HIPA Committed to Growing U.S. Business in Hungary
Over the past few decades, Hungary has become a major investment location for U.S. companies, the Hungarian Investment Promotion Agency says. It lists a stable political and economic environment, high quality infrastructure, favorable taxation system, motivated and highly-skilled work force, diverse language and technological capabilities as just some of the features of Hungary that make it particularly appealing when it comes to choosing a location to settle.
With its geographical central location, Hungary also offers ideal conditions for both manufacturing and service activities, providing a close proximity to a market of 250 million people and the opportunity to deliver global services around the clock.
When it comes to numbers, the United States plays a major role in the Hungarian trade and investment field. American companies are present in economic sectors ranging from general and advanced manufacturing to business services and a great variety of high value-added areas like electronics and medical technology.
Forty out of the 50 biggest American companies have a presence in Hungary. By last year, the United States had risen to become the second largest investor in Hungary, with more than 1,400 companies employing around 100,000 people.
Between 2016 and 2019, HIPA supported more than 50 new investment projects from the States, leading to almost 8,000 new jobs for Hungarians with a total investment volume of more than EUR 800 million. In 2017, U.S. foreign direct investment stock reached more than USD 11.1 billion, amounting to almost 11.9% of total FDI stock of Hungary.
Bilateral commercial trade reached USD 5.8 bln in 2019, which was a 2.3% increase compared to the previous year. According to the Central Statistical Office data, America was the third most important trade partner for Hungary outside of the European Union in 2019.
Imports were more than USD 2.4 bln, putting the United States in 14th place on the list of import source countries. America is the largest consumer of Hungarian exports outside the EU, with more than USD 3.4 bln of imports. In the past five years alone, Hungarian exports grew by 22%, making the States now the 12th most important export market of Hungary.
American operations in the field of electronics, automotive and engine parts manufacturing, life sciences, agricultural, and logistics play the most oversized role. Fourteen major U.S. companies (including GE, National Instruments, Aptiv, Jabil, Coca-Cola, Arconic, and Lear) employ more than 43,000 employees with locations from Szombathely to Debrecen. Companies within business services and ICT sectors have traditionally had a strong presence in Budapest (examples include Morgan Stanley, IBM, Microsoft, Citi, BlackRock, and Oracle).
A clear sign of trust in the Hungarian business environment is that, increasingly, more U.S. companies present in Hungary are deciding to reinvest or expand their operations with a wider and more comprehensive range of activities, many times of high added value.
In addition, there is an increasing emphasis on talent management, educational collaboration and innovative solutions. In the business services sector, for example, the accumulated experience in the industry has led to the emergence of centers of excellence in recent years where ever more complex activities are carried out, including functions like R&D, corporate finance, and credit management.
HIPA offers a wide variety of incentives to facilitate FDI and reinvestments by the enterprises, mainly cash subsidies or tax benefits. The shift from “Made in Hungary” towards “Invented in Hungary” aims to attract high value-add technology-intensive investment and R&D activities that will increase the competitiveness of the Hungarian economy.
Over the years, HIPA has provided its one-stop-shop management consultancy services to U.S. businesses establishing or expanding their operations in Hungary. The agency has also been quite active in policy advocacy, and has a long-standing partnership with the U.S. business community and the American Chamber of Commerce in Hungary (AmCham).
Competition and Cooperation
With the support and assistance of HIPA, competition has also fostered increased cooperation, and, for example, Citi and Morgan Stanley are pioneering sectorial collaboration with their fellow financial players MSCI and BlackRock, launching the Career Networking Event series, aiming to attract talents back to Hungary from other parts of the world.
AmCham has a significant role in supporting member companies and facilitating a constructive dialogue with the Hungarian government and HIPA.
The past few months have shown that crisis resilience, supply chain security and active government support for business will play an increasingly important role in the future of global investment decisions.
Hungary has been firm and swift to respond to the unforeseen challenges caused by the COVID pandemic, and implemented the most significant economic stimulus package in the country’s history.
In the midst of events, U.S.-Hungarian economic relations are strong and continuously growing, which is the result of the accomplishments and mutual trust. Hungary remains determined to maintain efforts to ensure a most favorable and competitive business environment, and is committed to support the continued successful operation and further growth of U.S. companies in Hungary.
HIPA Strengthening Ties With Site Selectors Guild
In March 2020, HIPA participated for the third time as a professional partner at the annual of Site Selectors Guild conference, this time in Atlanta. The cooperation between one of the world’s most renowned associations of site selection professionals and HIPA goes back over several years. The first international advisory forum of the SSG was held in Hungary in 2017.
The event was a unique opportunity for HIPA to present the Hungarian business and investment environment, to build relationships, and to develop already existing collaborations with the type of focused professional audience that is not available anywhere else in the world. HIPA is in contact with a number of SSG members who have brought investment projects to Hungary in the past or who have clients that are currently considering investments in the country.
As part of the professional program in Atlanta this spring, HIPA held a special investment seminar for Georgia-based companies with the largest investments in Hungary (such as AGCO, Coca-Cola, and UPS) and other company representatives planning to expand in Europe in the near future.
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