7days, 2005. július 18

7/28/2019 7Days, 2005. július 18.

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

July 12, 2005Business BNP Paribas total assets up 150%

Injection of Ft 4 bln into K and H EquitiesGraboplast expects Chinese ordersLasselsberger buys ZalakerámiaLG mulls CEE plant in Hungary

Custom rises at cheap gas stationsLast day for Brau Union Hungária shares Atlas Copco expands in compressor marketDrug prices and subsidies changeBalaton wine regions set up own associationINA’s Crosco to drill wells in Hungary for Falcon ASz report recommends Mehib role changesMÁV gets max. Ft 30 bln creditSlovak FinMin reduces MOL unit’s fineStudio Varga to be liquidated Armed forces okay Kongsberg radios for delivery

Economics Hungary 5th most popular for FDI in Europe in 2004EC supports gov’t measures to reduce fiscal deficit Agricultural producers’ prices down 11.5%

Politics PM-Opposition leader debate seen as draw - pollDomestic Farming minister protests dumping of cheap food

Pharmacists make proposals to Health Min.Redcurrant growers to rally in Brussels

July 13, 2005Business 10 of 11 bidders chosen for BA

Lower tax lures businesses to Slovakia

Ibiden opens Ft 25 bln factoryBridgestone builds tire factoryNew power plant in NyíregyházaMusashi completes expansionGiant multis subsidizedSynergon wins Ft 52 mln contract from CEUDaimlerChrysler operative from July 1Bogus companies formed with foreign citizensSzentgotthárd Spa construction startsFood Express targets 10% revenue rise in 2005Paks gets okay to remove fuel capsules

PSzÁF reports on leasing co’s Alternative telcos protest Magyar Telekom stanceEconomics Consumer prices up 3.8% yr/yr in JunePolitics EU not to demand more spending cuts in HungaryDomestic Call recording breaches data protection law

Debrecen court awards royalties to artistConstitutional Court rules on university entry exam Antenna shares may be sold at Ft 5,141

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July 14, 2005Business NABI bus company reports drop in sales

OTP's EPS at Ft 878.2 by 2009MÁV borrows Ft 22.4 bln from 2 banksInterfruct Cash and Carry up for saleMOL pricing policy favors own stations

New tender for Sárvár Thermal CrystalFt 1 bln city rehab program in MarcaliJNT to increase market shareBiogas power station to be built in central HungaryDisabled to be trained as call center assistantsGov't spends Ft 18 bln to prepare for EU subsidies Austrian bank offers Hungarian credit to councilsHerend CEO removedHankook may be eyeing Hungary for new plant

Economics EconMin subsidizes new foreign investors IT Federation points to streamlined tax regime

Gov't to raise public wages by 2-3% in 2006 - FinMinSpain may open to Hungarian labor

Politics Parties debate number of election rounds 'Pensioners' place ad on pension value

Domestic Flood waters intensive on upper Hungarian rivers Police to reward "good" drivers with beer

July 15, 2005Buisness Haulage co's may raise prices by 10%

EBRD raises $49 mln selling OTP sharesInfopark building "C" officially opened

Raiffeisen's 3rd money market fundNew vehicle sales down 9.4% yr/yr in H1Union Insurance H1 revenue up 55%MOL will not up Energopetrol stake priceFeratel purchases 54% of HungaroramaSales of breweries dropped 11% last year Environmental guidelines for pharmaceuticalsWine squad to sniff out fake wineGySEV transporting Austrian freightHollóház Porcelain to be sold through negotiationsPublic channel plenty squeezes cable TV

Strike at Kossuth printing house, SzegedPublic procurement law to be amendedEconomics Government reduces revenue target

FinMin forecasts Ft 28.8 bln general gov't surplusUnemployment to grow - Finance MinistryGov't spends Ft 540 bln on procurement in H1

Politics EconMin orders investigation into leakDomestic M7 motorway section opens today

ARC hoarding show set for August

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July 18, 2005Business Three final bids for Antenna Hungaria

Vegyépszer has Ft 2 bln half-year profitLogistics co. invests Ft 1.1 bln in LébényGov't tightens up on constructionMalév sets up subsidiary for fuel supplies

MTelekom fined for breach of ad lawsFerihegy-1 to reopen on September 1Program to spend Ft 64 bln on urgent road worksChambers employ factoring co'sBKV revenue up in 2004Liquidator splits BábolnaCourt ruling on Kartonpack assets comes into forceTextbook publisher doing better OTP Real Estate fund's assets at Ft 46 bln

Economics Industrial output up adjusted 10.1% yr/yr in MayBusiness confidence down in June

Counterfeit banknotes not to compromise cash flowProducers' milk purchase price drops in June

Politics Fidesz calls for stronger sugar protectionRadio presidency in legal tangle

Domestic State to be sued for Swiss account moneyFt 50 bln for Orczy Garden

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July 12, 2005BusinessBNP Paribas total assets up 150%The total assets of BNP Paribas Hungária Bank Kft has increased by more than 150%, according to thecompany’s balance sheet, which amounts to Ft 157.7 billion. From Ft 48 billion, the outstanding loan stock hasincreased to Ft 62 billion. This jump, however, is not the only factor responsible for the increase: the bank hasonce more taken a lead in the syndicated loans market as well. BNP Paribas’ income from interest has risen fromFt 5.4 billion to Ft 8.1 billion, while the general administration costs are down by Ft 200 million, totaling Ft 3.03billion. Both the ROE index and the operating efficiency of the bank has increased. (NG 5) E.C.

Injection of Ft 4 bln into K and H EquitiesK and H Bank Rt has raised capital at its brokerage unit, K and H Equities Rt, by Ft 4 billion, the bank announcedyesterday. K and H Equities had net assets of Ft 1.007 billion at the end of 2004. K and H Equities recordedlosses of Ft 3.846 billion in 2004, and total assets came to Ft 14.589 billion. In 2003 - the year an embezzlementscandal involving billions of forints was uncovered at the brokerage - K and H Equities had losses of Ft 9.031billion. Since the embezzlement scandal K and H Bank has set aside a combined Ft 11.428 billion in riskprovisions related to the affected accounts, but more could still be necessary, depending on an ongoinginvestigation of the matter. In spite of the scandal, K and H Equities reclaimed its position as one of Hungary’sleading brokerages after regaining its license in 2004. At the end of March 2005, it was the third-biggest trader onthe bourse. (Econews; Nb 12)

Graboplast expects Chinese ordersGyor-based Graboplast Rt sold PVC floor worth Euro 1 billion in China, through the Shanghai trade network JOC,with whom it has been in contact for two years. China’s construction industry is developing fast, providing a vastmarket for PVC floors. Graboplast expects the Beijing Olympic Games to bring further boost in exports to China.Graboplast has different special PVC floors for each and every ball game. It aims to secure the position of officialsupplier for the Olympic buildings. Additionally, a Graboplast product is being considered as carriage flooring for the new Beijing metro. (Mon.Vg) K.H.

Lasselsberger buys Zalakerámia Austria’s Lasselsberger Ceramics announced yesterday it would exercise its purchase option for all outstandingshares of Hungarian peer Zalakerámia Rt. When the offer to purchase the shares expires, Lasselsberger willdelist Zalakerámia’s shares. In a public purchase offer announced July 4, Lasselsberger raised its stake inZalakeramia from 89.8% to 93.6%, giving it an automatic option for the purchase of all remaining shares.

Lasselsberger is offering Ft 2,350 per share for the remaining stake in the company, the same price as in thepublic purchase offer. Zalakerámia had unconsolidated net assets of Ft 10.52 billion at the end of last year, givingit assets per share of Ft 1,965. Lasselsberger bought a 50.11% stake in Zalakeramia from AÉB Bank Rt inSeptember 2004. (Econews)

LG mulls CEE plant in HungaryKorea’s second largest manufacturer of consumer electronics LG is considering Hungary, Poland and the CzechRepublic a potential location for a new manufacturing plant in Central Eastern Europe, Communications Director Park Sung-Ko said. The corporation will soon reach a final decision regarding the location of the new unit and thevalue of the planned investment, he added. Part of LG’s goal of becoming the largest producer of durableconsumer goods worldwide, the project is expected to kick off in the beginning of next year, according to thecompany spokesman. (MH 13) P.P.

Custom rises at cheap gas stations

Increased custom at cheap gas stations, is leading to more units opening, selling fuel at a price 8-10 Ft less thanthe big companies. Klubpetrol Kft (KP) has the biggest network with its 38 stations and will add 15 more this year and open their first Ukrainian station as well, Vilmos Hajdu, managing director of franchise companyHungaronafta Kft told Világgazdaság. The company signs contracts for 5-10 years with their partners andtransfers them 95 octane petrol and pump oil from KP base in Tokod, as well as from Debrecen and Kecskemét.Hypermarket chain Tesco Globál Stores Rt plans to double the number of its stations, reaching 30 units. Tesco,like the other cheap petrol companies, does not purchase from gas and oil company MOL Rt but from differentsources depending on the price, said communication director Emese Danks. Tesco sells petrol 95 and 98 andpump oil. Auchan is also expanding, while Cora is to open its first cheap station. (Mon. Vg 7) K.H.

