2023.04.27. 2INTERNAL AFFAIRS05.01.2004 -The pricing machine in work06.01.2004 -Stricter sick benefit rules07.01.2004 -Defence Ministry to invite tenders for supply of weaponry for Gripens08.01.2004 -László on his way out, Draskovics to succeed him

- Motorway M5 a sticker-based one from March09.01.2004 -Economic policy does not depend on Draskovics

- Medgyessy: the government is planning for a longer periodFOREIGN AFFAIRS05.01.2004 -The EU will not bring price increase

- VAT rules to modify in May againMACROECONOMY05.01.2004 -2004. Year of adjustments?08.01.2004 -General government deficit higher than expected

- Force entrepreneurs: moratorium not to be extended09.01.2004 -Hungarian citizens not saving up

- Record low unemployment rateBANK05.01.2004 -Credit card besides trade credits08.01.2004 -Would K&H not undertake the damage caused by Kulcsár?

INSURANCE06.01.2004 - Insurance companies increased results08.01.2004 -Two hundred thousand people terminated their insurances09.01.2004 -OEP asking for more

HEAVY INDUSTRY06.01.2004 -Lyukóbánya to operate further07.01.2004 -Development at Modine

- Large Rába contract with Armed Forces- Lyukóbánya mine still operating- Reorganiastion at Linamar

08.01.2004 -NABI’s sales continue to decrease09.01.2004 -New bidding round for DAM assets

CHEMICAL INDUSTRY07.01.2004 -BorsodChem builds new chlorine plant

- Richter increased its Polfa share09.01.2004 -Humet capital increase may be put off till March

ENERGY INDUSTRY07.01.2004 -Péti Nitrogénművek Rt. entering liberalised market09.01.2004 -The chairman of MVM resigned

BUILDING INDUSTRY06.01.2004 -House construction will become significantly more expensive08.01.2004 -Wienerberger to start a capacity increasing investment

ELECTRONICS05.01.2004 -Flextronics posted better figures09.01.2004 -The Videoton group‘s revenues decreased

INFORMATION TECHNOLOGY06.01.2004 -Avaya sold its cable business line

TEXTILE- AND CLOTHING INDUSTRY07.01.2004 -Not enough sewers in Ózd

FOOD INDUSTRY06.01.2004 -Parmalat Hungária not for sale for the time being07.01.2004 -Rauch improved

AGRICULTURE08.01.2004 -The price of arable land increases at high speed

TRADE, FAIRS05.01.2004 -Merchants are not transferring VAT hikes to customers

- Car market broke a record- Stop for wreckage, product fee for cars

06.01.2004 -Lidl builds store in Komárom as well07.01.2004 -Reprography fee to increase08.01.2004 -Hypermarkets on the petrol market

- Decreasing prices at AudiTRAFFIC, TRANSPORT05.01.2004 -Demonstrations against M508.01.2004 -Will the Danube Highway be led in a tube?09.01.2004 -M5 to be built on PPP base

2023.04.27. 3SERVICES09.01.2004 -New owner at Fõfotó

INVESTMENT, DEVELOPMENT05.01.2004 -The house building fever calms down06.01.2004 -Gas-run power plants In Várda

- Spar to build a meat processor- TriGránit prepares for Millennium Tower III- The investment at Vörösmarty tér to start

07.01.2004 -Flats are still in demand09.01.2004 -Auchan to open only one outlet this year

- Multinationals carrying out developments in PécsSECURITIES’ MARKETS05.01.2004 -The stock exchange closed the year with weakening – but the whole year can be

considered successfulENVIRONMENT PROTECTION05.01.2004 -Environment loading fee in an increasing system

CULTURE09.01.2004 -Picasso and Klimt in Budapest

2023.04.27. 4INTERNAL AFFAIRS - 05.01.2004The pricing machine in workThere is hardly any product or service, the price of which has not increased in the new year. The price of food and medicines rose and the fee of telecommunication services as well. Domestic train tickets will cost 11 percent more, while a public transportation ticket within Budapest got more expensive to HUF 140. The price of basic food and medicines rose because the VAT rate increased. Due to the environment loading fee that was introduced as of January the canal fee increased significantly – in the capital, for example, by 36 % - and more has to be paid for household electricity also. However, pensions increased by 6.3 percent, the normative support of homeless supply grew by 30 percent and more money will be given to firemen as well – writes Magyar Hírlap’s extensive compilation, which takes account of nearly all changes that entered into force at the beginning of the year. (MH Jan. 1st p2-3)

INTERNAL AFFAIRS - 06.01.2004Stricter sick benefit rulesNational Health Fund OEP is strengthening its Budapest supervision network to abolish sick benefit deceptions. The 280-strong body is carrying out consiliary activities, too. Under the regulations in effect form January, those unable to work for more than 30 days should be checked by doctors even in the patient’s home in the presence of its family doctor. Should the patient not honour the regulations, sick benefit can be withdrawn. (VG, p 1 and 5)

INTERNAL AFFAIRS - 07.01.2004Defence Ministry to invite tenders for supply of weaponry for GripensThe Ministry of Defence will invite tenders for supplying Gripen fighter jets leased from Sweden with weaponry already this month. The ministry will spend about HUF 28 billion on weaponry for the 14 fighter planes. The tender calls for the purchase of air-to-air and air-to-surface missiles and ammunition for the automatic guns of the fighter planes. The U.S. and the Swedish governments, three German companies and an Israeli firm were invited to the competitive bidding. (Nszab, p 5, MH, p 4, NSZ, p 4)

