Bilateral economic ties between Japan and Hungary, foreign trade, capital investment

The bilateral ties between the two countries go back long in history but have been mainly dominated by cultural and civil ties and cooperation. With Hungary’s democratic change in 1990 and the transition to market economy, the economic relations have become another significant and vibrant aspect of the rich cooperation between the two countries. For today Japan has become one of the most important investor in Hungary having brought in not only a significant amount of direct investment but also their highly-developed corporate culture. Besides investments, the trade volume has also been showing a growing trend.

Structure of trade between Hungary and Japan (in million USD)

Source: Hungarian Central Statistical Office

In 2008 Japan was Hungary’s 29th biggest export partner, and the 10th biggest import partner. For Japan, Hungary is its 31^st largest export market (the 2nd biggest in Central Europe after the Czech Republic) and the 48^th biggest importer (the biggest volume from the Central European region).

Major bilateral agreements relating economic ties

• 1975 Treaty of Commerce and Navigation
• 1979 Agreement on Science and Technology
• 1980 Agreement on the Avoidance of Double Taxation
• 1994 Treaty of Aviation
• 1997 Exchange of notes on the full waiver of visa requirements
• 2008 Agreement on mutual acknowledgment of driver’s licenses

Capital investments, 2004-07 (in million euros)

Source: Hungarian National Bank

Japan is one of the most important investor in Hungary. The flow of Japanese foreign direct investment to Hungary had been dynamic since the early nineties with Hungary’s transition to market economy, though the pace slowed down due to the global economic crisis erupted in 2008. The total stock of invested capital by Japanese companies to Hungary amounts to approx. 2.5 – 3 billion euros. The majority of the invested capital flows into high value added production industries. However, the official statistics show a lower stock of capital influx due to the fact that a large part of Japanese investments are carried out through European subsidiaries, which appear as EU source in official statistics.

According to JETRO (Japan External Trade Organization) in 2008 there were 113 Japanese or Japan-related companies active in Hungary, of which 47 are production entities.

Biggest Japanese investments to Hungary (in alphabetical order)

Source: ITD Hungary Zrt.