7days, 2004. október 4

7/28/2019 7Days, 2004. október 4.

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1051 Budapest, Hercegprímás utca 19 Tel: 354 3290 Fax: 354 0130 Mail: [email protected]

27/09/2004BUSINESS

Vodafone buys out minority partner Employers reject taxing interest marginRaiffeisen gains 5.6% in Antenna HungáriaForrás sells 9.2% Antenna stakeAntenna trading suspended

Report slams lack of banking competitionInsurance sector's risk-weighted capital fallsT-Mobile beats brand name targetPSzÁF imposes fine on Citibank Retail lending rates rise, deposit rates fallBusiness borrowing rates up to 13.25%Brau to hold EGM in October BUX peaks on Monday, down 0.14% on week

ECONOMICSGovt to levy 25% tax on share capital gainsECB official says Hungary back-paddling on euro zone criteriaEconomic growth optimisticAgricultural subsidies

Central bank and gov't share inflation projectionMinistry to cough up Ft 45.5 bln

POLITICSPM-designate's supporters to pick culture minister for MSzPFormer PM threatens lawsuit over chargesMDF re-elects David as chair

DOMESTICBank robbery and murder suspects' trial opens todayLocal bickering scuppers US troop plansChurch 1% donationsDecrease in marriages, births and deaths

28/09/2004

BUSINESS "No" vote for central bank reportsOBI aims to become DIY leader by year-endFewer to be laid off at Pick Tycoon Demján eyes MalévApplications filed for Hungexpo tender System House wins Ft 1.1 bln Pécs Uni tender Auchan planning major expansionsRussian buys stake in AntennaKika to open further outletsTelephone and Cable announces agreementsMOL to raise diesel priceMotorway sticker sales up 38% yr/yr

Freebie guides fight for spaceMalév expects charter revenue to rise 25%OTP starts screening JubankaVehicle leasing profits up 6.5% yr/yr Beijing denies interest in Bp AirportIEB signs for Euro 20 mln loan

ECONOMICSDeficit could reach 10%Taxes key to competitiveness-AmChamIncreased vacation subsidiesSavings coops protest planned tax

POLITICS

Gyurcsány will face spending constraintsFinMin receives "Budget Box"DOMESTIC

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Transylvanian Hungarian University opens yr 29/09/2004BUSINESS

10 buy tender documents for 3G licenseMcDonald's expects 15% turnover risePoultry industry nervous re South American birdsMobile phone subscribers top 8.3 million

Tax dampens coops' merger plansSláger tops the chartsTesco to open 5 more gas stationsDresdner, JP Morgan hired for bond saleFt 125 bln public bond issue launchedPosta outsourcing receives complaintsLast attempt to save HumetLogistics center for KecskemétHungary's Nabi Bus May Boost U.S. Output

ECONOMICSUnemployment rate at 5.9% in June-AugustConsumers cautiousIndustrial parks on the up

Tax changes aim to boost competitivenessFalling figures of bank employeesInvestors should sell forint against euroAnalysts expect Euro 2.29 bln deficit

POLITICSGyurcsány presents gov't platform at rallyReferendum support from strange bedfellows

DOMESTICTerrorist gets 12 yrs for Budapest bombClean up begins of Tisza waste

30/09/2004BUSINESS

Shell begins sales of new diesel fuel New spa hotel built in MarcaliElectrolux develops frost-free freezer Zalakerámia stake used for collateral

Nypro to extend in NagyigmándDacia returns to HungaryLottery fever attracts gambling touristsPSzÁF fines Generali Ft 1 mlnEurópa Bísztosító's risk reserves adequateIstván Park construction to start this fallAirport developmentPassenger traffic at Ferihegy up 29.5%Tourist info on the air

Dunaferr expects profit of Ft 15 blnMTV refreshes website

ECONOMICSJárai Says Government Must Cut SpendingContributions to benefit bankrupt entrepreneursSummer tourists put USD 135 mln on Visa cardsIndustrial output rises 10% yr/yr Banks search for interest tax alternative

POLITICSGyurcsány elected prime minister Gyurcsány program continuityEconomy Minister István Csillag Steps Down

DOMESTIC Hungarian family receives refugee statusDecision on Kulcsár's house arrest

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01/10/2004BUSINESS

Dunaferr sale closedJysk to come to HungaryAntenna to pay extra dividend

New logistics center for FerihegyBT to open regional office in Bp

Pannonmill completes millRewico plans acquisitionsBorsodChem on Warsaw ExchangeBSE suspends trading in E.ON subsidiariesDanubius acquires majority stake in GundelRaflatac opens new plantFt 1.5 bln awarded for IT improvementHungarian toy storyIBM initiates software supportLocal councils to select bank via tender Őrmester plans to go public

ECONOMICSConflict of C/A gap and strong forint

Analysts say c/a deficit will slow in H2Budget delay "does not affect main targetsIndustrial prices up 0.2% m/m, 2.6% yr/yr Borrowing costs drop at 35 Bln bond sale

POLITICSPrime minister names new cabinetLászló Kovács expounds plans at EP hearingState secretary László Keller quitting

DOMESTICCrowd trouble mars Fradi 3:1 win

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27/09/2004

Business

Vodafone buys out minority partner

Vodafone Group Plc, the world's largest mobile-phone operator, bought out a minority partner to take fullownership of its Hungarian unit, Vodafone Magyarország Rt. Antenna Hungária Rt sold a 12.1% stake in the unitto Vodafone. Antenna wants to sell the stake at more than its book value of Ft 17.6 billion CEO Géza László said.

Antenna's stake fell from 30% in June last year, when Vodafone invested Ft 28.2 billion in the smallest of thecountry's three cell phone providers. (Bloomberg; Vg 5)

Employers reject taxing interest margin

Employers represented in the National Interest Coordination Council on Friday stated their opposition to a plan totax the interest margin of banks. Addressing the plenary session of the National Interest Coordination Council(OET), an interest group comprising representatives of both employers and employees and the government saidthey also opposed raising corporate tax in the banking sector, but consider this solution the more acceptable oneof the two versions, their representative said. PM-designate Ferenc Gyurcsány and Finance Minister Tibor Draskovics on Sept. 15 announced plans to raise the corporate tax on financial institutions from 16% to 24,introducing a two-rate corporate tax. (MTI)

Raiffeisen gains 5.6% in Antenna Hungária

Raiffeisen Bank announced that it had purchased a 5.6% stake in Antenna Hungária Rt, explaining the largeturnover in the share during the last hours of trading on the Budapest Stock Exchange on Thursday. The bank didnot disclose the seller or the purchase price. (Econews)

Forrás sells 9.2% Antenna stake

State-run holding company Forrás Rt, said it sold a 9.2% stake in broadcaster Antenna Hungária Rt that thegovernment is preparing to sell to an industry investor this year. Forrás sold 1.1 million Antenna shares to anundisclosed buyer, cutting its holding to 1.29%, the company said. The sale price was Ft 4.3 billion, or Ft 3,920 ashare, according to Bloomberg data. (Bloomberg)

Antenna trading suspended

Antenna trading suspended The Budapest Stock Exchange said it suspended trading in the shares of state-owned broadcaster Antenna Hungarian Rt, pending an announcement. The announcement, which may

significantly influence the share price, "can be expected,'' the bourse said on its web site. Antenna shares rose Ft375 as a result, or 11 %. (Bloomberg)

Report slams lack of banking competition

A report by analysts at the National Bank of Hungary says there is still no genuine competition on the bankingmarket, citing the sector's profitability, which is well above the European average, as supporting evidence. Thereport notes that, although businesses have been able to get cheaper loans as the result of some competitionamong banks, retail lending practices - especially for consumer loans - suggest big market players may be takingadvantage of their positions. Banks entering the market in the nineties tended to focus first on the corporatesegment rather than spend the money on costly networks of retail branches and deal with the credit-riskier general public. (Econews)

Insurance sector's risk-weighted capital falls

Hungary's insurance firms' capital adequacy - the rate of actual and minimum required risk-weighted capital - fellfrom 190% at the end of 2003 to 164% by mid-2004, according to PSzÁF's first-half report on the sector.Insurance firms' risk-weighted reserve capital on their policies was down 1% from Ft 149.89 billion in the previousyear, which was said to be a result of changes in accounting regulations. Hungary's 28 insurance companies hadrisk-weighted reserves of Ft 148.5 billion on their policies, well over the required minimum of Ft 90.3 billion.(Econews)

T-Mobile beats brand name target

Mobile service provider T-Mobile Rt has reached the popularity of the brand name that was projected for December this year, CEO András Sugár said referring to opinion polls. T-Mobile changed its name in May thisyear from Westel, one of the most well-known brand names in Hungary. T-Mobile's brand key words are trust andinspiration as well as ease of service, Sugár said. Since May T-Mobile has been suggesting an image of youthand speed, Sugár said. (Ng 4) M.K.

