7days, 2005. január 24

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7/28/2019 7Days, 2005. január 24. http://slidepdf.com/reader/full/7days-2005-januar-24 1/22 1051 Budapest, Hercegprímás utca 19 Tel: 354 3290 Fax: 354 0130 Mail: [email protected] Business Tax system set for further overhauls Matáv to negotiate Montenegrin sale nxt wk Danubius in talks to buy London hotel Audi sales grow despite downhill market  New PR company enters Hungarian market Flextronic staff face lay offs Hitelgarancia CEO steps down Volán employees may strike for 12% rise Mahart optimistic about privatization Some 4/6 companies poised for BSE Gyor borrows Ft 5.5 bln for roadworks MTV to launch ’reality show’ BUX tops 15,000 mark at all-time high FHB has over Ft 366 bln in outstanding bonds Economics Monetary Council decided on a 7:1 rate cut EVA is success story Cereal harvest jumps preliminary 90.5% Diákhitel grants students Ft 11.55 bln MNB forex reserves Euro 11.702 bln Politics Culture minister announces resignation FinMin may face investigation Fidesz MP expected to lead ’06 campaign Gyurcsány calls meeting with party heads Domestic Hungary to be regional health center Split referendum fails in Miskolctapolca Hungarians reach South Pole Business ÁPV offers last stake in Szikra Duna Profit asks for liquidation Bauhaus and Wal-Mart in Hungary MÁV picks three bidders Szalai steel co.’s shine Sopron incubator is ready PSzÁF waits on Kafijat’s AÉB stakes Matáv will pay dividends Herend Porcelain opens shop in Shanghai MOL has new owners with 5.06% stake Glass company faces liquidation Buckbee-Mears sells plant to Max-Magyar Foreign owners of OTP Flexfon latest alternative telco to enter market Sopron Bank expands in western Hungary Economics FinMin projects Jan. deficit at Ft 210 bln Draskovics clarifies plans for tax office  November industrial output revised up Budapest shines in ranking of regions EU subsidy for railroad lines Politics 2

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

Business

Tax system set for further overhaulsMatáv to negotiate Montenegrin sale nxt wk Danubius in talks to buy London hotelAudi sales grow despite downhill market

 New PR company enters Hungarian marketFlextronic staff face lay offs

Hitelgarancia CEO steps downVolán employees may strike for 12% riseMahart optimistic about privatizationSome 4/6 companies poised for BSEGyor borrows Ft 5.5 bln for roadworksMTV to launch ’reality show’BUX tops 15,000 mark at all-time highFHB has over Ft 366 bln in outstanding bonds

Economics

Monetary Council decided on a 7:1 rate cutEVA is success story

Cereal harvest jumps preliminary 90.5%Diákhitel grants students Ft 11.55 blnMNB forex reserves Euro 11.702 bln

Politics

Culture minister announces resignationFinMin may face investigationFidesz MP expected to lead ’06 campaignGyurcsány calls meeting with party heads

Domestic

Hungary to be regional health center Split referendum fails in MiskolctapolcaHungarians reach South Pole

Business

ÁPV offers last stake in SzikraDuna Profit asks for liquidationBauhaus and Wal-Mart in HungaryMÁV picks three biddersSzalai steel co.’s shineSopron incubator is readyPSzÁF waits on Kafijat’s AÉB stakesMatáv will pay dividends

Herend Porcelain opens shop in ShanghaiMOL has new owners with 5.06% stakeGlass company faces liquidationBuckbee-Mears sells plant to Max-Magyar Foreign owners of OTPFlexfon latest alternative telco to enter marketSopron Bank expands in western Hungary

Economics

FinMin projects Jan. deficit at Ft 210 blnDraskovics clarifies plans for tax office

 November industrial output revised up

Budapest shines in ranking of regionsEU subsidy for railroad linesPolitics

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

Hungarian-Romanian dialogueDomestic

Foreigners may pay road taxGasoline prices go up tomorrow

Business

EU continues procedure against HungaryEricsson builds 3G network 

Matáv and IKO set up companyTele2 passes 200,000 subscriber mark Competition office eyes Tesco gas priceDráva Faipari restarts operationsPécs bus co. to offer tender Telecottages assist co’s to provide data to ApehMOL sees sales up but margins down this year Product fee law inaccurate, say drinks co.sAlcufer founds Slovakian subsidiary

Economics

VAT freeze costs state Ft 2 bln

Consumer prices up 5.5% yr/yr in December - KSHFinMin attempts to save on drug spendingCompromise on stability and growth pact - FinMin

Politics

Age discrimination must be stopped, says MDFDomestic

Gov’t spends Ft 10 bln on jobs for RomaGreenpeace protests against GM cornService commemorates Holocaust victimsElectricity prices riseFt 171 bln to be spent on environmentPetrol station attendant commits self-robbery

Business

Greenergy to open cycle power plantElectricity price hike „in the air”E.ON Titász now closed companyLeasePlan wins MÁV tender Vodafone soon to pick 3G supplier U.S. fund reduces stake in MOLLang gets go ahead for publisher stakeHungarian airlines chief resigns

Ft 6.4 bln in mortgage bonds auctionedBan on G.M. maize seed approvedGriff hits the mallsBids for Dunaferr should be in by Jan 24Erkel seeks investors

 New flat prices rising fastest in BpEconomics

Gyurcsány mulls flat tax rate of 19%Bank Assoc proposes no fee for OBAEconomic performance is EU averageDrug hike bigger than expected

Real wages down 0.5% yr/yr Hungary signs up for assisted loan dealsHelp for homeowners in debt

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

Applications for farm credit from Feb 1Politics

Gyurcsány outlines 05 programProblems cloud Fidesz lead

Domestic

President grants mercy to patricide girlGeneral Havril to be new chief of staff 

BusinessMatáv to change name to Magyar TelekomMOL turns to Lukoil, YUKOS suspends exportsFreesoft wins Ft 750 mln MÁV contractBKV braces for even harder timesPét to produce over mln tons of manure p/aBudapest Congress center to be renovatedSkála's registered capital soarsGyőr goes digitalWine Agency prepares for exportEU seeks new recruits from Hungary

SMART winners selectedEconomics

FinMin brainstorming ways to simplify taxFactoring Association proposes law changeSuranyi in EU think tank's managementAnalysts forecast 100bp rate cut by Mar Doctors protest retirement ageSárközy hands in streamlining proposalPublic procurement spending doublesMortgage banks make more foreign issuesHalf take out holiday insuranceGross budget debt rises Ft 1,005 bln

Politics

Orbán: Hungary will have to adopt flat taxPM calls for more worker protection

Domestic

Selective waste collection to rise by 150 %Hungary's suicide rate drops

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

17 January 2005Business

Tax system set for further overhaulsThe Finance Ministry is planning to implement further changes to the taxation system, restructure statefinancial institutions and reform other finance-related areas of state administration by 2006, accordingto a draft that is not yet public. These include the introduction of lower rates or wider brackets for lower-income individual taxpayers, the extension of eligibility criteria for the simplified entrepreneurial tax

(EVA) to include businesses with higher operating costs. The ministry is proposing to merge theCustoms and Excise Office (VPOP) and the State Tax Office (APEH). Having fulfilled its mission, theState Privatization and Holding Rt (ÁPV) would also be wound up; its proposed legal successor, theHungarian State Treasury, would also incorporate the currently independent Treasury Asset Directorate(KVI). (Vg 1) P.P.

Matáv to negotiate Montenegrin sale nxt wk The Montenegrin privatization council said on Friday evening that Hungary-based telco Matáv Rt hadsubmitted the winning bid for a government-owned 51.12 % of telco Telekom Montenegro, and it wasinviting Matáv to negotiate the sale next week. Matáv beat out Slovenia’s Telekom Slovenije, Serbia’sTelekom Srbija, and Austria’s Mobilcom. Matáv bid Euro 114 million for the 51 % and agreed to investEuro 67.3 million in the company as well as buy out small shareholders for Euro 2.2 per share. (MTI;

Ng 1, Nb 13)Danubius in talks to buy London hotel Danubius Hotels Rt, is in discussions to buy Jarvis Hotels Plc’s Ramada Plaza Regents Park Hotel,London, for about Sterling 60 million, the London-based Times reported, citing an unidentified personclose to negotiations. The acquisition of the hotel, based in northwest London, will be Danubius’s first inthe U.K., the Times said. Contracts for the purchase of the four-star hotel have already beenexchanged, the newspaper said. Danubius, in which chairman Bernard Schreier has a 53 % stake,owns 73 hotels in countries including the Czech Republic, Romania and Slovakia, the Times said.(Bloomberg; Ng 7, Vg 9)

 Audi sales grow despite downhill market Last year 1,350 Audi cars were sold in Hungary, as against 1,175 cars in 2003, managing director of Porsche Hungária Kft János Eppel announced. This means that Audi could increase its market shareunder shrinking market conditions, Eppel said. According to previous reports, the number of car salesdeclined for the first time after many years in Hungary last year. The Volkswagen Group, which owns Audi’s engine factory in Gyor, is the largest foreign investor in Hungary. (Nv 5) M.K.

New PR company enters Hungarian market The Austrian PR- and lobbying agency Accedo Communications GmbH has entered the Hungarianmarket through a subsidiary, together with opening a new office in neighboring Slovakia. TheHungarian company is headed by Ágnes Szabó, who left the local subsidiary of another Austrian PRand lobbying agency, Publico. Although Accedo Communications GmbH was founded only two and ahalf years ago, the parent company has already made it to the top ten of PR and lobbying firms in Austria. (NG 5) P.O.

