1. Welcome to Hungary

2. Hungarian Investment Policy and Business Environment
Mrs. Agnes Henter Director, Investment Projects
June 16, 2008

3. ITD HUNGARY: Your Natural Partner
ITDH: YOUR NATURAL PARTNER
Founded by the Hungarian Government to provide its services free of charge
promote and facilitate foreign investments
develop international relations
promote Hungarian capital investments
EU integration-oriented SME development
Central Office in Budapest  55 Foreign Trade Offices

4. Efficient services by ITD Hungary
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.
Tailor-made incentive solutions
Decision
Accelerating permitting procedures, evaluation of potential investments.
Assistance in incentive application
VIP treatment for expatriates (visa, working permits etc.)
Implementation
Special follow-up contact services
Assistance in further investments, expansions
Aftercare

5. Hungary in Europe Hungary Land: 93,030 km² Population: 10,1 million
GDP/capita, at PPP: EUR 16,000 (2007 forecast)
Hungary is located in the heart of the European continent. Hungary occupies just 1 % of the European continent. Hungary, with its favorable geographical location, is at the crossroads of main commercial routes in Europe. From Hungary, a market of some 240 million people can be reached within 600 miles.

6. Sustainable economic growth in 2008
Sustainable macroeconomic growth, EU-member since 2004
Average GDP growth in the past 5 years: 3.6%
GDP growth of 2.7% is expected this year with a 3.3% improvement of the manufacturing and business services sector
Industrial production growth is estimated to keep its pace at around 6%
Export growth of 10% is forecast
Unemployment rate is expected at 7.7%
Average gross wage: € 750
Average inflation rate will be around 6%
Economy
GDP
Output
Forecast source: GKI – an independent economic research institute and think tank in Budapest. 1.
Hungary demonstrated strong economic growth in the past decade and several economic sectors such as transportation equipment and vehicle manufacturing, electronics, IT, chemical production, and financial and business services performed outstandingly
GDP growth in Hungary has been mainly driven by the expansion of export and investments. A large proportion of export and economic growth has been generated by multinational companies.
2. While domestic demand is moderate, industrial production and export is expanding dynamically.
3. Unemployment rate will remain at around 7.5% this year. However, the share of long term unemployed is relativley low in the country.
Employment and wages
Inflation

7. Hungary is front-runner as regards FDI Influx
Cumulated FDI* in Hungary
in million USD
97,396
Since the end of the 1980s, Hungary has attracted a steady stream of foreign capital.
Source: National Bank of Hungary, Ministry of Economy and Transport
* Including reinvested earnings from 1995

8. Hungary’s position in FDI
Significant FDI/capita in the region
Growing proportion of
reinvestments
Growing importance of high value
added investments
Major investors: Germany, the
Netherlands, Austria, UK
(Europe: 81%)
(Poland and Slovenia: 2006, Slovakia: 2007 Sept., Czech Republic and Hungary: 2007)

9. Large investments announced in 2007
Automotive
Denso (2. stage): Automotive electonics, 110 jobs
Székesfehérvár
Magyar Suzuki: Automotive manufacturing, 690 jobs, Esztergom
F. Segura: Automotive manufacturing, 79 jobs, Szolnok
Electronics
Samsung Electronics: Elektronics, 1000 jobs, Jászfényszaru
Heliogrid:Solar panel manufacturing, 810 jobs
Rétság
Genesis Energy: Solar panel manufacturing, 190 jobs
Tatabánya
SSC
Vodafone: Financial service centre, 750 jobs
Budapest
IT Services (Deutsche Telekom): SSC, 1745 jobs, Budapest Debrecen
British Telecom: SSC, 220 jobs, Debrecen
ICT
Lufthansa Systems: expansion, 150 new software development positions
Neusoft: software development centre of the leading Chinese software technology company
Biotechnology
Beike Biotechnology: Chinese stem cell research project
St James: hospital project from Malta
AAI Pharma: Representative office of the American pharma company
Others
AHI Roofing:
Construction, 106 jobs, Várpalota
DAF Trucks – PACCAR:
Regional disrtibution centre, 49 jobs, Zsámbék

