(Comtex Business Via Thomson Dialog NewsEdge)Oct 04, 2006 (New World Publishing via COMTEX) --Besides getting money from EU structural funds and large-scale national R&D programs, Hungarian companies and academic institutions could also benefit from more EU-funded joint research projects, which are financed from the community's framework programs for research and technological development (FPs).

The programs, which aim to nurture transnational cooperation in building a more competitive, knowledge-based European economy, are a collection of the actions at EU level to fund and promote research.
The currently running program is the sixth in the history of FPs; it began in 2002 and runs until the end of this year.
"Projects under the FPs have to be transnational," said Alexander Fazio, European incentives advisor at Ernst & Young's Brussels office. "In other words, only consortia of partners from different member and associated countries can apply."
The budget of the sixth framework program (FP6) is EUR19 billion. Among the special focus areas of the FP6 are life sciences, genomics and biotechnology for health, information society technologies (ISTs), food quality and society, new production and devices, and aeronautics and space.
In general, the EU contributes only a certain percentage of the total costs of a project. Participants have to mobilize their own resources accordingly. The percentage of the EU's financial contribution depends on the type of activity.
"Participation in the FP6 has been fairly low from the new member states," Fazio said. "This is probably due to the fact that companies and research institutions operating in these countries are not yet used to forming and operating cross-border research consortia."
According to Fazio, consortia have great autonomy for the management of their projects, adding that one of the project participants has to act as coordinator. The European Commission transfers the EC financial contribution to the coordinator for further distribution to the other participants. The coordinator is also responsible for delivering reports.
"To define details of relations between participants, the signing of a consortium agreement is highly recommended," Fazio said. "This agreement should also cover the ownership and possible utilization of patents resulting from joint research."
In Hungary, the FP6's IST program has proved attractive for local innovative firms and research institutions. ISTs constitute the largest component of the sixth framework program, and center on projects related to IT, communication, and technology that promote the creation of a knowledge-based society.
"Hungarian participation in both the fifth and sixth framework programs has been quite active, and is on the increase," said Orsolya Ignacz, EU subsidy section manager at Ernst & Young Advisory Kft. "Despite being relatively active, however, Hungarian participants have tended to be consortium members - not project leaders."
Projects usually need to be shared among seven or eight countries. They are also open to countries that are candidates for EU accession; hence Hungary's involvement since 1999 in the fifth framework program.
"Third" countries - i.e. those located outside the EU that are not accession candidates - can also participate, but receive limited funding. Meanwhile, intellectual property rights are difficult to transfer outside the EU.
"We'd like to promote the idea that Hungarian participation should be increased to a coordinating role," said Ignacz.
To tackle the problem, Ernst & Young organized a conference on the sixth framework program for a wider audience on March 31.
"Hungarian participation is lagging behind, compared to the older member states," Ignacz noted.
Ernst & Young itself won EU funding in order to promote ISTs in the new member states and the associated candidate countries.
"In Hungary, we have been dealing with national funding, and with indirect EU funding, though we have a separate office in Brussels that specializes in EU grants and keeps in close contact with the EU," said Ignacz.

The next cycle

With the FP6 closing this year, the EU has already announced the launch of the next program. FP7 will last from 2007 until 2013, with a total budget of EUR72 billion. Its thematic priorities will include energy and the environment, with the latter incorporating climate change.
"The EU has realized there's still a technology gap between Europe and the likes of the U.S. and Asia. R&D is one area that could help the EU close the gap, and it has decided to increase the budget significantly," Ignacz said.
While debate is still ongoing as to the final size of the budget, with the figure of EUR72 billion proposed by the European Commission, Ignacz opined that EUR50 billion is a more likely expectation. The issue needs to be settled soon so that the fund can become operational by 2007.
In the academic research sphere, Budapest University of Technology and Economics has carried out three successful projects.
"Universities often have established relationships with other universities; with private companies, it's a bit more difficult," observed Ignacz. "We have recently been assured that Hungarian authorities would like to strengthen the relationship between academic, research and private firms."
One notable exception to the relative lack of involvement in the Hungarian private sector comes from the local subsidiary of U.S. telecom giant Motorola, which is leading the secure mobile payment research project known as "SEMOPS."
Hungary has strong potential to be the region's "little tiger" in terms of software development, Janos Suga, managing director of Motorola Hungary Kft, told the BBJ in a recent interview.
"The problem is that a lot of [Hungary's homegrown software developers] are leaving to work abroad. We need to find Hungarian projects for these people," he said.
Suga also observed that R&D no longer works the way it used to. He explained that it used to be that one simply opened up a software development center; now, things get done through projects like SEMOPS, for which a major company appoints experts and works with them over a period of time.
In addition to providing administrative and financial coordination, Motorola Hungary is responsible for ensuring that the project utilizes the potential of new mobile technology to the utmost. The company is also providing test programs and facilities.
Further Hungarian participation in SEMOPS comes from T-Mobile Hungary Rt. The market-leading mobile unit of Magyar Telekom Rt is contributing to system development, will provide testing capabilities, and will also participate in demonstration. Raiffeisen Bank Rt will offer R&D assistance by representing the banking side for the "requirement definition," "design" and "evaluation" phases, while bookstore chain Libri Kft is providing insight into needs and requirements on merchant side.

Budapest Business Journal

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