Preparing to ride the wave
Companies from the United States remain committed to their activity in Hungary and despite any tussles they may have with the government, their past commitment show they have no plans of changing their attitude. The Budapest Business Journal spoke with the President of the American Chamber of Commerce in Hungary (AmCham) Willy Benkő about why he is so confident Hungary is set to capitalize on a global economic recovery, and why his conviction is politically neutral.
The Hungarian government expressed hopes of significantly increasing American investments to Hungary. Do you see that as a reality?
Yes, further U.S. investments are possible, but it won’t be anything dramatic. This, however, isn’t Hungary-specific. We have common issues that everybody is trying their hardest to figure out, to find a way to emerge from the economic situation.
Also, you probably have heard that during the G8 summit, EU leaders and the US President plans to start negotiations on the Transatlantic Trade and Investment Partnership (TTIP). The negotiations will focus on addressing tariffs, standards and regulatory barriers and if accepted, it will create the world's largest free trade agreement. TTIP could increase growth on both sides of the Atlantic by 3% over the medium term and reinvigorate the transatlantic partnership. Now this could be a milestone for Europe, CEE and Hungary as well when it comes to US investment and AmCham Hungary will of course be actively involved in this process.
The government has already signed several so-called strategic cooperation agreements with foreign companies and is looking for more than 50 such pacts. What do these documents actually entail for the companies involved?
AmCham Hungary was the first to sign such a strategic cooperation in early 2011 in the Hungarian Parliament. This framework contract, developed jointly the Ministry of Public Administration and Justice and AmCham Hungary, was signed by Tibor Navracsics and my predecessor István Havas, was designed to advance well-structured dialogue between legislators and the business sector during the legislation process. In the past two and a half years, we have submitted well-received and implemented comments and proposals on the Civil Code, the Labor Code, the Data Protection Act and the Bankruptcy Act, among others in this framework on behalf of our members and the business community at large.
As for agreements with specific companies, I personally understand the intent being to reach a partnership with multinational firms so they will remain committed to Hungary and to improving the economy on the long-term. However, the proof of the pudding is eating. We will have to see in a few years from now how much substance these agreements held.
How is AmCham’s relationship with the government and the political elite? Your events regularly feature speakers from the government as well as the political opposition.
I personally am determined not to get involved in political affairs, “colors” aren’t important and this is a view that everyone in the organization shares. What we want to convey is a consistent set of values at all times, such as the American business values of competitiveness, transparency, free enterprise and open partnership with all stakeholders.
What is the feedback you’re getting from your members about the outlooks for the Hungarian economy?
AmCham has just accomplished evaluating the responses in an internal Business and Investment Climate Survey. We asked questions that were identical with the ones forwarded last year in order to make the surveys comparable. While in general businesses would welcome greater stability and predictability and significantly bigger transparency in public matters, the overwhelming majority of respondents expressed moderate optimism. Companies Businesses that produce mainly for exports say they are doing quite well and that demand abroad is healthy. Those that are focused on the domestic market are more intimately affected by the local regulatory environment.
The current government has been criticized for years now because of the lack of predictability in policymaking. Have you experienced any improvement in that department?
One should not forget that business ventures aren’t asking for a favor when they push for predictability. There are firms that are investing heavily in industries that are bound to take off once Europe recovers and they will be able to take the economy along. The more information is shared with them and done in a timely fashion, the easier their planning processes, for the benefit of the given companies and the entire Hungarian economy.
Hungary has had disputes with the U.S. mainly in political matters, like criticism of the new constitution introduced by Viktor Orbán’s government. Do these tensions affect you?
Like I said, we tend to steer clear of political mattes and remain focused to representing values towards our members. Any disputes that arise should be resolved by those involved. Having said that, business entities can and probably should play a facilitating role between governments. Who would be a better advocate of Hungary’s potentials then an American businessperson who successfully conducts their activity in this country and is, in broad terms, happy about the environment, enjoys the undisputed political stability and appreciates the bold decisions of the government that aim to dismantle old-fashioned inherited systems e.g. in healthcare, education or in labor regulation.
Hungary like much of Europe is currently looking at the United States and the Federal Reserve with concerns that it may downscale or stop its economic stimulus program. Given how reliant Hungarian assets and the strength of the forint are on international sentiment, what are your expectations in the matter?
I too mainly follow the issue in the press. However, I can say with confidence that Hungary is strong in key economic areas, like the automotive sector, electronic manufacturing or the manufacturing of power plant components. These sectors and the major investments that companies have made in the past place Hungary in a great position to go along with the growth trajectory that will come upon an improvement in international perspective. Finally, as I have said, if signed at the end of the TTIP process some time by the end of next year, a new free trade agreement between the European Union and the United States of America has the potential to boost bilateral trade, opening markets for small and medium size enterprises that today can only dream about entering those markets. If trade barriers will be made away, investments and commercial relations will substantially grow, giving hope that for instance Hungary’s well recognized talent can get in the US and innovative Hungarian products and services arrive in America.
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