Flextronic staff face lay offsFlextronics International Kft will lay off around 900 of its staff recruited by temporary agencies and of itscore employees from the company’s Zalaegerszeg-based factory in the near future, according to theonline edition of commercial television channel RTL Klub. Downsizing is scheduled to start at the end of February, communications director Gábor Sarlós said. Flextronics is forced to cut its workforce becauseof dwindling orders, Sarlós added. Flextronics dismissed almost 300 of its staff recruited by temporaryagencies just before Christmas from its Zalaegerszeg- and Sárvár-based factories. (NG 4) P.O.

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

Hitelgarancia CEO steps downThe CEO of the majority state-owned credit insurance company Hitelgarancia Rt, Marta Kismarty,handed in her resignation at the company’s EGM last Friday. Kismarty cited the lack of confidence frombanks as the main reason for her move. The EGM recalled two members of the board of directors, andnamed new ones, while the supervisory board remained the same. Last year, Hitelgarancia signed22,000 loan guarantee contracts with SMEs, up by 70% from 2003. The amount of more than 90% of the loans did not reach Ft 20 million. Commercial companies made up almost half of those contracted

with Hitelgarancia. (NG 4) P.O.Volán employees may strike for 12% riseThe Highway Traffic Trade Union representing 25,000 employees of Volán bus companies is preparingfor a strike, because Volán companies are not willing to grant a 12% pay rise. The employer believesthat a 6% salary increase is enough. The trade union says that Volán employees are not as highlyappreciated by the company as their work and social importance would require that. If no agreement isreached by Friday, Volán buses may not run in Hungary next Monday in the early morning hours as awarning strike. (Nv 5) M.K.

Mahart optimistic about privatizationHaving closed the sale of two sea vessels built by Russia for Hungary as part of a state debtconsolidation agreement, state shipping company Mahart Rt is looking to complete several major 

privatization tenders this year, István Vásárhelyi, Vice President of Mahart’s owner the StatePrivatization and Holding Rt (ÁPV) said. Delivered late and initially appearing to be somewhat of awhite elephant, Pannon Star and Pannon Sun were eventually bought by a Bahamas-registered of theClippers Group for USD 13.1 million. Mahart is seeking a strategic investor interested in a concessionto operate the Csepel Free Port Rt, as state revenues from the concession could easily reach the samelevel as if Mahart sold the company. The port is becoming increasingly busy; traffic increased by 30%from 2003 to 2004. (Vg 7) P.P.

Some 4/6 companies poised for BSE Four to six companies is expected to enter the Budapest Stock Exchange (BÉT) this year, compared tothe one, software developer Freesoft Rt, in 2004, BÉT CEO Zsolt Horváth said. These firms are likely tocome from an exclusive club of 35 companies, which are considered ready to enter the bourse, Horváth

added. Their shares can be traded on the stock exchange from the second half of the year, at theearliest. In related news, more than 9,000 users have already logged on to www.tozsdemagus.hu , anonline stock exchange simulation game, organized by BÉT and Equitas brokerage firm, the bourse’sbusiness policy and communications director Gábor Kutas said. The game kicked off at the end of November, and will last until the end of February. The main prize is a Seat Leon Adrenalin. (NG 7) P.O.

Gyor borrows Ft 5.5 bln for roadworksThe city of Gyor has taken out a Ft 5.5 billion loan from OTP Bank Rt to finance the construction of anunderpass on the Vienna-Budapest railway line and the construction of new roads, mayor József Balogh said on Friday Balogh said Gyor invited bids in an international public procurement process,and OTP won the contract ahead of three other financial institutions. The loan, which can be drawn onin installments, is available until the end of 2007. The loan has a 15-year run, and a 7.5 years grace

period. (Econews)MTV to launch ’reality show’ Hungarian Television (MTV) plans to launch a reality show in literature in March, MTV announced. MTVfollows BBC’s example of the Big Read show, for which they paid Ft 500 million. During the showpeople will be encouraged to vote for the best books of all time and the prospective books will bepresented by celebrities. The Big Read was a huge success in The U.K. resulting in library membershipand book sales rocketing. (Nv 3) M.K.

BUX tops 15,000 mark at all-time highThe Budapest Stock Exchange’s BUX index climbed 3.42 % over the week to close at 15,220.34 onFriday for an all-time high. The blue chips, excepting telco Matáv Rt, were up for the week with retailbank OTP Rt leading the list with its own record-breaking sales. The BUMIX index of shares with

medium and low levels of capitalization soared by 5.30 % to close at 1,401.05 points. Overall tradingamounted to Ft 72.9 billion, down a shade from the Ft 76 billion of the previous week. (MTI; Vg 9)

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

FHB has over Ft 366 bln in outstanding bondsLand Credit and Mortgage Bank Rt (FHB) had bonds outstanding worth a total nominal value of Ft366.332 billion at the end of 2004, up Ft 88.4 billion from a year before, FHB said on Friday. FHB hadliabilities of Ft 577.982 billion, including interest, as against collateral of Ft 713.112 billion, includingcapital of Ft 370.959 billion and interest of Ft 342.153 billion. FHB’s coverage rate is 123%. Now almostall of FHB’s issues are foreign. (Econews)

Economics

Monetary Council decided on a 7:1 rate cut Seven members of the Monetary Council, the rate-setting body of Hungary’s central bank, voted infavor of a 50-basis-point reduction of the base rate, and one member voted for a 75-basis-point cut at ameeting on December 20, according to abridged minutes of the session published on Friday. The voteresulted in a 50-basis-point reduction of the base rate to 9.50%, with effect from December 21, 2004.(Econews; Ng 1, Vg 20)

EVA is success story 20,000 SME’s have signed up to join the simplified entrepreneurial tax (EVA) system this year, and only136 opted out, the State Tax Office (APEH) said. As a result, approximately 100,000 businesses willenjoy the benefits of a more straightforward system. Introduced in 2003, EVA was clearly the successstory of that tax year, with revenues exceeding the target by 107%. EVA revenues totaled Ft 67 billion

in 2004, this year’s target is Ft 75,3 billion. (Vg 4) P.P.Cereal harvest jumps preliminary 90.5%Hungary’s annual yield of cereal crops rose by 90.5% in 2004 to 16.7 million tons, preliminary figurespublished by the Central Statistics Office (KSH) on Friday show. One reason for the huge rise was thatthe base figure in 2003 was just 8.770 million tons as a result of an extended drought. Cereal cropswere planted on 2.963 million hectares in 2004, 2.7% less than in 2003. Farmers harvested 6.02 milliontons of wheat, up 104.7% from 2003 on 5.3% more land than in 2003. The average yield was 5.130tons per hectare, up about 35.4% from the 1996-2000 average and 94.3% higher than in the previousyear. (Econews; Vg 8)

Diákhitel grants students Ft 11.55 blnDiákhitel, a state-owned provider of student loans, provided loans worth a combined Ft 11.22 billion to

18,722 students in the 2004 autumn term, which ended December 17. Each student can take out a loanof a maximum Ft 25,000 per month. The term of the loan depends on the size of the installments,which, in the first two years of repayment, are 6% of the monthly minimum wage (or an installment of Ft3,420 at present), and afterwards are 6% of the wage the debtor was paid two years previously.(Econews; Vg 9)

MNB forex reserves Euro 11.702 blnThe National Bank of Hungary (MNB) had forex reserves of Euro 11.702 billion at the end of December,up from Euro 10.476 billion at the end of September, the National Bank of Hungary said in its quarterlyreport published on Friday. The State Debt Management Center (ÁKK) had new liabilities of Euro 1.3billion in Q4. This included a Euro 1 billion issue of euro-denominated, fixed-rate bonds in October, anda USD 100m issue of floating rate bonds in December. (Econews)

PoliticsCulture minister announces resignationCulture Minister and Socialist Party Chairman István Hiller said yesterday that he would soon resignfrom his ministerial post to devote himself to chairing the party. Hiller told a party conference that hewas resigning as of February 14, and said he believed the Socialist Party had a good chance of winninggeneral elections in 2006. Hiller said he wanted to „serve this shared objective with all my energy.”(MTI; Nv 1, MH 1, Nb 1, Vg 4)

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

FinMin may face investigationFinance Minister Tibor Draskovics voiced his dismay on Friday over reports that the Chief Prosecutor’sOffice was considering an investigation based on a charge filed against him by a member of parliament.Independent MP Gyula Balogh, who recently left the smaller opposition MDF party, initiated legalproceedings against the FinMin under charges of embezzlement. Balogh said that instructions byDraskovics and his associates to the national tax authority to withhold Ft 150 billion of VAT from beingrefunded to taxpayers until their right to the money was determined, was illegal. He added that

Draskovics and the ministry had handled the money as though it were theirs, which Balogh qualified asembezzlement. Responding to the charges, Draskovics said that VAT revenues had plummeted after May 1, 2004, Hungary’s EU entry, which is why he had instructed the tax authority to exercise tighter controls on VAT reclaims. (MTI; Ng 4, Nb 6)

Fidesz MP expected to lead ’06 campaign Antal Rogán, a deputy of the main opposition Fidesz party and member of its national council isexpected to lead the party’s campaign for the general elections in 2006, Deputy Chairman Pál Schmittsaid on Saturday. Schmitt said it was „likely that Rogán will be in charge of the campaign” before theelections. (MTI; Sat Nv 1, Nb 6)

Gyurcsány calls meeting with party headsPrime Minister Ferenc Gyurcsány has invited the chairpersons of the four parliamentary parties for a

meeting in the first week of February to discuss Hungary’s development program with them. Themeeting will also serve as the launch of the new political year in Hungary. If the meeting is held,Gyurcsány will also debate with opposition party Fidesz leader, Viktor Orbán. Orbán usually holds his„State-of-the-Union” speech in the beginning of February in front of his own supporters. (Nv 1) M.K.

