Opening to the east: state secretary Péter Szíjjártó and HITA boss Erzsebet Dobos.
Since the last change of government the Hungarian Investment and Trade Agency (HITA) has come ever closer to the centre of power. Founded to take over the tasks of the former investment agency ITD Hungary, which resided on Andrássy út, HITA originally reported directly to the National Economy Ministry and moved into its immediate vicinity, namely the magnificent mansion on the corner of District V’s Honvéd utca and Szalay utca, which the Dresdner Bank holding BKD Bank set up for itself in the 1990s.
HITA will remain in this building but from a purely organisational point of view the agency has moved closer to Parliament by becoming directly subordinate to the office of the prime minister, or more precisely to the state secretariat for foreign affairs and external economic relations led by Péter Szijjártó.
From deficit to trade
At a press conference Szijjártó explained the main reason for this reassignment. Now that the government has the problem of the budget deficit under control – “Hungary is one of the five European Union countries that managed to reduce their budget deficit, moreover to under two per cent” – implementation of the growth strategy will be the key task of the government, the state secretary said, with the “opening to the East” that the government has been pushing for some time playing a considerable role.
HITA is intended to play a considerable part in its implementation, which is a reason for the closer links to the government and its prime minister, Szijjártó said.
According to him, the stronger focus on new export markets is driven by the realisation that in the near future major growth impulses are not likely to emanate from the EU countries owing to the euro crisis, or at least not in the order of magnitude that some of the countries targeted in the “opening to the East” are capable of. Szijjártó named the countries of the Middle East and Far East, the Caucasus, the Commonwealth of Independent States and the Western Balkans as targets of the new strategy. There will also be greater focus on some South American and African countries (here the name of the new strategy is somewhat lacking).
Currently these massive country groups account for an almost negligible proportion of Hungarian exports. While around 76 per cent of exports go to EU countries, other European coutries and nations on other continents receive only about 12 per cent each.
Once non-European industrial countries such as USA, Canada and Australia are deducted from that 24 per cent, the countries that Hungary has set its sights on as part of the “opening to the East” carry minimal weight within exports. That is intended to change dramatically: according to Szijjártó the opening of these markets supported by the Hungarian state should lead to them accounting for a third of all exports within just five years.
In tandem with that the strong position of the EU countries is to be fostered and maintained, probably in absolute figures, including Hungary’s most important export market, Germany, which is currently the destination of a quarter of all exports.
Eyes east
Szijjártó is well aware of the complexity of the opening to the East, including the need for the political sphere and the economy to be well coordinated. That requires relevant meetings at the government level, the creation of joint committees and commercial establishments, as well as the creation of the relevant statutory conditions such as the passing of bilateral investment protection and taxation conventions, he said.
He announced specifically, for example, that Hungarian embassies are to be reopened in Chile and Nigeria and the existing consulate in Sao Paulo, Brazil, upgraded to a chief consulate. HITA will be involved in preparing the many upcoming visits and the continuous development of trade relations with the given countries, which is another reason for the closer links to the state leadership, the state secretary said.
HITA will also take on another important task as part of the opening to the East, namely increasing the contribution, which at the moment is not very significant, of Hungarian small- and medium-sized enterprises (SMEs) to total exports, Szijjártó said. While Hungarian SMEs employ 75 per cent of Hungarian employees, their share in exports is currently just 20 per cent, he said.
If the export performance of SMEs with a foreign background is deducted from that, then the value is just 12 per cent, he added. Although Szijjártó did not name a specific target, he made clear that the government would like to see a figure here that is significantly higher than currently, with the help not least of the relevant programmes and measures of HITA.
