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BBJ

SPECIAL REPORT:

Telecoms & IT

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MVNOs, (MT), the largest mobile providers, of Magyar Telekom in Hungary and its which use the frequency telecom company it is ready are also provider, says leading mobile another company, that might threaten a piece of to face any challenge Yet, at this point, looking to claim entrant is will its incumbent position. how competition the pie. The latest it’s hard to say UPC, which out. cable TV provider and ultimately play already competitor seriously, stepped onto the “We take every market DIGI to enter the stage in March it the intention of crowded mobile However, the frequency agreement good is no exception. 2015, through an enough to provide purchased is not frequencies with nationwide use it lets services that quality mobile them to offer somea licensed to Vodafone. may says coverage. We expect existing clients,” Its biggest strength UPC service to their MT. statement from existing market. its Fejos) been anticipating be has Jessica market (Photo: DIGI The mobile cellphone tower. a year, ever sincemobile is the leader in providing for now: A T-Mobile big change for in Hungary, Network Above the rest, rights to obtain television services National Telco has purchased the operating the of 26.7%, the government Now mobile services with a market share frequencies. Nowspeculation, with the (NTN) since 2012. its portfolio, thanks National to a stateadded to that according to the telecom will be added that it will develop thing “We take every competitor ations with Chinese announcement to cooperation of Media and Telecommunic network. The only Huawei. is more funded mobile equipment maker clients served by the is that movement seriously, and the intention Authority. That makes that seems certain mobile sector, but it is “The number of types of market is no subject to the than 900,000 potential afoot in Hungary’s the moves will come, DIGI to enter the network will be users. Its UPC says it distribution of hard to judge when be. customers, and services and the provision might them by is exception.” restricted to data or how big they with purpose will be mobile market is trying to tempt essentially usage told which services by At present the and shall enable T-Mobile brand, “developing special can take aims,” MVM NET the in Romania. dominated by MT’s and a 4G in its home market market by closely specified “Therefore, mobile market which our subscribers that of the pursued has 46% of the kept BBJ in a statement. services on that reaches 95% But no the DIGI has dominated of users can be broadband network home their landline its competitors. needs and behavior two mobile player for traffic under way, and under control and the demand mobile”. country. The number 31% of the market, undercutting is UPC their with mass recruitment is Wi-Free, a precondition volumes should be easy to plan.” here is Telenor, with 22%. staff would be One such example Wi-Fi reach full operability portfolio to Virutal building followed by Vodafone social DIGI’s existing The project should can be several Mobile The network a free-of-charge There are also operate to expanding service. LTE450 by March 2016. (MVNOs) who a quality that lets you switch the inaction may ready quickly because it uses network for Network Operators without their own offer of your home A fair explanation allows full nationwide mobile networks instead those licensed waiting for a reduction on the service via free by technology, which fewer base stations be that DIGI is is set to enter for with a lot frequency, using Some supermarket frequency modem and surf on landlines, whichDIGI sheds that coverage case of higher firm that to another company. business in a small taxes Once available it than in the this logging into any into force in 2016. Hungária Zrt., a cable business, chains are into there are ranges. Antenna player is the country’s burden on its existing acquired by to push down hotspots, of which towers and was fashion, but a bigger UPC. (See box.) and millions be better positioned for gaining owns radio year, has been charged with firm, leading cable TV now holds a 23% share would 360,000 in Hungary the state last prices, a must Huawei will DIGI Kft., which and has increased its consumer out the work, while companies in Europe. share. say tax carrying solution is years, market technology. Both bln project in cable TV services mobile providers to supply the in the past seven Another innovative The three main the HUF 12.8 revenues by 300% a mobile frequency last for freeing up capacity enables UPC were hired for for PC Phone. The app the rates any cuts are essential Digital Hungary without public procurement. must have bid the enjoy But it has not taken achieve the government’s its way around household should fall for a reason. mobile users to Huawei knows market as it helps with actual network whereby every by 2018. home phone. measures to proceedspokesman could only Agenda, and offered for their Hungarian mobile high-speed broadband matter, pays network development its that the have building. The firm’s Vodafone with Telekom, for that Business Journal MT to extend tell the Budapest the position to comment Magyar sector-specific taxes totaling is working together with have alleged has experience in so-called their own spy networks, the Chinese company is not year, and the landline broadband network. It also for the off by assists 30-35 billion a company technology HUF the issue. that. LTE450 the that on part of its customers – developing governments, and government in spying on tax is only a small Brazilian and Russian the company denies. in Finland. raised charges case of MVM NET, highly for a private firm Waiting for tax cuts? of Huawei has do Enter government In the The involvement since in the past data will be dealt leave room to front investment however, does, services asked to sensitive however, a small That on the mobile networks. When India, Canada, the eyebrows, Pundits see only with over the declined to some guesswork. would be willing to rent Eventsanother twist recently with in the U.S., U.K., player officials reportedly voiced elaborate on its role, Huawei chance that DIGI to a small MVNO, like took that a state-owned NET and Australia have of Huaweiʼs announcement make a statement. arena. MVM about the security out its frequency be entering the ns concerns Lidl’s Blue Mobile. apparently tipped Tesco Mobile or scenario, would been pursuing telecommunicatioby networks. U.S. officials, a more likely same Zrt. has for government purposes According to to engage in the DIGI may be ready price war that the firm activities kind of aggressive

Telecoms & IT

Business Journal Budapest

Vol. 23. number 19

oct 16, 2015 – OCT 29, 2015

Hungary’s practical business bi-weekly since 1992 | www.bbj.hu

HUF 1,250 | €5 | $6 | £3.5

Special Report

Connected to the world

Waiting for a shakeup in telecoms market No one can say when DIGI will use its frequency license to provide mobile access – or why it hasn’t done so yet. And that’s only one question mark hanging over a sector that seems very much in flux. 16 news

Analysts surprised as prices stay down While they are still scratching their heads over the CPI’s continued decline, local market watchers say they are certain that inflation will kick in soon – perhaps even by the end of October. 3

Photo MTI / Szilárd Koszticsák

special Report

Things fall together in the new IoT

PM Viktor Orbán calls for a ‘Google tax’ at the opening of the UN’s October 12-15 conference on ICT, which brought global players to Budapest. 18

News

BBJ_2319_news.indd 1

Evermore Hungarians are developing applications for the Internet of Things, which allows us to keep in touch with our machinery, and even makes it possible for machines to talk with one another. 19

business

A call for help as refugees keep coming

Foreign business is his business

E-tickets ready to change the Metro

NGOs seeking to help the refugees passing through Hungary complain about policies that let the country shirk its duties to asylum seekers, as they call on the government to provide more assistance. 6

In an exclusive interview, the vice president of the Hungarian Investment Promotion Agency talks about the challenges of bringing in FDI – and explains why this country is a great place to do business. 15

The head of the company installing the new ticketing system for Budapest’s public transportation explains how things will change by 2017 – and why it will mean increased ridership and higher revenues. 12

2015.10.14. 20:08

www.bbj.hu

Budapest Business Journal | Oct 16 – Oct 29, 2015

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Telecoms & IT

Movement expected

Subscriptions

Report

in the mobile market

mobile success Apart from the

three main

MVNOs, (MT), the largest mobile providers, of Magyar Telekom in Hungary and its which use the frequency telecom company it is ready are also provider, says another company, leading mobile that might threaten a piece of to face any challenge Yet, at this point, looking to claim entrant is will its incumbent position. how competition the pie. The latest it’s hard to say UPC, which out. cable TV provider and ultimately play already competitor seriously, stepped onto the market “We take every DIGI to enter the stage in March it the intention of crowded mobile However, the frequency agreement good is no exception. 2015, through an enough to provide purchased is not services with nationwide that lets it use frequencies quality mobile them to offer somea licensed to Vodafone. may says coverage. We expect existing clients,” Its biggest strength UPC service to their MT. statement from Fejos) be its existing market. has been anticipating (Photo: Jessica DIGI The mobile market cellphone tower. a year, ever sincemobile is the leader in providing for now: A T-Mobile big change for in Hungary, Network Above the rest, rights to obtain television services National Telco has purchased the operating the of 26.7%, the government Now mobile services with a market share frequencies. Nowspeculation, with the (NTN) since 2012. its portfolio, thanks National to a stateadded to that according to the telecom will be added that it will develop thing “We take every competitor with Chinese announcement to cooperation of Media and Telecommunications network. The only Huawei. is more funded mobile equipment maker clients served by the is that movement seriously, and the intention Authority. That makes that seems certain mobile sector, but it is “The number of types of market is no subject to the than 900,000 potential afoot in Hungary’s the moves will come, DIGI to enter the network will be users. Its UPC says it distribution of hard to judge when be. customers, and services and the provision might them by is exception.” restricted to data or how big they with purpose will be mobile market is trying to tempt essentially usage told which services by At present the and shall enable T-Mobile brand, “developing special can take aims,” MVM NET the in Romania. dominated by MT’s and a 4G in its home market market by closely specified “Therefore, mobile market which our subscribers that of the pursued in a statement. has 46% of the kept services on that reaches 95% But no the BBJ behavior of users can be DIGI has dominated broadband network home their landline its competitors. traffic two mobile player and needs and the demand for country. The number 31% of the market, undercutting is under way, their UPC mobile”. is Wi-Free, under control and with mass recruitment a precondition volumes should be easy to plan.” here is Telenor, with 22%. staff would be One such example Wi-Fi reach full operability portfolio to Virutal building followed by Vodafone social DIGI’s existing The project should can be several Mobile a free-of-charge 2016. The network LTE450 There are also operate to expanding service. you switch (MVNOs) who a quality may by March it uses network that lets for the inaction of ready quickly because Network Operators without their own offer A fair explanation your home allows full nationwide mobile networks instead those licensed waiting for a reduction on the service via free by technology, which fewer base stations be that DIGI is is set to enter for with a lot frequency, using Some supermarket frequency modem and surf on landlines, whichDIGI sheds that coverage case of higher firm that to another company. business in a small taxes Once available it than in the this into force in 2016. logging into any Hungária Zrt., a cable business, chains are into there are ranges. Antenna player is the country’s burden on its existing acquired by to push down hotspots, of which towers and was fashion, but a bigger UPC. (See box.) and millions be better positioned for gaining owns radio year, has been charged with firm, leading cable TV now holds a 23% share would 360,000 in Hungary the state last prices, a must Huawei will DIGI Kft., which and has increased its consumer out the work, while companies in Europe. share. say tax carrying solution is years, market technology. Both bln project in cable TV services mobile providers to supply the in the past seven Another innovative The three main the HUF 12.8 revenues by 300% a mobile frequency last for freeing up capacity enables UPC were hired for for PC Phone. The app the rates any cuts are essential Digital Hungary without public procurement. must have bid the But it has not taken enjoy achieve the government’s its way around household should fall for a reason. mobile users to Huawei knows market as it helps with actual network whereby every by 2018. home phone. measures to proceedspokesman could only Agenda, and offered for their Hungarian mobile high-speed broadband matter, pays network development its that the have building. The firm’s Vodafone with Telekom, for that Business Journal MT to extend tell the Budapest the position to comment Magyar sector-specific taxes totaling is working together with have alleged in own spy networks, also has experience so-called company is not a year, and the landline broadband network. It the off by their assists the Chinese– technology for HUF 30-35 billion part of that. the company on the issue. developing LTE450 governments, and that spying on its customers tax is only a small government in Brazilian and Russian the company denies. in Finland. raised charges case of MVM NET, highly for a private firm Waiting for tax cuts? of Huawei has do Enter government In the The involvement since in the past data will be dealt leave room to services front asked to sensitive investment however, a small That does, however, on the mobile networks. When India, Canada, the eyebrows, Pundits see only with over the declined to some guesswork. would be willing to rent Eventsanother twist recently with in the U.S., U.K., player officials reportedly voiced elaborate on its role, Huawei chance that DIGI to a small MVNO, like took that a state-owned NET and Australia have Huaweiʼs announcement a statement. the security of arena. MVM out its frequency tipped make concerns about be entering the Lidl’s Blue Mobile. officials, apparently Tesco Mobile or scenario, would been pursuing telecommunications networks. U.S. a more likely same Zrt. has for government purposes by According to to engage in the DIGI may be ready price war that the firm activities kind of aggressive

Telecoms and IT

Business Journal Budapest

Vol. 23. number 19

oct 16, 2015 – oct 29, 2015

Hungary’s practical business bi-weekly since 1992 | www.bbj.Hu

HUF 1,250 | €5 | $6 | £3.5

sPeCIal RePORT

connected to the world

Waiting for a shakeup in the telecoms market No one can say when DIGI will use its frequency license to provide mobile access – or why it hasn’t done so yet. And that’s only one question mark hanging over a sector that seems very much in flux. 16

analysts surprised as prices keep falling

sPeCIal RePORT

Photo MTI / Szilárd Koszticsák

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While they are still scratching their heads over the CPI’s continued decline, local market watchers say they are certain that inflation will kick in soon – perhaps even by the end of October. 3

Things fall together in the new IoT

PM Viktor Orbán calls for a ‘Google tax’ at the opening of the UN’s October 12-15 conference on ICT, which brought global players to Budapest. 18

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Appearance of corruption becomes routine One-bid tenders, or contracts awarded without a tender, have become standard operating procedure with this government. The appearance of impropriety is the elephant in the room with such contracts, but we have become so inured to situations that appear corrupt that it seems almost unnecessary to point them out. Just for the sake of form, we will point out a few recent cases. Chinese telco Huawei was named the winner of a no-bid contract to participate with state-owned Antenna Hungária – a company also chosen without a tendering process – to build Hungary’s fourth mobile network. The total contract is said to be worth HUF 12.8 billion, but neither party is sharing details. It is interesting to note that Huawei has faced charges of providing insecure equipment from various governments. U.S. officials have even said that Huawei creates equipment that allows the Chinese government to spy on users – though U.S. officials are hardly beyond reproach when it comes to charges of spying. Regardless of who the partners are, it seems bizarre that taxpayers are not allowed more information on this major deal for which they are paying. If there were some reason to forgo a competitive tender, it would be nice to know what that reason was. Then there is the fence on the Serbian-Hungarian border, built by a state-owned company, HM EI, which was contracted by the Ministry of Defense. The man who oversaw the tendering process was Ministry of National Defense State Secretary István Dankó, who is also chairman of the board of HM EI. Because this is such an obvious conflict of interest, the government had to change the rules just for this bid. As the sole bidder, HM EI reportedly won the contract on August 2 – one day after

the conflict-of interest rule was changed and the tender was announced. The contract with HM EI set the hourly wage for attaching the razor wire to the existing posts at as high as HUF 10,795, according to reports. While we would question the moral and legal existence of the fence, which was built to prevent refugees from entering this country, there may be some in the government who would argue that the job was so important that is was necessary to forgo a tendering process. If that is the case, then why not explain that, in a credible fashion? Why go through a sham tendering process that had to be exposed in the media? Before we go accusing the government of completely ignoring corrupt procurement proceedings, we should look at the case of Közgép. The Hungarian Procurement Board has prohibited Közgép from participating in public tenders for the next three years after it found the company submitted “false data” in a construction bid. It was great of the Procurement Board to flag this problem, but why were there no problems with Közgép before, when it was one of the most successful bidders for government work? Since Fidesz was elected in 2010, Közgép reportedly received state orders valued at more than HUF 100 bln in public procurement tenders. Things changed in February, when one of Közgép’s owners, media oligarch Lajos Simicska, had a public falling out with Prime Minister Viktor Orbán. Since then, Közgép has stopped getting government work, and just this month, the company said it would have to lay off half of its staff. Maybe there is no connection between the company’s fate and its owner’s relationship with the prime minister. But it certainly seems that way. It is possible to ignore the appearance of corruption in the government’s dealings. It is even possible to ignore an elephant. But it is not easy.