Domestic 

Hungary to be regional health center The U.S. is ready to help Hungary become a regional healthcare center, said the health minister yesterday, after returning from a visit to Washington. While in the U.S. capital, minister Jeno Rácz andoutgoing Health Secretary Tommy Thompson signed a five-year cooperation agreement, after which,said Rácz, the U.S. side immediately presented concrete plans that include building an Americanhospital in Budapest, designing emergency care, providing logistics centers, and participating in direct

research. He also noted that a health maintenance management company, Tennessee-based NashvilleHealth Care, was interested in cooperating with Hungary, and this matter also had to be pursued. (MTI;MH 2, Nv 4, Nb 8)

Split referendum fails in Miskolctapolca A referendum was held in Miskolctapolca yesterday about the separation of spa resort Tapolca from themother city Miskolc. The referendum was valid, as almost 60% of local resident cast a vote, but 58% of the people voted against the separation. The initiators of the separation argued that Miskolc’s richestpart could have an easier life as a new municipality without the burden of the city’s poorer districts. (MH2) M.K.

Hungarians reach South PoleThe first Hungarian South Pole expedition has reached its destination yesterday. The duo of KrisztinaKovalcsik Bátori and Zoltán Ács, who were also the first Hungarians to conquer the North Pole lastyear, spent a week working their way to the South Pole as part of a 5-strong international team. Thesuccess of their plan was suddenly jeopardized just 6 miles from the target, as the sixth member of theteam, an American, needed medical assistance which did not arrive for 3 hours. The expeditioneventually reached its destination and was flown back to Patriot Hills, a private base in the EllsworthMountains in the heartland of Antartica, half an hour later. (Nb 1) P.P.

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

18 January 2005Business

 ÁPV offers last stake in SzikraThe privatization agency ÁPV Rt is offering for sale its 15.27% stake in printing company SzikraLapnyomda Rt. The deadline for bidding is March 2, according to the announcement made yesterday.The stake has a book value of Ft 403.22 million. Szikra had audited net assets of Ft 5.57 billion at theend of 2003, including registered capital of Ft 2.64 billion. The company is majority-owned by Lang

Kiadó és Holding Rt (62.13%), and the European Bank for Reconstruction and Development (EBRD)holds a further 21.28%. (Econews MH 2, NG 4, Vg 11)

Duna Profit asks for liquidationDuna Profit 2002 Rt’s planned Sajóvelezd-based window production company is currently beingliquidated after having accrued over Ft 2.5 billion debt. The owner itself requested liquidation since itwas unable to finish the investment and start production. Duna Profit is hoping to find an investor whowould be able to pay for the unpaid machinery and transport it from Austria to Hungary, and then itcould start production and pay off the debt. It has not ruled out the possibility of auctioning thecompany. (Nb 16) E.C.

Bauhaus and Wal-Mart in Hungary 

Bauhaus AG, the German DIY company, is set this year to plug into the Hungarian home improvementmarket, market watchers reported. Bauhaus, which operates stores in neighboring Austrian and theCzech Republic in the region, is said to have already bought its first building sites on as yet unidentifiedlocations. According to analysts, another potential heavyweight entrant in the years ahead could beWal-Mart Store Inc. The world leader retail giant set up its own Hungarian subsidiary, Global sourcingKft in 2003, who is now said to be scouting out possible investment channels. (NG 1) S.F.

MÁV picks three biddersRailroad company MÁV Rt has picked Alstom, Bombardier and Stadler, all makers of rolling stock, tostart negotiations on a contract to supply 60 multiple units - electric trains which combine locomotiveand passenger car in one vehicle - worth an estimated Ft 40 billion. Siemens, the fourth company, wasexcluded during the technical evaluation. MÁV will take several weeks to decide the winner of thetender, according to an announcement yesterday. To finance the purchase of the 60 multiple units,MÁV has invited bids from six banks: HVB Bank Rt, the Hungarian Development Bank MFB Rt, VRLeasing, Kreditanstalt fur Wiederaufbau, Citibank and ImmoRent GF. (Econews; MH 11, Nv 4, NG 4)

Szalai steel co.’s shineRiding on the wave of a global sectoral upswing, Salgótarján Steel Rt (SAC), Csavar és Húzottárugyár Rt, CA Kft and Silco Rt, the four metallurgy companies owned by top financier József Szalai, madeoperating profits of Ft 496 million on aggregate revenues of Ft 12 billion last year. The bulk of the sales,Ft 8 billion, were pulled off by SAC and Silco, though the same two also reported extraordinary lossesof Ft 184 million and Ft 25 million to add up to the total Ft 254 million. The Szalai companies expect thisyear to be more muted with operating profits projected to come in at Ft 303 million. (NG 4) S.F.

Sopron incubator is ready 

 As a result of a Ft 1.3 billion investment, a business incubator has recently been handed over in SopronIndustrial Park. The 3 storeys, with a combined space of 4400 sqm, host a restaurant and a conferencehall besides the offices. Ft 700 million of the investment came from the PHARE CBC fund, Ft 344million was granted by the government, and the rest came from private sources. The 23 tenants include6 companies incubated, 7 enterprises, 5 university organizations, and 5 companies to enhanceincubation. (Vg 12) E.C.

PSzÁF waits on Kafijat’s AÉB stakesFinancial watchdog PSzÁF is withholding approval of the purchase of stakes in the banking and trustcompany ÁÉB Rt by Kafijat Kft, a company owned by the bank’s CEO, Megdet Rahimkulow, untilKafijat officially informs PSzÁF of the purchases. PSzÁF announced its resolution, dated January 11,yesterday. PSzÁF said that Kafijat still holds 59.95% of the bank and cannot vote with the additionalstakes it acquired until meeting its obligation to provide the information. (Econews)

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

Matáv will pay dividendsWhile the planned acquisition of Montenegro’s Telekom Crne Gore AD adds to Matáv Rt’s debt burden,Hungary’s leading fixed-line telephone company is not planning to modify its dividend strategy, thecompany said. If everything goes according to plan, Matáv will have acquired 51.12% of Telecom CrneGore from the state of Montenegro for Euro 114 million and spend an additional Euro 51 million onbuying out minority shareholders by mid-2005. The company paid Ft 70 dividend on each share with anominal value of Ft 100. (Nv 5) P.P.

Herend Porcelain opens shop in Shanghai Herend Porcelain Rt has opened a brand-name shop in Shanghai with an investment of Ft 40 million(Euro 160,000), the company’s marketing manager said. Occupying an area of 100 sqm, the outlet islocated in the most elegant shopping center of the Chinese metropolis with 12 million inhabitants, Tibor Szuszky said. The shop will offer the company’s painted tableware as well as ornamental pieces andfigurines, he said. The initial stock is valued at Ft 100 million (Euro 400,000), with the shop planningsales of Ft 200 million (Euro 800,000) this year, the manager said. (MTI; Nv 16)

MOL has new owners with 5.06% stakeU.S. company FMR Corp., based in Boston, Massachusetts, and Fidelity International Ltd., based inBermuda, acquired a 5.06% stake in Hungarian oil and gas company MOL Rt by December 14 2004,they announced in the official gazette of the Budapest Stock Exchange yesterday. The announcement

did not name the seller(s). According to available information, MOL shareholders with a stake in excessof 5% include Hungarian Privatization and Holding (ÁPV Rt) with a 11.82% stake, JP Morgan ChaseBank (14.94%), Austrian oil company OMV (10.04%), Slovakian Slovbena and Slovintegra (7.99%), Alliance Capital Management L.P. (6.60%) and Capital Group Companies, Inc. 5.28%. (Econews)

Glass company faces liquidationGlass manufacturing company KHG Kft in Nagykanizsa has stopped production after accruing tens of millions of forints, spending some years constantly in the red. The firm’s situation became critical lastDecember when one of its creditors Erste Bank Hungary Rt commenced a foreclosure against KHG.The debt to Erste Bank could only be repaid using the total income of December, which resulted tens of millions being owed to the utility company. Company CEO Péter Bencze said if they are unable to findinvestors, production will not be restarted. KHG has sent its 140 workers on vacation, but according toNépszabadság, the liquidation is set to start soon, endangering the jobs of 140 Nagykanizsa folk. (Nb16) E.C.

Buckbee-Mears sells plant to Max-Magyar Blaming dwindling demand for its products, US-German Buckbee-Mears Hungary Kft (BMH) shut downits plant in Tatabánya, western Hungary. The unit, which specialized in quality control of monitor masksand employed some 270, was sold to plastic die-casting firm Max-Magyar Kft, who has already beganrefurbishing the buildings and plans to launch operation in spring after a Ft 500 million technologyinvestment. With its new acquisition, the company hopes to boost production by 30%. Max-Magyar wasset up in nearby Tarján in 1999 and registered revenues of Ft 2.8 billion last year. (NG 5) S.F.

Foreign owners of OTP Foreign ownership in top Hungarian lender OTP Bank Rt climbed to 91.6% by the end of 2004 versus

81.1% in January last year, though only 85.9% of the actual voting shares were held by non-Hungarianinvestors, figures released by the bank yesterday showed. Foreign interest in OTP continuedthroughout 2004 as market value of the company’s shares doubled. Of the Ft 110 billion worth of stocksstill owned by OTP staff, one-third is estimated to belong to management. (NG 11) S.F.

