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Hungary – the right place for your investment 14th November 2013 Introduction of HITA Who we are • Governmental agency for investment promotion and trade development • Main activities: consultancy, mediation, providing information, around 500 programs yearly • Headquarters in Budapest • 150 employees • Supervising body: Prime Minister’s Office Our services Investment Promotion One-stop services for foreign investors Trade Promotion Export development programs for Hungarian SMEs Supplier Services Enhancing business between foreign OEMs and Hungarian suppliers Offices in Hungary and abroad Domestic network Central office: Budapest 15 regional offices outside Budapest covering the whole country Foreign network 61 foreign offices in 47 countries all over the world 74 trade and investment counsellors Investment promotion Pre-decision Tailored information packages on the economy, industrial sectors, incentives, business environment, supplier network Assistance in location search and evaluation Organisation of site visits and partner meetings Implementation Supplier search Providing information on permitting procedures Assistance in identifying incentives Intermediate Body for VIP cash incentive (preliminary information, application) Operations Expansion assistance After care services Intermediary body between the government and the companies Supplier search Business environment Hungary Location: EU - a common market of more than 500 million people Ukraine, Russia and the Balkans - market of 210 million consumers Land: 93,030 km² Population: ~10 million GDP/capita, at PPP (2012): EUR 16,800/ USD 22,924 Source: Eurostat, OECD Macroeconomic overview EU GDP • EU-member since 2004 • GDP growth (2012): -1.8% • Forecast (2013): +0.7% External trade and industry • Export growth (2012): +2.0% • Industrial production (2012): -1.7% Employment and wages • Average gross wage (2012)*: €770.5 • Unemployment rate (2012): 10.9% Inflation Budget balance • Inflation rate (2012): 5.7% • Forecast (2013): 3.1% • Government balance (2012): -1.9% • Forecast (2013) : -2.7% (% of GDP) Source: National Bank of Hungary, HCSO, Convergence Programme of Hungary 2013-2016 * Exchange rate: 1 EUR = 289,42 HUF Most important aims of Hungarian economic policy • Financial and fiscal stability • Reducing public debt • To raise the growth potential of the Hungarian economy • To increase the level of labour market participation and employment • Enhancing competitiveness Recent governmental measures for competitiveness • New labour code (effective from 1 July 2012 ) in favour of employers • New act on vocational training in favour of business needs • Strategic agreements between the government and top investors • Job Protection Action Plan – cutting contribution payable by employers for 5 prioritised employee groups Competitive tax system • Low corporate income tax: • rate for the first HUF 500 million (~ USD 2.3 million) of the tax base is 10%; • beyond HUF 500 million, it is 19% • Flat personal income tax: 16% European countries Corporate income tax France 33.33% Spain 30.00% Germany 29.55% UK 24.00% Greece 26.00% Czech Republic 19.00% Slovakia 23.00% Poland 19.00% Hungary 10-19% FDI in Hungary Inward FDI stock Percentage of GDP (2012) 90 80.30 80 67.70 70 57.40 60 45.80 50 42.40 34.10 40 30 20 10 0 Hungary Czech Republic Slovak Republic Source: Eurostat, Hungarian National Bank, OECD Poland Romania Slovenia Inflow of foreign direct investment (2012) (million USD) 14,000 12,000 10,000 8,000 6,000 4,000 2,000 0 Hungary Source: UNCTAD Czech Republic Poland Slovakia Romania Bulgaria Main investment decisions in 2013 • • • • • • • • • • • • • • Coloplast, medical devices manufacturing OPEL, engine manufacturing ZF Lenksysteme, electric steering systems Hankook, tyre manufacturing Hewlett-Packard, IT Sauflon, contact lens manufacturing Procter & Gamble, personal care products manufacturing General Electric, establishment of an oil & gas branch Greif, shared service center Bridgestone, tyre manufacturing Jabil, electronics manufacturing Thai President Foods, instant noodle manufacturing Systemax, shared service centre Bosch, R&D facility 1055 BUDAPEST, HONVÉD UTCA 20. TELEFON: (+36) 1 872 6699 FAX: (+36) 1 872 6699 WWW.HITA.HU Chinese investments in Hungary: the success story of Huawei • 2004 - the Hungarian office established • Employs ca. 200 people • 2011 - production of telecommunication devices for the EMEA Region (in contract manufacturing with Flextronics and Foxconn - employing indirectly ca. 900 people) • 2012 - European logistics centre operated by DHL (supplying Europe, North Africa, the Middle East and Russia) • 