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Above: Árpád Göncz, the first freely elected President of Hungary, in 1937 at the age of 15, standing by the gate of Hajnóczy József (Bors) utca 3. At left he is shown signing books in Berzsenyi Dániel Gimnázium (secondary grammar school) in 2004 at the age of 82. Göncz died on October 6 at the age 93.

your daily dose of information in BBJ quality

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2015.10.14. 20:08

1 News BBJ

macroscope

news

Leak: PM says Russia more important than U.S.  4

news

NGOs say more help needed for refugees

6

MACRO Speaking x of figures

The Budapest Business Journal presents some of the most important macro data of the past fortnight.

Photo: MTI / Tamás Kovács

€459 mln Hungary’s trade surplus in August, which was €25 mln more than the same period last year, with exports and imports both increasing by a year-on-year 6.2%,

Lack of inflation surprises analysts Prices have been driven down by the decreasing cost of oil, but the latest drop in CPI baffled market observers. They are still projecting growing prices soon, maybe by the end of October. zsófia czifra

In spite of market expectations, Hungary’s consumer price index dropped 0.4% in September, according to data released by the Central Statistical Office (KSH). Inflation started to fall again in the summer, mainly down to the decreasing oil prices, and KSH said CPI was 0% in August. The drop in prices surprised analysts. Consumer prices in September decreased by 0.6% on average from the previous month. Food prices fell by 0.2%, and within this price decreases were recorded in, amongst others, chocolate, cocoa (3%), meat preparations (1.8%) and milk (1.7%), while price rises were measured in sugar (3.7%) and edible oil (1.7%). Due to seasonal changes, clothing and footwear prices increased at the highest rate, by 1.4%. Core inflation, an indicator from which the effects of

BBJ_2319_news.indd 3

products sensitive to external shocks are removed, rose to 1.3% in September from 1.2% in August.

term; they see the key rate remaining in place until the end of 2016.

CPI to accelerate in October

Slowing retail sales, record-high trade surplus

According to Portfolio.hu analysts, it is hard to explain why inflation is not rising. Household consumption is picking up, monetary conditions are loose and there are evermore indications that the labor market is also getting in shape. One possible explanation, or at least partial explanation, is that the external environment dampens the impact of domestic developments on consumer prices. Another possible interpretation is that there is a lag when prices respond to labor market changes and so any price pressure from there will be palpable only later. Analysts unanimously agree that the current level of inflation will not last long, and some even think that it will be back in positive territory in October. According to Dávid Németh, senior analyst with K&H Bank, as the effect of last year’s mandatory utility tariff reduction fades out, inflation will pick up in the following period. According to Erste Bank analysts Vivien Barczel and Gergely Ürmössy, the headline figure is expected to continuously rise for the remainder of this year, and could be as high as 1.5% in December. Barczel and Ürmössy predict an inflation rate of close to 0% for the full year. As for monetary policy processes, low inflation supports keeping the base rate at the current 1.35% level in the long-

In August 2015, the volume of retail sales grew by 4.7% compared to the same period last year, according to both raw and calendar-adjusted data. This is the lowest growth figure seen in the past 11 months, which signals an abatement in the increasing willingness to purchase. Adjusted for calendar effects, the volume of sales rose by 3.7% in food, drink, and tobacco products, by 4.6% in non-food retail trade, and by 7.4% in automotive fuel retailing. Data showed smaller year-onyear dynamics in all three groups, with the smallest drop in the y.o.y. growth rate recorded in fuel retailing – to 7.4% from 8.3% in July. In January-August 2015, the volume of sales – also according to calendar adjusted data – was 6.1% higher than in the corresponding period of the previous year. While the growth in retail sales volume fell back in August, the last summer month saw a record high trade surplus, KSH data shows. Exports and imports grew by 6.2% y.o.y. in euro terms in August 2015. The country’s foreign trade surplus came in at €59 million. Both the August and the January-August balances set new records. Hungary’s foreign trade surplus exceeded €5.3 billion by the end of August, greatly surpassing the already high surpluses in the previous years.

Hungary’s Central Statistical Office said.

6.2% Increase in Hungary’s industrial output in year-on-year terms in August, Hungary’s Central Statistical Office confirmed on October 14.

11.9% Increase in Hungary’s home prices yearon-year in the second quarter of the year, the second highest rise among the EU member states after Sweden’s 13% increase, EUʼs statistical office Eurostat reported.

5.3% Growth in the number of guest nights spent in accommodation establishments in Hungary in August, compared with the same period a year ago, according to Hungary’s Central Statistical Office.

Source: KSH, MTI

Economics Minister Mihály Varga, right, talks with Anett Pandurics, president of the Hungarian Insurance Association (Mabisz), left, and Dániel Molnos, chief secretary of the association, after an address before its conference in Budapest on October 14. Varga told the gathering that the scandal surrounding Volkswagen’s engine emissions, which could indirectly impact the Audi factory in Győr, was further proof that the economy needs to diversify, so that it is not too heavily reliant on the automotive industry.

2015.10.14. 20:08

www.bbj.hu

04 News

Budapest Business Journal | Oct 16 – Oct 29, 2015

NEWS MNB to promote more lending in exchange for tax cut The National Bank of Hungary (MNB) is planning steps to promote an increase in lending in the corporate sector, especially to SMEs, as a condition for the reduction of the tax on the banking sector, Deputy Governor Márton Nagy said on October 13 at a conference in Vienna, Reuters reported. “The bank levy can decrease but, on the other side, the (banks) should perform some credit growth, as a condition, in the corporate sector or mainly in the SME sector, to get this bank levy decrease,” Reuters quoted Nagy as saying. National Economy Minister Mihály Varga earlier promised that tax benefits would be granted to banks that increased their lending activity after the financial crisis. Under an agreement signed by the Hungarian government and the European Bank for Reconstruction and Development (EBRD) on February 9 of this year, the top rate of the bank levy will be reduced to 0.31% of total assets in 2016 from 0.53% this year, and will be lowered further between 2017 and 2019. Although the Hungarian government originally introduced the extraordinary bank levy as a temporary measure, it later became permanent. In the 2016 budget, the government has included a cut in the extraordinary bank levy. “We want to maintain this agreement,” Nagy said. “But you can ... somewhat change the agreement in the direction we are asking for ... in order to really make the agreement more balanced, which means you give something and the other also gives something,” Nagy said, according to Reuters. The deputy governor said he expected that banks would be satisfied in the end. “The banks, of course, say there is no demand, but that’s not true. There are still very tight credit conditions,” Reuters quoted Nagy. The news wire added that the MNB extended its Funding for Growth Scheme (FGS) in April until the end of next year, which provides free funding to commercial banks to lend to small- and medium-sized businesses. Nagy said a complete proposal on ending the scheme and providing incentives for banks to lend more would be unveiled in mid-November, according to Reuters.

PM reportedly favors Russia over U.S. on leaked tape In foreign policy, Hungary should concentrate on Germany, Russia and Turkey, not the United States, Prime Minister Viktor Orbán told his party, according to what Hungarian online daily 444.hu says is a leaked recording. The tape was reportedly made during a March 28-29 Fidesz celebration at the Bibó István College in Buda, where Fidesz was founded. While the three “power centers” continuously affect the region, the interests of the United States keep changing, the prime minister reportedly said. “Building a strategy on the United States’ CEE politics is strictly forbidden, because it can disappear from under your feet,” Orbán said. He also spoke

BBJ_2319_news.indd 4

of moral differences with the U.S. leadership. Orbán mentioned two examples in which Former Prime Minister Ferenc Gyurcsány, a man that he has constantly vilified in public, made the right choice in opposing America. During 2000-2006, Orbán said, then-Prime Minister Gyurcsány opposed U.S. pressure to accept military equipment for the “Star Wars” Strategic Defense Initiative. Later, when the American foreign affairs administration changed, “they were left hanging”. According to Orbán, Gyurcsány also chose correctly in favoring the South Stream gas pipeline promoted by Russia over the Nabucco pipeline being pushed by Americans. “Americans were in favor of Nabucco like hell. I represented that as well, and attacked Gyurcsány vehemently, saying it was foolish that they were supporting the South Stream instead of Nabucco. Then, out of the blue, the Americans announced that they will not fund it,” Orbán reportedly admitted. Orbán reportedly said in the leaked tape that the American-Hungarian relationship has become tense because the foreign politics of the United States is determined by a “radical leftist” value system, which supports the marriage of homosexuals and sees a potential threat in “national identity”. When Hungary included “the trinity of God, Home and Family” in the fundamental law of Hungary, America acted as if this were an open provocation, Orbán said. “We were not looking for trouble ... as at this time we were already in conflict with the banks and the EU as well,” he said. According to the report, Orbán also said American and Hungarian interests conflict when it comes to Russia. “The USA’s identifiable interest is to confine Russia, which would have catastrophic consequences for us. Our interest is to create a beneficial and advantageous connection for us between the European continent and Russia,” the prime minister said.

Government spent private pension funds on state debt After passing laws to pressure private pension holders to merge their savings with the state system, the government spent almost all the money it received from those funds – about HUF 3 trillion – to cover state debt, but debt is still at record levels, according to reports. Meanwhile, former private pensioners are apparently still awaiting full acknowledgement of the money they gave up. In testimony in Parliament on October 8, State Secretary András Tállai said that Hungaryʼs Pension Reform and Debt Reduction Fund was spent on controlling state debt. That fund was created by the government in 2011, and at the time officials said the money would be placed together with the public pension fund, with the stated goal of reforming the pension system. Instead, almost all the HUF 2.9453 trillion taken from private pension funds were spent to cover shortfalls in the government budget, and the Pension Reform and Debt Reduction Fund was terminated on

Photo: MTI/Balázs Mohai

in brief

Remembering Árpád Göncz Gábor Kuncze, who was leader of the now-defunct Free Democrats party, places flowers before a memorial of Árpád Göncz outside the Parliament building on October 7. Göncz, a communist-era dissident, was the first freely elected president of Hungary and became the countryʼs most popular politician. He died on October 6 at the age of 93.

January 31, Hungarian online daily index. hu said on October 8. In 2010, the newly elected Fidesz government passed laws making it difficult to keep a private pension, thereby forcing savers to switch their pensions over to the public pension fund. At the time, government officials said that those surrendering their private pensions to the public pension fund would receive individual retirement accounts, so that their extra contributions would be acknowledged. But a law passed in April 2013 effectively eliminated the idea of separate accounts for former private pension holders. Still, the idea may be revived. According to a report in The Budapest Beacon, János Lázár, the head of the Prime Ministerʼs office, has said: “That was an important promise made by the Ministry of National Economics that there would be individual accounts. The pension administration is currently working on creating this.”

Varga named Euromoneyʼs CEE Finance Minister of the Year Financial periodical Euromoney named Hungary’s National Economy Minister Mihály Varga “Finance Minister of the Year” in the Central and Eastern European region at a ceremony on October 10, according to reports. “I consider this award as one I deserve together with the Hungarian people, the country’s economic stakeholders and members of the Hungarian government,” Varga said after receiving the award, according to the official website of the Hungarian government, kormany.hu. “It is the result of joint efforts that the Hungarian economy has, over the past five years, managed not only to overcome the crisis but also to enter a steady growth path ... The government of Hungary made the right decisions and these have resulted in economic data that are outstanding even from an international perspective.” Euromoney’s online issue said the award is an acknowledgement of the Hungarian government’s perfect timing of the forint conversion of foreign currency mortgages, particularly regarding the Swiss

central bank’s decision in January, when the Swiss franc exchange rate suddenly rose substantially, as well as of Hungary’s early repayment of its loan to the International Monetary Fund in 2013, Hungarian news agency MTI reported.

Hungary’s railway, bus service could receive joint management The establishment of a combined management company for the state-owned railway company MÁV and bus company Volán will be proposed by Ministerial Commissioner for Public Transportation Dávid Vitézy, Hungarian Magyar Idők reported on October 12. Vitézy reportedly said that the complete integration of the two bodies would be too costly and timeconsuming, but that management functions could be unified. According to the daily newspaper, the proposed management company would be in charge of creating a unified timetable, fee, and ticket and information system for passengers, but it would commission the separate services of the two bodies. The commissioner said the two state companies currently operate competing services, whereas there is a justified demand for them to cooperate when it comes to ticket purchases and arranging timetables.

Kopint-Tárki decreases GDP growth projection for 2015 to 3%

Hungary’s GDP growth projection for this year has been scaled down to 3% from July’s 3.2% by economic research institute Kopint-Tárki, below the official government forecast of 3.1%. However, for the next year the economic research institute raised its projection from 2.4% to 2.5% GDP growth. It cut its forecast for average annual inflation to -0.1% from +0.5% for 2015 and to +1.7% for next year from the +2.6% projected in July, managing director Zoltán Ádám told journalists on October 13, according to Hungarian news agency MTI. The researchers consider the

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András Tállai to oversee restructuring of tax office András Tállai, state secretary of the National Economy Ministry has been appointed government commissioner responsible for overseeing the restructuring of Hungary’s National Tax and Customs Office (NAV), the ministry told Hungarian news agency MTI on October 12. The mandate of the state secretary is effective until December 31, 2015. Earlier reports stated that NAV would be supervised by the state secretariat of the National Economy Ministry. Following the restructuring, NAV would classify businesses as of the second quarter of 2016 and those paying their taxes would receive more preferences by as soon as next year, Tállai told journalists earlier on October 13. NAV will list businesses in three categories, classifying them as reliable, average or risky. The government’s aim is to create a new, customer-friendly tax system, Tállai said. To be classified as reliable taxpayers, companies, having operated for at least three years, cannot have tax arrears of more than HUF 500,000 in the past five years, among other requirements, MTI reported. For such companies, tax audits will last a maximum of 180 days after April 1, 2016, and the deadline for VAT reimbursements will be reduced from the current 75 days to 45 days from January 1, 2017 and to 30 days from 2018, MTI added.