Flexfon latest alternative telco to enter market Flexfon Kft, a Hungarian subsidiary of Innoflex AG, a German-based telecommunications company,has started providing landline services in Hungary. Landline calls with Flexfon will be 4-55% cheaper than calls made with other service providers, according to Flexfon head Gábor Hamori. Flexfon willoffer the services using the network of Matáv Rt. Initially, Flexfon services will be available only inMatáv service areas. Flexfon operates with a skeleton staff of 5 people, and relies not on advertising,but on its network of 5,700 agents to recruit clients. The company expects to have 20,000 customers by

June, and 100,000 by the end of 2005. Flexfon needs 25,000-30,000 clients to break even. In additionto landline services, Flexfon will also offer internet and satellite communications, as well as access toan internet shop currently operating in 8 countries. (Econews)

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Sopron Bank expands in western Hungary Hungary’s only non-Budapest based comprehensive financial institution Sopron Bank Rt is to open 2more branches in the first half of 2005. The bank is fully owned by EB und Hypo Bank Burgenland andalready has two branches in Sopron, one in Szombathely, and one in Gyor. The next branch will startoperating in Keszthely from the first half of February, which is followed by a Veszprém based branch inQ2. According to vice CEO Losonczi Ferenc, there may be another branch opened in Zala county in H2depending on the results. Sopron Bank was in the red in 2004 and is expected to be so in 2005 as well,however, it is becoming increasingly popular, attributed to its fast credit approval: its outstanding creditstock is soon to top Ft 6 billion. The German bank has invested Ft 9 billion so far in the past 2 years.(Vg 14) E.C.

Economics

FinMin projects Jan. deficit at Ft 210 blnHungary is to register a general government deficit of Ft 210 billion in January, the Finance Ministryprojected yesterday. The projection does not cover the position of local governments. The centralbudget alone is expected to post a deficit of Ft 199.2 billion in January. One-off effects explain some Ft120-130 billion of the January deficit. The ministry forecasts the Q1 general government deficit at Ft369.9 billion, including a central budget deficit of Ft 325.3 billion. The general government expects topost 36% of the whole year’s GFS deficit in the first quarter. The 2005 GFS general government deficit,excluding local governments, is targeted at Ft 1,022.5 billion or at 4.6% of GDP, Finance Ministrydeputy state secretary István Várfalvi said. (Econews; NG 1, Vg 1, MH 2, Nv 5, 11, Nb 15)Draskovics clarifies plans for tax office„I have no plans to merge the State Tax Office (Apeh) and the Customs and Excise Office (VPOP)”,Finance Minister Tibor Draskovics declared today in response to news of extensive tax reform and taxauthority restructuring that made the headlines in yesterday’s issue of business daily Világgazdaság.Draskovics did not deny the existence of the confidential ministry document that served as the basis of the article, however he played down its significance as being nothing more than a summary of „proposals” by senior ministry officials. The document proposes January 2007 as the date when the twoorganizations would „not” be merged, today’s daily broadsheet Magyar Hírlap claimed, adding thatVPOP’s reduced workload resulting from Romania’s planned EU accession in 2007 would allowHungary to merge the latter with Apeh and spend the resulting savings on re-establishing the institution

of tax inspectors. (MH 11) P.P.November industrial output revised upHungary’s industrial output rose 7.9% yr/yr in volume terms in November, according to working-day-adjusted figures, and was up 0.2% from October according to seasonally- and working-day adjustedfigures, the Central Statistics Office (KSH) said yesterday. Unadjusted industrial output rose 10.6%yr/yr in November. The adjusted monthly rise was unchanged but the adjusted yr/yr rise was revised upfrom 7.7% and the unadjusted rise from 10.5% from the preliminary figures reported on January 11. Ina change from the previous months, export sales dropped 2.1% from October and domestic sales rose2.9%. (Econews; NG 4, MH 11)

Budapest shines in ranking of regionsPrague, Budapest, Bratislava and their environs head the league of 223 European regions in terms of growth prospects, according to a recent survey by the Centre for Economic and Business Research inLondon. The criteria used as the basis of ranking included recent economic growth history andprospects through 2006, the presence of skilled labor, the market size of the regions and their eligibilityto access EU funding sources. Six of the seven Hungarian regions are among the top 20 regions, whichinclude southeastern Ireland as the sole western European area as 20th. The South Alföld regionranked 22nd. (MH 12) P.P.

EU subsidy for railroad linesThe European Committee has secured a total of Euro 9.1 million to prepare the preliminary studies of 3major Hungarian transportation investments. The Szajol-Záhony train line’s rehabilitation plan wasawarded Euro 6 million, the Székesfehérvár-Boba line can use Euro 2 million, and the future Danubenavigability investment was granted Euro 1.1 million. All the above projects are a part of Trans-

European Network (TEN-T), which covers the most significant transportation corridors of the EU. Thesubsidy is to cover about 50% of the preliminary expenses in the planning period. The projects will beimplemented sometime between 2007-2013. (Vg 3) E.C.

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Politics

Hungarian-Romanian dialogueNewly elected Romanian Prime Minister Calin Popescu Tariceanu’s visit to Hungary, viewed as apolitical gesture as being the first to a foreign country since the ballot, was „abundant with symbolicgestures but genuine agreements were thin on the ground”, according to Magyar Hírlap’s commentator.Both Prime Minister Ferenc Gyurcsány and former premier Viktor Orbán were reported to have avoidedcontroversial issues and declared to share views on Romania’s EU accession plans, ethnic Hungarians’

autonomy in Romania and the environmental conflict surrounding plans to build a gold mine in thehistoric Transylvanian village of Rosia Montana. The two governments will have joint meetings everyfall starting this year, Gyurcsány and Tariceanu agreed. (MH 1) P.P.

Domestic 

Foreigners may pay road tax The Finance Ministry is proposing to levy a road tax on each vehicle entering Hungary with a foreignlicense plate as of April 1, according to the detailed short and mid-term plans made public by the pressyesterday but later denied by minister Tibor Draskovics. Passenger vehicles and trucks would beequally subject to the new tax, Magyar Hírlap claims on the basis of the document. Discarded byPresident of the National Tourism Committee Péter Wolff as „cretinous”, road tax would bring in Ft 20billion in extra budget revenues in the eight months to the end of 2005. The question is whether it would

or would not be questioned by the EU as discriminative against foreigners. (MH 13) P.P.Gasoline prices go up tomorrow Oil and gas company MOL Rt, the country’s major distributor of fuel, will raise retail petrol prices by Ft5/litre on January 19, while price of diesel will remain unchanged, a MOL spokesman said yesterday.MOL said the new price would be Ft 239.5/litre for 95-octane unleaded and remain Ft 229/litre for diesel. Explaining the measure, MOL cited a recent rise in international crude oil prices. (MTI)

19 January 2005Business

EU continues procedure against Hungary EU finance ministers decided yesterday to continue the excessive deficit procedure it started against

Hungary last summer, MTI reported from Brussels. The move comes as no surprise and is in line withthe December 22 recommendation of the European Commission (EC). The procedure was alsocontinued against Greece which, in contrast with Hungary, is a eurozone member. Joaquin Almunia,EU Commissioner for Economic and Monetary Affairs, said yesterday that the Commission will preparenew recommendations for Hungary next month. In a separate statement, the council said that it willstudy Hungary’s new convergence program, submitted in December, soon. (Econews; MH 1, Nv 5, Vg1, Nb 15)

Ericsson builds 3G network The Hungarian subsidiary of Ericsson, the world’s leading maker of wireless telecom infrastructureequipment, will build a Euro 20 million network capable of supporting third-generation (3G) mobilecommunications for Pannon GSM Rt. Ericsson Magyarország Rt and Pannon GSM announcedyesterday they had signed a memorandum of understanding on the network. Pannon GSM plans tostart providing 3G services in Budapest by the second half of this year, and in the rest of the country bythe end of the year, Pannon GSM CEO Ove Fredheim said. Pannon GSM paid Ft 19 billion for a 15-year license of a 3G frequency band auctioned by the state in December. (Econews; Vg 1, Nv 5, NG 5,MH 12)

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Matáv and IKO set up company IKO Productions Kft, a provider of interactive wireless content, and Matáv Rt have set up a jointcompany called IKO-Matáv Média Holdings Rt. IKO and Matáv both hold equal stakes in the company.IKO-Matáv’s owners have also transferred to the company a 31% stake in commercial televisionbroadcaster RTL Klub. IKO-Matáv has two 100% subsidiaries: IKO New Média Kft, which sellsinteractive text messaging services and wireless content, and IKO Content and Rights, which buys therights to use the content in Hungary. IKO-Matáv was set up with registered capital of Ft 3.2 billion. IKO

Productions is owned by a Belgian businessman of Hungarian origin, Tamás Rákosi, who will now headIKO-Matáv. Peter Malcsiner, who heads IKO New Média, estimates the Hungarian market for premiumwireless content grew by 30% last year to Ft 12 billion. IKO-Matav has approximately a 30% share of this market, he said. (Econews; Nv 5, Vg 8, MH 12)

Tele2 passes 200,000 subscriber mark Tele2 Magyarország Kft, an alternative telco, has signed up more than 200,000 customers sincestarting up eight months ago. Tele2 has been offering long-distance calling services in Hungary since April 2004, and started offering local landline services in Budapest and seven other Hungarian cities inOctober. Tele2 will enter the market in all of incumbent telco Matáv Rt’s service areas by the end of January, managing director Gergely Laczkó Tóth announced yesterday. The company will enter EmitelRt’s three primary service areas in March and Invitel Rt’s nine areas in June, he added. About 14% of subscribers in Matáv service areas use alternative telcos, and most chose Tele2, said Lackó Tóth said.(Econews; NG 5, Nv 5, MH 12)

Competition office eyes Tesco gas priceThe Competition Office (GVH) is investigating Tesco-Globál Stores Rt’s gasoline prices on the requestof a gas station chain, according to unnamed sources. The Office did not wish to comment on anongoing case. The claim was that Tesco would abuse its market position when selling gasoline belowthe market price at zero profit, and make up the difference by selling other products. Tesco’s gasolineprices are Ft 10-Ft 15 lower than of other gasoline companies. It is neither irregular nor unlawful if ahypermarket sells some of its products without profit to increase competition, said chief secretary of theHungarian Trade Association, György Vámos. (NG 1) G.R.

