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Hungary: World of Potentials

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Katalin Csorba

on 5 December 2015

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Transcript of Hungary: World of Potentials

Economic policy
Macroeconomic situation
US Hungarian economic cooperation
Trade and investment promotion
Hungary:World of Potentials
Katalin Csorba, Economic Diplomat
School of International Service, American University, Washington, DC, January 15, 2013

About Hungary
Constitutional form:
35,909 sq mile
9,982,000 (2011)
Official language:
Hungarian Forint
four seasons
Membership of international organizations:
At the crossroads of 4 main Eurpean transportation corridor
Gate to a market of 500 million consumers
I About Hungary
II Macroeconomic situation
III Economic policy
IV Competitiveness
V US-Hungarian economic relations
VI Trade and investment promotion
Activities and Services
Division of States Among Offices
Hungarian Investment and Trade Agency (HITA)
János Berényi, President of the Agency
Foreign Economic Diplomats
Our Strategic Goals
And many more:
AES, AIG/Lincoln Eastern Europe LLC, American International Group Inc, AMP Inc., Arrow Electronics Inc, Beckton Dickinson, Bristol Myers-Squibb, Calsonic, Citibank, Coca-Cola, Cognizant, Columbian Chemicals, Convergys, Dell, Delphi, Exxon Hungarian Telephone and Cable Corporation, Flextronics, Genesis Energy, Getronics, Guardian Glass, Johnson and Johnson, Lear Corporation, Marriott Hotel, Mobil Corp, Morgan Stanley, NCR, Pfizer, Phillip Morris, Raleigh Studios, Sara Lee, TYCO, US West, Zoltek etc
Over USD 9 billion investment value –
largest share in the region

– 600 companies
Major US Companies in Hungary
Source: Hungarian Central Statistical Office
US- Hungarian Trade Relations
Increase bilateral trade volume

Develop business links between SMEs

Increase the level of US FDI in Hungary
Source: Draft Budget 2014
FDI in Hungary
Main Macroeconomic Indicators
Export of
Goods & Services
Source: IMD World Competitiveness Online 2013
Nominal GDP in Hungary
Source: Eurostat
Net External Debt
Source: Eurostat
Lowest Budget Deficit
in the Region
Source: Eurostat
Aims of the Hungarian Economic Policy
Attracting capital

Diversification of countries of destination with the help of active economic diplomacy

Diversification of export product structure

Manufacturing industries & energy

Knowledge-based industries & services
Automotive industry SSC
Electronics Life science
Chemical industry Logistics
Food industry ICT
Renewable energy

Major role and support of SMEs and their foreign investments

Background institutions and network of economic diplomats
Foreign Economic Strategy
High Quality
Labor Pool Available
360,000 students in 68
higher education

81,923 majoring in
business administration

University degree requires strong
language and computer skills

90% of students speak

20% of fresh graduates have
international experience

61% of students have
professional experience

Seniors and executives
with several years of experience readily available
University Towns:
Excellent Access
to Key Markets
At the crossroads of 4 main European transportation corridors

Extensive road and railway transportation network

Highly developed logistics and telecommunications infrastructure
Competitive Labour Costs
Tatabánya, IP
Nyíregyháza, IP
More than 200 industrial parks are available for manufacturing activity
Green- and brownfield investments
Good access to highways
Excellent infrastructure services
Turnkey solutions
New technology and logistical parks
Customs arrangements
Administration (authority permits)
Financial services
Legal consulting
Extra services
Ready-made Industrial Sites
Governmental Incentives
Source: WEF Global Competitiveness Report 2013-14
Strong Scientific Capacity
million USD
Percentage of GDP, 2012
Gross Value Added by Sectors
Source: Hungarian Central Statistical Office
Geographical Distribution of
Hungarian Trade
Main import sources:
Main export destinations:
Percentage of GDP, 2012
percentage of GDP
FDI Stock in Hungary
Source: National Bank of Hungary, 2013
million EUR
percentage of GDP
by country of origin
Securing financial & fiscal stability: introducing strict fiscal policy
Public debt to GDP target: 50%
Budget deficit target: < 3%
Inflation target of the Central Bank of Hungary: 3%
Turning welfare state into an economy based on productive labor
Increasing the level of employment
Improving business environment
Promoting foreign direct and domestic private investments
Macroeconomic stability
Economic growth and competitiveness
Job creation
Financial consolidation
decreasing government debt
budget deficit under 3%
EDP* abrogated by EU
inflation rate is 0.9%

Labor market tendencies
rising employment

Tax system
from income taxes based to consumption based
16% flat-rate personal income tax
corporate tax rate: 10-19%

Business environment
strategic cooperation agreements with top companies

Structural reforms
pension system, public transport, higher education, state and municipal financing
Source: Eurostat
Source: Eurostat, national statistics
English Proficiency Index 2012
Source: EF-EPI English Proficiency Index 2012
Competitive Tax System
Low corporate income tax
For the first HUF 500 million (USD 2.2 million) the tax base is 10%, beyond that amount:19%

Development tax allowance
Flat personal income tax: 16%
Starting Business
Number of days to start a business
Source: The Gloal Competitiveness Report 2013-14
The quality of scientific research institutions
The World Economic Forum ranks Hungary No. 21 among 148 countries.
Soft Factors
International Schools in Budapest
British, American, German, French, Chinese, Japanese, Austrian, etc.
Private Medical Services
Well-known accross Europe
Entertainment facilities
Thermal baths - 1st in Europe
Wellness, recreation centers
Rich cultural life
Excellent food and wine
Regional aid intensity map
All 7 regions of Hungary qualify for incentives. Aid intensity varies between 10-50%.
Government's strong commitment to streamlining business processes
Wide range of available incentives
Both refundables and non-refundables, cash subsidies, tax incentives, low-interest loans, land for free or reduced prices
Investment Sites
in Free Enterprise Zones
Thank you for your kind attention
*Excessive Deficit Procedure
Full transcript