E C O N O M I C D E V E L O P M E N T

INNOVATION

„ H O W T O I M P R O V E T H E N E W P E R I O D T H R O U G H

E X P E R I E N C E S F R O M 2 0 1 4 - 2 0 2 0 T O 2 0 2 1 - 2 0 2 7 ? ”

Content

of the

presentation

General overview of OPs and EDIOP 1

2

3

4

5

6

7

International overview and state of play,

Financial instruments

Challenges of 2019

Introducing new procedure – pilot programme

Experiments for the next period

Specific aspects of EDIOP

3

Hungarian OPs 2014-2020

(m EUR)

51

111

927

935

3 070

3 785

3 920

3 971

4 174

7 643

8 813

0 2000 4000 6000 8000 10000

Hungarian Fisheries Operational Programme

OP for Supporting Socially Disadvantaged Persons

Competitive Central-Hungary Operational Programme (CCHOP)

Public Administration and Services Operational Programme

Human Resources Development Operational Programme

Environment and Energy Efficiency Operational Programme

Integrated Transport Development Operational Programme

Territorial Operational Programme (TOP)

Rural Development Programme

direct Single Area Payment Scheme

Economic Development and Innovation Operational Programme (EDIOP)

Million EUR

Economic Development and Innovation OP – Priorities

4

8. Financial Instruments - 2352 M EUR

1. SME

1582 m EUR

2. R&I

1688 m EUR

3. ICT

455 m EUR

4. Energy

226 m EUR

5+6.

EMPL

2150 m EUR

Employment and

training

7.

Tourism

361 m EUR

Capacity building Modern business

infrastructure Entrepreneurship

Clustering, access to foreign market

R&I infrastructure and capacity Business R&I Strategic R&I cooperation

Competitive ICT sector

Digital economy Digital catching-up

Broadband

Energy efficiency and renewable energy

Employment programmes

Trainee programmes Flexibility at work

Training

Preservation of natural and cultural

heritage

• E D I O P s t a t u s c o m p a r e d t o n e i g h b o u r i n g

c o u n t r i e s

• C o m m i t t e d a n d d i s b u r s e d f u n d s

• P r i o r i t i e s , b e n e f i c i a r i e s

INTERNATIONAL OVERVIEW

AND STATE OF PLAY

ET: 4,66 bn € (1)

SK: 5,54 bn € (2)

HU: 8,81 bn € (1)

RO: 9,97 bn € (3)

BG: 3,62 bn € (4)

HR: 8,04 bn € (1)

PL: 12,76 bn € (2)

CZ: 11,46 bn € (2)

AT: 8,04 bn € (1)

SL: 3,82 bn € (1)

PT: 6,36 bn € (1)

EDIOP was very intense at the beginning of the period compared to V4 countries

Committed Paid EU payment

97%

71%

59%

113%

87%

21%

26%

15%

36%

30%

33%

28%

18%

49%

33%

1. Not only the size of the program, but

also the dynamics of publishing calls

and financial commitment is

outstanding

2. High commitment and

reimbursements are paired with the

highest payment claims towards to EC

among the V4 countries

3. However this fast progress makes the

end of this period difficult

7

Low support to high number of beneficiaries

Firms €/Firms (SME + R&D + ICT) Implemented

12 060

13 145

13 591

47 896

10 %

7 %

0 %

6 %

19 %

1 037 228 €

484 180 €

249 735 €

114 334 €

570 394 €

8

9

= 127/19/25

State of Play

(m EUR)

= 33 176

= 19 066

8 060

8 756

11 435

8 280 8 093

2 778

1 556

205

2 172

0

2000

4000

6000

8000

10000

12000

Tota

l bu

dge

t

An

no

un

ced

cal

ls

Op

ened

cal

ls

Pla

ne

d c

alls

Req

ues

ted

su

bsi

dy

Co

mm

itm

ent

Co

ntr

act

ed

Dis

bu

rsem

ent

(ad

v. +

inv.

)

Indicative allocation for priorities, budget of the opened calls, contracted amount ( bn HUF)

Total indicative budget: 2553,8 bn HUF

Budget of announced calls: 2721 bn HUF

Contracted amount: 2504,4 bn HUF Paid amount to final beneficiaries: 218 bn HUF 10

Number and amount of subsidy according to different beneficiaries EDIOP-1-7. priorities (m EUR)

No

. of

pro

ject

s

Amount of subsidy (m EUR)

MICRO

SMALL

MEDIUM

OTHER

NONPR. GOV.

