Website of the Hungarian Goverment

12 March 2020, Chișinău

Good afternoon, Ladies and Gentlemen, good afternoon to everyone,

I thank the Prime Minister for having so warmly commended us Hungarians to you. I’d like to say a few words about why we’ve come here. The reason goes beyond diplomatic courtesy, which requires a reciprocal visit after your president came to visit us in 2017. Our visit here is not only diplomatic: we’ve also conducted a series of talks focusing on economic matters.

First of all I’d like to tell you how I see changes in the European economy from the perspective of Hungary and Moldova, and then I’d like say a few words about specific cooperation opportunities. Fortunately we’re young enough to see history not only as part of the past, but as events which have happened and which enable us to draw conclusions relevant to the next twenty to thirty years – to the future. What has happened since 1990? What has happened is that Western European economies have been strong enough to transfer capital, technology and production capacity from their own countries to the countries of the former Soviet zone. These have primarily been Poland, Czechoslovakia and its two independent successor states, and Hungary; we call these countries the Visegrád Four. The capital and technological transfer directed from Western European states to our countries has facilitated a change in the structure of our economies. And today when a global company from Western Europe decides on the location of new production capacity, there’s a good chance that a company – from France or Germany, say – will create new capacity not at home in France or Germany, but instead in Central Europe. This region that I’m talking about – the Central European region – has effectively caught up with the technological level of Western European countries; and it is also very close to catching up with what I might call their level of capital. Looking at Hungary, for example, today our country is able to produce 72 to 73 per cent of Europe’s average per capita GDP, and our plan is for that figure to be somewhere between 85 and 100 per cent by 2030. I’m telling you this because there’s clearly a historical shift which indicates the direction of capital and technology transfer from Western Europe to Central Europe. The question is what the next step will be. The next step is that what happened to Central Europe will – or to be more precise could – also happen to two other regions. One of them is the Balkans, while the other one is the region where you live: the eastern part of Central Europe – or, we could say, the Eastern European belt of Central Europe. I’m convinced that the most important process in the economic history of the next twenty years will be our supply of capital and technology to the Balkan countries, and then, moving eastwards, to you: you will have the chance to join the modern global economic system, which started out in Western Europe, is now in Central Europe, and will also arrive here. I think that this will be the story of the next ten to twenty years. Naturally the question is whether you want this, and whether you’ll be able to seize this opportunity.

The Prime Minister obviously spoke about experience and sharing experience in our cooperation because we’ve already completed the process which lies ahead of you. This is not because we were better than you, but because our geographical location is closer to the centre from which technology and money started moving towards the East. Therefore we have twenty or thirty years of experience which could be of great use to you in the future. Naturally this is something for governments, not for businesses, and so the most important aspect of our talks today was how to share the good and bad experiences gathered by Hungary over the years with those people guiding Moldova’s economic policy. We were able to agree on this today, and I hope that you will learn much from our good decisions – as well as from our mistakes. In order for the historical process I’m talking about to take place, we need two things. The first is that you should want it. At today’s talks I saw that your government is well aware of where your country is situated: Russia is not very far, meaning – to speak plainly – that Moldova cannot act as if it were on the Atlantic coast. But its geographical location is in no way an obstacle to the arrival here of the capital and technology coming from the West. And during my talks today I saw that what we call transatlantic integration – in other words, integration into the system of the European Union – is a goal that this government has expressed, and is a direction it is happy to move in. This is a prerequisite for the capital and technology transfer I’ve mentioned to be able to reach you. Today I saw that the conditions for this exist on the part of the future recipients.

The only question now is where this transfer will come from. What do we see in Hungary? First of all, we see that more and more Western European businesses realise that if they want to remain competitive, they must transfer their production to places where they’re able to create profitable conditions for their operations. We’re acquainted with your tax system, we’re familiar with your economic policy, and I can confidently say that in terms of economic regulation the conditions you’re offering for investments are better than those which Western European countries are able to offer, and are competitive with those we are able to offer projects from Western Europe. I see that the first prerequisite for receiving technology transfer – a favourable tax regime – is already in place here. The second major question is whether you have people who want to work: whether the country’s labour market is large enough. Every analysis of your economy that I’ve read states that for you it is a problem that very many people – especially highly qualified workers – are leaving to work abroad. Before you convince yourselves that this is only a problem for you, I can tell you that we are also familiar with it. But this process will not last forever. In Hungary, for instance, this situation persisted for a long time, and last year or the year before was the first in which more Hungarians returned home from Western Europe than left, and the population flow started to reverse. Of course to achieve this you have to work hard for quite a few years, you need a wages policy, and you need a good tax system. It’s very important to have better family support here than that in Western Europe, and to enable a higher level of home ownership than in Western Europe – where this is the biggest problem. But if good jobs, wages, housing and family support are all combined into a package, then the situation will turn around – if not tomorrow, then after a time. And then here too people will start coming home, as they have in Hungary.