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Last day for Brau Union Hungária sharesShares in Brau Union Hungária Rt will trade for the last time tomorrow before they are delisted on Thursday,according to an announcement on the website of the Budapest Stock Exchange (BSE). The delisting brings to anend the almost two-year-long struggle between brewing giant Heineken and small shareholders in Brau UnionHungária. After Heineken bought a majority stake in Brau Union Hungária in October 2003, small shareholderssuccessfully blocked approval of the takeover by demanding a higher offer price for their shares. In February2005, after sixteen months of wrangling, the Hungarian Financial Supervisory Authority (PSzÁF) approvedHeineken’s offer to the shareholders of 17,200 per share - about a third more than its original offer. (Econews)

Atlas Copco expands in compressor marketIn line with last year’s trend, in H1 2005 the turnover of compressors produced by Swedish Atlas Copco continuedto expand in Hungary. Mobile and installed compressors and generators are available but demand mainly grewfor the mobile, trailer-carried compressors. However, Hungarian importing company Atlas Copco Kft has alsostarted a compressor rental business. The company has been selling used machines since May, said mobiledivision director Nándor Gidófalvi. They expect the Metro 4 construction to provide them with substantial orders,he added. New machines tend to go to fleet buyers, i.e. Vegyépszer Holding, Strabag Rt, Betonút Rt, andHidépito Rt. Compressors were rented for the constructions of the motorways M7 and M6. This year the one-year warranty was replaced by a three- or five-year one. (Mon Vg 7) K.H.

Drug prices and subsidies changeDrug producers have decreased prices of subsidized drugs by 1.5%, however, as a result of the extension of thefixed subsidization system, users have to on average pay 1.4% more for the same drugs. The extensionmeasures of the National Health Fund (OEP) effective from July 1 affected 1,885 out of the approximately 6,000subsidized drugs such that the price of 1,200 drugs increased, 200 decreased, and about 500 did not change. Of 70% of those increased in price did not by rise more than Ft 100. The point of the new, fixed system is that thestate will subsidize the generic drugs, the cheapest equivalents of the brand-name drugs. According to someestimates, this may result in billions of savings for the OEP. (NG 1, 3) E.C.

Balaton wine regions set up own associationHungary’s winegrowers have decided to set up five associations to represent each of the country’s wine regions, András Urbán, the head of the National Council of Winegrowing Communities (HNT), announced yesterday. Thewine regions around Lake Balaton will be the first to set up their own association. The winegrowers, includingthose in the Badacsony, Balatonboglár, Csopak and Somló regions, account for 10% of Hungary’s vineyards,15% of its wine and about a quarter of winegrowers’ revenue. Hungary’s wine industry is worth an annual Ft 80billion. (Econews; MH 3)

INA’s Crosco to drill wells in Hungary for FalconDrilling company Crosco, a unit of Croatian oil company INA, announced it will aid in exploration in the areaaround Szolnok, in central Hungary, for Canada’s Falcon Oil and Gas Ltd. Crosco will drill three wells and has anoption to drill an additional four. Falcon Oil and Gas has exploration rights for 2,331 hectares in Hungary.(Econews)

ASz report recommends Mehib role changesThe Hungarian Export Credit Insurance Rt (Mehib) facilitated Ft 353 billion worth of Hungarian exports between2000 and 2004 by providing a state guarantee for companies active in foreign markets, the State Audit Office(ÁSz) concluded in a recent review. Last year, Mehib insured 5.4% of exports to developing and emergingmarkets, on average using 30% of the Ft 250 billion state fund earmarked for insuring projects for which nocommercial insurance product is available. Rather than to any factor under Mehib’s control, the relatively low ratewas due to the small number of exports requiring such state guarantee, ÁSz found, citing limitations on the

insurer’s activity that were lifted in January 2003. The report recommends that the government review andredefine Mehib’s role in the overall system of facilitating Hungarian exports in the long term in the light of recentchanges to the economic environment. (Nv 5) P.P.

MÁV gets max. Ft 30 bln creditTo maintain MÁV Rt’s liquidity, the state is guaranteeing surety credit, as explained in the Official Gazette. According to a government decree, the rail company may receive a maximum of Ft 30 billion, to be used to clear its backlog of payment arrears. The last time MÁV took a grant was last year, amounting Ft 52.87 billion, Ft 40billion of which could be spent on public transportation development, and the rest on investment. MÁV had Ft 137billion in outstanding loans last year, a figure which this year will increase significantly. (NG 1) E.C.

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Slovak FinMin reduces MOL unit’s fineOn further investigation of a 1.35-billion-koruna (currently $41.6 million) fine it imposed on local MOL Rt subsidiarySlovnaft for its fuel-pricing policy in February, the Slovak finance ministry reduced the penalty to 1.341 billionkorunas ($41.3 million), after taking into account R+D and marketing costs, spokesman Mikulás Gera said. In amove seen by many as going against EU business policies and probably not without political motives, the Slovakgovernment fined the company. This was done on the premise that it had raised prices more than costswarranted, Finance Minister Ivan Miklos said in February, arguing that Slovnaft was not entitled to keep its‘unjustified profit’ from fuel sales. With regard to the latest ministry announcement on the issue, a spokesman for Slovnaft said the company would, as before, appeal against the fine. (Mon. NG 7) P.P.

Studio Varga to be liquidated At the initiation of a former employee, the court has ordered the liquidation of Studio Varga Kft, which was one of the late 90s most successful animated movie producer. According to Napi Gazdaság information, the State TaxOffice (Apeh) has also encouraged its liquidation because of its tax arrears accrued. Credit note requests can besubmitted to liquidation processor Credit-Audit Kft until August 8, thus only after the deadline will it be known howmuch dues Varga has accumulated, said Szeréna Nagyné Tóth. (NG 1) E.C.

Armed forces okay Kongsberg radios for deliveryThe Armed Forces’ equipment testing authority has found UHF radio supplied by Norway’s Kongsbergsatisfactory and has approved the rest for delivery, the Ministry of Defense said yesterday. The Armed Forcesrefused an earlier delivery of the radios in April 2004 because of technical faults. The Defense Ministry said itwould seek Ft 200 million in damages from Kongsberg because of the faulty equipment. Kongsberg signed theEuro 100 million contract to supply the radios in March 2003. The supply contract comes with an offset agreementworth 180% of the value of the equipment. Kongsberg will deliver the radio equipment by 2013, but will completethe offset deal by 2010. (Econews; Nv 3, MH 6)

EconomicsHungary 5th most popular for FDI in Europe in 2004Foreign direct investment (FDI) in Hungary is expected to come to Euro 4 billion this year, Minister of Economic Affairs János Kóka said at a press conference in Budapest yesterday where consultant firm Ernst and Youngannounced the results of a new survey showing that Hungary was the fifth most popular destination for FDI inEurope last year. Hungary received Euro 3.4 billion or 4.8% of total FDI in Europe last year, according to the Ernstand Young survey, beating Spain, Russia and the Czech Republic. The list was headed by the UK, France,Germany and Poland. (MTI; MH 11, Mon. Vg 2)

EC supports gov’t measures to reduce fiscal deficitEuropean Commission officials said they thought the Hungarian government’s recently announced measureswere adequate to keep the country’s fiscal deficit at the targeted 3.6% of GDP in 2005, Reuters wire servicereported yesterday. Reuters published a draft proposal for the commission’s next session on Wednesday, whichsaid that it would not effect further sanctions against Hungary at present, despite the country’s high deficit.Joaquin Almunia, Commissioner for Economic and Monetary Affairs, announced a few days ago that the bodyhad received details of the relevant measures from Hungary, and would soon put the report on the commission’sagenda. However, the EC proposal warns that sanctions can still be expected if Hungary’s hesitates in taking theproposed steps, Reuters said. (MTI)

Agricultural producers’ prices down 11.5% Agricultural producer prices fell 8.8 % in May 2005, compared to May of the previous year, the Central StatisticsOffice (KSH) reported yesterday. Crop prices decreased 13.4 % yr/yr in May and prices of live animals and animalproducts rose 6.7% in May from the previous year. In the first five months of 2005, agricultural producer prices fell

11.5% from the same period a year earlier, as the result of a 24.2% decrease in crop prices and a 6.7% rise inprices for live animals and animal products, KSH reported. Feed prices decreased by 19% in January-May 2005compared to the same period last year. (MTI; MH 13)

PoliticsPM-Opposition leader debate seen as draw - pollNeither party came out as a clear winner of the prime minister’s televised debate with Fidesz leader Viktor Orbán,according to a poll by Median published in Monday’s national daily Népszabadság. Orbán’s performance at theFriday debate was slightly more popular overall - 32 % of the total picked him as the ‘winner’ of the talk comparedto Gyurcsány’s 29%. Voters with no determined party choice preferred Gyurcsány, 17% of undecided voters,compared to 11% said Orbán did better. The poll revealed that the event was widely noticed, 9 % of respondentshad heard about the debate, 60% watched some of it while 20% followed the entire talk on television,Népszabadság reported. (MTI Nv 3, MH 6, Mon. Vg 16)

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DomesticFarming minister protests dumping of cheap foodHungary must take steps to stem the flow of imports of cheap, processed food, Agriculture Minister József Gráf told a conference on foreign trade yesterday. ‘We will not be the dump for Europe’s food producers,’ Gráf said.Hungary’s farmers exported 13% more in Q1 2005 than in the same period a year earlier, but imports rose evenfaster, by 17.5%. Speaking about Hungary’s struggle to cope with last year’s bumper grain harvest, Gráf saidfarmers would be encouraged to grow less in the short run, generating a surplus of just 2 million -2.5 million tons.

(Econews; Nb 1)Pharmacists make proposals to Health Min.The Hungarian Pharmacists’ Chamber will submit its proposals to the Health Ministry regarding the on-dutysystem and online orders for home delivery, while requesting the ministry to clarify the recently passed newmarket regulations which require chemists to pass on wholesaler discounts to the patients. The number of round-the-clock pharmacies is sufficient, however their geographical distribution is uneven, according to PresidentKatalin Szatmári, who also said the Ft 375 surcharge for night service did not cover the costs. (Nv 4) P.P.

