The business side of

the Rubik’s Cube

Hungary – A proven

location for investments

Mrs. Katalin Németh

Ms. Judit Czakó

HITA

Getting to know us

LOCATION

EU - a common market of 507 million people

Ukraine, Russia and the Balkans - market of 210 million consumers

Land: 93,030 km² Population: ~10 million

GDP/capita, at PPP (2012): EUR 16,800/ USD 22,924

Source: Eurostat, OECD 2012

FACTS ABOUT HUNGARY

Swimsuits are necessities

Hungarians are smart; just ask the people at Nobel

Hungarians are sports mad

Tokaji is the Wine of Kings and the King of Wines

WHAT MAKES US DIFFERENT?

L L L

EXPATS LIKE HUNGARY

• International schools in Budapest

British, American, German, Austrian, French, Chinese, Japanese etc.

• High standard private medical services

• Entertainment facilities

Thermal baths, wellness, recreation centres throughout the country

Rich cultural life

Excellent food and wine

• According to Condé Nast Traveler readers Budapest is the second best city on earth

To provide information and to organize programs in the interest of encouraging foreign companies to invest in Hungary. Seek out and maintain contact with potential foreign investors, assist in their decision-making process, and encourage their intentions to re-invest.

• Seek out potential foreign investment projects

• Support the investment projects through a wide range of services

• After care

HUNGARIAN INVESTMENT AND TRADE AGENCY

HITA

Offices

Domestic network

Central office: Budapest

15 regional offices covering the

whole country

Foreign network

61 foreign offices in 47 countries all

over the world

74 trade and investment counsellors

Győr

Salgótarján

Tatabánya BUDAPEST

Miskolc

Pécs

Szeged

Szolnok

Debrecen

Nyíregyháza

Szombathely Veszprém

Eger

Békéscsaba

Szekszárd Kaposvár

HITA NETWORK

estimated

investment value

of EUR 3 billion

20,000 new

jobs to be

created

AT PRESENT:

HITA manages more than 100

investment portfolios

RESULTS IN 2013:

35 successful investment projects

EUR 1,2 billion investment

7,000 new jobs

OUR FOCUS SECTORS

Manufacturing

Industries and Energy

• Automotive industry

• Electronics

• Renewable energy

• Chemical industry

• Food industry

Knowledge-based

Industries and Services

• SSC

• Life science

• Logistics, R & D

• ICT

Highlights from the business

and economic life

WHOM ARE WE PROUD OF –

Major American investors in Hungary

AND THE REASONS BEHIND…

• Investment friendly political measures (financial support, tax allowances)

• Competitive taxation system

• Good balance of costs and quality

• High level of educational system

• Close cooperation between educational institutions and companies

• Excellent road network and office infrastructure

• Quality of life

• 21 International schools

COMPETITIVE TAX SYSTEM

• Low corporate income tax:

• rate for the first HUF 500 million (EUR 1.69 million, USD 2.22 million) of

the tax base is 10%;

• beyond HUF 500 million, it is 19%.

• Tax incentives and allowances (development tax allowance, R+D tax

incentives)

• Flat personal income tax: 16%

Source: Deloitte, January 2014

CEE countries Corporate income tax

Slovakia 22%

Czech Republic 19%

Poland 19%

Slovenia 17%

Romania 16%

Hungary 10% or 19%

NUMBER OF DAYS TO START A BUSINESS

0

5

10

15

20

25

30

35

5 6

10

16 18

20

32

Hungary

Slovenia

Romania

Slovakia

Bulgaria

Czech Republic

Poland

Source: The Global Competitiveness Report 2013-2014

Percentage of GDP

Source: Eurostat, Hungarian National Bank, OECD

HIGHEST INWARD FDI STOCK IN THE REGION

0

10

20

30

40

50

60

70

80

90

Hungary CzechRepublic

SlovakRepublic

Poland Romania Slovenia

80.30

67.70

57.40

45.80 42.40

34.10

MAIN INVESTMENT DECISIONS IN 2013

• OPEL, engine manufacturing

• Hewlett-Packard, IT

• Samsung: electronics manufacturing

• Procter & Gamble, personal care products manufacturing

• General Electric, establishment of an oil & gas branch

• Greif, shared service center

• Bridgestone, tyre manufacturing

• Systemax, shared service center

• Bosch, R&D facility

• Flextronics: electronics manufacturing

• DHL: Express logistics

• Takata: airbag manufacturing

AND THE AWARD GOES TO…

Source: www.fDiIntelligence.com, European Cities and Regions of the Future 2014/15

Budapest has been ranked the most attractive city in

Eastern Europe in 2014-15.