2013 - Strategic partnership agreement signed with the Hungarian government Chinese investments in Hungary: the success story of ZTE • 2005 – Hungarian office established • Employs ca. 60 people • Main activity: maintenance of telecommunication equipment • 2010 - LTE technology infrastructure development for Telenor • 2012 - network operation centre set up in Budapest to monitor telecommunication networks in the South-East European region • 2013 – signing of MOU with government, establishment of European Mobile Phone Repair Centre Focus sectors in investment promotion Shared Service Centres Automotive industry • Booming sector with around 80 SSCs already operating in the country • One of Hungary's core industries, accounts for 20 per cent of total export • More than 30,000 employees involved • Over 600 companies are present employing 100 000 people Life sciences • History of over 100 years in pharmaceutical manufacturing • Approximately 250 research and educational institutes related to biotech Focus sectors in investment promotion (cont.) Electronics ICT • Hungary is the largest electronics producer in Central and Eastern Europe • Outstanding cooperation between educational institutions and companies • Significant footprint of prestigious electronics firms • Growing number of data centers Logistics • Strategic position in the heart of the continent • Highly developed transport infrastructure Benefit from a good balance of quality and cost of labour High quality education Well trained, creative and flexible human capital • • • World-renowned academic and university background with cutting-edge competence International experience Extended cooperation with business sector Source: Statistical Yearbook of Education, 2011/2012 Competitive average wages Gross wages, industry (€) 2012 December 1600 1451 1400 1200 1000 1077 1072 945 800 600 400 200 0 Source: wiiw, Eurostat, national statistics 930 928 907 899 748 655 547 532 423 389 Take advantage of high-quality infrastructure Excellent access to key markets • At the cross roads of 4 main European transportation corridors • Extensive road and railway transportation network • Highly developed logistics and telecommunications infrastructure Expanding motorway network Warsaw, 10 hrs Vienna, 1 hr Rotterdam, 12 hrs Prague, 5 hrs Munich, 6 hrs Hamburg, 8hrs Kyiv 12 hrs Bucharest, 10 hrs Constanza, 12 hrs Zagreb, 1 hr Trieste, 6 hrs Koper, 6 hrs Road density km/km2 5 4.5 4 3.5 3 2.5 2 1.5 1 0.5 0 Source: IMD, World Competitiveness Yearbook, 2012 Ready-made industrial sites More than 210 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 Warehousing Customs arrangements Forwarding Administration (authority permits) Financial services Legal consulting Extra services Nyíregyháza, IP Tatabánya, IP Available incentives Available incentives * Preferred local governments are located in Northern Hungary, Great Hungarian Plain (North and South) and South Transdanubia. ** According to preferred and most preferred micro regions. *** Employment of min. 50 new students. Free Enterprise Zones 903 communities provide several tax allowances for investors Maximum 80% corporate tax relief for 10 years Only HUF 100 million (EUR 0.33 million)* investment is needed 0% in the first two years of employment instead of 27%. 12.5% in the third year of employment instead of 27%. 0% in the first two years of employment instead of 1.5%. Development tax allowance Social contribution allowance Vocational training contribution allowance Note: calculations are based on 300 HUF/EUR rate HITA Investment sites in Free Enterprise Zones Fényeslitke Felsőzsolca Szécsény Tiszalök Alsózsolca Nyírbogdány Bátonyterenye Mezőcsát Mátészalka Fehérgyarmat Nyírbátor Csenger Tiszafüred Létavértes Kunhegyes Tiszaföldvár Berettyóújfalu Mezőtúr Mezőberény Tab Kunszentmárton Sarkad Kistelek Kaposmérő Mórahalom Industrial Park Industrial Site Industrial Hall Maximum aid intensity Eligible expenditure Adjusted aid ceiling Up to EUR 50M 100 % of regional ceiling For part between EUR 50-100M 50 % of regional ceiling For part exceeding EUR 100M 34 % of regional ceiling Please note that the current incentive system is valid till end of 2013, however it is expected to be effective till 30 June 2014! Quality of life Expats like Hungary • International schools in Budapest British, American, German, French, Chinese, Japanese, Austrian etc. • Private medical services Well-known across Europe • Entertainment facilities Thermal baths, wellness, recreation centres throughout the country Public golf courses Rich cultural life Excellent food and wine Tibor Németh Head of Trade Department Embassy of Hungary Phone: +359 2 963 1135 E-mail: [email protected]