The Main Characteristics of Foreign Economic Relations between Hungary and the ASEAN Countries with Special Focus on Trade in Agricultural Goods

Kozár, László – Neszmélyi, György

Keywords: Southeast Asia, regional integration, eastern opening, agro-foreign trade, Q17, R11, N75

In addition to a brief review of the economic integration process among the states of the ASEAN region, the authors of this study aimed to examine and analyse the main economic, social and political characteristics of the Hungary-ASEAN relations. The importance of this topic is underlined by the fact that the Hungarian government attaches great importance to the improvement of the economic relations with Asian economies. This intention was expressed by a new foreign economic strategy ‘Eastern opening’, announced by the government in 2012, even though the foreign trade statistical figures did not justify its success until now.

The authors consider that an increasing opening towards the East serves the economic interests of Hungary, and that this is a right and desirable direction to proceed, and believe that behind the modest results there might be insufficient knowledge of the market mechanisms, the actors of the local supply chains and the potential partners. To make the Hungarian economic endeavours in this direction more successful, a more thorough examination of the local characteristics – including the actual demand arising in the targeted markets – is necessary. This opinion is relevant to not only the Asian ‘Giants’ such as China, India and Japan, but also to smaller states, like the ASEAN members, which - together - in terms of population and economic performance – reach the dimensions of an economic great power as well.

Furthermore, the integration of the ten Southeast Asian countries is developing rapidly, which is coupled with their increasing weight in the world trade. The dynamic economic and social development in the ASEAN region – and in parallel with this the growing demands and purchasing power – may encourage the Hungarian ventures in theory. In practice, however, there are still very few Hungarian entrepreneurs who are ready and able to enter the markets of the countries in the region and operate successfully there in the long term.

It is a well-known fact that the since the time of the change of regime, Hungarian foreign trade has become strongly concentrated towards the European Union (EU) Member States. The ASEAN countries – because of the geographic distance and by other reasons – cannot be an alternative to the EU market; however, to a certain extent they can relieve this one-sided concentration and may provide additional opportunities for the export of Hungarian goods, and rather for the export of Hungarian services and know-how.

The share of the ASEAN region within the entire Hungarian foreign trade turnover is small nowadays, furthermore – as per the statistical figures – this region is rather an import resource for Hungary than an export market. This fact – just itself –should not be considered as a problem. When the amount of imports exceeds exports, that means that it is more worthwhile to do business with suppliers from those countries than with others.

All this is relevant to the field of agricultural trade as well: Hungary imports a range of commodities which cannot be produced by domestic farmers or in Europe (spices, tropical fruits etc.). It is evident that the ASEAN region cannot be the major market for Hungarian agricultural exports, not even in the long term. However, there are still many opportunities to increase the turnover of goods and services and enhance the co-operation in this geographic region. In the last section, the authors outline an example in the case of Vietnam – co-operation of joint public warehousing of agricultural commodities – which may be a good example for the promising potential opportunities.

In contrast with the majority of the ASEAN countries, the Hungary-Vietnamese political and economic relations started much before the regime change in Hungary. However, the potential advantages arose from this fact – the network of connections and the sympathy of Vietnamese professionals who graduated in Hungary, the reputation and popularity of Hungarian agricultural products and technologies, the achievements of R&D in the field of agriculture – could not be utilized from Hungarian side. Vietnam, however, still preserved its socialist political establishment, but in terms of its economic development strategy and economic policy has gradually been standing on the basis of market orientation. Vietnam, with its population of ninety million, shows a rapid and successful development and it means there are good opportunities even for Hungarian entrepreneurs. It would be a mistake to leave these potentials unused.

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