Despite global challenges, Hungary achieved a remarkable performance, consistently setting investment records.Continue reading
“We are living in a decade of unpredictability; the global economic environment has presented us with challenges we were not prepared for, such as pandemics, energy crises, and galloping inflation. That is why we need dialogue,” said István Joó, CEO of the National Investment Promotion Agency (HIPA), at the annual kick-off of the German-Hungarian Chamber of Industry and Commerce (DUIHK) in Budapest on Thursday.
István Joó, CEO of HIPA, emphasized the unpredictability of the current decade and the challenges posed by global economic conditions, including pandemics, energy crises, and inflation. He highlighted the need for dialogue during the annual kick-off of the German-Hungarian Chamber of Industry and Commerce (DUIHK) in Budapest on Thursday.
The CEO stated that despite the unfavorable economic environment, the value of foreign investment in Hungary doubled to EUR 13 billion compared to the record year of 2021. The number of jobs created increased by 30% to 20,000, also a new record.
The government has made every effort to make the country a preferred destination for investors. It has harmonized VAT, introduced the lowest corporate tax rate in the EU, lowered the public tax burden on labor, and introduced the most flexible labor law in the EU with a dual vocational training system based on the German model.
Hungary boasts unique political stability in Europe, he added.
Mr. Joó also spoke about how the country has become a meeting point for Eastern and Western investors, with tangible benefits: shorter supply chains leading to lower risks and costs, and a lower carbon footprint of companies.
István Joó. Photo: Facebook /Marie-Theres Thiell
He said that HIPA had made a number of tweaks to the investment incentive scheme over the past year. These included investment in renewable energy generation and research and development, but also a new element of support for investment required for the transition to net-zero emissions.
In the ten-year history of HIPA, Germany has always been among the top three investors in all but one year, with foreign direct investment reaching EUR 18 billion last year, accounting for 20 percent of the total stock of foreign direct investment.
Between 2014 and 2023, the agency supported more than 200 projects related to German investors, and 18 reinvestments were decided last year, indicating that companies operating in Hungary are doing well.
When making investment decisions, the government focuses on investments with high added value and low energy and labor requirements, paying special attention to the southern regions of the country, the CEO emphasized. Joó explained that bilateral relations had continued to strengthen despite the difficulties, citing the telecommunications, retail, and automotive sectors as examples.
László Bódis, Deputy State Secretary at the Ministry of Culture and Innovation, emphasized that the government would continue to work to better meet the labor needs of Hungarian and foreign companies, including by restructuring the higher education and vocational training system.
Last year, the number of applicants for STEM (science, technology, engineering, and mathematics) degree programs increased by 39 percent.
Among the successes of the past year, he cites Hungary’s rise in the innovation rankings, the doubling of higher education funding, and the increase in spending on research, development, and innovation from HUF 112 billion (EUR 289.9M) in 2016, to HUF 320 billion (EUR 829.24B) last year.
László Bódis. Photo: LinkedIn
The HUF 147 billion (EUR 380.6M) framework program for innovation recently announced by the government aims to make Hungary one of the 25 most innovative countries in the world and one of the 10 most innovative countries in Europe by 2030, he added. The aim is to create an ecosystem of higher education, research, and innovation in which research is conducted jointly with the business sector.
In his welcome speech, András Sávos, Chairman of the DUIHK, said that the value of trade between the two countries had increased 14-fold since the fall of communism to EUR 68 billion, which corresponds to a third of Hungary’s gross domestic product (GDP).
András Sávos. Photo: LinkedIn
Around 2,400 German-owned companies employ 250,000 people; their value added amounts to one-seventh of GDP, i.e., 14-15%, and the value of their investments reached HUF 1,000 billion (EUR 2.5B) last year. The unprecedented economic interdependence between Hungary and Germany provides a very solid basis for future cooperation, he said.
He emphasized that the DUIHK provides a platform for dialogue, and the main goal of the professional organization is to maintain this dialogue in the future.
The uncertainties of the past year – wars, geopolitical tensions, growth, and inflation issues – will not diminish this year either, and in this respect, this year will not be any easier than 2023.
He said that DUIHK wants a predictable regulatory environment and a stable, growth-promoting economic policy for all economic players. Maintaining competitiveness is at the heart of the organization’s activities and services. They are interested in ensuring that the economies of both countries and Europe remain competitive.
Barbara Zollmann. Photo: LinkedIn
Barbara Zollmann, executive board member of the DUIHK, said that the 934-member professional association’s goals for this year include expanding its strong network to strengthen its professional advisory services and launching additional training in the areas of ESG and finance.
The DUIHK wants to work to improve the competitiveness of companies and the framework conditions for an optimal investment environment, according to its annual program.
Via: MTI; Featured Image: Facebook / Millenáris