2023.04.27. 5INTERNAL AFFAIRS - 08.01.2004László on his way out, Draskovics to succeed himThe Prime Minister has surrendered its Finance Minister: effective on 15 February, Minister of Finance Csaba László will leave his post. Succeeding him is Tibor Draskovics, the current cabinet chief. Draskovics’ position will be filled in by Tamás Katona, former president of the Central Statistical Office, deputy State Secretary of the Prime Minister's Office. Discussing the reasons for the departure of the Finance Minister, Prime Minister Medgyessy said the GDP-proportionate general government budget deficit ultimately totalled 5.6 percent, which was higher than the 5.2 percent predicted by the Finance Ministry in December, and significantly worse than the 4.8 percent target set by the government. "This difference made it necessary to draw both professional and personal conclusions.” – the Prime Minister said, adding that although the outgoing Finance minister has solved many problems successfully, the government cannot afford to risk its credibility and prestige by taking no action after such a discrepancy. Medgyessy added that he would authorise the new finance minister to re-think how the current macro-economic figures and the state of the 2003 general government budget would affect the introduction of the common European currency, the euro. The new Finance Minister is to open negotiations with economic players and the representatives of the different political interests, so that the success of the government's long-term reform programmes may be ensured through a wide consensus, Medgyessy said. Finance Minister Designate Tibor Draskovics, allegedly on vacation in Kenya at present, stated that he would review Hungary's schedule for joining the Eurozone by 2008 and also how budget goals could be met. Foreign Minister and major coalition party chairman László Kovács also explained the move by the higher than expected general government deficit last year, whilst Chairman of the Alliance of Free Democrats (AFD) Gábor Kuncze thanked László for his work as a Finance Minister, adding that the gap between the December forecast of the general government budget deficit and the actual figure was so great that he had to accept responsibility for it. Chairman of the opposition Fidesz-Hungarian Civic Alliance Viktor Orbán said he was surprised by the reasons given for the dismissal of Finance Minister. Orbán underlined that the degree of the general government budget deficit had already been known by everyone for two or three months. Chair of Hungarian Democratic Forum (MDF) Ibolya Dávid was of the same opinion. She went on to say that she believes the government is now trying to shift responsibility to the minister for its economic policy that lacks any concepts. Olivier Desbarres, Vice President for emerging markets at Credit Suisse First Boston said that László's dismissal is a positive development, because the market did not think that he had much credibility. He added, however, that it would be naive to think that replacing László with Tibor Draskovics is the solution to all of Hungary's fiscal problems. Zoltán Török, macro analyst from Raiffeisen Bank is of the opinion that appointing a new Finance Minister would have a stabilising effect only if the overly optimistic approach could end. Mária Zita Petschnig from Pénzügykutató said that it was rather a political than an economic decision, Csaba László was simply made to be the scapegoat. Former Finance Minister László Békési has a similar view, however, he added that the change was necessary, since the Finance Ministry has made a series of mistakes. Békési concluded that the whole economic policy of the government is mistaken. György Barcza, analyst form ING thinks that the real question is what kind of changes the successor of László is planning and whether he can realise them or not. (MH, p 1, 2 and 3)

Motorway M5 a sticker-based one from MarchThe government has decided to buy all the shares of M5 motorway operator Alföld Concession Motorway (Alföldi Koncessziós Autópálya (AKA)) by January 31 - Prime Minister Peter Medgyessy told the press on Wednesday. The transaction, the price of which was not revealed, is made possible through the proceeds of Postabank’s privatisation. The credit institution was sold for HUF 101 billion. The purchase price of AKA may not be higher than this figure. According to calculations, the motorway operator is worth HUF 70 billion and it has HUF 50 billion in debt. A decision has been made that motorway M5 will be included in the so-called "sticker system", but prices will not be raised. At the same time bidding will be opened for the construction of M5 up to Szeged with the new stretch of the motorway to be completed by December 31, 2005 at the latest. Necessary funds for the construction of the remaining 45-kilometre stretch come from the Transport Ministry’s motorway construction fund. (NG, p 3, MH, p 1 and 9)

2023.04.27. 6INTERNAL AFFAIRS - 09.01.2004Economic policy does not depend on DraskovicsAccording to foreign press reactions after the dismissal of the Finance Minister, new minister Tibor Draskovics is as weak politically as his predecessor was. Financial Times (FT) writes that the new member of the government, like outgoing László, does not have a strong background in governing Hungarian Socialist Party MSZP. Csaba László was often criticised for not communication appropriately with the market, however, his dismissal can be rather put down to his political positions than to his lack of professional skills. The economic daily draws the attention to the fact that the new Minister is no member of any parties and also that he has quite good personal contacts with the Prime Minister. The German version of FT states that sacking László is a sign that Péter Medgyessy is very strict in decreasing general government deficit. Handelsblatt, whilst writing in details about the loss of faith as a cause of the Finance Minister’s dismissal, remembers that foreign investors have downsized their forint investments recently, which resulted in many unsuccessful treasury bond auctions. International Herald Tribune is not expecting any significant changes in Hungary‘s economic policy, since the outgoing and the new Finance Minister have similar political and business backgrounds. Draskovics, as the cabinet chief for the Prime Minister, was present in the preparation and announcement of almost all important economic policy decisions, for example at the signature of the financing contract for the fourth tube line or in discussions on public workers‘ wage hikes. Although he is a lawyer by profession, experts say it can not be a problem and the future Finance Minister had opportunity to work together directly with almost everyone who had a say in decisions in the past more than 15 years. Analysts are of the opinion that it depends rather on the political constellation and not that much on the new Finance Minister what kind of economic policy the country is going to have in the near future. László Békési, the first Finance Minister of the Horn-led government says that Draskovics is a very professional expert who would be capable of working out a totally different economic policy than is now in effect and he added that there was a need for that since the approved 2004 budget was too tight and realistically can not be met. Tibor Draskovics announced that it was quite important that the Hungarian economy could reach the highest peaks of European integration and also that euro should replace the forint, but the most important was that the accession was successful and not that it was as fast as possible. Observers add that all this shows that Hungary will not be able to meet Maastricht criteria by 2006, which is the pre-requisite of the monetary accession set for 2008. Vice President of the National Bank of Hungary MNB Péter Adamecz confirmed that the central bank continuously supports the process of euro accession as fast as possible, but he added that the decision was up to the government to make. Experts point to the fact that there can be heated debates again between the central bank and the government, since contacts between central bank governor Zsigmond Járai ad Tibor Draskovics are not better than they were with Csaba László. As daily Magyar Hírlap has learnt, the dismissal of the Finance Minister was decided upon in Thailand with Medgyessy only waiting for the right occasion to come to announce it. (NG, p 1 and 3, VG, p 5, MH, p 1-3)

Medgyessy: the government is planning for a longer period2004 will be the year of European Union accession, a crucial event in the history of the Hungarian Republic – leading politicians of the Hungarian Socialist Party MSZP and the government voiced at a meeting of Dialogue for Budapest Foundation (Párbeszéd Budapestért Alapítvány) and Hungarian Socialist Party‘s Budapest Council (MSZP Budapesti Tanácsa). The Prime Minister emphasised that the difference between cabinets creating chances and giving grace lies in the fact that the former one does not let that the price for welfare will be paid by children. Péter Medgyessy added that he would expect incoming finance minister Tibor Draskovics to pursue a tight fiscal policy and bring the rise in living standards into line with the country's economic potential. He went on to say that they are planning for the longer term and this approach would bring them popularity. Then he added that they had been through three successful elections and they would win the fourth one and the fifth one, too. Through Hungary‘s accession to the European Union, a dream of decades is becoming true and an opportunity arises for all Hungarians to reunite without redrawing the country‘s borders – Foreign Minister and Hungarian Socialist Party Chairman László Kovács said. MSZP parliamentary floor group leader Ildikó Lendvai stressed that her party, through undertaking its program in the new circumstances can gain an election victory in 2006. She added that there must be intervention in the health service, or public administration which could result in the harming of the interests of some people or groups, that in turn could lead to a temporary loss of popularity for the government and the party. (NSZ, p 3)

2023.04.27. 7FOREIGN AFFAIRS, EUROPEAN UNION - 05.01.2004The EU will not bring price increaseAfter the EU accession, regardless a few exceptions no price increase is expected in case of consumer goods. According to ÉFOSZ (National Association of Food Distributors) the rate of import food will not exceed 12-12 percent after next May either. For the Hungarian food industry those countries can mean competition that will join the community together with our country. OKSZ (National Commercial Association) does not count on a price increase in the market of neither food, nor clothing products, indeed supply is expected to expand after the accession, which can press prices downwards. Otherwise, according to György Vámos, secretary in chief of OKSZ, this year, due to the restrain of wage outflow, the growth of consumption can decrease to 3-5 percent from last year’s value of around 8 percent. (Nszab. Jan. 3rd p17, MH Jan. 3-4th p10, NG Jan. 5th p5)

