HUNGARY An ideal location for R & D Mrs. Ágnes Henter Head of Department Investment Promotion Directorate ITD Hungary

Hungary in Europe Land: 93,030 km² Land: 93,030 km² Population: 10,1 mn people Population: 10,1 mn people GDP/capita at PPP (2006 GDP/capita at PPP (2006 estimate): USD estimate): USD Hungary

Sources: National Bank of Hungary 82,151 million USD * Including reinvested earnings from 1995 Hungary is Front-Runner as regards FDI Influx Cumulated FDI in Hungary

Source: National Bank of Hungary FDI stock by country of origin and industry Total FDI Stock in Hungary as at end of 2006: 81,718 million USD

Aviation Industry in Hungary

5 arguments that make Hungary an ideal location for aircraft manufacturing Automotive (engine manufacturing – see Audi, GM Powertrain, Autokut) industry is one of the leading-edge sectors of the country: Good basis of automotive suppliers who could diversify to aerospace Availability of talented, creative, flexible and qualified labor pool, combined with the highest productivity in CEE: 5 educational Institutions specialized in aviation Aerospace industry is a start-up industry in Hungary. Major investors are large international companies (spare part production or MRO): GE, Lufthansa, Alcoa Outstanding business infrastructure: Aerospace companies can settle in industrial parks located at existing airports Competitive incentive package: innovative industries such as aviation are key priorities of the government Aviation Industry in Hungary

GEES, VeresegyházLufthansa Techn., BudapestElektrometal Paks, Paks Repair activity 15M$ middle size investm. SME/Supplier category Not airport dependent Established in 2000 Employs 150 people Engine component repair FAA/JAA certified Overhaul activity 15-18M$ middle size investm. Integrator category Airport location Established in 2001 as a JV Employs 350 people Large aircraft overhaul JAR-145 certified Component manufacture Small size investment <10m$ SME/Supplier category Not airport dependent Established in 2001 Employs 150 people Wire harness manufacture ISO 9100 certified Hungaerotech, DebrecenAlcoa, Nemesvámos, Székesf.várFlame Spray, Gödöllő Owner: Eldim Component manufacture Small investment <10M$ SME/Supplier category Not airport dependent Established in 2002 Employs 30 people Turbine parts manufacture AS 9100 certified Component manufacture Middle size investment SME/Supplier category Not airport dependent Established in 1997/2002 Employs 110 people Aerospace fastener manufact. AS 9100 certified Thermal spray (APS, HVOF), slurry diffusion, honeycomb brazing SME / Supplier category Not airport dependent Established in 2002 Employs 30 people ISO 9000 certified Companies in the re-emerging Hungarian Aviation Industry Aeroplex, Budapest Owner: MALÉV Overhaul activity Airport location (Ferihegy) Established in 1992 as JV with Lockheed 620 employees New hangar in 2007 Turnover: HUF 12 bn FAA/JAA/EASA certified Aviation Industry in Hungary

5 Educational Institutions specialized in Aviation Budapest University of Technical and Economics Sciences with 24,383 students in general Department of Aircrafts and Ships provides high level education The University together with Hungarian Aviation Industry Foundation and corporations pursue international and domestic research activities Pilot and aircraft engineer training in College of Nyíregyháza College of Szolnok provides aircraft engineer education, the institute is now involved in the Grippen program A total of 300 students study aviation sciences in higher education 4+2 year vocational secondary education in Kossuth Lajos Vocational School in Budapest with yearly 60 students Additionally numerous technical educational institutes serve the industry by providing skilled workforce for the 2nd & N-Tier Suppliers Aviation Industry in Hungary

R & D sector in Hungary

Budgets of the EU framework programmes Source: HUNGARIAN SCIENCE AND TECHNOLOGY FUNDATION 50.5

Hungary attracts 15% of all new R&D jobs in Europe! Source: IBM Plant Location Hungarian R&D activity in Europe Destination countries by estimated job creation in R&D projects, H1-2006:

Employment in high-tech manufacturing and KIS sectors as a percentage of total employment Hungary EU-15 EU-25 Source: Eurostat, High-tech Statistics 2007 Hungary-best performer in CEE

780 m€ R&D expenditure in 2005, 14.4% increase compared to 2004 R&D expenditure : 50% state funding, 40% entreprises Hungarian R&D represents 23,000 FTE jobs, of which 70% of scientists and engineers 2,500 R&D units, of which 750 business units Reference science parks: Infopark, Gaphisoft Park, Talentis Park, Corvin Science Park, Biopolisz in Szeged, Airport Debrecen Business Park 47,000 students in engineering, 19,000 students in IT Chemical engineering, mechanical engineering and informatics subsectors account together for 40% of the total R&D expenditure in 2005 Clinical medicines, health sciences and pharmacology account for 6% of the total R&D expenditure Increasing R&D expenditure Source: E&Y EIM, 2006

