With runaway productions finding better conditions further east, Czech producers are switching their hopes from tax rebates to German-style production rebates.

Representatives of the Czech Audiovisual Producers Association (APA) revealed 2007 numbers to reporters at the Karlovy Vary International Film Festival. Foreign producers spent $142.4m (CZK 2.1bn) in the Czech Republic in 2007, an increase of 56% over 2006. But local producers say the numbers hide a decay that is eating away at the industry.

APA deputy chairman Petr Keller was quick to point out as much as 70% of the 2007 spend was from The Chronicles Of Narnia: Prince Caspian. 'If it weren't for Narnia, 2007 would have been following the same trend as in previous years,' Keller said.

Production volume collapsed from $338.9m (CZK 5bn) in 2003 to $101.7m (CZK 1.5bn) in 2004. The picture improved slightly in 2005, but drooped further to $94.9m (CZK 1.4bn) in 2006.

Keller blamed the decline on the weak dollar and on the Czech Republic's handicap in competing with other European countries with incentives, such as Germany and Hungary.

The relative strength of the crown against the dollar has increased the budgets of projects shooting in Prague as much as 25%, Keller said. 'A strong crown hurts all exporters, from Skoda Auto to film producers,' APA chairman Pavel Strnad said.

The lack of incentives has long been a sore point for Czech producers. APA has concentrated its efforts in recent years on getting the government to support a tax rebate similar to Hungary's. Such proposals have been repeatedly rejected, most recently by the Finance Ministry, which argued that 'unsystematic' tax relief was contrary to the current government's policy.

APA leaders in Karlovy Vary hinted that in the future they would pursue a production rebate plan based on the German model. Producer Helena Ulrichova pointed out that in the first six months of the German Federal Film Fund, production spend leapt to $636.5m (Euros 400m). 'Euros 400m speaks for itself,' Ulrichova said.

'It's worth spending a little bit of money to get [foreign producers] to spend their money here,' Strnad said.