NGO

MUNICIP.

11

• I n t e r n a t i o n a l c o m p a r i s o n

• S t r u c t u r e

• S t a t e o f p l a y

FINANCIAL INSTRUMENTS

280 302

433 457

727

1414

2352

0

500

1000

1500

2000

2500

Croatia Bulgaria Czech Rep. Slovakia HUN 07-13 Poland HUN 14-20

Financial instruments’ budget in neighbouring countries

(2014-20; m EUR)

13

R&I financial programmes for enterprises ≈ 618 m EUR

14

INDICATIVE

PROPORTION OF

FINANCIAL

INSTRUMENTS

ICT services, Broadband development ≈ 257 m EUR

SME – access to finance ≈ 876 m EUR

Energy efficiency for enterprises and for households ≈ 567 m EUR

Employment programmes, social enterprises ≈ 34 m EUR

TO 1

TO 4

TO 2

TO 3

TO 8

LOAN

INSTRUMENTS

VENTURE CAPITAL

COMBINED

INSTRUMENTS +

Information on

Note: Number of residential contracts 9 576 pcs. The reason for difference between approval and contracted amount: The contracted amount also includes the amount of the private source. Source: MFB report, week no 45

State of play of Financial Instruments (bn HUF)

698,8

397,0

237,3

358,7

222,1

134,1

714,8

0

100

200

300

400

500

600

700

800

0

100

200

300

400

500

600

700

800

Loan programmes Combined loanprogrammes

Venture capital products Total

Requested amount Volume of approval decision Volume disbursed to final recipients Financial allocation

15

• P e r f o r m a n c e i n d i c a t o r – O P

m o d i f i c a t i o n

• A u d i t c h a l l e n g e

• P a y m e n t c h a l l e n g e

CHALLENGES OF 2019

As a result of the performance measurement (31.12.2018) an OP modification is in progress

Energy -11,5

EDIOP 8 - FI -134,1

145,6 bn EUR

SME +75,3

R+I +56

ICT +14,3

• Hungarian „Multi” Programme • Modern Model Factory Programme

(I.4.0) • Small amount of subsidy in less

developed micro regions

• Supporting R+I activates of enterprises (grant combined with FI);

• Strengthening capacities of regional research centres;

• Supporting AI ecosystem;

• Supporting EuroHPC (High Performance computing) initiative

17

18

Main areas audited by the authorities:

Research, Development and Innovation

(innovation content of projects)

Reliability of performance data

(indicators)

Market price

Verification of SME status

Project implementation location

(convergence regions vs Central-

Hungary)

Audit

Experience on

Utilisation of audit experience:

Approving and strengthening R&D&I

best practices (NRDIO, National IPR

Office)

Improving reliability of indicator data

(collecting, recording, storing of data,

electronic data exchange systems).

Market price – 3 bids, documentation of

price assessment

Verification of SME status

Increased number of on-the-spot audits

Challenge

audit processes

At the second half of the period the focus shifts (EDIOP 1 -7.):

payment volume decreases - labour intensity increases

Paid amount to beneficiaries Number of payment transaction

ADVANCE

FINAL

PAYMENT

INTERIM

PAYMENT

19

Introducing new procedure –

pilot programme

REF

UN

DA

BLE

– 1

00

% P

RE-

PAYM

ENT

20

%

0-8

0 %

BA

SED

ON

EV

ALU

ATIO

N

SU

BS

ID

Y

P E R I O D O F T I M E

EFFE

CTI

VE

IMP

ELEN

TATI

ON

Implementing – 1 year Maintenance – 2 years

EVALUATION CRITERIAS

• Increase of wage cost per capita (%, max. 10 point)

• EBITDA/ revenue (%, max. 10 point)

• Increase Value added per capita (%, max. 5 point)

• Implementing I 4.0 solution (max. 10 point)

• R+I activity (max. 5 point)

• Business activity in the neighbouring countries (Y/N, 5 point)

• Increasing export revenues (%, max. 5 point)

Experiences for the

next period

• I m p o r t a n t b u t s t i l l t h e u n r e a c h e d b e n e f i c i a r i e s

