1. Hungary – the right place for your investment 14th November 2013

2. Introduction of HITA

3. Governmental agency for investment promotion and trade development Main activities: consultancy, mediation, providing information, around 500 programs yearly Headquarters in Budapest 150 employees Supervising body: Prime Minister’s Office Who we are

4. Investment Promotion One-stop services for foreign investors Supplier Services Enhancing business between foreign OEMs and Hungarian suppliers Trade Promotion Export development programs for Hungarian SMEs Our services

5. Domestic network  Central office: Budapest  15 regional offices outside Budapest covering the whole country Foreign network  61 foreign offices in 47 countries all over the world  74 trade and investment counsellors Offices in Hungary and abroad

6. Pre-decision Implementation Operations Tailored information packages on the economy, industrial sectors, incentives, business environment, supplier network Assistance in location search and evaluation Organisation of site visits and partner meetings Supplier search Providing information on permitting procedures Assistance in identifying incentives Intermediate Body for VIP cash incentive (preliminary information, application) Expansion assistance After care services Intermediary body between the government and the companies Supplier search Investment promotion

7. Business environment

8. Hungary Location: EU - a common market of more than 500 million people Ukraine, Russia and the Balkans - market of 210 million consumers Land: 93,030 km² Population: ~10 million GDP/capita, at PPP (2012): EUR 16,800/ USD 22,924 Source: Eurostat, OECD

9. Macroeconomic overview EU-member since 2004 GDP growth (2012): -1.8% Forecast (2013): +0.7% Export growth (2012): +2.0% Industrial production (2012): -1.7% Average gross wage (2012)*: €770.5 Unemployment rate (2012): 10.9% Inflation rate (2012): 5.7% Forecast (2013): 3.1% Government balance (2012): -1.9% Forecast (2013) : -2.7% (% of GDP) EU GDP External trade and industry Employment and wages Inflation Budget balance Source: National Bank of Hungary, HCSO, Convergence Programme of Hungary 2013-2016 * Exchange rate: 1 EUR = 289,42 HUF

10. Financial and fiscal stability Reducing public debt To raise the growth potential of the Hungarian economy To increase the level of labour market participation and employment Enhancing competitiveness Most important aims of Hungarian economic policy

11. New labour code (effective from 1 July 2012 ) in favour of employers New act on vocational training in favour of business needs Strategic agreements between the government and top investors Job Protection Action Plan – cutting contribution payable by employers for 5 prioritised employee groups Recent governmental measures for competitiveness

12. Competitive tax system Low corporate income tax: rate for the first HUF 500 million (~ USD 2.3 million) of the tax base is 10%; beyond HUF 500 million, it is 19% Flat personal income tax: 16% European countriesCorporate income tax France33.33% Spain30.00% Germany29.55% UK24.00% Greece26.00% Czech Republic19.00% Slovakia23.00% Poland19.00% Hungary10-19%

13. FDI in Hungary

14. Inward FDI stock Source: Eurostat, Hungarian National Bank, OECD Percentage of GDP (2012)

15. Inflow of foreign direct investment (2012) Source: UNCTAD (million USD)

16. 1055 BUDAPEST, HONVÉD UTCA 20. TELEFON: (+36) 1 872 6699 FAX: (+36) 1 872 6699 WWW.HITA.HU Main investment decisions in 2013 Coloplast, medical devices manufacturing OPEL, engine manufacturing ZF Lenksysteme, electric steering systems Hankook, tyre manufacturing Hewlett-Packard, IT Sauflon, contact lens manufacturing Procter & Gamble, personal care products manufacturing General Electric, establishment of an oil & gas branch Greif, shared service center Bridgestone, tyre manufacturing Jabil, electronics manufacturing Thai President Foods, instant noodle manufacturing Systemax, shared service centre Bosch, R&D facility

17. Chinese investments in Hungary: the success story of Huawei 2004 - the Hungarian office established Employs ca. 200 people 2011 - production of telecommunication devices for the EMEA Region (in contract manufacturing with Flextronics and Foxconn - employing indirectly ca. 900 people) 2012 - European logistics centre operated by DHL (supplying Europe, North Africa, the Middle East and Russia) 2013 - Strategic partnership agreement signed with the Hungarian government

