The Hungarian ICT sector and the role of the Hungarian Chamber of

Commerce and Industry

Ms. Maria StarkInternational DirectorHungarian Chamber of Commerce and Industry

E-Government Final Seminar

Naples, 12 June 2008

I. Current situation of the Hungarian

economy

II. Hungarian IT sector

III. The Hungarian Chamber of Commerce and

Industry

Hungary in the heart of Europe

GDP per capita 2007 estimate US $ 20,700

Characteristics of Hungary

In the heart of Europe the country traditionally bridges East and West, North and South

Foreign investment of 55 billion EUR, presence of the biggest multinational companies, around 30.000 foreign companies

Business friendly legal environment, qualified and motivated labour force

GDP structure: agriculture: 3.3%; industry: 32.5%; services: 64.2%

Member of the NATO (1999) and the European Union (2004) → Access to the Internal Market of 490 million people without restrictions of quantity and customs, EU grants

Macroeconomic Growth

2002 2003 2004 2005 2006

Gross domestic product (%) 3.5 3.4 4.6 4.1 3.9

Industrial production (%) 2.8 6.4 7.4 7.3 10.1

Exports (% - volume) 5.9 9.1 18.4 10.8 16.8

Imports (% - volume) 5.1 10.1 15.2 5.3 13.0

Consumer prices (%) 5.3 4.7 6.8 3.6 3.9

Balance of foreign trade -3.4 -4.2 -3.9 -2.8 -2.2

Current account balance -5.0 -6.4 -7.1 -5.1 -6.5

Unemployment rate 5.9 5.8 6.1 7.2 7.5

2007

1.3

8.1

16.2

12.2

8.0

-4.0

-5.0

7.5

Foreign investments by sectors

Source: Ministry of Economy and Transport

Processing industry 60% Trade and repairs

16%

Others 14%

Property and economic services

8%

Electric power, gas and steam power

supply 1%Freightage, storage, post and

telecommunication 1%

Hungarian Foreign Trade

Restructuring in the 1990’s, Hungary as an open economy

Continuously increasing value/volume of the Hungarian foreign trade

More than 80% of all Hungarian exports are directed to the EU

Export (2007): 58 374 M EURImport (2007): 60 339 M EURForeign trade balance (2007): -1,965 M EUR

Foreign trade is dominated by industrial products

There are no major changes respecting our foreign trade after joining the EU

ICT in Hungary

Hungary: land of creativity, information & communications technologyOne of the main areas of innovation and economic growthMany IT companies begun relocating R&D activities here /HP-Compaq, Nokia, Siemens, Ericsson and SAP/

Characteristics of the Hungarian ICT sector

Strong growth in the past couple of years2003-2007: annual growth rate in Hungary – 6,5 % /in the EU – 2,6%/Hungarian ICT market represents 15% of the CEE totalTotal sales in 2007 EUR 6.4 billion – 36% higher than in 2002ICT expenditures grew at 12% in the period 2002-2005

Growth of the ICT market in Hungary2002-2007

 Source: EITO, 2007 Total sales (in billion EUR) % growth

  2002 2003 2004 2005 2006 2007 2003 2004 2005 2006 2007

Total IT 1,5 1,6 1,8 1,9 2,1 2,2 13,1 16,8 7,4 5,6 7,2

Total telecoms 3,2 3,5 3,7 3,9 4,1 4,2 10 5,7 5 5,2 3,9

Total ICT 4,7 5,2 5,5 5,8 6,1 6,4 10,5 6 5,8 5,4 5

Main drivers of the market growth

significant investment by SMEsfast growing software marketgrowing FDIregional demand for outsourcing services

Hungarian ICT market by sub-sector

carrier services 59%computer hardware 12%IT services 11%software 7%datacom and network equipment 4 %end-user communication equipment 4 %office equipment 1 %

IT export

Export revenue of IT companies: 8,756 million EUR (2006)

- 36,5 % IT activity- 63,5 % other activities - /manufacture of

electronic components, mobile phones and telecommunications equipment/

Hungary as an investment venue

Favourable Policy Environment for the ICT Industry

The Hungarian Information Society Strategy was approved in 2003

The National Development Plan II, 2007-2013, has earmarked 3% of EU funds (EUR 790 million) for the development of the ICT sector

10% tax deduction on software developer’s labour costs

New Hungary Development Plan (2007-2013)

15 Operational Programmes7 years - 7000 billion HUF Electronic Administration Operational Programme

Amount: 1,43 % of the support fundOverall objective: improve the performance of public

administrationPriorities: 1. Renewal of the internal procedures of public

administration and its services2. Infrastructural developments aimed at improving

access to public services3. Preferential developments as well as4. Technical assistance both for the Convergence and

Regional Competitiveness and Employment Objectives

The Hungarian Chamber of Commerce and IndustryNational organization of 23 regional chambers of commerce

and industry

The chamber represents the whole Hungarian economy: micro, handicraft, small, medium, big and also multinational companies

40 thousand voluntary member companiesLegitimacy

The members of the voluntary chamber are the most conscious enterprises

Proportional representation of 2/3 of the GDP

More than 500 employees

95 regional offices covering the whole country

The network of the Hungarian Chamber of Commerce and Industry

Services offered by the Hungarian Chamber of Commerce and Industry

Lobbying in economic policy issues, representation of entrepreneurs’ interests

Promoting the creation of favourable entrepreneurial environment

Defending business ethics (codex of ethics, Conciliatory Bodies in consumer protection disputes)

Services offered by the HCCI I. EU

Sector specific information booklets

Information sessions, trainings

Euro Information Centers in 6 chamber offices

Counseling on EU funds and application forms

Creation of quality standards for tender advisors, pool of qualified advisors

Széchenyi Card System-financial support for SMEs

Services offered by the HCCI II. Business development

Matchmaking, partner research

Organization of business meetings

Transfer of Business offers, business information

Organization of conferences, seminars

Issuing trade documents (Certificate of Origin, ATA Carnet)

Internet portal, newsletters

Services offered by the HCCI III. Participation in Vocational

Training

Elaboration of the curriculum and examination requirements for the training of 16 professions – affects 40% of the total number of apprentices, in total 25 thousand pupils

Definition of quality requirements for the exams on master level, setting up examination board

Mediation between apprentices, schools and workshops

International Relations

Member of EUROCHAMBRES since 1990

Central European Chamber of Commerce Initiative (CECCI)

Priority membership in ICC Hungary

Bilateral cooperation agreement with 58 countries’ national chambers

The ICT Strategy of the HCCI

Enhanced involvement of Hungarian companies into the information societyClose cooperation in this respect with the governmental institutionsBy acquiring public tasks joining the e-governmental network

Means of the ICT Strategy

Development of one-stop-shop, on-line support in the field of business servicesProviding interconnection between partner institutions (clusters, research institutions, bilateral chambers, etc.)Promoting e-commerce and B2B on-line services, developing data basesEstablishing quality assurance systems

Thank you for your kind attention!