What is Ostrava’s current FDI breakdown – which foreign companies are present there and from which countries do they originate?
As a result of our efforts, the city and region have been able to attract a host of important foreign companies to set up shop locally. These companies represent a wide variety of interests and industries, including information communication technology (ICT) and electronics (Siemens, ASUS, TietoEnator, Bang & Olufsen, Dexon), automotives (Visteon, Stant, Gates, Dura, Brose, Hayes-Lemmerz), pharmaceuticals and healthcare (IVAX, Mölnlycke), chemicals (BorsodChem, Messer, Gardena), metallurgy (Bekaert, LNM Holdings), energy (Dalkia, E.On) and many other areas, including logistics, construction and food.
The FDI investments come from many different countries. In the past several years, we have seen a significant rise in the interest of Asian and US manufacturers. The largest investment so far has been that of LNM Holding’s purchase of the city’s largest steel mill, now called Mittal Ostrava.
Perhaps the most exciting opportunity for investors has yet to be mentioned. In the centre of Ostrava, there is a plot of land more than 60 hectares in area, called Karolina. It is potentially one of the largest city-centre development projects in Europe. The city has just completed a long cleaning and preparation of this brown-field site and I believe that it will serve as a motor for future development of the entire region.
In addition, we have the Ostrava Science & Technology Park, which is located on the campus of Ostrava’s technical university. It has become a big draw for IT companies and is growing exceptionally fast.
Q What are your priorities in terms of seeking out foreign investment?
A In trying to change the economic structure of the city, which had largely been based on coal mining and steel production in the past, we tried to throw out as wide a net as possible, to try to encourage as much diversification as possible.
Over the past few years, we have realised that we have certain core strengths and we have made efforts to strengthen them. The region now has a manufacturing cluster with particular emphasis on automobiles and electronics. We have a very strong foundation in wood processing and paper. We are seeing phenomenal growth in IT.
In terms of source countries, we are in a great position to take advantage of our central geographical position and recent accession to the EU, so companies that come here look to both the east and west.
Q What unique advantages can Ostrava offer foreign investors in an increasingly competitive region?
A Strong transportation infrastructure, a lot of room for growth in the logistics sector, the Ostrava International Airport and its huge capacity for growth, a large, educated and available workforce, and much more.
But, most importantly, we have highly skilled people working in a variety of state institutions, including the Department of Economic Development at City Hall, CzechInvest, the Union for the Development of the Moravian Silesian Region, and others that are ready to work with people who are interested in finding out more about the area.
With the federal tax system focused as it is in federal hands, there is little in the way of financial incentives that the city can offer potential investors that the federal government cannot. But we can make a difference in our willingness to help the investor through the challenges of coming to this country and getting set up properly.
The city has even taken an active approach in trying to help investors find accommodation and education for their children. This year, the city has played a very active role in helping to create the first International School of Ostrava. The school will produce secondary school graduates who are extremely proficient in English, and serve as ‘school away from school’ for the children of managers who plan to live in the city for several months or years while their businesses are being established.
Q What are the drawbacks that you must address?
A I believe that our biggest disadvantage is the same disadvantage suffered by other ‘second cities’ around the world. Most interest is focused on the capital – in our case, Prague. We also still have a lot to do in overcoming our image as a steel town.
Other than that, I believe that we have already overcome most of the disadvantages we once had. We now speak better English, our economic base is diversifying and transportation links are being visibly improved.
I believe that we have been able to overcome our disadvantages by trying harder to deliver what those who come here are looking for.