Business chamber head acknowledges progress, but says pace of reform could be faster

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Hungary's government has started structural reforms in the right areas, but the pace of implementation could be speeded up, Hungarian Chamber of Commerce and Industry (MKIK) chairman László Parragh told MTI. Parragh said structural reforms often require the tools of a "front-line medic", adding that Hungary's return to the right path from longtime, deeply faulted systems would not be possible without serious conflicts. He agreed with the government on the necessity of a policy of consolidation in the second half of their term, but noted the risk that restructuring would not be of a sufficient scale.

    Before the 2010 general elections, Parragh signed a joint declaration of intent with then Fidesz chairman Viktor Orbán on steps necessary to put the Hungarian economy back on its feet, to preserve workplaces, to support SMEs and to improve the country's competitiveness. Among the tasks to achieve these aims was a reduction in bureaucracy, a crackdown on corruption, a modernization of trade development, the expansion of the Széchenyi Card, the restructuring of professional training, better use of European Union funding and structural reforms.
    Parragh acknowledged government actions in all areas mentioned in the joint declaration, adding these moves had been the source of tension, but had still created remarkable results, while maintaining the peace.
    He voiced continued support for the government's introduction of a flat-rate personal income tax and urged the government to stand by the measure to allow a reaping of the benefits after the social trauma that followed the introduction.
    He said the restructuring of Hungary's trade school system was continuing on schedule, in spite of efforts by some to block the progress. He added that, in addition to the introduction of a new trade school model, the restructuring of the higher education system was also moving in a direction that was in line with the expectations of market players.
    Parragh said the changes made to developing trade would also result in success as the government had made clear its orientation toward China, the Arab countries and Eurasia, as well as restructuring the tools and institutional system that support trade between Hungarian companies and foreign partners. He added that the linking of the networks of MKIK and the Hungarian Investment and Trade Agency (HITA) would produce perceivable results already this year.
    Parragh gave good marks to the expansion of the Széchenyi Card – a corporate credit card for overhead costs – and said further positive results could be achieved if the Széchenyi Card operator Kavosz would be made an organization cooperating in the use and outlay of EU funding.
    He said a reduction in taxes had been contradictory as some taxes had been cut while others had risen, some had been eliminated and others had been introduced. He added that, judging from the Szell Kalman Plan 2.0, a recently unveiled version of a structural reform program launched more than a year ago, businesses could expect their material and administrative burden to grow.
    Parragh said that a rechanneling of EU funding had failed to take place in spite of all promises and the necessary political will because of growing rigidity of institutional frameworks at the EU and the national levels and because the EU had not allowed a repurposing of funding from operative programs.
    He said communities had often been unable to call down EU support for projects because of a lack of co-financing or because local councils were unable to manage the investments financially until the funding after their completion arrives. He added that MKIK estimates investments worth as much as HUF 1,000 billion will be held up by the end of 2013 because of these problems.

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