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PSzÁF imposes fine on Citibank

Financial market authority PSzÁF has imposed a fine of Ft 2 million on Citibank Rt for failing to follow accountingrules to the letter, according to the latest issue of Magyar Tokepiac. PSzÁF also called on the bank to conduct aninternal audit. PSzÁF imposed a fine of Ft 9 million on Citibank in 2001 and fine of Ft 5 million in 2002 for failing tofollow risk management rules and run credit checks on potential clients. (Econews)

Retail lending rates rise, deposit rates fall

Average interest rates for consumer and other retail loans fell during August, but rates on home loans andoverdrafts rose slightly, according to figures published by the National Bank of Hungary. The spread betweenlending and deposit rates for maturities up to a year, including overdrafts, fell from 11.91% to 11.58 during August.The average interest rate on home loans rose 14 basis points to 12.46%, but the APR on these loans rose by just10 basis points to 15.74%. The average interest rate on home loans with floating interest rates, or with rates fixedup to a year, rose 38 basis points to 12.58%. Banks granted Ft 15.2billion in home loans in August, Ft 1.9 billionless than in July. (Econews)

Business borrowing rates up to 13.25%

The average interest rate on business loans, excluding overdrafts, rose by 11 basis points to 13.25% during themonth of August, according to figures published by the National Bank of Hungary on Friday. Corporate loanscame to Ft 237.8 billion in August, down Ft 17.4 billion from July. The average interest rate on overdrafts for non-financial companies fell 56 basis points to 12.36% in August. The average interest rate on deposits with maturities

up to a year dropped by 35 basis points to 10.35%, and the rate for deposits over a year fell 54 basis points to9.76%. (Econews)

Brau to hold EGM in October

Brewery company Brau Hungária Rt announced the company would hold an extraordinary general assembly onOctober 17. The EGM will discuss the dematerialization of shares and the amendment of the companyconstitution. One of the questions to be cleared is whether the majority owner Amstel-Heineken may exercise itsvoting right, since they bought their stake without a valid public bid. (Ng 8) M.K.

BUX peaks on Monday, down 0.14% on week

The BUX hit an all-time high on Monday at 12,364.21, but was unable to revisit the point at any time during therest of the week, closing Friday at 12,323, down 0.14% from the previous Friday. Turnover during the week cameto Ft 38.61 billion (Euro 154 million), a far cry from the Ft 78.83 billion of a week earlier. Among the blue chips,

only oil and gas company MOL Rt ended the week higher, with telecom Matáv Rt remaining flat. Drug maker Richter Gedeon Rt fell 1.28% to Ft 23,100 on the week. MOL announced during the week that it had applied to listits shares on the Warsaw Stock Exchange. (MTI)

Economics

Govt to levy 25% tax on share capital gains

The government plans to raise the capital gains tax on profits from the sale of stock exchange investments fromthe current 0% to 25% next year, Finance Minister Tibor Draskovics said Friday. The government's aim is to bringthe rate of taxes on income from capital investments closer to the rate of taxes on income from labor. Thegovernment also intends to raise the rate of the withholding tax on dividends from 20% to 25%, Draskovics said.(Econews: BBJ 1)

ECB official says Hungary back-paddling on euro zone criteria

After significant advances toward euro zone entry, the Hungarian economy has recently been back-paddling,European Central Bank Vice President Lucas Papademos told a conference on EMU accession in Budapest onSaturday. Papademos said that public sector employment in Hungary was the highest of all the OECD countries,and that how quickly it could reform its public sector would be the key to its success. "Hungary's policy choices of the past few years have led to the current divergence," Papademos said. (MTI)

Economic growth optimistic

A report prepared by economic research firm GKI Kft and Erste Bank Rt predicts a 4% increase of the economy,dynamic growth for investment, but a moderate rise in real wages for this year. The report takes into account adrop in inflation and a more balanced budget. GKI and Erste also expect that the budget deficit will be 5%-5.3% of the GDP compared to the 4.6% projected by the Finance Ministry. (Vg 4) P.O.

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Agricultural subsidies

Hungary has disclosed a total of 108 agricultural state subsidies to the EU, which the country wishes to maintainuntil the end of 2006. The subsidies include the funding of state-owned agriculture company Bábolna Rt, whichwas previously attacked by local agribusinesses in Brussels. Hungary, together with the other new members of the EU, had to submit the list of agricultural funds to the EU by the end of August. The full list is yet to be madepublic, but the Agricultural Ministry has not ruled out the possibility of publishing a detailed report. Specialistsclaim that some of the subsidies do not comply with EU regulations, but the ministry declared them well grounded.

(Vg 1) P.O.

Central bank and gov't share inflation projection

The government and the central bank agree on the inflation rate estimated for the end of next year, FinMinpolitical state secretary János Veres said. National Bank of Hungary managing director István Hamecz said thecentral bank projects 6% inflation for the end of this year and 4-5% inflation for the end of 2005. In its latestInflation Report published in August, the National Bank forecast Dec. 2004 inflation at 6.1% and Dec. 2005inflation at 4.4%. Hamecz said that higher oil prices do not pose a fundamental threat to the projection, however,wage rises do. (Econews; NV 5, MH 9)

Ministry to cough up Ft 45.5 bln

The Ministry of the Interior will fund a total of 75 projects, managed by local municipalities, with Ft 45.5 billionduring the next four years, Minister Mónika Lamperth announced. The projects include the renovation of the local

hospital in Baja, southern Hungary, the modernization of the county library in Debrecen, eastern Hungary, and theJózsef Attila Cultural Center in District 13 of Budapest will also get a face-lift. The ministry picked projects, whichwould improve the quality of municipality services. (Nb 8, *Vg 4) P.O.

Politics

PM-designate's supporters to pick culture minister for MSzP

The Gyor-Sopron County group of the Socialist Party (MSzP), headed by prime-minister-in-waiting FerencGyurcsány until his Sunday resignation, voted to support the culture minister in his bid to chair the senior government coalition party. Culture Minister István Hiller, who is known to be a close ally of Gyurcsány in theparty, is one of five candidates running for the post. The winner will be chosen by MSzP's congress on October 15-16. Gyurcsány attended the county group's meeting on Sunday, where he officially stepped down as leader of the W Hungary party group since he expects to be asked to form a government on Monday as new prime

minister. (MTI)Former PM threatens lawsuit over charges

Former Prime Minister Viktor Orbán of the opposition Fidesz party on Saturday threatened to sue the spokesmanof the senior government coalition party MSzP in an exchange of verbal blows about unethical behavior. Orbánfired the first shot in the duel earlier on Saturday, charging the government with siphoning off state property intowaiting pockets. In response, MSzP spokesman István Nyakó denied this, saying that Orbán's description fittedthe performance of the previous administration, when he was PM. (MTI)

MDF re-elects David as chair

The opposition MDF party re-elected Ibolya David as its chair with 322 votes to 91. David has chaired the partysince 1999. Recently the members of the party's parliamentary group sought to remove her, wanting a closer alliance with the larger opposition party Fidesz, but the national assembly stuck by her. David has topped public

opinion polls as the most popular political figure in Hungary for several years. (MTI: MH 1, Nb 1, Nv 4, Vg 4)Domestic

Bank robbery and murder suspects' trial opens today

A Budapest court begins to try a case involving the bloodiest bank robbery in Hungarian history today. The twodefendants are charged with killing eight people during a bank robbery in the western Hungarian town of Mór twoyears ago. The defendants, Ede Kaiser and László Hajdú, have denied the charges. Police say the two menentered the local branch office of Erste Bank in 2002. They allege that while Kaiser stood at the door and sentarriving people away, Hajdú first killed the security guard, and then killed all the customers and staff in the room.Twenty minutes after entering the bank, the two men walked away carrying a bag with Ft 7m (approx. Euro28,000) inside. (MTI; MH 3, Nb 21)

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Local bickering scuppers US troop plans

Hungary is not included on a list of East European countries where the US plans to station troops, a senior Defense Ministry official said. Deputy director of communications István Bocskai was speaking on the heels of aUS announcement that it planned to reorganize its military presence abroad to enhance the mobility andeffectiveness of its armed forces. "Squabbles on the domestic front triggered by the training of Iraqi civilians at abase in Taszár, SW Hungary, from Dec. 2002 to Apr. 2003 may be one of the factors that prompted the Americans decide against maintaining any military base in Hungary and to remove its troops from Taszár,"

Bocskai said. (MTI)

Church 1% donations

The State Tax Office APEH reported that the 118 churches officially registered in Hungary received a total of Ft3.5 billion from 648,000 taxpayers who chose to donate 1% of their 2003 personal income tax. The number of donors was 2% higher than last year. The Hungarian Catholic Church attracted the bulk of the contributions from417,000 taxpayers, who raised Ft 2.18 billion in total. Listed second and third most popular recipients of tax forintswere the Calvinist Church of Hungary (attracting Ft 690 million) and the Lutheran Church of Hungary (Ft 214million). The Federation of Jewish Communities in Hungary (Mazsihisz) received Ft 70 million from 6,628taxpayers, thus receiving the highest per capita donations of the four mainstream churches. (Nv 3) P.P.