Dráva Faipari restarts operations

Wood processor Dráva Faipari Kft will restart operation in March. The company, based in Barcs insouth-western Hungary, goes back 100 years and was closed autumn 2004, after loosing its major client and making up Ft 1.7 billion debts. The firm, which once had 900 workers, will employ 15 peoplefrom March and about 50 from April to produce wooden parquet, said general manager András Steiner.The company was bought few weeks ago by Dráva Faipari Művek Kft, which is owned by localindividuals. (NG 5) G.R.

Pécs bus co. to offer tender Pécs-based regional bus company, Pannon Volán Rt will offer a tender on the operation of some of itsloss-making lines in a few weeks, said CEO János Gungl. Regional bus companies are able tooutsource their lines from Jan 2006. The terms of this tender will be such that any vehicle owners withfree transport capacity may enter. A unique agreement will be made with each of the subcontractors.

Passengers will be able to use the outsourced lines with the same conditions as the regular ones. (NG5) G.R.

Telecottages assist co’s to provide data to ApehThe National Tax Office (Apeh) has signed an agreement with the Hungarian Telecottage Alliance thatwill allow companies to use the country’s 506 electronic cottages to digitally supply corporate recordsrequired by the tax authority. Since January this year, businesses can only submit these data online or in electronic storage media. (MH 3) S.F.

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MOL sees sales up but margins down this year Oil and gas firm MOL Rt said yesterday it expected its crude and chemical product sales to rise by2.3% in 2005 but expected sales margins to come under pressure throughout central Europe. However,it predicted the spread between the Brent and Urals type crude oils would remain well above thehistorical average at least through 2007, the company said in an update of its long-term corporatestrategy, reported Reuters. MOL said it expected the Brent-Ural spread to fall to $3.30 per barrel in both2005 and 2006 from $3.60 in 2004, and forecast it to decline to $3.00 in 2007. MOL forecast a fall in

sales margins due to growing regional surplus, even for the highest quality fuels. (Econews)Product fee law inaccurate, say drinks co.sTerms of the law on environmental product fees are incomplete and inaccurate causing considerableuncertainty for companies, according to a press release of the National Association of Soft Drink, FruitJuice and Mineral Water Producers, published yesterday. Not only are the definitions of the law and theassociated government decree incomplete and unclear; the preparation time for the adaptation wasalso too short, according to Martonyi és Kajtár Baker & McKenzie Lawyers’ Office, who producersasked to examine the law. These shortcomings would justify a constitutional examination, the lawyer’soffice added. (NG 4) G.R.

 Alcufer founds Slovakian subsidiary Metal waste management company Alcufer Kft has recently founded a subsidiary in neighboring

Slovakia with the aim of expanding its used car collection and recycling activities there, according tomanaging director Ferenc Horváth. Alcufer Kft also plans to create a network of collection sites inSlovakia and is in negotiations with a Hungarian automotive company on possible collection of thecompany’s used cars in Slovakia. Alcufer Kft realized developments worth Ft 1.5 billion in 2004 and itsturnover counted for Ft 16 billion. (Vg 7) R.G.

Economics

VAT freeze costs state Ft 2 bln According to the daily Népszabadság, the National Tax Office Apeh has so far found only minor administrative errors - no traces of fraud - in VAT rebate documentation of companies with EUregistration numbers. Finance Minister Tibor Draskovics froze all VAT refunds of such companies inmid-November as there were major discrepancies between documentation supplied by companies and

data given by Europeans tax authorities. The freeze has to date cost Ft 2 billion to the state, because adefault interest equal to twice the base rate is payable on the Ft 150 billion withheld. In related news,European Commission specialists will assist Hungarian authorities fathom out why tax revenue hasbeen lower than expected, and help remedy the shortfall, said EU Commissioner László Kovács inBrussels yesterday. (Nb 1; MTI) R.G.

Consumer prices up 5.5% yr/yr in December - KSH Consumer prices in Hungary remained unchanged in December from November and increased 5.5% intwelve months, the Central Statistics Office (KSH) announced yesterday. The figures are better thananalysts’ expectations of a 0.08% rise for the month and a 5.65% increase in twelve months. Thefigures show a continued slowing trend following a 0.1% monthly rise in headline inflation in November and a twelve-month increase of 5.8%. Annual average inflation was 6.8% in 2004, up from 4.7% in

2003. VAT changes and higher excise duties, introduced at the start of 2004, boosted inflation by 2percentage points last year, according to KSH. (Econews; Nv 1, NG 3, MH 11)

FinMin attempts to save on drug spending The Finance Ministry is looking into ways to save up at least Ft 35 billion on drug subsidies for theNational Health Insurance Fund to meet its Ft 284 billion spending budget available for drug subsidiesthis year, a ministry memo revealed. Originally an initiative to adopt a relevant package of measureswas to be brought forward at a government meeting in early January, however, ministries are stillworking out blueprints for the plan. Last year state expenditure on drug subsidies grew 14% as againstthe 18%-20% in previous years. (MH 1) S.F.

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Compromise on stability and growth pact - FinMinThe EU finance ministers, who met in Brussels yesterday, are moving toward compromise on reformingthe EU stability and growth pact, and appear ready to consider the effects of pension reforms thatHungary has been calling for, Finance Minister Tibor Draskovics told a news conference. They werealso looking to introduce more flexible regulations for measures to combat oversized deficits, he said.Regarding the pension reform, Draskovics said that Hungary, Poland, and Slovakia had submitted a joint proposal calling for the inclusion of the effects of pension reforms requiring capital outlay when

calculating fiscal deficits, allowing higher deficit figures to compensate for this effect. (MTI)Politics

 Age discrimination must be stopped, says MDF The opposition Hungarian Democratic Forum (MDF) has called for a swift government action to stopdiscrimination on the basis of age. Such discrimination, apart from being illogical, is rampant in thecountry, said party chair Ibolya Dávid yesterday, reacting to a recent study by economic researchinstitute GKI. Workers above 45 years of age need protection, and newspapers that carry discriminating job adverts must be fined, she said. In the study, half of the respondents said that a mixed age groupdrives efficiency. (MTI)

Domestic 

Gov’t spends Ft 10 bln on jobs for RomaThe government spent Ft 10 billion (Euro 40 million) in 2004 on providing jobs for Roma or helpingthem to seek employment, the Labour Minister said yesterday. Altogether 50,000 Roma were assistedby the fund last year, said Gábor Csizmár, briefing the press on the Integrated Roma EmploymentProgram. The program, which is in its second year, funded the employment of 18,500 people doingpublic community work at a cost of Ft 2.6 billion (Euro 10 million), as well as employment programsheld for 3,200 people at the county level, at a cost of Ft 1.2 billion (Euro 5 million). Monies available for aiding Roma employment will multiply in the coming year, as EU funds become available, Csizmár said.(MTI)

Greenpeace protests against GM corn An unauthorized demonstration was held yesterday morning by Greenpeace in front of the PrimeMinister’s office, located on the banks of the Danube. Roughly 20 activists wearing yellow overalls andblack „Xs” - the symbol of gene manipulation - on their white-painted faces, demonstrated against theapproval in Hungary of genetically modified corn. The protesters poured several sacks of corn on thepavement. After around 20 minutes police arrived at the scene to establish the identities of theprotesters and the demonstrators’ campaign chief was taken away in a police car. Last year Greenpeace and four Hungarian farm groups called for tight regulations on the genetic manipulation of corn. The environmental group’s Hungarian press chief Gábor Weinbrenner told journalists that thegovernment had promised to discuss the issue in its first session this year. „As far as we know a decreeon banning genetically manipulated corn imports has already been drafted but the decision is beingprotracted,” he said, adding that they would remain there until the decree has been passed. (MTI; Nb 1,MH 7)

Service commemorates Holocaust victims

 A commemoration service was held yesterday at the Dohány utca synagogue in memory of theliberation of the Budapest ghetto 60 years ago. The ceremony was attended by Prime Minister FerencGyurány, President Ferenc Mádl, parliamentary Speaker Katalin Szili, former premiers Viktor Orbánand Péter Boross as well as several political dignitaries. Around half of the capital’s 200,000-strongJewish community fell victim to the Holocaust in the Second World War. (MH 1, Nv 1) S.F.

Electricity prices riseThe government is about to change the electricity price system, bringing it closer to the system for gasprices. The rate of the price increase would be set according to the yearly usage, according tounnamed sources. Public consumers below 1300 kilowatt-hours yearly consumption would get 5%increase, while users above that would have to fork out for a 7% increase. For commercial consumersthe price hike would be 12%. The Hungarian Energy Office (MEH) has admitted to working on a

preferential price system, but did not want to comment on the details. (NG 1) G.R.

