Belgian Investors Punching Above Their Weight

Sometimes overshadowed by issues related to the European Union due to the bloc’s heavyweight presence in Brussels, bilateral relations between Belgium and Hungary are thriving, especially in the field of economic cooperation. The interest of Belgian businesses in Hungary as an investment destination continues unabated with representatives of technological and future-oriented companies increasingly drawn to the country, Ambassador Siegfried Peinen says.

“One of the pleasant surprises I have come across since my arrival to Hungary is the strength of economic relations between the two countries and the fact that I see continued interest on the part of Belgian companies in Hungary,” Belgian Ambassador to Hungary Siegfried Peinen, who took up his position in the Hungarian capital in August, tells Diplomacy&Trade in an exclusive interview. The diplomat, who first visited Hungary in 1988 as a tourist, is still in the process of building up his professional network and paying courtesy visits.

Stellar figures
Known to the general public primarily for its beer and chocolate products as well as banking and insurance services, Belgium’s presence in the Hungarian economy is in fact a lot more multifaceted. It is no wonder, however, that people associate Belgium with beer production. The country boasts a stunning 261 breweries, 1,500 trademarks, 50,000 direct and indirect jobs in the brewing sector and the inclusion on the UNESCO Intangible Cultural Heritage of Humanity list. The country was the largest exporter of beer globally in 2017 with Belgian brewers snatching first place from the Germans.
Belgian companies with a presence in Hungary represent the traditional sectors that form the basis of Belgium’s valiant economy. The drivers of growth in bilateral trade and investments are mainly chemicals, transport equipment, machinery as well as the agriculture and food sectors. The country’s hallmark investment in Hungary is K&H Bank, a fully owned subsidiary of KBC Bank N.V. of Belgium. In line with KBC’s strategy of establishing significant, and often leading, positions in its core home markets in Belgium and Central Eastern Europe, K&H is Hungary’s second biggest lender in terms of total assets.
“Even though both our countries are relatively small in size, in terms of FDI, Belgium has been punching above its weight and is consistently among the top 10 largest investors in Hungary,” the Ambassador notes, adding that the total volume of FDI inflows from his country stood at EUR 1,822 billion at the end of 2018. The volume of bilateral trade is already high, and it has been increasing at an above average rate in recent years. The total trade volume exceeded EUR 5 billion last year, with roughly EUR 2.7 billion in Belgian exports and about EUR 2.4 billion in Hungarian exports to Belgium. The average rate of annual export growth from other EU countries to Hungary was around 6% in 2018 while from Belgium it was more than 20%. “Of course, this doesn’t mean that such rapid expansion takes place every year, but it nevertheless mirrors the general direction of trade relations. The trend has remained favorable this year with volumes continuing to increase,” Siegfried Peinen says.

Investor interest unabated
Hungary’s location at the crossroads of eastern and western as well as northern and
southern economic routes in Europe renders the country especially important for Belgian ports, which are among the largest in Europe.
They are increasingly looking at Hungary when improving their logistics network and further developing their strategy of diverting more of their transports to railways, according to the Ambassador. A case in point is Antwerp, the second busiest European port, which is now linked with a direct train line to the city of Louvain as an alternative to road transport. The ‘beer train’ connects the port to the facilities of AB InBev, which transports millions of hectoliters of beer to Antwerp. The new train, which will operate from 2020, can carry 47 containers and the resulting reduction in CO2 emissions is estimated to reach 75%. As a sign of our times, environmentally friendly and smart investments are gaining ground in economic relations between the two countries.
“As of late, a number of Belgian companies from the green and smart technology sectors have also expressed interest in Hungary. Only recently I was in touch with a Belgian company specializing in brownfield development and investment that was interested in Hungary. Belgium has a long track record in the area of cleaning up contaminated soil and later developing real estate projects on these plots,” Siegfried Peinen notes. In late November, the BelgaBiz business club organized an Innovative Mobility conference as part of its “Plug-In to the Future” event series, with panelists including representatives of Belgium’s CenEnergy.

Committed to raising awareness
The Ambassador notes that on the political level, relations between Hungary and
Belgium are mostly focused on issues related to the EU. “Generally speaking, bilateral political relations are good, but, of course, as ambassador, my job is to make these relations even better. We don’t have any specific bilateral issues; most of the subject matters we discuss are related to EU dossiers.
On some of these dossiers our views are the same, on others, we have divergent opinions, but this is only normal in a club with 28 members,” Siegfried Peinen says.
One of the diplomat’s key ambitions is to develop local awareness of Belgium in order to stimulate tourism. Although, Belgium is rather well known to Hungarians, additional information and fun facts about the country, such as those featured on the comprehensive and informative focusonbelgium.be website, could help raise interest in it as a tourist destination, he says.
“Given the disappearance of frontiers within the Schengen area in Europe it is increasingly difficult to calculate exact visitor numbers, but anecdotal evidence shows that the number of Belgians coming to Hungary is on the rise," Siegfried Peinen notes.