1. Conference New Address for Your Business Strategická průmyslová zóna Holešov Petr Zahradník Head of EU Office Česká spořitelna

2. Holešov Industrial Zone Analysing the impacts in a broader economic and regional context Petr Zahradník and Jan Jedlička April 2010

3. Parameters applicable in the long term One of the key factors in the unprecedented economic prosperity of this decade: a targeted motivating investment incentive policy attracting hundreds of leading global and European corporations to the Czech Republic; Despite significant qualitative changes (from large-scale processing industry to more sophisticated services, a change in policy approaches to incentives, major impact of the crisis) targeted investment incentives remain legitimate and justified; Without rational and sound investment no sound economic development creating jobs and promoting competitiveness would be possible in the long term

4. Significant enhancement of growth performance and achievement of long-term economic prosperity; Improving the competitive position of the country and its regions; Crucial creation of new, mainly qualified, jobs; Positive change in the balance of trade, improving its commodity and territorial structure in terms of more ambition and more emphasis on quality; Key contribution to ongoing structural changes Long-term effects

5. Impact of the economic crisis Global and European economies, including the Czech Republic and the Zlín Region, have seen a dramatic decrease in real economic performance affecting all its components, including investment (in the EU -18% y-o-y, in the Czech Republic more than 8% in 2009); Devastating effect on labour markets, as well as the state of and outlook for public finances, possibly holding back the recovery process; Czech Republic: capacity issues; before the crisis – enormous rate of investment; is all the investment usable?; encouraging factor: further expansion of exports and incentives for mainly Asian investors to operate on the EU‘s single internal market

6. Impact of the economic crisis EU – Czech Republic – Zlín Region in %Q1/2009Q2/2009Q3/2009Q4/20092009 q-o-q- GDP data-4.1-0.3+0.6+0.7- y-o-y GDP data-4.0-4.9-4.5-3.1-4.1 Czech GDP in 2009 in %20062007200820092010 e EU+3.1+2.9+0.9-4.1+0.7 Czech Republic+7.0+6.1+2.3-4.1+1.3 Zlín Region+8.8+6.7+1.7-4.5 e +1.6 EU, CR and Zlín Region GDP in 2009

7. Key parameters of the Zlín Region’s economic development Crucial structural changes in the economy during the past 20 years (factual extinction of two key processing industries: shoemaking and aviation); GDP per capita (10th place out of 14 regions of the Czech Republic); Very dynamic growth since 2000 → a typical convergence region, capable of sustaining long-term, above-average economic growth; Relatively favourable long-term unemployment data in both national and European context, but… (10.8% at the end of 2009 and 11.4% at the end of Q1 2010 !!!); in times of prosperity, long-term average below 8%

8. Key parameters of the Zlín Region’s economic development Changing demographic conditions (peak of prosperity → population growth, both natural and through migration, now population in decline); visible ageing process; region with high social cohesion Persisting investment underdevelopment (even in times of prosperity, investment per capita was only at 3/5 of the Czech Republic’s average) → strong investment need, no excess capacities created; Strong business base, especially in the SME sector; long tradition of expansive and innovative enterprise – Baťa – one of the best known multinationals, founded in the Czech Republic; Motto and objective: find a new Baťa !!!

9. Key parameters of the Zlín Region’s economic development in %20042005200620072008 Zlín Region GDP per capita (CR = 100) 79.680.781.581.880.9 Zlín Region GDP per capita (EU = 100) 60.462.363.365.764.8 Zlín Region GDP (CR = 100) 4.64.7 4.6 Czech GDP in 2009

10. Competitive economy – promoting the application of outcomes from R&D and innovation projects; – strengthening the role of the services sector in the region’s economy; – strengthening the role of SME’s; – maintaining competitiveness in dominant industries: chemical, rubber and plastics industries, metallurgy, electrical engineering, food industry → main task of the Holešov Industrial Zone Priority areas for future economic development of the Zlín Region Strategy for 2020 and Development Programme for 2012:

11. Successful society –increasing the competitiveness of the workforce in a knowledge- based economy (lifelong learning, languages); –reducing unemployment rate to achieve a natural rate; –enhancing the efficiency of health and social services Efficient infrastructure and rural development – improving environmental parameters; – making rural life more attractive through diversifying activities in rural areas; – increasing the region’s importance as an inter-regional transport destination and developing the public transport system Attractive region – attracting more visitors and improving the use of tourism capacities; – promoting awareness about the region as a tourist destination; – preserving the region’s cultural heritage Priority areas for future economic development of the Zlín Region

12. Assessing the position of Holešov in terms of development needs Development Programme for 2012: a test to determine how individual subregions (13) of the Zlín Region fulfil their development priorities; Based on objective analysis, excellent result for the Holešov subregion : second place overall; relative ranking almost 10% above regional average; Dominant position mainly due to excellent transport infrastructure, links to public transport networks, competitive economic parameters (in terms of business environment and relatively favourable labour market situation), and demographic conditions

13. Assessing the position of Holešov in terms of development needs Holešov – position in the region OVERALL 2 nd * Demography 4 th Competitive economy 3 rd Successful society 6 th Efficient infrastructure and rural development 2 nd Attractive region 10 th *(9.8% above regional average), source: Zlín Region Development Programme for 2009-2012 Holešov’s position in the region in terms of development needs

