Locating Europe’s biggest casino resort in Hungary was no chance decision. The town of Bezenye in the north-west of the country was chosen for its strategic proximity to three central European capitals: Vienna, Bratislava and Budapest. The multi-billion dollar EuroVegas complex will be built within Hungarian borders because the project required better infrastructure than Slovakia could provide and licensing laws that Austria would not offer.

State secretary for development and economy Ábel Garamhegyi says the ease of doing business in Hungary is the country’s most attractive draw for foreign projects such as EuroVegas.

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But Hungary cannot afford to be complacent about its ability to attract global investors, because the past couple of years have seen the loss of some of the country’s big foreign automotive players, including Hyundai and Ford.

Although China, India, Romania, Bulgaria and Slovakia are taking some of Hungary’s business based on low-cost labour, Mr Garamhegyi considers it a short-term problem.

“Slovakia and Romania will not remain low-cost destinations for long as salaries are rising sharply,” he says. “Hungary is still relatively cheaper than western Europe but cost is not our main competitive advantage; it is quality.”

Investing in the future

Mr Garamhegyi says Hungary has chosen a different strategy to Romania and Slovakia by investing in infrastructure such as roads, railways, financial institutions and IT before it started to court investors.

“We can offer business locations near motorways, for example, whereas Romania can offer cheap labour. The difference is our advantage will not melt away,” says Mr Garamhegyi.

Competition from other countries was keenly felt after Hungary’s accession to the EU. Opening Hungary’s domestic businesses up to a bigger field was very painful at first, says Mr Garamhegyi, but doing so made the economy much healthier in the long run.

“The result was a certain confidence in our companies, which is remarkably visible in our export ratio which has rapidly increased as our companies learned to compete in a global market,” he says.

Hungary has no official eurozone target but in 2009 the country will be in a position to decide, says Mr Garamhegyi.

“It will help in terms of predictability of exchange fluctuations, but it won’t bring a lot of extra trade and it won’t help with our US or Japanese partners, for example, so I don’t think it is such a crucial issue for Hungary,” he says.

More important is that Hungary’s big foreign partners build on their original investments.

“Companies want to stay in Hungary because we have eliminated bureaucratic hassle,” says Mr Garamhegyi. In 2007, Hungary ranked 45th worldwide for ease of doing business, according to the World Bank Index.

“We are constantly simplifying every single procedure, which means less money spent on lawyers and accountants, for example,” says Mr Garamhegyi.

“At the moment it takes a day to license a business in Hungary but we want to make it an hour; we are working on electronic licensing and making building permissions and environmental permits easier.”

CURRICULUM VITAE

ÁBEL GARAMHEGYI

2008Republic of Hungary

Ministry for National Development and Economy, state secretary for international economic relations

2007Republic of Hungary

Ministry of Economy and Transport, state secretary for international economic relations

2006Republic of Hungary

Ministry of Economy and Transport, deputy minister