Decrease in marriages, births and deaths

Marriages were 2.1% down and births 1.4% down from the first seven months in 2003, representing almost 500

fewer marriages and 780 fewer babies, the Central Statistics Office (KSH) said. 24,200 marriages wereregistered, 54,500 babies were born and 78,300 died between January and July. Deaths fell between March andJuly from extraordinarily high figures in spring 2003. The overall number of deaths - 3,200 - in the first sevenmonths was 4.0% down compared to the corresponding period in 2003, alleviating the tendency of a slimmingpopulation. Hungary had a total population of 10,103,000 at the end of the period surveyed. (MTI)

28/09/2004

Business

"No" vote for central bank reports

Parliament yesterday voted down the central bank's reports for 2002 and 2003, but approved its 2001 report, withthe "no" votes coming from the government majority. "The National Bank of Hungary (MNB) interpreted thefunction of the central bank in a limited manner, focusing on its main goal of cutting inflation, pushing up the

exchange rate of the national currency in a forced manner, which caused huge losses in GDP growth for theeconomy," MP Albert Molnár of the senior government coalition Hungarian Socialist Party (MSzP) and member of the MSzP parliamentary group's economic working group, said. (MTI; MH 1, Vg 5, Nv 3)

OBI aims to become DIY leader by year-end

With the opening of four more stores in Hungary by the end of the year, DIY chain OBI Kft, owned by Germany'sTengelmann, aims to become market leader in Hungary, László Reiter, who heads the stores in Hungary, saidyesterday. OBI, which has been in Hungary for ten years, recorded sales revenue of Ft 34.3 billion in the businessyear ending April 30, 2004, a 17% increase from the previous year. This business year, OBI expects turnover of around Ft 41 billion, with four new stores opening. (Econews; Ng 4, Nv 5, Vg 10)

Fewer to be laid off at Pick

Meat processing company Pick Rt has reduced the planned number of layoffs from 450 to 250 due to successful

talks between the company and emloyees' groups, announced Gábor Golhovics president of the workers' union atPick Rt. The company, which employs 2,380 people announced the layoffs as a result of its planned shutdown of the company's pork slaughtering division. Earlier Pick Rt explained the decision by the fact that pork in the EU isavailable at a considerable lower price than in Hungary. (Vg 15) R.G.

Tycoon Demján eyes Malév

With less than a month ahead of the Oct. 20 deadline, only one investor, Euroinvest Rt, has expressed formalinterest in the tender to buy Malév Rt, the state-owned flag carrier said. Partially owned by business tycoonSándor Demján, Euroinvest is now looking into ways to carry out a massive capital injection at Malév to clear thetroubled airline of its Ft 36 billion debt burden and return it to profit. Malév, which flies some 3 million passengersannually and generates revenues in excess of Ft 110 billion, was put up for sale by the State Privatization HoldingRt (ÁPV) in early Sept. (MH 11) S.F.

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Applications filed for Hungexpo tender

Six investors filed their applications to the State Privatization and Holding Rt (APV) for the privatization tender of the majority ownership of Hungexpo Rt until yesterday's deadline. ÁPV is to determine the upcoming weeks whichapplicants match the professional and the financial criteria. Those that qualify may start the scanning process of Hungexpo and may submit their offer until January 11. The projects must include the plan of a program andexhibition center conforming to certain parameters. APV leaves it up to the investor whether they want to investand develop on the current site or decide to move on to a new area: the aim is to have a high standard and

competitive exhibition center in Budapest. (NG 4) E.C.

System House wins Ft 1.1 bln Pécs Uni tender

Software developer International System House Kft (ISH Kft) has won a public procurement tender for PécsUniversity worth gross Ft 1.1 billion to set up a management IT system in the university, announced Kristóf Asbót,communications director at ISH Kft. The company will have to install a 200-user-network by the middle of 2005and will also operate the system for the next 8 years. SAP and IBM are also taking part in the program assubcontractors. (Vg 16) R.G.

Auchan planning major expansions

Auchan Hungary Kft. is planning on having a 17-20 unit network by the end of 2008. This year, however, Auchanonly opened 1 hypermarket, which is the 9th store and was opened in the XI.th district of Budapest, and there willbe no more than 2 new hypermarkets opened next year. Auchan intends to develop the largest own-brand gas

station and wants to surpass the magic limit of the turnover of Ft 200 billion by the end of this year. Smaller storesare to come, too, however, they are currently concentrating on huge base area hypermarkets. (NG 5) E.C.

Russian buys stake in Antenna

Megdet Rahimkulov, majority owner of General Banking and Trust Ltd (ÁÉB) through its company Kafijat Kft,acquired 5.89% in state-owned broadcaster Antenna Hungária on Thursday, the same day ÁÉB sold its 50%stake in Zalakerámia Rt, Rahimkulov announced yesterday. He also added that although he expects huge profitsfrom the transaction, he does not want to take part in the company's oncoming privatization. Although he declinedto disclose the price, sources say that AH shares were purchased at Ft 3.920 per share from Forrás Rt. (Vg 17)R.G.

Kika to open further outlets

Despite the fact that the Hungarian home improvement market has experienced a severe downturn, Kika Kft is

planning on building new stores. The next large unit is going to be either in Pécs or in Debrecen, and in theupcoming years, there will be three more stores serving customers in Miskolc, Györ, and Budapest. Kika, havingbought the other Austrian home improvement chain Michelfeit, has inherited 7 more units, 2 of which are locatedin Hungary. In addition to these, Kika opened a 40 000 sqm store in Budaörs last year which led it to an evenhigher level of turnover. Kika's expansion is quite significant as the home improvement market is the first to suffer when there is an economic down turn and this is the last to start increasing when consumption increases. (NG 5)E.C.

Telephone and Cable announces agreements

Hungarian Telephone and Cable Corporation said today that it has reached definitive agreements with theremaining two shareholders of PanTel Rt. to acquire their aggregate 24.9% equity stake in PanTel Rt. HungarianTelephone previously announced that it had reached a definitive agreement with Royal KPN NV the majorityshareholder of PanTel, to purchase its 75.1% share in the business of PanTel. Hungarian Telephone has agreed

to ultimately purchase nearly all of the assets of PanTel, through a series of transactions, from PanTel's threeshareholders for an aggregate purchase price of approximately euro 27.0 million and 250,000 shares of Hungarian Telephone's common stock. (BU.S.INESS WIRE; Vg 9, MH 9)

MOL to raise diesel price

Hungarian Oil and Gas Company MOL Rt, the country's major distributor of fuel, will raise the wholesale price of diesel by Ft 4/litre on September 29, a MOL spokesman said yesterday. MOL said the new wholesale price of diesel would be Ft 233/litre. Wholesale petrol prices will remain unchanged. Explaining the measure, MOL cited arecent major rise in international crude oil prices. (MTI; Nv 5)

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Motorway sticker sales up 38% yr/yr

State motorway operator AAK sold 5.8 million motorway stickers in the first eight months of this year, 38% morethan in the same period of last year, the company said yesterday. The marked rise was due in part to the inclusionof a 120-kilometre section of the M5 motorway in the sticker system in March. Sales of four-day stickers were up45% yr/yr in the first eight months of the year, but sales of 10-day stickers fell by almost half to around Ft 1.1million. Sales of annual stickers rose 10% during the period to 176,000. Sales of annual stickers will probably beinsignificant from now on. (Econews; Ng 3, Nv 5)

Freebie guides fight for space

Tough competition is to be expected on the free program guide market as Finnish Sonoma Budapest PublishingRt and Boomerang Kft are jointly entering the market with a new publication Exit. Furthermore, another freepublication, Flyers, by an independent publishing company has entered the arena targeting the under 20 market. According to Laszlo Bartucz, CEO of Est Media Group, the firm that is publishing Pesti Est, the increasedcompetition is good for the market since it needs to increase the number of readers as well as the number of advertisers. Pesti Est increased its circulation from 110 000 to 130 000 this year. In the long run however, 3companies will not be able to survive, added Bartucz. (Ng 4) E.Cs

Malév expects charter revenue to rise 25%

Hungarian airlines Malév Rt expects its charter flights to generate 25% more revenue this year than 2003's Ft 7.6billion, in line with the target, spokesperson Adrien Krebsz announced yesterday. Charter revenue during the first

seven months of the year rose 30% over the same period in 2003, Krebsz said. Malév expects half a millioncharter passengers by year-end, up 40% over 2003. Around 268,000 passengers flew on Malév's charter flights inthe first seven months of the year. (Econews)

OTP starts screening Jubanka

OTP Bank Rt sent a delegation of nearly forty executives and consultants including deputy-CEO László Wolf toBelgrade on Sunday afternoon to start screening Jubanka yesterday morning, business daily Napi Gazdaságreported yesterday. In addition to OTP, the French bank Societe Generale and Alpha Bank of Greece havesubmitted bids for an 88% stake in for the sale of 88% of Jubanka, Serbia's fifth-largest bank by the end of August. Chairman-CEO of OTP Sándor Csányi recently announced that OTP is to make three or four acquisitionsin the next 18 months, in addition to Jubanka. (Econews)

Vehicle leasing profits up 6.5% yr/yr

Vehicle leasing and loan companies had combined pre-tax profits of Ft 23.7 billion in the first half of 2004, up6.5% yr/yr, according to a report by financial regulator PSzÁF. Vehicle leasing and loan companies' ROA duringthe first half was 3.62%, down from 4.74% a year earlier, and ROE was 37.91%, down from 41.47%. Vehicleleasing and loan companies which were members of banking groups - 45 of the total 193 - accounted for Ft14.96billion of the industry's H1 pre-tax profit, up 28.7% yr/yr. (Econews)

Beijing denies interest in Bp Airport

Beijing Capital International Airport Co., China's biggest airport operator, denied a Hungarian newspaper reportthat it's interested in buying a stake in Budapest Airport Rt. "Budapest Airport has not said they'd like us to invest,and we haven't considered that either," Company Secretary Shu Yong said in a telephone interview. Hungary'sdaily Világgazdaság, citing former Beijing Capital Chairman Li Peiying, reported that the Chinese company isinterested in investing in the operator of the Hungarian capital's international airport, which Beijing Capitalconsiders a link for Chinese visitors to Europe (Bloomberg)

