Agency Serves as Foreign Investors’ Top Local Partner

Csaba Kilian, Executive Director
Csaba Kilian, Executive Director

The Hungarian Investment and Trade Development Agency (ITD Hungary) is the ideal local partner for investors in Hungary’s high potential economy. Founded in 1993 to help implement the government’s investment and trade promotion policies, ITD Hungary has been steadily growing and has 20 offices in Hungary besides the main offi ce in Budapest and 56 offi ces in 46 countries, to better serve investors all over the world.

Liaison between public and private sectors

ITD Hungary’s highly skilled team of professionals is ready to assist investors in starting business operations in Hungary. The organisation’s web site has a section on “Invest in Hungary” which contains a wealth of information about investment opportunities and procedures. ITD plays a key role as a liaison between government, local authorities and the private sector, and it can help streamline the investment process significantly.

In 2008 ITD Hungary handled 564 investment project initiatives, was involved in more than 300 projects and brought 30 projects to a successful completion. It also organised 118 events to promote foreign direct investment in Hungary, helped attract €1.54 billion in foreign capital, helped to create 8,094 new jobs, and hosted many conferences and other networking events to bring local and international players together.

More than €4 billion in FDI in 2008

Csaba Kilian, ITD Hungary’s Executive Director, says that the agency is currently working to keep FDI fl ows coming into Hungary in spite of the global economic slowdown. He says, “Hungary attracted more than €4 billion of inward investment last year and reinvestment is growing.” Hungary’s attractions remain strong: a competitively priced, highly skilled labour force, easy access to neighbouring markets, advanced business infrastructure, and one of the lowest corporate tax rates in Europe.

Hungary is generally faring well during the global crisis. The automotive sector, while hurt by the crisis, nevertheless continues to attract significant FDI and has strong long-term growth potential. “Daimler will invest around €800 million in a new plant which will start production by the end of 2011 or early 2012; this venture will directly create 2,500 new jobs and more jobs indirectly,” Csaba Kilian says.

The electronics sector also continues to attract investors even though competition is heating up. Samsung is producing plasma and LCD televisions at 3 locations in Hungary and is transferring more of its production to Hungary, where the global group is reinvesting.

Significant investment and reinvestment in key sectors

Variaties activities are also bringing in investments, including an expansion by BP which will create 1,100 new jobs, a reinvestment by IBM which will create 290 jobs and a venture by British Telecom which will create 600 new jobs.

Biotechnology and pharmaceuticals as well as renewable energy initiatives are other growth sectors in Hungary. Csaba Kilian says, “We are seeing serious large investment and reinvestment in biotech and pharmaceuticals R&D activities, and in renewable energies there are significant new investments in biomass, wind and solar energy ventures, including a possible plant to produce solar panels in rural Hungary.”

GDP growth up to 3% or 4% by 2011

In fact, while Hungary is expecting negative GDP results this year, the economy should rebound quickly. Csaba Kilian explains, “We anticipate that GDP will grow to 3% to 4% by 2011. Hungary’s strengths are its macroeconomic fundamentals, good business infrastructure, and an attractive cost quality ratio. Hungary is moving up the value chain in the quality of labour that it can provide while still keeping costs reasonable. This is why many companies involved in R&D, engineering and other high-tech ventures are reinvesting here.”

ITD Hungary is helping to push forward Hungary’s new national development plan, which is supported by EU structural and cohesion funds. “These funds will play a very important role in attracting new investment, and the government is working to speed up the tender process,” Csaba Kilian points out.

Stimulating growth of SMEs

Another goal for ITD Hungary is to spur on the growth of Hungary’s small and medium-sized enterprises, which are set to play a very important role in the country’s future. “We are encouraging our SMEs to think beyond Hungary’s borders,” Csaba Kilian explains. ITD Hungary plans to screen around 2,000 SMEs and single out the ones with the most potential for exports.

To encourage investment, ITD Hungary works with the Ministry of National Development and Economy to provide cash and job creation incentives and training subsidies to investors, and a special incentive package for investors in larger projects has been implemented.

ITD Hungary is confi dent about Hungary’s future prospects. Csaba Kilian says, “About 40% of Hungary’s GDP is from foreign investments here in Hungary. The government which wins the next elections must concentrate on creating an environment that allows these enterprises, as well as SMEs, to grow and be profitable. Hungary is very competitive in both manufacturing and services and foreign investors should utilise the country’s innovative, skilled professionals.”

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