Hungarian Investment Promotion Agency

With the global decline in foreign direct investment volumes and the achievement of full employment in Hungary, “a completely new situation” has emerged, and the Hungarian investment promotion efforts have long been aimed at “moving towards even higher value-added activities” – Mr. István Joó explained, outlining the motivation behind the recently published amendments.

The Government Commissioner for Investment Promotion and Implementation of Large FDI Projects stressed that

while production is very important, innovation must also be encouraged so that companies not only manufacture cars in Hungary but also carry out research and development and register patents in our country.

This is precisely the aim of the restructured framework for R&D support - Mr. István Joó added.

Under the new rules, companies employing at least 50 people – down from the previous threshold of 100 – are now eligible to apply for this type of investment support.

This means a broader eligibility scope, allowing many more Hungarian companies to benefit

 – Mr. István Joó noted.

In addition to his remarks on Kossuth Radio, HIPA’s CEO elaborated on the updated non-refundable VIP Cash Subsidy system in an interview with public television channel M1. He pointed out that many companies are unaware of the fact that some of their activities actually qualify as R&D. This can include, for instance, engineering a new component at a vehicle manufacturer or creating a new product at a food industry firm.

If a company recognizes the value of its innovation activities and strengthens its focus in this area, it can apply for EKD support by creating just 10 new R&D jobs. The new rules also encourage larger foreign companies to register their patents in Hungary, Mr. István Joó added.

He emphasized that R&D requires engineers and highly qualified professionals, which also means “universities can significantly benefit” from the updated incentive system.

He stressed the importance of encouraging foreign investors who have already established production capacity in Hungary to follow up with R&D projects and to build partnerships with local universities.

However, new factories and larger manufacturing centers are also needed, in fact, they are essential for the development of Hungary’s southern regions, because these are the areas where untapped resources are still available. “There’s still work to be done from Békés to Baranya,” he underlined.

This is why the investment threshold for applying for EKD support has been reduced from EUR 3 million to EUR 2 million in the 11 least-developed counties. This means that investors targeting southern Hungary can already apply for support with a project worth roughly HUF 800 million – Mr. István Joó explained.

In his interview with Kossuth Radio, the HIPA CEO emphasized that targeted investment incentives in the southern region are already yielding results: BYD is building its first European car plant in Szeged, a large-scale investment will soon be inaugurated in Makó, an industrial park is being developed in the Pécs area; and the completion of the M44 motorway in Békés brings “an entirely new dimension”.

Speaking on M1, Mr. István Joó also underlined that

Hungary remains one of the top investment destinations in Europe.

This is reflected in the award for the continent’s best investment promotion agency, which was recently presented to HIPA at the AIM Congress, a leading global investment forum held in Abu Dhabi.