Message from Ambassadors

Hungary:
The new growth engine of the EU,
Japan’s long-established partner
Norbert PALANOVICS, MSc, PhD
Ambassador of Hungary to Japan
Hungary is a bustling business hub located in
the heart of Europe with the lowest corporate
tax in the continent. The country was recently
named as the best country for investment in
the Eastern Europe & Central Asia region bySite Selection, one of the most popular US
magazines on investment. Hungary alsoachieved No. 1 ranking for investment volumeper capita.

further expansion, getting the necessary labour force or
local regulations and administration. Recently, the Site
Selection Magazine also named HIPA as the regions’best investment supporting organization. Until now theHungarian government has signed more than 70 strategic
partnership agreements, among them with 7 Japanesecompanies.

The country’s GDP growth rate has been around 4% forthree consecutive years. As a European Union member,companies investing or doing business in the country
have access to the EU market of 500 million people. 45of the world’s 80 largest multinationals have either
established long-term presence or have their SME
suppliers here. Hungary is an open economy whereparticular emphasis is placed on promoting foreign
investment. The inward FDI stock in 2015 was 70% of
Hungary’s GDP. Partnership with potential investors
receives the outmost priority. The Hungarian Investment
Promotion Agency (HIPA) supports companies evenafter they settled in the country, whether it is about

To further promote investments in Hungary, thegovernment has introduced a number of schemes. A new
incentive scheme has been launched to support techintensive investments. Furthermore, a few key changes
have been introduced to the tax system. The emphasis has
been shifted from income-type taxes to consumptiontype taxes. The corporate tax rate has been lowered to aflat 9%, the lowest in the EU. The flat personal incometax system was generally introduced in 2013 as a low-ratefamily friendly system, where the costs of raising children
are taken into account (family tax credit from the personal
income tax). On 1 January 2016, the tax rate was reduced
to 15%. There is also a gradual reduction of the tax burden

Inviting incentives and non-impeding tax system

Norbert Palanovics was appointed Ambassador of Hungary to Japan in 2016.
He was born in Pécs, South Hungary. He first arrived in Japan in 2002, whenhe spent one year at Kansai Gaidai University in Osaka, majoring Asian Studies.
After finishing his Master’s degree in business studies in Hungary, he went toMexico to lecture at a private university, then returned to Japan to commence
his doctorate studies at Nagoya University. While researching for his PhD
degree, he worked as a Japan correspondent for a Hungarian newspaper andfor a Hungarian business weekly. His PhD thesis about Japan’s peacebuildingbased ODA diplomacy was successfully defended in 2008. He publishedseveral articles and book chapters based on his research.
In 2008, he set up the Tokyo representative office for Hungary’s largest andmost prestigious food company, Pick Szeged Co, and successfully introduced
Hungary’s special edible national treasure, the Mangalica to the consumers inAsia. He was appointed Ambassador of Hungary to Japan in 2016.
Ambassador Palanovics speaks Japanese, English, Spanish, German and Hungarian. His hobbies include foodculture, movies, sports, traveling, exploring and understanding new cultures.

262018.9

related to employment. For this purpose, in 2017 thesocial contribution tax was lowered by 5 percentage
points to 22%. From 2018, a further 2.5 percentage points
reduction has been implemented.

Innovation, technology and education
Currently, 157 Japanese companies are active in Hungary,employing about thirty-four thousand people. The mostrecent investor in the country is GS Yuasa that chose thecity of Miskolc for their new lithium-ion battery factory.
Hungary was not only a top candidate country for GS
Yuasa for its highly developed infrastructure andfavorable tax system, but also due to the country’s longterm investment in new and innovative technologies. The
government has launched a major re-industrialization
blueprint, the Irinyi Plan. Under the Plan, Hungary is tobecome one of the EU countries with the most developed
industrial sectors by 2020. Hungary is shifting towards
an innovation-focused economy supported by researchand development and tertiary and vocational education.
For example, the University of Óbuda launched theirdual programme with Denso Hungary in 2017. Denso
already employs more than 5000 people in Hungary, andthey see the future in the practical education of young
professionals. Additionally, the Ányos Jedlik e-mobility
plan is creating an umbrella organization including
automotive companies, energy utilities, universities,
research institutions, NGOs, municipalities to achieve ahigh level of electric mobility.
A yet unexplored area by Japanese investors in Hungary
is the ICT sector. The share of ICT spending as part of
GDP has increased to 4.3% in 2016. In addition to that,the Hungarian IT outsourcing market is by far the mostadvanced in the Central European region. The outsourcing
services primary market in Hungary totaled 213 million
euros worth in 2016. Just to name a few, Hungary has
welcomed companies like HP, IBM, Oracle, SAP, Unisys
to launch their IT support centres in the country. Hungaryis also an ideal location for R&D centres thanks to thelarge pool of local professionals. Among many others,prominent companies such as Accenture, Blackrock,Morgan Stanley, Huawei Technologies, GE have chosen
Hungary for their solutions, methodology and application
development centres.

Hungary amounting to 4 billion euros. When it comes totrade, Japan is our largest buyer of agricultural and foodproducts in the Asia region. I sincerely hope that Japanese
investors and partners will see more opportunities inHungary on top of the countless success stories Japanesefirms have already achieved with us.

The ceremony of laying the foundation stone of the new GS Yuasa
factory in Miskolc with Minister of Foreign Affairs and Trade, Mr.
Péter Szijjártó and GS Yuasa President Mr. Murao Osamu inMarch 2018

Hungary’s Prime Minister Mr. Viktor Orbán and the Chairman ofSuzuki Corp. Mr. Osamu Suzuki in Hungary in 2015 with theSuzuki Vitara (Escudo in Japan), manufactured in Hungary

Promising future outlook
With the 150th anniversary of diplomatic relations
between Japan and Hungary coming up in 2019, we seethat there are many reasons to celebrate. Japan is ourbiggest investor from Asia, with Japanese investment in

Minister of Foreign Affairs and Trade, Mr. Péter Szijjártó signs thestrategic partnership agreement with Denso President Shinsuke
Yamaguchi in 20132018.927