IEB signs for Euro 20 mln loan

Inter-Europa Bank (IEB) Rt has signed an agreement for a seven-year, Euro 20 million loan with SanPaolo IMILondon, IEB said yesterday. The bank's shares are 85.87% held by SanPaolo Internazionale S.p.A and 9.99% byHolneth BV, a Banco Santander Central Hispano subsidiary. The bank reported a 56.3% yr/yr rise in non-consolidated after-tax profits, to Ft 1.06 billion, and a 55.6% rise in consolidated after-tax profits, to Ft 1.35 billion.IEB had begun drawing up a medium- to long-term plan with the involvement of a strategic owner, whichenvisages further growth and will involve considerable investments. The bank plans to delist its shares, but hasnot made a final decision on the matter yet. (Econews)

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Economics

Deficit could reach 10%

Although Reuters predicts Q2 budget deficit around Euro 2-2.4 billion Világgazdaság experts think that it mightsurpass Euro 2.5 billion and overall deficit in the last four quarters could reach 10% of GDP. Foreign trade deficitin Q2 is estimated at Euro 500 - 600 million, which alone will rise budget deficit in Q2 to Euro 2.4 billion. Expertsalso say that figures might catch up in H1, as unfavorable foreign trade results are mainly due to Hungary's EU

accession in May, which also resulted in some economic players increasing their import in April. (Vg 4) R.G.Taxes key to competitiveness-AmCham

The system of taxation is the most efficient device to increase the country's competitiveness, Peter Fath, director of the Hungarian American Chamber of Commerce said yesterday. Fath was presenting the recommendationsbased on a study by an AmCham committee set up with the objective of improving Hungary's competitiveness.Corporate and local profit taxes should be harmonized, with a 16% corporate tax, 4% of which to be transferred tolocal governments, László Nemeth, an AmCham board member, said. Local business tax is non-existent in theEU and it should be eliminated, the study suggests. (MTI; Ng 3, Vg 5, Nv 5)

Increased vacation subsidies

The advisory board of the Hungarian National Vacation Fund (MNUA) accepted the proposal of calling for atender called 'The Family Vacationing Together' on their board meeting last Friday. The fund will distribute Ft 300

million for those in need. A family of 4, for example, may get a Ft 120 000 holiday voucher, in addition to which aFt 40 000 retention is needed that can be provided by the family itself or by any organization such as theemployer, the trade union, the local government, the church or an NGO. In 2005, MNUA is hoping to spend Ft 1.2billion on holiday aid, allowing up to 100 000 people to afford a vacation. (NG 3) E.C.

Savings coops protest planned tax

Savings cooperatives have protested plans to introduce a 6 % tax on net interest revenue of financial companies,arguing that, unlike Hungary's very profitable banking sector, at which the tax is aimed, savings cooperatives havenot enjoyed the recent windfall that banks have. In a statement made on Sunday, chairman of the National Alliance of Savings Cooperatives (OTSZ) Endré Kiss also said savings cooperatives' exclusion from negotiationsmade before the announcement of the tax's planned introduction was unacceptable. (Econews)

Politics

Gyurcsány will face spending constraintsFerenc Gyurcsány promised "daring changes" to win his party's nomination for PM. Spending cuts demanded bythe EU mean he may be as constrained as his predecessor, said fund manager Gergely Forian-Szabó at CA IB.President Ferenc Madl confirmed Gyurcsány as official candidate of the Socialist-led coalition yesterday. According to Forian Szabó, Gyurcsány's dilemma is the same as his predecessor's, he's committed to reining ingovernment spending so the country can qualify to adopt the euro in 2010, however, he's also pledged to sustainsocial welfare payments as the Socialist party seeks to rebuild voter support and win elections in 2006.(Bloomberg; Nb 1, Nh 1, Nv 1, Ng 3, Vg 5)

FinMin receives "Budget Box"

The finance minister has received a leather "Budget Box" from the speaker of Parliament yesterday, modeled onthe British example, which in future will contain the budget for the coming year. Speaker of Parliament Katalin Szilitold reporters after handing the Budget Box to Finance Minister Tibor Draskovics that finance minister in officewill, from now on, present the budget to the speaker in the box. The Hungarian Budget Box is a 38x27x10centimeter red box made of leather, with a sign "Budget Box of the Finance Minister" on its upper left quarter.(MTI; Nv 3)

Domestic

Transylvanian Hungarian University opens yr

The Sapientia Transylvanian Hungarian University must seek other sources for its work to complement Hungarianfinancial assistance, the head of the Government Office for Hungarian Minorities told the university's academicyear opening ceremony in Cluj yesterday. Jozsef Bálint-Pataki said the Hungarian budget has provided nearly Ft10 billion to the ethnic Hungarian university so far, an amount that covered more than 96% of the university'scosts. Bálint-Pataki said the university has proven it fulfils its mission and promotes that ethnic Hungariansprosper in their land of birth. (MTI)

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29/09/2004

Business

10 buy tender documents for 3G license

Ten potential investors have bought the tender documents for Hungary's high-speed mobile licenses so far, amonth before the government's application deadline. The potential bidders include European, American and Asiancompanies, with service providers and hardware manufacturers among them, Sándor Debreczeni, a board

member of the country's phone regulator, said. No further details on the companies were provided. Hungarydelayed plans to sell licenses for so-called third- generation networks during the past two years as Europeanphone companies cut back expansion plans after spending USD 100 billion on permits elsewhere. (Bloomberg;Ng 1, MH 11, Vg 15)

McDonald's expects 15% turnover rise

The Hungarian subsidiary of fast-food giant McDonald's expects a 15% sales revenue increase from last year's Ft26 billion, well above expectations, managing director Radek Janalik said yesterday. McDonald's will invest Ft 1billion in Hungary this year, opening two new restaurants and renovating one, as well as opening five newMcCafe's. McDonald's has 45 restaurants in Hungary that it owns and another 41 which are franchises. It ismarket leader, with a 70% to 80% share of the fast food market. McDonald's Hungary Kft had registered capital of Ft 6.528 billion last year with capital reserves of Ft 4.739 billion. (Econews; Ng 4, MH 10, Vg 15)

Poultry industry nervous re South American birdsEU trade negotiations with Mercosur, the association of South-American countries may bring European poultry-industry into trouble. According to unnamed sources, the Committee is about to increase the import-quota of poultry meat from 330,000 tons to 600,000 tons with reduced duty level of 1%-3% to help other Europeanproducts at the South-American markets, director of Poultry Product Council László Takács said. South-Americanproducers have much lower cost levels than their European competitors, for example the consumer protectionand hygiene regulations of EU do not apply to them. (NG 1) G.R.

Mobile phone subscribers top 8.3 million

As of August, the number of mobile telephone subscribers in Hungary - which has an overall population of 10million -- reached 8.317 million, climbing by 58,000 for the month, the National Telecom Authority (MHH) saidyesterday. The MHH press release said that subscriptions were up by 10.7% in August year-on-year. T-MobileHungary had the largest ratio of subscribers - 47.74% - while Pannon GSM Rt had 33.36% of the market and

Vodafone Hungary Rt had 18.90%. In the past year, Vodafone increased its customers by 3.34% and T Mobileincreased its by 0.24%, while Pannon GSM was down by the same amount. (MTI; MH 11)

Tax dampens coops' merger plans

The integration of savings co-operatives may slow down because of the interest margin tax planned by theFinance Ministry. The 6% tax would apply to co-operatives that have equities above Ft 250 million. According tothe law, co-ops must increase their equity above Ft250 million by 2007. To avoid the new tax, co-ops may adjourntheir planned mergers till 2007. At the end of March, 90 of 167 savings co-operatives had equity above therequired level. For this year about 25-30 mergers were planned by co-ops to fulfill legal requirements. (NG 4) G.R.

Sláger tops the charts

In August Sláger Radio reached 30% share among people between age 18 and 49 overtaking former marketleader Radio Danubius, which had 28% share. According to the survey of Szonda-Ipsos, between January and

August among the whole audience above 15 years the market share was 23.5%. The radio also has the longesttime spent with listening daily on average; in August that was 215 minutes compared to 199 minutes of DanubiusRadio. (NG 7) G.R.

Tesco to open 5 more gas stations

Tesco-Global Department Stores Rt said it plans to open another 5 gas stations before the end of the year invarious parts of the country next to its already existing 4 stations. Hungary's number one retail chain operator plugged into the gas distribution market in late July when it launched its first pump in Ajka, western Hungary,selling fuel at discount prices. Meanwhile Tesco is being closely watched by rivals like Shell and Agip, who saidthey would to turn to the competition authorities should the retailer breach regulations by cross-financing its fueldistribution arm. (Vg 1) S.F.

