Hungary an ideal place for investors. Investment Seminar Groningen

Transcription

1 Hungary an ideal place for investors Investment Seminar Groningen

2 What can Hungary offer for Dutch Investors? Excellent access to key markets Benefit from a good balance of quality and cost of labour Build on knowledge-based priority sectors Excellent infrastructure Investor-friendly tax environment Synergies from cooperation with local suppliers Quality of life One-stop-shop service offered by HITA 2

3 IMPROVING ECONOMIC PERFORMANCE IN 2010 EU EU-member since 2004 GDP Output Employment and wages Inflation GDP growth 2010: +0,8% (2009: -6.7%) Exports growth 2010: +12,6% (2009:-9.6%) Industrial production: +10% (2009: -17.8%) Average wage: 750 (H1 2010)* Unemployment rate %, (2009: 10.1%) Average inflation rate 2010: 4.9% *Exchange rate: 1 = HUF 3

4 Introducing the government measures Main challenges in 2010: Domestic structural problems, Low employment and high unemployment rate, Negative impacts of global economic crisis, slow recovery in Europe. Major shift in the economic policy was needed The Government focuses on - Macroeconomic stability, - Economic growth and competitiveness. All new measures support the achievement of the aforementioned goals 4

5 Introducing the government measures Jun 2010: First Action Plan (29 measures) Oct 2010: Sectorial Extra Taxes Nov. 2010: Pension System Reform Financial sector taxation: ~EUR 720 M in 2010 Reduction of Corporate Tax rate 10% for revenues up to 1,8 MEUR Personal income tax flat 16 % + family taxation Extraordinary taxes for retail, telecom & energy companies (to be phased out in 2013) Incorporation of private pension funds payments to government-run pension fund Jan 2011: New Széchenyi Development Plan March 2011: Growth and Stability Programme 7 areas of focus: health industry, green economy, homebuilding, boosting businesses, science and innovation, employment, transport and logistics Decision on structural reforms 5

6 First Action Plan (1.) Determined to reach 3.8% of GDP deficit target, Strict fiscal policy is crucial (sovereign risk), Measures taken to increase revenues and decrease expenditures of the budget, On the revenue side: Financial sector taxation: HUF 200 bn (~EUR 720 mn) in 2010 On the expenditure side: Cost stop in public institutions, Total 15% saving in public sector wage costs, Salary cap at state-owned companies (~EUR / month), Significant cut of the number of board member and supervisory board member positions at state-owned companies, Reduction of parties financing by 15%. 6

7 First Action Plan (2.) Competitiveness goals: improved business climate, higher employment rate. Strengthening the role of SMEs in the economy: - 10% CTR under HUF 500 mn revenues (instead of current 19%), - Higher share of SMEs in receiving EU funds, - Extension of Széchenyi Credit Card program. Simplified tax regime and lower tax rates: - Flat personal income tax rate: 16%, - Introduction of family income tax (in 2 yrs), - Elimination of some small taxes. Simplification of permitting procedures (less permissions are needed) 7

8 Sectoral Extra Taxes Stabilising the budget - further need to increase revenues and cut expenditures Projected revenues for 2010: HUF 161 bn (EUR 588 nm) HUF 30bn (EUR 110 mn) from retail companies HUF 61bn (EUR 223 mn) from telecom companies HUF 70bn (EUR 256 mn) from the energy sector Similar revenues are expected in Stabilised budget is favourable for foreign companies in the long run 8

9 New Széchenyi Plan Main objectives (via increasing investment rate) Higher economic growth Creating 1 million more jobs until 2020 As of 14 January tenders First round: HUF 1100 bn Support of Hungarian companies in development and internationalisation 9

10 Growth and Stability Programme Plan Széll Kálmán ( ) Labour market Pension system reform Prescription drug subsidy fund STRUCTURAL REFORMS Education Public transport SHRINKING NATIONAL DEBT State and municipalities Red tape and administration 10

11 Effects of the Growth and Stability Programme Improving comptetitiveness Decreasing national debt 82 % 65-70% Public finance deficit below 3 % 2,94%; 2,5%; 2,2%; 1,9% Jobs GDP growth 1% 4-6 % Investmen t rate 17 % 25 % New Sz échenyi Plan Plan Széll Kálmán 11