VAT rules to modify in May againThe government plans to enact the Union VAT Law not as a separate legal material, but rather through modification suggestions. This way, misunderstandings on where certain products should be grouped could be prevented, since new VAT brackets will be effective only for the scope mentioned in the modification suggestions. The draft is set to be up for debate in February in Parliament with the decree to be accepted till 15 March. The Law is set to be twice as long on the back of regulations in connection with community trading. One debated point is the self-assessment of VAT on goods coming from a third country, which can increase Hungary’s transit role. Also on 1 May, the global quota, operating as a part of the licensing system, will be abolished, with its role taken over by the Union’s trading regulations. The quota mentioned – to be effective according to separate agreements with China and with other non-WTO members, with whom Hungary has no bilateral free-trading agreements - applies to shoes and clothes in the first four moths of 2004. Under the rules, a total of 9 million shoes can be brought to the country between January and April, 8.3 million pairs of it can come from China. Upper clothes can enter Hungary to the amount of USD 11.6 million, whilst other clothes to the tune of nearly USD 7 million. The share of products from China is USD 6.7 and USD 1.9 million, respectively. (Nszab, 3 Jan, p 17, NG, 5 Jan, p 3)

MACROECONOMY - 05.01.20042004. Year of adjustments?Market analysts are of the opinion that should economic policy regain its creditability, goals set up by the government can be met. Analyst from ING György Barcza states that a lot depends on what effects austerity measures taken at the end of 2003 will have on economic developments (e.g. interest rate hike, modifications in the home loan system) and also on how much unfavourable process of 2003 can turn for the better. The government is firm in its goals to meet the 2008 deadline for entering the eurozone and it has a further goal of pushing budget deficit to 3.8 percent of the GDP. However, analysts say that the budget deficit will be one percent more next year. Macro analysts forecast a 6.1 percent year-on-year inflation for January 2004, whilst the corresponding figure for next June and September is put at 6 percent and for 2004 December at 5.5 percent. Other projections call for an even 7 percent inflation for the beginning of the year, going down to under 6 percent till the end of the year. Deficit of the balance of payments is put at 4.8 percent for January, going up to 6.1 percent in the second quarter, then moderating to 4.3 percent in the third quarter, then increasing again to 4.7 percent in the last three months of 2004. GDP growth for the separate quarters is thought to be around 3.3, 3.2, 3.5 and 3.7 percent, respectively. An expert from Concorde says that forint will get stronger by the end of the year. Andor Daróczi is expecting a HUF/EUR rate of 255 and a HUF/USD rate of 200 for December. (NG, p 1 and 3, MH, p 1 and 10)

MACROECONOMY - 08.01.2004General government deficit higher than expectedHungary's general government deficit was HUF 1,054 billion in 2003, according to preliminary figures announced by the Finance Ministry. The figure corresponds to 5.6 percent of 2003's estimated GDP and is HUF 80 billion up on the Finance Ministry’s earlier forecast. In its latest forecast, the Finance Ministry put the annual deficit at 5.2 percent of the GDP at the end of December. Reasoning the higher than expected data, Finance Ministry sources said that VAT revenue fell short of the ministry's calculation and so did personal income tax and corporate tax. Social security and housing altogether accounted for a deficit of HUF 50-70 billion. As for this year’s general government deficit, analysts remarked that since austerity measures of the government are likely to result in a one percent drop of the deficit posted in 2003, the government’s forecast of a GDP-proportionate general government deficit at 3.8 percent for this year seems not that credible. Experts are counting on a general government deficit of 4.5-4.6 percent of the GDP for 2004. However, they added that larger than expected inflation can give an additional push to the figure. (NG, p 1 and 3)

2023.04.27. 8MACROECONOMY, LABOUR - 08.01.2004Force entrepreneurs: moratorium not to be extendedThe Labour Ministry is not planning to extend the half-year moratorium given to enterprises employing forced entrepreneurs. The deadline was 31 December, 2003. Thus, companies giving their employees schemes concealing their employment can count on penalties running up to HUF 6 billion. However, a serious supervisory campaign is not in sight and companies have nothing to fear of the tax police till 30 June, since one paragraph of the effective Tax Law gives them amnesty, should they restructure debated contracts till that date. (MH, p 1 and 11)

MACROECONOMY - 09.01.2004Hungarian citizens not saving upAlthough researchers see signs of recovery in comparison with figures of 2002, the study of market research firm GfK Hungária Rt shows that 55 percent of the general public still has no investment at all. In the 12 Western European countries surveyed in parallel, only 22 percent said they had no investments and also in the Czech Republic 10 percent more of the respondents were saving up for the future. The decisive majority of Hungarian savings are on current accounts or in short-term bank deposits. Those having their savings in life insurance policies seem to have stabilised at around 12 percent. Only four percent of public savings is kept in pension funds, whilst investments in securities reached only 1 percent, compered to a corresponding figure of 7 percent measured in current European Union member states. (NG, p 5)MACROECONOMY, LABOUR - 09.01.2004Record low unemployment rateAccording to the data of KSH (Central Statistics Office) the unemployment rate was 5.5 percent in average between last September and November, which is 0.4 percent lower than that of the previous year. Since the political transformation the unemployment rate has never been this low. (The lowest value up to now, 5.6 percent was showed by statistics in 2001.) In the examined three months 65.2 percent of the population of a working age was present in the labour market; their number increased by 77 thousand people to 3 million 92 thousand persons compared to the data of 2002. The number of unemployed people was 233 thousand, which is 12 percent less than a year ago. (MH p9, NG p3)

BANK - 05.01.2004Credit card besides trade creditsTrade crediting market expanded by a maximum of 10 percent in the last month of 2003, which compares to a 30-40 percent increase posted in the corresponding period of the last years. During Christmas shopping, more and more clients are using credit cards. Majority of banks granting trade credits is entering the market with their own credit cards, thus offsetting the restricted increase of trade crediting. Budapest Bank counted on outlays of HUF 17.5 billion in 2003. HUF 1 billion from the HUF 3 billion annual revenue income comes from the credit card, introduced in 2003. Credigen Bank had a HUF 1 billion larger than expected sales revenue in December, however, all this was still not enough for the credit institution to exceed the HUF 8.5 billion recorded in 2002. At Cetelem, outlays exceeded expectations. (Nszab, 3 Jan, p 17)

BANK - 08.01.2004Would K&H not undertake the damage caused by Kulcsár?K&H Bank (Commercial and Credit Bank) makes verbal damage compensation offers to its customers irrespectively of the amount indicated on the bank notices sent out by its former managing director, Attila Kulcsár, who is accused with defrauding. György Magyar, attorney at law, told this to Magyar Hírlap. He also complained that the bank got a confidentiality paper signed by one of its customers even before stating the offer. According to the paper’s information the offer made by K&H does not worth even half of the sum that could be claimed by the customer based on the statement signed by Kulcsár. The financial institute did not answer the questions of the paper yesterday. (MH p4)