Merkel blasts Hungary on migration

German Chancellor Angela Merkel voiced criticism of eastern European countries, and Hungary in particular, in a closed-door meeting with members of the center-right European People’s Party on October 7, portal politico.com reported based on a recording of the session that the site obtained from a group member. “The eastern Europeans — and I’m counting myself as an eastern European — we have experienced that isolation doesn’t help,” Merkel said, according to the site. “It makes me a bit sad that precisely those who can consider themselves lucky that they have lived to see the end of the Cold War now think that one can completely stay out of certain developments of globalization.” Merkel also reportedly commented on how Germany has taken refugees from Hungary, and on Hungary’s anti-refugee fences. “Yes, we have helped Hungary, ... I’m also being criticized for that in Germany. We have helped Hungary because we have thought that one had to save Europe’s dignity,” the chancellor was quoted as saying. “The refugees won’t be stopped if we just build fences. That I’m deeply convinced of, and I’ve lived behind a fence for long enough.” Merkel also made a reference to statements by Hungary’s Prime Minister Viktor Orbán, who has said that Muslim refugees pose a threat to “Christian Europe”. “When someone says: ‘This is not my Europe, I won’t accept Muslims….’ Then I have to say, this is not negotiable,” Merkel reportedly said. “Who are we to defend Christians around the world if we say we won’t accept a Muslim or a mosque in our country. That won’t do.”

Photo: MTI/Attila Kovács

2.4%-of-GDP official government deficit target for 2015 attainable and project a 2.2% deficit ratio for 2016, MTI added.

New job for Rogán Then-Fidesz parliamentary faction leader Antal Rogán, left, speaks with János Lázár, the minister heading the Prime Minister’s Office on October 6, during a gathering of Parliament. On October 12, Parliament voted to set up a new independent ministry, the Prime Ministerʼs Cabinet Office, which will be responsible for general political coordinating tasks and will be headed by Antal Rogán. Lázár put the bill to parliament. After the bill was passed, Rogán told MTI that the Cabinet Office would not be ‘a ministry of any specialty’ but its priority would be ‘what the prime minister designates as a task’.

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NGOs say more help needed as refugee flow continues Thousands of refugees continue to flow up from Croatia every day, though the V4 countries say they might start work on closing that border. CHRISTIAN KEZSTHELYI

Although the Hungarian government had threatened to team up with its Visegrád Four (V4) peers Slovakia, Czech Republic and Poland to close the southern border, as of October 14, thousands of refugees were still coming into the country from Croatia every day, in what has, for the moment, settled into routine movement. Hungarian NGOs working with refugees complain that the government does very little to address the situation, or to help the refugees. “Politicians are not going to give either a political or a legal solution to the refugee crisis, as the government has backed off from this area and civilians and Facebook groups have been dealing with the refugees,” said

Presidents of the Visegrád Four countries meet with their Croatian counterpart at an October 9 gathering in Balatonfüred to discuss the refugee situation. Clockwise from left are János Áder of Hungary, Andrzej Duda of Poland, Kolinda Grabar-Kitarović of Croatia, Milos Zeman of Czech Republic and Andrej Kiska of Slovakia. (Photo: MTI/Tamás Kovács) Dr. Éva Simon, a lawyer and executive committee member at Hungarian Civil Liberties Union (TASZ). Simon was addressing an October 8 meeting in Budapest of NGOs involved with the migrant crisis. Others at the meeting noted that the government

offers little in the way of humanitarian aide to the tide of refugees heading through this country on their way to Austria and Germany. After initially leaving almost all the work of providing refugees with food and medicine to volunteer groups,

including some organized via Facebook, the Hungarian government announced in mid-September that it would allocate HUF 199.5 million to see that aid is provided by three NGOs: Magyar Máltai Szeretetszolgálat (Knights of Malta), a Magyar Vöröskereszt (Red Cross) and

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Magyar Ökumenikus Segélyszervezet (ecumenical aid). But at the October 8 meeting, the NGO representatives in attendance said these state-sponsored groups couldn’t do enough by themselves. They said the government should be doing more to assist those groups that have been helping all along.

Still passing through For now it could be asked how much the government needs to do for refugees who apparently do not spend much more than a day in this country. “Refugees arriving in Hungary through the Croatian border are being boarded onto buses and trains immediately,” said Péter Gerner, coordinator of Migration Aid, describing his experiences at the border: “Once the trains and buses are full, they are being transported to Hegyeshalom. They disembark there, meet a soldier who shows them that the registration for the refugee camp is this way, and the Austrian border is that way. You can guess which way the refugees choose to go. More than 5,000 refugees pass through Hungary this way every day.” This routine could potentially change soon. According to Foreign Minister Péter Szijjártó, the V4 countries agreed in the first week of October that they could jointly protect the borders of the Schengen Area and the external borders of the EU along the southern boundary of Hungary. Szijjártó said the V4 prime

“They disembark there, meet a soldier who shows them that the registration for the refugee camp is this way, and the Austrian border is that way. You can guess which way the refugees choose to go.” ministers would agree on the details, including the number of soldiers and police officers to be deployed. Croatian officials are not happy, as this arrangement would see authorities from all the Visegrád Four countries patrolling the Croatian-Hungarian border. Aside from Croatia, the other entrypoint for asylum seekers coming into Hungary, Serbia, has been effectively closed, because a fence on the Serbian border means police can apprehend those who do enter there, and they are almost all denied asylum. “Since September 15 approximately 600 asylum seeking procedures have been started” at the Serbian border crossing at Röszke said Júlia Iván, legal officer at the Hungarian Helsinki Committee, which tries to defend asylum seekers. “But almost no one was granted protection. The decision is made in 1-2 hours at Röszke, and almost every request is rejected as

Procurement chief also head of successful fence bidder The Ministry of Defense official in charge of the office deciding who would win the HUF 2 billion contract to help build a fence on the Serbian-Hungarian border was also the head of the state-owned firm that won the job as the sole-bidder, according to a report from index.hu. As director of the team responsible for building the fence to stop refugees entering Hungary, Ministry of National Defense State Secretary István Dankó was in charge of those deciding on the tender, and he is also chairman of the board of HM EI, the state-owned military company that won the tender, index.hu said. As the sole bidder, HM EI received an official contract for the job on August 2, only one day after the tender was advertised – and a government regulation on conflict of interest was amended to allow for the unusual bidding process – index.hu reported. The contract with HM EI also set the hourly wage for attaching the razor wire to the existing posts as high as HUF 10,795, index.hu said.

refugees arrive from Serbia, which the Hungarian government earlier declared a safe country.” In effect, asylum seekers cannot ask for asylum here, Iván said. “There is a legal border closure, which works well,” he said. “The institution of asylum has ceased to exist.” While organizations such as the Helsinki Committee and Migration Aid say their efforts to help refugees should receive more funding, István Hollik, a

lawmaker from the governing coalition’s junior partner, the Christian Democrats, criticized these groups. Hollik claimed that Hungarian-born U.S. businessman George Soros “is financing limitless illegal migration” by funding Hungarian and international organizations. As examples of the organizations involved, he named the Hungarian Helsinki Committee, the Menedék Migration Aid Association, TASZ, and Migration Aid.

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COMPANY news Report: Andy Vajna will own TV2 The new owner of Hungarian commercial channel TV2 will be announced this week, and Andy Vajna, government commissioner in charge of the Hungarian film industry, will take over as proprietor, Hungarian online daily figyelo.hu reported on October 13. According to the daily, Vajna has signed the contracts, while

current owners Zsolt Simon and Yvonne Dederick will sign the contracts “soon”. Vajna will reportedly take over the debts from the current owners and Simon and Dederick are expected to get more for the channel than they originally paid. Vajna will reportedly take out a loan to cover the more than HUF 20 billion purchase price, figyelo.hu said. Once the contracts are signed by all parties, Hungary’s National

Competition Office (GVH) will need to approve the acquisition, the daily says, adding that by the end of the year the channel could be under the ownership of a Fidesz-friendly entrepreneur. Hungarian online daily index.hu wrote earlier that Vajna would become the head of TV2, because Fidesz needs a channel that can broadcast political messages to reach a far wider viewing audience.

Eagle Ottawa completes HUF 9.5 bln expansion American automobile interior manufacturer Eagle Ottawa wound up construction works on a 17,000 sqm production hall at its Hungarian base in Szolnok, central Hungary, plant manager Zoltán Juhász said on October 13, according to Hungarian news agency MTI.

The expansion was made possible with an investment of HUF 9.5 bln. Production at the unit is scheduled to start in the second half of November. The firmʼs headcount in Hungary grew from approximately 1,000 in February to around 1,900 in October, and is expected to reach 2,500 in the near future, MTI reported. The company is planning to further increase its production capacity by 30% in 2016, MTI added. According to MTI, Eagle Ottawa Hungary had HUF 4.9 bln net income last year on HUF 37 bln revenue and net income was HUF 5.8 bln and revenue HUF 26.8 bln in 2013.

Commerzbank introduces renminbi accounts in Hungary As of October, clients of Commerzbank Group in Hungary can keep accounts in Chinese renminbi, according to an announcement issued on October 12 by the German-based corporate bank. Clients of Commerzbank Zrt. may open accounts in RMB, and they can initiate and receive transfers through this account to and from China as well as to and from companies outside of China, the bank said, adding that the account can also be used to conclude FX spot and forward transactions. The product range is to be further expanded in the near future, as the bank also intends to offer loans in RMB to its corporate clients. “Encouraging settlement of commercial transactions in renminbi is an essential element of liberalization of the foreign trade of China,” said Balázs Kenesei, director of transaction services at Commerzbank Zrt. Since the central bank of China devalued the Chinese currency in several steps this August, and further downgrades might be expected, the importance of commercial transactions concluded in renminbi has increased, the announcement said. Importers who had concluded contracts with their partners in RMB are now able to purchase at prices some 6% lower in euros compared to the beginning of August, the announcement explained.

Photo: MTI / János Vajda

Despite VW scandal, Audi Hungária hits production targets

Supercomputer for Miskolc Researchers at the University of Miskolc will be able to carry out projects that were previously impossible with this new supercomputer, purchased with HUF 3.2 billion in European Union funding and unveiled in a ceremony on October 13. This is the third supercomputer at a Hungarian university; those in Debrecen and Szeged already have their own.

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Although Audi Hungária said it could not comment on the future impact of the situation at the Volkswagen group, the Hungarian unit of the German car manufacturer continues to achieve its production targets, the firm told Hungarian news agency MTI on October 9. Volkswagen, the parent company of Audi, is still reeling from the disclosure that it rigged approximately 11 million diesel engines to hide the extent of their emissions. Audi Hungária told MTI that it had turned out approximately three million of the EA189 diesel engines that have come under scrutiny since 2008. Audi Hungária has not stopped hiring and it has no knowledge of production being scaled back at other factories, the Hungarian unit told MTI.

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Villeroy and Boch Hungary expects 10% revenue rise Porcelain maker Villeroy and Boch AG Magyarország aims to reach a 10% revenue increase, up to HUF 22 billion, this year, Gábor Hideg, the managing director of the Hungarian unit, said on October 8. The company expects the revenue increase as a result of restructuring in its product portfolio by shifting its weight toward highend products, the managing director said. The firm’s turnover in Hungary was HUF 20 bln last year, with HUF 17 bln coming from exports. The company’s Hungarian plant in Hódmezővásárhely, southeastern Hungary, turned out 1.2 billion units last year, Hungarian news agency MTI said.

Hungarian low-cost airline Wizz Air has signed a five-year contract worth HUF 5 billion with state-owned Malév Ground Handling (MGH) to supply the airline with services at Budapest’s Liszt Ferenc International Airport, it was announced on October 6. The new contract extends a business relationship that started in November 2012. Wizz Air CEO József Váradi said that MGH had been awarded the contract because it offered the highest quality service at the best price. “Wizz Air’s aim is to serve its passengers efficiently at the highest standards, and MGH will be an excellent partner in reaching this aim,” the CEO said. The company was chosen following a six-month tender process in which international firms like Celebi and Menzies Aviation also took part. “The five-year contract ensures the developing efficiency of Malév,” MGH CEO Ervin Nemes said.

Wabererʼs enters Budapest bourse Hungarian road haulage company Waberer’s is listing shares on the Budapest Stock Exchange (BSE) as of October 6, a resolution by Zsolt Katona, BSE CEO, revealed on October 5. The company is listing 14,654,028 securities with a face value of €0.35, which add up to a total nominal value of €5,128,910, the resolution says. As Waberer’s is still a private company limited by shares (Zrt. in Hungarian), trade in the shares is not yet possible. However, if the company complies with “additional requirements” within 90 days of the listing, it may apply for trading to start. Stock exchange regulations require a Zrt. to attach a resolution on the modification of its type of operation to a public company limited by shares (Nyrt.) to its application for listing, along with the minutes of the general meeting that approved the resolution, Hungarian news agency MTI said.

BorgWarner’s new plant to create 700 jobs American automotive parts manufacturer BorgWarner on October 2 opened a 25,000 sqm plant in Oroszlány, northwestern Hungary, which is expected to employ up to 700 workers when it reaches full capacity, Hungarian news agency MTI reported. The plant, which will produce exhaust pipe parts, is divided into a 15,000 sqm production area and a 10,000 sqm logistic and service center, plant manager Ágnes Sosna said. The development is part of a HUF 9 billion investment, for which the company received a HUF 850 million government grant,

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Photo: MTI / Boglárka Bodnár

Wizz Air signs HUF 5 bln contract with MGH

Suspension plant The first joist is put in place at an October 13 ceremony celebrating the construction of a 10,000 sqm plant being built by the Japanese firm NHK Spring to produce automobile suspensions in Tata, northern Hungary. The plant is expected to employ 100 people once it is finished next year.

MTI reported, adding that BorgWarner pledged to create 400 jobs at the two plants established as part of the project.