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Ft 171 bln to be spent on environment Environmental protection developments worth Ft 171 billion will be realized throughout 2005 accordingto Environmental Protection and Water Management Minister Miklós Persányi’s estimate. The Minister also announced yesterday that despite the reduced 2005 budget of the Ministry there will be efficientsources available for the realization of high volume investments through EU subsidies and allocationsat other Ministries. He added that Hungary will have access to all available EU subsidies by 2006. Withits Ft 90 billion 2004 budget cut to Ft 60 billion this year, the Ministry wants to focus mainly on theestablishment of regional waste collection sites and safety of the environment this year, Persányi said.(Nb 8) R.G.Petrol station attendant commits self-robbery  A petrol station attendant, claiming that he had been robbed, was shown to have stolen two days’income, police said yesterday. The man, whose name was not disclosed, told police that an unidentifiedgunman wearing a ski-mask had forced him to hand over the money of the petrol station of Felcsut,western Hungary, on Sunday morning, a spokesperson of Fejér County police said. His testimony,however, contained a number of contradictions and did not tally with recorded images of the securitycamera. After submitting to a lie detector test, the 50-year-old man confessed that he had stolen petrolstation’s Friday and Saturday takings. Police found and confiscated money concealed in the petrolstation, while the rest was gambled away. Criminal proceedings are under way. (MTI; Nv 15)

20 January 2005Business

Greenergy to open cycle power plant Greenergy Kft will set up a combined cycle power plant as part of a Ft 3.1 billion investment, unnamedsources reported. The plant, to be constructed on the premises of a pharmaceutical company, will bemade up of two gas turbines and a steam turbine. Energy provider HMN Kft is said to be behind theinvestment, and finances 80% of the costs from bank loans. The British Centrax Ltd. will deliver the gasturbines, while another British company, Peter Brotherhood Ltd. the steam turbine. Greenergy built itsfirst power plant in Sopron, western Hungary, on the premises of Swedwood Sopron Furniture Kft in2003. (NG 1) P.O.

Electricity price hike „in the air” 

 A hike in the price of electricity „is in the air,” the government spokesperson said following a cabinetmeeting yesterday, adding that a way would be found to keep energy prices from exceeding inflation for the most vulnerable sectors of the public. The economics minister should have a proposal on the tablethis week on a welfare-based tariff system, Boglár László said. She declined to give the date for thepower price hike but said the welfare-based tariff system should be in effect by the time it occurred.(MTI; Vg 1, 8, Nb 15)

E.ON Titász now closed company  A January 18 shareholders’ meeting of regional electricity distributor E.ON Titász approved a motion toconvert E.ON Titász into a closed company, Titász said yesterday. The shareholders’ meetingconverted the articles of incorporation into a founding document and approved it. Titász shares weredelisted from the Budapest Stock Exchange on Oct. 14. The main shareholder, German energy giant

E.ON, increased its voting stake in Titász to 97.20% through a public bid last year, and then exerciseda purchase right for all outstanding Titász shares. (Econews; Ng 7, Vg 9)

LeasePlan wins MÁV tender LeasePlan Hungária Kft was named the winner of the public procurement tender announced by railroadcompany MÁV Rt for car fleet leasing and management. The four-year deal is worth Ft 6.17 billion, andcould save Ft 650 million for MÁV annually. The railroad company will lease out a total of 1,161vehicles, 394 cars and 767 trucks, through LeasePlan. MÁV also plans to put up for sale 508 of its ownvehicles and get rid of 653 rented cars, whose operation would have cost Ft 2.2 billion annually. (NG10) P.O.

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Vodafone soon to pick 3G supplier Vodafone Hungary Rt will decide in 4-6 weeks on a company to supply it with a third-generation (3G)mobile network, CEO Attila Vitai said yesterday. Vodafone Hungary bought a 3G license in December of last year for Ft 16.5 billion. Under the terms of the contract, Vodafone must offer 3G services inBudapest by the end of the year. Vitai said the supplier would be selected from three or four companiesalready in partnership with the parent company in a way that „will be the easiest to connect into thisprocess”. (Econews; Ng 4, Vg 6)

U.S. fund reduces stake in MOL Alliance Capital Management LP said yesterday that it reduced its stakes in Hungarian fuels groupMOL Rt to 3.89%. ACM said it cut its holding on January 11, a day after MOL’s share price bottomedafter a 6-day decline early January. The New York-based fund manager acquired a 6.6% stake in MOLlast September on behalf of 123 clients. In the same month last year, another big U.S. fund, the Capitalgroup Companies announced it acquired a stake of 5.28% in MOL. MOL’s share price rose 32% on theBudapest Stock Exchange between September 13, 2004, the time when ACM announced its purchase,and January 11, 2005. (Econews; Ng 7, Vg 9)

Lang gets go ahead for publisher stakeLáng Publishing and Holding Rt has been granted approval by the Competition Office (GVH) to acquirea stake, representing nearly 70% of voting rights, in schoolbook publisher Nemzeti Tankönyvkiadó Rt

after submitting a Ft 3.2 billion offer for the company. GVH found that the activities of Láng and itsacquisition target do not overlap significantly. The selection of Láng as tender winner in earlyNovember, in preference to the consortium of the Polish national schoolbook publisher and MozaikKiadó Kft, created uproar because several politicians and media sources suspected conflicts of interest.(Vg 5, BBJ website)

Hungarian airlines chief resignsThe chairman and chief executive of the Hungarian national carrier Malév Rt resigned at a boardmeeting of the company yesterday, the airline said. László Sándor, who has been at the helm of thecompany since May 2003, will continue to fill his positions until an extraordinary meeting on Feb. 11,which will elect a new CEO and new board members. (Econews; Ng 4, Vg 7, Nb 15)

Ft 6.4 bln in mortgage bonds auctioned 

HVB Mortgage Bank Rt (HVBJ) auctioned a combined Ft 6.4 billion worth of two fixed-rate mortgagebonds on January 19, the bank said yesterday. HVBJ offered Ft 3 billion worth of its new 6.5-year HVBF 2011/C bonds. HVBJ received offers for Ft 3.7 billion but accepted none of the over subscription.The average net price was 109.3610%, the average yield was 8.14%. HVBJ offered Ft 3.4 billion worthof its 5-year HVBF 2009/B bonds. HVBJ received offers for Ft 4.625 billion, but again accepted none of the over subscription. The average net price was 109.3610%, the average yield was 8.53%. (Econews;Ng 12)

Ban on G.M. maize seed approved The cabinet supports the ministry of agriculture in halting the distribution of genetically modified maize,the government spokesperson said after yesterday’s cabinet meeting. Focusing on seventeen types of maize known as MON 810 GM, Boglar László said the cabinet had decided that it preferred to err on

the side of caution and would not allow the distribution or planting of maize seed that has beengenetically modified to repel the European corn borer. The ban takes effect on January 20, and has notime limit. The cabinet, László said, would revisit the issue once scientific studies had been completed.(MTI; Ng 3, Vg 5)

Griff hits the mallsSurrendering to the recent trend of malls taking over the local shopping scene, men’s fashionmanufacturer and retailer Griff Gentlemen’s Rt has changed its strategy and move its flagship store atNyugati tér to the MOM Park shopping center, President and CEO Zoltán Süto said yesterday.Meanwhile, the company is in talks with investors with plans to open two stores in China and possiblybecome a franchiser. (Vg 6, Nb 16) P.P.

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Bids for Dunaferr should be in by Jan 24Companies interested in purchasing the State Privatization and Holding (ÁPV) Rt’s 50.4% stake inDunaferr Customs Agency Kft should submit a bid by Jan. 24. The winner should undertake anobligation to keep current staff. The main agency’s main customer is Dunaferr Rt. Other owners of theagency include Dunaferr Danube Ironworks Rt and Dunaferr Portalan Forwarding Kft. (Ng 10) P.O.

Erkel seeks investorsIn a few weeks, the Cultural Heritage Ministry will invite private investors to enter into negotiations on

the reconstruction of Erkel Theater, the less prestigious sister of the Opera House. Since no budgetfunds are available to foot the estimated Ft 10 billion bill for the badly needed overhaul, the ministry isproposing an agreement under which the developer would get to use the building 240 days a year inexchange for reconstructing it, with the state retaining ownership. (Nb 8) P.P.

New flat prices rising fastest in BpPrices of new flats in Hungary are rising significantly faster than prices of new flats in the CzechRepublic and Poland, according to the Engel Group, a property developer which owns several bigresidential properties in each of these countries. Prices for flats in a residential complex the EngelGroup is building in northern Budapest, on an old industrial property, rose 18% last year. Incomparison, prices of new flats in Warsaw rose just 8%, and prices in Prague fell by as much as 10% insome areas. This year, the Engel Group expects new flat prices in Budapest to rise about 11%, and

those in the areas around the capital to rise by about 9%. (Econews; Vg 7, MH 11)Economics

Gyurcsány mulls flat tax rate of 19% As requested by Prime Minister Ferenc Gyurcsány, the Finance Ministry is investigating the possibilityof switching to a VAT system with a flat tax rate, business daily Világgazdaság reported. According tothe newspaper’s unnamed source, the ministry is skeptical about the proposition because a 19% flatrate, which would equal VAT rates in Slovakia and Romania and thus be ideal for Hungary’scompetitiveness, would result in Ft 400 billion revenue loss for the budget. The problem with Hungary’sVAT system does not consist in having three different tax brackets but in the fact that the standard rateis 25% while in most EU countries it is about 20%, Gabriella Erdos, tax partner of advisory firmPricewaterhouseCoopers Kft opined. (Vg 1) P.P.

Bank Assoc proposes no fee for OBAThe Hungarian Bank Association has proposed that the Hungarian financial institutes should not payany fee to the National Deposit Insurance Fund (OBA) from 2006. The proposal was partly triggered bythe super-tax levied on banks in 2005 and 2006. The Bank Association also reasons that OBA presidesover a Ft 50 billion fund, the bank system is secure, and the current laws guarantee a sound depositinsurance. While financial institutes paid Ft 3.1 billion to the National Deposit Insurance Fund in 2002,the amount dropped to Ft 1.5 billion by last year. (NG 1) P.O.

