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Hungarian Businesses to Benefit from Future Construction Legislation

Hungarian Businesses to Benefit from Future Construction Legislation

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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.

By Gabriella Galik, Partner, KCG Partners Law Firm

Hungary Knowledge Partner

Nagy és Trócsányi was founded in 1991, turned into limited professional partnership (in Hungarian: ügyvédi iroda) in 1992, with the aim of offering sophisticated legal services. The firm continues to seek excellence in a comprehensive and modern practice, which spans international commercial and business law. 

The firm’s lawyers provide clients with advice and representation in an active, thoughtful and ethical manner, with a real understanding of clients‘ business needs and the markets in which they operate.

The firm is one of the largest home-grown independent law firms in Hungary. Currently Nagy és Trócsányi has 26 lawyers out of which there are 8 active partners. All partners are equity partners.

Nagy és Trócsányi is a legal entity and registered with the Budapest Bar Association. All lawyers of the Budapest office are either members of, or registered as clerks with, the Budapest Bar Association. Several of the firm’s lawyers are admitted attorneys or registered as legal consultants in New York.

The firm advises a broad range of clients, including numerous multinational corporations. 

Our activity focuses on the following practice areas: M&A, company law, litigation and dispute resolution, real estate law, banking and finance, project financing, insolvency and restructuring, venture capital investment, taxation, competition, utilities, energy, media and telecommunication.

Nagy és Trócsányi is the exclusive member firm in Hungary for Lex Mundi – the world’s leading network of independent law firms with in-depth experience in 100+countries worldwide.

The firm advises a broad range of clients, including numerous multinational corporations. Among our key clients are: OTP Bank, Sberbank, Erste Bank, Scania, KS ORKA, Mannvit, DAF Trucks, Booking.com, Museum of Fine Arts of Budapest, Hungarian Post Pte Ltd, Hiventures, Strabag, CPI Hungary, Givaudan, Marks & Spencer, CBA.

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