SPEECH BY PRESIDENT OF THE REPUBLIC MARTTI AHTISAARI
TO REPRESENTATIVES OF INDUSTRY AND BUSINESS
IN PÉCS, HUNGARY ON 28.9.1998

I am pleased that this visit to Hungary gives me the opportunity to make the acquaintance of the city of Pécs and its economic sector. Pécs is nowadays well known in Finland. In addition to a long-standing inter-city twinning arrangement and lively contacts between civic organisations, several large Finnish companies have located here. Your city is also making a valuable contribution to international cooperation by providing accommodation for the quartermaster corps of the Nordic-Polish peacekeeping company in Bosnia-Herzegovina. The people of Pécs have every reason to be proud of their rapidly internationalising city with its wealth of tradition.

The positive development that has taken place in Hungary is very impressive. We in Finland have always known that Hungary has been a pioneer among the transitional economies. Your reforms have been successful and, what matters most, they have continued despite political and economic difficulties. The results are appreciated abroad. A clear indication of this is the high level of foreign investment in Hungary: according to UN figures, foreign direct investment in your country has exceeded $15 billion. No other Central European country can point to such a statistic.

The dynamism of your economy and its high growth figures - over 5% again this year - promise continuing rapid development. We are very aware of Hungary’s importance as a market. Thanks to your central geographical location, you can also serve companies locating here as an important centre for business operations in various parts of our continent.

Hungary was the first Central European country to apply for membership of the European Union. For several reasons, including your consistently good economic prospects, you were among the six countries which were last spring given the go-ahead to begin pre-accession negotiations. Besides economic growth, you have also made good progress in legislative convergence or EU harmonisation.

Thanks to the general development of your economic policy, the structural measures that you have implemented and your adoption of EU legislation, Hungary will meet the criteria for membership set at the Copenhagen summit in 1993. We Finns greet the progress that Hungary has made, because it will mean that we are both operating in a single market, with all of the new opportunities for trade between us that this implies.

The ongoing process of enlargement of the European Union differs in many ways from earlier ones. What makes it especially challenging is that it is taking place parallel to internal reform of the Union. Besides that, the number of candidate countries is greater than ever before and their starting points have been further from the EU average than in earlier rounds. All of this will take time and require a lot on the part of both candidates and existing members. But ultimately it lies in the interests of all for the enlarged Union to have an ever greater capacity to act effectively than it has had up to now. We in Finland consider the enlargement process with its negotiations, partnership programmes and subsidies very important in itself. We shall do everything we can to ensure that it remains dynamic and enhances our prospects of success in building a shared European home, where no new dividing lines will be created.

Bilateral relations between Finland and Hungary in the economic and trade sectors have always been good. Despite geographical distance and the differences that earlier existed between our systems, companies in our countries have always found each other. Our visible trade with Hungary has been around a half of one per cent of our grand foreign trade total, which is no mean achievement. Yet I am convinced that both parties would like our trade to develop to a much higher level.

The structure of Fenno-Hungarian trade is becoming increasingly diversified. No longer do we merely exchange timber and paper for wine. Markets are being found for products of many other sectors as well. High-technology products associated with telecommunications, the energy sector and construction are representative of Finnish industry’s new export palette. Similarly, the Finnish market, open as it is to stiff international competition, offers Hungarian companies excellent opportunities to develop their exports and diversify their range.

Finland has participated in many ways in supporting the Hungarian reform process. In the early 1990s we participated in several multilateral programmes, such as the balance-of-payments arrangements worked out by the IMF and the G-24 countries as well as in maintaining the environment centre in Budapest. Now, as EU members, we are contributing through the PHARE programme. On the bilateral level, Finland was the first Western country to grant Hungary a structural adjustment credit. Worth $100 million, it was used to finance Finnish exports of capital goods and services to this country. Technical cooperation between us has included numerous training, consultancy, technology-transfer and research projects. The purpose of all of these measures has been to build a foundation for both economic cooperation more generally and concrete trade more specifically.

Finnish companies’ interest in establishing a more permanent presence in Hungary has been increasing. There are more than fifty joint-ventures, in many different sectors and with capital inputs of varying sizes. There is about the same number of entirely Hungarian-owned companies working in cooperation with Finnish partners. The total invested in Hungary by Finnish companies has reached $150 million. To this figure we can add $60-100 million worth of new investments now in the pipeline. I am convinced that this positive trend will continue - after all, Hungary has become Central Europe’s most enticing country for foreign investors. Finland’s own experience dating back to as early as the 1980s demonstrates that liberalisation of capital flows and relaxation of restrictions on foreign ownership help diversify an economy and spur economic growth.

Here in Pécs we are witnessing considerable investment by Finnish advanced-technology companies, and even clustering. Our national pride Nokia, which already employs nearly 2,000 people in Hungary, began making computer monitors in the industrial park here in Pécs a few years ago. Since then, several other Finnish companies like Elcoteq and Saloplast have discovered Pécs and built factories here. Nokia and Tammerneon are among those that have established in Budapest this year. Positive experience of investing in Hungary is adding to interest on the part of our companies in doing so.

One of the important tasks that governments must perform is to provide the conditions that the main actors in the economy, i.e. companies, need in order to be able to operate successfully. Decision-makers must see to it that legislation and the agreements and arrangements that regulate international cooperation and trade meet the needs of companies. When that is done, we can expect our companies to succeed in the numerous functions of international trade.

The pace of internationalisation continues to quicken. Countries and their economies are becoming increasingly interdependent. Organisations and companies are linking together in networks. In this development, we must come closer together and have a better knowledge of each other’s cultures and ways of thinking in order to be able to respond to new challenges. Between Hungary and Finland this is not difficult. We have known each other well for a long time. Opportunities for us to cooperate with each other are even better in an integrating Europe. The city of Pécs provides a good example of this.

The discussions and exchanges of views that have been conducted during this visit as well as any new modes of contact that may have been agreed on will certainly lead in time to more business between our companies, and all of us will benefit from that.

I want to express my heartfelt thanks to the representatives of the city of Pécs and surrounding region, to the businesspeople present here and to all of the others around this table for having given me the opportunity to make your acquaintance and take part in useful discussions with you.