2023.04.27. 9INSURANCE - 06.01.2004Insurance companies increased resultsCompared to last year’s figure of HUF 28 billion, the earnings before interest and tax of Hungarian insurance companies will expectably exceed HUF 30 billion – announced PSZÁF (State Supervision of Financial Institutions). While according to the international trends life insurance constructions develop faster, a more significant growth can be measured in the non life insurance business line in Hungary. Based on the figures of the first nine months the 31 market players achieved a premium income of HUF 408.8 billion, within this HUF 156.1 billion arose from life insurances. The boom sector of the non life insurance market is vehicle insurance and liability insurances deliver better figures up as well. The cost ratio improved at most constructions, cost ratio did lowered in the life insurance sector, however it increased in the non life insurance business lines. The market remained concentrated: the five market leader companies controls more than 80 percent of the market. (VG p11)

INSURANCE - 08.01.2004Two hundred thousand people terminated their insurancesAt the end of last year more than 200 thousand car owners indicated that he/she would like to contract third party liability insurance at a new insurance company for 2004. This year can bring serious changes in the insurance market, mainly owing to the two new players, Union and Magyar Posta insurance company. Newcomers can obtain a significant slice from the cake including 3.6 million customers owing to their cheap premiums and transparent fee structure: Magyar Posta Biztosító registers 62 thousand and Union 50 thousand contracting parties on an offer level in the current period of processing. Last year less, but this year more than 100 customers parted with Allianz Hungária Biztosító, which possesses nearly half of the market; the number of new members was around 60 thousand persons in both years. The second and third largest players of the market, Generali-Providencia and OTP-Garancia refused to provide data. (NG p4)

INSURANCE - 09.01.2004OEP asking for moreNational Health Insurance Fund OEP is in negotiations with insurance companies and is asking three times as much as earlier for the cure of those injured in traffic accidents. Insurance companies have paid a total of HUF 500 million, but the health insurer spent HUF 1.5 billion for the treatment. Health Minister Mihály Kökény is of the opinion that larger payments will mean that third-party liability insurance fees will not increase. However, daily Népszabadság writes that insurance companies may forward their excess costs to their clients. (Nszab, p 5)

HEAVY INDUSTRY - 06.01.2004Lyukóbánya to operate furtherThe Lyukóbánya mine near Miskolc, the last deep-operation mine of the coal field in Borsod county, will continue to operate. A total of 37 million tons of coal has been extracted here, but a further 15 million tons is still under the ground and is going to be extracted for public goals. American owner AES Corporation has invited bids for the further operation of the mine, since it has become uneconomical. Four investment groups have signalled interest and talks are intense with one of them with results expected in the foreseeable future. (NSZ, p 5)

HEAVY INDUSTRY - 07.01.2004Development at ModineAmerican owned Modine Hungária Kft. intends to double its turnover in the coming three-four years. The company’s annual sales revenue adds up to 30 million euros at the time being. The Mezõkövesd based firm that produces special cooling equipments for the automotive industry bought the buildings of the neighbouring company and launched a development programme in a value of 8 million euros. Modine employs 224 workers and turns out its products for export only. (VG p6)

Large Rába contract with Armed ForcesVehicle company Rába will receive contracts to supply further vehicles to the Hungarian Armed Forces in 2004 and 2005, with payments of HUF 9.6 billion in 2005 and of HUF 12.8 billion in 2006. Under an earlier agreement, Rába has contracts worth HUF 4.2 billion with the Armed Forces for 2004. After the announcement was made, trading in Rába shares was suspended on the Budapest Stock Exchange for more than one hour. According to analysts, the order can increase Rába’s figures by almost HUF 1 billion this year, however, it is not expected to be enough for a profit by the end of the year. Rába had net consolidated sales revenues at HUF 21.8 billion in the first three quarters of 2003 and posted a HUF 4.5 billion after-tax loss. (VG, p 9, NG, p 10)

2023.04.27. 10Lyukóbánya mine still operatingMixed enterprise Lyukószén will operate Lyukóbánya mine in a lease contract for a period of at least one year. Plans call for the employment of at least 300 miners. András Szepessy, general manager of Lyukószén Kft., owned by Mendikás and Regulax Kft., said that it is only up to the mine’s management whether they will enter into a contract with owner ASE. The American owner reasoned that stricter environment protection regulations and liberalised electricity market were behind its suggestion to close the mine. Under the current resolution, extraction can go on till July. The mine produces 25-30 thousand tons of coal monthly, with three-fourth if it sold to Borsodi Hõerõmű, also in the interest group of AES. (VG, p 7, NG, p 5)

Reorganiastion at LinamarOrosháza Automotive Divízió and Orosházi Linamar Products Division are amalgamated under the name Linamar Product Division. LPD’s new factory director is Gábor Fehér who took over this position from Istvánt Prozlik. Mr Prozlik will continue his career at the company in a different position. The organisations of Orosháza Agricultural Divízió and Linamar Hungary Rt. Központ’s (Linamar Hungary Co. Centre) division will continue their operation under the name Orosháza Agricultural Divízió. Changes came to effect as of January 5. (VG p9)

HEAVY INDUSTRY - 08.01.2004NABI’s sales continue to decreaseThough in the last quarter of 2003 NABI Rt. sold 331 buses, on an annual level it still lags behind the set quantity of 1200 pieces. Last year the company lowered its plan figures three times, but the currently published data is still lagging behind the target that was modified in October by 51 pieces and by 230 pieces from 2002’s figures. The factory is pessimistic in long term as well: according to Péter Róna, chairman, they would revise the production plans for 2004 and would expectedly organise themselves for a lower production volume. With regard to 2003 analysts expect losses of 11.3 million dollars from NABI and professional opinions are not optimistic for this year either: in addition to the sale of 1280 buses they forecast one-and-a-half million dollars in minus. The hedge-hopping of the dollar affected the firm, which realises the majority of its revenues in dollars, very sensitively, though in short term its hedge transactions concluded at a dollar exchange rate of HUF 231 are extremely profitable. (NG p7-8, VG p9)

HEAVY INDUSTRY - 09.01.2004New bidding round for DAM assetsMátraholding Rt., the company managing the liquidation of the steel works DAM decided to issue a new call for bids for the steelmaker‘s assets yesterday. Under the new bidding rules, operating assets are priced at HUF 4.4 billion, whilst stocks at HUF 645 million. Unlike in the first round, this time they can be bought separately, too. Deadline for the bidding is 9 February and information has it that among bidders unsuccessful bidders of the recent Dunaferr process would turn up. (NG, p 5)