12 From laggard Lowest corporate tax 10 % Most stable political system 2/3 Simplest PIT system PIT with the strongest incentive for willingness to have a child January January 2011 to champion Deficit below 3% Fastest debt reduction 82% 65-70% March 2011 Most flexible labor market 2012 Fastest increase of competitiveness One of the most efficient states 2014 April July 2010 New Széchenyi Plan Plan Széll Kálmán Source: NGM

13 COMPETITIVENESS IN KEY SITE SELECTION FACTORS 13

14 HUNGARY IS PERCEIVED AS A QUALITY LOCATION Top 5 satisfaction assets Telecommunication infrastructure 1. Local labor skills level 2. Transport and logistic infrastructure 3. Quality of education 4. Quality of life 5. Hungary Attractiveness Survey 2009 Respondents: 202 * Very attractive + fairly attractive responses Respondents: 202 * Very attractive + fairly attractive responses 14

15 Doing business in 2011 Country Ranking Singapore 1 United Kingdom 4 USA 5 Germany 21 France 26 Slovak Republic 41 Hungary 46 Hungary among the top 10 countries with the greatest improvement in business climate Spain 49 Bulgaria 51 Romania 56 Czech Republic 63 Turkey 65 Poland 70 China 79 Ukraine 145 Source: World Bank, Doing business,

16 Strong scientific capacity The World Economic Forum ranks Hungary 18 of 131 countries in quality of scientific research institutions Country Ranking Israel 1 Switzerland 2 UK 3 Germany 6 The Netherlands 9 Ireland 16 Hungary 18 Austria 20 Czech R. 21 China 39 Spain 43 Poland 47 Greece 88 Slovakia 90 Source: Global Competitiveness Report, World Economic Forum, 2010/

17 LIBERAL LABOUR REGULATIONS IMD s World Competitiveness Yearbook ranks 58 countries by the labour regulations According to the survey labour regulations do not hinder business activities Rank Country Scores 1 Iceland Singapore Switzerland Hungary United Kingdom Ireland Bulgaria Poland Slovak Republic Czech Republic Romania 3.3 Source: IMD, World Competitiveness Yearbook

18 A MARKET OF 500 MILLION PEOPLE WITHIN THE EU-27 Hungary is a land of innovation located in the heart of Europe that offers a skilled workforce, a high quality of living and competitive business advantages. Hungary Land: 93,030 km² Population: 10,1 million GDP/capita, at PPP: EUR 14,900/ USD 18,840 (2009) (wiiw, EIU) 18

19 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 19

20 EXPANDING MOTORWAY NETWORK 20

21 LOW CORPORATE INCOME TAX Country Corporate income tax France 33.33% Spain 30.00% Germany 29.44% UK 28.00% Greece 25.00% Czech Republic 19.00% Slovakia 19.00% Poland 19.00% * Hungary 10-19% Asian countries Corporate income tax Japan 40.69% Malaysia 25.00% China 25.00% South Korea 24.20% Singapore 18.00% Source: European Commission, 2010; France, Germany, Asia: KPMG,

22 READY-MADE INDUSTRIAL SITES Nyíregyháza, IP Tatabánya, IP More than 130 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 30% of Hungarian GDP today is already produced by companies in industrial parks - sites favoured by multinational companies. 22

23 REAL ESTASTE MARKET Stock of A class offices in Budapest (2010 Q1): Average rental price Budapest EUR 12-15/sqm/month Other cities EUR 8-12 /sqm/month Vacancy rate in Budapest in 2010 Q1: 24.9 % Top quality telecommunication services Broadband internet available everywhere Extensive network of highways 3,000,000 sqm EiffelSquare Capital Square Corvin Offices Millennium Tower Millennium Tower 23

24 International schools in Budapest Chinese, British, American, German, French, Japanese, Austrian etc. Private medical services Well-known across Europe EXPATS LIKE HUNGARY Entertainment facilities Thermal baths, wellness, recreations centres throughout the country Public golf courses Rich cultural life Excellent food and wine 24

