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The Czech Republic Shifts Gears in Defense and Manufacturing: A Buzz Interview with Jan Kohout of PRK Partners

The Czech Republic Shifts Gears in Defense and Manufacturing: A Buzz Interview with Jan Kohout of PRK Partners

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The Czech Republic is marked by dynamic changes in the banking, finance, and technology sectors underpinned by the influence of ESG, compliance issues, and the impacts of global crises, according to PRK Partners Partner Jan Kohout, with the defense sector and strategic shifts in traditional industries making headlines as well.

"The landscape is significantly influenced by ESG and compliance issues," Kohout begins. "Recent crises – including the Russian aggression in Ukraine, terrorist attacks in Israel, and the Red Sea crisis – have accelerated shifts directly affecting industries like defense, which traditionally struggled to secure financing in the Czech market. This is changing thanks to domestic and European strategies and the readiness of local banks, usually subsidiaries of Italian, Belgian, or Austrian banking groups, to support the financing of these businesses," he explains.

As for the Czech Republic's defense sector, Kohout reports that "there's been notable movement, such as the consolidation of ownership in a major ammunition player, transitioning from a foreign to a Czech group." According to him, this reflects broader changes and the increasing importance of defense in national and European economic strategies.

Moving on, Kohout notes that "the AI Act discussions within Europe are pivotal," as the region pushes forward with technological development. "These discussions highlight a tug-of-war between professionals and the industry at large regarding market impacts and the availability of new tools, as we are increasingly seeing that technology will continue to be a significant driver of change," he says.

Speaking about local legislative changes, Kohout highlights some that are of particular importance for the banking and finance sector. "Legislation often mirrors EU initiatives," he goes on to say. "For instance, the act on non-performing loans reflects EU directives. We're also looking at class actions and ongoing discussion whether or not this new approach in litigation – if passed into law – could benefit the Czech judicial system."

Looking at the bigger picture, Kohout reports that the Czech economy, which is closely tied to Germany, "faces potential impacts from Germany's economic struggles. A significant issue for our manufacturers is the rising cost of energy, pushing some to consider relocating production to more cost-effective locations like the US."

Finally, he highlights that "industries like machinery and automotive are seeing a surge in takeovers and acquisitions – this is often driven by the need for traditional manufacturers to restructure and refocus on electric vehicles and related infrastructure." Interestingly, Kohout points out in conclusion, there is also a "notable trend of new investments from China, indicating a shift in supply chains and global manufacturing strategies."

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