The American Chamber of Commerce, representing more than 360 businesses, published its third “Cooperation for a More Competitive Hungary” recommendation package this January. The document was sent to Prime Minister Viktor Orbán and his cabinet shortly after, as part of an ongoing dialogue. AmCham President Dr. Farkas Bársony and CEO Írisz Lippai-Nagy talked to the Budapest Business Journal about the work behind the scenes.
BBJ: For those who are not AmCham members and may not know, what exactly is the “Cooperation for a More Competitive Hungary” recommendation package?
Farkas Bársony: It is a consensus-based compilation of much needed improvements, that we believe will move Hungary’s economy forward in the coming years. It is the essence of our year-round advocacy work. We treat it as a living document, a basis for debate and dialogue with our members and the government. The recommendation package has four chapters (General Business Climate, Competitive Workforce and Education, Innovation, and R&D and Digitalization) and 16 recommendations altogether.
Írisz Lippai-Nagy: AmCham’s advocacy activity is based on an annual cycle, where our members are invited to provide input through AmCham’s committees, projects or events. This advocacy input is further developed at regularly organized platforms and at AmCham’s annual flagship events, such as the “Business Meets Government Summit”. The recommendation package, along with our community’s commitments, are compiled based on inputs from all these sources. It is a meticulous but rewarding job and our success stories testify that it is a worthwhile effort.
FB: We have been working for a more competitive Hungary for more than 29 years, so the fact that we are vocal about the business community’s needs is not new. Let me give you an example. In 2004, we published a position paper on taxation, highlighting that the most immediate improvements to national competitiveness may be made through reform of the taxation system and urging a reduction of the Corporate Income Tax (CIT). Thirteen years later, the government announced a 9% CIT rate – the lowest among OECD member states – and Minister [of Foreign Affairs and Trade Péter] Szijjártó referenced and thanked AmCham as a persevering partner, which had consistently urged such a reduction. The above example is only one of the dozens of advocacy recommendations AmCham Hungary’s community has proposed to the government since 1989.
BBJ: Beyond AmCham members, who are the other stakeholders involved?
FB: AmCham functions as a multi-stakeholder platform, therefore we engage not only our 360 plus members, but also the business community at large, our government partners (such as the Hungarian Investment Promotion Agency, or HIPA), NGOs and our academic partners.
ÍLN: We also engaged 450 plus high school students two years ago in the “Tudsz jobbat!” nationwide campaign, where we asked them to design their dream schools and dream jobs. They came up with wonderful and constructive ideas, so their inputs were summarized and, as an appendix of our second recommendation package, were shared with the Minister of Human Capacities.
BBJ: How long did it take to pull together this latest version?
FB: 411 days! We completed the previous recommendation package in mid-December 2016, and ever since we have been consciously channeling advocacy inputs into this new document. Of course, if an issue is more urgent, it is shared immediately with the government. As our goal is to reach a consensus on the issues listed in the recommendation package, we always leave plenty of time for an open discussion in our Policy Task Forces (PTF) and for the Board of Directors before the material is considered final.
BBJ: How does this 2018 version differ from the previous package?
ÍLN: Each year we have robust recommendations in the areas of education, digitalization, taxation or the widening of the labor pool, as these issues continue to be most critical for our members. This year we also put a heavy emphasis on business-university cooperation, as it is a key element of an innovation-friendly ecosystem and a high added-value economy. We have already conducted a survey and number of interviews with our university partners and will continue the dialogue in 2018.
BBJ: It is too early to talk about the latest package, but what has the government reaction been to the idea of the recommendation package in general.
FB: I believe what they appreciate most is receiving structured feedback on a regular basis in a concise, yet meaningful format. It is something they now anticipate, it is part of a routine so to say. And we also value the strong and structured working relationship we have established with our government partners.
In 2017 we consulted with Minister Szijjártó, Minister [of Justice László] Trócsányi, had regular professional discussions with State Secretary István Lepsényi and the representatives of the Ministry for National Economy, HIPA, the Ministry of Human Capacities and the Ministry of National Development. We are also active members in the National Competitiveness Council, established by Minister [for National Economy Mihály] Varga in 2017.
BBJ: What success stories can you point to from the first package?
FB: We are proud to report that several new policy measures and government initiatives are in line with our recommendations, in areas such as R&D, taxation, labor mobility and Industry 4.0. To give you some examples, we see a very positive trend in making Hungary an attractive location for R&D centers and value-added investments, for instance by the recently introduced favorable changes in the non-refundable cash incentive system with the purpose of supporting R&D activities and technology-intensive investments, an initiative driven by our Innovation PTF.
There are also clear and tangible changes, such as lifting the simplified licensing procedure threshold from 5% to 10% on employment of non-EU (third country) residents, something that will positively affect a number of large employers.
ÍLN: We also made some progress in education, where a lot remains to be done. However, we appreciate the increased focus on raising the efficiency of language learning in public education and the introduction of a Career Orientation Day. We are also part of the industry specific Sector Skill Councils, established so that industry players can provide regular and structured input for a more competitive and up-to-date (vocational) training system and curricula.
BBJ: What are the next steps from here?
FB: We will continue our annual advocacy work, initiate meetings with the government, while preparing for the next set of recommendations and driving positive change. And when I say we drive change, I mean that in line with our recommendations our community made several commitments – such as developing an online career orientation platform or enabling business-university dialogue, as we strongly believe that a more competitive Hungary can only be realized if all players go the extra mile.