10. Major Chinese Investments in Hungary
Value of total Chinese investments: approx. USD 250 million
Bank of China: Unique example of Chinese capital in the CEE banking sector
Hisense: LCD manufacturing
Huawei: ICT
Lenovo: Desktop computer manufacturing
ZTE: ICT
Hainan Airlines: Direct flights between Beijing and Budapest
Shanghai Construction Group: Construction projects
Asia Centre – China/ Brand Trade Centre : Greatest wholesale trade and logistics distribution centre in Central Europe
Neusoft: Software development
Beike: Stem cell research
Livan: Biodegradable food packaging production
Byd: Electronic manufacturing
Bank of China februárjában 2,7 milliárd forint jegyzett tőkével megnyílt a bank budapesti leánybankja. Ma a bank alaptőkéje 5,4 milliárd forint. A közép-európai régióban ez az egyedüli kínai banki érdekeltség. Fiókhálózat terjeszkedést tervez.
Hisense júniusától a Flextronics sárvári gyára a Hisense, az egyik legjelentősebb kínai szórakoztató elektronikai és háztartási gépgyártó cég megrendelésére gyártott közép- és felső kategóriás hagyományos, illetve széles LCD- és plazmaképernyős televíziókat a Hisense által szállított részegységekből november elején önálló gyártásba kezdett meglévő egy gyártósorával egy szombathelyi bérelt csarnokban, mivel a Flextronics – augusztusi bejelentése szerint – kiszállt a TV-gyártásból Magyarországon. Éves teljes kapacitása 1 millió db/év, de jelenleg db-ot gyárt, melyet re kíván növelni. Bérgyártásban vagy a Hisense más termékeinek gyártásában gondolkodnak.
Huawei - A telekommunikációs cég végéig magyarországi irodája létszámát főre kívánja emelni, nagyrészt helyi szakértők alkalmazásával. A magyarországi leányvállalat dinamikusan erősítette pozícióját a mobil kommunikációs berendezések, valamint a szélessávú internetes szolgáltatásokhoz szükséges eszközök szállításával. Partnerei közé sorolhatja többek között a T-Com-ot, a Pantelt és a Synergon-t is, mely utóbbival rendszerintegrátori megállapodást írt alá. Egész Kelet-Európát stratégiai területként tekintik és Magyarországra logisztikai központként is számítanak.
Lenovo - Az IBM PC üzletágát felvásárló – a világon a 3. legnagyobb személyi számítógép gyártó - cég óta Magyarországon is működtet leányvállalatot. alig több mint egy év alatt a kínai „számítógépóriás”, 1 millió desktop számítógépet gyártatott Magyarországon. Magyarországi együttműködő partnere a Sanmina SCI.
ZTE - Kína legnagyobb tőzsdén is jegyzett távközlési berendezésgyártója és a vezeték nélküli megoldások egyik vezető szolgáltatója, a Huawei mellett a másik legnagyobb kínai hírközlésgyártó magyarországi tevékenységét az Invitel Rt-vel kötött, ADSL-modemek szállításáról szóló szerződés aláírásával kezdte, majd emberi erőforrás központot nyitott Budapesten, amely logisztikai és műszaki támogatást nyújt a ZTE gyorsan bővülő európai tevékenységéhez. Tervezés szintjén áll egy európai logisztikai bázis létrehozása. Mr. Zhou Fuqiu alenök tavalyi kijelentése alapján nagyban számít a magas színvonalú magyar humán erőforrásokra. Egy tenderkiírás elnyerese – pld. a 450 Mhz frekvencia-tender – nagyban segítené a terjeszkedési döntést.
Hainan Airlines - Heti három alkalommal Budapest-Peking közvetlen járatot tart fenn ban mintegy magyar, illetve kínai állampolgárt szállítottak májusától business kategóriát vezetnek be járataikon.
Egyéb befektetések:
Changsu Standard Parts Factory – 1997 óta Ongán (Miskolc). 35 fős csavargyár
Keeway Motorgyár
Hungary Skála Group – 18 áruház 100 %-os kínai tulajdonban
Wing Sport – Wink sportcipő bolthálózat
Szállodák: Hotel Oriental (Angyalföld), Duna Hotel (Római part), Margaréta Szálloda (Balatonfüred)
Budapest/Hungary is the 4th best location for Chinese Investments according to China International Institute of Multinational Corporations.
Source: International and Chinese CEOs roundtable in Nov. 2007

