Bombay (Mumbai), 18th October 2013.

Ladies and Gentlemen,

First of all may I just say thank you very much for the invitation, not just for the Prime Minister, but for the Hungarian delegation. Your Excellency, we appreciate that you have provided the opportunity to discuss some important issues between India and Hungary. First of all, we are all aware of differences in size – size of the territories and the population. Therefore, it would be appropriate to introduce Hungary a little bit here, but to explain a country in two minutes is almost impossible. May I just point out that Hungary is not just a good place but an important one: logistically one of the most important places in Europe. Therefore, Hungary was always has always been of importance not just to Hungarians, but also by the others who were interested in trade, or in making war. Hungarians were always important in a deeper sense throughout European history, and we like to say in Hungary that because the Hungarians are freedom-loving people and real freedom fighters, we produce more history than we can consume.

The second point which is probably worth knowing about Hungary is the language. Now we speak English of course, but when the Hungarians speak Hungarian, nobody else in the World can understand what they are talking about. So it is not a language, it is more of a secret code for Hungarians that generates the feeling that we belong to the same family. Our language is a very unique one, a very ancient one, and is closer to logic and mathematics than to the other languages. The logic and structure of the language generated a certain way of thinking which resulted in the Hungarians creating special inventions. We are characterized by that way of thinking, which resulted in just to mention for example: Hungarians invented the computer, the ballpoint pen, and the espresso coffee machine. It is not a bad composition. I think this summarises the Hungarian character rather well.

Ladies and Gentlemen,

At the same time I would like to be very clear, that Hungary belongs to the European Union and the European economy, which is suffering now. We are here to provide some views about what chances we have in the future, but if we would like to be honest with each other we have to start with the fact that Europe is still suffering a lot. The economic crisis in Europe is a consequence of the reorganisation and reshuffling of the World in many terms, such as economy, security, technology and so on. Some countries and nations are rising, like your nation your Excellency – India –, which is a global power in the making. And as usually in history, processes have not only winners, but sometimes also losers. And now the Europeans are the losers. The question is whether the Europeans are able to reform themselves and create a situation which is more win-win than it is today. That is a big question. I am regularly invited to the prime ministers' summit of the 28 countries of the European Union and we have many discussions about the future. And what I can say now to our Indian hosts is that Europe as such, does not have a clear idea at this moment about how to get out of the crisis.

But at the same time I would like to draw your attention to the fact that Europe has various regions. One of the regions within Europe is Central Europe. I would like to draw your attention to that fact. The European Union consists of approximately 500 million inhabitants. In Central Europe, from Poland down to the Adriatic, in Central Europe we have 80 million inhabitants. And this region has some special characteristics created by history, but what is more important is that this region, these countries – Hungary is part of that region – are over the crisis. We are beyond that. Because these countries, including Hungary, in the recent years have deeply reformed their economic structure, their welfare expenditures, have deeply reformed their bureaucracy, and therefore, that part of the European Union may now be considered as a competitive one again. When Hungarians try to convince you to come to Hungary, to cooperate with Hungary, we are at the same time trying to convince you to cooperate with Central Europe, because it makes sense from a business point of view.

You should know that the Central European countries, among them the Hungarians, consider the crisis as an opportunity. I am not a businessman, I am a politician. The most difficult part of my job is to convince the people to change something dramatically – because it is not part of the human character to change again and again. People tend to wish for more safe, secure and long-term arrangements. But sometimes, if you would like to maintain the competitiveness, you have to change even your personal strategy, even the strategy of your country, even the strategy of your economy. And the crisis is clear evidence to everybody, that unless you change your life you have no chance to become competitive in the future. The Central European countries and the Hungarians have done exactly that. We convinced our people that now we have to change our life strategy. It was not easy, in democracy everything is under discussion, we can’t avoid having a lot of disputes, but basically, three years ago the Hungarians voted to give the government a two-thirds majority. Hungary is a parliamentary democracy, so the legitimacy of the administration comes from Parliament, which means when you have a two-thirds majority in Parliament you have the strongest possible legitimacy for the administration. This administration, led by myself, decided to change the country dramatically. I am a lawyer by graduation, and to explain the extent of these changes, I’ll just mention that we created a new constitution, a new civic code, a new penal code and a new labour code. We basically changed every aspect of society.

You should know, Ladies and Gentlemen, that all politicians tend to say that what he is doing is good. It is quite natural. But in politics whether what you have done was right, is decided by time. I can’t say that our work means sure success for the future, but what I can say is that there are many signals which are promising and show that Hungary is getting out of trouble and is creating a good prospective for itself.

I would like to mention some facts which can prove that. First of all we introduced a flat rate tax system on income – a 16 % flat rate income tax system on a family basis, which means that those who raise children enjoy some priorities. We introduced the lowest corporate tax rate in Europe for the small and middle sized companies, which mean 10 %, and for the major companies it is 19 %. The labour code is probably the most flexible in the European Union. We are trying to reduce the bureaucratic burden – it is very difficult, bureaucrats don’t like the idea, but we are trying – and I think the bureaucratic background of Hungary is better than it was, but we still have lot to do.  We transformed the vocational and higher education systems at the same time, which are now more appropriate, more adjustable to business than previously. As a consequence of all this I can now say that we have reduced the public debt level from 85 % – the debt of the state, I mean – down to 77%. This is very rare. The major challenge for the European Union countries is that state indebtedness is out of control. There are only 5 countries out of the 28 in the European Union who were able to reduce it. And Hungary is one of them. In the new constitution we have a ceiling for debt, which means that the indebtedness of the state cannot exceed a certain level. In the constitution it says 50%. We are far above that, so we must continue to reduce debt year by year. And we have a regulation in the constitution that says that Parliament cannot adopt a budget act that creates new debt for the country. It is very severe and strict. On the other hand I would like to mention that in 2012 foreign direct investments reached some 3.2 billion euros. At the same time in Hungary we were able to maintain political and social stability – which is a real challenge all over Europe. I think the facts are rather in favour of the decisions we made, and all in all we can say that all our decisions could generate a good prospective for the business community, the foreign and domestic business community at the same time.

