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Hungarian businesses to benefit from future construction legislation

Following the elections in April 2022, an independent ministry was created in Hungary to manage, control and regulate construction and investment activities. Shortly after meetings with the representatives of professional organizations were held to provide the basis for further legislative work on the preparation of a new framework law on the institutional, substantive and procedural rules governing public investment.

Contrary to the plan that the bill would be submitted to the Parliament in the autumn of 2022 and would be in force from January 2023, the legislative process is still ongoing. The two acts in question are the act on public investment and the Hungarian construction industry framework. The aim of these acts is to improve the efficiency and predictability of public construction investments by creating legal guarantees for their implementation, and to consistently support domestic companies in the fields of design, implementation and the production of construction materials. By doing so, it is primarily intended to assert national sovereignty, national self-sufficiency and the nation’s capacity for self-reliant growth, meaning that whatever is built in Hungary with state money must henceforth be built largely with Hungarian labor and engineering skills, with Hungarian materials and technology, and with the Hungarian economy in mind.

In the recent decades, Hungary is heavily relying on imported materials and labor force, therefore foreign dependence on the Hungarian construction industry has to decrease and the operation of domestic, and local businesses need to be strengthened.

However, the development and retention of a dominant share of Hungarian-owned construction companies will not be achieved by hindering competitive market conditions, but through programmes and regulations to improve competitiveness in the sector. It is not enough for a business to be Hungarian, it must also provide professional services and good quality. Additionally, the acts also aim to will speed up investment processes by weeding out bureaucratic rules that unnecessarily complicate the lives of those in the construction industry.

Currently, the Hungarian construction market is in recession, ongoing investments are still driving the industry, but their phasing out is already posing significant challenges for the sector. With the receding housing opportunities, unpredictable markets and shrinking public resources, the output of the Hungarian construction market is already declining.

The idea of legislation set out to increase the efficiency of public construction investments and to enhance stability and predictability in their implementation is generally well received by the public and the experts, especially in light of the goal of Hungary to become one of the European leaders in successful public investment by 2030.