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Hungarian Investment Policy
and Business Environment
Mrs. Agnes Henter Director, Investment
Projects
June 16, 2008
ITDH: YOUR NATURAL PARTNER
Founded by the Hungarian Government to provide its services free of charge
• promote and facilitate foreign investments
• develop international relations
• promote Hungarian capital investments
• EU integration-oriented SME development
ITD HUNGARY: Your Natural Partner
Central Office in Budapest 55 Foreign Trade
Offices
Detailed tailor-made information package about economy, politics, financial incentives, business environment, tax system, sectors incl. electronics, etc.Site visits, meeting with local, regional and government bodies, experts, service providers, consultants, potential suppliers, etc.Tailor-made incentive solutions
Accelerating permitting procedures, evaluation of potential investments.Assistance in incentive applicationVIP treatment for expatriates (visa, working permits etc.)
Special follow-up contact servicesAssistance in further investments, expansions
Decision
Implementation
Aftercare
Efficient services by ITD Hungary
HungaryHungary
Land: Land: 93,030 km²93,030 km²Population: 10,1 millionPopulation: 10,1 millionGDP/capita, at PPP: EUR GDP/capita, at PPP: EUR 1166,,000 (2007 forecast)000 (2007 forecast)
Hungary in Europe
Sustainable macroeconomic growth, EU-member since 2004
Average GDP growth in the past 5 years: 3.6%GDP growth of 2.7% is expected this year with a 3.3% improvement of the manufacturing and business services sector
Industrial production growth is estimated to keep its pace at around 6% Export growth of 10% is forecast
Unemployment rate is expected at 7.7% Average gross wage: € 750
Average inflation rate will be around 6%
GDP
Output
Inflation
Employment and wages
Economy
Sustainable economic growth
in 2008
Source: National Bank of Hungary, Ministry of Economy and Transport* Including reinvested earnings from 1995
97,396
Hungary is front-runner as regards
FDI Influx
0
5 000
10 000
15 000
20 000
25 000
30 000
35 000
40 000
45 000
50 000
55 000
60 000
65 000
70 000
75 000
80 000
85 000
90 000
95 000
100 000
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Cumulated FDI* in Hungary
in million USD
Hungary’s position in FDI
21%
2%
2%
2%2%
4%
4%5%
6% 11%
13%
28%Germany
Netherlands
Austria
UK
France
USA
Luxembourg
Norway
Belgium
Switzerland
Italy
Other
•Significant FDI/capita in the region
•Growing proportion of
reinvestments
•Growing importance of high value
added investments
•Major investors: Germany, the
Netherlands, Austria, UK
(Europe: 81%)
FDI Stock per capita in EUR
0
1 000
2 000
3 000
4 000
5 000
6 000
7 000
Poland Slovakia Slovenia CzechRepublic
Hungary
(Poland and Slovenia: 2006, Slovakia: 2007 Sept., Czech Republic and Hungary: 2007)
Large investments announced in 2007
Automotive Denso (2. stage): Automotive electonics, 110 jobsSzékesfehérvár
Magyar Suzuki: Automotive manufacturing, 690 jobs, Esztergom
F. Segura: Automotive manufacturing, 79 jobs, Szolnok
ElectronicsSamsung Electronics: Elektronics, 1000 jobs, Jászfényszaru
Heliogrid:Solar panel manufacturing, 810 jobsRétság
Genesis Energy: Solar panel manufacturing, 190 jobsTatabánya
SSCVodafone: Financial service centre, 750 jobsBudapest
IT Services (Deutsche Telekom): SSC, 1745 jobs, Budapest Debrecen
British Telecom: SSC, 220 jobs, Debrecen
ICTLufthansa Systems: expansion, 150 new software development positions
Neusoft: software development centre of the leading Chinese software technology company
BiotechnologyBeike Biotechnology: Chinese stem cell research project
St James: hospital project from Malta
AAI Pharma: Representative office of the American pharma company
OthersAHI Roofing:Construction, 106 jobs, Várpalota
DAF Trucks – PACCAR:Regional disrtibution centre, 49 jobs, Zsámbék
Bank of China: Unique example of Chinese capital in the CEE banking sectorHisense: LCD manufacturingHuawei: ICTLenovo: Desktop computer manufacturingZTE: ICTHainan Airlines: Direct flights between Beijing and BudapestShanghai Construction Group: Construction projects Asia Centre – China/ Brand Trade Centre : Greatest wholesale trade and logistics distribution centre in Central EuropeNeusoft: Software developmentBeike: Stem cell researchLivan: Biodegradable food packaging production Byd: Electronic manufacturing
Value of total Chinese investments: approx. USD 250 million
Budapest/Hungary is the 4th best location for Chinese Investments according to China International Institute of Multinational Corporations.