May I just say a few words about why we are here? Probably you understand that in the last 20 years the main target for Hungarian business was to join the European Union. Hungary was occupied by the Soviet Union and when this communist regime collapsed 23 years ago the question was how we can reorientate the country. We joined NATO and we joined the European Union. As a consequence of that understandable process, the export structure of the Hungarian economy is unbalanced at this moment. We are an export-driven economy; more than 80-85 % of the GDP is generated by exports. We are an open country ready for cooperation. But at the same time more than 80 % of our exports go exclusively to the European Union countries. Which is very good when everything is going well in the European Union, but when we are in crisis, it is very unbalanced and unfavourable for us. Therefore, we decided to rebalance our relations. It is obvious that we should try to forge new relations in countries that are just emerging, and India is one of those countries. We decided to intensify our relationship with countries like India, and we created a strategy called “Opening to the East”; 12% of our exports currently go outside the European Union, and by 2018 we will raise this level to 23%, which is a great reshuffling of the structure of our exports. We have established a joint economic commission with the Indian business community and with the Indian government, and we also discussed all questions related to joint economic activity with your Prime Minister yesterday.

Just as a reaction to the introductory remarks of your President today, the direct flight service was mentioned at the negotiation of the two prime ministers, and we agreed that it is a must to establish that kind of direct flight, because otherwise the distance would make it almost impossible to intensify our relations.

I would like to inform you that because Hungarians think that business requires a solid basis in human relationships, we made an offer to the Indian government to open 200 state scholarships for Indian students in Hungary and the Prime Minister mentioned that they are ready to do the same thing here in India. I think we can also intensify our relationship at a student level. Finally, I should make some remarks on what kind of areas we think the Indian and Hungarian business community can cooperate in best. This visit is not just a polite, diplomatic visit. It is more than that; that is the reason why I am accompanied by 70 Hungarian business leaders representing their own companies.

Dear Chairman,

I think there are some territories in which Hungarian capacity in minds and in economic and financial real terms are quite stable and suitable for cooperation. First, I would like to mention the automotive industry, where we are highly regarded within the European Union. Generally speaking engineering is an area that has scope for cooperation; traditionally the Hungarians, because of their technical background, are remarkably good at engineering. The construction industry: we have some companies which are also competitive outside the country. The energy sector: even under the Soviet Union, when there was a sharing of labour within the communist camp, that area was always delegated to the Hungarians, meaning that regardless of the dictatorship, our knowledge, know-how and education on the energy sector always has been and is still very strong. And we have some good companies which are quite successful not just in Hungary, but all around the region. There are good opportunities for partnership.

There is one area which could be important to India in the future if I perceived well how life is going in India, and this is water and water management. We have some excellent professionals in that field. Good companies, good engineers, and water as such is also a very important topic in Hungarian politics. Just recently we organised a global conference under the umbrella of the United Nations, to discuss the future of water. The Secretary General was there and all the international experts. Water and water management is something we can draw your attention to. Agriculture is traditionally very strong in Hungary. If you have a look at just the prime figures, you will find in the statistics that agriculture contributes only 5% to the GDP. But if you take into consideration agriculture as an entire vertical system – the figure is almost 20 %. It is a very considerable part of our economy. Info-communication technologies, biotechnology and pharmaceutical technologies are equally important. Hungary has a very diverse background of export. You probably know that approximately 25% of our GDP is created in the high-tech area of our economy.

Ladies and Gentlemen,

Another point that I think it is reasonable to mention here is that you already have some investors in Hungary. And we are proud of it. You have some flagships. The Indian foreign direct investment in Hungary is now somewhere in the region of 1.5 billion US dollars, and Indian companies employ a total of nearly 9000 people in Hungary. The operation of Indian enterprises in Hungary is highly appreciated. The Hungarian government has a system to conclude so-called strategic cooperation agreements with certain, not all, but certain multinational companies, especially with those companies who we think could remain with us for a longer term. Not just come and then leave, but rather to stay for several years. It is not more than 30-35 companies. And among them there are two Indian companies already, which means that at least two companies would like to cooperate with the Hungarians on Hungarian soil for the long term. These are TATA Consultancy Services and CG Electric, which is a manufacturer of high voltage equipment.

Ladies and Gentlemen,

This is the situation we are in today. I must mention that the Hungarian delegation was welcomed and received at the highest possible level. Your President was so kind as to welcome us, the speaker of the house also. Some party leaders as well, and the Prime Minister. And we had a long and intensive negotiation, so what a politician can do has been done. But it is not enough, you know. Politicians can run the country, we like to think that. But this is not the case. You as a business community know far better that a country is run by business, by economy, by everyday activity. What the politicians can do is only to open the gates and provide opportunities. I think the Indian and the Hungarian governments have done their best. Now, it is your turn to utilise all the opportunities available.

Thank you very much for your attention.

(Prime Minister’s Office)