Michelin to suspend Hungary expansion over government policy

26th January 2012, Comments 0 comments

French tyre giant Michelin says it will suspend its planned expansion in Hungary due to the unpredictability of Prime Minister Viktor Orban's economic policies.

The company decided to suspend development projects there as the government was making life difficult for foreign firms, especially by levying hefty crisis taxes on them, Paul Young, director of Michelin's Hungarian affiliate, was quoted in the economic daily Vilaggazdasag.

"The attitude of the current government, the new taxes and the new laws make the economic environment unpredictable," said Young.

Contacts with Hungarian governments since 1996 had been "excellent," but since Orban's takeover 18 months ago, "everything has drastically changed," he added.

"Before, we could plan for the long term."

"Today I cannot predict when we will be able to continue our project to expand capacity, which would have improved the competivity of the Nyiregyhaza site and created jobs," he added.

Since 2005, Michelin has invested roughly 100 million euros ($131.5 million) in its production site in the northeastern town of Nyiregyhaza, which churns out two million high-performance tyres annually and employs 1,050 people.

According to Young, the company had intended to boost annual production to reach eight to 10 million tyres.

Orban has drawn repeated criticism from partners like the International Monetary Fund and the European Union over his unorthodox economic policies.

© 2012 AFP

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