Redcurrant growers to rally in BrusselsEncouraged by the success of a similar course of action by the country’s beekeepers, the redcurrant producers of the Ipoly valley, north of Budapest, are planning to launch a protest rally in Brussels against cheap imports fromnon-EU countries. The EU needs to recognize the importance of protecting its internal markets, said grower OttóMenyhárt. (Nv 5) P.P.

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July 13, 2005Business10 of 11 bidders chosen for BAHungary’s government allowed 10 of the 11 registered groups to bid for a majority stake in Budapest Airport Rt,disqualifying only Corporacion America. Hungary is selling 75% plus one vote in the company, which will haverights to operate and develop the Hungarian capital’s international airport for 75 years, the state assets salesagency said in an e-mailed statement today. Companies have until Aug. 9 to submit initial offers, with binding bidsdue Nov. 2. Hungary’s government, the first to offer an airport operator stake in the region, is selling the companyto save on developing the airfield. ‘Through privatization and the attraction of working capital, the investments anddevelopments required by rising passenger traffic can be financed from private funds,’ the agency said in itsstatement. (Bloomberg; NG 4, Nv 5, MH 12)

Lower tax lures businesses to SlovakiaLow corporation tax and VAT has attracted around a thousand Hungarian companies to move their headquartersto areas near the Hungarian border in Slovakia, a Slovak daily reported yesterday. According to a reportpublished by the liberal paper SME, mainly Hungarian trading and broker companies set up businesses inSlovakia and the local tax office has found them disciplined tax-payers. According to figures of the HungarianChamber of Commerce quoted by the paper, Hungarian businesses attracted by lower taxes have ‘exported’capital equivalent to around USD 1.5 million to Slovakia. Companies have to pay a flat 19% corporation tax, andVAT is also 19% in Slovakia. (MTI; NG 2, MH 11)

Ibiden opens Ft 25 bln factoryJapanese car parts maker Ibiden opened a Ft 25 billion factory south of Budapest yesterday, less than a year after the start of construction. The factory, which makes ceramic diesel particulate filters, is the biggest greenfieldinvestment in Hungary this year, Prime Minister Ferenc Gyurcsány noted at the opening ceremony. For the plant,which will employ 700 people, Ibiden received state subsidies, training subsidies and tax breaks. Ibiden CEOIwata Yoshifumi said the 26,000 sqm plant would turn out 1.2 million ceramic filters a year, delivering them to bigEuropean carmakers such as Mercedes, BMW and Audi. Plans are to expand capacity at the plant soon, perhapseven by building a similar-sized plant next to the original one, he added. (Econews; NG 3, Nv 5, MH 11)

Bridgestone builds tire factoryJapanese tire maker Bridgestone could start building a Euro 190 million factory in Tatabánya, northwest of Budapest, early next year, and begin full-scale production from 2008, business daily Világgazdaság reportedyesteday. Bridgestone decided to build the plant, its seventh in Europe, in spring in order to meet rising demand,

especially for high performance and large rim size tires, which account for more than half of summer tire sales,vice president of Bridgestone Europe Des Collins told Világgazdaság. The highly automated plant will employ 200people from 2008, and turn out 8,000 tires per day from 2009. The plant will supply the European market.Bridgestone has already purchased a 66 hectare site in the Tatabánya industrial park and is applying for thenecessary building permits. (Econews; Tue. Vg 6)

New power plant in NyíregyházaThe German E.ON Group will build a cogeneration power plant in Nyíregyháza after a contract between the cityand the company was signed yesterday. The contract for the Ft 11 billion project, to generate both heat andelectric power, was signed by Nyíregyháza’s mayor, Judit Csabai, and E.ON Hungária Rt CEO Konrad Kreuzer.The new 49 megawatt plant, which is scheduled to start operating on January 1, 2007, will supply a minimum of 910 terajoules of heat to the city, Kreuzer told the press. Csabai said that once the facility was up and running thecost of heat and power to Nyíregyháza residents could come down by as much as 15%. (MTI; NG 4, Nv 5, Nb 11)

Musashi completes expansionMusashi Hungary Kft, the Hungarian unit of the Japanese car parts maker, has completed a Euro 1.5 millioncapacity expansion at its plant south of Budapest, business daily Világgazdaság reported yesterday. The plantneeded the extra capacity to meet orders for camshafts for Fiat and GM, Musashi Hungary CEO András Nagy toldVilággazdaság. Production of the camshafts, which go into Multijet 1.3 litre diesel engines assembled in Poland,will increase 20% because of the investment, he added. Last year Musashi Hungary had revenue of more thanEuro 26 million, more than double that in 2003. Revenues rose after Musashi invested Euro 4 million at the plantto start making ball joints for Audi. The plant employs 270 people. (Econews; Tue. Vg 6)

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Giant multis subsidizedOn the basis of individual government agreements, 8 multinational companies may get over Ft 31 billion insubsidies until 2008, according to Népszabadság information, and negotiations are being held to allocate another Ft 30 billion. The daily’s calculations show that those corporations already contracted have been subsidized by anaverage of 17% of their total investments, including international giants such as Electrolux, Asahi Glass, Bosch,ExxonMobil, Denso, Ibiden, IBM, and Michelin. Between 2004-2008, these companies are creating 6000 jobs. In2003, however, 4,800 SMEs have received a total of Ft 12 billion in subsidies which they used to carry out over Ft30 billion-worth of investment, thus creating 15 000 new jobs. These data suggest that it cost the budget quite alot to attract operating capital in order to preserve Hungary’s favorable position on the investment target list. (Nb1) E.C.

Synergon wins Ft 52 mln contract from CEUSAO-Synergon Kft, the outsourcing unit of IT company Synergon Rt, has been picked to operate the CentralEuropean University Business School’s IT system, Synergon announced on the website of the Budapest StockExchange yesterday. The contract is worth Ft 52 million over the next two years. SAO-Synergon will set up andoperate 8 servers and 200 workstations under the contract. (Econews; NG 5, Tue. Vg 9)

DaimlerChrysler operative from July 1Having become operational as of July 1, DaimlerChrysler Automotive Hungária Kft (DCAH) expects to sell 3,300-3,500 new cars and utility vehicles by the end of the year. DCAH was set up as a joint-stock company byDaimlerChrysler AG and MB-Automobilvertriebs GmbH (which is part of the Austrian Pappas Group), so theimport/wholesale and distribution of DaimlerChrysler brands is handled by two different corporate entities. ThusMB-Auto Hungary Kft, which has handled all of these activities until now, will remain in charge of distribution,while DCAH will act as importer and wholesaler of new Mercedes, Smart, Chrysler and Jeep cars, trucks andvehicle parts. (NG 4) P.P.

Bogus companies formed with foreign citizensBogus companies are being set up with the participation of foreign, in many cases Romanian, citizens, writesNépszabadság, citing an unnamed attorney. To register a company in Hungary, it is sufficient if the CEO providestheir address of residence - which, attributed to the lack of thorough verification process, may well be spurious -and appoints a local resident to action on their behalf, whose address may also be false. If they create anelectronic signature, company affairs can easily be conducted without the personal contribution of the ‘CEO’, thusallowing the person responsible to completely disappear. Last year, several bogus companies were registeredunder the name of homeless citizens and at least 7 homeless shelters were defined as headquarters of suchfirms. To prevent address abuses, the Justice Ministry will submit a proposal for a law amendment such that

lawyers processing company registration be held responsible if the registration address is obviously false. (Nb 4)E.C.

Szentgotthárd Spa construction startsThe construction of Szentgotthárd spa commenced last week and is to be opened next fall, said Gotthárd-ThermKft CEO Sándor Gömbös to Világgazdaság. The investment totals nearly Ft 2 billion. The spa operating company,which is fully owned by the Szentgotthárd municipality, has already taken Ft 1.5 billion loans. Ft 300 million is hasbeen awarded as non-refundable state subsidies, and the remaining amount is financed by own sources. Thenew spa will present a Mediterranean atmosphere including medical and fun spas, sports and therapeuticsections, and steam rooms. Nearby the spa, private Hungarian investors are planning on constructing a 4-star hotel which may be suitable for conference events as well. (Vg 7) E.C.

Food Express targets 10% revenue rise in 2005Food Express Kft, a company that makes and delivers hot lunches, expects this year’s revenue to rise 10% over

2004’s Ft 3 billion, László Zsidek, the company’s CEO and owner, and a well-known chef, announced yesterday.Last year the company’s revenue almost doubled, albeit from a low base. Pre-tax profits were about a fifth of revenue. This year, however, profits will fall because the company plans to make several big investments, Zsideksaid. Food Express sold about 10 million meals last year, giving it half of the market for hot, delivered meals. Thecompany has also started delivering meals to supermarkets for retail sale. (Econews; NG 4)

Paks gets okay to remove fuel capsulesThe National Nuclear Energy Office gave theoretical permission for the recovery at the Paks Nuclear Power Plant’s second block. The damaged fuel capsules will be removed placed into metal cases and rested in a basinfor years, said Gyula Fichtinger, head of department for security at the Office. The second reactor of the plant willhave to be stopped during the operation. The preparation of the procedure will take several months, and the exacttime has not been set yet. The work will be carried out by technicians of Russian TVEL company under supervision of Hungarian experts. Unless there are complications, it will take one or two months. (MH 7) G.R.

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PSzÁF reports on leasing co’sThe portfolio rating of leasing companies deteriorated considerably last year, the State Financial Supervisory Authority (PSzÁF) said in a recent report of the sector. While in 2003 bad debt accounted for only 1.6% of totalcredit, a year later the rate of overdue amounts went up to 2.5%. This negative trend was even more pronouncedamong the ten major industry players backed by a commercial bank, which have seen the rate of debt defaultingrise from 2.2% to 4.2% during the same period. Bad debts in the entire sector currently total Ft 17.7 billion, withthe previously mentioned group of bank affiliates accounting for 59.3%. (NG 4) P.P.