Dentons: Law firm’s expansion makes Budapest a regional hub The recent expansion of Dentons’ Budapest team, with the addition of some 50 partners, associates and other professionals from White & Case, has significantly strengthened the firm’s legal services offered in Hungary, turning it into a regional advisory hub, Dentons announced in October. A company statement adds that the firm has significantly increased its rankings in key league tables for legal advisors on M&A transactions in CEE/SEE, reaching the No. 1 spot for Eastern Europe in Bloomberg’s recently published Global M&A Market Review Legal Rankings (1st 3Q 2015), while also reaching the No. 4 position in CEE by volume and No. 5 by value in Mergermarket’s M&A League Tables for 1Q-3Q 2015. “The regional M&A deal flow in Central and Eastern Europe continues apace with increased activity in both the mid-market and large scale segments, and with healthcare, financial services and TMT attracting a significant portion of the attention,” Rob Irving, partner in Dentons’

Budapest and global co-chair of Dentons Private Equity Group said. “The expansion of our headcount in Budapest, together with Dentons’ commitment to the region, has enabled our team to ride this wave of activity.” István Réczicza, office managing partner at Dentons Budapest, added, “Dentons’ recent expansion in Budapest has created a pivotal advisory hub to serve the new M&A upsurge in the CEE/SEE region and broader increase in demand for legal services.”

Vodafone’s outdoor 4G coverage exceeds 99% in Budapest The Hungarian unit of telco giant Vodafone has reached 99% fourthgeneration mobile telecommunications coverage in Budapest, ten months after the acquisition of additional elements of the frequency spectrum allowing the telco to build up its network, CEO Diego Massidda announced on October 5. Massidda added that 4G coverage of underground lines in the capital has reached 100%, and noted that the company has invested approximately HUF 10 billion in establishing its 4G network; he expects 100% outdoor 4G coverage to be reached in the country’s residential areas by the end of the year. Vodafone expanded its 4G

network with frequency licenses in the 800 and 2,600MHz bands, which it acquired last year for HUF 30.2 bln, Hungarian news agency MTI reported.

SPAR Hungary launches HUF 4 bln investment The Hungarian unit of retail chain SPAR on October 5 laid the cornerstone for a HUF 4 billion hypermarket investment in the city of Érd, near Budapest, Hungarian news agency MTI reported. The Interspar unit under construction is expected to be one of SPAR Magyarország’s biggest, with a total area of 7,000 sqm. It is due to open in the spring of 2017 at the latest, and would employ a staff of approximately 100. SPAR Magyarország is contributing HUF 400 million to the upgrade of a motorway exit near the store, MTI reported. Érd Mayor András T. Mészáros said the local government would get 540 sqm in the store for municipal services and other tasks. Hungary introduced a ban on the construction of shopping centers bigger than 300 sqm from 2012, MTI recalled, adding that the area threshold was bumped up to 400 sqm when the ban was extended into 2015. Businesses may still apply to a special committee for an exemption.

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AmCham improving Talent for leadership competitiveness step by step

expert opinion

Maximilan Péter Malchiner CEO Innermetrix

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS are paid promotional content for which the Budapest Business Journal does not take responsibility

In our knowledge-based society, the greatest assets for corporations are the so-called “hidden assets”. Such assets include brand, IP, and also talent for leadership. A few decades ago, a completely different skill set was required to make someone a successful employee. Remember that the term “industrial society” is based on the Latin word “industria”, meaning diligence. In that system of expectations, the most valuable characteristics of an employee were diligence, ability to bear the workload and reliability. Corporations did not care about individualism, as workers were monochromic, hired for less innovative and creative jobs. The power of intellectual capital nowadays is reflected in the capital invested in start-ups. An appropriate idea is enough for the stock exchange to boost a company, raising it to vertiginous heights even if it has not yet generated financial results. The trust of investors, in such cases, is based on the intellectual capital of owners. The role of leaders has also changed significantly. Nowadays, they are expected to lead a team of different individuals, and motivate them to meet their goals. This requires immense knowledge, but it is important to understand what is meant by knowledge. Education, qualifications and previous professional experience might not reveal the leadership skills of a person. In the past, we have mistakenly assumed that talent equals knowledge, but this not true. It is also not true that we possess inborn weaknesses and strengths. In the past 15-20 years, researchers have been able to identify a great deal of information about our brains. We now know that the human brain shows unique development in many areas that are not directly linked to intelligence but still factor into thinking and decision making. Based on this discovery, it can be said, that we are born with natural talents and natural NON-talents. If we build on our talents, we can develop them into strengths, but if we become dependant on NON-talents, we will produce weaknesses.

phenomenon. Unfortunately, the compulsion for suitability, which is taught to us in school, is taken over to other areas of our lives. In our job, we cannot even confess to ourselves that there are certain tasks that do not suit our personality, motivation or behavioral preferences. Instead, we adapt and we try to hide our NON-talents, but we keep fabricating weaknesses for ourselves this way. And using these avoidance strategies consumes loads of our energy and leads to burnout. A leader is responsible for themselves and for dedication to their own development and improvement of their career. A basic building block for such dedication is a high level of selfawareness. By being self aware, we can avoid tasks unsuitable for us, and therefore avoid working in positions that are unsuitable for us. If we accept the fact that intellectual capital, especially in a country that is poor in natural resources like Hungary, is the basis for competitiveness in the future, then we will have to accept that – for the sake of the next generation and present employees – talent management needs to receive particular emphasis. Today, the basis of a successful and healthy career is the identification of leadership talent, the polishing of SELF-awareness, high levels of SELFdevelopment based on SELF-awareness, and life-long learning. Currently the greatest employee survey in the world is the “What’s Your Genius Study”, which we conducted with Innermetrix for seven years, in 26 countries on five continents, with the participation of 137,000 people. The survey revealed that truly successful people are the so-called “Peak Performers”. They owe their success not to their outstanding talent, but to their maximum self-awareness and to their authentic career planning. They know, in every circumstance, what they are good at, and they keep to those talents. They never have to adjust to a role or a task, but they adjust the task or the role to themselves in a realistic way.

Levente Hörömpöli-tóth

AmCham Hungary officially launched a 10,000-steps health awareness campaign with a “Walk the Walk” event on October 8 in downtown Budapest. Health is a key pillar of AmCham Hungary’s Policy Agenda for 2015-2017 to improve the competitiveness of the country. “Our goal is to push Hungary ten places up the [World Economic Forum’s] world competitiveness ranking within the next ten years,” CEO of AmCham Hungary, Írisz Lippai-Nagy said. In order to achieve this, AmCham has launched initiatives in the pillars of investment, talent, innovation and health. As one of the health initiatives, an employee health program was launched this year for the 160,000 employees of AmCham member companies. “Employers have the responsibility to guard the mental and physical health of their employees, who, in turn, need to do their homework as well. We need to educate them that they can do a lot for themselves. We believe that a nation relying on a healthy workforce can boost economic efficiency,” Diána Stegena, CEO of Amgen Hungary and chair of the Healthy Nation Policy Task Force at AmCham added. The first milestone of a 100-dayhealth campaign was a 10,000-step walk where 700 colleagues from 30 enterprises covered around three km on foot in downtown Budapest, followed by various sports activities on Margaret Island. The 10,000-step initiative is based on a cooperation with Global Corporate Challenge (GCC), the world’s most successful global worker health program. GCC offers a way to develop a new approach to sleeping, eating and moving by making people change their daily habits. According to the program, considerable results can be expected from something as simple as

taking 10,000 steps a day. Thanks to GCC’s global outreach, as many as 1.8 million employees at more than 5,000 enterprises in 185 countries have taken part. “According to a WHO recommendation, doing 30 minutes of sports per day is enough to keep you fit, therefore it is our mission to fight inactivity. This year marks the ten-year anniversary of the country’s biggest corporate fitness program, Coca-Cola Wake Your Body,” noted Valentin Tóth, director of communications of CocaCola HBC Hungary, and a sponsor of the 10,000-step walk. Coca-Cola reaches out directly to workplaces as well. It often visits offices where social spaces are altered in a fashion that encourages movement, by installing indoor bicycles instead of chairs. But public spaces are also targeted. In Széchenyi utca, for example, a bus stop has been converted into a place where passengers waiting for their vehicle can jump on an exercise bike fixed to the ground. AmCham’s 10,000-steps-a-day initiative is expected to become a yearly happening, so stay tuned for more.

Using this approach, existing intellectual capital can be paired with peak performance, which will be realized in a healthy and balanced way.

Maximilan Péter Malchiner is the Innermetrix CEO, ICF Executive Coach Burn-out and other psychosomatic and Trainer, and Author of the bestseller illnesses are routed in this very “You Are More!™”

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The American Chamber of Commerce in Hungary is seeking to boost the countryʼs economy by improving the health of the workforce.

The AmCham crew on the move, at top, and in front of Parliament, above.

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Budapest Business Journal | Oct 16 – Oct 29, 2015

Real Estate news CEE said to be on track for investment record

JLL predicts that CEE is on track for a record level of real estate investment activity in 2015. The summer months saw a preliminary transaction volume of well in excess of €2.8 billion recorded in the third quarter. This quarterly figure represents one of the strongest third quarters in the market’s history and is only marginally short of the record-breaking year of 2007. “With the final quarter of the year often representing one of the busiest periods for our investment teams, and looking at the pipeline of deals that are in advanced stages, we predict that the CEE regional volume could reach the €8 bln mark by yearend,” said Kevin Turpin, head of research CEE at JLL. “Should the latter happen, it would put 2015 at the highest level since the economic downturn and third highest in the past 12 years.” Czech Republic currently leads in terms of investment volumes with a share of 43%, followed by Poland with 28%. Hungary is improving with 11%.

ConvergenCE wins big tender ConvergenCE has taken over the property management of the Kálvin Center, Duna Office Center and Baross 52

after a competitive tender. The buildings total approximately 30,000 sqm and were recently acquired by the UK-based investment management fund Europa Capital. “We can guarantee the highest quality services to the owners and the tenants through our repositioning and lease up of this portfolio,” said Csaba Zeley, asset management director of ConvergenCE. “We have found that the synergies offered by combining asset and property management add significantly to the quality management of our buildings and the satisfaction level of our tenants. This is at the core of protecting real estate values.”

Hotel planned near Central Market Hall Hotel operator Meininger Hotels plans to undertake the construction of a 6,800 sqm hotel near to the Nagycsarnok (Central Market Hall) close to central Budapest. The company has agreed on a 20-year lease with the development partner Bedori Investment Kft. The law firm CMS advised the landlord and Dentons acted as legal advisors to Meininger Hotels. Investments of more than €265 million have been transacted in the CEE hotel sector during the first

six months of the year according to Cushman & Wakefield (C&W). As many as 16 hotels have changed ownership in the region: “A wide range of investors from all over the world are looking to invest in this sector, benefiting from stronger returns as trading conditions are set to improve and lending institutions are more open to provide debt,” said C&W. Despite continuing economic and political uncertainty in Europe, travel and hotels did well in 2014. There were almost 600 million international visitors and 2.7 billion overnight stays recorded across the continent, representing a new record, and these figures are expected to increase further this year. Prague, Budapest, Bratislava, and Warsaw are among the cities in CEE that have benefited most from these macroeconomic factors according to C&W. Due to the double digit growth, availability of debt and resurgent interest from investors in the region, activity is growing, both with investment products and development projects. Despite the limited development opportunities available, a number of international hotel chains are screening the region in search of opportunities to expand their brand portfolios. In Budapest, 500 rooms are due to be

Kálvin Center on Budapestʼs Kálvin tér. opened by 2016 in the three- to five-star segments. Construction of the Meininger project is planned to start before the end of the year.

5TH DISTRICT

6TH DISTRICT

2TH DISTRICT

6TH DISTRICT

7TH DISTRICT

LuxuRy aT Danube District 5th, 120 sqm, panoramic view to Danube, fully furnitured (Alf Italia), 2 bed rooms, 2 bath rooms and huge livingroom with balcony, Gross proceeds: 6,5%.

134Sqm- LISzT FeRenC SquaRe Unique offer! 134 sqm, 2 bedroom-apartment with balcony is for sale on the 2nd floor (lift access) of the most beautiful classical building of the vibrant Liszt Ferenc square.

67Sqm We offer an apartment in district 2, near the banks of Danube. It is situated in a good condition, „Bauhaus” building, the apartment is furnished and completely renovated.

95Sqm Next to the Opera House is the building which was built in turn of the century XIX. The apartment is on the first floor, with a balcony. It’s 95 sqm, it has one living room and two bedrooms.

unIque oPPoRTunITy In THe DIPLomaT DISTRICT We offer a real treasure chest located in Benczur Villa (built in 1892) for sale. Come along and have a look. Do not miss it.

94Sqm, 3 RoomS City center, balcony, classical style, design, newly renovated and double-comfort. These mark the 94 sqm apartman, that has 3 rooms, 2 bathrooms.

+36 (70 )461 9301

350 000 Euro

+36 (70) 716 9086

98 000 000 HUF

+36 (70) 716 9831

29 900 000 HUF

+36 (70) 716 9196

95 000 000 HUF

+36 (70) 388 5806

25 900 000 HUF

+36 (70) 461 9306

44 500 000 HUF

6TH DISTRICT

5TH DISTRICT

6TH DISTRICT

79 Sqm - 2 RoomS, KIRÁLy STReeT Great investment opportunity! Brilliant location near Deák Square, this extremely bright and quiet apartment is in need of total refurbishment and full of potential.

61 Sqm -2 RoomS, nÉmeTH LÁSzLÓ STReeT We offer an apartment in district 6, near Andrássy street. BEAUTIFULLY RENOVATED, bright and quiet in central location. READY TO MOVE IN! Great investment opportunity!

165 Sqm - 5 RoomS, moLnÁR STReeT This completely renovated duplex apartment has separate rooms, 3 bathrooms and it is located close to the Danube and the heart of Budapest. Ideal for investment.

240 Sqm - 5 RoomS, DÓzSa GyÖRGy RoaD Wonderful view over the Heroes’ Square, this exclusive style apartment has 5 rooms, 3 bathrooms and a roof terrace. Varosliget with the world famous Szechenyi spa is just a 5 minute walk.

89 Sqm - 3 RoomS, HunyaDI SquaRe 6th district Hunyadi square we offer a nice renovated apartment facing a nice green square, living room, 2 bedrooms. Building in excellent condition

101 Sqm - 4 RoomS, eÖTVÖS STReeT We offer an 101 sqm unrenovated apartment in a nice building built at the turn of the century, first floor, lounge, 3 bedrooms, 2 bathrooms. Bright, facing the street.

