Synopsis "Hungary: Investment Climate Statement 2015"
Hungary maintains an open economy and attracting foreign direct investment (FDI) remains important for the Hungarian government. The Hungarian government established the Hungarian Trade and Investment Agency (HITA) on January 1, 2011 to encourage foreign companies to invest in Hungary, facilitate bilateral trade, and support the activity of Hungarian small and medium sized enterprises (SMEs). In 2014, HITA was split into the Hungarian Investment Promotion Agency (HIPA), which encourages and supports inbound FDI, and the Hungarian Trading House, which promotes Hungarian exports abroad. Both HIPA and the Trading House were placed under the authority of the newly renamed Ministry of Foreign Affairs and Trade. Hungary had been a leading destination for FDI in Central and Eastern Europe, and FDI inflows reached a 2005 peak of USD 7.7 billion. FDI inflows in 2008 reached USD 6.96 billion, although the pace of inflows has particularly slowed since the 2008 global financial crisis and Hungary's relative advantage compared to regional competitors has diminished. In 2010, FDI had dropped to USD 1.97 billion as companies became more cautious about committing to large investments. Hungary showed some signs of FDI growth, with FDI reaching USD 4.62 billion and USD 4.01 billion in 2013 and 2014 respectively, although this marked inflow of FDI was largely composed of reinvestment of profits by existing investors and recapitalization of banks which sustained losses - few new investors entered the market. As a block, the EU accounted for 77 percent of all FDI stock in Hungary, with Germany standing as the most significant country of origin accounting for 24 percent of Hungary's FDI stock in 2013 and 22 percent of all FDI inflow in 2014. In 2014, the Netherlands accounted for 59 percent of all inbound FDI, with Germany as the second most important source. The United States is the largest non-European investor, holding 4 percent of FDI. There are approximately 200 companies in Hungary of U.S. origin, although the figure is closer to 800 if representation offices, sales offices, and sole proprietorships owned by U.S. citizens are considered. FDI stock in Hungary, as reported by the Hungarian National Bank, amounted to USD 105 billion as of the end of 2014 with a majority of the investing falling within automotive, software development and life sciences sectors.
