The Hungarian Investment and Trade Development Agency - ITD Hungary – Eszter Rumbold-Molnár Deputy-Director/Commercial Secretary ITDH Brussels Office/Hungarian Embassy Commercial Section

ITD HUNGARY Central Agency for Investment and Trade Promotion Founded: 1993 September (Predecessor: Investcenter 1988) Owners: Ministry of Economy and Transport, Ministry of Foreign Affairs Form: incorporated non-profit company

ITD Hungary’s Main Functions Background: Hungary’s high exposure to international trade (total foreign trade abt. 130% of GDP; total FDI abt. 50% of GDP, GDP abt. 60 bn EUR) - foreign business of paramount importance ITDH’s Main Functions: Investment Promotion Trade Development EU Integration Assistance

ITDH Network Headquarters: Budapest SLOVAKIA Salgótarján Miskolc UKRAINE ITDH Network Eger Debrecen AUSTRIA Győr Budapest Veszprém Tatabánya Békéscsaba Kecskemét ROMANIA SLOVENIA Zalaegerszeg Szeged Kaposvár Szekszárd SERBIA and MONTENEGRO Headquarters: Budapest Nation-wide network: 14 Regional Offices World-wide network: 35 Foreign Offices in 29 countries 10 Representative Offices in neighbouring countries CROATIA

ITDH Services Offered (1) Information and Advisory Service on Investments and Trade Business Events Conferences, Fairs, Exhibitions, Business Network Meetings Databases: companies, investment opportunities, industrial parks ITDH Euro Info Centre (EIC) in Budapest Publications: country and sector analyses, trade information, legal circumstances

ITDH Services Offered (2) Information and Advisory Service for Investors: - macroeconomic, financial and legal environment - assistance in locating investments, finding business partners and sites (local governments, industrial parks) - available support schemes (SMART Hungary, Europa, special schemes for SMEs) - liaisoning with lawyers, accountants, HR experts, financial institutions, central and local authorities assistance in licencing procedures

ITDH Services Offered (3) Information and Advisory Services for Trade Partners: - trade, customs and foreign exchange regulations - market and trade opportunities and potential partners - assistance in locating outsourcing opportunities, potential suppliers and subcontractors

ITDH – Facts and figures in 2002 ITDH was directly involved in projects leading to foreign direct investments worth abt. EURO 302 million, creating appr. 5 861 new jobs ITDH organised 368 professional programs (128 investment promotion, 240 trade development) Export products of 1000 Hungarian companies were displayed at 122 exhibitions in foreign countries

FDI to Hungary with assistance of ITDH

ITDH Brussels office Responsible for Luxemburg-Hungary commercial relations, together with the Hungarian Embassy and our Honorary Consul in Luxemburg, and the Belgium/Luxemburg-Hungary Chamber of Commerce Database available on concrete business partner requests from Hungary Business partner search service through our internet site: www.business2hungary.be Our event in Luxemburg, in December 2003: Conference on Hungarian Capital market and investment

SMART HUNGARY New, quality oriented investment promotion policy of Hungary Selective stimuli for FDI (high level of FDI achieved – shift from quantitative to qualitative growth) Total compliance with EU rules, regulations and standards

Strategic Goals of SMART Hungary to support 'old' investors' businesses and reinvestments to foster higher value added R&D, innovative, manufacturing and service-oriented investments to promote Hungary's regional role (regional centres) to pull up less-developed regions to stimulate reliance on local suppliers to improve ecological awareness

Concept of Incentives FDI incentives brought in line with EU rules: - most of old tax incentives abolished by 31.12.2002, - new grant schemes introduced from 01.01.2003. Level of support based on “investment intensity”: tax allowances+grants+other incentives total cost of investment Intensity ratio set for each region and industrial sector.

Major Incentives – Tax-Related Corporate tax: 18% Tax on dividends withdrawn or transferred abroad: 20% Tax benefits from 2003: - development tax benefit - tax-free investment reserve (deferred tax) - tax allowance for corporate R&D, innovations - tax benefits for training and retraining - tax rate reductions (personal income tax, healthcare)

Major Incentives – Direct (1) Available for companies registered in Hungary Strictly regulated rules of application Support depend on - industry sector - number of employees - invested amount

Major Incentives – Direct (2) Expansion of competitive investments (high quality, high value added industries, infrastructure, training, IT, environment awareness) Establishment of regional centres (regional corporate and strategic service centres) R&D, innovation (knowledge based centers and industries, industrial parks, incubation houses)

Role of ITDH One-stop-shop for foreign investors Separate department deals with large investors (individual support packages) EU Structural Funds implementation – intermediary body

ITD Hungary – headquarters H-1061 Budapest, Andrássy avenue 12 ITD Hungary – headquarters H-1061 Budapest, Andrássy avenue 12. Tel: +36 1 472 8100 Fax: +36 1 472 8101 E-mail: info@itd.hu http://www.business2hungary.com ITD Hungary – Brussels office B-1061 Brussels, rue Mignot Delstanche 57. Tel: +32 2 343 5044 Fax: +32 2 344 5415 E-mail: itdbrussels@skynet.be http://www.business2hungary.be