133 500 000 HU

+36 (70) 716 9144 118 900 000 HUF

+36 (70) 716 9144

+36 (70) 388 6234

37 800 000 HUF

+36 (70) 388 5549

36 000 000 HUF

+36 (70) 388 5379

38 000 000 HUF

+36 (70) 716 8654

37 500 000 HUF

1051 bp. Harmincad st. 4. x 1051 bp. Hercegprímás st. 2. x 1066 bp. Ó st. 24-26. 1056 bp. Papnövelde st. 3. x 1061 bp. Liszt Ferenc sq. 10. x www.oc.hu

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2015.10.14. 20:09

www.bbj.hu

2 Business

Budapest Business Journal | Oct 16 – Oct 29, 2015

E-tickets promise easier transit, more money Budapest’s public transport will be switching to an electronic ticket system, which should be more efficient, harder to cheat, and also more convenient to use. The head of the company overseeing the project explains the improvements we can hope for by 2017. zsófia czifra

The days of passengers wandering onto the metro without a ticket and hoping that they won’t get caught will soon be over. Like most major metropolitan underground systems in the world, riders on Budapest’s underground will have to pass through a gate. This low-tech change may be one of the more outwardly visible improvements we can expect with the introduction of the e-ticket system in Budapest, but there will be many other differences. Time-based passes and tickets are to be purchased at vending machines, and customer service centers will be supported by online and mobile phone-based purchasing options. Budapest’s transportation authority, BKK, projects that 1.5 million personalized and anonymous smart cards will be issued to regular commuters and another nine million smart paper tickets will be issued to occasional travelers and tourists. The system is due to be up and running by 2017, perhaps even before the end of next year. Other cities that switch to this kind of automated system have reported increases in ridership and even greater increases in revenue. Scheidt & Bachmann, the contractor chosen for the project, is to install approximately 800 automated access gates at metro stations and designated suburban railway stations, while roughly 10,000 new ticket validators will be installed on 2,500 buses, trolleybuses and trams. Scheidt & Bachmann has already worked for BKK as a subcontractor, supplying 200 new ticket vending machines that are already operating in the capital and in surrounding towns. The Budapest Business Journal asked Márton Hraboczki, managing director of Scheidt & Bachmann, about the state of the project.

What is the current phase of the project and when will you deliver the entire system? A: We’ve just closed the planning phase, which is one of the most important phases of the project. We signed the agreement on October 8, 2014, and we have 38 months from then to build and implement the system.

When and what changes will passengers see with the new system? A: They will meet the new ticket machines on the mass transportation vehicles of the Budapest transport company in the second half of next year, and that is when the installation of the new gates will also likely start.

According to international experiences, e-ticket systems bring significant savings for transport companies. What is the situation in Hungary? A: Based on industrial standards, transport companies have seen on average a 15% increase in their ticket income on a year-

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Márton Hraboczki, with portraits of two of his role models.

“Based on industrial standards, transport companies have on average seen a 15% increase in their ticket incomes on a yearon-year basis by introducing the e-ticket system.” on-year basis through introducing the e-ticket system. In some cases, this growth rate has been even higher: In Newcastle, for example, a 20% increase was reached. The Newcastle system, by the way, was awarded the best chip card system of Europe in 2015. In addition, passenger traffic grew by 8% on the underground in 2014 in Newcastle. A study revealed that passengers appreciated, most of all, the convenience and the fast service.

What does international experience suggest we should expect in the first few years, both financially and in operation? A: Scheidt & Bachmann has built systems both smaller and larger than the one we have planned for Budapest, but according to our experience, a significant increase, as mentioned before, in ticket income can be expected during the first couple of years. Passengers usually get used to the new system very quickly and because the availability of e-tickets is quick and convenient, they will soon probably like it too.

What would you identify as the biggest challenge when planning the new system for

Budapest, and how have you met those challenges? A: This is a totally new system to Hungary; there is, therefore, no user experience. Consequently, we cannot talk about relevant local competence either. In spite of this, the experts at the Budapest Transport Center (BKK) did an excellent job, because they professionally researched the market and its tendencies, undertook a brand new innovative technology, and made technical specifications according to these. The greatest challenge, however, is to convince those nonprofessionals who question the technology.

What is the cost of the project and what is the expected return on investment? A: The total value of the project is €91 million, which includes, in addition to the total implementation costs, a five-year-long operation period. Return on investment with similar systems is relatively fast, due to the impressive ticket-income increase following implementation. Accordingly, the loan from the European Bank for Reconstruction and Development (EBRD) is a short-term loan with a maturity of eight years.

As you said, the company will operate the system for the five years after implementation. What happens once that five-year period expires? A: The operation contract can be extended for another five years.

If demand arises, can the system be further developed? A: The current open payment technology will still be a leading technology in the next ten to 15 years.

An example of modern gates installed in Dublin. Further elements of the system are designed to be inter-operational, so they are open to future integration. This includes the National Unified Ticket System, the ticket sales system of the Hungarian Railways (MÁV), and near field communication (NFC) technology.

Do you plan further similarly large-scale projects in the Hungarian market? A: Scheidt & Bachmann is currently not involved in designing automated fare systems in any other cities or with other transport companies in Hungary. However, as in all of our other locations worldwide, we plan long-term in Hungary. Therefore we are constantly seeking new business opportunities. The company has already delivered the elements of similar automated fare systems to some 58 large cities, and has built complete systems in eight cities, including Boston, Dublin, Pittsburgh, and Ottawa. As for Hungary, there is a similarly large-scale project going on here at the moment, namely the National Unified Ticket System, and we are going to participate in the public procurement process for this system.

2015.10.14. 20:09

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2 Business

Budapest Business Journal | Oct 16 – Oct 29, 2015

Success in Business, Success in Life Matchmaker promises “happily ever after”

Nora Kenyeres, Founder & Head Matchmaker.

If you are busy running a successful company with almost no time to find your better half, we may have the perfect solution for you… Match Made Abroad is not yet another dating app. It is an exclusive, international matchmaking agency, where flesh-and-blood matchmakers help each member find their ideal partner. The company’s operation may seem old-fashioned these days in the era of online dating, but let’s not forget that how we, humans, find love is best coordinated by other human beings, not by computer algorithms. Match Made Abroad is the only Certified Matchmaking service in Hungary and the proud member of the prestigious Matchmaking Institute in New York. The matchmaking process is coordinated by the company’s certified matchmakers, who interview each member in person first, then find quality matches for them. “The initial interview with the company’s Founder and Head Matchmaker, Nora Kenyeres, in their posh office in Buda is more like chatting with a friend than an actual interview. She wanted to understand me, my background and my expectations regarding my ideal partner as deeply as possible. A few days later, I started to receive hand-selected profiles of ladies who met my search criteria and who were interested in getting to know me. It was really convenient that I did not have to go through hundreds of profiles and send several

emails until I could actually go on a date with someone I knew nothing about. Match Made Abroad took care of everything: all I had to do was show up on the date!” Confidentiality and trust are essential. “Since our service is delivered offline, our system and database are secure. This is of paramount importance for many of our clients”-said Nora Kenyeres. Match Made Abroad prides itself on providing a professional, personalized service mainly for business owners, managers and busy professionals who have neither the time nor the inclination to spend many hours online or in bars to find the perfect partner. “Our clients appreciate that they can outsource this important area of their life to experts. We save them time by carefully screening candidates so they go on only the good dates that have the most potential. We guarantee a certain number of introductions and even organize the dates. We are here to help during the entire process, meaning that we often become part of our clients’ lives for up to 12 months. At first, it may seem strange to hire experts for finding the perfect partner, however it is without a doubt that it is the only way to maximize your chances of finding The One. We have access to exceptional singles that you would not really meet otherwise. I believe that if you want professional results in any area, it pays off to seek the help of the experts. And if it is about happily ever after, the stakes are certainly high.”

Company Information:

Match Made Abroad Ltd.

Registered address: 1024 Budapest, Lovohaz street 2-6., Mammut 1., 4th floor, Hungary www.matchmadeabroad.com

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2015.10.14. 20:09

Your passport to greater success

Lufthansa’s bonus programme offers small and medium-sized enterprises great benefits Today more than ever, business trips are an integral element of working life. Now they also provide an ideal opportunity to help manage travel expenses with options such as free flights and upgrades. You can also use them perfectly to further motivate employees – for example, with PartnerPlusBenefit, the Lufthansa corporate bonus programme. Since 2001 the airline has supported its corporate customers through a special bonus programme – PartnerPlusBenefit. Currently PartnerPlusBenefit is available in 130 countries and over 100,000 companies have benefi ted from being enrolled in the programme.

Participation is free of charge, companies simply have to register. On international flights operated by Lufthansa and partner airlines, points can be collected in First, Business and Economy Class. These are then credited to a company account that is managed online. Only participating companies can access their credit balance, which can then be redeemed for attractive awards, such as free flights or upgrades. The varied range of awards available has been optimized to companies’ needs. Participation in the corporate bonus programme can also be combined with Miles & More miles. In this way, employees can earn both types of points on their flights: miles for their personal Miles & More account and benefit points for the company’s account.

Registering for PartnerPlusBenefit is very easy and can be done via www.partnerplusbenefit.com. Information on all the awards and the partners participating in the programme can be found on the relevant country’s home page. There you can also find out how to redeem points, check your current points balance and read all the latest news about Lufthansa’s corporate bonus programme. Now is the perfect time for you to take a closer look at the programme and all that it offers. Participation in PartnerPlusBenefit definitely pays – without exception.

Collect points on business ﬂights

Enjoy the benefits of Lufthansa’s free corporate bonus programme: just collect valuable bonus points on flights, redeem them against attractive awards – and motivate your employees as you do so. www.partnerplusbenefit.com

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2015.10.14. 20:09 10/12/15 2:22 PM

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2 Business

Budapest Business Journal | Oct 16 – Oct 29, 2015

Attracting FDI, and creating new jobs The Hungarian Investment Promotion Agency (HIPA) works to increase foreign direct investment in Hungary. Szilárd Bolla, vice president of HIPA, discusses the work, which has already brought in €549 million this year and more than 5,000 new jobs.

“A great number of actions have been taken in Hungary in order to establish the most competitive investment environment of Europe.” contributes to the fact that FDI Magazine - belonging to the Financial Times Group - has chosen Budapest as the most attractive city in terms of capital investment in Eastern Europe in 20142015.

Szilárd Bolla, HIPA VP: ‘Hungary a truly exceptional place for investments’. bbj staff

typically requires a young and agile 20). It is partly due to this, and partly due workforce of graduates who speak foreign to the changed needs of investors, that What results has HIPA languages. Therefore, HIPA pays special in Hungary, too, larger investments are achieved in the course of attention to attracting these investments. becoming less concentrated in Budapest this year and what are the The results are well demonstrated by the and its surroundings. Based on the data organizationʼs goals for the future? A: HIPA is a professional organization fact that, in the first half of 2015, it was of the first half of this year, it can be for the promotion of foreign direct in this sector that nearly a quarter of the concluded that, in terms of territorial investment, and there are three pieces 27 domestic investments managed by distribution, the projects managed by of data which show the most important HIPA were implemented. Today, nearly HIPA have reached the capital and the measure of its success: The number 100 SSC centers operate in Hungary, countryside in almost the same proportion. Based on this experience, we have of investors opting for Hungary, the organizations such as IBM, GE, Eaton, number of new jobs created by them, and Emirates, BT, Lufthansa, and UNICEF launched our Investor Friendly Settlement Program aimed at preparing communities the volume of investment. In relation to have placed confidence in the country. to ensure a professional reception these, we can demonstrate outstanding In the international context, of potential foreign and domestic performance achieved in the first five what is the position of the investors, and through this, to improve months of this year. With the support domestic suppliers? the overall competitiveness of the of HIPA, 27 investment projects have A: The priority sectors for Hungarian domestic investment environment. The been approved. Due to these favorable decisions, 14 new investments will be suppliers are the automotive industry training available for each municipality implemented in Hungary in cooperation and electronics. Out of the worldʼs 20 is divided into 4+1 modules, following with our agency, while 13 companies will largest (TIER-1) automotive suppliers, which the participants give an account carry out re-investments. As a result of 15 are present in Hungary, and they of their knowledge by writing a project this yearʼs 27 investment decisions, as also need suppliers. It is a key objective proposal. Those who submit the best many as 5,597 new jobs will be created of the Hungarian government to enable proposals will be visited by a delegation and €548.82 million in foreign capital the Hungarian small- and medium-sized of diplomats to enable the representatives will be invested in the country. I wish to companies to get involved into the supply of the municipalities to gain practical emphasize that these results are for the chain of the large enterprises that have knowledge as well. first five months, but the prospects for production capacity in our country. To support this objective, the What are some of Hungaryʼs later in the year are also good. Looking special advantages for into the future, also in relation to the Hungarian Investment Promotion Agency investors? new foreign economic strategy, it is our launched the TIER UP! program in specified objective to become, by the October 2014, which aims to strengthen A: Hungary provides an excellent value end of 2018, the Central and Eastern cooperation between universities and proposition for investors. The combination European regionʼs benchmark investment the domestic SME sector in the field of of a strategic geographical location professional apprenticeship programs and in the heart of Europe with more than agency. joint research and development projects. 200 industrial parks, superb transport The most important goal of the program infrastructure and a long-established What are the new trends is to make sure that domestic SMEs can logistics industry, globally acknowledged in the domestic investment play an important role in the supply chain human capital at a reasonable cost, an environment? A: In our experience, the value of our of integrators that were established in investor-friendly legal environment and labor code combined with the highest region is growing. Large companies are Hungary. labor productivity in Europe, and the increasingly beginning to recognize What efforts are made to government’s non-refundable subsidies the opportunities and potential of the bring the rural areas closer and commitment to further improve countries in the region, among them, to the investors? the business climate makes Hungary a those of Hungary: The large number of available, well-trained and motivated A: In order to put the more remote truly exceptional place for investments. workers, favorable wage levels and the regions into a favorable position, the In addition, you cannot disregard that advanced infrastructure combined with European Union has developed a support HIPA will help you through the whole the recently approved favorable labor system that determines the extent of a investment process, from start to finish, code. Very good examples of these are maximum percentage of the eligibility of through a one-stop shop service model, business service centers, as this sector the investment in the region (50-35-25- free of charge. Through its work, HIPA

BBJ_2319_biz.indd 15

What steps does Hungary take to stay competitive? For example are there any initiatives to improve education here? A: Over the past four years a great number of actions have been taken in Hungary in order to establish the most competitive investment environment of Europe. The government has completely reformed the tax system, created one of Europe’s most flexible labor codes and restructured the tertiary education system. Investments into Research & Development & Innovation hit a record high in 2013 (HUF 118 billion) and are set to grow in the next years as well. Furthermore, between 2014 and 2020, 60% of EU structural and cohesive funds will be invested in economic development. Improving education also plays a vital role in staying competitive, e.g. improving the dual education system. To guarantee the constant pool of world-class professionals, HUF 50 bln will be invested in the enhancement of dual vocational education and training in the next five years.