Source: International and Chinese CEOs roundtable in Nov. 2007
Major Chinese Investments in
Hungary
Hungary’s position in logistics
•Hungary is situated at the cross roads of four main European transportation corridors•The road and railway transportation network is extensive and it is under continuous development
1. Singapore
2. The Netherlands
…
6. Japan
….
35. Hungary
...
38. Czech Republic
40. Poland
50. Slovak Republic
•Hungary is ahead in the World Banks Logistics Performance Index (2007) considering the speed of customs clearance, the average timing of export and import transactions and the transport costs
Hungary: logistics centre
•An EU member country, Hungary has direct access to the EU market of nearly 500 million customers;
•After the most recent expansion of the EU, Hungary became the geographical centre in the CEE.
Sca
ndin
avia
/Nor
dic
UK/Ireland
North W
est
Europe
IberiaEastern
Mediterranean
Centra
l Easte
rn
Euro
pe
Central Souther
n Europe
NIS and Asia
Number of institutions in higher education: 71
Number of students in higher education: 416.4 thousand
Majoring in: Business and Administration: 105 th Informatics: 17.7 th
Number of graduates in 2007: 57.7 th
University Towns
Budapest 161,300
Szeged 30,00Pécs
Pécs33,100
Veszprém 10,600
Miskolc 13,600 Debrece
n25,200
90% of students speak English2nd most popular foreign language: GermanFollowed by: French, Italian, Spanish
All diploma with foreign language certificate and computer skills!
Well trained, creative and flexible
human capital
Priority sectors in Hungary
Recycling Biotechnology
Renewable energy
ICT, SSC
Automotive
Electronics
Aviation and Aerospace
Digital media and creative industries
Dynamics of the sector
Existing presence
Growth
Stability
Decline
Low Average Strong
Hungarian performance
Very strong
Strong
Medium
Low
Very low Source: Deloitte, Project Astra
High-performing sectors: strong position in
Central-Eastern-Europe
Hungary is the largest electronics producer in CEE providing 40% of the
regional output and nearly 50% of the exports major hardware producer in the region, representing 5.5% of
Europe’s output
Hungary has a high proportion (5.4%) of the labour force in high tech
manufacturing, ranking 6th in the EU (Eurostat, 2007) the strongest pharmaceutical and biotechnology sector in
CEE the highest number of shared service investments between
2002-2006 in Europe (Ernst&Young, 2007)) strong R&D in the automotive sector
Strong innovation capacity
The World Economic Forum ranks Hungary 24 among 131 countries in terms of the quality of scientific research institutions
Hungary is ahead of its regional competitors, and the Mediterranean countries
Ranking Country
Switzerland 1
USA 2
Germany 5
France 19
Norway 21
Hungary 24
CzechRepublic
30
Slovenia 33
Spain 49
China 56
Poland 64
Greece 76
Source: Global Competitiveness Report, World Economic Forum, 2006/2007
The sector’s share in the national economy:
19.4% of total industrial production
20% of total exports
Total number of companies: 630
Total number of employees: 110,000
Export ratio: 90%
Car manufacturing, assembly
Suzuki: 300,000 pcs planned for 2008
Audi Motor: TT coupés and roadsters, A3 cabriolet,
379 variants of 24 different types of
powertrain
Engine manufacturing
Audi Hungary: 1.913 million engines in 2007
GM Opel: 434 thousand engines
Automotive
World’s 3rd largest powertrain plant in Hungary by Audi!
High Performing Sectors
Automotive engineering
Győr
Miskolc
VeszprémSzékesfehérvár
Érd
Pilisszentiván
Budapest
• In the past couple of years 15 automotive manufacturers started research and development including Audi, Knorr- Bremse, Continental, ZF Friedrichshafen, Schefenacker, Bosch, Denso and Hankook.
Major companies conducting R&D, centres
of excellence
•Major R&D research include highly complicated, high-quality vehicle parts and components, advanced vehicle control, laser machining, metal foams, nano-composites
Production Value: USD 19 billion
29% of total manufacturing production
29.4% of total exports
Total number of companies: 9,000
Total number of employees: 135,000
Export ratio: 87%
.
Electronics Hungary is the largest electronics producer and exporter in theCEE region by providing 40% of the regional output and nearly 50% ofthe exports.