18. Chinese investments in Hungary: the success story of ZTE 2005 – Hungarian office established Employs ca. 60 people Main activity: maintenance of telecommunication equipment 2010 - LTE technology infrastructure development for Telenor 2012 - network operation centre set up in Budapest to monitor telecommunication networks in the South-East European region 2013 – signing of MOU with government, establishment of European Mobile Phone Repair Centre

19. Focus sectors in investment promotion Shared Service Centres Booming sector with around 80 SSCs already operating in the country More than 30,000 employees involved Life sciences History of over 100 years in pharmaceutical manufacturing Approximately 250 research and educational institutes related to biotech Automotive industry One of Hungary's core industries, accounts for 20 per cent of total export Over 600 companies are present employing 100 000 people

20. Focus sectors in investment promotion (cont.) Electronics Hungary is the largest electronics producer in Central and Eastern Europe Significant footprint of prestigious electronics firms ICT Outstanding cooperation between educational institutions and companies Growing number of data centers Logistics Strategic position in the heart of the continent Highly developed transport infrastructure

21. Benefit from a good balance of quality and cost of labour

22. High quality education Well trained, creative and flexible human capital World-renowned academic and university background with cutting-edge competence International experience Extended cooperation with business sector Source: Statistical Yearbook of Education, 2011/2012

23. Competitive average wages Source: wiiw, Eurostat, national statistics

24. Take advantage of high-quality infrastructure

25. Excellent access to key markets At the cross roads of 4 main European transportation corridors Extensive road and railway transportation network Highly developed logistics and telecommunications infrastructure

26. Expanding motorway network Vienna, 1 hr Rotterdam, 12 hrs Prague, 5 hrs Munich, 6 hrs Hamburg, 8hrs Warsaw, 10 hrs Kyiv 12 hrs Zagreb, 1 hr Trieste, 6 hrs Koper, 6 hrs Bucharest, 10 hrs Constanza, 12 hrs

27. Road density km/km 2 Source: IMD, World Competitiveness Yearbook, 2012

28. Ready-made industrial sites Green- and brownfield investments Good access to highways Excellent infrastructure services Turnkey solutions New technology and logistical parks Warehousing Customs arrangements Forwarding Administration (authority permits) Financial services Legal consulting Extra services More than 210 industrial parks are available for manufacturing activity Nyíregyháza, IP Tatabánya, IP

29. Available incentives

30. * Preferred local governments are located in Northern Hungary, Great Hungarian Plain (North and South) and South Transdanubia. ** According to preferred and most preferred micro regions. *** Employment of min. 50 new students.

31. Free Enterprise Zones 903 communities provide several tax allowances for investors Development tax allowance Social contribution allowance Vocational training contribution allowance  Maximum 80% corporate tax relief for 10 years  Only HUF 100 million (EUR 0.33 million)* investment is needed  0% in the first two years of employment instead of 27%.  12.5% in the third year of employment instead of 27%.  0% in the first two years of employment instead of 1.5%. Note: calculations are based on 300 HUF/EUR rate

32. HITA Investment sites in Free Enterprise Zones Szécsény Tab Nyírbogdány Mezőcsát Mezőtúr Sarkad Tiszafüred Nyírbátor Mezőberény Mátészalka Tiszaföldvár Létavértes Mórahalom Tiszalök Bátonyterenye Kunszentmárton Alsózsolca Berettyóújfalu Fehérgyarmat Felsőzsolca Fényeslitke Kaposmérő Kistelek Kunhegyes Industrial Park Industrial Site Industrial Hall Csenger

33. Eligible expenditure Adjusted aid ceiling Up to EUR 50M 100 % of regional ceiling For part between EUR 50-100M 50 % of regional ceiling For part exceeding EUR 100M 34 % of regional ceiling Please note that the current incentive system is valid till end of 2013, however it is expected to be effective till 30 June 2014! Maximum aid intensity

34. Quality of life

35. International schools in Budapest British, American, German, French, Chinese, Japanese, Austrian etc. Private medical services Well-known across Europe Entertainment facilities Thermal baths, wellness, recreation centres throughout the country Public golf courses Rich cultural life Excellent food and wine Expats like Hungary

36. Thank you for your attention! Tibor Németh Head of Trade Department Embassy of Hungary Phone: +359 2 963 1135 E-mail: sofia@hita.hu