25 MAIN SECTORS 25

26 Major Automotive Investments in Hungary Daimler: Investment volume: EUR 800 million Direct employment: min AUDI: Investment volume: EUR 930 million Direct employment: min. 1,800 GM: Investment volume: EUR 500 million Direct employment:

27 SUZUKI OPERATION IN HUNGARY As a result of several years' expansion and innovation, the company reached a production capacity of 300,000 cars/year. Location: Esztergom, Hungary Models: Suzuki SWIFT, Suzuki Splash, Suzuki SX4, Subaru G3X Justy, Fiat Sedici CUV Further investments will be made 27

28 BOSCH OPERATES ITS LARGEST PLANT GLOBALLY IN HUNGARY BOSCH s investments in Hungary highlights operational and logistics competitiveness, more than 90% of Hungary s automotive production goes for export. 28

29 ICT & SOFTWARE DEVELOPMENT Several major well known software developers are present, including IBM, HP, Siemens, CISCO, SAP, Oracle and TATA Several IT companies, such as BT, EDS-HP and Getronics operate technology service centres in Hungary Strong cooperation between business and academia in R&D (IBM, CISCO, Oracle and SAP) 29

30 SCHARED SERVICE CENTERS IN HUNGARY - OUTLOOK More than 60 companies have a SSC in Hungary Over 25,000 people are employed in this sector Internationally recognized companies that have already established a SSC in Hungary BP, British Telecom, Citigroup, ExxonMobil, Hewlett Packard, IBM, KLM, Morgan Stanley, Nokia, Roche, Tata Group, Vodafone Hungary is a member or the European Union, NATO, OECD and is a Schengen state. Hungary is ranked 20th globally on Quality of Life Index and 6th in an environmental protection index. Source: International Living, GWICAN (2010), PWC 30

31 SSC and ICT companies in Hungary 31

32 ELECTRONICS Largest electronics producer and exporter in the CEE Major global manufacturers: Samsung, GE, Philips, Sanyo, Sony and Jabil, Flextronics Booming sectors: IT manufacturing telecommunications, consumer electronics Hungary provides an ideal environment for electronic manufacturing services as the country has good industrial infrastructure and a strong industrial culture. Hannu Hanatala, Managing Director, Elcoteq 32

33 INNOVATION IN HUNGARY Large presence of multinationals investing into R&D activities Continuously expanding R&D investments in automotive manufacturing, software development and life sciences Latest developments: Life sciences AMRI (USA), Codexis, Richter EGIS-Servier Sanofi ICT Ericsson (Sweden) SAP Oracle Automotive Schefenacker, ZF, Knorr-Bremse, Valeo, Bosch Audi 33

34 LARGEST INVESTMENTS IN 2010 Ampito Group, Great Britain, regional IT service centre Audi, Germany, Automotive manufacturing Aufwind Neue Energien, Germany, biogas production Ceva-Logisitics, US-Netherlands, regional distribution centre Csnorway, Norway, call-centre Epack, Israel, chemical industry, manufacturing ESAB, Sweden, SSC Fagen/Ethanol Europe, USA-Ireland, bioethanol production Flextronics 2, USA, electronics manufacturing Givaudan, Switzerland, food ingredients manufacturing GM, US, Automotive manufacturing Grundfos, Denmark, financial SSC Henkel, Germany, chemical industry, manufacturing Oriflame, Sweden, transportation, warehousing Osmotica Pharmaceutical, Argentina-USA, clinical research Samsung Cheil Industries, South-Korea, plastics manufacturing Samyang, South-Korea, electronics industry, manufacturing SMR, India, Automotive manufacturing 34

35 TAILOR-MADE INCENTIVE SYSTEM 35

36 Government Incentives Low corporate tax rate Special Incentive Package EU co-financed tender applications VIP treatment (speeding up permitting procedure) 36

