2 PROLOGUE We would like to express our gratitude for your interest in the economy of Vas County, the westernmost region of Hungary located on the border with Austria. Situated at the crossroads of trade routes that have been important since antiquity and Roman times, the area marking the dividing line between Eastern and Western Europe has been a lively intermediary for thousands of years with significant investor interests. The Chamber of Commerce and Industry of Vas County coordinates the activities of more than 20,000 businesses. The greatest asset of our Chamber is the combined knowledge, experience, support and cooperation of our members as well as partners, in addition to that of our business leaders and entrepreneurs in the county. We also feel it is important to showcase our uniqueness, that is, our talents and skills, the vibrancy of our region as well as our economic and scientific frameworks to our current and future partners, not only to those in business. On behalf of the economic authority and business network of Vas County, I wish you a fruitful time studying this publication. Should you be interested, we look forward to welcoming you in our region! Vince Kovács President of the Chamber of Commerce and Industry of Vas County The economy of Western Hungary, including Vas County, is extremely open due to its geographical location, moreover, is organically linked to European and global networks with all the advantages and disadvantages that this entails. The capitals of the neighbouring countries (with the exception of Ljubljana in Slovenia) are all closer to Vas County than the Hungarian capital, Budapest. Roughly halfway between Vienna (or Bratislava), Graz and Zagreb, Vas County is centrally located with regard to transport links running from both north-south and east-west. Therefore, it is no coincidence that the Chinese state planned a cargo airport here a decade ago. The county’s economy is characterized by the strong presence of multinational companies, predominantly automotive suppliers, and, traditionally, a broad spectrum of trade in services: health tourism activities are prominent as Western Hungary hosts the majority of Western European visitors not visiting Budapest for a city break. Although Bükfürdő and Sárvár are internationally renowned spa resorts, Szombathely - the former Roman town in Vas County - is also the birthplace of St. Martin, so, in addition to health tourism, there is also a plethora of opportunities for the development of cultural tourism, including the jewel of the region (Kőszeg), one of the oldest churches in Hungary (Ják) and the relics of the cult of Mary (Celldömölk). Vas County was the centre of ornamental horticulture in Hungary (with events and wonderful arboretums that remain renowned to this day), moreover, with its suppressed thermal springs and extremely fertile river valleys (Rába and Répce), could easily become a center for the production of greenhouse vegetables. Even though Szombathely, the county town of Vas County with a population of 80,000, has been a major university town for a century now, the activities of smaller towns are also becoming increasingly important because of their high-quality educational facilities (Kőszeg, Sárvár, Celldömölk, Szentgotthárd, Körmend, Bük, etc.). Three universities are present in the region, including Hungary’s top university, Eötvös Loránd University (ELTE), which is based in Budapest and is working ever more closely with large companies in the county (dual training in mechanical engineering and tourism, a course in the chamber of commerce at the university, etc.). As a center for healthcare from primary and secondary to higher education - building on the infrastructure as well as expertise of health tourism, sports and recreation - it is no coincidence that becoming a hub of the healthcare industry is the county’s most important medium-term strategic plan in addition to automotive and logistics developments. Many potentials in cooperation with Austrian and Slovenian authorities as well as economic, educational (vocational and scientific training) and municipal actors remain untapped. As an authority, it is our fundamental task to initiate and support such progress. THE MAIN FEATURES OF THE ECONOMY OF VAS COUNTY 3 In Vas County, the past 30 years since the end of the Cold War (in 1990) have brought about real growth in both its economic output and income of 50 and 75%, respectively. The role of the real economy, especially of a few predominantly foreign-owned companies, has been key in terms of its expansion, both in absolute terms and overall. In terms of GDP per capita, the County is among the highest in Hungary, moving up one or two positions every year, moreover, by and large, the same is true of incomes. In spite of rising price levels and the weakening exchange rate of the forint leading to the rapid erosion of wage growth, gross domestic income has rebounded strongly after the COVID crisis, with the County ranking between third and fifth nationwide in this respect. In Vas County, the value added generated by firms is sufficiently stable and its contribution to the County’s GDP is steadily increasing (from approximately 40% to close to 60%). The three main components of the value added generated by local firms (profit