Hungary
Find out more about Hungary and some of its major investments.
Discover more about the investors and investment sectors within this West European country.
Economic History in Brief
Hungary is a country located in Central Europe with a population of around 9,797,561 people. It stretches across an area of 35,920sqm and is bordered by Ukraine, Austria, Romania, Serbia, Slovakia and Croatia. Hungary’s capital and largest city, Budapest, is classified as a top international city and an economic hub. It boasts a high standard of living and is an OECD high-income economy.
After centuries of being inhabited by Romans, Celts, West Slavs, Germanic people, the Huns and Avars, Hungary’s foundation was laid in the late 9th century. By the 12th century Hungary became a middle power within the Western world and by the 15th century, the country reached a golden age. Although Hungary is yet again considered as a middle power in the 21st century, it has the 57th largest economy by nominal GDP in the world. It is the 35th biggest exporter of goods in the world and the 34th biggest importer. In 2004 Hungary joined the European Union and in 2007 it became part of the Schengen Area. It is a member of the Council of Europe, the World Bank, NATO, WTO, United Nations and the AIIB. Hungary also ranks 20th in the world when it comes to quality of life.
Prior to World War II Hungary mainly relied on economic growth through land cultivation. After the war, the country aggressively pursued industrialization under communist rule. Although the company’s strategic location in the middle of Europe was ideal for foreign trade, the rapid industrialization pushed for a more self-sufficient economy. Because of this trend, Hungary was dominated by state-owned enterprises. After 1968 the pioneering ‘New Economic Mechanism’ was launched. This initiative overhauled the economic system, encouraged the private sector to grow and for the economy to be decentralized. From this point onward Hungarian trade started being less geographically restricted, and the range of exported products started growing exponentially. The ‘New Economic Mechanism’ soon gave Hungary the boost required to become one of the most economically healthy countries in the region.
Investment Opportunities
Although growth has slowed in recent years, Hungary continues to hold significant investment value. Some of the main industries in the country are construction materials, mining, metallurgy, chemicals, pharmaceuticals, textiles, processed food and particularly vehicle manufacturing. Hungary is also a leading producer of equipment for the information technology sector, including mobile technology and information security, with exports of close to US$20 billion annually. Since 2017 it has enjoyed a competitive tax system involving a flat corporate income tax rate of 9%.
Companies Investing in Hungary
As one of the forerunners in Central Europe in renewing investment relations with China in the early 2000s, Hungary has enjoyed significant investment from China. Around 75% is through the acquisition of Borsodchem, a Hungarian chemical company bought by Wanhua Group. In 2018 Chinese company Zhejiang Kaishan Compressor Co. agreed to build a HUF45 billion geothermal power plant in Hungary. Shortly after the announcement was made, it was also announced that talks about launching direct flights between Shanghai and Budapest.
Indian conglomerate SRF announced in June 2018 that it would invest around EUR60 million to build a film factory in Hungary. South African Brewer SABMiller controls as much as 30% of the beer market share in Hungary and NEPI Rockcastle, a South African commercial property investor, bought one of the largest retail centres in Budapest. In total, South Africa has invested around US$350 million in Hungary. Not to be left behind, the United States remains the largest investor in Hungary outside of Europe. With a total investment of more than US$9 billion, 17,000 American companies employed 100,000 people in Hungary. Companies with strategic investment agreements include Alcoa, BorgWarner and IBM. Other investors include Huawei, Lenovo, Sevenstar Electronics, ZTE, Canyi, Xanga, Orient Solar, Comlink and BYD Electronics.
Investors with Interests in Hungary
Founder and managing partner of Future Perfect Ventures (FPV), Jalak Jobanputra is known for her interest in making technological investments in Hungary.
Conclusion
Because of its favourable location, Hungary is not only accessible to the four main European transport corridors; it is situated at its crossroads and has one of the highest motorway densities as well as five international airports. Hungary’s competitive tax system includes main rates of 2% maximum local business tax, .3% innovation contribution, 27% general VAT, 18% reduced VAT (accommodation, internet and necessities like bread and milk), and even tax exemption for certain services. There is also a range of subsidies and incentives made available by the government with the aim of increasing competitiveness. Hungary has a highly qualified workforce of over 4.5 million people available at a reasonable cost. As a member state of the European Union, Hungary is harmonised with European law and an investor-friendly legal environment. With a relatively stable economy throughout the 21st century, Hungary continues to be one of the leading nations in attracting foreign direct investment (FDI) in Eastern Europe – despite slowed growth.
More Companies in Europe
Alven Capital
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AWS Grunderfonds
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Permanent TSB Group Holdings
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Vital Capital
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Investcorp
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Credo Ventures
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Prime Ventures
Prime Ventures is a public venture capital firm with interests in the European technological entrepreneurial market.
Investors with Interest in Europe
Gil Smolinski
Gil Smolinski is an angel investor and business developer who has several decades of experience in the tech industry. He is the co-founder and managing partner of NGN Partners, a business development company that monitors the tech market for high-end opportunities for investment and team building.
Osman Semerci
Osman Semerci, an award-winning investment executive with over two decades of experience in international investment.
Jan Sessenhausen
Jan Sessenhausen is a German early-growth venture capital investor. Sessenhausen is known for steering away from generic trends. Instead, his investment ideology explores companies that are developing fundamental concepts that will drive innovation.
Varun Dalal
Varun Dalal is a venture capital investor with a strong focus on early-stage companies in the mobile and media industries. He started his career in finance and is a qualified chartered accountant.
Felix Haas
Felix Haas is a German entrepreneur, advisor, and prolific angel investor with a private portfolio of over 80 startups.
Michele Faissola
Michele Faissola is an investment specialist with more than 25 years of experience in financial services. His expertise includes investment banking, asset management, and wealth management. Faissola is the CEO of Dilmon, a top private family office, and the co-Founder of F.A.B. Partners.
Oliver Thylmann
Oliver Thylmann is an investor and entrepreneur based in Cologne, Germany. Thylmann is the co-founder and chief customer officer at Giant Swarm.
Evgeny Kireev
Evgeny Kireev is a Cypriot investor whose interests include a large variety of industries, including technology, motorsport, and Foodtech.
Carlos Blanco
Carlos Blanco Vazquez, an award-winning entrepreneur and private investor in various industries, including the technology sector. He has over two decades of experience and has made his mark on more than 75 companies.
More Countries from Europe
United Kingdom
The United Kingdom has one of the most open economies in the world. Despite its continuing flirtation with socialism and the often-burdensome weight of history, it is a stable country, both politically and economically.