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Dresdner, JP Morgan hired for bond sale

Hungary hired Dresdner Kleinwort Wasserstein, a securities unit of Dresdner Bank AG of Germany, andJPMorgan Chase & Co. to manage a sale of euro 1 billion of euro denominated bonds. The fixed- coupon, seven-year securities should be sold in the first half of October, the fourth foreign-exchange denominated bond sale thisyear. The agency said it plans to use the proceeds from the sale to cover maturing debt. Hungary's foreign debt israted A1 at Moody's, four levels below the highest grade, and A- at S&P, six steps from the top. (Bloomberg; Nv5, MH 13)

Ft 125 bln public bond issue launched

Student loans center Diákhítel Központ has launched a two-year Ft 125 billion forint-denominated public bondissue to finance student loans, CEO Tamás Csillag and deputy CEO of state debt management agency AKK András László Borbely said yesterday. Three different series of the fixed-rate bonds will be issued in the twoyears of the program and Diákhítel plans to reissue each of the series several times, raising the potential issueamount by tens of billions of forints. Unlike Diakhitel's previous issues, the bonds will carry a state guarantee.(Econews; Nv 5, Ng 12, Vg 18)

Posta outsourcing receives complaints

In addition to money transportation, cash handling, property management and cleaning, national postal serviceprovider Magyar Posta Rt has recently begun outsourcing mail delivery in Budapest for better cost efficiency.While the company is indeed making considerable savings on wage costs, the service quality provided by

subcontractors leaves a lot to be desired, broadsheet Magyar Hírlap claims citing complaints from Dist. 12. "Wehave not yet received any serious complaints regarding subcontractors' services", Spokesman Tamás Tomecskósaid, adding that the Postal Services Act permits outsourcing of mail delivery as long as registered mail, packagesand cash delivery is performed by postal employees. The Independent Trade Union of Postal Employees arguedthat Magyar Posta is sacrificing its reliability and good reputation by using subcontractors. (MH 10) P.P.

Last attempt to save Humet

The board of directors of food supplement producer Humet Rt decided to make a last effort to save the companyfrom liquidation. The company will try to issue 7.2 million new shares, tripling their amount. The papers may besubscribed by the creditors of the company at a price of Ft 29 each resulting in a Ft 210 million income. Themanagement wants to redeem 85% of its debts with the shares, the rest in cash within two years. To carry out thetransaction the terms must be accepted by the majority of the creditors. Dr Elek Csucska Fund, the largest lender of Humet Rt already offered the company to meet its debts with newly issued shares. (NG 11) G.R.

Logistics center for Kecskemét

Hungarian-owned Bertrans Rt is in the process of a Ft 700 million green-field investment, which will create a newlogistics center in Kecskemét, central Hungary, Pál Rózsa said on behalf of the owners of the company. Thelogistics complex will serve as a regional hub providing domestic and international freight forwarding,warehousing and customs clearance services. The 5,000-sqm facility will feature a storage capacity of 10,000pallets and state-of-the-art technology, Rózsa added. (Nv 11) P.P.

Hungary's Nabi Bus May Boost U.S. Output

Nabi Bus Industries Rt, the third- largest supplier of city buses in the U.S., may transfer some work to the U.S.from Hungary because of rules about domestic production, daily Világgazdaság said. A U.S. transport authorityrejected a request by Canadian bus maker New Flyer Industries Ltd. to extend an exemption from the so- calledBuy American rule for spare parts of articulated buses, the paper said, citing András Bodor, a Nabi director. The

Buy American rule requires that 60 % of the buses sold by foreign companies have to be made in the U.S. sotransport companies can benefit from state subsidies to pay for them, Világgazdaság said. (Bloomberg)

Economics

Unemployment rate at 5.9% in June-August

Hungary's average rate of unemployment was 5.9% in the three months to August, unchanged from the precedingthree-month period, and up 0.2 %age points from the same period a year earlier, the Central Statistics Office(KSH) said yesterday. The average number of unemployed was 246,600 between June and August of 2004, asagainst 244,400 between May and July, and 238,800 between June and August of 2003. According to ILOstandards, which put working age between 15 and 64 years of age, Hungary's employment rate was 56.8%. Thiscompares to 64.4% in the EU-15 and 62.1% in EU-25 (Econews; Nb -Piac, Ng 3, Vg 5, Nv 5, MH 10)

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Consumers cautious

While companies are today more upbeat on their business prospects than they were in the previous 3 months,consumers have turned somewhat gloomier, Ecostat said in its latest survey. The economic researcher's Top 100growth index, gauging the sentiment of the largest corporations, rose to 55% in Sept., the SME growth index wasup at 50.3%, while its consumer sentiment index stood at 40.9%, down 2.5% from April-June. (Vg 5) S.F.

Industrial parks on the up

The number of industrial parks operating in Hungary rose to 165 by the end of last year, of which 141accommodated altogether 2,450 companies, according to figures released by the Industrial Parks DevelopmentCouncil. Employing total staff of some 139,000, these businesses have, to date, carried out investments totalingFt 1,256 billion and produced goods worth Ft 3,430 billion, 66% of which was exported. Industrial parks todayemploy 17.3% of the industrial sector's total workforce, and account for 23% of its entire revenues and an evenhigher 28% of its export income. (Vg 4) S.F.

Tax changes aim to boost competitiveness

The Finance Ministry's amendments to the tax law, which were submitted to parliament on Monday, includechanges designed to boost competitiveness, raise employment, bring businesses in line with EU rules anddiscourage businesses from finding ways to avoid paying taxes. As part of the changes, SMEs will be able todeduct costs of protecting patents. Also, businesses employing at most 5 people will be allowed to deduct anamount equivalent to the minimum wage for each new employee they hire. If, however, headcount is reduced

within three years of the deduction, penalties will apply. (MTI Econews; Nv 5, MH 9)

Falling figures of bank employees

In the first six months of 2004, banks cut back their total headcount by 500 to 26,500 despite a steady growth inthe number of branches, the state financial watchdog PSzÁF said. The decline in the number of bank employeescame amidst the ongoing merger of Postabank Rt into Erste Rt and ahead of OTP Bank Rt's recentannouncement that it would shed 1,000, mainly back-office jobs, or 6% of its workforce. The H1 fall-off reversedthe upward trend of 2001-2003, when banks boosted their staff by almost 1,000 to 27,200. (Vg 1) S.F

Investors should sell forint against euro

Investors should sell the Hungarian forint against the euro because tensions between the central bank and thegovernment may weaken the currency, BNP Paribas SA said. Hungarian lawmakers rejected the central bank'sreports on its 2002 and 2003 operations in a vote on Monday, parliament's press office said. The central bank

said in a statement after the vote the rebuke won't affect its work. The clash may call into question the position of Central Bank President Zsigmond Járai, she said. Under Jarai, policy makers at the bank boosted the cost of borrowing to 11 %, the highest in the EU, in an effort to rein in inflation. (Bloomberg)

Analysts expect Euro 2.29 bln deficit

Analysts polled in yesterday's issue of business daily Napi Gazdaság put Hungary's Q2 current account deficit atEuro 2.29 billion, Euro 600 million more than the Euro 1.705 billion deficit in Q1. The estimate would put the deficitfor the first half of the year at Euro 4 billion, compared to Euro 3.285 billion in the same period last year. TheNational Bank of Hungary (MNB) will publish its current account report for H1 on Thursday. The analysts put thec/a deficit for the whole year at Euro 7,074 billion, under the MNB's estimate of Euro 7.2 billion in its AugustInflation Report, but over the Euro 6.840 billion estimate produced by the latest Reuters poll of analysts.(Econews)

PoliticsGyurcsány presents gov't platform at rally

Ferenc Gyurcsány played up his left-wing, redistributive credentials at a Socialist Party rally yesterday, saying hewould strive for justice and improvements for all Hungarians. Gyurcsány pledged his government would providemore opportunities to the poor, while he said affluent groups should carry a greater burden of responsibility. Thegovernment would bring in policies to boost investments, such as tax breaks for those businesses that createmore jobs, particularly for young mothers and the over 50s, Gyurcsány added. Anyone who earned between Ft100,000 and 150,000 would be better off, he said, as a result of changes to the tax system. (MTI; MH 1, Nv 1)

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Referendum support from strange bedfellows

Ending a case that has been pending for almost a year, the Constitution Court finally gave the green light to areferendum on the privatization of healthcare yesterday. Originally coming from the Worker's Party and other far left organizations, but also embraced by the two major opposition parties, gained support from over 240,000citizens. The popular vote is expected to take place in December. The question voters will have to answer is, "Doyou agree that public healthcare institutions and hospitals should remain in state ownership, and that an Act of Parliament to the opposite effect" should thus be annulled?" (MH 1, Nv 4) P.P.

Domestic

Terrorist gets 12 yrs for Budapest bomb

German terrorist Andrea Martina Klump was sentenced to 12 years imprisonment by a Stuttgart court yesterdayfor bombing a busload of Jewish emigrants in Budapest in December 1991 that injured six. Klump, a suspectedformer Red Army terrorist, tried to blow up the busload of Jewish emigrants from the Soviet Union bound for Israelwho were transiting through Budapest by detonating a car bomb from a parked vehicle as the bus, carrying 33passengers, went by on its way to the airport. The bomb went off prematurely, seriously injuring two people in thepolice car leading the bus, and hurting four passengers on the bus, none of them seriously. Klump was arrested inVienna in September 1999 in a shoot-out with authorities that killed her companion Horst Ludwig Mayer, another suspect in the bombing. Klump's 12-year-sentence includes a prison term she received in 2001 for another bombing, this one committed in Spain. (MTI; Nv 1, MH 20)

Clean up begins of Tisza waste

Water authorities have started the cleanup of 60 tons of floating residential waste that entered Hungary on theTisza river earlier this week. The operation will be completed by the weekend, Spokesman Csaba Csont of theNorthern Hungary Regional Environmental and Water Authority said. Supposedly originating from an illegal wastedumping site in Ukraine and now spread over a 25-km stretch of the river, the non-hazardous mass measures 100cubic meters in volume and consists of plastic bags, plastic and glass bottles, and pieces of wood. (MH 4)

30/09/2004

Business

Shell begins sales of new diesel fuel

Shell Hungary Rt has introduced a new high-detergent diesel fuel, "V-Power Diesel", and expects the new brand

to boost its diesel fuel sales in Hungary between 5% and 10%, Shell Hungary retail director Balázs Erényi said onThursday. Diesel fuel accounts for 35% of Shell Hungary's sales. The new diesel fuel, which already meetsstandards to be adopted by the EU in 2005, will be delivered from an oil refinery in Godorf, Germany. (Econews;Ng 4, Vg 12)

New spa hotel built in Marcali

A new four-star spa hotel will be built in Marcali, southwest Hungary, for Ft 1 billion, the local council said. Theinvestment will create 200 jobs in the town. From the construction costs, Ft 400 million will be covered by thegovernment's Széchenyi plan and other tender resources, the municipality will pay Ft 200 million and a bank loanwill be taken for the remaining Ft 400 million. The hot springs in Marcali were declared a spa in 1990 and the localspa received 40,000 guests annually. (Vg 7) M.K.

