Hungary: The Ideal for Biotechnology Ábel Garamhegyi, Ph.D. Deputy State Secretary for Foreign Economic Affairs February 2006
H U N G A R Y Land: 36,000 sqr. miles Population: 10,080,000 people GDP (2005): USD 100 billion 2
1. Favorable Investment Environment 2. FDI Growth as the Main Focus of Government Policy 3. The U.S. Investments in Hungary 4. Investment Policy
1. Favorable Investment Environment Economy Location Infrastructure Productive, qualified, available workforce Capital attraction Dynamic macroeconomic growth, favorable real exchange rate Hungary: a bridge between East and West, 4 Pan-European Corridors Well developed telecommunication and highway infrastructure The highest labour productivity in the region, motivated and qualified workforce is available Highest FDI stock per capita in the region
1. Favorable Investment Environment Dynamic macroeconomic growth serves as the base for favorable investment conditions 2002 2003 2004 Q1-Q3 2005 Gross Domestic Product (%) 3,5 2,9 4,2 4,1 Industrial production (%) 2,8 6,4 8,3 6,9 Exports (%-volume) 5,9 9,1 18,4 10,1 Imports (%-volume) 5,1 10,1 15,2 4,2 Consumer prices (%) 5,3 4,7 6,8 3,7 FDI* 3,2 1,9 3,7 2,8 Unemployment rate (%) 5,9 5,8 6,1 7,2 * Euro billion
SK SK A SLO SLO HR HR YU YU RO RO UA UA Parassapuszta Parassapuszta Vác Röszke szke Ilocska Ilocska Letenye Letenye Duna Dunaújv jváro ro s Eger Eger Veszpr Veszprém Gy Győr Tatab Tatabánya nya Kaposv Kaposvár Pécs cs Lelle Lelle Szeksz Szekszár d Sopron Sopron Moh Mohács cs Sz Székesfeh kesfehérv rvár Kecskem Kecskemé t Békéscsa scsa ba ba Ny Nyíregyh regyház a Miskolc Miskolc Kiskunf Kiskunfélegy legy háza za Debrecen Debrecen Füzesabony zesabony Em Emőd Baja Baja Polg Polgár V V/C IV X/A VIENNA VIENNA V V/A BRATISLAVA, BRATISLAVA, PRAHA PRAHA IV GRAZ GRAZ ZAGREB ZAGREB TIMISOARA, TIMISOARA, BUCAREST BUCAREST BELGRAD BELGRAD CLUJ CLUJ-NAPOCA, ARAD NAPOCA, ARAD LVOV, KIEV LVOV, KIEV KOSICE KOSICE Szolnok Szolnok IV V ARAD ARAD V Szeged Szeged Nagylak Nagylak Duna Duna Tisza Tisza BUDAPES BUDAPES T M30 M30 M3 M3 M3 M3 M35 M35 M4 M4 M8 M8 M4 M4 M0 M0 M2 M2 M8 M8 M15 M15 M1 M1 M81 M81 M86 M86 M9 M9 M70 M70 M7 M7 M6 M6 M9 M9 M56 M56 M5 M5 M43 M43 44 44 Szombathe Szombathe ly ly Zalaegerszeg Zalaegerszeg Nagykanizs Nagykanizs a M25 M25 Helsinki Corridors Highway Motorway Highway under construction 1. 1. Favorable Favorable Investment Environment Investment Environment Highways and motorways
1. Favorable Investment Environment Productive, qualified, available workforce 75 Labour productivity per person employed (GDP in Purchasing Power Standards per person employed relative to EU-25 ) 70 65 EU-25 = 100 60 55 50 45 Hungary Czech Republic Slovakia Poland 1997 1998 1999 2000 2001 2002 2003 2004 2005 * *Note: 2005 figures are Eurostat estimates Source: Eurostat
2. FDI Growth as the Main Focus of Government Policy EUR million 55 000 50 000 45 000 40 000 35 000 30 000 25 000 20 000 15 000 10 000 5 000 0 EUR million Stock and inflow of Foreign Direct Investments 5 000 4 000 3 000 2 000 1 000 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 Q1-Q3 2005 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 51 525 2005 Source: National Bank of Hungary
2. FDI Growth as the Main Focus of Government Policy FDI stock per capita in Central and Eastern European countries (the end of 2004) 6 000 5 000 4 000 EUR 3 000 2 000 1 000 0 Source: national banks Poland Slovakia Slovenia Czech Republic Hungary
2. FDI Growth as the Main Focus of Government Policy FDI stock* by industry (the end of 2004) Transport equipm ent Electrical and optical equipment Other m anufacturing Trade, repair of vehicles R eal estate and business activities Financial intermediatation Transport and comm unication Other Source: National Bank of Hungary *Excluding other capital
2. FDI Growth as the Main Focus of Government Policy Shared Service Centers in Hungary R&D centers Bosch, Zenon, Electrolux, IBM, Novartis, Astra Zeneca, Siemens, Nokia, Philips, Ericsson Regional call centers GE Hungary (European HQs), ING, Hewlett Packard, General Motors Financial centers Alcoa, BAT, Avis, Exxon Mobil, IBM, GE Electric, Diageo Outsourcing EDS, SYKES Logistic centers Renault Nissan, Porsche, Velder AG
3. The U.S. Investments in Hungary I. The ratio of U.S. investments is the highest in Hungary among the Central-Eastern-European countries U.S.A. 29% of total FDI in Hungary The U.S. is one of the leading foreign investors in Hungary Approx. USD 9 billion investment value About 1000 companies
3. The U.S. Investments in Hungary II. I Top U.S. investors in Hungary
4. Investment Policy I. Priority sectors of our investment policy Biotechnology ICT sector Automotive industry Shared service centers Logistics R&D Innovation High added value Knowledge based economy
4. Investment Policy II. I. Direct Subsidies for Investments 1. Tender applications in the framework of the Economic Competitiveness Operative Program (ECOP) 2. Special incentive package for strategic investors 3. Subsidy for employment creation and training II. Tax-related Incentives III. Supplier Development Program IV. One-stop Shop The Investment Incentive System
Contacts Ministry of Economy and Transport Ábel Garamhegyi, Ph.D. Deputy State Secretary for Foreign Economic Affairs H-1055 Budapest, Honvéd utca 13-15. Phone: (36 1) 374-2746 Fax: (36 1) 374-2726 E-mail: garamhegyi.abel@gkm.hu Internet: www.gkm.gov.hu Hungarian Investment and Trade Development Agency (ITDH) György Rétfalvi, Chief Executive Officer H-1061 Budapest, Andrássy út 12. Phone: (36 1) 472-8100 Fax: (36 1) 472-8101 E-mail: retfalvi@itd.hu Internet: www.itd.hu
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