CHEMICAL INDUSTRY - 07.01.2004BorsodChem builds new chlorine plantIn framework of the chlorine-vinyl chain capacity expanding programme BorsodChem entered into a contract with Chlorine Engineers Corp. Ltd, which company belongs to Mitsui & Co. Ltd. The agreement aims the working-out of the basic design of a membrane-cells electrolysis plant that can be expanded from 80 kilotons up to 160 kilotons a year. The new membrane-cells chlorine plat will start its test run at the end of the coming year. (VG p9, MH p9)

Richter increased its Polfa shareRichter acquired GZF Polfa’s additional 12 percent share package by effecting its pre-emption right. The Polish Treasury Ministry offered the package last year already. The share exchanged owners on December 30th at a nominal value of 29.7 million z³otys, the Hungarian investor’s ownership rate increased to 63 percent in the pharmaceutical company. Richter intends to acquire 100 percent of Polfa. The current purchase hardly affects the Hungarian company’s financial situation; at the end of September the firm had HUF 40.2 billion in cash and securities. (VG p9, NG p10, MH p13)

CHEMICAL INDUSTRY - 09.01.2004Humet capital increase may be put off till MarchThe capital raise of dietary supplement producer Humet approved back in December may be put off till March, since the Court of Registration has not registered the earlier capital reduction yet. According to plans, the capital raise would apply to all shareholders registered at the annual general meeting. Bankruptcy proceeding that seemed quite likely in December is not threatening Humet, since in the meantime it supplied products to Poland to the amount of EUR 50 thousand and it got an order for a further 26 thousand portions from the United States. (NG, p 11)

2023.04.27. 11ENERGY INDUSTRY - 07.01.2004Péti Nitrogénművek Rt. entering liberalised marketPéti Nitrogénművek Rt. was the first company to have entered the liberalised Hungarian gas market as an entitled consumer. Nitorgénművek plans to get the 400-450 cubic metres of natural gas necessary annually to produce nitrogen fertiliser mainly from imports from this year, whilst a small part will be accounted for by a Hungarian trading company. Information has it that chemical companies BorsodChem Rt. and TVK have also entered or will enter the market soon. Entitled retail consumers have until the end of March to terminate their utility contracts. The liberalised market means that around 70 percent of it is open, translating into more than 170,000 consumers. Should concerned parties not enter the market till the March deadline, their next opportunity to do so will come only in October. Companies with trading rights on the market include oil company Mol Rt., regional gas distributor Tigáz Rt., Budapest gas distributor Fõgáz Rt., First Hungarian Natural Gas and Energy Trading and Service Kft. (Elsõ Magyar Földgáz- és Energiakereskedelmi és Szolgáltató (EMFESZ) Kft.) or trading companies founded by these firms. According to experts, those with chances to gain a sizeable market share are Mol’s subsidiary and EMFESZ. (NG, p 3)

ENERGY INDUSTRY - 09.01.2004The chairman of MVM resignedYesterday the chairman of MVM (Hungarian Electricity Works) resigned. Gyula Lengyel got into a conflict with general manager László Pál. Due to the tension between the two executives it was raised earlier that László Pál, former ministry of industry of the Horn cabinet, would continue his career at the head of MÁV (Hungarian Railways), where he would have replaced László Udvari. Otherwise the Ministry of Economy and Transport is considering the replacement of the railway company‘s chairman. (Nszab. p1, 15)

BUILDING INDUSTRY - 06.01.2004House construction will become significantly more expensiveBuilding material producers have or will considerably raise their prices in the next few months, thus it is worth starting purchases as soon as possible for those considering house construction. According to the „market research” of Magyar Hírlap the average degree of the price raise will be 6 percent, probably except for roof building, since the price of wood and ridging will not increase, although the price of ceramic tiles rose by 10 percent in December. Based on the answers given to the paper’s questions cement is 6 percent more expensive already, and the same price increase is expected in case of bricks at Wienerberger as of April, due to the two new tax types (eco and energy tax). (The company will presumably „swallow” the gas price raise and it had already built the more expensive electricity into its prices last autumn.) As of January Ytong raised the prices of certain pore concrete products by 9 percent; binding materials are 5, while blocks 9 percent more expensive. As of March armoured concrete elements necessary for house construction will cost more; here the degree of the price increase is around 6 percent and as of January 12th plasterboard will be 3 percent more expensive as well, while the prices of wood materials will not be raised by producers. As of January 1st the price of plastic windows was raised by 5 percent by Fenstherm Kft., which plans additional price raises in two months, and Kanada Trade Kft. – which manufactures wooden shut-off devices – will raise as of March, by 5-10 percent. (MH p1, 9)

BUILDING INDUSTRY - 08.01.2004Wienerberger to start a capacity increasing investmentWienerberger Téglaipari Rt.’s (which controls 55 percent of the domestic market) HUF 1.5 billion worth investment in Kisbér has started recently, within the frame of which the plant’s capacity will be doubled. As a result of the development to be completed by the end of March, by utilising the total capacity instead of the current 70 million small size bricks they will produce 140 million pieces. Ferenc Kovács, production manager of Wienerberger, which operates 30 production plants in Hungary, stated that the company would decide, whether they will expand the capacity of the factory in Mezõtúr to the production of 140 million small size bricks annually with an investment of HUF 800-900 million. The development is necessary, because in the past two years the housing market increased dynamically and already started construction continue this year as well. The unfavourable effects of changes taking place in the home loan system are expected to considerably influence the market in 2005. (VG p5)

2023.04.27. 12ELECTRONICS - 05.01.2004Flextronics posted better figuresFlextronics International Kft. achieved a sales revenue of HUF 747 billion in its business year ended at the end of March last year. This exceeds the figures of the year before by more than 30 percent. The improvement can be explained by the growing market and the increase in the company’s services. Flextronics is the very first company in Hungary that produces electronic products on commission of Chinese companies. The turnover of Flextronics International, which is registered in Singapore, exceeded 13 billion dollars last year. (VG p4)

ELECTRONICS - 09.01.2004The Videoton group‘s revenues decreasedLast year the Videoton group achieved a turnover of nearly HUF 70 billion, which is worse than that of the previous year by almost HUF 4 billion and it is expected to close 2003 with an operating profit of more than 4 billion – reported Gábor Széles, CEO. (MH p10)

INFORMATION TECHNOLOGY - 06.01.2004Avaya sold its cable business lineThe United States based Avaya sold its cable division to CommScope for 263 million dollars. LNX Rt. that is the most significant Hungarian trader of the system does not expect considerable changes arising from the transaction. However is possible that CommScope’s products will appear on the company’s product scale at the mean time. LNX whose market share adds up to 25-30 percent in the Hungarian cabling market achieves an annual sales revenue of HUF 1.4-1.5 billion from this business line. (VG p8)

TEXTILE- AND CLOTHING INDUSTRY - 07.01.2004Not enough sewers in ÓzdFairway Kft. will lock its plant in Ózd and will move production to Eget after it was looking for sewers in vain. The company with English interests has shifted from the manufacturing of suits to men’s coat in a development of HUF 75 million, however, it could not increase its current workforce of 130 by another 40, and thus it could meet only 70 percent of its orders. 60 workers form Ózd will have a job in Eger after relocating there in February. (VG, p 7)

