
Foreign Direct Investment
According to UNCTAD's World Investment Report 2021, FDI inflows to the Czech Republic fell to USD 6.3 billion in 2020 from USD 10 billion the year before. In the same period, the total stock of FDI stood at USD 189 billion. The country continues to rank among the largest recipients of FDI inflows into Central Europe. EU member states are the most important foreign investors in the Czech Republic. In terms of FDI stocks, the Netherlands is the largest investor in the country, followed by Luxembourg, Germany and Austria. Recent FDI data show a high share of Chinese, Korean and United States investors. Financial services and manufacturing receive the majority of FDI (the latter spearheaded by the car industry and metallurgy), followed by the real estate and wholesale and retail trade sectors. According to the latest data from OECD, FDI inflows to the country stood at USD 2.5 billion in the first semester of 2021, marking a 14.8% decrease compared to the same period one year earlier (mostly due to disinvestment in the first quarter of 2021).
According to the Government Agency for Foreign Direct Investment, the Czech Republic ranks first among central and eastern European countries in terms of FDI stock and per capita inflows. This is due to the introduction of investment incentives, the presence of skilled and inexpensive labour, and the geographical advantages of the Czech Republic, such as its location in the heart of Central Europe. Since May 2021, the Czech Republic introduced a new FDI screening mechanism in line with the EU guidelines. Under the new law, any non-EU investor must obtain a permit before acquiring more than 10% of the shares or voting rights of a company operating in a sector that is sensitive for the country’s safety or its internal or public order (e.g. energy, gas, heat and water management, food and agriculture, healthcare, transportation, communication and IT systems, financial markets, emergency services and public administration, military material, etc.). The Czech Republic was ranked 41st out of 190 countries in the World Bank's latest Doing Business report, dropping 6 spots compared to the previous edition. This was mainly due to near-stagnation of the country's progress with regard to the ease of doing business.
Foreign Direct Investment | 2019 | 2020 | 2021 |
FDI Inward Flow (million USD) | 10,108 | 9,411 | 5,806 |
FDI Stock (million USD) | 171,334 | 195,240 | 200,587 |
Number of Greenfield Investments* | 90 | 57 | 109 |
Value of Greenfield Investments (million USD) | 2,369 | 2,596 | 3,094 |
Source: UNCTAD - Latest available data.
Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.
Country Comparison For the Protection of Investors | Czech Republic | Eastern Europe & Central Asia | United States | Germany |
Index of Transaction Transparency* | 2.0 | 7.5 | 7.0 | 5.0 |
Index of Manager’s Responsibility** | 6.0 | 5.0 | 9.0 | 5.0 |
Index of Shareholders’ Power*** | 9.0 | 6.8 | 9.0 | 5.0 |
Source: Doing Business - Latest available data.
Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.
