Kiraly

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Hungary

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The Hungarian Investment and Trade Development Agency (ITDH) Los Angeles Representative Office 11766 Wilshire Blvd. Ste 410 Los Angeles, CA 90025 Tel: (310) 479-7878, Fax: (310) 479-5119 itdlosangeles@hungariantrade.org, www.itdh.hu “Hungary in the EU: New opportunities for foreign partners” By Ágnes Király-Végi PhD

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in May 2004 Land: 93,030 km² (= State of Indiana) Population: 10.152 M GDP in 2002: USD 65,814 million

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high integration with the EU in terms of trade heavy reliance on FDI as a driving force in the economy gross output per employee grew 2.4 times since 1989 the Hungarian financial system is one of the most developed in Central Europe the legal framework conforms to the international / EU standards the labour force provides a strong base for foreign business operations Economic Achievements

Economic Outlook Rankings, 2003 : 

Economic Outlook Rankings, 2003 Source: Euromoney

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U.S. Investments in Hungary The amount of American investments in Hungary is around USD 8 billion, which is app. 30 percent of the total foreign direct investments flown to our country.

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1. Szentgotthárd - General Motor 2. Győr - GE Hungary 3. Zalaegerszeg - GE Hungary 4. Nagykanizsa - GE Hungary 5. Székesfehérvár - Alcoa, Ford Motor Co. 6. Dunaharaszti - Coca-Cola 7. Veresegyház - GE Hungary 8. Gödöllő - Lear Corp. 9. Ózd - GE Hungary 10. Kisvárda - GE Hungary 11. Vác - GE Hungary 12. Hajdúböszörmény - GE Hungary 13. Orosháza - Guardian Glass 14. Tiszaújváros - AES 15. Budapest - GE Hungary, PepsiCo Inc., IBM, Sara Lee, GE Capital, Hotel Marriott, Philip Morris, etc. 16. Balassagyarmat - Delphi - Calsonic Major U.S. Investors in Hungary

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Novartis/Sandoz Seeds Glaxo-Wellcome AstraZeneca Audi Continental Teves Michelin Ikarus RÁBA Valeo Auto-Electric Knorr – Bremse Luk Savaria Bakony Autóalkatrész Gyártó Visteon Magna Steyr Zeuna Starker General Motors ZF Hungária GE Hungary Flextronics Ericsson Nokia Continental Temic Philips Elcoteq Companies Involved in R&D Activities in Hungary Automotive Industry IT Electronics Pharmaceutical Industry Other Pannonplast Dunaferr BoschDraxImaier (Sokoró) AFT Zenon Electrolux IBM Sysdata (Siemens)

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Productivity and qualifications of the workforce longest history of working with foreign investors management skills, teamwork high technical skills education system, training system Infrastructure, logistics Incentives Stability of the economy Hungary’s Attractiveness as an Investment Site

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Trans European Corridors and Logistic Centers in Hungary IV. CORRIDOR VII.Corridor VII. Corridor V.Corridor V/C. Corridor V/B. Corridor V. Corridor IV. Corridor X/B. Corridor Logistic Centers  Helsinki Corridors Public Road Railway Water Way Railway Prospective Public Road Railway

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Tax type benefits Untaxed development reserve Gradual reduction of the itemised health care contribution Development tax benefit Tax allowance for R&D activity, innovation and adult training The rate of corporate tax is the second lowest in the OECD Direct subsidies Support for European regional enterprise centres Subsidy for competitive investments Local tax allowance Special treatment Incentives Provided by the Hungarian Government Incentives in Hungary have been EU compatible since January 2003.

