By : Saul Ellison, InvestCEE
This past week, New York City played host to the United Nations General Assembly Week where the world’s leaders and other prominent figures convened for several days. Typically, leaders speak on the state of the global economy and the politics of the day.
United Nations General Assembly Week
During this week however, representatives from Hungary were active in numerous events speaking not about politics but about the growing success of their small country which is exceeding all economic and business expectations. On Thursday, September 27th, the Hungarian Investment Promotion Agency (HIPA) along with ROI Research on Investment and the Hungarian Consulate General of NY concluded a multi-day tour with an event highlighting investment opportunities in Hungary.
Hungary : A country to be reckoned with
Those in attendance represented some of the best from the U.S. investment scene including investment banks, institutional and angel investors and individuals who are leading the charge for foreign direct investment into Central and Eastern Europe. Attendees were told the compelling story of a country of 10 million people managing to produce an economy that has grown twice as fast as major European countries including Germany, Great Britain and France.
Minister of Foreign Affairs and Trade, H.E. Péter Szijjártó commented on the unique attributes that has made Hungary one of the premier and growing innovation hubs not only in Central Europe but in Europe as a whole. He emphasized the government sponsored initiatives that have led to one of the lowest European unemployment rates, rising incomes and their open business community that is tight knit yet welcoming of new ideas and emerging technologies. Szijjártó applauded U.S. investments who are “second only to Germany” in total investment and responsible for the rapid growth in the economy especially in healthcare, pharmaceuticals and digital technologies.
The event evoked a sense of arrival for a country that has yet to have a major international presence in the 21st Century globalized world, but that is quickly and assuredly changing, as Ambassador Ferenc Kumin commented. Ambassador Kumin’s comments were followed by a short ceremony where President of HIPA, Róbert Ésik, awarded 2018’s “Chain Bridge Budapest Award” to Blackrock as the most significant U.S. investor in Hungary in 2017. Blackrock executive Joseph Konchansky accepted the award and gave serious credit to Hungary and their competitive advantages for making the country an easy choice for Blackrock to establish its base. He credited the Hungarian workforce for helping propel Blackrock which has already exceeded its Hungarian growth projections.
FDI's in Hungary : U.S. Corporate Perspective
The highlight of the evening was a panel discussion on foreign direct investments in Hungary from U.S. firms featuring the aforementioned Joseph Kochansky from Blackrock, Erika Nielson Director of Global Affairs from Borgwarner and Kevin A. Murray, Chief Executive Officer of Citi’s Central European operations.
Hosted by Jamie Harkrider of ROI Research on Investment, panelists were asked very pointed questions about their experiences in Hungary and what exactly was the value they saw that couldn’t be matched anywhere else. One of the most consistent comments was on Hungary’s still affordable yet highly skilled labor.
Economics will always represent one of the hallmarks of what is needed for successful business development, but when asked about what else attracted these businesses to Hungary, Kevin Murray of Citi noted, “What we see now is multinational corporations coming in and realize the ease to open business in Hungary. They tend to look at Hungary due to economics, where they’ve done extremely well to cut foreign debt dramatically since 2010 and even though wages have gone up, taxes have offset any wage increases substantially.” Borgwarner's Nielson quickly added, “the Corporate Income Tax is key at being only 9%, the only single digit corporate tax in the European Union”.
Erika Nielson of BorgWarner commented on a strong auto sector with key OEMs Audi, Daimler, Opel, Suzuki and now BMW as well as the Hungarian University system and overall business community as being one of the most underrated aspects. Nielson noted, “We partnered with Corvinus University and St. Stephens College, EDUTUS University and Pannon University where due to strong relations, BorgWarner has grown to 3 facilities employing about 1,700 people all in Hungary.”
Murray, who had spent 25 years in Budapest and developed Citi’s shared services center, highlighted the ability to work with such Universities where businesses input was actively sought after in helping develop the curriculum for students. Murray remarked, “if you want to impact something, you have to get involved with it. We get involved with several Universities to influence the education and help tailor things to get ahead of the curve, where students are coming back more intuitive and smarter as new entrants to the workforce. Some 70% of students from low to middle class backgrounds who go through our partner programs have jobs in 3-6 months.”
The panel and panelists were well received. Even Ambassador Kumin commented on how surprised he was at the feedback, “it couldn’t have gone any better.” We at InvestCEE would agree.