The future of innovation and technology in Hungary

From 7th April 2020, important measures in Hungary were announced as part of their Economy Protection Action Plan. This plan was created in response to the economic state of emergency declared during the COVID-19 pandemic on top of Hungary’ ongoing recovery from the European debt crisis and the migrant crisis.

Now in the second phase of this initiative, these are just some of the main points outlining the plan:

• The Health Industry is receiving more significant support than ever before so that the products of Hungarian pharmaceutical companies and medical supplies manufacturers appear in Hungarian health care in a higher percentage. Both university and corporate research institutes will receive funding through an Agency for Health Industry Innovation.
• In the interest of protecting employers, credit guarantee and capital programmes are being announced to boost corporate liquidity. These grants could protect Hungarian-owned businesses not only from economic decline, but equally from foreign buy-outs.
• 75,000 people currently working in jobs requiring secondary qualifications due to the absence of language certificates have been released from the obligation of taking foreign language examinations. This exemption applies to all students who successfully completed their higher education studies by 31 August 2020.
• Offering a 40% wage support available for 3 months for research and development jobs.
• Reducing administrative burdens and taxes.
• Calling for proposals with an allocation of hundreds of billions of forints will be released for companies retaining their workforce for the purposes of technological developments, environmental protection, and energy efficiency projects.
• In response to company shutdowns, online training will be organised for workers. An example of this is over the course of one week in May, as many as 37,000 persons enrolled in the basic IT online course which seeks to boost the chances of employment.
• The state agrees to cover 95% of training fees, while jobseekers are entitled to interest-free adult training student loans.
• University students will be able to apply for a one-time, all-purpose, interest-free student loan of the amount of HUF 500,000.
• Sectors most affected by COVID-19 and industries with extensive traditions in Hungary can expect extra funding. The construction industry, transport, logistics, tourism, the creative industry, the health industry, and the food industry will all have access to development grants and tax cuts, in addition to the availability of preferential loans and capital programmes.

German and Hungarian Relations

In relation to the final aim outlined above, we can see how Hungary is already reinforcing policies to realise its aims, for example, within the tourism industry. Hungary is currently strengthening its EU collaboration, with the gradual reopening of Hungary – Germany borders. During an online meeting in June, Minister for Innovation and Technology, László Palkovics stated that “German is Hungary’s most important source market, and the number of German tourists visiting Hungary has increased by 20% in recent years. The fact that a significant increase in self-organised trips can be expected following the end of the coronavirus pandemic may result in a renewed expansion of bilateral tourism relations.”

Last year, the total contribution of tourism to Hungary’s GDP exceeded 10%, with the number of guest nights having increased by 60% in the last 10 years. Furthermore, over 2 million of the total number of 31.3 million guest nights spent in Hungary in 2019 were related to the 624,000 German tourists visiting the country. The two countries are looking into the future with these plans, discussing the recovery of the automotive industry, which will also be a priority following tourism, as it is a huge part of both economies. According to Minister Palkovics, Hungary wishes to be a supportive and initiative partner to the Berlin government in the planning and implementation of community measures aimed at exiting the virus crisis, the rebooting of production processes and restoring the unhindered functioning of the internal market.

Cooperation between countries will help boost the tourism sector – a sector that was hit first and most significantly by the COVID-19 crisis. Therefore, the Hungarian government also is providing 600 billion forints (EUR 1.74 billion) in funding within the framework of the Economy Protection Action Plan to the tourism sector. Tourism tax has also been suspended until the end of 2020, with a further 150 billion forints (EUR 434 million) are being provided for development projects regarding tourist accommodation.

Artificial Intelligence

More recently, Hungary presented its new Artificial Intelligence (AI) strategy at the University of Debrecen, to determine what activities are necessary for its realisation via the designation of fundamental principles, technological focus areas, and projects. “Hungary would like to benefit from the opportunities afforded by artificial intelligence, and would like to be one of the winners of these technological changes”, stated Minister Palkovics. He goes on to explain that based on the strategy, Hungary must prepare its society and economy for the fact that “this technology is coming, this technology is already here, and that we must do our best to use it,” the Minister declared.

One important area of the strategy is the notion that technology and AI should be harnessed to ‘make our lives easier.’ Minister Palkovics highlighted this, stating that we use AI in our daily lives without often realising it, such as when submitting forms online or in a post office. He also stated that “by 2030 artificial intelligence could be responsible for 11-14% of Hungary’s gross domestic product (GDP).” A National AI Laboratory has already been established, the country has joined Finnish initiatives and has set a goal for about 1 million people to have a basic level of knowledge concerning AI through various training courses. This all reinforces Hungary’s early commitment to the strategy and desire to be “good hosts for research & development,” as Palkovics hopes.