Electrolux develops frost-free freezer

Refrigerator maker Electrolux Lehel Kft has begun production of the world's first frost-free freezer in its factory inJaszberény, Electrolux said yesterday. Electrolux spent more than euro 1 million to develop the freezer inHungary. The freezer will be introduced in Western Europe this year and in Hungary in spring of 2005. Electroluxplans to make 600,000 freezers worth euro 106 million in 2004 in Hungary. Marketing manager Ildikó Szmida saidthe new freezer will be around 25% more expensive than Electrolux's traditional products. (Econews; Vg 3, Ng 5)

Zalakerámia stake used for collateral

Lasselsberger Ceramics of Austria is using its shares in Hungarian tile maker Zalakerámia Rt as collateral for aloan from the Raiffeisen group and Investkredit Bank, according to an announcement in capital markets gazetteMagyar Tokepiac. Last week Lassselsberger announced it had raised its stake in Zalakerámia by 50.11% to89.7% with the purchase of a stake owned by bank ÁÉB Rt. The sale was agreed on earlier in summer. Thebanks providing Lasselsberger the loan include Raiffeisen Zentralbank (RZB) Raiffeisen Zentralbank Osterreich,Raiffeisenlandesbank Oberrosterreich, Raffeisenlandesbank Neidersosterreich-Wien and Investkredit Bank.

(Econews; Vg 15)

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Nypro to extend in Nagyigmánd

Plastics producer Nypro Hungary Kft plans to extend its plant and profile in Nagyigmánd, northwest Hungary,Nypro Inc.'s European manager Jack McCabe said. Nypro produces telecommunications plastics primarily for Nokia in Nagyigmánd, but the company wants to make other electronics, IT, machine industry or health careproducts too. Nypro has so far invested euro 12 million in Hungary and has two plants with 4,700 sqm in total.Nypro reported a net revenue of Ft 5,273 million in 2004. (Vg 10, N) M.K.

Dacia returns to HungaryCar model Dacia Logan will soon be sold in Hungary for Ft 1.75 million, thus meaning the return of RomanianDacia cars on the Hungarian market. French Renault invested euro 450 million in Romania to produce Dacia carsthere, and the make was once well known in Hungary too. Dacia's Logan will be meant for poorer people whowant a big car, make director Gábor Sipka said. Other dealers are afraid that the rock bottom price may giveDacia an unfair advantage over their cars. (Vg 12) M.K.

Lottery fever attracts gambling tourists

Tens of thousands of tourists from Hungary's neighboring countries come to gamble to Hungary every week,spokesman of Szerencsejáték Rt László Somorai said. Gamblers from Austria, Croatia, Ukraine and Romania areattracted by the currently Ft 1.6 billion prize. Last year there was no lottery winner for 38 weeks and by the end of the year 15-20% of Szerencsejáték's lottery revenue came from tourists, Somorai said. (Vg 9) M.K.

PSzÁF fines Generali Ft 1 mlnFinancial watchdog PSzÁF has fined fund manager Generali Alapkezelo Ft 1 million for failing to regularly provideit with information and for inadequate documentation of transactions. At an on-site investigation in May 2004,PSzÁF found discrepancies as great as Ft 24.82 billion between Generali's reports on its portfolio and the netassets registered with custodial banks. The discrepancies were the result of bad calculations and incorrect dataentry. PSzÁF also found that Generali's contract with OTEK-Gordius Kft, the firm to which it outsourcedaccounting and IT tasks related to portfolio management, contained irregularities. (Econews; Vg 13)

Európa Bísztosító's risk reserves adequate

Financial market regulator PSzÁF has said that risk reserves of insurance company Európa Bísztosító Rt wereadequate on July 21. Groupama of France, Európa Biztosító's sole owner, raised capital in the company by Ft 1.8billion on June 22. The raise was more than enough to cover a Ft 685 m shortfall in risk reserves cited by PSzÁFin May. PSzÁF had given the company until the middle of November to correct the situation. Európa generated

revenue from premiums of Ft 10.86 billion in 2003, of which Ft 5.67 billion was from the sale of third party vehicleinsurance. (Econews; Vg 13)

István Park construction to start this fall

The construction works of residential park István Park in Dist. 14 will start this fall, sales manager of investor SLProperties Kft Adrienn Harmath said. István Park will be built next to the new shopping and entertainment center Récsei Center and the park will host 800 families, Harmath said. 47% of the flats have been sold before startingthe construction, Harmath said. Apartments in István Park will have deep garage, a common bicycle storage roomas well as an internal park. (Vg 19) M.K.

Airport development

State Privatization and Holding Rt (ÁPV), as 100% owner of Ferihegy International Airport operator Budapest Airport Rt, has recently approved a long-awaited Ft 5 billion project to develop a new cargo base with the

company's own funds. Budapest Airport is planning to construct a 19,000-sqm logistics complex with 6,000 sqmof office space, for which a comprehensive feasibility study has already been carried out. The planned facility isrequired to accommodate the airport's booming cargo business, which totaled 50,000 tons in 2003 and is growingat an annual rate 7.5% above the European average. Several logistics service providers, including TNT ExpressWorldwide Hungary Kft, DHL Hungary Kft, and Magyar Posta Rt, have signaled interest in leasing space once thenew base is operational, which is scheduled for 2006. (NG 13) P.P.

Passenger traffic at Ferihegy up 29.5%

Around 4,160,000 passengers passed through Budapest's Ferihegy international airport in the first eight monthsof 2004, up 29.5% on the same period in 2003. Airport operator Budapest Airport reported 740,000 passengerspassed through the airport the month of August, 24.5% more than in the same period in 2003. Transfer passengers accounted for 10.6% of all passengers in the first eight months. Passengers traveling with low-fareairlines increased tenfold to 433,339 in the first eight months. (Econews)

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Tourist info on the air

Mobile service provider T-Mobile Hungary and Hungarian Tourism Rt (MT Rt) have jointly launched a WAP portalfor tourism recently, announced Gábor Galla, CEO of MT Rt. The portal features information provided by MT Rton restaurants, hotels, spas, cultural and other programs, weather and on Tourinform offices. T-Mobile customerscan even get information on facilities nearest to their current location. (MH 12) R.G.

Dunaferr expects profit of Ft 15 bln

Steel company Dunaferr Rt expects pre-tax profit of Ft 15 billion in 2004, CEO Peter Honig said. The companyhad pre-tax profit of Ft 10 billion by the end of August, Mr Honig said. In 2002, Dunaferr had losses of Ft 9.5billion. In 2003, the company had profits of Ft 193 million. Mr Honig's mandate as CEO was extended at an EGMon September 20 until 2006. The EGM also approved a Ft 17.3 billion capital raise in the company through theprivate placement of new shares. The shares will be subscribed by Kundax, a member of the consortium, led byDonbass and Duferco, which purchased a majority stake in Dunaferr. (Econews)

MTV refreshes website

Hungarian state television MTV has recently renewed its website both in form and content. www.mtv.hu has beentransformed to an Internet news portal where in addition to items broadcast on MTV's news programs, other information is also available. Other planned developments on the web page include a searchable archive of MTVprograms and a blog site. (MH 12) R.G.

EconomicsIncreased gov't spending

The share of welfare spending in state expenditure is set to increase considerably, rising over 60% next year, theFinance Ministry said after discussing the draft of the 2005 budget. The ministry will be fixing targets of Ft 2,048billion in VAT revenues, Ft 454 billion in corporate tax, Ft 662 in excise tax and Ft 999 billion in personal incometax. According to the draft, the two social security funds will have a combined deficit of Ft 354 billion, which willarise as the difference between the planned Ft 1,167 billion revenue and Ft 1,521 deficit of the National Health Administration Fund. The Finance Ministry is projecting 4% GDP growth in 2005, and 4%-4.5% in the next twoyears. Hungary's state debt may total 57.7% of GDP this year and 56.4% in 2005, and the budget deficit could bereduced by an annual 0.5-0.7 percentage points in terms of GDP. Housing loans are estimated to grow to Ft1,600 billion by the end of 2005, with government subsidies rising from this year's Ft 200 billion to Ft 270 billion.(NG 1) P.P.

Járai Says Government Must Cut Spending

Hungarian Central Bank President Zsigmond Járai said tensions are growing between the government and thecentral bank over the direction of monetary policy and public spending in the coming years. Járai said thecountry's budget deficit is now unsustainable and must be cut if interest rates are to decline, from 11%, thehighest in the EU. The central bank wants to see more spending cuts in the 2005 budget, he said. "Consolidationshould sooner or later occur, because the current state of the budget is unsustainable" he added. (Bloomberg)

Contributions to benefit bankrupt entrepreneurs

The Finance Ministry is planning to impose a new, mandatory social security type of payment for small enterprisesand self-employed people from next year, according to unnamed sources. Small companies and privateentrepreneurs would have to pay 4% of their income in addition to other social security in payments, which in caseof the minimum wage of Ft 57,000 would be Ft 2,280. In exchange, they will be entitled to unemployment benefit if their companies go bankrupt. (MH 1) R.G.

