10/20/2005

State pushes eminent domain rule: The Prague (Czech Republic) Post, 10/19/05

Bill would force landowners to sell property to government

By František Bouc

A hotly debated bill allowing land appropriation for industrial park development will likely pass in November.

A potential $1.9 billion (46 billion Kč) investment from South Korean carmaker Hyundai has the government scrambling to push through a bill that would force landowners to sell their property to the government not only for major infrastructure projects but also the development of industrial parks.

"The issue of law expropriation for industrial parks became pressing in light of Hyundai's interest in building a plant in north Moravia," said Prime Minister Jiří Paroubek. "If we secure the land in time, we've got a big chance to receive the [Hyundai] investment."

Hyundai CEO Chung Mong-Koo paid a visit to north Moravia in late September to examine a possible site for the company's new European plant. Although Hyundai's management has not made a final decision, soon after Vice President Kim-Dong Jin visited the north Moravian industrial park in Nošovice, he said it was a hot contender to house the new plant.

However, to be able to offer the Nošovice industrial park to Hyundai, the government needs to acquire the land, 30 hectares (74 acres) of which is owned by about 170 land owners who have no interest in selling.

"The government began negotiating with us, but we do not want to sell the land. No money would actually compensate us for the loss of the [fertile] soil," said Jiří Vícha, chairman of the Nošovice agricultural cooperative.

Last year, similar disputes over the sale of the land at Nošovice turned away South Korean carmaker KIA, which decided to build its new plant in neighboring Slovakia instead.

Industry and Trade Minister Milan Urban said it was vital that the country not lose an investment that would bring new jobs and economic prosperity to the region. Acquiring the Hyundai investment was in the state's strategic interest, he said, so requiring landowners to sell their Nošovice land to the government was a legitimate expectation.

"Time is pushing us and we need to proceed fast," Urban said. "We would prefer reaching an agreement with [land] owners first, but should regional authorities fail to come to terms with the owners, we'll need to turn to land expropriation."

The new law is likely to pass in a second reading in Parliament in November. If it is adopted, Urban said, the first place it would be implemented is in Nošovice.

Strategic parks
Land appropriation to develop industrial parks has been hotly debated in political and business circles. In early June the Cabinet drafted a bill that would enable forced buyouts of land from private owners to build roads, motorways, railways and other projects of strategic public interest. The bill, however, did not include industrial parks. The Chamber of Deputies passed that bill in its first reading in August.

In September, Industry and Trade Minister Urban suggested inclusion of a statement that industrial parks are projects of strategic public interest before the second reading in the Parliament in November. Industry and Trade Ministry spokesman Ivo Mravinac admitted that Urban's proposal was prompted by the opposition the government was running into developing the Nošovice industrial park.

However, not everyone was in favor of including industrial parks into projects of strategic public interest. The Environment Ministry is categorically opposed to the idea. "The land would be bought for private investors, which cannot be considered as being in the public interest. We shall try to prevent such attempts to give an advantage to industrial parks," Environment Minister Libor Ambrozek insisted.

However, Radomil Novák, head of the state's inbound investment agency, CzechInvest, said industrial parks enjoy a similar privilege in other European countries.

"Expropriation of land for industrial parks as an extreme measure is applied across Europe and is, for instance, quite common in Britain," Novák said.

Shadow Industry and Trade Minister Martin Říman of the senior opposition Civic Democratic Party vehemently disagreed. The influx of foreign investment such as the one from Hyundai was desired, he said, but not at any cost. "Ownership rights need to be respected, and although expropriation needs to be used in some cases, development of industrial parks should not be the reason," Říman said.

This is the second time the Industry and Trade Ministry tried to push through a proposal to expropriate land for the purpose of building industrial parks. Three years ago, then-Industry and Trade Minister Miroslav Grégr failed to get a bill passed. His attempt had been prompted by the problems the government ran into trying to purchase a 1-hectare plot of land at Hranice na Moravě for a plant being built by multinational electronics manufacturer Philips. The owner of the property, Markéta Regecová, eventually sold the land to the government for 25 million Kč ($1.02 million).

This time the government will not be blackmailed, Grégr said. It intends to buy the Nošovice land at fair market price, which is about 150 Kč per square meter. North Moravian Deputy Regional Governor Pavel Drobil said the land should be in the hands of the government by the end of this year.


The Prague Post: www.praguepost.com