37 1. Cash subsidy for strategic investments Non-refundable TAILOR-MADE INCENTIVE SYSTEM 2. Corporate tax allowance 80% of corporate tax may be deducted for up to 10 years Minimum EUR 10 m investment with 150 new jobs in developed regions and EUR 3.3 m with 75 new jobs in high unemployment regions 3. Job creation, IP subsidy Non-refundable Available in less and least developed micro-regions and settlements Amount of subsidy: Nyíregyháza HUF 260 million (~EUR 0.95 million) if headcount increases at least by 500 HUF 160 million (~EUR ) if headcount increases at least by 300 HUF 80 million (~EUR ) if headcount increases at least by Training subsidy Independent of intensity ratio From 50% to 90% of total training costs, depending on the type of training and location of the investment Tatabánya, IP 37

38 SUBSIDIES (CASH+TAX) MAY REACH 50% OF INVESTED CAPITAL Borsod-Abaúj-Zemplén Nógrád Szabolcs-Szatmár-Bereg Heves Győr-Moson -Sopron Komárom -Esztergom Budapest Hajdú-Bihar Vas Veszprém Fejér Pest Jász-Nagykun- Szolnok Nyíregyháza, IP Zala Bács-Kiskun Békés Somogy Tolna Csongrád Investment volume as percentage of the intensity ratio Up to EUR 50 million 100 % Baranya For the part between EUR million 50 % For the part over EUR 100 million 34 % Tatabánya, IP 10% 30% 40% 50% + 10 % for medium enterprises + 20 % for small enterprises 38

39 Planned changes in SIP Planned changes are part of our new Strategy on Export and Investment Promotion Main (partly new) factors in granting decision: Impact of the investment on the economy (Incomes effect, GNI), Number of new jobs and their period of existence, Development level of the region of the investment location, Economic development impact of the investment on the region, Rate of Hungarian suppliers Gross value added of the investment Lasting, long-term business activity 39

40 DUTCH-HUNGARIAN RELATIONS 40

41 Major products are electrical machinery and equipment, machinery and mechanical appliances and vehicles The Netherlands is the 9 st largest export market for Hungary m Eur Hungarian imports Hungarian exports Source: Central Statistical Office of Hungary 41

42 Import from the Netherlands in 2010: EUR 2,845.2 million Export to the Netherlands in 2010: EUR 2,283.7 million Source: Central Statistical Office of Hungary 42

43 Cca. EUR 9 billion investment value / 200+ companies/ 11 of Top20/ employees /2nd largest investor Philips Unilever Royal Dutch Shell Aegon ING Heineken Primagaz/SHV DAF Paccar Friesland Sara Lee / Douwe Egberts TNT Getronics KLM OCÉ Sanoma (VNU) Randstad 43

44 Major Dutch Investments and Reinvestments Philips Lighting in Tamási launched new energy-saving and efficient LED lighting fixtures, the production site is employing 240 people. Philips expanded its operations in Hungary in 2010 to include production of 3D television sets at its plant in Székesfehérvár. Philips Lighting established regional distribution centre in Százhalombatta, distribution services made for 16 countries in the CEE region. The investment and warehousing services has been outsourced to CEVA Logistics. In longer run RD centre will employ 150 heads. In the first half of 2009 Unilever increased capacity and improved technology in its factory in Nyírbátor, where household chemicals and cosmetics are produced. The project has an investment value of EUR 8 million. Allee shopping mall (Budapest) opened in November 2009 with 47 thousand square meter shopping and 7 thousand square meter office space thanks to the investment of ING. OCÉ, the Dutch printer giant established a software development company in Szeged in The volume of the investment counts EUR 3 million and they will employ 75 highly skilled IT engineers. ProfiPower and Randstad joined forces and thus will create the largest recruitment firm in Hungary in Clients benefit from a broader portfolio ranging from staffing, search and selection, HR solutions and executive search. Raben Group entered the Hungarian market due to the acquisition of business and operational activities of Delacher. Raben Logistics Hungary has branches in 3 cities: Budapest, Debrecen and Győr. DBH Investment Venture Capital Fund (belongs to DBH Group, a Dutch-Hungarian real estate, investment and business services company) thanks to Jeremi venture capital program invested a combined HUF 1,3 bn in 4 technology SMEs. 44

45 THANK YOU FOR YOUR ATTENTION Agnes Henter Director General Ministry for National Economy Investment Strategy H-1055 Budapest, Honvéd str Phone: Fax: