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Foreign companies invest in Hungary differently than before
( 24 / May / 2005 )
Budapest, May 24 (MTI ECONEWS) - Hungary's stable economy, good infrastructure, broad network of suppliers and skilled workforce still make it attractive to foreign investors, in spite of the country's high payroll taxes and top-heavy bureaucracy.
But Hungary is past the period of big greenfield investments -- a period some of the country's neighbours are just in the midst of. Rather, big foreign companies are more interested now in consolidating and strengthening their positions on the market as well as acquiring competitive businesses, according to partners at consultancy KPMG's unit in Hungary.
While some foreign investors may choose to expand in Slovakia, Bulgaria or Romania, instead of Hungary, because of the higher jobless rates and lower fees, Hungary is seeing a different type of expansion: companies already present in the country are boosting production at their Hungarian units and turning them into bases to supply the rest of the region, or they are adding other activities to their Hungarian units' profiles, KPMG partner Peter Kiss said. The former companies include General Electric and Electrolux, whose production facilities in Hungary supply many other countries in the region. The latter companies include Ericsson and Audi, which have added research and development arms to their production units in Hungary, as well as Diageo, which has transferred its accounting services to Hungary, and Sykes, which runs a customer call centre to service Samsung products made in Hungary. When companies include higher added-value activities to their scope of operations in Hungary, they signal their intent to stay in the country for the long term, Kiss said.
KPMG partner and former Finance Minister Csaba Laszlo noted that innovation, along with research and development, must be made priorities for Hungary's long-term economic planning.