A total of 22,507 companies were set up in the Czech Republic last year, up 27 percent against 2006 and the highest number in the last five years, according to data of the Cekia agency.
“Interest in business activities in the Czech Republic is growing in connection with economic boom,” Cekia board member Petra Dolezalova said, adding that the new companies can boost further economic growth.
“The growth in the number of companies is not dramatic, on the other hand it is clear that the steps taken by the government are a good impulse for those who are not sure whether or not to launch business activities,” Economic Chamber spokeswoman Viktorie Plivova said.
There is less paperwork, some bureaucratic obstacles have been removed and procedures take less time, she added.
Contrarery in the Doing Business 2008 chart from September 2007 which evaluates countries by the conditions for starting a business, the Czech Republic fell from the 52nd to the 56th position.
The report issued by the World Bank and the IFC highlighted the shortening of the time needed for setting up a company, accessibility of loans and conditions for foreign trade.
It criticised the lengthy court proceedings and complicated tax legislation.
Raiffeisenbank analyst Ales Michl is of the opinion that it can be seen that the economy is riding the wave of the most dynamic household demand in history.
“This motivates new companies to enter the market, and the existing ones to reinvest on a massive scale. We cannot be cutting taxes for ever and so maybe a step in a different direction would be good, namely to simplify conditions for business activities and to make authorities to be more flexible,” he said.
The increasing number of companies can also be ascribed to higher foreign trade, Patria Finance economist David Marek said.
“Ten years ago, foreign trade turnover was at 110 percent of GDP, while last year it was 150 percent of GDP already,” he said.
Nearly a half of the new companies were established in Prague, and over two fifth of the new companies are in the real estate segment. The number of joint-stock companies grew fast, also due to the expected changes after the government’s tax reform.
Almost two fifths of the new companies are from the areas of wholesale, retail, construction and services, such as accounting, audit, consulting, architecture and advertising.
Alongside Prague, the highest number of companies was established in the regions Jihomoravsky, Stredocesky and Moravskoslezsky.
Of the new companies, 19,893 were limited-liability (s.r.o.) and 2,614 joint-stock (a.s.) companies which thus took up 11.6 percent of the total number.
The number of companies removed from the registry of companies last year reached 4,032, while liquidation of 5,470 companies started.
Cekia had 290,301 companies in its databases last year, 92.2 percent of which were limited-liability companies.
(Czech News Agency)