Alternative telcos protest Magyar Telekom stanceHungary’s alternative telcos have asked the Prime Minister’s Office to inform government institutions andagencies that they too, not only Hungary’s incumbent telco Magyar Telekom Rt, can provide services related tothe electronic governmental core network (EKG), a kind of government intranet. Since the telecommunicationsmarket was deregulated in 2000, alternative telcos have grabbed 18% of the government telecommunicationsmarket. But Magyar Telekom’s practice of misleadingly presenting itself as the only option for connecting to theEKG could keep alternative telcos from sharing a part of the Ft 17 billion network, which will connect 900institutions and agencies by 2008, according to Géza Szathmári, who heads the Association of AlternativeTelecommunications Companies (ATSzE). (Econews; NG 3, MH 13, Tue. Vg 11)

EconomicsConsumer prices up 3.8% yr/yr in JuneConsumer prices rose 3.8% yr/yr in June, exceeding analysts’ expectations of 3.63% and picking up from May’s

increase of 3.6% yr/yr, the Central Statistics Office (KSH) reported yesterday. Prices rose 0.3% from May to June.High seasonal food and fuel prices were behind the increase. Core inflation remained unchanged from May toJune and slowed to 1.9% from June 2004, well under May’s 2.2% yr/yr rise. Consumer prices in the first sixmonths of 2005 rose 3.7% over the same period last year. Seasonal food prices rose 6.9% from May to June,pushing overall food prices up 0.9%. Excluding seasonal foods, food prices were 0.1% lower last month than inMay. Potato prices were 31.2% higher than in May, but still 39.6% lower than a year earlier. Prices for freshdomestic and tropical fruits rose 7.5% in a month and were up 14.7% from June 2004. (MTI; NG 1, Nv 5, Nb 11,MH 13)

PoliticsEU not to demand more spending cuts in HungaryThe European Commission is expected to say Hungary’s 2005 budget deficit target is achievable withoutadditional spending cuts, Reuters reported, citing a draft assessment by the EU’s executive on Hungarian fiscal

policy. The Commission, which releases its assessment on Hungary today, will probably say the country’sbudgetary performance remains ‘vulnerable’ and call on authorities to pass a prudent budget for 2006 followingthe country’s own targets outlined in its euro adoption program, Reuters said. Hungary plans to cut the deficit to4.7% of gross domestic product this year from 5.4% in 2004, excluding revenue to private pension funds.(Bloomberg; NG 3)

DomesticCall recording breaches data protection lawCorporate call centers are in breach of the law if they fail to offer their clients the option not to have their callsrecorded, Data Protection Commissioner Attila Péterfalvi declared a few days ago. That recording conversationsbetween call staff and customers without asking for the latter’s consent could become a widespread practiceamong banks, stockbrokers and utility companies is only a matter of citizens’ indifference and could besuccessfully appealed in court, according to Péterfalvi. The ombudsman’s judgment, by contrast, is not a bindingdecision. According to service providers, the records serve clients’ interests to ensure that their instructions arefollowed precisely. (Mon. MH 7) P.P.Debrecen court awards royalties to artistDebrecen municipality must pay Ft 4 million royalty to an artist who created a mosaic of the city’s coat of arms.The legally binding decision was made by Debrecen Court of Appeals after two years of litigation. The artworkwas set up at the main square of the city but the local government paid only for the material and labor costs. Theyclaimed that the artist renounced the royalty and that the city will have no income from it, but the Court did notaccept their reasoning. (Nv 4) G.R.

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Constitutional Court rules on university entry examThe two-level high school leaving examination introduced this year is against the principle of equal opportunity,the Constitutional Court ruled. The new exam unifies the high school final exam and the entrance exam for universities and colleges. But students who sat their high school exam according to the old system in the previousyears and now added a higher level complementary exam could have higher points with the same results asthose who finished high school this year. In spite of this, the Court’s decision does not affect this year’s exams,and the government was given until the end of this year to correct the regulations. The Education Ministry willcope the problem with increasing the number of students admitted to higher education, a press release from theMinistry says. (MH 6) G.R.

Correction (from June 9 issue)

Antenna shares may be sold at Ft 5,141The 75%-plus-one-vote stake in Antenna Hungária Rt may be sold for as much as Euro 180 million, reportednews agency Dow Jones, equivalent to a price per share of Ft 5,141. One of the bidders is the AustralianMacquarie Communications. Participating bidders may bid higher than their own previous bids. Bidding closesthis Friday. (June 9 NG 11)

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July 14, 2005Business

Masterfoods move pet food production

Masterfoods is planning to relocate pet food production to Germany to the tune of 40,000 tons a year. Thisamounts to almost one third of total annual output in Hungary, which makes the decision all the more surprising,as Hungary has lately become a regional center for pet food production and a locomotive of agricultural exports.

The Hungarian subsidiary Masterfoods Hungary Kft is looking at new commercial opportunities to make up for theloss in activity, and plans no cut-backs in employment. Experts say that the industry is expected to continuebooming and domestic demand may double over ten years. (NG 1, 5) M.H.

NABI bus company reports drop in sales

Bus manufacturer NABI Group sold 558 buses in the first half of 2005, a 28 vehicle drop year-on-year, thecompany's website reported yesterday. NABI sales to North America were down, but sales to Britain and the EUwere up, the website said. The company delivered 257 buses to the U.S.A in H1 of 2005, down significantly fromH1 2004's 346. As of June 30, orders from the U.S. numbered 473. Meanwhile, sales to the British market were285, up by 50 from 2004, while sales to other EU countries amounted to 16, up from last year's 11. (MTI; NG 7)

OTP's EPS at Ft 878.2 by 2009

The OTP Bank group predicts pre-tax profits of Ft 294.4 billion in 2009, a Ft 143 billion increase from 2004 andrepresenting average annual growth of 14%, according to OTP's presentation for investors on the bank's website. Although the contribution of OTP's foreign subsidiaries to consolidated pre-tax profits is significant, OTP Bank Rt'sresults dominate the group's performance. OTP subsidiaries' combined pre-tax profits are expected to rise from Ft40 billion in 2004 to Ft 109 billion in 2009, with an annual average growth target of 23%. The contribution of foreign subsidiaries to total group pre-tax profits is expected to grow from 22% in 2004 to 40% in 2009. (Econews;NG 1, 7)

MÁV borrows Ft 22.4 bln from 2 banks

As indicated on Tuesday, Hungarian State Railways MÁV Rt will sign an agreement on credit lines from K&HBank Rt and MKB Rt to a value of Ft 22.4 billion, MÁV announced yesterday. MÁV has declared the tender for theremaining Ft 4.8 billion credit line unsuccessful. K&H Bank will provide a Ft 7.6 billion credit facility and MKB willprovide Ft 14.8 billion. MÁV will use the credit line to finance its operating losses. (Econews; NG 1, 4, MH 3, Nv 4)

Interfruct Cash and Carry up for saleThe German Tengelmann Group is to sell its Hungarian cash & carry subsidiary, Interfruct Kft. The 22-unit chainwhich serves resellers and small retailers had previously been rumored to be an acquisition target for MetroHolding and CBA Kft, but Péter Magyar, CEO of Interfruct denied those claims. Current rumors have it that afinancial investor may buy the company, but observers point out that it could also be an attractive target for German hard-discounter Aldi and US retail giant Wal-Mart Stores, both of which plan to enter the Hungarianmarket in the near future. (NG 1, 4) M.H.

MOL pricing policy favors own stations

MOL Rt has adopted the new strategy of raising fuel prices at different rates. As a wholesaler the company sellsgas at Ft 8 higher and diesel Ft 6 higher, while at its own gas stations prices rose only by Ft 4 and Ft 3respectively. MOL has an 80% share on the wholesale and 35% of the retail markets. Alternative stations can

choose to swallow the difference or to dump it on consumers. Both versions are quite likely to cause losses.MOL's new policy might force some gas station networks out of Hungary, said Shell Hungary Rt Chair-CEO IstvánVarga. MOL spokesman Ferencz I Szabolcs said the company has changed its pricing policy and said networkscan also buy gas from refineries in neighboring countries. (Nb 12) K.H.

New tender for Sárvár Thermal Crystal

A new tender has been called for the sale of the assets of Sárvári Thermal Crystal Kft by its liquidator, KossuthHolding Rt, Napi Gazdaság reports. Offers for the Sárvár premises of the company, its operating assets,extraction rights and several thermal and water wells may be submitted until the 22nd of July. According toliquidator Péter Kovács, several bidders were interested in the first tender, but because of the high expectedinvestment needs they have decided to wait and see, which may also explain why the target price has beenlowered to Ft 80 million in the second tender. (NG 6) M.H.

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Ft 1 bln city rehab program in Marcali

A consortium of Strabag Construction Kft and Szabadics Civil and Underground Engineering Kft has won thepublic procurement tender for the rehabilitation of 5.5 hectares of land in Marcali. The municipality will spend Ft 1billion on the program, which will include cleaning up 1.6 hectares of polluted industrial area, and the constructionof public utilities, streets, parking lots, parks, an open air theatre and a music hall in undeveloped areas of the city.(NG 6) M.H.

JNT to increase market shareLogistics and security company JNT Kft has a mid-term aim to get a 50% share on thehome market of cash handling and conveyance as against the current 35%, said managing director SaroltaEtsedy. JNT purchased its predecessor Defend Kft's assets in 2003. Most of its sales revenue, which was Ft 4.5billion last year, comes from orders of its owner, the Magyar Posta Rt. The company has 600 employees and 150vehicles, and also have a network covering the whole country. JNT plans investments of Ft 100 million eachduring the next 1.5 year. Still to be renewed are the cash handling technology and the fleet as well, Etsedy added.(Wed. Vg 10) K.H.