FOOD INDUSTRY - 06.01.2004Parmalat Hungária not for sale for the time beingNeither parent company nor its Hungarian subsidiary Parmalat Hungária is giving information on to what extent the case around the parent company will have an effect on the operations of the Hungarian subsidiary. In the long run, the Hungarian company can be hardly hit because of the Italian developments, since earlier it needed financial help from the Italian parent company so that it could still operate in a stable way financially. Éva Nagygyörgy, spokesman if Sole Hungária Rt. stated that the financial problems surrounding Italian Parmalat do not have an impact on the Hungarian dairy market, but an eventual sale of the subsidiary could lead to forces being transformed, since Parmalat Hungária boasts a 5 percent stake in milk processing. She went on to say that should the sale of the subsidiary be on the agenda, not only Sole, but also other larger Hungarian dairy companies would think over the possibility of buying it. Daily Napi Gazdaság has learnt that Új MiZo Rt. would not buy the Parmalat subsidiary, since the company is in the process of reorganisation at present. István Kispál, the Central European Director of Friesland, reflecting on the Parmalat bankruptcy case, said that what is not for sale can not be bought. (NG, p 5)

FOOD INDUSTRY - 07.01.2004Rauch improvedLast year Rauch Hungária Kft. achieved revenues of around HUF 18 billion. This exceeds that of the previous year by 40 percent. Export provides more than 40 percent of the turnover. In Hungary the company processes 70 thousand tons of fruits annually, its daily capacity is 1.7 million boxes and bottles. (VG p8, NSZ p10)

2023.04.27. 13AGRICULTURE - 08.01.2004The price of arable land increases at high speedThe price of Hungarian arable land by hectare increased to more than HUF 400 thousand from the HUF 300-350 thousand at the beginning of 2003, and in short term – until the summer of 2005 – a price raise of additional 35 percent is expected – said Zoltán Fűr, executive of Földbróker.hu. In a five-year horizon a hectare price of HUF 800-1200 thousand is not excluded either. (One hectare of Austrian land currently costs HUF 1.5-2.5 million.) In the Hungarian land market the effect of mortgage crediting cannot be perceived yet, in addition, the reception of EU support of maximum HUF 38 thousand per hectare is also delayed. The impact of the state’s land purchasing programmes is minimal, last year it only concerned one percent of the land. (NG p1, 4)

TRADE, FAIRS - 05.01.2004Merchants are not transferring VAT hikes to customersAlthough value-added tax rates of meat, vegetables, fruit, dairy products, cereals and that of sugar was raised from 12 percent to 15 percent as of January 1, majority of food stores have not modified prices accordingly yet. Cora is advertising that it freezes its prices. Stores of Cora network will not have larger prices because of increased VAT brackets in January for sure. Hungarian-owned retail chains are also acting the same way. CBA is taking a wait-ad-see approach till its suppliers are building larger prices into their tariffs. In co-operative stores price hikes are expected not earlier than in one and a half month. G’Roby is coming up with new prices in parallel with ordering new products to replace old stocks. In its six stores in the capital, G'Roby calculates to have losses at HUF 1.2 million on the back of VAT modifications. Spar Magyarország, however, stated that it does not wish to mislead its customers and suppliers by promising that it would not build higher tax rates into its prices. When it comes to smaller shops, prices are set to modify within some weeks. Small shops can be hardly hit by tighter measures effective as of January, that is, stricter hygienic regulations and the abolition on self-governmental leases. (Nszab, 3 Jan, p 17, MN, 3 Jan, p 1 and 11)

TRADE, FAIRS, CAR - 05.01.2004Car market broke a recordCompared to the number of the year before last year that is 173 thousand vehicles, there were 210 thousand new passenger cars sold in Hungary last year, which is a record. According to Magyar Gépjárműimportõrök Egyesülete (Association of Hungarian Vehicle Importers) in the background of the expansion stood advanced purchasing, whereas many buyers counted on rise in prices. Due to the harmonisation of prices to the European price level an increase of 10 – 15 percent is expectable at the dealers. The market leader Suzuki counts on selling 42 thousand vehicles this year. There were 85 thousand cars produced in Esztergom in 2003, owing to an investment of HUF 60 billions the capacity of the factory will be increased up to 200 thousand vehicles by the year 2005. Opel plans to sell 28 thousand cars, while Porsche Hungária wants to market 41 thousand vehicles in 2004. Renault sold approximately 16 thousand cars until the end of September last year. (MH Jan. 3-4, p9)

Stop for wreckage, product fee for carsAs of 1 January, used cars with only an Euro 3 engine and lighter than 3.5 tons can be brought to Hungary. These regulations, however, will be in effect till Hungary’s May 1 accession to the European Union, since after May every used car with a Union-type licence can be marketed in Hungary. Damaged cars taking out of the traffic abroad are not likely to be given the green light here, thus Hungary’s not going to be the place for wreckage from Western Europe. It is the manufacturer’s responsibility to deal with cars that are taken out of the traffic in Hungary. What is a problem is the products of car companies that cease to exist and also used cars that go to other countries. In Hungary, 400,000 cars of this type, mainly Trabants, Wartburgs and Ladas are in use. State intervention is indispensable to solve this problem. Daily Magyar Hírlap learnt that the Environment Protection Ministry is planning to introduce a product fee to build up the necessary car deconstruction and utilisation background. Plans call for a fee of HUF 10,000-15,000 per ton, which will be levied not only on new cars, but also on those that are brought to the country as used ones. (MH, 3 Jan, p 5)

2023.04.27. 14TRADE, FAIRS - 06.01.2004Lidl builds store in Komárom as wellLidl Magyarország Kft. (Lidl Hungary Ltd.) bought an area of 11 thousand square metres to construct a discount store in Komárom. The German store chain has to apply for building permit still in this year, and within a year after handing in the application the investment has to be started. The municipality rose this condition, because in the „Csillag” (star) quarter of the city that was chosen for the investment a tourism centre will be implemented, in the infrastructure development of which Lidl undertook cooperation. In the mean time the German discount store chain builds its Eastern European logistics and educational centre in Székesfehérvár, where five stores will be handed over this year. (VG p1, p7)

TRADE, FAIRS - 07.01.2004Reprography fee to increaseAccording to the recommendation of the Hungarian Reprography Association the reprography fee to be paid by importers will increase by 7 percent as of January and the tariff borne by operators by 5 percent. According to the plans of the organisation faxes and scanners will also be included among tools, on which loyalty is imposed. Elaboration of the government decree will take a longer period of time due to conciliations. According to the association’s estimations last year HUF 350 million was received from reprographic fees. (VG p4)