Mihály Varga, Minister for National Economy has suggested several times that Hungary needs to diversify from its heavy reliance on the automotive sector. What can HIPA do to help there? A: The automotive sector truly plays a crucial role; since 2014 more than half of all investment deals signed with the cooperation of HIPA targeted the automotive industry. Besides this important industry, HIPA has six other key sectors to focus on: Electronics, shared service centers, information and communications, the food industry, life sciences, logistics, and renewable energy. HIPA offers tailored services to each of them. For instance, I would like to point out the progress we have made in the SSC sector. By now there are more than 100 service centers employing around 37,000 workers making a great contribution to the economic development of the country. But pharmaceutical, ICT and logistics sectors have strong roots in Hungary; they can also offer competitive advantages for investors.

2015.10.14. 20:09

3Special Report BBJ

Telecoms & IT

Movement expected in the mobile market The industry was already wondering what DIGI might do with the mobile frequency license it has been sitting on for a year when the government said it would enter the sector too, with its own mobile network. levente hörömpöli-tóth

Magyar Telekom (MT), the largest telecom company in Hungary and its leading mobile provider, says it is ready to face any challenge that might threaten its incumbent position. Yet, at this point, it’s hard to say how competition will ultimately play out. “We take every competitor seriously, and the intention of DIGI to enter the market is no exception. However, the frequency it purchased is not enough to provide good quality mobile services with nationwide coverage. We expect them to offer some service to their existing clients,” says a statement from MT. The mobile market has been anticipating big change for a year, ever since DIGI purchased the rights to obtain mobile frequencies. Now the government has added to that speculation, with the announcement that it will develop a statefunded mobile network. The only thing that seems certain is that movement is afoot in Hungary’s mobile sector, but it is hard to judge when the moves will come, or how big they might be. At present the mobile market is dominated by MT’s T-Mobile brand, which has 46% of the mobile market and a 4G broadband network that reaches 95% of the country. The number two mobile player here is Telenor, with 31% of the market, followed by Vodafone with 22%. There are also several Mobile Virutal Network Operators (MVNOs) who operate mobile networks without their own frequency, using instead those licensed to another company. Some supermarket chains are into this business in a small fashion, but a bigger player is the country’s leading cable TV firm, UPC. (See box.) DIGI Kft., which now holds a 23% share in cable TV services and has increased its revenues by 300% in the past seven years, must have bid for a mobile frequency last fall for a reason. But it has not taken any measures to proceed with actual network building. The firm’s spokesman could only tell the Budapest Business Journal that the company is not in the position to comment on the issue.

Waiting for tax cuts? That does, however, leave room to do some guesswork. Pundits see only a small chance that DIGI would be willing to rent out its frequency to a small MVNO, like Tesco Mobile or Lidl’s Blue Mobile. According to a more likely scenario, DIGI may be ready to engage in the same kind of aggressive price war that the firm

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Piggybacking to mobile success

Above the rest, for now: A Magyar Telekom cellphone tower. (Photo: Jessica Fejos)

“We take every competitor seriously, and the intention of DIGI to enter the market is no exception.” pursued in its home market in Romania. DIGI has dominated that market by undercutting its competitors. But no mass recruitment is under way, and building staff would be a precondition to expanding DIGI’s existing portfolio to offer a quality service. A fair explanation for the inaction may be that DIGI is waiting for a reduction of taxes on landlines, which is set to enter into force in 2016. Once DIGI sheds that burden on its existing cable business, it would be better positioned to push down consumer prices, a must for gaining market share. The three main mobile providers say tax cuts are essential for freeing up capacity to achieve the government’s Digital Hungary Agenda, whereby every household should have high-speed broadband by 2018. Magyar Telekom, for that matter, pays so-called sector-specific taxes totaling HUF 30-35 billion a year, and the landline tax is only a small part of that.

Enter government Events on the mobile services front took another twist recently with the announcement that a state-owned player would be entering the arena. MVM NET Zrt. has been pursuing telecommunications activities for government purposes by

operating the National Telco Network (NTN) since 2012. Now mobile services will be added to its portfolio, thanks to cooperation with Chinese telecom equipment maker Huawei. “The number of clients served by the network will be subject to the types of services and the distribution of users. Its purpose will be restricted to data provision and shall enable essentially usage with closely specified aims,” MVM NET told the BBJ in a statement. “Therefore, the needs and behavior of users can be kept under control and the demand for traffic volumes should be easy to plan.” The project should reach full operability by March 2016. The network can be ready quickly because it uses LTE450 technology, which allows full nationwide coverage with a lot fewer base stations than in the case of higher frequency ranges. Antenna Hungária Zrt., a firm that owns radio towers and was acquired by the state last year, has been charged with carrying out the work, while Huawei will supply the technology. Both companies were hired for the HUF 12.8 bln project without public procurement. Huawei knows its way around the Hungarian mobile market as it helps Vodafone with network development and is working together with MT to extend its broadband network. It also has experience developing LTE450 technology for the Brazilian and Russian governments, and for a private firm in Finland. The involvement of Huawei has raised eyebrows, however, since in the past officials in the U.S., U.K., India, Canada, and Australia have reportedly voiced concerns about the security of Huaweiʼs networks. U.S. officials, apparently tipped

Apart from the three main mobile providers, MVNOs, which use the frequency of another company, are also looking to claim a piece of the pie. The latest entrant is cable TV provider UPC, which stepped onto the already crowded mobile stage in March 2015, through an agreement that lets it use frequencies licensed to Vodafone. Its biggest strength may be its existing market. UPC is the leader in providing television services in Hungary, with a market share of 26.7%, according to the National Media and Telecommunications Authority. That makes more than 900,000 potential customers, and UPC says it is trying to tempt them by “developing special services by which our subscribers can take home their landline services on their UPC mobile”. One such example is Wi-Free, a free-of-charge social Wi-Fi network that lets you switch on the service via your home modem and surf for free by logging into any available hotspots, of which there are 360,000 in Hungary and millions in Europe. Another innovative solution is PC Phone. The app enables UPC mobile users to enjoy the rates offered for their home phone. off by their own spy networks, have alleged that the company assists the Chinese government in spying on its customers – charges the company denies. In the case of MVM NET, highly sensitive investment data will be dealt with over the networks. When asked to elaborate on its role, Huawei declined to make a statement.

2015.10.14. 20:09

www.bbj.hu

Budapest Business Journal | Oct 16 – Oct 29, 2015

4G helps blanket Hungary in broadband Christopher Mattheisen, CEO of Magyar Telekom, discusses the efforts of the countryʼs largest telecom to reach every corner of Hungary with fast, effective internet.

How early do we have to switch to 5G? How much of a challenge is it for Magyar Telekom? Is the switch to 5G at the doorstep, or is it a few years away? A: As always, Magyar Telekom is willing to be the flagship of introducing new technologies to the Hungarian market. Right now we are constructing a 4G network as this is the best technology for serving current needs. The next step is LTE Advanced, which is available at Magyar Telekom in test networks. In connection with 5G, concrete plans only appeared in 2014, and standardization has just started this year. The first commercial networks are expected to appear in 2019-2020.

bbj staff

Magyar Telekom has been investing big resources in the development of 4G. Is it still a major focus of MT’s efforts What does Telekom do to now that you have reached 95% of promote the use of 4G? residential coverage? A: As of this spring, Telekom A: Both the cable and mobile network made 4G available for all its clients are important for us. It is true that, in using mobile internet. Subscribers use the past 2-3 years, the focus has been the comfort of fast internet on more on developing the mobile network, as devices and screens, and it is important we introduced the 4G technology in this to support the spread of 4G with a period. As a result of our efforts, we have wide portfolio of 4G devices and offers. more than 95% of residential coverage, Subscribers of Magyar Telekom can enjoy which will be expanded to 97% by year’s the advantages of fast 4G abroad as well. end. The quality of the network is also of Beyond these indicators of success, vital importance. That is why we worked three independent measurements to ensure that our broadband mobile recently proved the excellence of Magyar Christopher Mattheisen: ‘It is an ambitious target, but I am optimistic.’ internet connection received the top Telekom’s mobile network: Independent results in independent domestic and consulting firm P3 Communications, awarded Magyar Telekom’s 4G mobile year, which meant that the company had MHz is that it can spread more widely, so international tests in 2015. More efforts are needed to expand network the “Best in Test” title, among to establish 1,305 new 4G bases. Today, that a single base can allow for a much knowledge and increase the demand domestic and international service our most modern mobile internet service bigger coverage area than would be for online services. We are reaching has become available in more than 2,400 allowed by other frequency bands. This providers in the field of voice and the younger generations with our settlements around the country. characteristic makes it possible to cover data services. Telekom’s 4G mobile less-populated countryside areas with Smartdigital program, which is a series network also won first place based of lectures that our colleagues offer in Is broadband cable 4G technology. on the measurements of Ookla Before 2014, Magyar Telekom was their free time, to tell students about still needed, or can we Speedtest’s customer mobile network only able to operate its 4G network in the possibilities of the digital world. Our “leapfrog” into a world – and those of the National Media and the 1,800 MHz band, previously used Webeasy service also helps by making where broadband is supplied by a Infocommunications Authority NMHH. for 3G broadband, and that limited the it easy for small companies to create an Meanwhile, we have also been working mobile network? possibilities of country-wide coverage. online appearance. A: A fast and reliable cable network on cable networks. The Hungarian As the result of the frequency tender, we will be necessary in the future, as cable government and Magyar Telekom both It seems the regard the development of broadband networks can bear ten times more data have gained access to frequency blocks telecommunications needed for us to provide our customers infrastructure as having elevated transfer than a mobile network. market is becoming more The expansion of mobile data transfer with the advantages of all-round 4G significance. Our mutual aim is that overcrowded. What possibilities do every household in Hungary should is chiefly being driven by increased mobile internet. you see for growth in Hungary? have broadband internet by 2018 – which demand for video and shared consumer A: One vital engine of growth is the What kind of Internet of is the goal envisioned for 2020 under content. Along with traditional devices, demand for expanded mobile data traffic, Things (IoT) applications more and more equipment is expected the European Union’s Digital Agenda. which is chiefly being generated by to be connected to mobile networks, like are relevant in Hungary? With the support of development by video and consumer shared content. In Magyar Telekom, we believe Hungary cars, energy measurement tools, health- How widely are they being used, and the last year, global mobile data traffic can achieve this goal by 2018. It is an care devices and devices worn on the what are the possibilities? ambitious target, but I am optimistic body. With the spread of smart devices A: A lot of things that are today being has grown by 60%, and the dynamics that we can reach it, especially because and 4G, media consumption and the classified as IoT are simply modernized are not expected to decrease. Beyond every player is doing their job to make desire to share experiences has been versions of telematics applications that traditional devices, more and more items it a reality. The Hungarian government shifting towards smart devices, and have been used for decades. But there like cars, energy-use gauges, healthare solutions becoming visible on the care devices and wearable devices will is working on the establishment of an shopping is moving online as well. horizon that demand functions offered be connected to the mobile internet. environment encouraging investments, What does it mean that by 4G, or in time, 5G. Examples include The spread of smart devices, as well and the market is focusing on driverless cars or remote-controlled as the desire to share experiences via Telekom offers 4G services development. And, naturally, European surgical robots, which will enter everyday portable devices and to shop online, are on 800 and 1,800 MHz? Union support will also be needed. A: The frequency tender of 2014 made life from the sci-fi world in a few years’ all driving 4G use. Our future direction it possible for media service providers time. These will require reliable data is likely to include integration of the What type of work does to occupy the 800 MHz band, which is connections in every circumstance, so telecommunications, IT, media and the development of the 4G being mutually used by Telenor in the only the best mobile internet network entertainment markets – using cable and network involve? framework of a network cooperation. will suffice. IoT has great potential for mobile networks – in a digital world built A: Magyar Telekom made 4G available for 2,199 new settlements in the past One of the greatest advantages of 800 the whole infocommunications industry. around online connections.

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2015.10.14. 20:09

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Budapest Business Journal | Oct 16 – Oct 29, 2015

expert opinion

Rita Veres Company Director

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS are paid promotional content for which the Budapest Business Journal does not take responsibility

Aon Hewitt

Moreover, considering the unfortunate drawback in our education system and attitude, we have to contemplate the future in order to be able to react rapidly. A short while ago, at Aon Hewitt’s Next Hour 2025 event, CEO’s, HR managers, consultants and Y generation representatives were brought together in a hackathon-like brainstorming session to identify the key changes with which HR departments must cope. Four challenges were delineated: dealing with the consequences of almighty technology; creating agile, fast, proactive and responsive organizations; finding new-style leaders; and future management of the connection between the individual and the organization.

