Predictable and stable regulations, a competitive taxation regime, efficiency in administration and a strengthened local supplier base have the potential to enhance the country’s attractiveness for investments, and therefore are vital to increase Hungary’s global competitiveness.
Between 2015 and 2019, Hungary’s economy expanded by an average 4.1% a year, faster than regional peers Czechia and Slovakia, or the eurozone as a whole. During this period, the pace of economic growth in Hungary was about twice that of the previous five years. Investments contributed more to this GDP growth in the past years (25%), than in most other eurozone countries (21%).
Hungary ranks 52nd out of 190 countries in the World Bank's Doing Business 2020 report, scoring very low in the procedure, time and cost of dealing with construction permits and getting electricity, areas where more efficiency could potentially make doing business easier, and drive us up in the rankings.
Hungary has one of the most open economies of Europe, with an FDI stock of around EUR 97 billion in 2019, more than 60% of the GDP, according to UNCTAD. FDI inflow not only provides additional capital, but also increases productivity and competitiveness and acts as a multiplier when working with Hungarian SMEs. Recognizing current trends, we believe that there is a turning point, thus the priority for Hungary’s investment promotion agenda should be to bring high value-added activities and technology intensive investments to Hungary.
Looking past the pandemic, once recovery starts, Hungary has the potential to achieve annual growth of about 4% – almost twice the baseline pace of 2.2% – with the right initiatives, including smart growth and human capital considerations, as detailed in our other strategic areas.
We support the optimization of the regulatory environment through a stable, predictable regulatory framework as well as transparency and open dialogue between stakeholders.
We advocate for reducing the number of taxes and the digitalization of tax administration
SUPPLY CHAIN AND REGIONAL DEVELOPMENT
Improving domestic value chains to enhance the security of supply, digitizing SMEs, reducing regional disparities and driving investment in underdeveloped areas; identifying pockets of excellence
We advocate for more streamlined, transparent and user-friendly administration processes, improved e-government readiness and more.
BEST PRACTICE GOVERNANCE AND COMPLIANCE
Promoting best practice governance in business, government, academia, and not-for profit sectors is a critical pillar of competitiveness, as transparency and compliance are key decision-factors for foreign investors considering entering Hungary and for well-functioning, efficient domestic sectors.
For more information about our efforts to create a more competitive and investor friendly business environment, read our Policy Agenda 2021-2025.
Dr. Dávid Kőhegyi
Local Partner and Head of Compliance and Investigations, Hungary at DLA Piper