The third question is whether there’s enough money available to take advantage of this historical process. This was also the biggest problem for us. In the nineties and early two thousands there was a shortage of capital in Hungary. There were business opportunities, but there was no funding for them. The regulations in force in Hungary at that time and the guarantees demanded by banks meant that they could only lend money to those who didn’t really need it – if you understand my meaning. So because the institutions that would have provided capital were not developed enough, it was very difficult to access funds, which created a large risk to capital recovery. We’ve agreed with the Prime Minister that one of our banks, Eximbank, will open a credit line of one hundred million dollars to fund – with what I hope will be favourable conditions – the business activities here and in Hungary of Hungarian and Moldovan businesses, of joint ventures. And if this amount is used up, we are prepared to open further lines of one hundred million and finance this transformation. The only question to be answered now is what we’re doing here – because, after all, this is about you, about Moldova. Why are we here?

Ladies and Gentlemen,

We are here because today, after a favourable period, Hungary can say that it is now a country that is a source of capital for foreign investment. This means that in Hungary enough capital – businesses, goods, technologies and knowledge – has been accumulated that we also want to use it outside the country’s borders. And we’re looking for places where this capital, or the sphere of businesses owning this capital, is able to create partnerships. Where larger steps need to be taken, we also have the banking instruments to finance exports and imports. So we are here to offer you our cooperation. We’ve had a fundamentally positive reception in other places where we’ve made similar offers. The biggest problem everywhere, the greatest difficulty we’ve encountered everywhere, has been the creation of a single outstanding large programme, a single large, outstanding joint venture, a single major project which can convince the small business sphere that the two countries are engaged in robust, well-founded cooperation which is supported both politically and economically. I think that here in your country a major time-saving advantage is that OTP is already present here. This bank, the flagship of the Hungarian economy, is present across the entire Balkan region, and is a highly successful bank which can create financial opportunities for you if your business activities require funding. So we already have a flagship here. The Hungarian flag is flying on the lower flagpole, but your economy also has another major player from Hungary: Richter Gedeon – a company manufacturing and selling pharmaceuticals – has also gained a foothold here.

Of course we don’t have an economy the size of France or Germany, and our competitive sectors are not as large as theirs, but there are a few sectors – in addition to pharmaceuticals and banking – that I’d like to highlight as having the potential for profitable cooperation. I’d like to draw your attention to agriculture. This is one of your strengths, for which you have excellent attributes, and we know that your country is famous for its agricultural products. I want to tell everyone that excellent attributes are not enough in themselves: the modern global economy also demands efficient production in agriculture. This requires technology: you need modern technology everywhere from cultivation, through the food industry, to processing. Hungary has the world’s most modern agricultural technologies, some developed in the West and others in Hungary, which we use and have invested in with great success in a number of places around the world – not only in the West, but also in Russia, for instance. We are happy to offer you these if you can incorporate them in your economic plans. If there are any mayors here, I would also like to draw their attention to the fact that Hungary is also very strong in the water industry. Its main strengths are in efficient use of water, in wastewater processing generally, in operating urban water systems and in water purification. So we can also cooperate with you in the latest water technologies.

Finally I would also like to draw your attention to the fact that in Hungary there is a highly advanced IT economy. Presumably those here know little about the Hungarian economy, but today I boasted to the Prime Minister about our results in an economic index. There is an index used to measure economies which focuses on economic complexity, which I think is one of the most useful indicators. This is a meaningful indicator, because it shows how robust a given economy’s foundations are: whether its success depends on a single sector, or if it derives its strength from a number of sectors with different profiles. In this economic complexity index, Hungary is ranked among the world’s top ten countries. It is in the top ten. Not many people know this, but in Hungary the IT sector accounts for more than 25 per cent of GDP. So we also boast a highly advanced IT sector. Here, too, we have IT companies which will be happy to cooperate with you.

Ladies and Gentlemen,

In closing I should say a few words about whether, according to Hungarians’ views or perceptions, your geographical location – the fact that you’re situated further east than Hungary and that you’re close to Russia – is an advantage or a disadvantage. I’d like to tell you Moldovan businesspeople that we believe that whenever the East and the West have had bad relations, we Hungarians have always lost out as a result. It is not in our interest for the Cold War to be rediscovered in the world, and for relations between East and West to be blighted. Therefore we see every country that can maintain good relations with both the East and the West not as a problem, but as exemplary. So for Hungarian politics and Hungarian businesses, those aspects of your economy due to your proximity to Russia – your cooperation with Russia, the fact that many of your citizens work there and that you also have businesses there – is not a problem but a distinct merit: an advantage, a strong point, an argument for seeking cooperation with you.

On the whole I can say that the geopolitical situation, political relations between our two countries, the historical trend within which we live in an economic sense, and the intentions of the governments of our two countries are fully congruent, and they all point to the need to strengthen Moldovan-Hungarian economic cooperation. Somewhat pointedly, today the Prime Minister and I said – harsh or brutal as it may sound – that it’s all very well for us to sign a strategic agreement on economic cooperation between our two governments, but paper can withstand anything: the proof of the pudding is in the eating. We can take this strategic agreement seriously when a spectacular, far-reaching decision is taken on the basis of it. And today the Prime Minister and I concluded that we should venture to make a public statement: our two countries have decided to launch a direct service, a direct air route, between Chișinău and Budapest, our two capital cities. And I also venture to add – although my foreign minister is the player taking the spot kick, not me – that this should happen in the autumn. By the autumn we must have a direct air connection between our two capitals, because without this, due to the great distance, everything we say about economic cooperation is just hot air or a dead letter. So I thank the Prime Minister for enabling this agreement to be signed; and the next time I visit you – or you come to visit us – I hope we’ll be able to use a direct flight.

I wish all of you every success.