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Planned Changes in Taxes and Contributions from 2004 Reduced corporate tax rate to 16% More favourable conditions for the development tax benefit: min. value of investment decreases to HUF 3 billion (HUF 1 billion in less developed regions) job creation of 100 employees (50 in less developed regions) no limit for investment value in case of job creation of 300 employees (150 in less developed regions), out of which 20% are career starters granted for 10 years investment value of HUF 100 million suffices also in case of food hygienic investments 25% of pre-tax profit can be used as tax-free investment reserve Tax base benefit also for medium-sized enterprises Loss made from 2004 can be written off for an unlimited period 50% of fixed financial assets and exchange rate gain paid in the form of local tax is deductible from the tax base

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May 1, 2OO4

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Improved efficiency and transparency of business Inflow of EU funds Cheaper financing as a result of better risk ratings and increasing competition in the financial sector Benefit from pan-European distribution strategies, development of transportation routes Impacts of the EU Accession Growth in trade and investment, improved business climate

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Saves time and paperwork in customs administration Less customs duty because of extensive EU bilateral trade agreements No hold-up at border crossings Transparent and harmonised legal and tax system No exchange risk and conversion charges after Hungary joins the Euro zone presumably in 2008 Increased competitiveness (regarding existing EU member states) especially in labour intensive sectors The advantages of EU integration for companies operating in Hungary

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Central office in Budapest Nation-wide network of domestic regional offices World-wide network of foreign trade offices Consultation and Advice Foreign Investment Promotion Export Promotion Business Matchmaking Information Services Publications Euro Info Center Conference Facilities ITD Hungary

For further information please contact our office:: 

USA- Los Angeles: Ágnes Király-Végi, PhD Deputy Director Hungarian Trade Commission, Consulate General of Hungary 11766 Wilshire Blvd., Suite 410 Los Angeles, CA 90025 T: 310-479-7878 F: 310-479-5119 E-mail: itdlosangeles@hungariantrade.org For further information please contact our office:

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Thank you for your attention!

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Slides with additional useful information

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V/C Planned Motorway Network for 2015 Rábafüzes Tornyosnémeti Röszke Ilocska Letenye Dunaújváros Eger Veszprém Győr Tatabánya Kaposvár Pécs Lelle Szekszárd Sopron Mohács Székesfehérvár Kecskemét Békéscsaba Nyíregyháza Miskolc Kiskunfélegyháza Debrecen Füzesabony Emőd Baja Polgár V IV X/A BÉCS felé V V/A POZSONY, PRÁGA felé IV GRÁC felé ZÁGRÁB felé SZARAJEVÓ felé TEMESVÁR, BUKAREST felé BELGRÁD felé ARAD, KOLOZSVÁR felé LVOV, KIJEV felé KASSA felé Szolnok IV V ARAD felé Szeged Nagylak Duna Tisza LJUBJANA, TRIESZT felé BUDAPEST Szombathely Zalaegerszeg Bszgyörgy Nagykanizsa

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Extent of Government Support by Hungarian Regions

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Population with University / College Education, 2001 In percentage of the total population between the ages 25-64 years Source: EU

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Source: Ministry of Education In 2001/2002 Total number of students trained is 26,750. Students are trained at 3 universities and 7 colleges. The time period of study is between 3-5 years. Universities and Colleges in Hungary Number of students trained for IT in universities and colleges

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Reduced administration and time connected to the movement of goods Customs declaration need not be issued Less stringent regulations concerning the payment of VAT Customs clearance regarding exports to countries outside the EU will speed up due to modernisation No hold-up at borders within the extended European Union Lower transactional costs More ample choice for economic customs procedures operations, in some respects with more liberal regulations Simpler rules in the field of customs guarantees Impacts of the EU Accession Growth in trade and investment, improved business climate

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Foreign investors are expanding their sites in Hungary in 2003 BOSCH --Holland co-- new electronic instruments and automotive parts manufacturing site (investment: 150 M Euro) AUDI -- German co -- new automotive parts manufacturing site (investment: 250 M Euro) ING --Holland co-- European Regional Financial Administration Center ELECTROLUX--Swedish co-- manufacturing refrigerators (investment: 65 M Euro) SYKES --American co-- Call Center

Impacts of the EU Accession: 

Impacts of the EU Accession Higher level of stability, democracy, security and prosperity as part of the EU. Transparency and simplification with harmonization of capital market regulations and of taxation and business accounting rules. Access to an extended market of some 480 million consumers for U.S. companies settled in Hungary. Simplified procedure in business administration when exporting to EU member states. Easier access to EU financial institutions and funds within the enlarged European Union. Drop in tariff rates from the current average 8.9 % to the EU level, 3.5 %. Pan-European distribution strategies Inflow of EU funds Benefits for U.S. Companies - I.