after tax, depreciation and personnel costs) have followed a broadly similar trend, what’s more, this tendency is without a doubt encouraging as well as paints a clear picture, namely profitability has increased dramatically year after year. Meanwhile, this increase over the last 6-8 years has brought about a marked change in the magnitude of both depreciation and personnel costs. The link between the dramatic increase in the share of personnel costs (over 60%, compared to approximately 20% some years ago!) and the shortage of staff is undeniable. The proximity to Austria is one of the main economic driving forces in the County, with people living near the border often crossing over into Austria to work, moreover, salaries comparable to those in Austria are often an expectation on the Hungarian side of the border. At the end of December 2021 in Vas County, which has a similar population to that of the Austrian province of Burgenland, the majority of the 44,000 enterprises, that is, 35,000, were registered as sole proprietors, while the minority, 8,600 to be exact, were registered as partnerships. 173 businesses were registered per thousand inhabitants in the County, an increase in entrepreneurship compared to the previous year. 92% of all partnerships employed 9 members of staff or less, while the number of enterprises with more than 249 employees was 27 in the County. In terms of their main activities, partnerships in trading, scientific and technical activities as well as construction and industry were most common, while those self-employed were most prevalent in the fields of agriculture and real estate. By examining the composition of enterprises based on turnover, those leading the TOP100 list of the County are exclusively foreign-owned companies. The largest domestic firm is a food company from Sárvár that finished 12th in the aforementioned ranking. The County’s industrial production was worth HUF 1.4 billion (approximately EUR 3.8 million) and the amount per capita of HUF 5.5 million (slightly less than EUR 15,000) was 31% higher than the national average. Exports account for four fifths of industrial sales, while mechanical engineering accounts for a dominant share of industrial production. The basic conditions required for production infrastructure are mainly available in industrial parks, which have been established by municipalities in all the major towns, in addition to the county seat. Along with stagnation nationwide, new projects for construction organisations in the County are on the rise: in 2021, companies signed new contracts worth HUF 41.7 billion (approximately EUR 110 million), 15%more in volume than recorded during the previous year. New investments worth HUF 147 billion (approximately EUR 400million) in 2021 by business organisations were 11% higher than a year earlier according to comparable prices. The rate of increase was much higher than that recorded nationwide of 2.3%. 65% of all the investments were made by enterprises employing at least 50 workers. 29% of development funds were used for the construction of buildings and other structures, while 70% facilitated the purchase of machinery, equipment and vehicles. In 2021, the retail network of Vas County had a turnover of HUF 327.2 billion (approximately EUR 875 million) according to current prices, equating to 2.6% of the national turnover. Themain driving force behind regional tourism is medical and wellness tourism services related to medicinal and thermal waters, respectively, with a high number of overnight stays concentrated in Bükfürdő and Sárvár. Other major tourist destinations are Kőszeg with its cultural values and mountainous environment, the Őrség Region with its folk traditions and characteristic dispersed or scattered (locally referred to as “szeres”) settlement structure, as well as Szombathely where, in addition to tourism, both professional and religious tourism are significant. The increasing role of both health prevention and healing in the tourismoffered by spa towns is in line with trends in national demand, with more than 10% of foreign tourists arriving for medical tourism purposes. As far as foreign guests are concerned, visitors from the Czech Republic, Austria and Germany stayed the most nights in accommodation located in Vas County. Regarding the labour market in the County, 130,000 people were employed and 2,000 unemployed. The number in employment was not significantly different from that recorded during the previous year, while the figure of unemployed individuals decreased by more than the national average. The unemployment rate was 1.2%, lower than the national average of 3.7% as well as one of the lowest among those of the capital city and counties of Hungary. Our Chamber strives to promote the interests of entrepreneurs in Vas County in accordance with those of the economy and society for the purpose of shaping the economic environment by participating in economic development and economic policymaking. As a result, high-quality services facilitate the business activities of enterprises while ensuring safe business transactions and fair market conduct. 9,0% 8,0% 56,0% Textile, clothing Others Food Industry 13,0% Chemical Industry 14,0% Machine Industry
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