Biogas power station to be built in central Hungary

A biogas power station planned for central Hungary will process organic manure and waste to produce electricity,Tamás Kovács, managing director of the company carrying out the investment said. A total of 90,000 tons of organic manure and waste from local farms will be used to produce enough electricity to supply 4,000-5,000households a year, Kovács said. The plant in Palhalma will cost Ft 1.5 billion to build and Hungarian agriculturalfirm Agrospecial expects to see a return of the investment in 8-10 years, Kovács said. The biogas plant will relievecarbon-monoxide emission by 180,000 tons in the region. The project will be partly financed from own resources,partly from tenders and bank loans, Kovács said. (MTI)

Disabled to be trained as call center assistants

The Human Resource Foundation launched an EU-financed program to train unemployed people with 100%disability as call center assistants. The first course will start in September, with employment opportunities offeredfor the duration of the program by T-Mobile Hungary Rt and Transcom. Currently the foundation is workingtogether with Adecco Hungary Kft to find unemployed people with disabilities who may want to participate in theprogram. (NG 4) M.H.

Gov't spends Ft 18 bln to prepare for EU subsidies

The government decided to spend Ft 18 billion on the preparatory work for 36 large investments to get ready tobid for EU resources in 2007. Environmental investments of over Euro 25 million and transportation projectscosting at least Euro 50 million can be considered large projects according to the EU standard. The targeted largeprojects include 20 environmental, 12 transportation, and 4 Budapest investments. Initial talks are alreadyunderway and will be finished by he weekend, József Uszta, head of National Development Office's relevantdirectorate, told Világgazdaság. The whole projects will be scheduled and the management structure checked.The contracts for the subsidies can be signed after the ministerial decree regulating the process is announced.(Wed. Vg 6) K.H.

Austrian bank offers Hungarian credit to councils

The Hungarian Development Bank Rt (MFB)'s products associated with a state credit line for local councilinfrastructure development are now offered by Austrian Niederösterreichische Landesbank-Hypothekenbank AG,

as well as Hungarian commercial banks. The Austrian commercial and mortgage bank has recently opened abranch in Budapest. Naturally, the low-cost state credit line is available only to Hungarian municipalities evenwhen extended by the Austrian bank. Cooperation between MFB and Niederösterreichische was made possibleby EU accession, which allows banks to reach out to customers in countries where they are not registeredcorporate entities, MFB CEO János Eros said. (Nv 5) P.P.

Herend CEO removed

The management of high-end porcelain manufacturer Herend Rt relieved CEO Sándor Polányi of his positionyesterday, for the second time in 1.5 years. According to a press release, Polányi will retain a seat on the board,and the management will essentially continue to follow his strategy with some modifications. A former CEO of alternative telecom Invitel Rt (then Vivendi Rt), Polányi said the decision came as a shock to him and he was notsure of the motives behind it. While admitting that his new strategic plan was slower to take off than expected, hesaid in had been successful, with H1 revenues up 4% year-on-year but 8.4% below forecasts. During the first

attempt to get rid of Polányi only three months after his appointment in 2003, the factory workforce, which owns75% of Herend shares, vetoed his removal by means of a mass demonstration. (MH 13) P.P.

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Hankook may be eyeing Hungary for new plant

Having suspended exclusive talks with the Slovakian government, South Korean rubber manufacturer Hankook isnow allegedly eyeing Hungary as a potential location for a new manufacturing plant, dailies reported. However theinformation was neither confirmed nor denied by Economy and Transport Ministry spokeswoman Judit Tóth.Hankook is preparing for a Euro 500 million investment in the CEE region, with unemployment-stricken Levice insouthern Slovakia having been the only candidate until recently, thanks to a government plan to finance 13% of the project cost through a non-refundable grant and another 8% in the form of a tax break. However, as the

suggestion triggered a governmental crisis in Slovakia, Prime Minister Mikulás Dzurinda was forced to back out of the proposal, after which Hankook said it would choose a location depending on which country offered the bestterms. (Nv 5, MH 11) P.P.

Economics

EconMin subsidizes new foreign investors

The Economy and Transport Ministry awarded state subsidies to 11 new foreign investors in 2004 and 2005,State Secretary Ábel Garamhegyi said. The projects enjoying state sponsorship over the past 1.5 years brought atotal of Ft 168 billion FDI in Hungary and are estimated to create 7,200 new jobs by 2007. According to theministry, a further 13 companies decided to invest in Hungary without receiving government subsidies and taxbreaks, totaling Ft 365 billion and probably resulting in another 6,700 new jobs. (MH 3) P.P.

IT Federation points to streamlined tax regime

The Federation of IT Enterprises has asked the government to make sure that IT employees - many of whombelong to small and medium enterprises - are taxed under a new simplified scheme currently being introduced.The knowledge-based economy would benefit if thousands of IT consultants, experts and engineers could paytheir contribution under the simpler scheme, the federation's chief Zoltán Kovács said yesterday. The newsimplified tax and contributions scheme is part of a government attempt to bring people working in the black andgrey economies into the tax fold. The scheme taking effect in 2006 rolls personal income tax, health-care andpension contributions into one package worth 35% of an employee's income and will be paid by the employer.Kovacs said the IT and communications sector employed 5.76% of Hungary's total workforce and contributed21.7% to Hungary's exports. Hungary's 8,900-9,000 firms contribute 10% to Hungary's GDP, he added. (MTI; Nv5)

Gov't to raise public wages by 2-3% in 2006 - FinMin

The Hungarian government plans to increase gross wages in the public sector by 2-3% next year, after a 6%wage hike this year, Finance Minister János Veres told a meeting of the EU's Finance Ministers in Brussels onTuesday. Veres said the ministry's calculations are based on recently announced expectations of an inflation rateof less than two per cent next year, triggered by a drop in the value added tax. Based on that figure, a 2-3 % risein salaries would lead to a real wage increase over this year's, Veres said. (MTI; Vg 3)

Spain may open to Hungarian labor

Spain is ready to lift employment restrictions on the citizens of the new EU members including Hungary as of May2006, provided the European Commission's new labor market report and recommendations from Brussels for allof the EU-15 to do so, State Secretary for European Affairs Alberto Navarro told daily Magyar Hírlap. Navarro isconducting talks with Hungarian Foreign Minister Ferenc Somogyi and Minister Without Portfolio in charge of European Affairs Etele Baráth in Budapest. With its foreign labor force of 4 million including 200,000 Polish and400,000 Romanian workers, Spain is not afraid that Hungarian labor would flood the country if the ban were

removed, he said. However, he refused to say whether his country would welcome labor from the new EUmember states if the European Commission made no such recommendation as mentioned above. (MH 9) P.P.

Politics

Parties debate number of election rounds

Hungary's four parliamentary parties could not come to an agreement on whether general elections in the futureshould be conducted in one or in two rounds, Gábor Fodor, executive of the junior government coalition liberalparty SzDSz said yesterday. Speaking after a meeting convened as part of a series of talks initiated to reduce thesize of Hungary's parliament, the executive said that the decision had been postponed till after the summer holidays. Executive József Gulyás said the governing Socialist and the smaller opposition MDF parties supporteda single round system, while SzDSz and the senior opposition Fidesz wanted two rounds. (MTI; MH 1, Nv 3, Nb 4)

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'Pensioners' place ad on pension value

A pensioners' lobby group placed adverts in newspapers yesterday quoting statistics which purport to show thatpensions are worth more today than four years ago, daily Magyar Hírlap reported yesterday. The National Allianceof the Association of Hungarian Pensioners (registered at the same address as the senior government Socialistparty) put adverts entitled "Orbán talks, the pensioners count", the paper reported. The issue of the value of pensions came up in last Friday's televised debate between Prime Minister Ferenc Gyurcsány and former primeminister and senior opposition party Fidesz Chairman Viktor Orbán, during which Orbán claimed that his

government (1998-2002) had increased the buying power of pensions by 22%. The pensioners' ads claims that4% of this could be claimed by the Socialist government led by Péter Medgyessy, which entered office in thespring of 2002. Moreover, the ad insists that pensions are worth 30% more today than in 2001. According toMagyar Hírlap's calculations, the ads cost at least Ft 4 million. (MTI)

Domestic

Flood waters intensive on upper Hungarian rivers

Water levels of the Danube river in central Hungary and on the Körös and the Maros rivers (eastern Hungary) arerising, and flooding is intensive on their upper sections, the water management authority said yesterday. The lowembankments of the Danube in the capital will be closed for traffic on Thursday afternoon, the authority said. Theheavy rain caused considerable damage to houses, roads and railway tracks all over the country, and floodedbasements and ground floors of several buildings in Budapest. (MTI; MH 7, Nv 16, Nb 22)

Police to reward "good" drivers with beer

Drivers on roads in northern Hungary will be given cans of beer by the police on Thursday, provided that a routinecheck-up finds car and paperwork in order, a spokesperson of Borsod-Abauj-Zemplen County police said. Theinitiative is designed to raise public awareness of the perils of drunken driving, and to encourage drivers andcyclists to drink non-alcoholic beverages when thirsty, Ilona Kompolti Jakab said. The beer being handed out is, of course, non-alcoholic. (MTI)

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Haulage co's may raise prices by 10%

Hungarian carriers have reached their limits after the recent fuel price hikes, István Galambos, president of theHungarian Association of Road Carriers told Napi Gazdaság. According to Galambos, fuel costs have risen by Ft17 per kilometer in the past six months, and haulage companies, already drawing on their reserves to weather the

storm, will be forced to pass it on to their customers, thereby raising the average transport charges of Ft 170 per kilometer by 10%. However, given that Hungarian prices are still more than 10% higher than in the neighboringcountries, international carriers lack virtually all pricing power to do so. (NG 1, 4) M.H.