Summer tourists put USD 135 mln on Visa cards

Summer tourists in Hungary spent USD 135 million using their Visa cards, up 30% from a year before, VisaInternational said yesterday. Around 56% of the amount, spent in June, July and August, was at POS terminals inshops, restaurants and places of entertainment. Although there are some 19,000 POS terminals in Hungary, thecountry is still far behind the Czech Republic with its nearly 50,000 POS terminals. U.S. tourists spent the most,USD 20 million, followed by tourist from the UK, spending of USD 16 million, followed by the Germans, spendingUSD 14 million. (Econews; Ng 5)

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Industrial output rises 10% yr/yr

Industrial output rose nearly 10% yr/yr in the first seven month of the year, although growth slowed in July,according to the Central Statistics Office's (KSH) monthly summary for July published yesterday. Unadjustedindustrial production rose 4.9% yr/yr in July, while the working-day adjusted figure shows a 7.6% rise, well over the comparable 1.9% rise in the EU-15, the KSH summary notes. Exports were behind the rise, rising 19% in thefirst seven months, while domestic sales fell 0.5%. (Econews)

Banks search for interest tax alternativeBanks are unhappy with the way in which the government plans to levy a tax on net interest revenue, HungarianBanking Association secretary Rezso Nyers said yesterday. On September 24, the government announced plansto introduce a 6% tax on net interest revenue for financial companies for two years starting in 2005. Nyersconfirmed a report in daily Magyar Hírlap that the association has set up a committee with representatives frommore than 20 financial institutions to present an alternative method for taxing the banks. (Econews)

Politics

Gyurcsány elected prime minister

Ferenc Gyurcsány was elected prime minister by Parliament yesterday evening, with 197 votes for and 12 againstand no abstentions, while 175 MPs did not vote. The vote also meant the approval of the Gyurcsánygovernment's platform. Gyurcsány, 43, a millionaire businessman, becomes Hungary's 6th prime minister since

1990. Ferenc Gyurcsány was then sworn into office during a brief ceremony. (MTI; Vg 1, Nv 1, Ng 1,3, MH 1, Nv1)

Gyurcsány program continuity

Presenting his program in Parliament yesterday, Hungary's new Prime Minister Ferenc Gyurcsány promised adynamic style of government for the eighteen months remaining until the 2006 elections. According to theprogram, the new premier will not undertake to tackle any of the much-discussed major reforms that are neededin healthcare, public administration and local government financing; furthermore, the issue of tax reform, a newConstitution, and the introduction of a 38-hour week will also be shelved until 2006. Some of the specificsmentioned in the 40-page document include additional financial support for the over 75s, a new Európa Plan andwaging a war on racial discrimination. While Gyurcsány considers his tenure a continuation of Medgyessy'sefforts, some of the latter's election promises, most notably the construction of 800 km of new highways, will onlybe partly fulfilled. (NG 1) P.P.

Economy Minister István Csillag Steps Down

Economy Minister István Csillag, whose proposed firing in August led to the collapse of the country's government,resigned two days before the new prime minister was scheduled to name his cabinet. Csillag resigned to avoidcreating conflicts for the new government and Hungary's minor coalition party, the Free Democrats, whichaccepted his decision, the party said on its Web site. Csillag is a member of the Free Democrats. Peter Medgyessy, Hungary's previous prime minister, resigned after the Free Democrats withdrew their support in himafter he fired Csillag. (Bloomberg)

Domestic

Hungarian family receives refugee status

An ethnic Hungarian family that fled from the northern Serbian town of Subotica after being repeatedly harassedfor their ethnicity was granted refugee status, the interior minister informed MTI yesterday. "I have grantedrefugee status to the Sotet family on special grounds," Monika Lamperth said. She said the family was subjectedto harassment in Vojvodina that "led to their utter despair" and their decision to "leave their homeland once andfor all". The family -- father László, mother Slavica, their son Denis, who was beaten up several times in Serbia,and their daughter Kelmentina, 13 -- crossed the border to Hungary and have been staying at a refugee facilitysince then. (MTI; Nv 3)

Decision on Kulcsár's house arrest

The Budapest Central District Court decides today whether to impose house arrest on former K&H broker AttilaKulcsár suspected of embezzlement. As the period of his detainment expires today, Kulcsár submitted a plea tothe Prosecutor's Office for his release on Monday. The Prosecutor's Office proposed house arrest instead of detainment to the Budapest Central District Court on Wednesday. Kulcsár has been held for a year now, and hasbeen questioned by the Prosecutor's Office since June 22. (MH 4) R.G.

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01/10/2004

Business

Dunaferr sale closed

The State Privatization and Holding Company (ÁPV) closed the sale of steel maker Dunaferr to the Donbass-Duferco consortium yesterday. ÁPV CEO Miklós Kamarás, Sergei Taruta of the Donbass-Duferco consortium andDunaferr Chariman-CEO Peter Honig all signed one of the company's shares in an act intended to signal the

close of the sale, which has been dragging on for more than nine months. At yesterday's continuation of an EGMadjourned on September, the decisions taken by in September, including electing Taruta as chairman of Dunaferr's supervisory board and confirming Honig in his position, took effect (Econews; Ng 1, Vg 1,15 Nv 10, MH10)

Jysk to come to Hungary

Danish furniture manufacturer and retailer Jysk Holding A/S announced its intentions to enter the Hungarianmarket. The company's Hungarian subsidiary called Jysk Kereskedelmi Kft is currently in the process of beingregistered at the Company Court. Jysk, one of the largest Danish companies is active in 18 countries with 860retail outlets and is known for its rock bottom prices, which will surely cause a stir in the Hungarian furnituremarket. (NG 1) A.K.

Antenna to pay extra dividend

State Privatization and Holding Rt (ÁPV) the majority owner of telecommunications company Antenna HungáriaRt (AH) announced its plans to commission the payment of an extraordinary dividend to AH shareholders,following the sale of AH's 10% stake in mobile communications provider Vodafone Magyarország Rt to VodafoneInternational Holdings BV at an estimated price of Ft 17 billion. ÁPV also put forth a proposal to the governmentconcerning the privatization of its 73% stake in AH to be finalized within a year. (NG 1) A.K.

New logistics center for Ferihegy

Budapest Airport (BA) Rt will start building a logistics center at Ferihegy airport within a few weeks. Theinvestment will cost Ft tens of billions and is to be finished in 2006. It will contain 19,000 sqm storage yards and5,000 sqm offices and will greatly increase international competitiveness of the airport. Some of the worldwidedelivery companies requested space to rent at the future yard; Magyar Posta Rt and Customs and Excise Officewill also settle to the new facility. Circulation of goods through the airport has been increasing for several years,and grew steeply this year. In the first eight months, 50,000 tons of cargo moved through the airport, 20% more

than in the same period of 2003. (Vg 1) G.R.BT to open regional office in Bp

British Telecom (BT) will establish its Central-European IT service center in Budapest, strategy director Aad vanWaveren said. The new center will be opened Oct 21 and within a year, 100-150 people will be employed. Theunit will work as a general service center for BT but it will be able to offer outsourcing solutions for other companies, too. British Telecom established its first office in Budapest in 1999, which has 30 employees now. Itcontrols sales and technical support in the Central- and Eastern-European region. (Vg 13) G.R.

Pannonmill completes mill

Pannonmill Rt, one of the largest Hungarian milling companies completed the construction of a new grinding millin Komárom, Northern Hungary at a cost of Ft 1 billion. The company plans to gradually replace the rest of its oldmills with new ones to secure capacity for the milling of hundreds of thousands of tons of grain a year. Pannonmill

was created through the recent merger of Hungaromill Rt, Pannon Gabona Rt and Pannon Borsod Kft by Austrianowner Vonwiller GmbH to form a company with a combined annual turnover of Ft 20 billion. (NG 4) A.K

Rewico plans acquisitions

Thomas Scheleife co-owner of logistics company Rewico Logistics Kft said that the company will spend Euro 1-1.5 million per year in the next three years to improve its facilities and to finance acquisitions of smaller locallogistics companies especially in the region of Eastern Hungary. Rewico currently owns 20 thousand sqm. of storage space in Budapest with a further 40 thousand sqm. in the environs. Rewico expects to exceed its turnover plans of Ft 2,2 billion for this year. (NG 4) A.K.

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BorsodChem on Warsaw Exchange

Polish Securities and Exchange Commission permitted shares of BorsodChem (BC) Rt to be traded at WarsawStock Exchange. This will be the first Hungarian company listed on the Polish stock market. This also allowsPolish institutional investors buy the shares. Austrian VCP, one of BorsodChem's owners offered most of itsshares for sale. About USD 100 million of total USD 550 million is intended to be sold at Warsaw Stock Exchange,according to Reuters information. (Vg 19, NG 11) G.R.

