WHY HUNGARY After the economic crises the Hungarian economy has recovered and reached 3.6% GDP growth in 2014, while 2.8% growth is estimated in 2015 and 2.2% forecasted for 2016. The main growth-supporting factors are still the infusion of EU-funds to programs to meet the specific challenges that the country is facing e.g. unemployment and opportunities between regions. Also, the unemployment has fallen significantly (7.1%) and is expected to continue decreasing, while inflation is forecasted to reach the bottom (0%) this year. Finnish companies’ interests towards the Hungarian market are stable. The Cleantech sector business opportunities with utilization of the EU-funds, the R&D potential in academic and private sectors (e.g. Horizon2020), as well as benefiting from the competitive and quality labor force offer subcontractor base in the manufacturing sector. Cleantech In general, the Finnish country brand is very strong and positive in Hungary and Finland is commonly used as a benchmark country related to Cleantech fields. The national Energy Strategy 2030 of Hungary was developed to ensure the long-term sustainability, security and economic competitiveness of the energy supply in Hungary. The five means to achieve the above goal include energy savings, increasing the share of renewable energy sources to the greatest possible level, safe nuclear energy and the electrification of transport on the basis of the former, creating a bipolar agriculture and integration to the European energy infrastructures. The Hungarian energy sector development will focus now on: Energy efficiency measures spanning the entire supply and consumption chain Increasing the share of low CO2-intensive electricity generation based primarily on renewable sources of energy Promoting renewable and alternative methods of heat generation Waste-to-energy Increasing the share of low CO2-emission modes of transport. The Energy Strategy envisages a half-dozen energy mix scenarios and proposes the Nuclear-Coal-Green scenario as recommended in the future. The increasing use of renewable energy sources could represent a genuine breakthrough for Hungary. By 2020 (RES target: 14.63%), gross renewable energy source usage will double compared to 2010 levels. The new feed-in tariff system (METÁR) is a more clear, stable and predictable regulatory system, and will aid the development of wind, PV, and other renewable energy forms in Hungary. The Hungarian District Heating sector is under a major structural reform developing a new heat market as well as integrating new, RES based heat and power generation. According to the new Waste Law, the solid recovered fuels (SRF) is considered as energy fuel which supports the waste-to-energy utilizations. The Mayor of Budapest announced recently the city’s commitment to build a new waste-to-energy power plant. The Paks Nuclear Power Plant is contributing to the Hungarian electricity market up to approximately 60-65% of total electricity demand. Since 2007, the Hungarian Electricity Co. (MVM) has been working on the strategic documents on extension of the operated blocks as well as additional new blocks. In 2009 the Hungarian Parliament approved the extension of Paks NPP and in 2012 the Hungarian government ranked Paks expansion as a high priority project of the national economy, and Paks II. The project company was established by MVM Group. In 2014, an agreement was signed by National Developmental Minister of Hungary and Rosatom for the expansion of Paks Nuclear Power Plant. 80% percent of the project’s cost will be financed with a EUR 10 billion credit line from Russia and minimum 1,000 MWe blocks to be considered with 20 years guarantee on fuel from Russia at the estimated investment cost of EUR 12.5 billion from which 40% should be from Hungarian subcontractors. Innovation National Research and Development and Innovation Strategy (2013–2020) defines innovation as an economic breakthrough point for Hungary. The Strategy is aiming to achieve the targeted 1.8% GERD/GDP ratio at the end of 2020 from the current level of 1.2%. In order to reach this goal, Hungary intends to spend significantly more resources - approx. EUR 2.3 billion in 2014-2020 directly on R&D and innovation through operational programs. The Strategy 2013-2020 has stated its main priorities to be: Facilitate +30 major R&D Units to be “born Global“ Hosting/strengthening +30 R&D Centers of multinational companies Assistance for +30 R&D driven SMEs on the regional level Coaching +300 small “gazelle” companies to enter the markets Financial support to + 1000 innovative start-ups Establishing local supply network around the R&D centers. Also, the major Hungarian universities are repositioning their R&D potentials, and in the framework of Knowledge Parks are looking for partners from academic life as well as the private sector. Major areas for cooperation could be joint R&D projects for multinational companies and cooperation in Horizon 2020 projects. Manufacturing The Hungarian manufacturing sector is playing a major role in the economy. The annual output of the mechanical engineering cluster is around EUR 9-10 billion and its share of total export is at the level of 10%. The automotive sector is one of Hungary’s leading industries and contributes with 20% of total exports. Around 700 companies - employing approximately 130 000 people - generated more than EUR 21 billion in revenue in 2014; roughly 93% of these products and services are exported. In 2014 over 2.4 million engines and 400 000 passenger cars were manufactured in Hungary. The number of TIER1 and TIER2 equipment manufacturers is continually rising: since the early 1990s several OEMs, such as Suzuki, Audi, General Motors and Daimler as well as 15 of the top 20 TIER1 suppliers have entered in Hungary. The competitive and skilled labor force is the key driving element in the Hungarian manufacturing sector. The newly introduced dual-educational system also serves the practical needs of companies and ensures the required labor force in their stable operation. Source: Finpro Hungary
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