HIPA Boss Vows to be There for Business Come ‘Rain or Shine’
István Joó, CEO of HIPA.
In his first interview with the Budapest Business Journal since taking over at the Hungarian Investment Promotion Agency, CEO István Joó talks about policy continuity, efforts to support businesses in the face of the energy crisis, and to make the Hungarian economy crisis-proof.
BBJ: Congratulations on taking on the role of HIPA CEO. Is it what you expected? What has surprised you most?
István Joó: I was very much honored to be invited by Minister [Péter] Szijjártó to take up the CEO job as HIPA is the most crucial satellite institution in the field of Hungarian foreign trade relations. It also meant enormous prestige that Prime Minister Viktor Orbán tasked me to be Government Commissioner for investment promotion and implementation of large FDI projects. The latter position is crucial to see through the infrastructure-related investments of industrial parks all over the country. I must add, though, that Ihave never been interested in positions, but I am instead inspired by duties, which, when carried out successfully, will benefit the whole country.
BBJ: Business loves continuity and stability. Have the priorities atHIPA changed in any way since youtook over?
IJ: The economy is in permanent need of investments to counter theimpact of a looming recession. The government and HIPA have done their homework tofuel growth by launching the HUF 150 billion Factory Rescue Program, which is managed by HIPA and supports energy efficiency and energy production investments by large companies with non-refundable funds. The coordinating role of HIPA, the soft investment promotion methods, and the one-stop-shop service model are all game-changing factors that are gaining significance in terms of competitiveness during a crisis, thanks to the new government structure.
BBJ: As part of the government’s response to the coronavirus pandemic, HIPA took over management of theCOVID-specific subsidies. Willit play a similar role in response totheenergy crisis?
IJ: Indeed, the subsidy to improve competitiveness was very popular among businesses, and the scheme helped save jobs and start new projects during the pandemic. The energy crisis poses yet another challenge that we must tackle head-on. In particular, companies with energy-intensive activities are under extreme pressure. The above-mentioned Factory Rescue Program is bound to ease the situation by providing a maximum of EUR 15 million each for large companies in production and processing to carry out investments to improve energy efficiency and build renewable energy generation capacities. There was enormous interest, given that 168 companies registered for incentives worth HUF 200 bln. An additional 214 companies started the registration process but could not complete it as the fund’s threshold was reached within 20 minutes; however, they will have the opportunity to participate in a subsequent registration. The applications submitted successfully thus far account for investments worth HUF 500 bln, showcasing the sheer volume of future projects.
BBJ: Talking about COVID, do you expect some form of restrictions to return this winter/spring should another wave arrive, or have we found other ways to manage now?
IJ: To the best of our current knowledge, no COVID-related restrictions are expected to take place.
BBJ: Do you think the energy crisis could eventually be more damaging to businesses than COVID? Is it a concern you hear expressed from potential investors?
IJ: We are talking about two different issues here, and due to the alternate nature of the two crises, other solutions are needed to address them. HIPA and the government work hard to assist businesses to prevail in these difficult times. As a result, Hungary strives to be the local exception amid the global recession that makes its economy crisis-proof.
BBJ: We have seen a lot of investments recently connected to batteries for EVs, and we know this has been a trend in Hungary for a while. Do you expect this to continue? Are there more deals in the pipeline?
IJ: There are talks in progress in this regard, as interest from market players in the EV segment is unbroken. In fact, since 2016, 43 related deals worth EUR 7.9 bln were closed by HIPA, the bulk of them with South Korean companies. Our objective is to ensure that the entire EV ecosystem is represented in the country. It is a very pleasant development that not only battery manufacturers and suppliers have invested in Hungary but also battery recycling businesses, which showcases that different stakeholders of the EV production cycle have found a home here. In addition, a series of large deals in other sectors are also underway, so we are pleased to have a strong pipeline not only in the EV segment.
BBJ: What other business sectors are you particularly excited by in terms ofdeveloping trends?
IJ: Medical technology is among the rapidly developing sectors. Take the example of the American Becton Dickinson, which plans to spend one-fifth of its USD 210 mln development budget earmarked for the upcoming five years at its plant in Tatabánya. In addition, no gloom over recession can stop the BSC sector from thriving, providing a modern work environment for more than 70,000 highly skilled people. ICT is growing fast, too, by relying on top-notch local talent. U.S.-based HTEC is setting up software development hubs to hire over 600 engineers, while Nokia’s EUR 6.8 mln 5G research-related investment will also help keep Hungary in the driver’s seat of innovation.
BBJ: You have now been in post for several months. If there was something you could change about theHungarian economy to make it more attractive to foreign investors, what would it be?
IJ: We offer one of the most business-friendly economic environments in Europe, and to maintain our competitive edge, it is vital to keep the current low corporate tax rate. The government is committed to achieving this goal. HIPA’s job is to attract investments with the biggest value-added possible. On the other hand, the country has reached its limits in terms of labor in many segments. However, there are still untapped reserves in certain regions, and we need to work on directing investments there. It is also crucial to urge businesses settled in Hungary to bring their R&D activities here, which is the precondition for creating quality jobs. There have been several such projects lately. To name but one, Bosch’s new R&D center in Zalaegerszeg will welcome 200 engineers to work on autonomous driving and 5G technology.
BBJ: Is there anything else you would like to add?
IJ: HIPA remains at the disposal of its business partners and will continue to serve them by providing a one-stop-shop service model and presenting their needs to different government decision-makers. Rain or shine, we will always be there for them.
This article was first published in the Budapest Business Journal print issue of November 18, 2022.
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