Impacts of the EU Accession: 

Reduce other trade barriers: No need to re-certify goods destined for accession countries. No need to adapt products for small markets. US exporters will benefit as their product manufacturing cost will decrease. Conform to a single standard and certification process for the entire region. Rigorous enforcement of competition policy and intellectual property rights Cost of doing business in an enlarged EU will fall as US exporters consolidate sales organizations and simplify corporate structures.  Less stringent regulations concerning VAT payments. Easier access to EU government public procurements for U.S. firms. Large public sector investments.  Elimination of exchange risk and conversion charges after Hungary joins the Euro zone, presumably in 2008. Impacts of the EU Accession Benefits for U.S. Companies - II.

Useful addresses: 

Useful addresses Department of Commerce Central and Eastern Europe Business Information Center website: www.mac.doc.gov/ceebic/ Contact: Michael Rogers T: 212-482-2645 michael_rogers@ita.doc.gov American Embassy Budapest - U.S. Commercial Service website: www.usatrade.gov Contact: Scott Bozek T: +36-1-475-4090 budapest.office.box@mail.doc.gov

Useful addresses: 

Useful addresses American Chamber of Commerce in Hungary website: www.amcham.hu Contact: Péter Fáth T: +36-1-266-9880 E-mail: beatrix.kovacs@amcham.hu

Additional Websites: 

Central Office of Statistics in Hungary: www.ksh.hu Economic Forecast/News: www.econews.hu Customs: www.vaminfo.hu Ministry of Foreign Affairs: www.kum.hu Ministry of Economy and Transportation: www.gm.hu Ministry of Finance: www.p-m.hu Hungarian National Bank: www.mnb.hu Budapest Business Journal: www.bbj.hu Additional Websites

Creativity: 

Creativity Power of ideas Tradition of innovation John von Neumann Albert Szentgyörgyi Dennis Gabor Ernő Rubik Eugene Wigner

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George Pataki – governor of NY Dennis Gabor – Nobel prize awarded in 1971 for his investigation and development of holography John von Neumann - brilliant inventor of the binary code John Kemeny – co-inventor of BASIC programming Oszkár Asbóth - inventor of the helicopter Peter Goldmark – inventor of color television and scanning system Robert Barany – Nobel prize awarded in Physiology or Medicine 1914 for his work on the physiology and pathology of the vestibular apparatus (balancing organ) László Bíró – inventor of the ball-point pen Leo Szilárd – physicist, ideas of nuclear chain reaction Ottó Bláthy –inventor of the transformer József Galamb – designer of Model T and Model A Ford Andrew Grove – co-founder and chairman of Intel Corporation Edward Teller – physicist, H-Bomb Inventor Albert Szentgyorgyi – Nobel Laureate, discovery of vitamin C They are All from Hungarian Families

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They are All from Hungarian Families Larry Csonka, Super Bowl Runningback, Miami Dolphins, 1971,’72,’73 Adrien Brody, Actor-Oscar Awarded for “The Pianist” Mariska Hargitay, Actress William Fox (Vilmos Fred) Founder of Fox Studios Drew Barrymore, Actress Adolph Zukor, Founder of the Paramount Pictures Empire and Loew’s Theatres Jerry Seinfeild, Actor, Comedian Tony Curtis, Actor Paul Newman, Actor

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Let’s meet in Budapest