11. Hungary’s position in logistics
Hungary is situated at the cross roads
of four main European transportation
corridors
The road and railway transportation
network is extensive and it is under
continuous development 1.
Singapore 2.
The Netherlands … 6.
Japan ….
35.
Hungary
...
38.
Czech Republic
40.
Poland
50.
Slovak Republic
Hungary is ahead in the World Banks Logistics
Performance Index (2007) considering the speed of
customs clearance, the average timing of export
and import transactions and the transport costs

12. Hungary: logistics centre
Scandinavia/Nordic
UK/Ireland
North West
Europe
Iberia
Eastern Mediterranean
Central Eastern Europe
Central Southern Europe
NIS and Asia
An EU member country, Hungary has direct access to the EU market of nearly 500 million customers;
After the most recent expansion of the EU, Hungary became the geographical centre in the CEE.

13. Well trained, creative and flexible human capital
University Towns
Number of institutions in higher education: 71
Number of students in higher
education: thousand
Majoring in:
Business and Administration: 105 th
Informatics: 17.7 th
Number of graduates in 2007: 57.7 th
Budapest 161,300
Szeged 30,00
Pécs
33,100
Veszprém 10,600
Miskolc 13,600
Debrecen
25,200
Felújítva:
Brunczvik Csilla
J:\ELEMZO\LABOUR\EDUCATION\Statisztikák\OM\ / oldal
Strong education background
World acknowledge scientists
It is necessary to have min. 2 foreign language examination to get the diploma at Business and Admi.
Usually one must be English or French.
The most important university towns beside Budapest are: Miskolc, Debrecen, Szeged, Pécs and Veszprém
Miskolc is the third largest city in Hungary and the University of Miskolc is the second largest university in the country with three technical faculties and three faculties in the humanities.
Debrecen is the second largest city in Hungary with a rich industrial and cultural history. Its university was founded as a protestant college in It has several faculties but the faculty of economics and business administration has two main focuses finance-accounting studies and languages.
Szeged is about 20 km from the Serbian border making a gateway to south-eastern Europe. Szeged University is one of the country’s leading centers of research and education in both the arts and sciences.
Pécs is the fifth largest city in Hungary. Hungary’s first university was established there in The present university is one of the largest institutions of higher education in Hungary with several faculties and special focus on economics, finance, human resources and accounting.
Veszprém: is about 120 km from Budapest, close to Lake Balaton. It has an excellent IT education.
90% of students speak English
2nd most popular foreign language: German
Followed by: French, Italian, Spanish
All diploma with foreign language certificate and computer skills!

14. Priority sectors in Hungary
Dynamics of the sector
Recycling
Biotechnology
ICT, SSC
Growth
Renewable energy
Digital media and creative industries
Aviation and Aerospace
Automotive
Electronics
Stability
Decline
Hungarian performance
Very strong
Strong
Medium
Low
Very low
Low
Average
Strong
Existing presence
Source: Deloitte, Project Astra

15. High-performing sectors: strong position in Central-Eastern-Europe
Hungary is
the largest electronics producer in CEE providing 40% of the regional output and nearly 50% of the exports
major hardware producer in the region, representing 5.5% of Europe’s output
Hungary has
a high proportion (5.4%) of the labour force in high tech manufacturing, ranking 6th in the EU (Eurostat, 2007)
the strongest pharmaceutical and biotechnology sector in CEE
the highest number of shared service investments between in Europe (Ernst&Young, 2007))
strong R&D in the automotive sector

