Budapest, July 14, 2003

On July 14, 2003 Elek Straub, president of the German-Hungarian Chamber of Commerce and Industry (NMIKK), and Wolfram Klein, member of the managing committee, presented the 2003 competitiveness report of the Chamber. The report, which was published for the eighth time this year, is based on a survey involving over 1000 Chamber member companies. Elek Straub met the press for the first time in his capacity of president of the Chamber since his election in May. Both speakers underlined that 84% of the German businesses in Hungary declared that they would choose Hungary again as a target for their investments, 15.2% would repeat their investment in a modified form. This represents assets which Hungary must make every effort to utilize, stressed Elek Straub.

According to the findings of the report (the detailed results of the NMIKK competitiveness survey are contained in the Competitiveness Survey 2003. The situation and expectations of the businesses with German interest in Hungary) the German investors also made it clear that the general investment conditions are no longer as favorable as they used to be, and that Hungary's attraction has faded. The main factors detracting from the general investment conditions are high costs and the poor world economic environment. Still, the German-owned businesses operating in Hungary continue to be satisfied with their performance.

The majority of foreign investments made in Hungary since 1989 have been implemented by German businesses. They have founded Hungarian companies, invested a total of 12 billion EUR and are employing more than 200 000 people. German-owned businesses play an important role in the society too, spending on average 2.9 million HUF each annually on cultural and charitable purposes.

Although the average revenues of the businesses operating in Hungary grew in 2002, this was the smallest growth over the past eight years. Even though the cost increase has also been substantial, it remains below the level forecast last year. Net income planned for 2002 shows nominal increase, but the rate of growth is slower than in the preceding years. In 2003, the companies are reckoning on growth similar to 2002 for revenues, profits and costs.

The companies consider that there is a need, among other things, for modernization of the public administration structure, adoption of a calculable economic policy, reduction of taxes and contributions, and the upgrading of education and health care in Hungary.