TRADE, FAIRS - 08.01.2004Hypermarkets on the petrol marketHypermarkets Tesco and Auchan will open their first petrol stations in the parking places at outlets near the M5 stretch leading out of Budapest already in the first half of the year. Tesco announced that besides the petrol station, a shop and a car wash could also be established at the same place. The UK store chain plans to build further petrol stations this year. Hypermarket chains are of the opinion that there is a large traffic at their parking lots, that is why it makes sense to build there petrol stations, operating with lower than average prices. Experiences coming from France and England are positive on the economic outlook for a petrol station chain for the hypermarket giants. Tesco has earlier planned to join forces with Klubpetrol that is selling petrol HUF 10 down on Hungarian oil giant Mol’s prices, but after the construction of the first petrol station of that kind at its Székesfehérvár outlet, no further ones have been built. Cora has been operating one station in the parking lot of its Törökbálint store for 6-7 years, giving petrol HUF 5 cheaper. Cora gave no information as to why it gave up construction plans. Under the effective rules, petrol stations at hypermarkets can give petrol not more expensive than the cost-price. As a result, the HUF 10-12 lower rates lured a lot of motorists there. Establishing one petrol station costs around USD 1 million. According to economic daily Világgazdaság, British-owned IMO Hungary Car Wash Kft. (IMO Hungary Autómosó Kft.), already having nine car wash outlets all around the country, is planning to expand its network in Hungary and is in the process of negotiations with several store chains. As Világgazdaság has learnt, IMO has made a deal with Auchan in the end. A manager of IMO did not wish to comment this information. (VG, p 5)

TRADE, FAIRS, CAR - 08.01.2004Decreasing prices at AudiAudi’s new price list includes more favourable prices than that of last year in case of several models. The registration tax entering into force as of February 1st allows significant price reduction for importers, especially in case of high value cars and 1.8 turbo gasoline, 1.9 TDI and 2.0 TDI turbo diesels. For example, A3 TDI (Attraction) became cheaper by 628 thousand, A4 1.8T by 830 thousand, while A8 4.2 by nearly HUF 2.5 million. (MH p17)

TRAFFIC, TRANSPORT - 05.01.2004Demonstrations against M5A comprehensive demonstration is in the making for the end of January on motorway M5 and on neighbouring main roads, should tariffs not go down. Civil organisations, self-governments, hauliers and private persons would all take part. Representatives of the government will continue talks with AKA Rt., operator of the motorway. The most favourable long-term decision would be to buy back concession rights, but funds are not in place for that. In case of subsidies, two-thirds of the national motorway network income should have been earmarked for M5. (MN, 3 Jan, p 11)

2023.04.27. 15TRAFFIC, TRANSPORT - 08.01.2004Will the Danube Highway be led in a tube?Budapest holds by the opinion of greens and gets the plan of expanding the lower embankment of Buda revised. The four-lane road’s part between Margaret Bridge and Szabadság Bridge would be swallowed by a tunnel, while above it a pedestrian walkway would be established – learned Népszabadság. The inspection of UNESCO’s centre in Paris could play a role in the capital changing its opinion, since the Danube shore is considered part of the world heritage. According to greens and civils, before such types of interventions appropriate professional conciliation is mandatory, but the current practice lacks all this, although without it even the world heritage title can be withdrawn. The paper claims to know that UNESCO contacted István Hiller, Minister of Culture, personally in this case. Presumably as a result of this the head of the portfolio will call for a meeting until March to find a solution with professionals interested in the development, which is convenient for environment protectors as well. (Nszab p1)

TRAFFIC, TRANSPORT - 09.01.2004M5 to be built on PPP baseAccording to information from economic daily Világgazdaág, the government would hold shares of Alföldi Concession Motorway Rt. (Alföldi Koncessziós Autópálya Rt.) only for a short time and plans to sell them as soon as possible. Reasons for the buyout are that the motorway can be included into the sticker system on one hand and that the cabinet can make a decision on whom and for which price will build it further to Szeged. The company selected to extend M5 will be responsible for the operation of the stretch running to Kiskunfélegyháza and also for the maintenance of the sticker based system. This means that M5 would be built further in a state-private entrepreneurial system, so-called PPP system. Financial and legal experts are currently working on the details of the construction. The largest problem is the lack of time: construction works should start already this year and should be finalised by the end of the next year at the latest. The drafted plan calls for the motorway going into private hands again on condition that the sticker system would apply to the new stretch as well. As it is known, toll gates on M5 will not be demolished and they will function as checking points. (VG, p 1 and 4)

SERVICES - 09.01.2004New owner at FõfotóThe German CeWe Color will acquire Fõfotó Kft. being in the hands of the Belgian Spector Photo, thus its market share will double, increase to 30 percent in the Hungarian market. The company counts on the development of 2.6 million films through its five thousand partners this year. (NG p5)

INVESTMENT, DEVELOPMENT, REAL ESTATE - 05.01.2004The house building fever calms downEU accession will not bring dramatic changes in the real estate market, according to professionals the announced price boom is proves to be false alarm. However, price increase started due to the raise of the price of energy consuming building materials, the spiralling effect of VAT increase and last, but not least, the cut of housing and home purchasing allowances. However, tightenings will only have an effect from the second half of the year only: since the building industry will have plenty of work until then in order to make houses from the record number - 41 thousand – of building licences issued last year. (MH 1st p13)

INVESTMENT, DEVELOPMENT - 06.01.2004Gas-run power plants In VárdaIntek Rt., owned half by Canadian InterRower Corp and C Hungary Kft., the latter one in the hands of Dexia-FE Energy Efficiency and Emission Reduction Fund (Dexia-FE Energiahatékonysági és Emisszió-csökkentési Alap), is planning to build gas power plants in Várda, near Kaposvár. In an earlier development, Intek has had extraction rights for the gas well opened in 1965 and currently locked for the period of 15 years. Should the above-mentioned gas field be as large as is written in the 40-year documentation, then Intek is likely to construct several minimum 2 MW plants – sources from Intek stated. The company is set to finance the first HUF 3 billion phase of the investment from an EBRD loan. Plans call for the first block to start operation in 2005. Intek is taking guarantee, among others, that the so-called waste heat of the plants will be used by Dutch flower production companies to be established later. Information has it that the amount of flower-related investment can exceed HUF 1 billion. András Varga, mayor of the settlement with some hundred dwellers said that it is mainly the opening of the flower production plants that will ease regional employment problems, whilst for the operation of power plants a staff of only some persons (managing, cleaning, guarding) will be necessary. (NG, p 5)