Astra-Zeneca GE Medicor Novartis-Sandoz Sanofi-Aventis (Chinoin) Servier (Egis) Teva-Biogal Audi Continental Teves Denso Draxlmaier EDAG General Motors Knorr – Bremse Magna Steyr Michelin Remy Automotive Temic-Telefunken ThyssenKrupp Valeo Auto-Electric Visteon W.E.T. Zeuna Stärker ZF Hungária Elcoteq Electrolux GE Medical GE Lighting Philips Samsung Solectron Automotive ICT ElectronicsLife science Machinery AFT Bosch Power Tool Zenon Cisco Ericsson IBM Nokia SAP Siemens/Sysdata TATA-Consulting T-Systems Attractive R&D in Hungary

GM-Opel Continental Teves Valeo Auto-Electric Corporate Research Centres: Increasing R&D expenditure Elcoteq Ericsson, Temic-Telefunken IBM, Simens PSE, GE Lighting, GE Health-care Nokia, Cisco, SAP TATA Consulting, T-Systems Sanofi-Aventis, Servier, Astra-Zeneca Knorr-Bremse, Arvin Meritor (Zeuna Starker) Bosch Power Tool Audi Magna Steyr EDAG Michelin Denso Visteon Knorr-Bremse ZF Hungária W.E.T. Flextronics Samsung SDI Draixlmaier Electrolux Teva-Biogal Zenon General Electric Teva-Biogal

Infopark, Budapest Budapest University of Technology and Economics, ELTE University of Natural Sciences, IBM, Hewlett Packard, Panasonic Innovation and Knowledge Centre, Budapest Budapest University of Technology and Economics, and 9 important IT companies Digital Community Centre, Miskolc Miskolc University, Hewlett Packard Research and Training Program, Szeged Szeged University, Tata Consultancy eScience Knowledge Centre, Budapest ELTE University of Natural Sciences, Delta Eletronik, Econet, ESRI, MiltuRáció Oracle Competency Center, Budapest Budapest Technical College CISCO Networking Academy Program, Budapest Budapest Technical College, Universiy of Szeged, Pécs, Veszprém SAP Competency Centre Budapest Technical College SUN Java and Solaris Certificates Strong co-operation between industry and academia ICT

Established in 2005 Budapest Financial, Mathematical Modelling Centre Number of employees: 25 top PhD mathematicians Established in 2006 Budapest Provide support for the US and UK units of the investment bank, especially in the areas of mortgage finance, information technology and financial control Number of employees: 450 people by 2009 „The choice of Hungary was due to positive experiences with the quality of its labor force and the country's political and economic stability” President of Morgan Stanley International Jonathan Chenevix-Trench and head of Morgan Stanley Global Operations and Technology Eileen Murray Business, service and technology centre Case Study - MorganStanley Fixed income division

Source: Audi Audi: FDI Brings High Technology to Hungary History  Engine plant officially opened in 1994 to produce 1.8L engines.  Received ISO 9002 certificate in 1995  4.2 and 3.7L 8 cylinder engine production began in 1997  Beginning of Audi TT Coupé and Roadster Assembly in 1998  In 2001 an Engine Development Center was set up now employing 100 people (~40% engineers) A total of EUR 33,480 million was invested in this project.  5 millionth engine in November, 2001  Since 2002 FSi (direct injenction petrol engine) Facts and plans  In million engines  23,675 cars have been assembled, new TT model was introduced in 2006 (50,000 in 2007) and engine for the Q7  Turnover in 2006 over EUR 5 billion  Hungary’s largest exporter today  Employs 5,022 people  24 different engines in 379 variants of four-, six- and eight-cylindeer engines for the VW concern in a 375 th. sq meter area  Since 2003 Audi invested a total EUR 3 billion in Hungary (360 million in 2006)  In 2005 Audi Hungary was awarded for its R&D activities by the Prime Minister

„We consider it our duty to support the development of Hungarian universities with our knowledge and experience. We also closely cooperate with university students and professors in the field of research and development,.” Thomas Faustmann, Managing Director, Audi Motor Hungaria Ltd. Audi Testimonial

Services of ITD Hungary

Hungarian Government's Investment and Trade Development Agency ITDH – Your Password to Hungary Non-profit organization Information and consultation centre for foreign investors in Hungary, providing: General and comprehensive information about the Hungarian economy Tailor-made site proposals Detailed programs Network: Central Office in Budapest 6 Regional Offices 56 Foreign Trade Offices 8 Representative Offices in the border regions of neighbouring countries Debrecen Eger Szeged Pécs Veszprém Győr Budapest

Detailed tailor-made information package about economy, politics, financial incentives, business environment, tax system, sectors incl. electronics, etc… Site visits, meeting with local, regional and government bodies, experts, service providers, consultants, potential suppliers, etc…. Accelerating permitting procedures, evaluation of potential investments. Assistance in incentive application VIP treatment for expatriates (visa, working permits etc.) Press conferences, ground-breaking ceremonies Special follow-up contact services Assistance in further investments, expansions. Decision Implementation After-Care First-class support by ITD Hungary

Thank you for your attention! Hungarian Investment and Trade Development Agency (ITDH) H-1061 Budapest, 12 Andrassy ut, Hungary Phone: (36 1) , Fax: (36 1) Internet: Mrs. Ágnes Henter Head of Department Investment Promotion Directorate ITD Hungary