Hungary

Hungary: Your gateway to Europe

Hungary offers countless advantages to foreign businesses, but among the most important is its strategic location: right in the heart of Europe

The country provides an ideal base for investors eyeing more distant markets or planning further expansion within central Europe or the European Union. As a result of EU accession on 1 May 2004, investors here find themselves within a single market of 455 million consumers and bordering four countries poised to join the EU in the coming years — enormous advantages for firms seeking new markets and new horizons.

Since the beginning of the transition to a democratic market economy at the end of the 1980s, Hungary has attracted a steady stream of foreign capital, well-balanced across the various sectors of the economy. The average capital influx of €2.5–4.5 billion per year over the past 15 years shows just how effective the Hungarian economy has been at integrating outside investment. A country of 10 million inhabitants, Hungary can currently boast of having attracted Foreign Direct Investment (FDI) of more than €51 billion to date. In the early 1990s, privatisation, conducted freely and in accordance with the rules of the market (a unique phenomenon in the region at that time), was the main incentive for foreign investment (although even then investments in new industrial facilities were becoming increasingly frequent); today, there are new incentives for foreign businesses and a new direction for incoming capital.

The enlargement of the EU has enhanced Hungary’s attractiveness as an investment location, thus foreign direct investments into Hungary, as well as profit reinvestments within FDI, are expected to rise. Even after privatisation had practically come to an end in Hungary, FDI inflows showed a balanced confidence of foreign investors in the country’s business environment. Hungary is one of the most attractive places in the Central and East European region for upgraded and high-value added investments.

While privatisation is still in progress in other central European countries, Hungary has begun travelling down a different road. To take one example, industry, which prior to the mid-90s had consisted mostly of simple manufacturing processes, has gradually been transformed by the introduction of advanced technologies and innovation into production of goods representing higher added value. Investment in the automotive sector as a proportion of total FDI, and the growth in the associated service sectors have become especially important: regional service centres are being set up and R&D activities initiated at an ever‑increasing rate. Today, not only have the largest multinational car manufacturers established production and assembly facilities in Hungary, their major international suppliers have also come and brought their subcontractors with them.

Hungary is truly a land of welcome for foreign investors — and a land of opportunity. These statements are justified by the fact that hundreds, if not thousands, of foreign companies have located here and their numbers continue to increase. While in 1990 the number of 100% foreign‑owned companies was 231 and the number of companies with foreign participation only 5,462, today their numbers are 18,000 and 27,000 respectively. Hungary is an export market itself and serves as a central distribution point for the region, providing access to some 450 million consumers. As a result, the growth of bi-lateral trade between the US and Hungary has been extremely dynamic and has grown tenfold in the past decade. In fact, Hungary is the only country in Central and Eastern Europe where the US is the leading investor, making it one of the hottest markets for US investment abroad. The following US-based companies have made major direct investments in Hungary: AES, Alcoa, Bristol Myers-Squibb, Coca-Cola, GE Capital, General Electric, General Motors, Guardian Glass, Hungarian Tel/Cable Corp., IBM, Jabil Circuit, Lear Corporation, Marriott Hotel, Media One, Pepsico, Phillip Morris, Sara Lee, Visteon.

The quality of life that Hungary offers foreign investors and employees in Budapest and throughout the country is an important factor when businesses consider locating here. Expats working in Hungary for extended periods have so far not been disappointed: they have found living in Hungary pleasant, and Budapest exciting and less expensive than other major European capitals. Moreover, the country boasts a rich and internationally recognised culture, distinctive cuisine, superb wines, a centuries‑old spa tradition, excellent schools, and numerous leisure activities and facilities. ITDH is the Hungarian government’s Investment and Trade Development Agency, which is the information and consultation centre for foreign investments in Hungary. The Agency assists investors through its extensive network of contacts in the private sector and in government offices, and through the Agency’s trade commissions both abroad and inland.

ITDH, as a non-profit organisation and as an “information and mediation one-stop-shop”, helps foreign companies in the preparatory work of investment decisions in finding the proper site for their operation in Hungary, as well as in the question of state incentives. Participating in 30-40% of the new investment projects in Hungary that come from all over the world, ITDH is well placed to promote Hungary’s international competitiveness. ITDH has received “World Class” evaluation in the IPA benchmarking of GDP Global by achieving a score of 70-75% in the general evaluation(project handling and investor servicing).

Contact details:
ITDH The Hungarian Investment and Trade Development Agency, H-1061 Budapest, Andrássy út 12 Tel: +36-1-472-8100 - Fax: +36-1-472-8101 - E-mail: info@itd.hu - Website: www.itd.hu

 

All pages are copyright of © Roxby Media Ltd - European American Business is a Roxby Media publication.