Czech-Hungarian relations are strongAs the pandemic fades away, we have a good foundation for rapid growth

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Miklós Boros sees himself as an essential Central European: he has worked in the diplomatic service in the region for all his life. "We share a common history and culture, and that’s also what we can build on to further develop relations within Central Europe," he notes, adding that there has been an increasing tendency to jointly represent the V4 countries’ interests. "Looking at various indicators, Czechia is a great country to live and do business in, so it is a great honour for me to work on improving Czech-Hungarian relations just here,“ says Mr. Boros, who has been the Ambassador of Hungary to the Czech Republic since 2017.

Q: How would you rate the current relations between our countries?

A: Our relations have always been good. And we are doing our best to keep improving them, in economic, cultural or social aspects. There have been a number of official and working meetings within the V4 at the level of presidents, prime ministers and chiefs of parliament, as well as ministers or experts.

From the economic point of view - in 2019, mutual trade between our countries reached a record volume of almost 10 billion euros. Although we do not yet have the figures for 2020, they probably won’t be better due to covid-19. Many investments have been made which have been beneficial to both countries. On top, Hungary is a hugely popular destination among Czech tourists: in 2019, Czechs were among the nations who spent the most nights in our country and made up the third largest incoming tourist group in total. I hope that when the pandemic is over, Czechs will start visiting Hungary again, as they did before. The country is waiting for them with open arms.

Promoting tourism is a priority

How much is the Hungarian economy affected by the shortage of tourism due to covid-19? How does the Hungarian government deal with this and how does it help hotels, spas and restaurants across the country?

This time around last year, it still seemed that 2020 would be the best year in the history of Hungarian tourism. This prediction only lasted until mid-March, when covid-19 also broke out in our country. The government, in cooperation with the Hungarian Tourism Agency, has taken measures to reduce the tax burden and promote growth, helping businesses in the impacted sectors to overcome this difficult period.

Can you name any specific measures?

For example, the Hungarian Tourism Agency will provide companies in difficulty with support of 85 billion forints (6.3 billion CZK) for building and refurbishment of hotels with over 100 rooms in the Hungarian countryside. 35 new hotels are expected to be built on the back of this, with 1,500 new and 4,200 refurbished rooms. Government wage subsidies of 50%, introduced in November last year, have been extended to accommodation and travel sectors. During the second wave of the pandemic, the government thus protects 140,000 jobs through wage contributions. Moreover, restaurants, cafes or fitness clubs which sit in state- or municipality-owned premises are exempt from rent from 1 February to 31 May 2021. Besides the above, the hospitality sector in Hungary can benefit from many other support programmes.

Strengthening competitiveness in a crisis

What is the overall situation around covid-19 and its impact on the Hungarian economy? Which other industries are most affected, and what measures is the Hungarian government taking to support them?

In 2020, production fell in all major segments of the economy and the GDP went down by 5.2%, which is still one of the comparatively better results in the EU.

Crisis management is a lot about change management as well as strengthening competitiveness. To tackle the crisis efficiently, decisive and coordinated action had to be taken in ​​fiscal and monetary policy and, in particular, competitiveness policy. It was necessary to take measures which could kickstart the economy already this year. Some key challenges in 2020 included protecting families, preserving jobs, targeted tax cuts and accelerated investment programmes. In infrastructure development, the government has also strived to emphasise 21st century megatrends such as digitisation and the green economy. I believe that after the pandemic subsides, the whole of Central Europe will catch up faster with the EU's economic level.

Investment worth €4bn and 13,000 new jobs

Can you be more specific on the investment programmes?

Despite the pandemic, the Hungarian Investment Promotion Agency (HIPA) helped implement 907 projects in 2020. As a result, investment worth over 4 billion euros will be made in the country and almost 13,000 new jobs will be created. I am particularly pleased to mention here that SK Innovation will build its new battery plant in Hungary for almost 2 billion euros. It will be the largest greenfield investment in the history of the Hungarian economy. As for Hungarian investment in the Czech Republic, MVM Group took over the Czech branch of Innogy in 2020 and another Hungarian company acquired a majority stake in the Aero Vodochody aircraft plant.

How does the covid-19 situation affect Hungarian SMEs?

Hungarian small and medium-sized enterprises have several forms of support at their disposal. Recently, a new programme was approved specifically to help this sector, which will allow SMEs to take quick interest-free loans of HUF 10 million (750,000 CZK). These loans are part of a broader action plan to re-open the economy. They are intended to help the most vulnerable SMEs, while there’s another programme with a credit line of HUF 100 billion (7.5 billion CZK) which offers a deferral of payments for up to three years.

Is there an active business cooperation or knowledge exchange on the level of specific regions of Hungary and the Czech Republic, economic sectors or SMEs? Or is there anything in the pipeline?

I am pleased to say that economic cooperation is extremely active in almost all sectors. Hungarian companies are very active in the Czech market, and we can meet our exhibitors at almost all trade fairs in the Czech Republic. One thing to point out is the Czech-Hungarian Chamber of Commerce, which has recently renewed its activity and together with the Hungarian Embassy in Prague, it has since organised a number of very successful events. As soon as the situation allows, more programmes will be added. Of course, I would also like to mention here the meetings of twin towns held in cooperation with the Embassy of the Czech Republic in Budapest. In order to strengthen the Czech-Hungarian trade relations even further, Hungarian pro-export agency CED opened a dedicated office in Brno in October 2019.

Mr. Boros was interviewed by Daniel Libertin and Jana Jenšíková

Translated by D. Libertin

Photos: archive of the Hungarian Embassy in the Czech Republic

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