16. Strong innovation capacity
Ranking
Country
Switzerland 1
USA 2
Germany 5
France 19
Norway 21
Hungary 24
Czech
Republic 30
Slovenia 33
Spain 49
China 56
Poland 64
Greece 76
The World Economic Forum ranks Hungary 24 among 131 countries in terms of the quality of scientific research institutions
Hungary is ahead of its regional competitors, and the Mediterranean countries
Source: Global Competitiveness Report, World Economic Forum, 2006/2007

17. Automotive High Performing Sectors
The sector’s share in the national economy:
19.4% of total industrial production
20% of total exports
Total number of companies:
Total number of employees: ,000
Export ratio: %
Car manufacturing, assembly
Suzuki: 300,000 pcs planned for 2008
Audi Motor: TT coupés and roadsters, A3 cabriolet,
379 variants of 24 different types of
powertrain
Engine manufacturing
Audi Hungary: million engines in 2007
GM Opel: thousand engines
Automotive industry is one of the economic sectors that have benefited the most from the heavy foreign direct investment inflows after the change of the political regime in Hungary in One quarter of the total FDI in manufacturing industry was invested in the automotive sector. In parallel, the small and medium-sized local automotive companies have become stable and strategic partners of local based and Western-European car manufacturers. Owing to the quick introduction of modern corporate management and quality assurance systems, productivity in the sector reaches the Western-European average. Automotive sector contributes to the total industrial output with EUR 10.6 billion which is 16% of the total amount. Since the motor companies - especially OEMs and TIER1s - manufacture mainly for export, the 630 automotive companies account for 25% of total exports.
The industry employs some 97,000 people. The world-class training and education of engineers in 5 major university towns make sure that this quality is maintained and even improved. Nearly 20% of the working engineers are engaged in product-improvement, while the others are active in technological development, production, quality assurance and sales.
Original manufacturers, such as Suzuki and Audi are continuously expanding their capacities and their workforce to meet growing demand. 14 of the world’s top 20 TIER-1s have already operations in Hungary in order to make the presence in Central and Eastern Europe, in a strategically significant automotive hub. Numerous multinationals have set up R&D centres in Hungary, examples include: Audi, Bosch, Knorr-Bremse, Magna-Steyr, ThyssenKrupp, Arvin Meritor, Denso, Continental, Visteon, WET, Draxlmaier, Edag and Temic Telefunken, ZF etc.
World’s 3rd largest powertrain plant in Hungary by Audi!

18. Automotive engineering
Major companies conducting R&D, centres of excellence
In the past couple of
years 15 automotive
manufacturers started
research and
development
including Audi, Knorr-
Bremse, Continental, ZF
Friedrichshafen,
Schefenacker, Bosch, Denso and Hankook.
Győr
Miskolc
Veszprém
Székesfehérvár
Érd
Pilisszentiván
Budapest
Expansions and reinvestments indicate that companies are not only satisfied with Hungary but also they are extending their activities into research and development
Major R&D research include highly complicated, high-quality vehicle parts and components, advanced vehicle control, laser machining, metal foams, nano-composites

19. High Performing Sectors
Electronics
Hungary is the largest electronics producer and exporter in the
CEE region by providing 40% of the regional output and nearly 50% of
the exports.
Production Value: USD 19 billion
29% of total manufacturing production
29.4% of total exports
Total number of companies: 9,000
Total number of employees: 135,000
Export ratio: 87% .
In the 1990s Hungary emerged as a major global production location in the electronics industry.
Levels of growth is about 10% every year.
Today, with its USD 10 billion electronics production output, Hungary represents 4.5% of the production of the European Union. The country is the most important electronics producer of the CEE region.
Electronics is one of the leading-edge sectors of the country: 17% of the industrial employees work for electronics companies producing 25.5% of the industrial output and 42% of the total export.
In the past few years, foreign investors have shown a particularly keen interest in four areas: information technology, communications, consumer electronics and automotive electronics. Several of the major global original manufacturers are present in the country such as GE, Philips, Siemens, IBM, HP, Ericsson, Nokia, Sony, Samsung. However, Hungary has been a popular location for CEM companies as well, including global tier one suppliers such as Flextronics, Sanmina-SCI, Solectron, Jabil Circuit and Elcoteq.