EBRD raises $49 mln selling OTP shares

The European Bank for Reconstruction and Development raised Ft 10.1 billion yesterday by selling shares in OTPBank Rt to fund managers, the first time the Hungarian lender's stock was offered since 1999. The London-basedEBRD sold 1.4 million OTP shares, or 0.5% of the Hungarian bank, through Credit Suisse First Boston, said AxelReiserer, a spokesman for the bank. The shares were sold at 7,225 forint apiece. (Bloomberg; NG 7)

Infopark building "C" officially opened

Etele Baráth, Minister of EU Affairs, officially opened the "C" building at Infopark-Budapest yesterday. Only 500 of the total of 12,700 sqm of office space has not yet been rented out. Companies renting space include FreeSoft Rt,

Nissan Sales Central & Eastern Europe Kft and T-Systems Hungary Kft. The "C" building was built by Strabag Rt,and designed by Épitész Studio Kft. Construction of the "D" Infopark building, which will have 17,000 sqm of rentable space, will begin this autumn and is scheduled to be completed early in 2007. The developer of Infopark-Budapest is IVG Immobilien, one of Europe's largest property development, investment and propertymanagement companies. (Econews)

Raiffeisen's 3rd money market fund

The State Financial Supervisory Authority (PSzÁF) has approved the launch of the new Raiffeisen GuaranteedMoney Market Fund, Napi Gazdaság reports. According to the newspaper, the fund will be a classical moneymarket liquidity fund with its assets invested exclusively in bank deposits. Each month, the bank will announce aguaranteed rate of return applicable for funds invested from the first day of the month through the last. Themanagement fee will be less than 1.5% while trading in the shares of the fund will be free and redemption will costFt 500. (NG 7, 8) M.H.

New vehicle sales down 9.4% yr/yr in H1

Sales of new cars and sports utility vehicles were 9.4% down in H1 2005 compared to the same period last year,according to figures published by the Association of Hungarian Vehicle Importers yesterday. The H1 fall waslarger than the Q1 yr/yr decrease of 7.4%. Dealers sold 94,642 new cars and SUVs in H1 2005, compared to104,439 in H1 2004. Last year, a total of 208,044 new cars and SUVs were sold in Hungary, 0.2% fewer than in2003, the first annual decline for ten years. Suzuki was again the market leader, selling 20,528 cars in H1 2005,based on wholesale figures. (Econews; NG 4, MH 11)

Union Insurance H1 revenue up 55%

Union Insurance Rt had revenue from premiums of Ft 7.3 billion in H1 2005, 55% more than in the same period of 2004, chairman and CEO Miklós Zsoldos announced yesterday. The company plans annual revenue frompremiums to grow from Ft 9.6 billion in 2004 to Ft 15 billion this year. Union has launched 50 new products over the past five years and has expanded into the vehicle, property and travel insurance markets. Union will financethe strong growth through a recent Ft 1 billion capital injection from its parent company, Wiener StadtischeInsurance AG. One-sixth of the fresh capital (Ft 166 million) will be used to raise the company's registered capitalfrom Ft 4.2 billion to Ft 4.366 billion. The remaining Ft 834 million will go into capital reserves, raising them to Ft 7billion. (Econews)

MOL will not up Energopetrol stake price

MOL Rt rejected the Bosnian government's request to raise its offer for a majority stake in Energopetrol by aboutEuro 10 million euros. The Balkan country's government asked MOL to spend KM 80 million ($49 million) insteadof KM 60 million on repaying Energopetrol's debt and to compensate by cutting its investment program, saidSándor Kántor, a MOL spokesman. MOL is vying with companies including Austria's OMV AG and Russia's OAOLukoil for customers in Eastern Europe, where economies and fuel use are growing faster than in the west. Thecompany will not reduce investment because it plans to upgrade Energopetrol, Kántor said. (Bloomberg; Thurs.Vg 1, NG 7)

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Feratel purchases 54% of Hungarorama

Innsbruck-based Feratel Media Technologies AG has bought an additional 54% stake in the live webcamcompany Hungarorama Média Kft, increasing its shareholding to over 80%, the Austrian news agency APAreported. The remaining 20% is owned by two Hungarian investors. Hungarorama had revenue of Euro 600,000in the 2004/2005 business year. The company provides live panorama footage using 11 cameras set up allaround Hungary. The footage also gives information on the location's weather and cultural and tourist attractions.The service is used by DunaTV and HirTV as well as being available on the internet. (Econews)

Sales of breweries dropped 11% last year

Breweries in Hungary sold 11% less beer last year than the year before, the chairman of the Hungarian breweries'association told the press yesterday. Sales of Hungarian breweries totaled 7.3 million hectoliters last year asagainst 6.5 million hectoliters the year before, Elemér Kiss said. The drop has resulted from the combined effectsof EU accession, high taxes and changes in consumer habits, Kiss said. Beer imports grew from 2003's 477,000hectoliters to 965,000 hectoliters last year and tax on beer is as high as 40%, he added. Kiss said he hoped thatthe excise tax on beer would not be raised next year and noted that the government's planned VAT cut may helpHungarian brewers increase sales. (MTI; MH 2, NG 5, Nv 5, Nb 11)

Environmental guidelines for pharmaceuticals

The Environment Ministry has drawn up environmental guidelines for the pharmaceutical industry, deputy statesecretary Robert Rakics announced yesterday. The guidelines include an outline description of the technologyrequired by the EU's Integrated Pollution Prevention and Control (IPPC) directive. Companies have untilNovember 2007 to comply with the EU directive, Rakics noted In 1998, it was estimated that Hungary'spharmaceuticals industry would have to spend Ft 26 billion by 2010 on environmental protection in order tocomply with EU directives, István Orbán, head of the Association of Pharmaceutical Manufacturers, said.(Econews)

Wine squad to sniff out fake wine

The Agriculture Ministry has declared a tight check on wine sales, announced János Karakas, counselor to the Agriculture Minister yesterday. During the raid starting in two weeks the experts of National Wine ClassificationInstitute (OBI) will examine the price-value ratio of wine in the six largest retail chains. They are also charged withthe detection of fake wine. Traders are puzzled, and the stores are indignant about the decision. In related news,the government has requested EU financial support for plans to distill 50 million liters of surplus wine, aspokesman for the Agriculture Ministry said yesterday. (Nb 11, Econews; MH 11) K.H.

GySEV transporting Austrian freight

A substantial part of Austrian railway freight will soon be transported on Hungarian lines. The Austrian andHungarian transportation undersecretaries will today sign the letter of intent, reports Népszabadság. Freight trainsbetween Vienna and Graz have difficulty in climbing the Simmering Mountain, and the eastward route crossingHungarian borders is the most economic solution. The Austro-Hungarian railway company GySEV Rt took over the Sopron-Szombathely section from Hungarian state-owned MÁV Rt some years ago and renovated it.However, the 53 km long Szombathely-Szentgotthárd section, also to be operated by GySEV, still needsrenovation, which will cost Euro 60 million and be jointly financed by Hungarian and Austrian states. The Simeringby-pass route is expected to be finished in 3 years and will make way for freight transport of 2 million tons morethan before, said GySEV president András Szabó. (Nb 1) K.H.

Hollóház Porcelain to be sold through negotiations

The State Privatization and Holding Company Rt (ÁPV) will try to sell the Hollóház Porcelain Rt company throughnegotiations, ÁPV announced yesterday. The decision follows two unsuccessful attempts to privatize thecompany by inviting formal bids. Potential buyers have until July 22 to express an interest. The ownership of Holloház Porcelain was transferred to ÁPV from the Hungarian Development Bank Rt (MFB) in 2003 on conditionthat ÁPV sell it by the end of 2005. Hollóház Porcelain had losses of Ft 64 million in both 2002 and 2003. Thecompany broke even last year on sales of Ft 1 billion, and expects to make a profit this year. (Econews)

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Public channel plenty squeezes cable TV

The number of public TV channels may rise to seven shortly from the current three if the Hungarian Television Rt(MTV), though struggling with financial difficulties, were to decide to launch its long-announced channelDemokrácia. MTV has also indicated that they intend to participate in the operation of the new joint culturalchannel of the V4 countries. Leaders of Duna Television Rt have indicated on their visit to the media authority thatthey are planning to transmit their two new channels not only over the internet but via satellite as well. Cablecompanies, which are already operating at full capacity, would be upset if they had to replace popular and

profitable stations with as yet unknown and perhaps less attractive channels, since by law, they must transmit allpublic channels. Unless the media authority decides otherwise by the end of August, the channel Demokrácia willhave to be registered. (Nb 1) E.C.

Strike at Kossuth printing house, Szeged

Workers at the Szeged Kossuth Printing House Kft are on strike again because the company has not paid twomonths' worth of wages, business daily Napi Gazdaság reports. According to the newspaper, workers demandthat wages for at least May be paid before calling off the strike. Tibor Névery, company director, told the daily thata part of the wages had already been transferred on Thursday, but more than Ft 10 million is still owed. At thesame time, according to klubradio.hu, the company also has unpaid receivables to the tune of tens of millions of forints. (NG 5) M.H.