High Performing Sectors
Hungary has the second highest share of ICT goods in the country’s export in the OECD
Hungary has the highest per capita ICT expenditure in the CEE region
ICT
High Performing Sectors
Debrecen
Szeged
Szombathely
•All major well known software developers are all present in the country including IBM, HP, Siemens, SAP, Oracle, Getronics, EDS, CISCO, TATA, Microsoft, Sun. •Several IT companies such as British Telecom, EDS and Getronics opened their technology service centres in Hungary.•Strong cooperation between business and academia in R&D, like Nokia, Ericsson, IBM, CISCO, SAP, Oracle, SUN
•Hungary is the fifth largest medicine producer in Europe
•Largest biotechnology innovation and spin-off sector in CEE
•Extensive R+D cooperation
•University biotechnology
centres
clustered in four academic
towns
Life sciences
High Performing Sectors
Genomnanotech Knowledge Centre
Neurobiological Knowledge Centre
Cell Communication Knowledge CentreInfobionics Knowledge Centre
Medipolis Knowledge Centre
Debrecen
Szeged
Budapest
Pécs
Four life science clusters
•Budapest, Szeged, Debrecen, Pécs: strong presence of large international pharmaceutical and biotechnology companies clustered around universities.
Kyoto protocol – reduce CO2 emission with 6% betw. 2008-2012 compared to reference period 1985-1987
EU target: 20% share of RES in total energy production compared to 4.2% at present
Hungary plans to reach 15% by 2020,
Major areas of growth: biomass, biogas, wind
Investments into biofuel and biomass production has already increased
The Energetics and Environment Operative Program earmarked USD 500 million to support renewable energy related investments
Compulsory feed-in tariff (between 5-13 cents) is differentiated by the size of the plant
Renewable energy
High Performing Sectors
SANYO Production of 50 MW capacity started in 2005
Expanding solar panel manufacturing factory to 150 MW
HelioGrid 50 MW planned capacity of thin film solar cell manufacturing in Rétság. Operation started in 2007 Q3Cooperation with the Research Institute for Technical Physics and Materials Science in solar cell technology
Genesis Announced to start large scale thin film cell manufacturing in Tatabánya with an investment value of EUR 100 M
Semilab Leading supplier of state-of-the-art metrology systems for the semiconductor and photovoltaic industry as well as for scientific investigation
Energosolar Develops and manufactures complete, turn-key production lines for thin film micromorph PV modules in Budapest Products: solar electric power systems, photovoltaic cell manufacturing equipment, photovoltaic module manufacturing equipment, photovoltaic systems
Increasing activity in solar panel
technologyRenewable
energy
Modernization of the Rail Infrastructure (15 billion HUF) Reconstruction of the existing road infrastructure (4 billion
HUF) Development of an Industrial and Logistics Park in Fényeslitke
– 120-150 ha (5 billion HUF) Building of the container transshipment station and Ro-La
terminal on 100 km2 (2 billion HUF) Development of the secondary and higher education in the
region Promotion of the cluster of the logistics service providers Marketing Construction planning of the Debrecen-Záhony Railway line
and of the M300 Highway between Motorway M3 (Vásárosnamény) and Záhony
Complex development program of the Záhony Area
in the 2nd National Development Plan (2007-2013): app.150 million USD
Záhony Logistics Centre
Taszár airport development
• Former US military base under development • Favourable location in South-Western Hungary• Can become a connecting link between the Far East and the European Union • Auxiliary and warehouse buildings • Fuel filling and repair facilities • Public road and railway links • Separate civil aviation sector and passenger terminal • Suitable for the establishment of a logistical centre and merchandise distribution base • The proximity of an industrial park and of a higher education and research centre • A large number of local experts experienced in air traffic control and in the operation of airports
POLUS KINCS ZRT. offers to investors:
The ownership of mining properties at Rudabánya and its surroundingsThe sole rights to the mining of BariteThe sole right to sell, the Mining rights of the reserve, of the Iron-ore, Copper-ore and the Poly-metallic metals
Project Rudabánya
The mine(s) and its reserve are ready to be introduced to the
Chicago and London Commodity Exchange.
Tax-related benefits
•Tax deductible items•Development tax benefit
Direct Incentives
•Special Incentive Package for large investments •EU co-financed grants•Incentives above intensity ratio
Intensity ratios
*from 2011: 10%
Investment Incentive system
Győr-Moson-SopronVas
Zala
Szabolcs-Szatmár-
BeregHajdú-Bihar
Jász-Nagykun-Szolnok
HevesKomárom-Esztergom
FejérVeszprém
Nógrád
BudapestPest
SomogyTolnaBács-
Kiskun
Csongrád
Békés
Baranya
25%*
30%
40%
50%
Open atmosphere, advanced business administrative system
Harmonious relationship with China’s central government
Largest Chinese community in Central and Eastern Europe
Chinese schools, newspapers and restaurants
Rich entertainment facilities
Unique benefits
Thank you for your kind attention!
Mrs. Agnes Henter, Director, Investment ProjectsITD Hungary Hungarian Investment and Trade Development AgencyH-1061 Budapest, 12 Andrassy ut, HungaryPhone: (36 1) 472-8181, Fax: (36 1) [email protected]