20. High Performing Sectors
ICT
Debrecen
Szeged
Szombathely
Hungary has the second highest share of ICT goods in the country’s export in the OECD
Hungary has the highest per capita ICT expenditure in the CEE region
All major well known software developers are all present in the country
including IBM, HP, Siemens, SAP, Oracle, Getronics, EDS, CISCO,
TATA, Microsoft, Sun.
Several IT companies such as British Telecom, EDS and Getronics
opened their technology service centres in Hungary.
Strong cooperation between business and academia in R&D, like Nokia,
Ericsson, IBM, CISCO, SAP, Oracle, SUN
The Hungarian ICT market exhibited strong growth in the past couple of years. Between 2003 and 2006 the average annual growth rate was 10%, slightly exceeding that of Central Eastern Europe (9.6%) and well exceeding the rate of the EU (2.75%). Today the Hungarian ICT market represents 18.7% of the CEE total. The total sales are expected to reach €6.9 billion in 2006 which is 43 % higher than the size of the market in 2002
1. Hungary has become one of the major players in hardware production in the region. In computer assembly and communications equipment production the country is the leader in CEE. The largest producers in the ICT sector include IBM (US), Flextronics, Samsung, Albacomp, GE (US), Nokia (Finland), Siemens (Germany) Solectron, Sanmina, Elcoteq, Videoton, Orion, Sanyo etc).
The software market is the fastest growing IT segment in Hungary, its weight grew considerably in the past couple of years. The country has strong positions in IT security, virus protection and character recognition software development as well as in bio-informatics. Last year the demand has been growing for security software, business intelligence and data management applications and ERP solutions for small and medium sized companies.
2. According to the Information Technology Outlook, 2006 (OECD), after Korea, Hungary has the largest share of ICT goods it the country’s export.
3. Comparing Hungary with Slovakia, the Czech Republic and Poland, Hungary has had the highest rate of ICT expenditure/capita since 2002.

21. High Performing Sectors
Life sciences
Hungary is the fifth largest medicine
producer in Europe
Largest biotechnology innovation
and spin-off sector in CEE
Extensive R+D cooperation
University biotechnology centres
clustered in four academic towns
Life sciences, which have a strong tradition in Hungary, achieved widespread recognition all over the world. Even a decade ago biotechnology as a business sector was virtually non-existent in Central and Eastern Europe. However, with the active support and commitment from the Hungarian Government, the biotechnology industry now shows dynamic expansion and development.
Vast majority of Hungarian biotech companies serve world-wide markets
Some of them are clear world-wide market leaders in their segments
Winners of the Hungarian Innovation Grand Prize in the past 6 years: were all life sciences companies
Among the EU accession countries, Hungary has the first biotechnology association founded in 2002
Hungary has a solid record of attracting and conducting international clinical trials, with over 250 clinical trials performed each year – an outstanding number compared to Hungary’s population.
(Reasons for conducting clinical trials in Hungary:
Rapid and reliable recruitment of study population
Investigators are motivated and qualified
High Quality of Data
Reasonable price advantage
Qualification of local study monitors is above international average)

22. Four life science clusters
Genomnanotech Knowledge Centre
Neurobiological Knowledge Centre
Cell Communication Knowledge Centre
Infobionics Knowledge Centre
Medipolis Knowledge Centre
Debrecen
Szeged
Budapest
Pécs
Budapest, Szeged,
Debrecen, Pécs:
strong presence of
large international
pharmaceutical
and biotechnology
companies
clustered around
universities.