Economic performance is EU averageHungary’s economic performance during 2004 was an overall average among the new ten EUmembers that are similarly developed, according to a Hungarian research institute. GDP growth washigh at 4.0 % in comparison to the Czech Republic’s 3.9 % and Slovenia’s 3.2 %, said András Inotai of the Academy of Sciences’ economic research institute yesterday. Unemployment, export andinvestment growth in Hungary were rated among the first. The unemployment rate of 6.0 %, for instance, is especially good compared to the Czech Republic and Slovakia, standing at 10 and 14.4 %respectively, he said. (MTI; Ng 4, Nv 5, MH 3)

Drug hike bigger than expected The price of subsidized medications will rise by 7.5% as opposed to the expected 7%, as thegovernment is unable to pay its share of a 15% additional subsidy it had agreed to grant together withmanufacturers, chairman of the Parliament’s healthcare committee Tibor Schvarcz said. Thegovernment and drugmakers signed an agreement in April not to implement a planned 15% consumer price hike and share the costs; however the resulting financial burden has become too heavy for thestate. The decision affects about 4,500 subsidized medications. While 42% of the adult population

hardly ever buys these, some 400,000 patients already spend over Ft 7,000 per capita on this productcategory on a monthly basis. (Nb 1) P.P.

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Real wages down 0.5% yr/yr Real wages fell 0.5% in the first eleven months of last year compared to the same period in 2003, theCentral Statistics Office (KSH) said yesterday. Net wages rose 6.4% during the period and consumer prices were up 6.9%. In November alone, real wages were down 0.9% yr/yr. Gross monthly wages rose5.2% yr/yr in November to Ft 164,117 and gross monthly wages in the first eleven months of the year rose 7.3% yr/yr to Ft 143,462. (Econews; Vg 5)

Hungary signs up for assisted loan deals

Having agreed to extend an assisted loan for two water treatment projects in Bosnia and Herzegovinalate last year, Hungary is set to sign several major assisted loan deals worth nearly Euro 100 million, András Péter Závoczky, a senior official of the Economy and Transport Ministry said. These includeschool construction in Montenegro, a power plant project in Vietnam and the recently announced Ft 4billion assisted loan program for the tsunami-stricken countries of Southeast Asia. The assisted loans,managed by state foreign trade bank Eximbank Rt and aimed to make participating companies morecompetitive, come with preferential interest rates and insurance rates, extended maturity and a graceperiod. (Vg 4) P.P.

Help for homeowners in debt The cabinet resolved yesterday to offer a debt consolidation program to some 30,000 families whoborrowed money prior to December 1988 to pay for homes, the welfare minister told a news conference

after the meeting. These families found themselves unable to pay when the regime changed, termswere altered, and many became jobless as of 1989, Kinga Göncz said. Under a new three-year program, the government will buy up the loans from lender OTP bank Rt and suspend repayment for ten years. (MTI; Vg 5, Nb 15)

 Applications for farm credit from Feb 1 Applications for the government’s new Ft 40 billion farm credit line will be accepted as of Feb. 1,according to Deputy CEO Sándor Aladics of the Hungarian Development Bank Rt (MFB), which willextend the loans. The government had approved plans to launch the program in one of its last sessionsin December, however, the announcement was pending another government decision regarding thetechnicalities. Yesterday’s cabinet meeting also approved a state exchange rate guarantee for MFB’sbond issues and other refinancing arrangements. (Vg 9) P.P.

PoliticsGyurcsány outlines 05 programThe government is considering comprehensive tax reform and tax reduction during 2005, PrimeMinister Ferenc Gyurcsány announced in an interview. However, the transformation of theadministrative system and the health care system will have to be delayed until after the elections in2006, Gyurcsány said. There will be no government reshuffles this year, the PM added. The Hungarianeconomy would be better off with a weaker local currency, the Prime Minister emphasized. Thegovernment is to stick to the convergence program, which is needed for the 2010 introduction of theeuro in Hungary, Gyurcsány stated. (NG 1) P.O.

Problems cloud Fidesz lead Major opposition party Fidesz-Hungarian Civic Alliance will exempt László Meszlény from his position of 

Fidesz’ communication manager, according to unnamed sources. Meszlény has been attacked in theparty for not coordinating the communication of the party and Fidesz’ parliamentary caucus. Hissuccessor may be deputy editor-in-chief of daily Magyar Nemzet Péter Csermely. As related news,Fidesz has increased its lead over the Hungarian Socialist Party (MSzP) in Medián’s latest opinionsurvey. Currently 47% of the people would go to vote, but 46% of them would vote for Fidesz and 35%for MSzP. On a related note, Fidesz’ vice-chair Zoltán Pokorni is expected to become Fidesz’ candidatefor Budapest mayor at the elections next year. (Nv 8) M.K.

Domestic 

President grants mercy to patricide girl President Ferenc Mádl has granted mercy to Kitti Simek who was sentenced for 26 months in prison for the murder of her father. Simek committed the murder at the age of 14, having been treated brutally by

him for years. The girl has since then born a daughter. The President has now suspended her sentenceand put her on a probation period. Mádl’s decision must be signed by Justice Minister József Petrétei.The last case of a presidential mercy was in 1996. (Nv 20) M.K.

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General Havril to be new chief of staff General András Havril will become the new Chief of Staff of the Hungarian Army, Prime Minister FerencGyurcsány and Defense Minister Ferenc Juhász announced. Havril, 54, who has been head of Hungary’s land forces, will be heard in Parliament next Thursday. Havril will occupy his new position onFebruary 1 and will then be promoted four-star general. (Nv 3, Vg 5, Nb 7 ) M.K.

21 January 2005Business

Matáv to change name to Magyar TelekomMatáv Rt's board of directors has decided to re-brand the company, introducing its parent DeutscheTelekom's T-brand and changing the official name of the company to Magyar Telekom Rt. The finaldecision on the name change will be taken by an EGM to be held on February 22. As a result of thechange, the T-brand will be fully introduced in the Hungarian group, following the brand structure of Matáv's parent company Deutsche Telekom Group. (Econews; Nv 1, Vg 1, Ng 11, MH 12, Nb 16)

MOL turns to Lukoil, YUKOS suspends exportsHungarian oil and gas group MOL Rt yesterday said it concluded a five-year agreement with Russia'sLukoil, after rival YUKOS suspended some crude export contracts affecting supplies to Hungary.YUKOS's Geneva-based trading unit Petroval declared force majeure under a contractual clause thatcovers circumstances outside its control. Bailiffs sold YUKOS's main production unit last month, leaving

the firm without oil to meet export obligations. Under its new contract with MOL signed late onWednesday, Lukoil will supply 5 million tons of crude oil in each of the next five years to Hungary andSlovakia. (MTI; MH 1, Nv 5, Ng 11, Vg 13)

Freesoft wins Ft 750 mln MÁV contract IT company Freesoft Budapest Kft has won a contract, worth Ft 750 million plus VAT, to develop a newbusiness management information system for Hungarian railway company MÁV Rt. Freesoft said it hadwon the open public procurement bid on the Budapest Stock Exchange (BSE) website yesterday. Thecontract will be signed within eight days. The BSE suspended trading in Freesoft shares before theannouncement at 12.23pm until 2.30pm yesterday. (Econews; Ng 11, MH 11, Vg 18)

BKV braces for even harder times

 After last year's Ft 45 billion deficit, public transportation company Budapesti Közlekedési Rt (BKV)expects losses to total Ft 60 billion by end 2005. If the central budget continues to provide increasingfinancial support, then 2006 could be the first year of deficit reduction said Botond Aba, BKV CEO. Thisyear BKV will receive Ft 50 billion from the municipality of Budapest to finance a number of investmentsto improve public transportation, such as the construction of the new metro line and the purchase of new buses and trolleys. (Vg 15) A.K.

Pét to produce over mln tons of manure p/aPét Nitrogen Works Rt is to start building a nitric acid production factory in February. The Ft 13 billioninvestment is to be finished by March 2007, and the plant is expected to produce 1.5 thousand tons of nitric acid daily. The new nitric acid plant will enable Pét to produce over a million tons of manure ayear. In 2004, there were 700 thousand tons of manure produced, the plan for this year is 800 thousandtons. Apart from the nitic acid plant, there is to be a new manure factory built as well, the contract willbe signed in March. (NG 5) E.C.

Budapest Congress center to be renovated  Accor group the owner of the Novotel Budapest Congress Center decided to renovate the site thissummer. The project costing over 10 million Euros entirely financed by Accor's own funds, entails thecomplete renovation of the building's exterior as well as its interior and technical infrastructure. Workwill commence in June and is scheduled to end by September said Center director Botond Üsztöke.The current rental fee of Ft 1.5 million per day for the center seating 1900 will be raised upon thecompletion of works Üsztöke said. (Vg 13) A.K.

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Skála's registered capital soarsSkála Real Estate Management Rt increased its registered capital from Ft 50 million to Ft 1 billion lastyear. The owners last withdrew Ft 1,15 billion of its capital in January 2004 thus reducing it to Ft 50million at the beginning of last year, and in 2003, its capital was decreased by Ft 5 billion from itsoriginal capital Ft 6.04 billion. Skála has sold 5 of its properties last year, which were bought byChinese investors. Napi Gazdaság has not been informed unequivocally whether the change inregistered capital corresponds to the Skála Group's retail division's secession of Skála Fashion House

Kft. (Ng 5) E.C.Győr goes digital In the framework of the 'Digital City' program József Balogh the mayor of Győr announced the launch of thewireless internet service covering the entire city via 14 access "hotspots". The system operated jointly by Intel,Cisco Magyarország Kft, and Int.Air.Net Kft costing Ft 10 million per year is used by the city to optimize its publictransportation network and to improve public security with the use of cameras that transmit images over theinternet. The network is free to be used by anyone who has the equipment suitable for a wireless connection. (Nb11) A.K.

