Transcript 2003 - Magyarorszag

The Hungarian Investment Environment and
Incentive System
Ministry of Economy and Transport
Republic of Hungary
December 2004
Hungary: a New Member of
the European Union
Land: 93,030 km²
Population: 10,116,000 people
GDP (2003): USD 82,757million
HUNGARY: the Reliable Partner
No political risk
No strikes
No social conflicts
No institutional risk
Early deregulation
EU compatible institutions
Creditworthiness
YES
to Investments
No financial risk
Moderate income policy
Sound & transparent fiscal policy
Stable monetary policy
… 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 ..
On an investment and export driven growth path together with the EU since the 1990s
The New Vision of HUNGARY
Connecting the most developed and the
fastest developing countries
Ideal geographic
location
Modern economic
structure
4 Pan-European Corridors
Rapid liberalisation
Gate to South East Europe
Sound stabilisation
Direct access to the EU
Radical privatisation
A BRIDGE binding West with East, North with South
in Europe
Hungarian Economy: Improving Macroeconomic Figures
GDP
•
Rate of growth reached 4,1% in H1 2004
Consumption
•
Consumption dynamics high but on a declining trend
Volume of investments grew by 13,5% in H1 2004
Investments
•
•
•
•
Industrial boom since Q4 2003; 10.4% y-to-y growth in H1 2004
•
Industrial export growth exceeded 20% in H1 2004
Output
Investments in manufacturing grew by 25,3%!
Employment and •
wages
Low unemployment (5,9%) compared to EU-average in H1 2004, and
moderating wage dynamics
•
Annual inflation at 4,7% in 2003, speeding temporary up in 2004 due
to VAT-regulation
Inflation
Hungarian GDP Growth Follows the Trend of the EU
change on the same quarter of previous year,
per cent
7
6
Quarterly GDP growth rates
Hungary
EU-15
5
4
3
2
1
0
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2
2000
2001
2002
2003
2004
Source: Central Statistical Office, Eurostat
Short Term Economic Effects of the EU Accession*
Growth rate
Foreign direct
investments
Industrial
production
•
an 0.8 percentage point increase in the GDP growth rate
•
•
•
•
phasing out of tariff free zones
state subsidy system in line with EU regulations
increased business confidence
regional hub role (the bridge between the EU and Eastern
Europe)
•
a 1.0 percentage point increase in the rate of industrial output
growth due to higher export sales dynamics
stronger competition and drive for innovation increase
competitiveness
use of EU funds will boost the construction industry
•
•
Infrastructural
investments
•
transport infrastructural investments may reach EUR 10-11
billion until 2010
* based on a joint study of three economic research institutes
Outlook for EMU Membership
Target date
•
Date of possible entry in 2010
•
•
Lower real interest rates boost investment
Fixed exchange rate risk eliminates conversion costs and
exchange rate risk
Expanding foreign trade supports economic growth
The single currency could increase the rate of economic
growth by 0.6-0.9 percentage points annually.
Advantages
•
•
Possible
disadvantage
•
Giving up independent monetary and exchange rate policy as
an instrument for managing asymmetric shocks
•
Government deficit (appr. 5.1-5.3% in 2004) and inflation (appr.
6.7-6.8% in 2004) significantly exceed the Maastricht threshold
Meeting the Maastricht convergence criteria has a short-run
cost
Challenges to
face
•
Hungary has been attracting a continuously high inflow
of foreign direct investment
3 439
3 165
3 500
3 068
2 381
2 489
2 645
2 575
2 143
924
1996
1997
1998
1999
2000
*Excluding other capital, including reinvested earnings
2001
2002
2003
jan-apr
3 900
3 600
3 300
3 000
2 700
2 400
2 100
1 800
1 500
1 200
900
600
300
0
GKM-projection
euro million
Annual FDI inflow* to Hungary
2004
Source: National Bank of Hungary
FDI Inflow by Countries
1989-2004 June
Austria
11,1%
Other
34,8%
The Netherlands
14,7%
USA
10,8%
United Kingdom
4,4%
Japan
6,2%
Germany
18,0%
Cumulative FDI inflows to Hungary reached EUR 45 billion
(more than 40% of GDP) from 1989 by June 2004.
EU Conform Regulation on FDI
From 1st January, 2003 EU-conform regulation in force
Implementation
• Direct Incentive for Investments
1. Economic Competitiveness Operative Program (ECOP)
2. Special incentive package for strategic investors
3. Subsidy for employment creation and training
• Indirect Incentives
1. Tax-related Incentives
2. Offset programs
Access to EU Structural Funds:
Tender applications co-financed by the European Union I.
Economic Competitiveness Operative Program
The ECOP is one of the five operative programmes through which the National
Development Plan (NDP) 2004-2006 will be implemented in Hungary. The
overall objective of the NDP is to reduce the income gap relative to the EU
average.
Within ECOP non-refundable grants are available for investors up to
HUF 25-150 million (USD 125-750 thousand) per project through the
following investment promotion tender applications:





Technological modernisation (ECOP 1.1.1.)
Establishment of regional corporate centres (ECOP 1.1.2.)
Strengthening of first tier suppliers (ECOP 1.1.3.)
