Industrial Cooperation Programs in the Czech Republic

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2 Industrial Cooperation Programs in the Czech Republic Pavel Záboj 2011 Ministry of Industry and Trade

3 Legislation for Industrial Cooperation Programs in the Czech Republic The Government adopted by its Resolution No. 499, dated June 28, 2010 the Principles of the Implementation of Industrial Cooperation Programs - ICPs Provision No. 19/2010 of the Minister of Industry and Trade concerning the realization of the Programs for Industrial Cooperation 3

4 Basic principles for Industrial Cooperation Programs in the Czech Republic ICPs are tools for economic compensation of state expenditures linked to purchasing goods, services and construction works in particular for defence and security purposes Obligation to apply ICPs for every transaction from foreign contractor which exceeds 1 mld. CZK (41 mil. EUR) or subcontract from foreign supplier which exceeds 500 mil. CZK (20 mil. EUR) 4

5 Basic principles for Industrial Cooperation Programs in the Czech Republic ICPs value shall not exceed 100 % of the total contract price (with minimum of 20 % of direct offsets) Program performance period shall not exceed 10 years 5

6 Main Goals of Industrial Cooperation Programs to support export promotions to support transfer of technologies and know-how to create conditions for new forms of long-term cooperation between Czech and foreign partners including integration of Czech companies into international supply chains 6

7 Management of Offset Activities Ministry of Industry and Trade provides methodology and tutorial activity connected with preparation, implementation and supervision of ICPs in close cooperation with contractual partners in each ICP Offset agreements are concluded between contractual partners of the main contract 7

8 Management of Offset Activities Minister of Industry and Trade nominates the Chairman, who, on the bases of other minister s proposals nominates other members of the Offset Committee 8

9 Offset Transaction Categories Direct Offset transactions - are related directly to the subject matter of the Public Procurement Contract in question or bring projects of specific industrial cooperation to Czech defence, security and aerospace companies. Indirect Offset transactions - are all other industrial cooperation projects 9

10 Offset Transaction Types and their evaluation Value of the Czech content (Export Promotion) Revenues generated by the Czech partner (Direct Foreign Investment) Another type proposed by the submitter and approved by the Committee 10

11 Offset priorities The Czech government doesn t stipulate any specific requirements (regional, sectoral etc.) both for each ICP and/or Offset transactions 11

12 Offset multipliers Offset multipliers, which enhances the value of Offset transactions are not used in Czech methodology 12

13 Penalties For case of nonefulfilment shall the contract contain one or more sanction mechanism A penalty for not delivering the total value of the Program must be always applied - amount to at least 5 percent of the undelivered value 13

14 ICPs in Czech Republic 1. PEGAS communication system for IRS, MOI CR EADS, EUROCOPTER police helicopters, MOI CR Eurocopter, GRIPEN supersonic aircrafts JAS 39 Gripen, MOD CR - Gripen International, ARTHUR radiolocation system, MOD CR SAAB, RBS multifuction rocket system, MOD CR - SAAB Bofors, AIRBUS transport planes, MOD CR EADS, KOT armored wheeled vehicles, MOD CR GD European Land Systems-Steyr, CASA transport planes, MOD CR EADS, LOV light armored vehicles, MOD CR IVECO,

15 Thank you for your attention Ministry of Industry and Trade Na Františku 32, Praha