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Hungary FDI seen falling to €1bn in 2011

Hungarian national economy ministry deputy state secretary Balazs Hidveghi expects to see FDI inflow of €1bn this year, business daily Vilaggazdasag reported on Friday. The estimate is under last year’s FDI of €1.4bn.

Mr Hidveghi, who recently took over the task of overseeing foreign economic relations, said the number of planned investment projects exceeds 90, and these are expected to have combined investment value of around €6.5bn in the coming 5-7 years.

The number of jobs to be created directly by these projects is close to 25,000, and the number of jobs expected to be created indirectly is around 65,000.

Mr Hidveghi said amendments taking effect soon to the rules of procedure of the complex system of support allocated through individual government decisions will make decisions quicker, more transparent and more predictable.

"This will help at least double FDI inflow next year compared to this year’s level," Mr Hidveghi added.

This year net foreign direct investment in Hungary will fall due to one-off factors such as the purchase of a stake in MOL by the state, the deputy state secretary said.

The state of Hungary purchased a 21.2% stake in oil and gas company MOL from Surgutneftegas for €1.88bn in a transaction closed early in July.

National Bank of Hungary (MNB) figures show net FDI outflow of €753m in the first half of 2011, yet before the MOL transaction. The H1 figures show a slight €65m withdrawal of direct foreign investments and a big minus €758m estimate for re-invested income - a minus reflecting shareholders’ decisions on dividends in the first half year - and a slight inflow of €70m on other capital movements which includes within-group transactions.

In the full year of 2010 FDI in Hungary totalled €1.378bn, including €2.682bn direct foreign investment in shares or business stakes and €89m in re-invested income and €1.393bn outflow on other capital movements.