Public procurement law to be amended

Parliament is to discuss public procurement law amendments in autumn. The EU directives drawn up last year have to be applied to Hungarian law by 31 January 2006 at the latest, and this will mean amendments to the 2003Hungarian law. The changes will not be deep but will be quite numerous. Companies with directors who havebeen convicted will certainly be excluded from public procurement tenders, say experts. New procedures will beincluded, such as the competition dialogue and framework-agreement as well as two electronic options: thedynamic procurement system and the electronic auction. The amendment will allow the division of building andservice procurements, said Pál Kerekes, managing director of Tenderker Bt. (Thur. Vg 5) K.H.Economics

Government reduces revenue target

The Finance Ministry has revised its revenue target for the year downwards in the light of recent unfavorable data,reports Napi Gazdaság. A major factor behind this is disappointing VAT revenues, which have reached 36.8% of

the annual target in the first half of 2005, compared to 41.3% in the same period of 2004. The ministry will requestthat the National Tax Office (Apeh) steps up its VAT inspection efforts. Revenues from the sale of state assets isalso expected to be lower, while other revenues from companies and from social security contributions areexpected to be higher. All in all, the ministry still expects to achieve its target of an annual deficit of 4.6% of GDP.For this to happen the budget balance in the last quarter would have to be positive, which is likely, says theministry, given that the surplus in the last three months of 2004 also reached almost Ft 100 billion. (NG 3) M.H.

FinMin forecasts Ft 28.8 bln general gov't surplus

The Finance Ministry forecasts a cash flow-based general government surplus of Ft 28.8 billion in July, bringingthe seven-month deficit to Ft 959.3 billion or 93.8% of the target for the whole year. Nine-month GFS generalgovernment deficit forecast is Ft 1,083 billion as compared to a full year target of Ft 1,022.8 billion. Thegovernment, excluding local councils, registered a GFS cash flow-based deficit of Ft 150.4 billion in June. Thefigure brings the six-month fiscal deficit to Ft 988.1 billion, as compared to the ministry's Ft 985 billion forecast.

The deficit amounts to 96.6% of the full-year target. (Econews; NG 3)Unemployment to grow - Finance Ministry

The Finance Ministry says current unfavorable trends on the labor market could well continue, Napi Gazdaságreports. According to its recent macroeconomic report, the Ministry expects unemployment to be at 6.5% thisyear, 0.4% higher than the preliminary data for 2004. At the same time, the number of people employed mightgrow by 0.5% this year compared to a decrease of 0.5% last year, although the ministry says stagnation is just aslikely. (NG 3) M.H.

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Gov't spends Ft 540 bln on procurement in H1

The government decided to spend Ft 540.1 billion through 2,248 public procurement tenders in the first half of thisyear, Ft 9.5 billion less than in the same period of 2004, the chairman of the Council for Public Procurement toldthe press yesterday. Companies based outside Hungary won 39 tenders for public procurement in the first sixmonths of this year, representing 3.2% of the total value of tenders as against 21% in the same period of lastyear, Lajos Berényi said, adding that foreign bidders received equal treatment as Hungarians. Small and medium-sized companies won 57.3% of all public procurement tenders in the first half of 2005, as against 34.3% in the

same period of last year, Berényi said. (MTI; NG 3, Nv 5, MH 11)Politics

EconMin orders investigation into leak

Economy Minister János Kóka has ordered an investigation into leaked data on investment incentives that areclassified as state secrets. Népszabadság, the daily that on Wednesday featured an article based on the leakedinformation, stated that it was unaware that the information published was classified as secret. The minister saidthat figures quoted in the article were not the actual amounts offered to potential investors but the upper limit of incentives available, which is classified information. Káka added that publishing the upper limits could cause hugefinancial damage to Hungary. Kóka added that some figures given in the article were incorrect. In response toKóka's announcement, Népszabadság deputy editor Ervin Tamás said the paper had not yet received officialnotification of the investigation and have no information to suggest that the figures published were classified assecret. However, the public should be informed of these figures just as much as of those disclosed by the minister in press conferences, he added. (Econews, MTI)Domestic

M7 motorway section opens today

The Balatonszárszó-Ordacsehi section of motorway M7 is to be opened for traffic early this afternoon to bothdirections. The 20 km-section cost Ft 65.1 billion to build. The unusually high construction expenses are attributedto the tough terrain of the area, and over 4.5 million cubic meters of earth had to be moved. By end 2006, a totalof 511 km of motorways will have been built and in 2007 the Hungarian motorway network will be extended byanother 193 km. (Nv 1) E.C.

ARC hoarding show set for August

As has been traditionally, Budapest will host the 6th ARC hoarding exhibition on Felvonulási tér from August 4-24.

The organizers have received a total of 1557 designs for the competition, from a wide range of entrants, theyoungest being 13. Out of the 1557 hoardings, 68 have been selected to be displayed. Last year, the expensesranged Ft 80 million-Ft 100 million. This year, the organizers can expect an increase in sponsorship. (Nv 6) E.C.

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Three final bids for Antenna Hungaria

Three of the six shortlisted bidders - the Macquarie consortium, Österreichischer Rundfunk (ORF) and SwisscomBroadcast - have submitted bids for the broadcasting company Antenna Hungária in the final round of bidding,which closed on Friday. On Friday, the State Holding and Privatization Company (ÁPV) announced that it expects

to select the winner by the end of July. ÁPV is offering a 75% plus 1 vote stake in Antenna Hungária, of which73.71% (nominal value Ft 8.754 billion) is currently held by ÁPV and 1.29% (nominal value Ft 152.84 million) isheld by Forrás Rt, part of the Arago group. The six bidders that got into the second round were: Abertis Telecom,Ceske Radiokomunikace, Macquarie consortium, Österreichiser Rundfunk (ORF), Swisscom Broadcast and TdFTelediffusion. (Econews; NG 7, Fri. Vg 13)

Vegyépszer has Ft 2 bln half-year profit

Construction company Vegyépszer Group reported after-tax profit of Ft 2 billion on net revenue of Ft 35 billion inthe first six months of this year, chairman-CEO Gyula Tímár announced. The group's major company Vegyépszer Rt had net revenue of Ft 29 billion and after-tax profit of Ft 1.5 billion in the same period, Tímár said. Vegyépszer Group plans total net revenue of Ft 75 billion for this year and the after-tax profit is expected to reach Ft 4.5 billion,Tímár said. (NG 4) M.K.

Logistics co. invests Ft 1.1 bln in LébényFreight forwarding and logistics company Transdanubia Kft will set a up a logistics center in Lébény, westernHungary, Managing Director István Horváth said. The investment is worth Ft 1.1 billion, and during the first phase,a 4,000-sqm center will be constructed by the Austrian-owned company. The warehouse will support the regionalexpansion plans of the German Kromberg & Schubert GmbH, a wiring harness production firm. Transdanubiasaid it would hire 20 new employees, and added that later the workforce might increase to 40-50. (Fri. Vg 11) P.Ö.

Gov't tightens up on construction

Measures aiming to clean up the construction industry took effect from Friday, resulting in more administrationand tighter control. At present the construction sector has 270,000 legal and 80,000-100,000 illegal workers, paidFt 500 billion in wages with no contributions or tax. Constructors will now have to provide detailed data for all theprojects whose net value exceeds Ft 10 million, 8 days before the construction starts. This also applies to

projects involving public procurement, e.g. roads, bridges, pipelines and drain systems, regardless of their value,said Sándor Fegyverneki, vice-president of National Housing and Construction Office (OLÉH). Irregularities willearn fines of Ft 50,000 - Ft 10 million. In autumn the government will set up the minimum wage table for thesector. (Thu. Vg 3) K.H.

Malév sets up subsidiary for fuel supplies

Friday's EGM of Malév Hungarian Airlines Rt approved the creation of a subsidiary to manage supplies of aviationfuel. The new company, Repulotéri Üzemanyag Kiszolgató (RÜK) Kft has registered capital of Ft 3 million. Malévholds 96.6% of RÜK and a Malév subsidiary Air Budapest Club Kft holds the remainder, Malév spokespersonKristina Németh said. RÜK will be responsible for ordering, storing, selling and supplying kerosene at Ferihegy,Sármellék and Debrecen Airports, Malév announced. Malév will put the vehicles and equipment required tosupply kerosene into the new company as a non-cash contribution. This will raise RÜK's registered capital to Ft308 million, Németh said. Malév will receive kerosene from RÜK through a co-operation contract. Malév supplies

220,000 tons of fuel a year to Ferihegy Airport, 60% of which is used by the airline itself. (Econews)MTelekom fined for breach of ad laws

The Competition Office GVH has fined Magyar Telekom Rt Ft 8 million on the grounds that its advertising of the"Teleperc" package could mislead consumers, GVH announced on Friday. The competition office ruled thatMagyar Telekom advertised its "Teleperc" package as the cheapest on the market. According to GVH, this wasnot the case, since other telecom companies offered lower prices. GVH also ruled that Magyar Telekom'scomparison of its package and a similar Invitel package was invalid as it failed to note that one company usessecond-based billing while the other uses a minute-based method. (Econews; NG 4)

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Ferihegy-1 to reopen on September 1

The reconstructed terminal 1 of Budapest's Ferihegy Airport will reopen for passenger traffic on September 1 asscheduled, the CEO of airport operator Budapest Airport (BA) Rt said on Friday. The 24,000-sqm terminal, built inthe 1940s and renovated over the last nine months, will receive 2.5 million passengers each year, János Hárskútisaid. Initially, the costs of the project were budgeted at Ft 8.7 billion, but extra works are likely to have contributedto an overshoot, he said. The number of passengers using the airport has risen exponentially, said Hárskúti.Budapest Airport is committed to making Ferihegy the most rapidly developing airport in Central Europe, he

added. The company is fully state-owned and a 75% stake plus one share has been offered for sale by the StatePrivatization Agency. (MTI)

Program to spend Ft 64 bln on urgent road works

A National Road Reconstruction Program (NÚP) is being prepared for 2005-2015 by the Road AffairsCoordination Directorate (Úkig) of the Economy and Transport Ministry, according to unnamed sources. NÚP willfocus mainly on the national network of roads, a Ft 7,000 billion national asset in poor condition. During the firsttwo years, the urgent reconstruction works will cover 5,000 km of roads at a projected cost of Ft 64 billion. The2005-2006 project will improve the state of around 16% of the network. (Fri. Vg 3) P.Ö.