Hungarian intellectual capital is doing well: Every day we come across Hungarian success stories – stories about impressive technological or digital advances, surprising research results or the radiance of our creative industry. Still, there is no time to rest; improving talent is crucial to maintaining competitiveness. This is not only true for individual companies, but also for the whole economy, right now and 5-10 years in In 2025, we will be able to work the future. Aon Hewitt’s inland database and trend report indicates the need for in transnational groups without a HR to evolve and find solutions to the command of foreign languages and coming changes in the labor market – without the need to leave our homes education, technological advances, etc. – simply through the optimized use of technological achievements. Online In order to gauge our current status, solutions and gamification will infiltrate Aon Hewitt conducted a “Macro Talent” into workplaces. Organizations will survey on behalf of HVG HR Center, in possibly employ “work-life experts” collaboration with GVI. In short, our goal to facilitate our lives because of the was to inspect the relationship between necessary interweaving of private life the forecasted manpower demand of and work. medium-sized and large enterprises Furthermore, in keeping with the and the supply of young professionals about to graduate from higher education. opinion of 92% of Millenials surveyed According to the survey, by the end (Deloitte Global Human Trends 2014), of 2017, enterprises will face a huge profit on its own will not be the singular shortage of specialists: more than 21% indicator for business success and of the organizations will have to deal efficiency. Job descriptions will soon with strategic shortages, particularly in fade away because they are too inflexible. the fields of engineering and commerce. Companies are less likely to keep a fixed Some 40% of those surveyed project the organizational structure, and regulations lack of mechanical engineers, and 34% will be replaced with principles. Flat, see a shortage in electrical engineers project- and network-based solutions – to an extent that could hinder the will own the future; boundaries between implementation of corporate strategies. enterprises will be blurred; virtual Companies said they intend to hire entry- corporations will be formed. Maybe an level workers from these fields more aggregated happiness index will show than any other. While the low number of the satisfaction of employees. We would graduates is a concern, the attraction not be surprised if in the near future we of working abroad could further reduce receive a business card from a “chief the number of qualified candidates. So, cultural officer” or a “future analyst”. HR specialists, there are lessons to be We imagine the future managers learned. as “chameleons”, and the credo of Besides analyzing the current situation, youth will definitely affect their style of we need to be forward-looking. How will leadership as well. Employees will need accelerated technology affect workforce? high intellectual abilities and emotional How will gamification be separated intelligence, as well as outstanding from work? How is work perceived by intercultural and interpersonal skills. It is Generation Y? How can we increase the almost impossible to limit this fantasizing satisfaction and engagement of today’s about life in 2025. At Aon Hewitt, we youth? In what ways will workplaces believe in progress, and that is why need to evolve? Is HR prepared for the I encourage everybody to think and future? There are many questions that talk about the future, to inspire people SMEs and large companies should start around us to start a dialogue. In that to handle right now. We are convinced way, we can shape a future that seems that the impact of changes are about to remote – and even scary to some. In affect the labor market are unpredictable. fact, there is no need to fear.

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Photo MTI / Szilárd Koszticsák

Future challenges at work

Prime Minister Viktor Orbán checks out an exhibition at the ITU Telecom World conference on October 12.

ICT world gathers in Budapest An October 12-15 conference here, organized by a UN agency, put Budapest and digital business in the spotlight. zsófia végh

Government officials and information and communication technology (ICT) professionals from around the world came to Budapest’s Hungexpo exhibition center October 12-15 for an international meeting with the proclaimed goal of “making ideas go further, faster to make the world better, sooner”. The International Telecommunication Union (ITU), the UN agency responsible for ICT-related issues that is celebrating its 150th anniversary this year, has organized ITU Telecom World for 40 years. The conference allows for discussion of a broad range of topics, with the most common being access to digital services and goods, regulation, and growth. “I think it is a powerful message and feedback for Hungary and the whole region that ITU brought its jubilee world conference to Budapest. The future is present in Hungary, and Hungary is a hub of the European ICT industry right now,” Kerstin Günther, managing director of Deutsche Telekom’s Pan-Net and chair of the Board of Directors of Magyar Telekom said at the conference opening. The event, said to have attracted more than 250 leaders from 88 countries, featured showy exhibitions and some events that may have seemed like formalities, but discussions taking place at ITU Telecom World gatherings often set trends in the digital economy, internet, and technology in the future. In global competition, the European telecom industry has been weakening for a while because of a highly fragmented market structure and the difficulty of attracting capital, Magyar Telekom CEO Christopher Mattheisen said. In a session on integrating digital markets, Mattheisen said regulators still tend to treat the sector like utilities, and are often behind the facts a few cycles. Unless imbalances are corrected, European companies won’t be able to invest, he added.

Orbán suggests ‘Google tax’ Pushing an idea the press has dubbed a “Google tax”, Prime Minister Viktor Orbán told the opening session of the ITU Telecom World conference in Budapest that foreign companies profiting from Hungary’s digital economy should contribute to the country. Orbán also noted that the ICT sector’s 21-22% contribution to GDP makes the weight of the digital economy within Hungary higher than the EU average. He said the country aims to provide every household with broadband internet access by 2018, which makes business sense: According to the European Commission, a 10% increase in broadband penetration raises GDP by 1-1.5%.

Among the many pavilions on display, some of the most spacious and spectacular were those from South Korea, China, and Saudi Arabia. The Hungarian exhibition was strong on invention and application – with several developers demonstrating prototypes showcasing the use of the Internet of Things or other digital solutions. “There are huge opportunities that are coming out of technology today and Hungary will benefit from them as much as any other country,” Mattheisen told the Budapest Business Journal.

2015.10.14. 20:09

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Budapest Business Journal | Oct 16 – Oct 29, 2015

Hungarians bring things together in the IoT Hungarians are at the forefront in developing applications for the new Internet of Things, which allows machines to communicate with one another. zsófia végh

Bikers who commute to work or courier service messengers will surely welcome the market launch of Shoka App and Bell, a digital visibility/bell/anti-theft device that comes in the form of a bicycle bell. The Hungarian invention, which combines a fixed element attached to the handlebar and software communicating with it, has different ringtone options for cars and pedestrians and a navigation feature as well. Shoka improves riders’ safety, which can be compromised by other technological advances. “Smart cars are ever more about providing silence and comfort inside, so their drivers are less likely to spot a biker on the road when listening to music,” Daniel Falus, CEO and co-founder of ShokaBell tells the Budapest Business Journal. Using smartphone platforms, ShokaBell can interrupt the music and bring the bike’s ring within the car, Falus said. ShokaBell also alerts bikers if their parked bike is moved (theft alert), and plans routes that avoid places with the most braking and ringing history, as logged previously by the app. The bicycle bell, production of which is set to start next spring, is a good example of the Internet of Things (IoT). Smart and communicating: That is the essence of the IoT, which seeks to connect physical products that transmit data to a “brain” that processes and uses the information smartly. It seems no sector will remain unaffected: Healthcare, education, business services, transport; all are seeing developments. According to a recent European Commission study, the market value of the IoT in the EU is expected to exceed €1 trillion in 2020. It is not yet clear how much of that market belongs to Hungarians, but this country has some advantages for those working in the field. The ICT Association of Hungary (IVSZ) has just launched a survey to gauge the relevance of the IoT here. The number of enthusiasts is high. The first professional forum, IoTPedia meetup in Budapest last May drew between 80-90 attendees. “Since then LogMeIn, Magyar Telekom, GE, SAP, and Cisco have taken an active role in building the community,” says Balázs Szabó, organizer, cofounder and CEO of IoT Labs Ltd. The company has developed Smartdrive.io, a plugand-play car-fleet management solution. IoT Labs secured nearly €400,000 in investment funds and is about to launch the product on the German market. Safety and navigation solutions are popular among Hungarian companies involved in the IoT. Car navigation system producer NNG earlier announced it would start working on connected car features. SmartVineyard, a vineyard monitoring

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Top Hungarian winemaker Tamás Dúzsi, center, has SmartVineyard watching his grapes.

Fifth generation talks to machines

The ShokaBell uses the IoT to prevent theft and increase safety.

Bikes that communicate with your smartphone if they are being stolen, sensors that watch over vineyards and solutions for managing a company car fleet are among the applications being developed here. system by Quantislabs Ltd. can prevent theft and damage beyond its main feature of collecting and synthesizing weather data for healthier grapes. Velotrack, an anti-theft and sports tracking device for bicycles, not only notifies the owner if a bike is being stolen, with its GPS it helps track and find it.

Wide-open field Those investing in IoT early on are entering a field with huge potential, Péter Vityi, vice president of IVSZ tells the BBJ. Since the threshold is fairly low – it requires a non-IT expert who spots a niche need and an IT professional – startups have more room to maneuver, Vityi says. “IoT doesn’t have to concentrate as much as mobile developments did, which were dependent on star manufacturers such as Apple or Samsung.” Csaba Antal, head of business development at Pear Williams Kft., the

While the third and fourth generations of mobile networks – 3G and 4G – were designed for people to connect to the internet, 5G is designed for the industrial internet, wherein machines talk to each other. Mobile broadband will still be important, but 5G will allow wireless connectivity for new uses, including wearables, smart homes, traffic safety, critical infrastructure and industry applications, and very-high-speed media delivery. Machine-tomachine communication can be divided into two main categories: Massive machine-type communication is about connectivity for large numbers of low-cost and low-energy devices in the context of the IoT; Mission-critical machine-type communication requires highly reliable communication to enable real-time control and automation of dynamic processes in various fields, such as industrial process automation and manufacturing, energy distribution, and intelligent transport systems. company behind Velotrack, agrees. “The market is at a very early stage in every part of the world, large companies have just started to build platforms,” he says, explaining that this means Hungary has an equal chance to compete. Yet, in order to become global players, Hungarian firms will need to overcome a shortage of experts and capital. There are around 2,500 engineering graduates per year in Hungary, but the domestic market has enough demand for another 4,000-5,000 more. As for capital, Szabó says: “Prototypes may be brought to life with an open-source platform easily, but developments require heavy investments. The Hungarian ecosystem at the small enterprise level is not prepared for that.” Pear Williams’ Antal disagrees, however, maintaining that there is plenty of capital available. “As long as a product can generate real demand, its creators will be able to find investors who finance it,” he says. His company received HUF 98 million in capital from Széchenyi Tőkealap-Kezelő Zrt. in February, and also received several business offers as one of the nine Hungarian startups featured at the Tel Aviv DLD Expo this September. Unlike ShokaBell, Velotrack

sells to businesses, as its machine-tomachine tracking device is built into the bike during the manufacturing process. “In Israel, we talked with electric bicycle firms, as these are much more expensive, and therefore require more security,” he says, adding that production will begin this month. Some of the more interesting progress in IoT is taking place in the automotive industry, as cars are being made to communicate with signposts and each other. That Hungary is an auto-making hub comes in handy for budding IoT startups, which can cooperate. Shoka, for example, gets essential technology from a Hungarian car parts supplier. The use of a 5G will be inevitable for the segment to progress, and for this Hungarian companies are also well positioned. Ericsson, a global communication technology and service provider, is carrying out 5G R&D activity in Budapest. The Swedish-based telecom recently announced the opening of the Ericsson Garage at its R&D facility in Budapest, a technology incubation lab, working with radical innovations connected to cloud computing, virtualization, 5G, IoT, and analytics.

2015.10.14. 20:09

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Budapest Business Journal | Oct 16 – Oct 29, 2015

Local startup adds videos Hungarian professionalism to instant messaging

expert opinion

re-adapt to Hungarian circumstances and opportunities. And that is often a source of discontent. Unfortunately, pessimism is a CEO fundamental characteristic feature of Arenim Hungarian experts, and they do seem Technologies AB to have a different approach to the and Minerva-Soft work. Only a few people seem to really Kft. like what they are doing – and to be enthusiastic about their work. Due to Are Hungarian professionals their higher level of motivation, foreign different from foreign professionals? professionals are often more efficient Does it make sense to make such and they do not get bogged down by a distinction? If yes, on what minor problems. Fortunately at our companies – basis? How are we different from Minerva Soft and Arenim Technologies foreigners? Or why cannot the two be – almost all colleagues combine differentiated? the positive characteristics of both As we are working in the IT and Hungarian and foreign specialists: telecommunications sector, I mainly They are highly educated, creative and have experience with professionals in motivated. And if they do get caught up those fields. In addition, I would make in a problem, the management will help a distinction between age groups. Older them to overcome their difficulties. people are reliable, and they have in-depth professional knowledge, but What is Hungarian intellectual in many cases they lack the innovative capital like? As a leader, how spirit, and only a few of them are willing would you compare the Hungarian to start big initiatives. situation to international one? What Meanwhile, the majority of the does Hungarian intellectual capital younger generation prefers to tackle lack, and what can we be proud of? only big challenges. They do not do very Given that more Hungarians have well in achieving small targets, which experience in international work, is it require diligence and perseverance. possible to talk about the reputation Their expectation is high, sometimes higher than that of the professionals of Hungarian intellectual capital from Western Europe. With the abroad? When a company is working in presence of global companies in international markets, opinions about Hungary, this generation can access the their home country are very important. latest technology, and they are involved I often experience that Hungary’s in international projects, and thus the reputation is not positive everywhere, differences between them and foreign and this image is often projected onto professionals is beginning to disappear. Hungarian experts as well. Of course Today, almost every student has the opportunity to take a semester abroad, these perceptions are misleading, and and they work during their studies to they can create disadvantages for a gain experience, so professionals in company that goes abroad. However, if we speak about a the younger age group are less different professional as person, it is usually not from their peers in Europe. disadvantageous that she or he comes However, often these young people, from Hungary. In fact, in many cases, upon their return to Hungary, cannot countries or companies have already had good experiences in working together with Hungarian companies and experts. In these cases, being Hungarian can even be an advantage. And it should be pointed out that Hungarians have achieved unquestionable success. Just think of the ten most influential Hungarian inventions, the great Hungarian inventors, top Hungarian professionals or Hungarian startups that have become famous in the last five years.

NOTE: ALL ARTICLES MARKED EXPERT OPINIONS are paid promotional content for which the Budapest Business Journal does not take responsibility

Szabolcs Kun

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A leader in the ITC field answers questions about the particular qualities of local professionals, and how Hungarian experts are perceived abroad.

