21 November 2013, Tokyo
Good Afternoon, Ladies and Gentlemen,
First of all thank you for the kind invitation. When speaking about our economies, we must first of all be aware of the facts. Japan and Hungary may represent different sizes and different dimensions. But there are some issues which make us more significant from a business perspective than our size would suggest. We have a perfect geographic location in the very heart of Europe. This is very important in terms of logistics. Of course we don’t know exactly how it happened that after the collapse of the communist regime some Japanese businessmen decided not to neglect this region, but instead to come to Hungary. But I think the main reason could have been the geographic location of the country. May I just underline, I know that you deal with money: investment, business, percentages and that kind of thing, and emotion cannot compete with profit and figures in business. But for us Hungarians it is very important, may I say, an emotional commitment, that when Hungary was in real danger and in trouble after the collapse of the communist regime and the state-run economy, and prior to building a new and modern one, and we were in between the two – which is one of the greatest dangers of the whole process of transition – Japan was the country which did not forget about Hungary. Instead of complaining about Hungarian uncertainties – which were definitely there – they stood up for Hungary and always supported the development of the Hungarian economy and remained friends of the Hungarians at that very uncertain period.
Ladies and Gentlemen,
Despite logistics, what I would like to mention here is not just that kind of very logical circumstance which you probably should and could take into consideration when you think about doing business in Hungary. In the meantime let me stress that we have been living in Hungary for 1100 years since founding our state; it probably doesn’t mean a lot to a businessman and it is not comparable with the long-standing history of your Emperor and the dynasty, but you know, 1100 years is something, at least by European standards: living in the same place, having a permanent statehood. Ladies and Gentlemen, From a political and cultural point of view we can speak about a huge stability when mentioning Hungary. In this respect we do appreciate the civilisational achievements of Japan. We respect the long continuity of your Imperial family; we respect your history, your culture and your ability to maintain your statehood. The second issue that we probably should take in to consideration in addition to the well known facts about Hungary is the innovative mind of the Hungarian people. It would take too long to list all the inventions of the Hungarians. Let me list only three of them: the computer, the espresso coffee machine and the ball-point pen: not a bad list. All of them were invented by a Hungarian. The third issue we should probably take into consideration in contemplating doing business in Hungary is that Hungary is a member of the European Union and at the same time not a member of the Eurozone. We play an important role in Central European cooperation – this is one of the reasons why your Prime Minister invited me to come to Japan. Four Central European countries together, the so-called Visegrad Four, is a Central European organisation and Hungary is currently providing the presidency and leadership for this group. We play an important role in cooperation within Central European, which represents a market of 80 million people, equalling Germany in terms of territory and population. The fourth issue is that there are lot of questions we can raise about the future of Europe. You probably know all the discussion about the future of the Eurozone, how to keep it together, how to save it, and so on. But there is one thing that is unquestioned. There is no doubt and it is not a disputed point in Europe that Central Europe and Germany will be the growth engines of the continent in the upcoming decade.
Ladies and Gentlemen,
We feel strong sympathy towards Japanese economic policy. Not only in terms of substance – that is not the issue – but also with regard to approach. We believe that courage, creativity and innovative solutions are the basis for a successful economic policy, especially during a time of crisis. In Hungary we have chosen the strategy of looking upon the crisis as an opportunity, not as a challenge: we made decisions that have improved our competitiveness considerably, making it possible to attain our goal of becoming one of Europe’s centres of manufacturing. You are businessman, and I am sure you will understand that when the crisis broken out, the politicians had two choices about how to view the crisis. One emphasises the fact that the crisis will be the cause of many difficulties and considers the crisis as an absolutely bad thing, which is really challenging to the political leadership. The other perspective is to think about the crisis as an opportunity – because in politics many decisions are often postponed. But in a time of crisis, you cannot continue like that. Therefore, even in Europe there is another group of politicians, who say: “OK. It is not good news, we will suffer a lot, it will cause many difficulties, but at the same time it is an Opportunity; a unique chance to introduce all of the previously postponed reforms, changes and renewals”.
