The COVID-19 epidemic has impacted the economies of all countries around the world and has revolutionized the way we work. Many people have found themselves working from home, most companies have seen their business profits plummet while others have thrived.
In the light of these lifestyle and economic changes, the Hungarian government has had to take action by introducing the Economy Protection Action Plan to financially support companies, protect employees and aid economic recovery.
We asked Róbert Ésik, President of the Hungarian Investment Promotion Agency (HIPA), to share his insights into the impact COVID had and what measures the Hungarian government put in place to increase the amount of FDI in the country.
Q. How did the pandemic impact all this, what innovative solutions have HIPA developed to further improve the two countries’ relations in terms of trade and investments?
I think 2020 was a challenging year for individuals, corporations, and countries as well. From an investment promotion point of view, what we have experienced was that when the pandemic broke out, the restrictive measures were also impacting the site selection processes, but by the end of the year we’ve been able to recover quite well. This recovery was partly due to the fact that there were certain industries where the investment processes did not slow down simply because there was a high demand for their product due to the pandemic, or because they were focusing on future-oriented activities. This meant that some of the projects kept on going and we also had new opportunities, for example when it comes to the manufacturing of certain detergents or medical devices, personal protective equipment, pharmaceutical products, or activities in the food industry. What was also going really strong were the projects related to the electro-mobility and business services sector.
The other main reason why 2020 was successful was our quick response in the form of an Economic Action Plan to try to compensate for the negative economic impact of COVID. This program amounts to 18-20% of the GDP and it has four pillars, including the protection of existing jobs, the support of new investments and the creation of additional workplaces, sector-specific programs as well as the insurance of liquidity to the companies by launching new credit programs or extending existing ones.
Within this Economic Action Plan, investment promotion got a big share and we have been able to launch two new subsidy programs managed by HIPA, which were using two legal titles for financial support related to the special situation caused by COVID: on one hand the Temporary Framework of the European Commission, on the other hand, compensation of losses incurred due to COVID. Based on these COVID-specific programs, we have received 1,338 applications from companies ready to keep all their existing employees (a prerequisite to get financial support) and to carry out investments (for which they will be receiving financial support). These 1,338 companies are planning altogether 2.3 billion euros of CAPEX and are ready to commit to maintaining 265,000 jobs.
Altogether, we have managed to close 907 projects successfully in 2020. From these 907, we had 97 large FDI deals, which are business as usual activities for us, and we have been able to close 810 COVID-specific projects. From the 97 large deals, we had 8 Austrian companies, which puts Austria in the fifth position.
Q. What is the future of all shared service centers? With the new widespread of smart-working or working from home, what do you think will be the transformations in that sector?
I believe that offices will remain important for business service centers. Of course, the pandemic has impacted the way of working and in many cases, the business service centers have responded very quickly by sending most of their staff to a home office, but I believe that once COVID is over most employees will return to their offices and will continue working in a similar way than before.
From a cultural point of view, it is also important for the companies to offer some common space for the employees and to make sure that the corporate culture remains in place for which you need to have some physical interaction between the colleagues.
Ultimately the ratio between the office space occupied by the desks of employees and the office space for common use might change, but offices will remain in place.
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