Rank City Country

1 Budapest Hungary

2 Wroclaw Poland

3 Katowice Poland

4 Plzen Czech Republic

5 Moscow Russia

6 Brno Czech Republic

7 Poznan Poland

8 Ostrava Czech Republic

9 Bratislava Slovakia

10 Prague Czech Republic

Forms of incentives

Cash grants

EU co-financed tenders

or

Cash subsidy based on the decision of the Hungarian

Government

Development tax allowance

Job creation subsidy

Training subsidy

Job Protection Action Plan

Vas Veszprém Fejér

Somogy Tolna

Baranya

Pest

Budapest

Nógrád

Heves

Borsod-

Abaúj-

Zemplén Szabolcs-

Szatmár-

Bereg

Hajdú-

Bihar

Békés

Jász-

Nagykun-

Szolnok

Csongrád

Komárom-Esztergom

Győr-Moson-Sopron

Zala Bács-

Kiskun Investment band

As percentage of the

intensity ratio

Up to EUR 50 million 100 %

For the part between EUR

50 – 100 million 50 %

For the part over EUR 100

million 34 %

10% 0%*

40% 35%

30% 25%

50% *with some exception

Regional Aid intensity after July 1, 2014

Manufacturing successes

The automotive industry in Hungary

THE ROUTES TO SUCCESS -

EXPANDING MOTORWAY NETWORK

Vienna, 1 hr

Rotterdam, 12 hrs

Prague, 5 hrs

Munich, 6 hrs

Hamburg, 8hrs

Warsaw, 10 hrs

Kyiv 12 hrs

Zagreb, 1 hr

Trieste, 6 hrs

Koper, 6 hrs

Bucharest, 10 hrs

Constanza, 12 hrs

• Production value: 9,37% of total industrial production (2012)

• Automotive industry gives 18,2% of Hungary’s total exports (17 bn EUR in 2013)

• Main export market: EU (75 %)

• No. of companies: cca. 712

• No. of employees: cca. 115.717

• Average gross salary: 824 EUR/month (Eurostat, 2013 June)

• Forecast: more than 2,3 million engines and 400.000 passenger cars will be manufactured in Hungary in 2014

FACTS AND FIGURES

Foundation: 1993

Products: TT Coupé/Roadster, A3

Cabriolet/Limousine

Car. prod. cap.: 125.000

Engine prod. cap.: 1.900.000

Nr. of employees: 10.500

Revenue (2013): EUR 5,588 billion

AUDI Hungaria Motors Kft.

Location: Győr

Foundation: 1991

Products: engines, cylinder heads,

gearboxes

Engine prod. cap.: 1.000.000 (2015)

Nr. of employees (expected): 1000

(1,500 - 2015)

Revenue (2012): EUR 86,7 million

General Motors Powertrain (GM)

Location: Szentgotthárd

Foundation: 1991

Products: Swift, Splash, SX4 ,S-Cross

Car. prod. cap.: 300.000

Nr. of employees: 3.100

Revenue (20123: EUR 1,5 billiion

Magyar Suzuki (Suzuki Motors)

Location: Esztergom

Foundation: 2008

Products: A and B Class, CLA

Car. prod. cap.: 150.000

Nr. of employees: 3.500

Revenue (2013): EUR 2,1 billion

(Operation started in March 2012)

Mercedes-Benz Manuf. (Daimler)

Location: Kecskemét

Szentgotthárd

Győr Esztergom

Kecskemét

Tatabánya BUDAPEST

Miskolc

Székesfehérvár

Pécs

Szeged

Szolnok

Debrecen

Nyíregyháza

Hatvan

Szombathely

OVERWIEV: MAJOR OEMS IN HUNGARY

More than 210 industrial parks are available for

manufacturing activity

WAITING FOR NEWCOMERS

• Green- and brownfield investments • Good access to highways • Excellent infrastructure services • New technology and logistical parks • Warehousing • Customs arrangements • Forwarding • Administration (authority permits) • Financial services • Legal consulting • Extra services

Unhit by the crisis

Knowledge-based industries

in Hungary

SSC SECTOR - A SUCCESS STORY TO BE

CONTINUED

1991

1996 1998

1999

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

• Constant growth since 1991

• 80 existing successful centres

• More than 30,000 employees

• Expanding scope and activities

• Growing number of „Centres of

Excellence”

2011 2012

2013

2014

• About 7.4% of the Total Value Added comes from ICT

companies

• ICT sector has shown a constant growth even during

the economic downturn

• Around 150 000 employees work directly in the sector

• Hungary ranks third place in the EU according to the

rate of ICT employees within the population

• There are more than 10 Science Parks in Hungary

ICT - A BOOMING SECTOR

Source: ICT Association of Hungary, 2013

SUCCESS STORIES –

INNOVATIVE HUNGARIANS

• Leonar3do – 3D virtual reality solution sold as an integrated hardware and

software platform. The company’s flagship product won six first price awards at

Intel’s ISEF in 2005.

• LogMeIn - The application allows the more than 125 million users worldwide to

control their computer remotely via a client program, a browser and a mobile

device. The company’s headquarter is in Boston, the regional centres are in

Sydney and Amsterdam while the development centre is located in Budapest.

• Prezi – Prezi is an online presentation tool with a special set of graphic and

functional tools. In 2010 the company was awarded with the European Seal of

e-Excellence Platinum Award. Prezi has offices in Budapest and San Francisco.

Source: IDC Hungary, 2012

TAKE-AWAYS

• Such a remarkable number of US companies can’t be

wrong

• The largest car engine manufacturing plant in the

world is in Hungary.

• The Rubik’s Cube was not the last invention by

Hungarians

Thank you for your

attention!

Mrs Katalin Németh

Investment

promotion director

katalin.nemeth@hita.

hu

+36 1 872 66 23

Ms Judit Czakó

head of department

judit.czako@hita.hu

+36 1 872 66 23

H-1055 BUDAPEST, HONVÉD UTCA 20. PHONE: (+36) 1 872 6699 FAX: (+36) 1 872 6699