Singapore firms can tap Hungary’s skilled work force, low tax rates for expansion into EU

SINGAPORE – Singapore companies seeking expansion into the European Union can look to Hungary as a gateway, given the country’s skilled workforce, low corporate tax and export-oriented economy, according to a new report.

It noted that Hungary, like Singapore, relies on foreign firms for 70 per cent to 80 per cent of its exports, helped in part by its 9 per cent corporate tax rate, the lowest in the EU.

The central European nation’s workforce is boosted by more than 70,000 graduates annually in fields such as construction, engineering and manufacturing, which complements the manpower needs of Singapore firms, particularly those in innovation and research-led sectors.

Mr Lennon Tan, president of the Singapore Manufacturing Federation (SMF), which helped compile the report, told The Straits Times on April 4 that Hungary has much to offer.

He cited its education system, which focuses on science, technology, engineering and mathematics, contributing to a skilled labour pool that supports tech-driven businesses.

This, in turn, will make it easier for Singapore firms to build up their operations in the country.

“The accessibility of skilled local talent, along with the availability of competitive infrastructure, enables Singapore companies to innovate and grow without the typical financial burden of entering Western European markets,” Mr Tan said.

“While high costs can make much of Europe seem out of reach, Hungary offers a clear edge with low corporate taxes, widespread English proficiency and strong support for foreign businesses, especially in tech and research.”

Mr Tan also noted that as Hungary is an EU member, Singapore companies can benefit from the EU-Singapore Free Trade Agreement, which offers duty-free access for most goods, reduces non-tariff barriers and streamlines Customs procedures.

“This helps to lower costs and enhance market access for businesses operating between Singapore and Hungary,” he added.

The report, which was compiled by the SMF, the Hungarian Investment Promotion Agency, the Hungarian Embassy here and communications agency Rothman and Roman Group, noted that Hungary has long been drawing investment from Asian companies, particularly those in the automotive sector.

One such firm is Patec Group, a Singapore manufacturer specialising in metal stamping, tooling and precision engineering solutions for industries such as automotive and electronics. The firm set up operations in Hungary in 2009 to better serve its clients in the region.

Commercial director Benjamin Chia told ST that the firm has continued operating in Hungary “mainly” due to the low corporate tax rate.

“Hungary is also very centrally located – it is connected to seven neighbouring countries by expressways, so it’s very easy for us to transport our products to our customers in western and eastern Europe,” he said.

“A lot of university graduates in Hungary are mainly from the engineering-related faculties. They are skilled enough to adapt to our company’s manufacturing pace as well.”

Bilateral trade between Singapore and Hungary surpassed US$1 billion (S$1.3 billion) in 2024, while Singapore firms employ 7,000 workers in Hungary.