• F l e x i b l e f r a m e w o r k – r e a c t i n g g l o b a l t r e n d s

• C o m p l e x s e r v i c e s f o r t h e w e l l d e f i n e d t a r g e t g r o u p

Awareness raising for those who haven’t been reached yet

1

There are still not reached high-growth companies (HGC)/ excellent projects (Focusing on HGC)

Rat

io o

f H

GC

in t

ota

l nu

mb

er o

f co

mp

anie

s W

illin

gnes

s fo

r te

nd

erin

g am

on

g H

GC

s

24

It is important that the upcoming OP can be flexibly adjusted to

government priorities and global trends

2

Global trend influence the programming process

-8

-6

-4

-2

0

2

4

6

8

19

98

19

99

20

00

20

01

20

02

2003

20

04

20

05

20

06

20

07

20

08

20

09

20

10

2011

20

12

20

13

20

14

20

15

20

16

20

17

20

18

EU-28 Hungary

GVOP GOP GINOP

EDIOP programming principles (2014-20):

- Job creation is important - Capital strength of SMEs are weak - SMEs must gain ground in domestic market

and become part of a value chain, etc.

MACRO ECONOMIC FUNDAMENTALS WERE CHANGED

5,2% (Q2 2019)

3,5% (last 3 months)

17,0% (2018)

-2,2% (2018)

GDP =

Unemployement. =

Investments =

Budget deficit =

26

Be enough flexible to modify the focus: sectorial – thematic Manufacturing sector – enhance digital capacity

0 10 20 30 40 50 60 70 80 90

(2017)

(2019)

(2019)

Technological Readiness Ranking of The Economist Intelligence Unit

IMD World Digital Competitiveness Ranking

DESI – Digital Economy and Society Index

23

43

38

Topics to underline:

1. Availability of infrastructure - good

• Social networks= 2/28

• Speed of internet= 10/63

2. Business and training rankings are

weaker

• E-business technologies= 27/28

• Digital knowledge= 61/63

27

Complex services needed from the implementing institutions

• Personalized tools

• One goal – more priorities

3

Complex approach for handling some specific target groups

Awareness raising

• Campaigns • Demonstrations • Events

Reaching as many as

we can….

Pre-selection

• Databases • Those who were

convinced at previous events

Defining the possible

clients

Personalized preparation

• Involving special experts • Mapping the real needs

of the company • Defining the exact

project content

Well established

project content

Application- implementation

• Funding • Measure the predefined

goals

More reliable

beneficiaries –

decreasing risks

Modern Model Factories (preparing SMEs for digital transformation

Hungarian Multi Programme (high growth companies)

29

Growing need for more complex approach

1. EDIOP 1. (SME)

Dedicated calls for preparing SMEs for digital transformation

2. EDIOP 3. (ICT)

Programme for modern (digital) enterprises – Chamber of Commerce

Dedicated call: Complex development of ICT solutions

3. GINOP 6. (Training)

Innovative trainings supporting higher business levels– Assisting digital

transformation of SMES through the involvement of vocational training centres

4. EDIOP 8. priority (financial instruments)

Dedicated support programmes for SMEs: EDIOP-8.2.6 (loan product), EDIOP-

8.2.5, EDIOP-8.2.7 (equity products)

30

1

Supporting small scale innovation - Increased the willingness for innovation -

SMEs realized that they have innovative activities;

Low level at willingness of cooperation among business actors - Initiating

joint R&I projects – cooperation between research and business sector;

Complex development of projects (EDIOP-1.2.1): infrastructure, building,

technology modernisation, ICT, training, know-how…;

Instead of general SME development programmes focusing on specific sectors,

topics:

o Manufacturing industry;

o Job creation at less developed areas;

o Initiating SMEs to implement Industry 4.0 solutions;

o Supporting high growth companies

R&I

SME development

Change of attitude: moving from non-refundable grants toward refundable

instruments; Start using combined instruments; Financial instruments

Project selection Introducing simplified procedure: well defined call for proposals;

ikonok THANK YOU FOR

YOUR KIND ATTENTION!

Ministry of Finance

Managing Authority for Economic Development

Programmes

E-mail: gazdasagfejlesztes@pm.gov.hu

Web: www.gazdasagfejlesztes.gov.hu