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Due to human's conscious inertia, most westerners see post-communist countries as places with an underdeveloped infrastructure, low standard of living and therefore a very risky market to invest in. Well, for some of them, like Russia or Rumania this is still very true (and unfortunately, will remain true for years, if not forever). Some others, like Hungary or Czech republic, might surprise you. It is a known fact, that Prague is one of the most beautiful cities on earth. In the last years it has also become a very attractive place to live, do business and invest. Living In Czech Republic Let's start with the fact that for a lot of readers of this newsletter leaving their home country will mean tremendous tax savings (for Americans living abroad, all income up to 75,000 is tax deductible, for many other countries all income is.) Sure, if you are a construction worker, you will not be able to find a job in Prague that will pay you as much as your current job in LA, but if you are a privacy consultant, Internet entrepreneur or stock-market trader, you might as well do it from here. The communications are about as good as in Germany, and in the small beautiful village in the mountains where I live, I have a phone line with ISDN, cellular coverage and satellite dish for my CNN and CNBC.

The skyline of Prague

The Czechs have a lot to offer in this direction as well. How about 40-cent beers? $60 escorts? 3 c/minute cellular calls? (I can assure you, that none of these are any worse, than their western analogues).

An opera ticket will set you back $20, the liter of gas $0.80, the workout at the health club - $2.

Dinner in the fancy restaurant Hilton Hotel will be $30 (unless you want to go crazy and pay $1000 for their Chaute, say, 1902: $800.)
 

Prague in Summer

Parking ticket: $15. Fancy 2-bedroom apartment downtown? $1000/month. (and you can buy it for mere $200,000) Nothing in life comes without a price, however. What is the price you pay? Well, electronics are more expensive, but what percentage of your budget do you really spend on TV's and refrigerators? The services are not as readily available as they are in the States, so if you want your suit dry cleaned in 2 hours, you have a choice of 2 cleaners, not 200, and they will not let you return your CD player after a month of use, just because "you did not like it". Medical care is not exactly the western standard, but there are special clinics for foreigners with western personnel and equipment, that accept your insurance. Well, expatriate living is by no means for everybody, and if it were, who would stay home and pay taxes? However, if you think, you might be ready to try it, then Prague is definitely one of the places to be. Doing Business In Czech Republic When a communist economy opens up and becomes a market one, there are plenty of opportunities for those who are in search of possibilities. Some things are just not there, and others are done the wrong way. The author is not likely to give you a list, because it'll be just so much fun for you to walk through the streets of Prague, and see the places you will put your vending machines, hot dog stands, banks or hotels.

Let's take a look at the things that usually scare people out of starting a business in a foreign country. Foreign language - probably, the biggest problem of all (depending on type of business, you are going to run). Hire an interpreter, hire English speaking personal - better yet, learn the language - by no means should it prevent you from going and taking, what is yours. Fear of underdeveloped legislation base - hire a lawyer! There are some fields (like lending against real estate collateral) that are still not quite up to the western standard, but you do not have to be in these fields. Your right to own property is defended by law as well as anywhere in the world. Once you get the feeling of it, you'll probably agree that the impossibility of being sued on the grounds of sexual harassment is kind of nice compensation. This country is still not in the hands of lawyers, thank God! Fear of bureaucracy and corruption - come on, nowhere in the world have I seen anything like the bureaucracy of first world countries, and there is nothing more sweet to a businessman than a corrupted bureaucrat. The list can go on and on, but like with any other activity, it's always easy (and less rewarding) to find an excuse.

KARLŠTEJN CASTLE: Built by Charles IV as stronghold so that the crown jewels of the Holy Roman Empire would be protected. It was constructed between 1348 and 1357. It is located in the town of KARLŠTEJN.

I certainly hope that many readers of this newsletter have more time than they had to work or run a business far behind them. Whatever you are invested in (I certainly hope, it is not MSFT or AMZN), you might want to look at what Czech Republic offers.
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The Castle Cervena Lhota, built on a small island in a pond, was completed in the 14th century.

Let's start with the plain vanilla bank deposits. Contrary to the popular believe that Eastern European countries currencies are unstable, the Czech Crown has been trading in the range of 17-18 per DM for the last ten years. And during that same ten years, the yearly deposits were paying 10-14 percent a year. So, if you just invested in Crowns 5 years ago, your money will have doubled (a USD account would bring you a mere 40 percent). Sure, you could've made much more, if you invested in real estate. In Prague, during these years, the prices of real estate went up 15% p.a. on average. You could quite easily have made another 10% p.a. renting property. In these years, the money you'd have invested in real estate would have tripled! These returns do not come free of risk. For example, last year the Czech Crown lost 20% of it's value compared to USD together with the DEM) That wiped out the gains for the year in your bank deposits and real estate investments (if not for this hiccup, the data in the previous paragraph would be even more impressive). It did come back this year, however. The moral is old: If you want to make a lot of money fast, there is just no way to do it without a substantial risk, and you cannot really predict, how much your investment will be worth tomorrow. But you can pretty much see in the case of Czech Republic, what will happen three or four years from now. The country is to become a member of EU and that will cause the real estate prices to become comparable to the prices in other EU countries.

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Right now you can buy a beautiful 6-bedroom villa in a premium location in Prague for $400.000. In five years it may well be worth one million dollars.

Once in a while a window of opportunity opens for those, who seek it. Living in Czech Republic, doing business here or investing is not for everybody. But it might be for you!

To contact Ilia Click Here
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