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HEBC for a Smart Hungary

December 14, 2017

In line with its tradition, the Hungarian European Business Council (HEBC) prepared its 2017 recommendations, titled 'Smart Hungary'. The Report explores issues that can help accelerate the country’s economic and social development.

According to the Council's 19th annual report published this Thursday, Hungary needs a comprehensive, long-term country strategy – 10-15-years in scope - that paves the way for the country’s future development.

The Hungarian European Business Council (HEBC) was established in 1998 at the initiative of the European Round Table of Industrialists (ERT), which is a forum of the top managers of 50 major European industrial companies. Members of HEBC are the top managers of 10 multinational companies in Hungary: ABB, AkzoNobel, Ericsson, Heineken, Henkel, L’Oréal, Magyar Telekom, Nestlé, Nokia and Shell.

One of the most important parts of HEBC's activity is the publication of the Annual Reports, which are written by the HEBC members and every sentence is based on consensus. HEBC wishes to promote the development and competitiveness of Hungary as a whole. The experiences of the members as international investors and employers can be important and useful supplements to the political, scientific and societal viewpoints.

In December 2017, the Hungarian European Business Council published 19th annual report entitled ‘Smart Hungary’. The Report explores issues that can help accelerate the country’s economic and social development. According to the Council, Hungary needs a comprehensive, long-term country strategy – 10-15-years in scope – that paves the way for the country’s future development. The long-term sustainability of the Hungarian economy relates to the country’s ability to use opportunities provided by digital transformation and innovation, to shape its education system, and to develop knowledge-based industries. The Council notes that Hungary is equipped with all the tools necessary to accelerate its economic development; there are numerous government programs supporting the digital transformation, which is a key aspect of sustainable growth.

The report approaches the country’s current situation and development prospects from the economic players’ point of view, and lists recommendations – among others – regarding enhancing investment into research and development, introducing e-education and widening the use of electronic-governance programs and applications. The recommendations also include suggestions to adjust the economic portfolio of Hungary, encourage policies to whiten the economy, and to approach strategically Hungary’s energy industry with the long-term future in mind.

As HEBC Chairman Roland Jakab, the managing director of Ericsson Hungary put it, “we are happy to see Hungary’s starting on the road of digital transformation, where development and economic opportunities are endless.” He added that HEBC welcomes the Digital Welfare Program 2.0, and all its components taking shape in the near future. “The ‘Invented in Hungary’ approach is one of the outcomes of the R&D incentive system’s actual reform,” he added.

Other members of the HEBC spoke about the need for consultation before tax changes are introduced by the government; called attention to Hungary having the highest VAT rate in the European Union; called for deeper European integration, including the introduction of the euro as Hungary’s currency; suggested that EU funds should be used for financing sustainable projects and warned how much corruption and the lack of transparency impede the proper functioning of society.

The Report stresses that while Hungary’s decreasing unemployment rate is an important achievement, member companies of HEBC are feeling the effect of the lack of skilled workforce. Therefore, additionally to recommendations regarding the educational reform, like more appreciation for teachers or the further development of dual education, the Council is suggesting to examine the integration of the under-employed segments of society into the labor market, such as women with small children, people living with disability and elderly people.

HEBC members are of the view that in order to create a ‘Smart Hungary’, many areas of public administration should become electronic. E-governance platforms can fundamentally transform and make public services more efficient for citizens and the business sector alike. At the same time, the transition to e-governance necessitates the implementation of targeted programs enhancing the digital literacy skills of people and the public sector. The Council welcomes the development of the digital infrastructure of Hungary, as it provides wide Internet access for the population; however, it also notes that the creation of a country-strategy would set the course for the strategic direction of development in e-governance as well.

According to the Council, the development of education and innovation, the creation of a capable workforce and transitioning to e-governance are the areas that affect the country’s competitiveness and its ability to attract investment, thus are the main factors in the country’s economic growth and social development.

At the presentation of the report, Levente Magyar, Minister of State for Parliamentary Affairs at the Ministry of Foreign Affairs and Trade stressed that the biggest challenge of the economic order in transition is digitization, where most of the tasks have yet to be tackled by Hungary. He was of the view that the recommendations of the HEBC coincided with the government's aspirations and suggested that Hungary could be the winner of the dizzying pace of change in the short term.

He said the aim of the government is to secure the most competitive environment in Europe for companies in this country. He added that providing the long-term the skilled workforce that can put Hungary ahead of its economic partners is a bigger challenge than digitalization.


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