23. High Performing Sectors
Renewable energy
Kyoto protocol – reduce CO2 emission with 6% betw compared to reference period
EU target: 20% share of RES in total energy production compared to 4.2% at present
Hungary plans to reach 15% by 2020,
Major areas of growth: biomass, biogas, wind
Investments into biofuel and biomass production has already increased
The Energetics and Environment Operative Program earmarked USD 500 million to support renewable energy related investments
Compulsory feed-in tariff (between 5-13 cents) is differentiated by the size of the plant

24. Increasing activity in solar panel technology
Renewable energy
SANYO
Production of 50 MW capacity started in 2005
Expanding solar panel manufacturing factory to 150 MW
HelioGrid
50 MW planned capacity of thin film solar cell manufacturing in Rétság. Operation started in 2007 Q3
Cooperation with the Research Institute for Technical Physics and Materials Science in solar cell technology
Genesis
Announced to start large scale thin film cell manufacturing in Tatabánya with an investment value of EUR 100 M
Semilab
Leading supplier of state-of-the-art metrology systems for the semiconductor and photovoltaic industry as well as for scientific investigation
Energosolar
Develops and manufactures complete, turn-key production lines for thin film micromorph PV modules in Budapest
Products: solar electric power systems, photovoltaic cell manufacturing equipment, photovoltaic module manufacturing equipment, photovoltaic systems

25. Záhony Logistics Centre
Complex development program of the Záhony Area
in the 2nd National Development Plan ( ): app.150 million USD
Modernization of the Rail Infrastructure (15 billion HUF)
Reconstruction of the existing road infrastructure (4 billion HUF)
Development of an Industrial and Logistics Park in Fényeslitke – ha (5 billion HUF)
Building of the container transshipment station and Ro-La terminal on 100 km2 (2 billion HUF)
Development of the secondary and higher education in the region
Promotion of the cluster of the logistics service providers
Marketing
Construction planning of the Debrecen-Záhony Railway line and of the M300
Highway between Motorway M3 (Vásárosnamény) and Záhony

26. Taszár airport development
Former US military base under
development
Favourable location in South-Western
Hungary
Can become a connecting link between
the Far East and the European Union
• Auxiliary and warehouse buildings
• Fuel filling and repair facilities
• Public road and railway links
• Separate civil aviation sector and
passenger terminal
• Suitable for the establishment of a
logistical centre and merchandise
distribution base
• The proximity of an industrial park and of
a higher education and research centre
A large number of local experts
experienced in air traffic control and in the
operation of airports

27. POLUS KINCS ZRT. offers to investors:
Project Rudabánya
The mine(s) and its reserve are ready to be introduced to the Chicago and London Commodity Exchange.
POLUS KINCS ZRT. offers to investors:
The ownership of mining properties at Rudabánya and its surroundings
The sole rights to the mining of Barite
The sole right to sell, the Mining rights of the reserve, of the Iron-ore, Copper-ore and the Poly-metallic metals
Phases of development:
Search for mineral barite – 2009
Search for iron-ore, copper-ore and poly-metallic metals – 2010
Establishment of mining areas – 2010
Preparation of the rights of mining +technical plans – 2011
Start of surface and deep mining – 2011
Process, treatment and sale of mined product

28. Szabolcs-Szatmár-Bereg Jász-Nagykun-Szolnok
Investment Incentive
system
Intensity ratios
Győr-Moson-Sopron
Vas
Zala
Szabolcs-Szatmár-Bereg
Hajdú-
Bihar
Jász-Nagykun-Szolnok
Heves
Komárom-Esztergom
Fejér
Veszprém
Nógrád
Budapest
Pest
Somogy
Tolna
Bács-
Kiskun
Csongrád
Békés
Baranya
Tax-related benefits
Tax deductible items
Development tax benefit
Direct Incentives
Special Incentive Package for
large investments
EU co-financed grants
Incentives above intensity
ratio
25%*
30%
40%
50%
*from 2011: 10%

29. Unique benefits
Open atmosphere, advanced business administrative system
Harmonious relationship with China’s central government
Largest Chinese community in Central and Eastern Europe
Chinese schools, newspapers and restaurants
Rich entertainment facilities

30. Thank you for your kind attention!
Mrs. Agnes Henter, Director, Investment Projects
ITD Hungary
Hungarian Investment and Trade Development Agency
H-1061 Budapest, 12 Andrassy ut, Hungary
Phone: (36 1) , Fax: (36 1)