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For a stronger Hungary in a stronger Europe

Sándor Laczkó
October 20, 2015

The Hungarian European Business Council (HEBC) has published its annual report of recommendations for the Hungarian government. HEBC’s annual country reports contain the members’ non-political, practice-oriented experiences as investors.

The title ‘For a stronger
Hungary in a stronger Europe’ expresses the overall goal to which members wish
to contribute with their proposals. The report examines all issues from the
angle of the impending new industrial revolution. The fourth industrial
revolution projects the prospect of billions of devices connected in a network,
the advance of robot technology, smart production and a new level of
automation.

HEBC considers it an important
governmental task that Hungary prepare in time for the expected industrial and
technological changes and be among those who are able to benefit from the
positive effects. It is worth examining the strategic goals of the most
developed industrial countries: they are sure to include development of the
education systems, exploitation of international innovation potential,
long-term cooperation with partner countries based on education and research,
and responsibility in dealing with global challenges.

A significant shift in the
direction of higher value-added production making use of technological advancements
would serve Hungary’s competitiveness. The industrial revolution is bringing the
creation of new jobs that are based on R&D and innovation. Mobility,
broadband and cloud-based solutions are leading to digital industrialization in
the world, creating the possibility for higher-level and more efficient
operation. Cloud sales are soaring in Europe, but there is still no established
practice of how companies should compete for this type of investment. The
supportive and regulatory environment is also just taking shape. The stakes are
high, the countries of Europe face an enormous opportunity. Hungary should play
a part in the processes so that the restructuring results in the creation of as
many new jobs here as possible.

The new job opportunities call
for skills and knowledge of a new kind and for continuous learning. It is
essential that the education systems should be transformed and adapt flexibly.
It is regrettable that the budget support for higher education in Hungary is
continuously declining.

In the opinion of HEBC the
Government should consider doubling the budget allocation for education, at the
same time setting appropriate targets and performance indicators. As the
results will not appear in the short term, an approach spanning political
cycles is needed. HEBC urges further encouragement and support from the
Government for cooperation between companies and the education institutions.
The best solutions making all levels of education more sustainable and
efficient should be implemented in an inclusive way, with the involvement of
all participants.

The multinational companies
form a bridge between local and global demands and experiences. They can offer
not only financial resources but also transfer best practices and models which
already exist elsewhere in the world.

If education were to be given
impetus, an effective answer could also be given to many pressing questions for
the country’s future: economic development, competitiveness, emigration, youth employment,
raising the level of foreign language skills and digital literacy. It is
important for people to increase their knowledge abroad, but Hungary should be
the centre of their life to which they return.

HEBC has been urging for years
the elaboration of a country strategy. Economic leaders and foreign investors
agree that a country strategy tracing the directions of long-term development would
improve the predictability of the business environment and make planning more
sustainable. In the report members repeat in detail what they mean by a country
strategy, in the hope that this can help its realization.

Non-discrimination is a basic
principle of HEBC in all respects. The expectation regarding taxation policy
too is that it should be free of discrimination and ensure a level playing
field for all market players. Only real market competition can create
competitive companies. The price of the short-term, extraordinary tax revenues
has been the missed opportunities for long-term investments and developments.
In examining the country’s ability to attract capital, it is worth taking into
account the investments that have failed to be realized, where the decisions
made by the parent companies were not in favor of Hungary. One of the primary
causes in all cases is the lack of predictability that also appears in the lack
of financial predictability.

If we ask which is more
important, the competitiveness of Europe or Hungary, the report says that in the opinion of HEBC, there can be no doubt about the answer. Hungary can only further increase its
competitiveness if Europe is stronger and more competitive. It is of vital
importance for a small country that directs 75% of its exports to European
markets, to contribute to the creation of a stronger and more competitive
Europe. If Europe develops and its positions are stronger in the world, Hungary
will enjoy the benefits as well.

Sándor Laczkó

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