Ladies and Gentlemen,
Hungary belongs to the second group of countries. In our society the major systems have been profoundly reorganised, as a result of which we have created one of the most favourable business environments in Europe. Just let me mention some examples. We have introduced a 16% personal income tax rate. This new flat rate tax system – contrary to the former progressive one – helps those who want to work more and who employ more people. This tax system is the key to successful economic growth and this tax system played decisive role in achieving a surprisingly high growth rate this year within the Hungarian economy. This tax system is the background for the success our economic policy will register this year. At the same time, three years ago we introduced one of the lowest corporate income tax rates in Europe: 10% for small and medium enterprises and 19% for the major ones. We have worked out one of the most flexible Labour Codes in Europe. We have reduced the administrative duties of businesses, but I have to confess, it is not yet enough, there is still a lot to be done in the Hungarian economy. And finally: a new higher education and vocational training system has been adapted to meet the labour demand of the business sector. That is about the economy. But at the same time may I just recall that in the last three years – by profession I am a lawyer – we changed all four pillars which are the pillars of society in the modern world: We created a new Constitution, a new Penal Code, a new Civic Code, and a new Labour Code. We can say, that the country we call Hungary is, by structure, very much different from the country were three years ago. Ladies and Gentlemen! Time will tell and numbers will prove the worth of Hungary’s economic policy – we will see. But sticking to the facts: only a few EU member states have been able to meet the triple challenge of today’s Europe. I am sure you have read many comments in your papers about the difficulties we are experiencing, especially within the Eurozone, but throughout Europe. The challenges to all political leaderships are very similar and basically have a triple structure. The first is public debt, and how to reduce it. In three years we have reduced the level of public debt from 85% to 78% of GDP. By European comparison this is a rather good result. The second challenge everywhere is how to improve competitiveness. In the case of Hungary, we have improved our competitiveness: the volume of foreign investments has been tripled over a single year. By 2012, in terms of Euros, it reached 3.7 billion. And the third challenge everywhere in Europe is introducing reforms and renewal processes while maintaining social and political stability. Thanks to the two-thirds majority we received as the outcome of the last election, we were able to maintain social and political stability in Hungary parallel to the renewal of our society.
Ladies and Gentlemen,
A major role is being played in this success by Hungary’s new foreign policy and foreign trade strategy, referred to as the policy of ‘Opening to the East’. In contrast to European markets that are facing stagnation or even recession, we have managed to strengthen our positions in the markets of countries with the world’s highest growth rates. We have a clear plan of how to diversify our export structure. By 2018, we want one-third of our exports heading outside of Europe. We are very far from that at this moment (currently, exports to the EU constitute 76%, 12,1% to non-EU European countries:, and only 12% outside Europe). We would like to raise that 12 % up to 33 % by 2018. That is a clear commitment on behalf of the Government regarding cooperation with countries like yours. In the context of our “Opening to the East” policy, we aim to develop strategic alliances and cooperation with the most dynamically growing economies, including, of course, Japan. One of the largest and most dynamically growing economies in the world, Japan is regarded by Hungary as a crucial strategic partner and we are committed to expanding the relationships between our countries, with a view in particular to strengthening economic cooperation. I am accompanied by more than 60 Hungarian entrepreneurs and business persons, representing industries in which Hungarian knowledge, expertise, experience and references are up to the world’s highest standards. I hope they will find methods for cooperation here, especially in technologies, where we Hungarians have some knowledge which is competitive with the level of even the most developed countries. Territories such as: info-communication technologies, the food industry, the construction industry, machinery, water and waste management and agriculture. In addition to expanding foreign trade turnover we also aim to have an increasing number of investors from Japan settling in Hungary. I admit, as I just have mentioned, we are emotionally committed to Japanese investors and accordingly the total portfolio of Japanese foreign direct investment in Hungary has already reached a total sum of 3.5 billion Euros. That is a friendship. And the 134 enterprises concerned employ a total of nearly 23,500 people in Hungary. So, Japanese companies provide a living and a livelihood for 25,000 Hungarian families. Thank you very much for that. Ladies and Gentlemen, Japan is the largest Asian greenfield investor in Hungary and our second most significant trading partner in Asia. I am convinced that in modern times, contracts signed with companies are as important as inter-governmental agreements. The Hungarian Government is signing strategic cooperation agreements with large international companies who are active in Hungary and which contribute to the performance of our national economy in a significant way. I am happy to inform you that we have already signed this kind of cooperation agreement with three Japanese companies. Suzuki was our first investor from Japan and now covers nearly 2% of Hungarian exports; it assembled 156 thousand cars last year and celebrated the launch of a new model this year. So, in the minds of many Hungarians, Suzuki means Japan. We are very proud that that Mr. Suzuki is here and he has always been a great friend of Hungary. I would not like to reveal secret facts, but since I know him personally, may I just say that he travels all around the world and yet he takes the time to visit us every year on at least one occasion and provides us with the opportunity to discuss how things are going with the world economy. And he gives us good advice for free. That is very helpful, thank you very much. Bridgestone has just decided to expand its capacity in Hungary by an investment of 267 million Euros, creating more than 500 new jobs. Denso has executed investments equalling 500 million Euros in the last 15 years. Takata Corporation has just recently announced a new greenfield investment project at a value of close to 70 million Euros creating 1000 new jobs in a region, which is rather underdeveloped in Hungary. So the value of that investment, politically and socially speaking, is even higher. Ladies and Gentlemen, We very much hope that the ultimate success of these flagship companies will convince the Japanese business community to come and invest in Hungary and look for the opportunity to cooperate with Hungarian companies. I would just like to repeat and underline that whatever debates are ongoing about the future of the European Union, one point is absolutely agreed on by all the analysis-makers and businessmen, and that is the excellent perspective and future of the Central European countries. We invite all of you to come to Hungary. Welcome to Budapest!
Thank you for your kind attention.
(Prime Ministers Office)
