The ministers of foreign affairs and trade and innovation and technology are to prepare an action plan for how to make Hungary more competitive and attractive to FDI, and business input will be essential, Péter Szijjártó told an AmCham business forum on June 14.

“At the end of June I will be meeting with the new minister of innovation and with him will put together those proposals on his side with those from myself, for example from you. From these issues an action plan will be put forward to government and then hopefully to Parliament,” the foreign and trade minister told AmCham members at the forum at the Marriott Hotel Budapest.


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In a speech that was rich in details, Szijjártó outlined the challenges that lie ahead for Hungary. Interestingly, he did not mention immigration once.

“Given the deep integration of Hungary into the European economy, you have to understand that the challenges ahead of the EU are challenges for us too,” he said.

He pointed out that with a 90% export over GDP ratio, 79% of exports went to the EU. The second biggest export destination outside of Europe was America, with China third. The possibility of escalating trade disputes between the United States and Europe and the United States and China was, therefore, extremely worrisome.

“If there is a country on earth – and I am sure there are others – interested in resolving these trade conflicts as quickly as possible without any injuries or harm for others, it is Hungary.” Given the size of the Hungarian market, it would be “ridiculous” to urge the sides to settle their disputes, the minister said candidly. Hungary would do what it could but must “cross fingers” there would be no full blown trade war.

 

Other concerns the minister raised included the long-term financial framework of the EU, where he said there would be “big debates”. Hungary had understood the EU required “homework” to be done, decreasing deficits, introducing structural reforms, being fiscally responsible, and had completed those tasks.

“This home work was not made by everyone, but now we see some endeavors that this kind of irresponsible behavior should be rewarded, and we are definitely against that.”

He used tax reduction as an example. Hungary had worked hard, politically and economically, to be able to introduce the lowest corporate tax rate in Europe. Other countries who had “not behaved in a fiscally responsible way” wanted to undercut that advantage Hungary had created for itself and argued for a unified EU tax rate.

“We will fight against this phenomenon,” Szijjártó promised AmCham.

On Brexit, the foreign minister said Hungary wanted an end treaty that offered “the most comprehensive and deepest free trade agreement possible”. Given the country’s export-orientated economy, Hungary’s default setting is “free and fair” when it comes to trade, he said.

That same rationale applied to the country’s determination to see the Schengen borders upheld. The external borders have to be protected in order to allow free movement of goods within them. If border controls have to be reintroduced within Schengen, it threatens companies, including AmCham members, who run “just-in-time and just-in-sequence businesses”, the minister warned.

“As a consequence [of all this], Hungary will have to double its efforts to maintain and even enhance competitiveness. […] We have to maintain the lowest tax rates in Europe and continue our economic strategy in the future of cutting taxes on labor.”

Szijjártó told members “We understand that low unemployment is a challenge, but it is a good challenge to have.” The government was trying to promote labor mobility and offering tax incentives to companies building dormitories or helping employees with home or rental loans, he said. Some 26 universities now offered training under dual education schemes, working with 600 partner organizations. There are even autonomous engineering faculties being established to make sure there are qualified experts available for what Hungary is targeting as a growth industry.

The government also recognized that connectivity is important. New transatlantic flights have started, and there are negotiating about further routes. “We understand that getting to the places where decisions are being made quickly is important.”

The minister ended by once again calling on AmCham members’ support. “We have no ambition to reinvent hot water or the wheel,” he said. “For me it is better to get suggestions from you how we can make your sectors more profitable and competitive. I really do count on you.”

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Zsófia JUHÁSZ

Zsófia JUHÁSZ

Strategic Operations Manager

+ 36 1 428-2085