2023.04.27. 16Spar to build a meat processorÍn line with the practise of the parent company, German retailer Spar’s Hungarian arm Spar Magyarország Kft. is to build a meat processing plant to supply all its domestic network and giving work to 120 people at the same time. Production is set to start early next year in the plant in Bicske, near the company’s freshly opened logistics centre. The plant will have a capacity of producing 3.5 tons of own products. The company is operating more than 100 supermarkets and 16 hypermarkets and the Kaiser’s network that numbers 22 stores and posted gross sales revenues to the amount of HUF 140 billion last year. Spar is continuously focusing on expanding its network and under a decision made last year, it will start a several billion forint investment program calling for the construction of an Interspar store in Pécs and a further 10 supermarkets, among others in Celldömölk and Fonyód. One-third of new outlets will be realised in own investments at a cost of HUF 300 million, while others will be leased after the construction, meaning a HUF 120-130 billion investment per outlet. The company, employing a workforce of 5,000, is going to operate stores with an area of 600-700 and 900-1000 square meters in the future. (NG, p 1 and 4)TriGránit prepares for Millennium Tower IIITriGránit Rt. will spend 3 billion euros in five-seven years on real estate developments in Central and South-Eastern European capitals. The company mainly raises multifunctional buildings, primarily with shopping centres and offices, partly with apartments. The firm has recently handed over the Millennium Tower II office building in Bratislava, on which 30 million euros were spent. Foreign investors fund Slovakian units in an increasing number and this leads to the boom of office demand, therefore TriGránit is considering additional investments. The construction of Millennium Tower III will be prepared and a large administrative building will be established for the municipality of Bratislava. In the near past the company pursued successful negotiations in Katowice and Warsaw about additional commercial and office projects, and it considers developments in Belgrade, Zagreb, Sofia and Bucharest as well. (VG p15)INVESTMENT, DEVELOPMENT, REAL ESTATE - 06.01.2004The investment at Vörösmarty tér to startING Ingatlanfejlesztõ Kft. (ING Real Estate Development Ltd.) will build a mixed function, several storey building in place of the former ORI headquarters at Vörösmarty tér. Demolition work will start in February, handover is planned for 2005. The investment costs HUF 12 billion. The 25 thousand square metre real estate development will be pursued together with the other owner, Művelõdési és Szabadművelõdési Alapítvány (Cultural and Free Cultural Fund). ING Kft.’s ownership rate will reach 66 percent next year. (VG p15)INVESTMENT, DEVELOPMENT, REAL ESTATE - 07.01.2004Flats are still in demandIt seems that despite of stricter home loan rules in effect, many are still planning to buy flats. András Gerõ, general manager of Otthon Centrum Rt., the largest Hungarian real estate firm is not expecting outstanding sales figures, but, based on developments of last days, business is going on continuously. He added that the land registry process will take longer on the back of the December rush. Otthon Centrum data shows that the turnover was around twice as much as in an average month. Out of the 1,800 flats sold by the company, 265, altogether to the amount of HUF 4.2 billion, were sold in the last month of the year. Budapest District Land Registry (Fõvárosi Kerületek Földhivatala) has reported clients of an average month between the period of 11 December and 22 December with 20,000 giving in their mortgage applications to have home loans still with more favourable conditions. It is not known yet what effect the boom of December will have on arrears of customers, which was at 90,000 early December. (NG, p 1 and 4)INVESTMENT, DEVELOPMENT - 09.01.2004Auchan to open only one outlet this yearAlthough hypermarket chain Auchan will open only one outlet in 2004 – in Albertfalva, in Savoya Park shopping center – the company has not given up its plan to build up a network of 18-20 outlets in Hungary. Auchan Magyarország Kft. is currently operating eight stores in Hungary, majority of them in Budapest or in its vicinity. Last year also saw the opening of only one Auchan store, so the expansion is showing a slower pace, whilst at he same time it is gaining ground much faster in Poland and Russia. General Manager Jean-Paul Filliat said that they were not aiming to play a leading role on Hungary’s hypermarket scene, bearing in mind that they did not plan to have a national network. Auchan will still be focusing on Budapest and its surroundings and also on large towns of the country. Auchan recorded a HUF 155 billion sales revenue in 2003 after posting a corresponding figure of HUF 100 billion one year earlier. The company plans to have a 15 percent revenue increase to reach HUF 175 billion by the end of the year. However, should consumption willingness not decrease as it is expected, even the mystic figure of HUF 200 billion can be met. (NG, p 5)

2023.04.27. 17Multinationals carrying out developments in PécsThis spring will see the start of significant commercial investments in Pécs, that is, the development wave of multinational companies having started in the town for the last few years shows no signs of abating. Do-it-yourself retail chain Praktiker is going to extend the area of its store by around 1,500 square meters and is to earmark HUF 300 million for the investment. The opening of Electroworld is set for the first part oft he year and shopping mall Árkád will open in April. The construction of shopping center named Family Center near Interspar will also start and Cora also builds its store in the town. (Dunántúli Napló, 7 Jan, p 5)

SECURITIES’ MARKETS - 05.01.2004The stock exchange closed the year with weakening – but the whole year can beconsidered successfulThe leading share index of the Budapest Stock Exchange, BUX closed last year with a weakening of 108 points, at 9380 points on the shortened trading day of Wednesday. Mol (Hungarian Oil) weakened by 0.6 percent to HUF 6315, Matáv (Hungarian Telecommunications) by 1.4 percent to HUF 790, OTP (National Savings Bank) by 1.3 percent to HUF 2675, Richter by 1.8 percent to HUF 24555 and Egis by 1.3 percent to HUF 8440. The weakening on New Year’s Eve somewhat worsens the favourable picture that arose of last year. Since BUX’ closing value at the end of 2003 is higher than the base value by 20.3 percent. The performance of the stock exchange was quite fluctuant during the year: in the first third of the year the share index decreased slightly, this was followed by a strong, 1400 point correction, which was stopped by the decision on switching the band. But by July the market calmed down and BUX started to rise again; at the end of August it exceeded the level of nine thousand again. As of October a slow decline started again, which turned into strengthening by the middle of December. The highest closing value of the year, 9914 points, was registered on October 14th. (NG p7, VG p10)

ENVIRONMENT PROTECTION - 05.01.2004Environment loading fee in an increasing systemThis year the state counts on revenues of ten billion from the environment-loading fee that was introduced on January 1st. Among the new green tax types only the soil-loading fee can concern the population directly, but in the form of the raise of service fees we will feel the water and air loading fees as well. As of January 1st a fee shall be paid for contaminating water and air, and as of July 1st for that of the soil too. It is a characteristic of the new system that the fee is imposed for contamination below the limit value. The air-loading fee is valid as of 2008; this year only 40 percent of the total fee is collected. The law makes the use of stokers by the population and public institutions free of fees; the air pollution fee will arise as cost at enterprises. The water-loading fee will also be introduced gradually, this year we only have to count on 30 % of the fee. The charge to be paid for retail sewage will be collected by the state from the canal operator, but the service provider will obviously recharge the cost increase to consumers. According to the preliminary calculations of the ministry, this item can make the sewage fee more expensive by maximum 20 %. In case of the soil loading fee to be introduced gradually also the 100 percent rate shall be reached by 2009, in the second half of this year 20 % of the total tax shall be paid. (Nszab Jan. 3rd p5)

CULTURE - 09.01.2004Picasso and Klimt in BudapestAfter Monet‘s paintings the work of Alberto Giacommetti, Swiss sculptor, will be exhibited in the Museum of Fine Arts. Műcsarnok is preparing to present the graphics of Picasso. The National Gallery will organise and exhibition from the works of the artists of Vienna and Budapest at the turn of the century, Klimt, Schiele and Kokoschka, and during the summer the art of Gulácsy, Uitz, Vaszary, Derkovits, Toulouse-Lautrec, Cézanne, Picasso, Modigliani and Paul Klee. (Nszab. p1, 10)