BSE suspends trading in E.ON subsidiariesThe Budapest Stock Exchange has suspended trading in the shares of E.ON Hungária Rt's three Hungarianelectricity distributors E.ON Northern Transdanubian Electricity Provider,, E.ON Southern TransdanubianElectricity Provider and E.ON Transtisza Electricity Provider on September 30 and October 1, the BSE said onWednesday. The shares were suspended pending further information on how and when shares not offered toE.ON Hungária in its public purchase offer for the three companies will be invalidated. On Wednesday a court of arbitration ruled in favor of E.ON Hungária in a dispute against its three Hungarian electricity distributors, allowingE.ON Hungária to buy out the remaining small shareholders in the three subsidiaries. (Econews; Ng 11, Vg 17)

Danubius acquires majority stake in Gundel

Danubius Hotel Group has acquired a further 17.6% of LL Partners's subsidiary Lang Gasztronomia, which ownsBudapest's exclusive Gundel restaurant, Danubius Hotels said on Wednesday. Danubius announced that it nowholds 66.6% of Lang Gasztronomia. Danubius bought a 49% stake in Lang Gasztronomia in July this year, and

announced plans to acquire a further 17.6 % of the company after approval by the Competition Office (GVH).Danubius said yesterday that GVH had approved the planned purchase and Danubius Hotels transferred thepurchase price of the 17.6% stake to the seller on September 30. (Econews; Ng 11, Vg 18)

Raflatac opens new plant

Finnish paper processing and manufacturing company Raflatac will inaugurate its new plant in Tatabánya,Northern Hungary today. The facility manufacturing self adhesive labels will initially employ 30 people with a ten-fold increase planned in the payroll for the near future complemented with the enlargement of the production hallfrom the current 5,000 sqm. to 20,000 sqm. The factory will primarily supply Austrian and Hungarian customers aswell as other Eastern European markets with pressure sensitive adhesive labels. (NG 4) A.K.

Ft 1.5 bln awarded for IT improvement

Ft 1.5 billion has been distributed amongst the first round of winners of a tender put out by the Economic

Competitiveness Operative Program (GVOP) for IT infrastructure improvement. The four successful applicantsare the local government of Egér, Pécs, and Veszprém, and the Nyíregyháza based company Marso Kft,announced László Koczkas, CEO of Information Society Kht, yesterday. There were 256 applications received for the seven tenders altogether until the end of September. (NV 10) E.C.

Hungarian toy story

German toy manufacturing company Marklin Holding GmbH is to relocate to Hungary. As a result of the highworking expenses, Marklin is to cut 400 jobs in Goppingen, Germany and reduce its costs by 15% until the end of 2005. Marklin has been present in Gyor, Hungary, for over 10 years, which is where the new location is thought tobe, and where the expenditure is only one tenth of Goppingen. (MH 12) E.C.

IBM initiates software support

IBM Hungary starts its support program for independent Hungarian software developers today. Firms will be able

to use IBM's Innovations Center for free to test develop and get IBM certification for their softwares. The center includes several million dollars worth hardware equipment. The applicants who will be chosen in a tender will alsoget sales and marketing training. IBM principally invites software developers that are specialized for SMEs. (Vg15) G.R.

Local councils to select bank via tender

For the first time, local councils are to choose their bank before the end of October via a public procurementtender. According to the banks involved, the tender makes the process more transparent, however, the changeswill only effect the administration, not the end result. The position of OTP Bank Rt is unshakeable: 77% of localcouncils hold their account with OTP, and Ft 110 billion out of the total savings of all local councils of Ft 183 billionare held by OTP. Among the Ft 173 billion credit, OTP holds Ft 90 billion. The local councils' second mostinfluential business partner is Raiffeisen Bank Rt, with a 15% credit portfolio. (MH 10) E.C.

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Őrmester plans to go public

Hungarian security company Őrmester Security Kft is planning a public listing on the Budapest Stock Exchangewithin three to eight years, business daily Napi Gazdaság reported yesterday. Őrmester has been operating inHungary for about 15 years. The company provides security guard services, sets up alarm and surveillancesystems and offers consulting services. It has subsidiaries in Serbia and Montenegro and Slovakia and has alsobegun setting up an office in Romania. Őrmester is also planning to expand in Slovenia and Croatia. Őrmester closed 2003 with revenue of Ft 1.23 billion and plans to boost sales to Ft 1.7 billion in 2004, aiming for profits of Ft

125 million. (Econews)

Economics

Conflict of C/A gap and strong forint

Hungary's central bank is being torn between the yawning current account gap that requires high interest rates toattract portfolio investments necessary to plug the deficit and a strong forint that calls for monetary loosening for itto avoid testing the strong end of the official band, London-based emerging markets analysts said after thesecond quarter current account figures had been released yesterday. Wike Groenenberg at Citigroup said thatalthough the numbers are "a touch better" than the market consensus, she still sees the full-year figure coming inclose to 9% of GDP. (Econews; Vg 15)

Analysts say c/a deficit will slow in H2

Analysts polled by MTI said Hungary's smaller-than-expected Q2 current account deficit came as no surprise tothem. The analysts also said they expected the deficit to widen more slowly in H2. The National Bank of Hungarysaid yesterday that the current account deficit was Euro 2.12 billion in Q2, and totaled Euro 3.825 billion in H1, asagainst Euro 3.285 billion in the same period last year. Economic research institute GKI will not modify its forecastfor an annual c/a deficit of Euro 6.5 billion, betting on a Euro 2.7 billion deficit in H2, CEO Gabor Karsai said.(Econews; Ng 1,Vg 4, Nv 5, MH 11,)

Budget delay "does not affect main targets

Finance Minister Tibor Draskovics said yesterday that the week delay in submitting the 2005 budget bill toparliament - the budget should have been submitted yesterday - would not affect any of the targets earlier announced and contained in the budget. Confirming his earlier statement, Draskovics said that the 2005 budgetwould aim to reduce the deficit by more than the earlier targeted half of a %age point. (Econews; Vg 5, Nb 16)

Industrial prices up 0.2% m/m, 2.6% yr/yr

Industrial producer prices rose 0.2% in the month of August and were up 2.6% in the twelve months to August,the Central Statistics Office (KSH) said yesterday. Twelve-month producer price increase in August was thelowest rate so far this year. Industrial producer prices for domestic sale rose by 0.4% in August, while producer prices in forint terms for sales abroad increased by 0.1%. Twelve-month domestic sale prices were up by 9.0%and forint-term export prices decreased by 2.4%. January-August industrial producer prices were up 3.9% from ayear earlier. (Econews; Vg 18)

Borrowing costs drop at 35 Bln bond sale

Hungary's borrowing costs fell at a sale of forint-denominated government bonds, according to the country's debtmanagement agency. The agency sold 35 billion forint of 8.25 % bonds due October 2009 at an average yield of 9.35 %, 33 basis points lower than at an auction of the same- maturity notes on Sept. 2, it said on its Bloombergpage. A basis point is 0.01 %age point. The average yield was the same as that on bonds with similar maturity on

the secondary market on Wednesday. The maximum yield at the auction was 9.37 % and the minimum 9.28 %.(Bloomberg)

Politics

Prime minister names new cabinet

Prime Minister Ferenc Gyurcsány yesterday named the members of his new cabinet. Minister of Foreign Affairs:Ferenc Somogyi (MSzP) from November 1, until Foreign Minister László Kovacs becomes EU commissioner Minister of Defense: Ferenc Juhász (MSzP) Minister of Finance: Tibor Draskovics (nominated by MSzP) Minister of Economic Affairs and Transport: János Koka (SzDSz) Minister of the Interior: Monika Lamperth (MSzP)Minister of Agriculture and Regional Development: Imre Nemeth (MSzP) Minister of Health: Jeno Racz (MSzP)*Minister of Justice: József Petretei (MSzP) Minister of Labor and Employment: Gábor Csizmar (MSzP) Minister of Environment and Water Management: Miklós Persányi (SzDSz) Minister of Information Technology andTelecommunications: Kálmán Kovács (SzDSz) Minister of Cultural Heritage: István Hiller (MSzP) Minister of Education: Bálint Magyar (SzDSz) (MTI; Nv 1,8,9, MH 1,2,3,4, Ng 1, Vg 1, Nb 1)

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László Kovács expounds plans at EP hearing

Hungarian Foreign Minister László Kovács, about to become EU energy commissioner on November 1, saidenergy policy would be a key area of efforts to make the European economy more competitive on global scale,which is a priority of the Lisbon strategy for the coming five years. Kovács identified, during the hearing by theEuropean Parliament's committee of industry, research and energy yesterday, three energy policy priorities,namely: raising economic competitiveness, ensuring sustainable energy supply and enhancing cooperation withexternal partners. (MTI; Ng 1, Nb 2, Vg 3)

State secretary László Keller quitting

László Keller, state secretary in charge of uncovering corruption in utilizing public funds, said he was unwilling toretain his post after Oct 3. A politician of the senior governing Socialist Party, Keller said yesterday he hadinformed Prime Minister Ferenc Gyurcsány about his decision. "After my mandate as parliamentary statesecretary expires next Sunday, I would like to work exclusively as a Member of Parliament elected in an individualconstituency," he said. (MTI; MH 1,2,3,4, Nv 1,8,9)

Domestic

Crowd trouble mars Fradi 3:1 win

A fan was stabbed and left fighting for his life after crowd trouble marred the UEFA Cup match betweenFerencváros and Millwall yesterday which spelled the end of FA Cup finalist Millwall's European dream. Over

3,000 Millwall fans traveled over for the game. Scuffles broke out in and around the stadium resulting in a handfulof arrests. Riot police were called to break up running battles in Budapest an hour before the game. Two Millwallfans were reported to be arrested and in police custody. (AFP)



7days, 2004. október 4

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