In 2014-2020, 10 percent or some HUF 700bn of EU funding will be directly devoted to research and development, Minister of State Zoltán Cséfalvay said at the innovation conference of the Hungarian Chamber of Commerce and Industry in Budapest.

The Minister of State underlined that in the next seven years HUF 7300bn of combined EU funds and domestic co-financing will be made available of which 60 percent is projected to be allocated directly to economic development.

In the opinion of Zoltán Cséfalvay, after the financial consolidation has been completed, attention may now turn to development policy. In order to make progress, he stressed, it is necessary for domestic enterprises to join large global value chains at as many points as possible. It is also crucial to bolster research, development and innovation, he added.

Speaking about the utilization of funds the Minister of State said that in the next seven-year period there will be several changes. A line must be drawn between development projects of which the entire private sector can benefit and standard enterprise investment projects. Zoltán Cséfalvay explained that he believes two separate support systems must be set up.

In the coming period, he said, they intend to use various financial instruments, such as refundable loans, preferential loans, guarantees and the combined forms of these. Refundable loans will be made available beyond the aforementioned period, for quite a long time, the Minister of State said.  The Ministry expects that 10 percent of total funding will be channelled to enterprises in the form of financial instruments.

He reiterated that as of 1 January 2014 the National Development Agency will cease to operate and the managing authorities of operative programmes will be integrated into relevant ministries which change is expected to shorten and accelerate procedures.

He called it another key change that – in order to bring in line EU and domestic funds -- as of January the innovation fund will come under the competence of the Ministry for National Economy.

President of Hungarian Chamber of Commerce and Industry László Parragh in his speech said, among others, that the adequate allocation of EU funds requires a well-functioning institutional background, of which only a framework is currently visible, and a comprehensive programme of which no agreement has been reached with Brussels yet.

It is a crucial issue for enterprises how to make the best of EU funds in 2014-2020, especially as regarding innovation they are facing competitors such as Germany, France or other developed countries, he emphasised.

László Parragh said that only 13 percent of Hungarian SMEs engage in innovative activities, due among other factors to lack of resources and skilled labour force. In 2012, he added, the Hungarian Chamber of Commerce and Industry established a network for supporting innovation on the basis of a partnership concluded with the Ministry for National Economy.

(Ministry for National Economy)