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Investment Promotion Policy of the Hungarian Government Deputy Minister D r. Ábel Garamhegyi

Investment Promotion Policy of the Hungarian Government Deputy Minister D r. Ábel Garamhegyi September 4, 2007. H U N G A R Y Land: 93,030 km² Population: 10, 055 ,000 people GDP ( 200 6) : € 84,3 million. WHY C hoose Hungary?. F actors that make Hungary an ideal location :

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Investment Promotion Policy of the Hungarian Government Deputy Minister D r. Ábel Garamhegyi

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  1. Investment Promotion Policy of the Hungarian Government Deputy Minister Dr. Ábel Garamhegyi September 4, 2007

  2. H U N G A R Y Land:93,030 km² Population: 10,055,000 people GDP (2006): €84,3 million

  3. WHY Choose Hungary? • Factors that make Hungaryan ideal location: • central location – a real business centre inthe heart of Europe • economic and political stability • availability of talented, creative, flexible andqualified labor pool • professional, technical and foreign languageskills • reasonable and competitive labor costscombined with high efficiencyoutstanding business infrastructure in termsof telecom, power supply andoffice space • outstanding quality of life …„agreat place to live and work”

  4. Economic Policy: New Equilibrium Programme • emphasis on consolidation • immediately and significantly improvingthe financial equilibrium and meet the Maastricht criteria in order to introduce the euro by 2010-2011 (nominal convergence) • improving long-term competitiveness and creating the conditions for a rapid and sustainable catching up to the EU average (real convergence) • Measures of the Programme • cutting public expenditures (immediately) • increasing tax revenues by • broadening the tax base and simplifying the tax system at the same time • structural reforms (health care, education, state administration)

  5. Factors of the Favourable Business Climate • dynamic macroeconomic growth, favourable real exchange rate • highest FDI stock per capita in the region • Hungary: a bridge between East and West,4 pan-European corridors • well-developed telecommunications and highway infrastructure • highest labor productivity in theregion, motivated and qualified workforce is available Economy Capital attraction Location Infrastructure Productive, qualified, available workforce

  6. 70 000 60 000 50 000 40 000 EUR million 30 000 20 000 10 000 0 2006 2005 2004 1995 1996 1997 1998 1999 2000 2001 2002 2003 FDI Inflow to Hungary 62 100 Stock of FDI in Hungary Source: National Bank ofHungary

  7. FDI Stock by Industry and Country of Origin Source: National Bank of Hungary

  8. Competitive Advantages of Hungary Labour Productivity GDP per person employed relative to EU-25 (in purchasing power standards) Source: calculations of the Ministry of Economy and Transport

  9. Competitive Advantages of Hungary Attracting FDI FDI stock per capital

  10. Labour Cost of Production of One Unit of GDP (2006)* * approximate values; source: calculations of the Ministry of Economy and Transport

  11. Presence of Korean Companies in Hungary Samsung SDI Samsung Electronics Samsung EM Hankook Tire KDB Bank Daewoo Mirae Industry Hanwha MGM LG-csoport Daidong Hungaria Dongwoo Precision Young Star ELC Engineering • close to USD 1.2 billion in investment value (est.) • more than 7,000 worklplaces • about 40 enterprises

  12. Success Stories: Examples Hankook Tire Ltd. • USD 620 million in investment value • 1.500 new workplaces Samsung SDI Ltd. • USD 260 million in investment value • 1.300 new workplaces

  13. Incentive System of the Government • Individual, non-refundable grant • Tax allowance • Job-creation grant • Training subsidy

  14. Possible Fields of Investment Traditional Sectors Additional Opportunities Based on the number of Korean investorsin Hungary • R&D • ICT sector • Biotechnology Other 8,5% Electronics 32,6% Automotive 58,9%

  15. Thank you for your kind attention! Dr. Ábel Garamhegyi, Ph.D. Deputy Minister H-1055 Budapest, Honvéd utca 13-15. Phone: (36 1) 374-2746 Fax: (36 1) 374-2726 E-mail: garamhegyi.abel@gkm.gov.hu Internet: www.gkm.gov.hu

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