Bank of Korea Governor Lee Ju-yeol (second from right) poses for a photo at a conference held to mark the 30th anniversary of the Korea-Hungary diplomatic ties on Dec. 6 (local time) in Budapest.

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South Korean capital has become Hungary’s biggest foreign investor, following major greenfield investments by Korean names in the country offering cheap tax rates and gateway to other parts of Europe.

At a conference held in Budapest last week to celebrate the 30th anniversary of the diplomatic relations of South Korea and Hungary, Hungarian National Bank Governor Gyorgy Matolcsy said South Korea would become a country that sends the most foreign direct investment (FDI) to Hungary this year, according to Bank of Korea (BOK) on Tuesday. BOK governor Lee Ju-yeol and Korean ambassador to Hungary Choe Kyu-sik attended the event.

Korea’s investment to Hungary this year is expected to surpass that of Germany, the long-time biggest investor for the country in which German auto giants including Audi, Mercedes-Benz and BMW have manufacturing bases.

But this year, Hungary has become one of the top picks by Korean businesses to expand their production capacity overseas. Korea’s major battery maker Samsung SDI said earlier this year that it would spend 560 billion won ($469.2 million) on expanding its electric vehicle battery manufacturing facility in Hungary. Another Korean battery major SK Innovation also said it would invest 945.2 billion won in the country to build its second EV battery plant.

Hungary imposes the lowest corporate tax rate of 9 percent in Europe, according to a report by tax-related think-tank Tax Foundation, which bolsters investment attractiveness of the country for overseas investors. The Export-Import Bank of Korea said Korea’s FDI to Hungary surged to $393 million in 2018 from a mere $13 million in 2017, and the figure already exceeded $361 million as of the end of June this year.

Hungary is also an appealing country to do business because it borders seven countries – Austria, Slovakia, Ukraine, Romania, Serbia, Slovenia and Croatia. It has outstanding transport infrastructure and other European nations are just two hours away from its capital city Budapest.

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