Hungarian industry optimistic about 2009

Local film production remains uncertain

MOSCOW -- The Hungarian film industry expects an increase in providing services to foreign film crews shooting in the country, and a stable situation with co-productions this year, despite the global economic downturn. The situation with local film production, however, which depends heavily on state funding, remains uncertain.

"I'm quite positive that we are going to have a better year than last in terms of providing services," National Film Office director Miklos Taba said. "And the crisis could have a positive effect on the figures as (foreign) studios might want to save money, and for them it is cheaper to come here."

However, any increase would largely be due to the fact that last year was quite poor for the service sector. "In 2008, we had a big fall in the area of providing services to foreign crews," explained Taba.

"First, production was becoming more expensive due to the exchange rate. Second, there was a strike of the Hollywood writers, and, third, there was a legislative problem as the Hungarian film law was adopted before the country joined the European Union and needed to be brought in line with EU legislation, so for the first eight months of 2008, there was legal uncertainty."

That period of legal uncertainty ended in August, when the Hungarian Parliament approved amendments to the national film law, guaranteeing 20% cash back to international productions filming in Hungary until 2012 and bringing the law in line with EU regulations. That returned the industry an advantage that had been bringing in substantial cash incomes. According to Erzsebet Toth, general secretary of the Motion Picture Public Foundation of Hungary (MMK), an organization in charge of the local film industry, production spend in Hungary jumped from 7 billion forint ($30.1 million at the current exchange rate) in 2004, when the tax incentive system was not yet in force, to 56 billion forint ($240.8 million) in 2007. The 2008 figure is not in yet but it must be much lower than in the previous year, Toth added.

Despite the fact that some other European countries have recently increased tax incentives for film productions, people in the Hungarian film industry seem not to be worried. "Today Budapest is similar to what Prague was (for foreign crews) several years ago," said Peter Miskolczi, head of Eurofilm Studio, which is involved in European co-productions and operates as a service company for U.S. productions. "Crews that have been here and liked it here will come back." He added that the Hungarian tax incentive system is still attractive for foreign crews, while those interested in lower rates could shoot in neighboring Bulgaria and Romania.

Unlike the service sector, the Hungarian co-production sector showed a notable growth in 2008, with the total budget of all co-productions in which the country was either a majority or minority partner, going up from 17 billion forints ($73.1 million) in 2007 to 24 billion forints ($103.2 million). Industry insiders predict the figure to stay about the same for 2009. "There is not going to be a drastic change in the area of co-productions this year," Taba said.

What has been hampering further development of the co-production sector so far is an absence of a workable system for international cooperation. "MMK doesn't have the right to work on inter-governmental agreements," said Zsolt Kezdi-Kovacs, Hungary's representative to Eurimages, adding that it took years to conclude some inter-governmental agreements. Currently, Hungary has co-production agreements with Germany, France, Italy and Canada, Taba said, while a similar agreement with India is close to being signed.

But alongside inter-governmental agreements, MMK hopes to profit from signing bilateral agreements with individual film foundations abroad, which hasn't been done until recently. An agreement with the Irish Film Foundation, expected to be signed during the Berlinale, will become the first one in a series of bilateral agreement between MMK and foreign film foundations. "I hope that we will be able soon to sign similar agreements with local film funds in Germany," Kezdi-Kovacs said.

But it is not all that rosy when it comes to Hungarian film production. The film industry's primary concern is that the government, which has been generously financing local film production over the last few years, may curtail its spending on the film industry in light of the ongoing economic crisis. "Some very difficult times are ahead of us," said Ferenc Grunwalsky, chairman of the board of MMK.

According to Grunwalsky, MMK is in negotiations with the country's ministry of culture and the committee on cultural affairs about the size of state support to the national film industry in 2009, and the outcome of the negotiations is expected within a month from now. "We are prepared for the worst but I hope that the situation will not deteriorate too much," he adds. Until recently, MMK's spending on Hungarian film productions stood at around 20 million euros a year.
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