Development of industrial and innovation infrastructure (ECOP 1.2.1.)
Development of logistic centres and their services (ECOP 1.2.2.)
Access to EU Structural Funds:
Tender applications co-financed by the European Union II.
Economic Competitiveness Operative Program
Non-refundable grants are available for small and medium enterprises up
to HUF 1.4-25 million (USD 7-125 thousand) through the following tender
applications:
• Support for the development of technical and technological background
of SMEs (GVOP 2.1.1.)
• Support for modern management systems and techniques for SMEs
(GVOP 2.1.2.)
• Support for advanced level technical consultancy (GVOP 2.2.2.)
• Support for the organisation of co-operation between SMEs
(GVOP 2.3.1.)
Special Incentive Package for Strategic Investments
If the investment volume reaches
• EUR 50 million by projects of the manufacturing industry or
• EUR 25 million by establishing regional corporate service centres
The Hungarian Government decides on granting
a customized incentive package
Within the customized incentive package more favorable and significant
subsidy is available than through ECOP and SMART tender applications.
Indirect Incentives
Tax-related incentives
•
Corporate-tax decreased down to 16 % (from 18%),
one of the lowest rates in continental Europe
•
For major investors, 10-year-long development tax benefit
up to 80% of the due corporate tax
•
Corporate tax benefit up to 25% of local tax (50% from 2005)
•
Tax-free investment reserve
•
Tax allowances for corporate R&D and innovation
Rapid Development of Transport Infrastructure
KASSA felé
V
Tornyosnémeti
Tisza
POZSONY,
PRÁGA IV
felé
BÉCS
M15
felé
A
Miskolc
SK
Duna
Győr
BUDAPEST
Szombathely
M8
Zalaegerszeg
LJUBJANA,
M7 0
Bszgyörgy
TRIESZT
felé TornyiszmiklósNagykanizsa
V
M6
M7
ZÁGRÁB Letenye
felé
Szekszárd
Kaposvár
Ilocska
Békéscsaba
ARAD
felé
M56
BELGRÁD
felé
X/A
SZARAJEVÓ
felé
V/C
M43
Röszke
YU
TEMESVÁR,
BUKAREST
felé
By 2015
• Network density to
reach EU average
Nagylak
Baja
Mohács
Pécs
HR
ARAD,
K O L O Z SV Á R
felé
M5
Szeged
• 431 km of expressway
RO
M44
Kiskunfélegyháza
M9
V/A
M4
M8
Kecskemét
Lelle
M35
Szolnok
IV
By 2006
to be completed
• 425 km under
construction
• Further 803 km in
preparatory phase
Polgár
Debrecen
M0
Székesfehérvár
M3
Nyíregyháza
M4
Dunaújváros
Rábafüzes
Emőd
Füzesabony
Tatabánya
Veszprém
M25
Eger
M3
M1
Sopron
SLO
V
Vác
M9
GRÁC
felé
Salgótarján
M2
Parassapuszta
M30
UA
LVOV, KIJEV
felé
IV
V
Helsinki corridors
motorway network in 2002
Network expansion in 2003-2006:
highway
motorway
highway under connstruction
motorway under constructionm
highway under preparation
motorway under preparation
Development of Road Infrastructure - Utilising the
Transit and Logistics Centre Roles
• By 2015: motorway network density reaches EU average
Act on development
of motorway network
European Initiative
for Growth
• By 2006: - 431 km of motorway to be completed
- Another 425 km will be under construction
- Further 803 km in preparatory phase
• Expected North-Southern Pan-European transport corridor
along M2 and M6 motorways
• M5 and M43 motorways
• By-pass roads
Local developments
• road- and bridge reconstruction (widening to 4 lanes,
strengthening the road surface, bridge modernisation,
reconstructing intersections)
• 13 logistics service centres are planned connecting to
European networks
Development of Railway and Air Transport
Infrastructure
• IV. corridor: Hegyeshalom –Tatabánya - Bp. – Szolnok –
Development of railway
lines along IV. and V.
pan-European
corridors
Békéscsaba - Lőkösháza
• V. corridor: Bajánsenye - Zalaegerszeg – Veszprém –
Székesfehérvár – Bp. – Szolnok – Debrecen – Nyíregyháza –
Záhony
• Investments with subsidies from ISPA and Cohesion Funds
• Airports of Debrecen and Sármellék becoming open for
Air transport
regular international transport
• Infrastructure developments at the airports of Győr-Pér,
Taszár, Pécs-Pogány, Zalaegerszeg-Andráshida and
Jakabszállás
Contacts
Ministry of Economy and Transport
Ábel Garamhegyi, Director-General for Investments and Economics
H-1055 Budapest, Honvéd utca 13-15.
Phone: (36 1) 374-2746 Fax: (36 1) 374-2726
E-mail: [email protected]
Internet: www.gkm.hu
The Hungarian Investment and Trade Development Agency (ITDH):
“One-stop-shop” for investors
Ádám Terták, Chief Executive Officer
H-1061 Budapest, Andrássy út 12.
Phone: (36 1) 472-8100 Fax: (36 1) 472-8101
E-mail: [email protected]
Internet: www.itdh.hu