14. scheduled start of production and investment (of total capacity): period observed: 2010 – 2015 impacts observed: on the CR as a whole + on the Zlín Region estimated macroeconomic parameters (until 2012 under the Convergence Programme of the CR): distribution of investments: 1/3 construction, 2/3 technology Macroeconomic model of impacts (1) Basic assumptions of the macroeconomic model 201020112012201320142015 start of production2%20%55%70%85%100% start of investment5%35%30%15% 0% CR; in %201020112012201320142015 real GDP growth1.31.32.62.63.83.84.04.04.04.04.04.0 GDP deflator0.60.61.01.01.51.52.02.02.02.02.02.0 unemployment rate10.810.18.68.67.07.06.56.56.06.0 public debt/GDP-5.3-4.8-4.2-3.0-2.5-2.0

15. jobs distribution: distribution of investors by sector: according to the sectors’ role in the economy (performance) + 3 times more chemical, plastics and aviation industry usable area for investors = 280 ha METHODOLOGY OUTLINE: zone area → investment + jobs → performance + GVA (GDP) + profit + export/import performance Macroeconomic model of impacts (2) Basic assumptions of the macroeconomic model 18.2%Vehicle manufacturing 13.5%Chemical and pharmaceutical industry 13.4%Rubber and plastics industry 12.1%Electrical and optical equipment manufacturing 12.1%Metallurgy and metal-working industry 7.5%Food and tobacco industry 7.3%Machinery and equipment manufacturing 3.7%Glass, ceramics, china and building materials 3.1%Paper and printing industry 2.9%Coking and oil refining 2.7%Processing industry not listed elsewhere 1.8%Wood processing industry 1.7%Textile and clothing industry 0.1%Leather industry CI data ratio indicators ZR citizensOthers - CRForeigners 60%25%15%

16. first effects in 2010 (construction + production), main effects from 2011-12 whole 2010-2015 period - GDP increase by CZK 151.9 billion with a  potential in 2015 GDP 0.88% higher and growth 0.05 pp faster Impact on Czech GDP 20092015 without the Holešov Zone GDP market prices in bil. CZK3,6304,822 real GDP growth-4.10%4.00% with the Holešov Zone HDP market prices in bil.CZK3,6304,864 nom. GDP increase in bil. CZK0.00%0.88% real GDP growth-4.10%4.05% Macroeconomic model of impacts (3) Czech GDP increase with the Holešov Zone Y-o-y real GDP growth in the Czech Republic without Holešovwith Holešov

17. first effects in 2010 (construction + production), main effects from 2011-12 over the 2010-2015 period - GDP increase by CZK 75.4 billion with a  potential in 2015 GDP 10.13% higher (!) and growth 1.01 pp faster Impact on the Zlín Region’s GDP 20092015 without the Holešov Zone GDP market prices in bil. CZK167225 real GDP growth-4.50%4.00% with the Holešov Zone HDP market prices in bil. CZK167248 nom. GDP increase in bil. CZK0.00%10.13% real GDP growth-4.50%5.01% Macroeconomic model of impacts (4) Zlín Region GDP increase with Holešov Zone Y-o-y real GDP growth in the Zlín Region with Holešov without Holešov

18. first effects in 2010 (construction + production), main effects from 2011- 2012 in target year 2015 41 713 new jobs with a  potential in 2015 unemployment rate 0.73 pp lower, at 5.27% Impact on employment in the CR 20092015 without the Holešov Zone no. unemployed527,728342,515 unemployment rate9.24 %6.00 % with the Holešov Zone no. unemployed527,728300,802 new jobs041 713 unemployment rate9.24 %5.27 % Macroeconomic model of impacts (5) Unemployment rate in the Czech Republic new jobs (right axis) unemployment rate without Holešov (left axis) unemployment rate with Holešov (left axis)

19. first effects in 2010 (construction + production), main effects from 2011- 2012 in target year 2015 15 499 new jobs with a  potential in 2015 unemployment rate 6.36 pp lower, at 1.24 % Impact on employment in the Zlín Region 20092015 without the Holešov Zone no. unemployed33,13619,300 unemployment rate10.83 %7.60 % with the Holešov Zone no. unemployed33,1363,801 new jobs015 499 unemployment rate10.83 %1.24 % Macroeconomic model of impacts (6) Unemployment rate in the Zlín Region new jobs (right axis) unemployment rate without Holešov (left axis) unemployment rate with Holešov (left axis)

20. over the 2010-2015 period – improvement of PF by CZK 55.4 billion with a  potential in 2015 State budget deficit CZK 15.5 billion lower (0.34 pp GDP) greatest effect  health insurance and social security,  unemployment benefits; partly also  individual income tax,  corporate income tax,  VAT Impact on Czech public finances 20092015 without the Holešov Zone bud. deficit in bil. CZK-239.6-96.4 bud. deficit in % GDP-6.6 %-2.0 % with the Holešov Zone bud. deficit in bil. CZK- 239.6-80.9 bud. improvement in bil. CZK0.00.015.5 bud. deficit in % GDP-6.6 %-1.7 % Macroeconomic model of impacts (7) Czech public finances deficit / GDP ratio public finances change (right axis) without Holešov (left axis) with Holešov (left axis)

21. 1.Public finances in the Zlín Region increased revenue – shared taxes (VAT, individual and corporate tax) over the period of 2010-2015 – revenue growth by CZK 69.7 million, with  potential 2.Balance of trade of the CR increasing surplus of BOT over the period of 2010-2015 – surplus increase by CZK 26.3 billion with a  potential 3.GDP structure change in CR and ZR stronger industry vs. other sectors Other relevant macroeconomic effects Macroeconomic model of impacts (8) Revenue increase in the Zlín Region – shared taxes with Holešov Balance of foreign trade in CR (in billions of CZK) balance of trade change (right axis) without Holešov (left axis) with Holešov (left axis)

22. Petr Zahradníkpzahradnik@email.cz Jan Jedličkajanjedli@seznam.cz Thank you for you attention Conclusion