Wine Agency prepares for export The preparation committee of The National Wine Agency will be set up by the end of January. Thecommittee's task is to work out a proposal on the operating conditions of the Agency, which will have topromote the export of Hungarian wines. The committee includes representatives of the Ministry of  Agriculture and Rural Development and wine producers. A budget of Ft 2.5 billion would be necessaryfor successful operation, according to the chairman of Hungarian Wine Academy, Péter Módos. At thistime wine marketing belongs to Agrármarketing Centrum Kht with a budget of Ft 250 million. (MH 13)G.R.

EU seeks new recruits from Hungary The EU's human resources department has published its latest vacancies in categories A/7 and B/3 inall the 10 new member states. The EU is expecting to hire 180 people from Hungary. To position A/7"European administrator", the successful applicant needs to have a college or university degree and 6-7 years of work experience and may expect a monthly gross salary over Euro 7000. Category B/3 callsfor "assistants" with at least a high school degree or equivalent and 5-8 years of work experience whomay expect a gross starting salary of over Euro 3700 per month. The application deadline in both

categories is February 3. (NG 2) E.C.SMART winners selected The winners of the SMART environmental tender have been selected. The 7 successful applicants aregranted a total of Ft 405 million in subsidy. The aim of the program is to encourage companies todevelop environment friendly, waste free, and economic technology which significantly reducesdetrimental output and to manifests sustainable development. The subsidy will enable the 7 winningcompanies to meet the national and EU norms as well as to increase efficiency and productivity at thesame time. The overall budget for the SMART program is Ft 3.6 billion. (Ng 5) E.C.

Economics

FinMin brainstorming ways to simplify tax 

The finance minister is deep in negotiation on ways to update and simplify the tax system whileimproving competitiveness and maintaining revenues, the ministry said yesterday. Finance Minister Tibor Draskovics met with László Parragh, President of the Hungarian Chamber of Commerce andIndustry, and Sándor Demján, President of the National Confederation of Entrepreneurs, yesterday,and with Gábor Széles, President of the Federation of Hungarian Industrialists, on Monday. Thebusiness leaders outlined the tax changes businesses wanted to see while the FinMin told them hewanted to eliminate over-regulation and turn the system into a business-friendly one. (MTI; Ng 1)

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Factoring Association proposes law changeThe Hungarian Factoring Association is proposing modifying the credit istitutions law in order to clearlyseparate the regulation of facoring from bad debt invoices, Gabriella Rédei said to Napi Gazdaság.State Financial Institutions Supervision (PSZÁF) is supporting the initiative, admitting that the lack of restrictions on factoring restrains the development of the factoring market. The total turnover of the 21companies who belonged to the association last year was over Ft 300 billion, 80% of the entirefactoring market. The factoring business is expected to become increasingly significant this year. (Ng 4)

E.C.Suranyi in EU think tank's management Former central bank governor and current international banker György Suranyi was chosen into themanagement of a newly formed European economic think tank in Brussels, the organization saidyesterday. The European and Global Economic Laboratory of Brussels (Brueghel) was set up by 12 EUmember states and 18 private concerns to develop alternative economic and social ideas for future EUpolicies, and focus on macro-economic, market regulation, migration and development issues. (MTI; Nb16)

 Analysts forecast 100bp rate cut by Mar Hungary's central bank (MNB) is expected to cut its 9.5 % base rate by a total of one percentage pointby the end of next month, a monthly Reuters poll of analysts showed yesterday. The MNB's Monetary

Council will hold its next rate-setting meetings on January 24 and February 21. The Monetary Councilreduced the base rate by 300 basis points in 2004, but the easing cycle is expected to slow down after the projected cuts in the first two months of 2005. The median estimate of 16 analysts participating inthe poll showed that by cutting the base rate to below 8.5% in the coming few months the MNB couldrisk triggering a forint currency crisis. (ECONEWS; MH 1, Ng 3, Nv 5, Vg 17)

Doctors protest retirement ageThe Hungarian Medical Association (MOK) will turn to Constitutional Court because of the latestamendment of the law on public servants, chairman István Éger said. According to the amendmentpublic servants - including doctors - have to retire after the age of 65, while in some other cases, whichdoes not include doctors, this limit is 70 years. The decreasing of the age-limit would cause a lack of doctors, this is the opinion of the Association. The decision will enable a generation change in the

sector, state secretary of the Ministry of Health, Social and Family Affairs, Mária Vojnik reflected. (Nv 4,MH 6) G.R.

Sárközy hands in streamlining proposal Professor Tamás Sárközy, government commissioner for modernization of administration handed in hisproposal to the government. The program includes ceasing the positions of ministers without portfolio,decreasing the number of state secretaries at the Prime Minister's Office, the professor said at aconference yesterday. The ministries should not act as authorities, their task is to prepare drafts andwork out development strategies for their sectors. For this less employees would be necessary. If thegovernment adopts the proposal, it may be discussed by the Parliament in the autumn. (Nv 3) G.R.

Public procurement spending doublesMore than Ft 1,200 billion was spent through public procurements in Hungary last year, chairman of the

Public Procurement Council Lajos Berényi said. This is more than twice as much as 2003. Ft 420 billionof that was distributed on motorway constructions; Ft 165 billion on other constructions. Ft 1129.7billion was spent in standard public procurements and further Ft 100 billion - Ft 150 billion in simplifiedpublic procurements, this latter sum will be totaled by May. Total value of public procurement tendersreach about 5% - 6% of the GDP, this rate is 15% - 20% in EU15 countries. (MH 11, Nv 5) G.R

Mortgage banks make more foreign issuesHungary's three mortgage banks had outstanding bonds worth a combined Ft 1,220 billion at the end of 2004, Ft 298 billion more than a year earlier, Econews calculated. Foreign issues accounted for 60% of all issues in 2004; foreign investors were among the biggest buyers of domestic issues as well.Mortgage bond issues in 2004 were less than half of the 629 billion worth of issues in 2003, but thetotal stock of domestic issues was still notable. (Econews)

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Half take out holiday insuranceMore than half of Hungarian tourists traveling abroad take out travel insurance policies, up from just athird a year earlier, according to estimates from QBE Atlasz Biztosito, Hungary's leading provider of travel insurance. Hungarians left the country 13 million times in the first nine months of 2004, but themajority of these trips were to go shopping or buy petrol. Just 4 million border crossings were made byHungarians intending to tour abroad. Of this number, 2.5 million tourists took out travel insurance. QBEnotes that fewer Hungarians are relying on travel insurance policies which come with bank cards andthat pay out maximum claims of just Ft 500,000-1m, and more are buying comprehensive policies.(Econews)Gross budget debt rises Ft 1,005 blnHungary's gross budget debt rose Ft 1,004.7 billion or 9.5% to Ft 11,592.4 billion at the end of last year,according to preliminary Finance Ministry figures. The year-end figure corresponds to 57% of the GDP,unchanged from the end of 2003, Econews calculated. Foreign currency denominated gross budgetdebt rose Ft 404.5 billion or 15.7% in forint terms and forint debt increased by Ft 600.1 billion or 7.5%.The figures reflect an intended shift towards foreign currency deficit financing last year when net foreigncurrency bond issues totaled more than Euro 2 billion after no such net issues in the previous years.(Econews)

Politics

Orbán: Hungary will have to adopt flat tax Hungary will be forced to join the flat tax revolution sweeping Eastern Europe if it wants a fair share of the foreign investment flooding into the region, opposition leader Viktor Orbán said. Three years of budget overshoots had blown Hungary's economic credibility, Orbán said yesterday. Orbán said thenew rhetoric should not disguise budget failings and that a deficit of 5.3 % of gross domestic product in2004 had been achieved by delaying VAT repayments. "Sooner or later, not later than the beginning of  April or the end of March, they must tell the truth," said Orbán. (Econews; MH 3, Vg 5)

PM calls for more worker protectionPrime Minister Ferenc Gyurcsány called for increased protections for workers at a meeting with Labor and Employment Minister Gábor Csizmar yesterday, who in turn announced that an ombudsman for labor issues would soon be established. The PM said job security in general needed improvement and

called on Csizmar to design a program to this effect. He noted that when businesses submitted bids for assistance, the extent to which they adhered to the Labor Code should be one factor considered. (MTI)

Domestic 

Selective waste collection to rise by 150 %With the rapid spread of selective waste collection sites and recycling plants across Hungary, the country's per capita amount of selectively collected waste will reach the EU member states' average within three years, theenvironmental minister said yesterday. Hungary's present per capita rate of 8 kg/year will rise to 10 kg by the endof 2005, and exceed 20 kg in three years, Miklós Persányi said. (MTI; Nv 12)

Hungary's suicide rate dropsHungary, which for many years had the world's highest suicide rate, is still near the top of the list but itssuicides have gone down significantly, a leading psychiatrist said yesterday. Dr. Zoltán Rihmer of the

National Institute of Psychiatry and Neurology reported that in 2003 there had been slightly more than2,700 suicides in Hungary for a rate of 27.5 per hundred thousand, high enough to take seventh placein the world but significantly below the rate of the 1980s, when it regularly took the top slot. WhileRihmer was unable to fully explain the reason for the high rate, he did point out that untreateddepression was a leading cause of suicide worldwide. (MTI)