Chambers employ factoring co's

Chambers of industry all over the country have been commissioning debt collectors or selling their debt tofactoring companies because of outstanding membership fees, which were compulsory for members prior to2000. Over the past couple of years, around 80,000 businesses in Budapest alone have been approached byeither debt collectors or factoring companies. The outstanding membership fees of the Budapest Chamber of Commerce and Industry (BKIK) is said to surpass Ft 1 billion. (NG 1) P.Ö.

BKV revenue up in 2004

Budapest Transport Company BKV Rt had consolidated revenue of Ft 59.43 billion last year, Ft 4.1 billion morethan in 2003, BKV deputy CEO Tamás Szentgyörgyi said. BKV managed to cut its operating losses from Ft 26.83billion in 2003 to Ft 24.12 billion last year but consolidated pre-tax losses grew from Ft 25.14 billion to Ft 26.97billion. BKV received subsidies of Ft 18.69 billion last year, as against Ft 18.83 billion in the previous year,Szentgyörgyi said. BKV's consolidated liabilities, not all of them loans, rose dramatically from Ft 30.43 billion to Ft61.56 billion last year. Long-term liabilities increased from Ft 12.26 billion to Ft 32.26 billion. The companyexpects its debts to reach Ft 60 billion by the end of 2005. BKV will require new loans to repay maturing loans andto pay suppliers who were owed money at the end of 2004. In related news, BKV plans to purchase 22 new metrotrains at a cost of Euro 174 million, and its request for financing of Euro 85 million to the European InvestmentBank is now being considered, the bank said on its website on Friday. (Econews; Fri. Vg 1, MH 3, NG 4, Nv 4, 5)

Liquidator splits Bábolna

Reorg Rt, the liquidator of debt-ridden state agricultural conglomerate Bábolna Rt, is preparing to sell a coldstorage facility in Nagyigmánd, northwestern Hungary, which is owned by a Bábolna subsidiary comprising thelatter's profitable activities. Bábolna Food Industries Rt will divest the assets, equipment and employee base of the refrigerated warehouse, while retaining its stock. The transaction is to be managed by Reorg subsidiaryReorg-Audit Kft, which will accept bids until August 19. All privatization revenues from Bábolna Food Industrieswill go towards repaying the parent company's Ft 30 billion debt. (Nv 5) P.P.

Court ruling on Kartonpack assets comes into force

The ruling of the Pest Central District Court which freezes Kartonpack Packaging Rt's assets has become legallybinding, the company announced on the Budapest Stock Exchange website on Friday. In a decision dated May 5,the court froze the accounts of several companies with connections to Attila Kulcsár, the broker accused of embezzling billions of forints from K&H Equities Rt. Among them were Britton Capital and Consulting, which owns61.9% of Kartonpack shares, Kartonpack itself and Kartonpack subsidiary Novoprint Rt. Kartonpack's EGM onJuly 5 authorized the board to lease out all of their assets. The terms of the leases could be set by the board inline with the company's financial interests, and in harmony with the expectations of its shareholders and theauthorities, the company announced. Apparently the EGM's decision was never implemented because thecompany has not announced any subsequent asset deals on the BSE website. (Econews)

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Textbook publisher doing better

National Textbook Publishing (NT) Rt managed to stop its 10% market loss and will perform a Ft 5 billion netrevenue this year, CEO István Jókai announced. NT plans to sell 7.7 million school books and related productsthis year to increase its revenue, which was Ft 4.5 billion last year, Jókai said. The company has upgraded its ITsystem and reconstructed its website to attract more clients, Jókai said. The Hungarian textbook market isestimated to be worth around Ft 15 billion. (NG 4) M.K.

OTP Real Estate fund's assets at Ft 46 blnThe net value of OTP Real Estate Fund's total assets reached Ft 46.4 billion in June, up from Ft 42 billion four weeks before. OTP has problems with the strong capital increase, as its new investments require time to carryout. The fund has financed more flats in Vérhalom residential park, Dist. 2 in June and has a warehouse andoffice building complex built in Szölökert utca, Dist. 3. The first leasing contracts of the Szölökert utca constructionhave just been signed. (NG 7) M.K.

Economics

Industrial output up adjusted 10.1% yr/yr in May

Hungary's industrial output rose 10.1% in May from a year earlier, according to work-day-adjusted figures, theCentral Statistics Office (KSH) reported on Friday. The increase was driven by an adjusted 13.1% rise in domesticsales. Work-day-adjusted export sales volume rose 7.3% yr/yr. Unadjusted figures show industrial output rose by

12.9%. The annual figures are unchanged from preliminary data reported on July 7. However, KSH revised downthe monthly growth of industrial production to 1.4%, according to seasonally- and working day-adjusted figures,from a preliminary 3.1%. Domestic sales rose 3.3% from April, exports, however, were down 1.2%. In the first fivemonths of the year industrial output rose 5.4% from the same period a year earlier. Export volume rose 6.3% anddomestic sales volume was up 5.1%. (Econews; NG 3)

Business confidence down in June

GKI-Wallis's combined consumer-business confidence index fell to an all-time low of minus 21.7% in June, GKI-Wallis announced. The negative record is due to the steady decline of consumer confidence, whereas businessconfidence has been stagnating since April. The confidence of companies employing less than 50 people is muchworse than that of the mid-sized firms and the big players, while consumers expect a deterioration in their financial situation during the upcoming 12 months. GKI-Wallis's confidence index has been calculated since 1996.(Nb 11) P.Ö.

Counterfeit banknotes not to compromise cash flow

The relatively low number of counterfeit banknotes discovered in Hungary does not compromise the security of the country's cash transactions, the Hungarian National Bank's (MNB) quarterly report said. In the first quarter of 2005, nearly 5,000 fake banknotes were seized by the authorities, which marks a 25% decrease from the sameperiod of last year, the report said, adding that 62% of the notes were for Ft 1,000. Counterfeit notes, as a rule,are home made color prints or Xeroxed copies, the document added. Hungary joined the European CentralBank's Counterfeit Monitoring System, thus becoming an active partner in a European institution fighting forgery.(MTI; MH 3, Nv 4, Nb 11)

Producers' milk purchase price drops in June

The average purchase price of milk that farmers received for milk sold dropped from Ft 62 to Ft 60.54 in June,said Szabolcs Vágó, analyst at the Agricultural Economy Research Institute. This figure is only an average, since

some farmers may receive Ft 64 for their milk, while others only Ft 57, Vágó said. Various interest representationorganizations will convene to discuss the issue, one proposal being to increase the Ft 4-5 EU subsidy, since other EU producers may receive three or four times more than that, Vágó said. Currently the price of a liter of milkfloats between Ft 120-189 in retail outlets. (NG 10) M.K.

Politics

Fidesz calls for stronger sugar protection

The opposition Fidesz party has called on the government to take steps in the EU on behalf of the country's sugar producers, an agricultural expert of the party said on Saturday. Planned measures by the European Commissionto cut sugar prices and reduce quotas may result in 10,000 fewer jobs in Hungary's sugar industry, Zoltán Lengyeltold journalists. Lengyel said that the Hungarian government's request merely to modify the commission'sproposed measures, while most EU member states firmly rejected them, was "insufficient". The EC plans to slash

the subsidies it gives to sugar producers by up to 39%. (MTI; MH 3)

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Radio presidency in legal tangle

The trustees of public radio station operator Magyar Rádió Rt (MR) meet today to remedy the legal vacuum thatwill arise when the term of current MR President Katalin Kondor expires at the end of July. Controversy arosewithin the board of trustees (consisting of delegates of political parties and civil organizations) because Kondor appointed MR Vice President János Hollós to take over the management of the radio station as Acting Presidenton expiry of her mandate. Those trustees who are Socialists believe this is against the law, MSzP-delegatedchairman Gábor Gellért Kis said. (Nv 3) P.P.

Domestic

State to be sued for Swiss account money

An unnamed Hungarian citizen from Pécs has announced plans to launch a legal battle against the Hungarianstate in September to reclaim a deposit made by his grandfather's brother before WWII, to which he is heir. Theaccount in question was regarded as a "passive deposit" and nationalized by Hungary after the war as no moretransactions were conducted by the lawful owners. In 1973, the Hungarian state transferred them to Swiss stateownership, in exchange for which the latter reduced Hungary's 1.8 million-franc debt for nationalizing Swiss-owned property by 325,000 francs. The State Asset Management (KVI) has contacted the descendants of theaccount holders, but no disbursements have been made to date due to a legal vacuum, according to KVI LegalDirector Balázs Vereby-Csethe. (MH 6, Nv 4) P.P.

Ft 50 bln for Orczy Garden

The Budapest City Council and the municipality of Dist. 8 are planning to upgrade the 11-hectare Orczy Gardenfrom its current state of decay into an attractive recreational area consisting of a public park, cultural and leisurefacilities, the district's Vice Mayor Zsuzsanna Mitus said. The plan will require a hefty investment of Ft 45 billion-Ft50 billion, to be financed jointly by investors and the municipalities, which are also hoping to draw on EU funds.The project forms part of the mid-term development plans of Budapest, the Podmaniczky Plan, and the SecondNational Development Plan. The landscaping phase will be preceded by replacing contaminated soil in part of thearea, which is currently used as a bus garage by public transport operator BKV Rt. This alone will cost Ft 2.4billion and take two years, Mitus added. (Nv 12) P.P.



7days, 2005. július 18

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