Hungary – the right
place for your
investment
15th May 2014
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
•
EU member since 2004
GDP
•
•
GDP growth (2013): 1.1%
Forecast (2014): 2.3%
Export of
goods
•
•
Export volume growth (2013): 5.3%
Forecast (2014): 5.8%
Employment
and wages
•
•
Average gross wage (2013)*: €776.9; $1031.1
Unemployment rate (2014 Q1): 8.3%
Inflation
•
Inflation rate (2013): 1.7%
•
•
Government balance (2013): -2.2%
Forecast (2014) : -2.9% (% of GDP)
Budget balance
*Exchange rate: 1 €= 296.92 HUF, 1 $=223.70 HUF
Source: HCSO, Convergence Programme 2014
Most important aims of the Hungarian
economic policy
• Securing financial and fiscal stability: introducing strict fiscal policy
• Public debt target: 50%.
• Budget deficit target: < 3%.
• Inflation target of the Central Bank of Hungary: 3%
• Turning welfare state into an economy based on productive labour,
by increasing the level of employment
• Improving business environment
• Promoting foreign and domestic private investments
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
(EUR 1.6 million) of the tax base
is 10%;
• beyond HUF 500 million, it is
19%.
• Tax incentives and allowances
(development tax allowance,
R+D tax incentives)
• Flat personal income tax: 16%
Source: Deloitte, January 2014
CEE countries
Corporate income tax
Slovakia
22%
Czech Republic
19%
Poland
19%
Slovenia
17%
Romania
16%
Hungary
10% - 19%
Hungary as an investment location
Key reasons to invest in Hungary
•
Well-qualified, cost effective labour force
•
Industry-academia cooperation
•
Ideal locations
•
Highly developed logistical, transport and communication
infrastructure
•
Business synergies with local suppliers
•
Governmental incentives
Main investment decisions in 2013
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Coloplast, medical devices manufacturing
OPEL, engine manufacturing
ZF Lenksysteme, electric steering systems
Infineon: semiconductor components producing
Hankook, tyre manufacturing
Hewlett-Packard, IT
Sauflon, contact lens manufacturing
Samsung: electronics manufacturing
General Electric, establishment of an oil & gas branch
Greif, shared service center
Bridgestone, tyre manufacturing
Thai President Foods, instant noodle manufacturing
Systemax, shared service center
Bosch, R&D facility
Flextronics: electronics manufacturing
DHL: Express logistics
Takata: airbag manufacturing
Our results – high inward FDI stock in regional
comparison
Percentage of GDP (2013)
Source: wiiw, 2014
Our results - the most attractive city for
investment
Ranking
City
Country
1
2
3
4
5
6
7
8
9
Budapest
Wroclaw
Katowice
Plzen
Moscow
Brno
Poznan
Ostrava
Bratislava
Hungary
Poland
Poland
Czech Republic
Russia
Czech Republic
Poland
Czech Republic
Slovakia
10
Prague
Czech Republic
Budapest - the most attractive city for capital investment in
Eastern Europe in 2014-2015.
Source: www.fDiIntelligence.com, European Cities and Regions of the Future 2014/15
Taiwanese investment in Hungary: the success
story of Foxconn
• 2004 – production in Komárom, supplying first Nokia, now
Huawei for telecommunication devices
• 2008 – production in Székesfehérvár, contract manufacturing
of electronic devices, R&D
• Employs 1,000+ people in Hungary
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
317,000 students in 66 higher education
institutions
International experience
Source: Statistical Yearbook of Education, 2012/2013
Competitive labour costs
Total hourly labour costs in 2013 (EUR)
60
50
40
EU 28
23.7
30
20
10
Hungary
7.4
7.4
0
Source: EUROSTAT
1055 BUDAPEST, HONVÉD UTCA 20. TELEFON: (+36) 1 872 6699 FAX: (+36) 1 872 6699
WWW.HITA.HU
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
Source: IMD, World Competitiveness Yearbook, 2013
Ready-made industrial sites
More than 210 industrial parks are available for
manufacturing activity
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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
Forms of incentives

Cash grants

EU co-financed tenders
OR

Cash subsidy based on the decision of the Hungarian
Government

Development tax allowance

Job creation subsidy

Training subsidy

Job Protection Action Plan
Maximum aid intensity
Győr-Moson-KomáromSopron Esztergom
Vas
Veszprém Fejér
Zala
Somogy Tolna
Baranya
BorsodAbaújZemplén SzabolcsNógrád
SzatmárHeves
Bereg
Budapest
Hajdú-Bihar
Pest
JászNagykunSzolnok
Bács-Kiskun
Csongrád
10%
0%*
30%
25%
40%
35%
50%
Békés
Investment volume
Percentage of aid
intensity
Up to EUR 50 M
100 %
For part between EUR
50 – 100 M
50 %
For part exceeding EUR
100 M
34 %
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
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
THANK YOU FOR YOUR
ATTENTION!