Austria represents a top country Hungary has investment and business relationships with. With over 2,000 Austrian companies operating in Hungary, bilateral cooperation plays an important role in the nation’s economic development. We asked Róbert Ésik, President of the Hungarian Investment Promotion Agency (HIPA), to share his insights into what makes Hungary such an attractive destination for Austrian direct investment, and we have had the pleasure of interviewing him.
Q. Austria and Hungary have traditionally had close economic and political relationships over the centuries. In the past few years, in what areas did the companies achieve the biggest improvement in bilateral relations, with a focus on trade and investments?
Austria and the Austrian companies are very important business partners for Hungary.
The Austrian companies represent the third biggest investment community after Germany and the United States. The estimated total amount of foreign direct investments coming from Austria are approximately 7 billion euros.
According to the official statistics, there are more than 2,300 Austrian companies active in Hungary and they employ over 80,000 people. The Austrian companies do represent a large community in Hungary and they are active in many different sectors. Some of the most important are: retail, financial services, and the construction industry.
Q. How has HIPA facilitated the development of Austrian investments in Hungary?
HIPA as an organization deals with economic development and within economic development, we focus on investment promotion. This basically means three things:
On one hand, we try to position Hungary as an ideal location to do business and to invest in. Secondly, HIPA as a management consulting company provides information and advice to its clients, which are either existing investors or prospective investors. Last but not least, we also mediate between government and business, which means that based on our discussions with our clients, we are in the position to make proposals to the decision makers on how to further improve the business environment. These are our three main activities.
If we focus on the management consultancy part – which makes up the biggest chunk of our activities – we can also differentiate between different topics.
On one hand, we are active in the field of location selection, so whenever we are talking to a client that is a prospective investor looking at this part of Europe – and at Hungary in particular – as a possible area to set up its business, we try to work together with them in order to identify the best possible location within Hungary.
This site selection advisory activity can be quite complex because companies are taking many decision-making factors into account before coming to a conclusion (eg. attributes of the location in terms of available utilities, infrastructure, local labour market, local business environment and attitude of local stakeholders). We can assist companies easily in this process also because we have the largest database of available greenfield and brownfield locations in the country.
We regularly organize site visits, through which the investors have the possibility to gather the most relevant information for them.
This site selection advisory activity also includes providing relevant information about the regulatory and tax environment, the labour market, the educational institutional framework and all other topics relevant for the client to be able to come to the right decision.
The second part of the consultancy services is focused on state aid, so this is more about the business case of the given investment. We also in this case aim to provide a one-stop-shop service regarding state aid options, meaning that we try to list the possible subsidy schemes which correspond to the investment project that we are dealing with.
HIPA is also the managing body of some of the incentive schemes like the VIP cash subsidy program based on individual government decisions.
A third important portfolio element when it comes to management consultancy are the supplier services of HIPA. Whenever there is a new FDI investor coming to the country, we aim to connect that investor with the existing ecosystem of Hungarian small and mid-size enterprises because on one side this potentially creates business opportunities for these Hungarian entities and on the other side it can help the investor to further optimize its cost position and to find an even better local business environment following its decision in favour of Hungary.
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