The Czech government will provide incentives of up to CZK 3.8bn (EUR 139mn) to South Korean tyre maker Nexen that plans to invest CZK 22.8bn (EUR 831mn) in a new plant in the country, CTK news agency reported.

The government signed the investment contract with Nexen on June 25. At the signing ceremony Prime Minister Bohuslav Sobotka said the deal is the result of 13 months of negotiations which will lead to the third-biggest direct investment in the country. The Czech Republic beat out Poland in the race to host the plant.

According to Adela Tomickova, spokeswoman of CzechInvest, the state agency in charge of negotiating with investors, the incentive package will include CZK 2bn in tax abatement, CZK 300mn for the creation of new jobs and material support worth CZK 1.14bn.

Nexen plans to start building the plant in 2015 and launch production within four years. The plant will be located in the industrial zone Triangle in the Ustecky region, north Bohemia, about 80km north-west of Prague. It will have an initial annual production of six million tyres. The plant will employ 1,000 people and at a later stage the company plans to boost the workforce to 2,300 people. The South Korean company has also said it will additionally invest CZK 40bn in the Tiangle zone to expand the plant in the future.

Succeeding in attracting Nexen’s investment is positive news for the new Czech government, which is trying to boost economic growth after a record-long recession.

The Czech Republic is a popular destination for South Korean companies, data from the Czech state investment and business development agency CzechInvest showed. Since 2005, South Korean companies launched 19 projects in the country investing a combined CZK 46.3bn and creating 8,432 jobs. The lion’s share of the investments came from car maker Hyundai that spent CZK 34bn to build a plant in the country in 2008.

The Czech Republic is also home to car plants run by Volkswagen's Skoda Auto and Toyota Peugeot Citroen Automobile Czech (TPCA).

Nexen’s chairman Kang Byung-Joong said his company decided to build the new plant in the Czech Republic to meet growing demand on the European market and be closer to its clients on the continent.