18th December 2008 (Exportér) - In countries with a high level of state control of the economy it is advantageous to utilise financing by the Czech state-owned bank.
The Czech Export Bank finances, in particular, the fifteen percent of Czech exports whose destination is outside the European Union market. With regard to the expectations of stagnation in the developed markets, the importance of these economies, which will, even after a decline in economic dynamism, maintain growth at a level of over four percent, will increase. In the credit portfolio of the bank the Commonwealth of Independent States (CIS) is currently mostly represented by Russia. Immediately behind comes Georgia, then Ukraine, Azerbaijan, Uzbekistan, Belarus, but also Moldavia and other countries.
The dynamic of Czech exports, including therefore also their funding by the Czech Export Bank, remains obviously the strongest in Russia and in the European countries of the CIS. The importance of the Caucasus and South-Caucasus States, however, is growing and will continue to grow. Their political, and in many cases, also their economic development, is accelerating significantly and it is desirable to capture this increasing demand in the process of its inception.
It is well known that the CEB financed the investment of the Energo Pro Company into Georgian hydroenergetics, which was particularly appreciated, not only as a large transaction, but also as a model for other investors in Georgia. Today there are again on-going further negotiations about an investment project, this time in the field of services. Other demand exists in the field of traffic engineering, also for development projects and in other sectors.
Generally, if we look at the activities of Czech companies and in the same manner also at the purposes of the loans provided by the CEB for the countries which we continue, inaccurately, to call Central Asia, they consist primarily of conducted or prepared projects, particularly in the area of mining, but also for the processing of raw materials, from oil and gas to minerals and metal ores and also for raw materials and products used in the chemical industry and construction.
Projects in transport infrastructure (rail and road construction) today represent a significant field, which is a prerequisite for the development of these regions. There is a permanent interest in classic machinery supplies, from unit production to the supply of entire cycles, and it is possible to expect a growth in the demand for transport technology and for means of urban transport.
In particular the economies that are favourably endowed in regard to raw materials and are heavily export-oriented will soon invest in projects for development of their infrastructure and for meeting the needs of their population. Therefore the onset of construction, transport networks and development companies can be assumed. It should also be expected, that the traders and suppliers from those countries that at one time developed the former silk route are already again travelling along it. The competitive environment is difficult there, however. For Czech exports or investments the CIS represents a truly broad range of economies and conditions for business. Certainly there are common elements: in virtually all these countries the Russian language is accepted as the first or second official language, almost everywhere we have something to maintain; Czech (Czechoslovak) goods and equipment are known from the Carpathians to the Hindu Kush, from Dniester to Amur. But it would be a major mistake during negotiations to give the impression that you perceive the CIS as a single economic (or perhaps even political) entity. Emphasising respect for the autonomy and individual identity of each country is a prerequisite for success.
The times when everything east of the Tisza was one territory, with a common mentality, currency and conditions, are long past. The mosaic of the CIS is now, in terms of trade, varied and demanding. On the other hand, the positive results of long-term work and effort will, most probably, be rewarded for the Czech entrepreneurs.
There are other factors common to these countries. There is a high degree of state involvement in the economy. Key industries are held in the hands of the State or they are state-controlled. If the exporter can offer favourable financing for his supplies and in the event that the bank owned by the Czech state is on his side, this, along with internationally comparable credit terms, increases the customer’s possibilities. Additionally the Czech Export Bank has, in these countries a stable network of cooperating financial institutions and can guarantee reliable and quality service to enterprises.
Jan Stolár, the Author is a spokesperson for the Czech Export Bank