ClipDis, which turns text into video clips, gets exposure with Facebook Messenger. Levente Hörömpöli-tóth

What a difference a dinner can make. That’s when Jason Binks, at the time director of digital at BBC Worldwide, received a funky video message from one of his daughters from across the dinner table. The demo app grabbed Binks’ attention right away: It turned typed text into a video clip by pasting together phrases from movies, YouTube CEO Samuel Hapak. material and music videos. Thus a boring line like “What’s up, buddy?” could be for now, the market is evolving. ClipDis spiced up by making different movie and is therefore working hard on committing TV characters of your choice say each fans by offering more. “The 2.0 version part of the sentence, from chief mobster to be launched in October enables users Tony Soprano to Neo from the Matrix. to film themselves with their smart The app, developed by an inventive phone and then make that recording Hungarian team, so intrigued the BBC’s part of the message,” Hapak said. They digital expert that he got involved with are also forging alliances elsewhere, as the founders of ClipDis. Now he’s CCO of with kik, another exponentially growing the firm, competing in the promising field platform. of instant messaging apps. According “Kids in the 12-16 year-old age group to a Juniper Research report, the $251 are simply bored all the time. They are billion a year mobile messaging industry surrounded by all this technology; they will be dominated by instant messaging need to keep themselves busy. Kik is apps, which will generate 75% of traffic, or increasingly used by them, which gives 63 trillion messages, by 2018. us a vast potential crowd to reach out to,” Considering the growth in instant the CEO noted. Using movie characters for commercial messaging, it was no accident that Facebook shelled out $19 bln for purposes brings up questions of WhatsApp one and a half years ago. intellectual property rights. “Of course, ClipDis hopes for a similar rosy exit, we were aware of this aspect from the although its valuation at $3 million is very start. We provide a platform that one comma short of the $3 bln Mark works like YouTube. We are not using Zuckerberg offered for Snapchat (which the content; the users are. We only make was turned down). it available for them, so it remains there While they haven’t made an offer to until advised otherwise by copyright buy the Hungarian startup yet, Facebook holders,” Hapak said. did invite ClipDis to be among the Hapak must be on to something, handful of features incorporated in the because within one year of its creation new Facebook Messenger, launched in ClipDis is already involved with the March 2015. And the overnight exposure Zuckerberg Empire. The company to Facebookʼs 700 million active users received an angel investment of $75,000 helped ClipDis to draw two million users from Schneider Trading Associates in order to get the demo work done in time in a short time. Users seem to enjoy the ability to for the Facebook presentation. In fact, mix their own video messages quickly CEO Sonny Schneider was so impressed and easily. “Templates are popular. We by the project that he wired the money realized people don’t want to bother without any paperwork. His Star Wars with figuring out what to send,” Samuel mania may have played a role in giving Hapak, founder and CEO told the the green light, given that ClipDis has a Budapest Business Journal. “However, rich section devoted to it. they still have the option to create their Before committing themselves to own messages. Some 50,000 words are Facebook, the ClipDis team was also already available from which a video invited to Boulder, Colorado, for an message is edited.” interview with the Boomtown Accelerator There are obvious indications that program. In the end, the call of Facebook demand is growing in the instant proved to be stronger, and the app’s messaging segment, as ESPN and launch in Messenger helped it attract other heavyweights show interest additional investment totaling HUF 130 in launching their own related apps mln from Microsoft and venture capitalist tailored for Messenger. Playfair Capital. “Facebook wants to see what works Now ClipDis’ must live up to users’ with users. Emojis are widely used, but expectations. But the team seems geared people want more and they are after up. “They want evermore personalized even more personalized content,” Hapak options to send messages and we are explained. Accordingly, even though the ready to meet this demand,” Hapak landscape seems to be dominated by gifs assured.

2015.10.14. 20:09

www.bbj.hu

Budapest Business Journal | Oct 16 – Oct 29, 2015

Telecommunications equipment manufacturers

21,441

neC easteRn euRope kFt.

8,991

–

avaya HungaRy kFt.

4,442

–

alCatel-luCent HungaRy kFt.

3,411

–

CisCo systems magyaRoRsZág kFt.

www.nokia.com

www.nec.com

www.avaya.com

www.alcatel-lucent.com

www.cisco.hu

moHanet mobilsystems Műszaki-Fejlesztő keReskedelmi És sZolgáltató ZRt.

2,854

309

–



–

Ÿ Ÿ Ÿ Ÿ

–

Ÿ Ÿ Ÿ Ÿ

–

104 (Budapest)

1989

– Samsung Electronics Corporation Ltd. (100)

Joseph (Jeongwoo) kim Kim Ki-sup Mónika Nagy Törökné

1138 Budapest, Dunavirág utca 2. (1) 453-1100 (1) 453-1103 –

2007

– Honhai (100)

péter tálos – –

2900 Komárom, Bánki Donát utca 1. (34) 886-069 (34) 886-101 szekesfehervar@ emea.foxconn.com

1992

– LG Electronics Europe Holding B.V. (99.99), LG Electronics Inc. (0.01)

Roh youngnam Daemin Hwang Krisztián Szili

1097 Budapest, Könyves Kálmán körút 3/A (1) 455-6060 (1) 455-6066 –

1990

– Telefonaktiebolaget LM Ericsson (100)

gábor Éry – –

1097 Budapest, Könyves Kálmán körút 11/B (1) 437-7100 (1) 437-7467 valaszolunk@ericsson.com

Hui Chun, lu yong, Wang shengli – –

1138 Budapest, Népfürdő utca 22. (1) 555-2300 (1) 555-8989 –

452

1,673

–

231

2005

– Huawei Technologies Cooperatief U.A. (100)

2007

– Nokia Solutions and Networks B.V. (100)

béla Zagyva Erzsébet Tóth Andrea Nagykálnai

1092 Budapest, Köztelek utca 6. (20) 977-7797 – –

–



–

2002

– NEC Europe Ltd. (100)

lajos veres – –

1142 Budapest, Ungvár utca 64–66. (1) 814-6424 (1) 321-8202 telecom.info@nec.hu

–

115

1990

– Sierra Communications International LLC (99.99), AVAYA Emea Ltd. (0.01)

andrás turai, györgy gombár – –

1062 Budapest, Váci út 1–3. (1) 238-8200 (1) 359-0583 –

   



–

1990

– Alcatel-Lucent Participations S.A. (100)

tamás matusek, kálmán topor – –

1116 Budapest, Kondorfa utca 6–8. (1) 209-9500 (1) 209-9599 –



Desktop UC system with messaging and phone functions, video conference and telepresence systems

1997

– Cisco Systems Inc. (Ÿ), Cisco Systems Management B.V. (Ÿ)

evan sloves, krisztina ilona Horváth – –

1123 Budapest, Csörsz utca 45. (1) 225-4600 (1) 225-4611 –

2006

Zoltán Havasi (90), Zsolt Mozgó (10) –

Zoltán Havasi Norbert Szabó –

1152 Budapest, Telek utca 7–9. (1) 271-1141 (1) 271-1142 info@mohanet.com

2010

– Panasonic Marketing Europe GmbH (100)

ireneusz piotr smaga – –

1117 Budapest, Neumann János utca 1. (1) 382-6060 (1) 382-6066 –



–



–



–

addRess pHone Fax email

–



Data transmission systems

top loCal exeCutive CFo maRketing diReCtoR

Ÿ Ÿ Ÿ Ÿ



–

Tablets, TV, audiovideo, cameras, monitors, printers, LED, SSD, portable SSD, memory cards, optical drivers

oWneRsHip (%) HungaRian non-HungaRian

1,934

 

–

otHeR teleCom and netWoRk equipment

yeaR establisHed

nokia solutions and netWoRks kFt.

–

  

industRy-speCiFiC solution

–



message Handling system

36,910

www.huawei.hu

39,186



–

Cti/CRm solution

HuaWei teCHnologies HungaRy kFt.

www.ericsson.com

84,948

–

  

voip

eRiCsson HungaRy kFt.

www.lg.hu

303,556



vsat system

lg eleCtRoniCs magyaR kFt.

www.foxconn.com



Call/ContaCt CenteR

pCe paRagon solutions kFt.

www.samsung.com

704,593

business pHone system/pbx

samsung eleCtRoniCs magyaR ZRt.

isdn pHones

Company Website

Fax maCHines

ansWeRing maCHines

analog pHones

tRi-bRand mobille pHones

dual band mobile pHones (900/1800 mHZ)

Rank

total net Revenue in 2014 (HuF mln)

types oF equipment

no. oF Full-time employees on July 1,2015

Ranked by total net revenue



–

 



–



–

www.mohanet.com

panasoniC maRketing euRope gmbH soutHeast euRope bRanCH oFFiCe www.panasonic.com

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   

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4 Socialite BBJ

WHAT’S

Fun things to d o in Budapest for the nex t t wo weeks.

Moving Walls 22 / Watching You, Watching Me Opened October 14, Open Society Institute

either consecutively or simultaneously. For more information check out the festival program. transferfest.blog.hu

This exhibition explores the intersection between photography and surveillance. Employing a dynamic range of approaches – from documentary to conceptual practice, from appropriation to street art – ten artists provide a satellite-to-street view of the ways in which surveillance culture blurs the boundaries between the private and public realms. opensocietyfoundations.org

WOMEX October 21-25, various venues

Budapest Transfer International Festival October 15-18, various venues Budapest Transfer is an interdisciplinary arts festival with a focus on contemporary literature. Each edition explores a theme – this year’s is gastronomy – that appeals not only to literature enthusiasts but also to the general public. The festival invite writers, experts and scientist who deal with or study food in all its real or symbolic meanings, and those who engage in or write about culinary arts. Most of the festival’s events are translated

This annual international networking platform for the world music industry will hold its five-day event in Budapest this year. It includes a trade fair, showcase festival, conferences, and film programs, as well as a festival opening and award ceremonies. Featured at this year’s event is Cheikh Lô of Senegal, Gypsy HeartBeats from Hungary, Bella Hardy of the U.K., Wu Man from China and Glitterbeat from Germany, among many others. womex.com Balthazar October 25, A38 Belgian indie pop quintet Balthazar comes to Budapest in support of their latest release “Then What”. This is also their first album in which a producer was involved and for this task they chose Ben Hillier, known from his work with Blur and Depeche Mode. The band’s sound is characterized by playful grooves and melancholic melodies with the

Wu Man performs at WOMEX on October 24. strong dynamics of the band holding it all succinctly together. a38.hu Cypress String Quartet October 28, Pesti Vigadó The Cypress Quartet was founded nearly 20 years ago and has given more than 1,000 concerts on four continents. For

their Budapest performance the quartet will play works by Beethoven including his String Quartet No. 1 in F major, op. 18, String Quartet No. 16 in F major, op. 135 and his String Quartet No. 7 in F major, op. 59. Members of the quartet are Cecily Ward on violin, Tom Stone also on violin, Ethan Filner on viola and Jennifer Kloetzel on cello. vigado.hu

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Budapest Business Journal | Oct 16 – Oct 29, 2015

Tokaji Aszú astounds as always Rob Smyth

As dry Tokaji wine increasingly grabs all the attention, we should never neglect the sweet side of Tokaj and its crowning glory: Tokaji Aszú. While the region’s still fledgling dry whites are starting to build a reputation, Tokaji Aszú is and continues to be among the world’s greatest sweet wines, if not the greatest of all. What makes the best Tokaji Aszú so special is its ability to possess vibrant freshness from the tingling acidity to counterbalance the sumptuous sweetness and thus make the wine remarkably layered, complex and yet not cloyingly sweet. The all important acidity was referred to in the tasting note made by the prestigious American wine magazine Wine Spectator, which has recently given a whopping 93 points to Tokaj Classic’s Aszú 5 Puttonyos 2010. Despite the difficulty of this rainy and cool vintage for dry wine, it is proving to be an excellent year for botrytized wines. “Marked by racy acidity, this nutty dessert wine is intense and long, with

flavors of lemon pâté de fruit, orange peel and almond,” said Wine Spectator’s Bruce Sanderson. He also referred to its classic minerally finish. Normally, the Furmint grape provides the steely and focused backbone in an Aszú blend, with the main supporting act being played by the more luscious Hárslevelű grape, possibly along with some Muscat-like fragrance from the Sárgamuskotály (Muscat Blanc), or one or two other grapes ending up in the mix. Furmint – whose thin skins make it ideal for attracting so-called “noble rot” or botrytis, which greatly concentrates sugars, flavors and acids – is occasionally deemed sufficiently hedonistic by itself to go it alone. Disznókő’s ultra rare and most premium offering, Kapi 6 puttonyos Aszú ( pictured), is not only made exclusively from Furmint, but it also comes from a single vineyard. French-owned Disznókő has just launched the 2011 Kapi 6 puttonyos, only its third ever release of Kapi. This wine is just a baby but it already shows considerable breeding. It is lemon-colored, full-bodied, reflecting the warm vintage, and fleshy with lots of peach, green apple, lime, white flowers, some tropical fruit and green pepper on the nose and palate. It currently doesn’t taste that sweet despite the 164 g/l of residual sugar, but it oozes pure flavors in Disznókő’s trademark contemporary, fruit forward style. The 2011 vintage was hot and dry and the grapes ripened very early, but botrytization was slow and limited due to

a lack of humidity, explains estate director László Mészáros. Nevertheless, the quality of the Aszú berries was exceptional, with great concentration from extreme shriveling, he adds. Mészáros and his team were surprised by the unexpected freshness from a very hot vintage. This could have something to do with the high limestone content of the Kapi vineyard, which can preserve acidity in wine. Its soil also comprises volcanic rhyolite tuff and lighter clay. The Kapi is a south-facing plot situated at 150-180 meters above sea level in the upper part of the Disznókő’s estate. The Aszú grapes for Kapi 2011, of which 4,654 individually numbered bottles have been made, were picked by hand, one by one, with three successive sortings between September 28 and November 11, then steeped in a Furmint-based must. This lengthy process served to allow the fruit to express all its richness and aromas, according to Mészáros. The price is HUF 29,000, which is right at the upper end of the Tokaji Aszú scale, Photo: © Vinexia.fr

Sweet, but balanced with acidity, this classic remains an excellent reason to drink Hungarian wine.

but Disznókő is a company that puts considerable effort into every single drop, which shows here. Its estate Aszú wines, which are blended from grapes coming across all its vineyards, always offer great value. Incidentally, the dryness also led to the lowest amount of Eszencia, the über intense elixir made exclusively from the free-run juice of Aszú berries, in the quarter of a century that the estate has thus far been operating. The 2005 Kapi 6 puttonyos is currently in majestic form and is striking that delicious middle ground between youth and age, with notes of mushroom, apricot, candied orange peel, with a refreshing burst of fresh citrus on the finish. It was a cooler vintage with lots of rain in August and September, with the grapes shriveling slowly. Another top Aszú from this vintage is Oremus’ Tokaji Aszú 5 puttonyos, which scooped 93 points from Wine Advocate. The 1999 Kapi, which comes from a “classic big vintage”, is naturally much more developed with an amber color, and is now registering plenty of tertiary notes like dried apricot, ginger, and orange peel, but the finish is, as ever, propped up with that welcome zesty citric zip. I’ve been getting mixed reports about the potential for good botrytis this vintage but, as ever in Tokaj, there can be significant differences between individual plots. This wet and cold weather could well put a dampener on proceedings and is more likely to lead to the development of malign grey rot rather than noble rot, unless the sun starts shining soon.

Sofitel Budapest welcomes new executive chef Deff Haupt is a German-born chef who has recently joined the team at the Paris Budapest Restaurant at the Sofitel Budapest Chain Bridge Hotel as executive chef. Haupt is known for his adventurous cooking style and has worked at some of the world’s best restaurants including the three-Michelin Star Au Crocodile in Strasbourg, Paul Bocuse’s restaurant in Lyon and Chef Joel Robuchon’s L’Atelier in Paris. Haupt’s menus at Paris Budapest will explore the fusion of French and Hungarian cuisine with an emphasis on local suppliers. One of his favorites is the Hungarian dish lecsó, the flavor of which he says is highly dependent on the quality of ingredients used.

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