VOL. 31. NUMBER 20 | NOVEMBER 3 – NOVEMBER 16, 2023
HUF 2,100 | EUR 5 | USD 6 | GBP 4
HUNGARY’S PRACTICAL BUSINESS BI-WEEKLY SINCE 1992 | WWW.BUDAPESTBUSINESSJOURNAL.COM
SPECIAL REPORT INSIDE THIS ISSUE
Telecoms
MTel, Municipal Library to Bridge Generational Digital Divide Magyar Telekom and the most extensive library network in Budapest have launched a joint Netrevalók (Net worthy) program to introduce older people to digital solutions that can help them in their everyday lives. 16
The Race for Lightningfast Internet The European Commission is looking to boost the digitalization of EU member states with its Digital Decade 2030 strategy. A vital point of this is the improvement of digital connectivity, with an ambitious target of gigabit coverage to all EU households by 2030. 18
Partnering for Health Success
SOCIALITE
Tejföl: The Essence of Hungarianness? In their house, David Holzer’s partner and her daughter don’t just use tejföl in cooking. They smear it onto bread and crackers, eat it by the spoon, and, for all he knows, rub it into their faces as part of their beauty routine. What is the Hungarian obsession with sour cream? 21
NEWS
MNB Cuts Base Rate to 12.25% For the first time in three years, the Monetary Council of the National Bank of Hungary has lowered the base rate, reducing the effective interest rate a touch more than was expected to 12.25%. The last time the MNB cut the base interest rate was in July 2020. 3
BUSINESS
In October, Novartis announced the spin-off of Sandoz to allow the former to become a “pure play” innovative medicines company. Country president Matt Zeller explains what that move means locally. 12 BUSINESS
Hungary Continues to Count on American Investor Activity The main objective of Hungarian investment promotion is to secure future deals that help the economy step up the global value chain. U.S. companies can help accomplish that goal despite the challenging economic circumstances. 8
2|1
News
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
IMPRESSUM EDITOR-IN-CHIEF: Robin Marshall EDITORIAL CONTRIBUTORS: Luca Albert,
Balázs Barabás, Zsófia Czifra, Kester Eddy, Bence Gaál, Gergely Herpai, David Holzer, Gary J. Morrell, Nicholas Pongratz, Gergő Rácz. LISTS: BBJ Research (research@bbj.hu) NEWS AND PRESS RELEASES:
Should be submitted in English to news@bbj.hu LAYOUT: Zsolt Pataki PUBLISHER: Business Publishing Services Kft. CEO: Tamás Botka ADVERTISING: AMS Services Kft. CEO: Balázs Román SALES: sales@bbj.hu
CIRCULATION AND SUBSCRIPTIONS: circulation@bbj.hu
Address: Madách Trade Center 1075 Budapest, Madách Imre út 13-14, Building B, 7th floor. Telephone +36 (1) 398-0344, Fax +36 (1) 398-0345, www.bbj.hu
What We Stand For: The Budapest Business Journal aspires to be the most trusted newspaper in Hungary. We believe that managers should work on behalf of their shareholders. We believe that among the most important contributions a government can make to society is improving the business and investment climate so that its citizens may realize their full potential. The Budapest Business Journal, HU ISSN 1216-7304, is published bi-weekly on Friday, registration No. 0109069462. It is distributed by HungaroPress. Reproduction or use without permission of editorial or graphic content in any manner is prohibited. ©2017 BUSINESS MEDIA SERVICES LLC with all rights reserved.
BBJ-PARTNERS
VISIT US ONLINE: WWW.BBJ.HU
THE EDITOR SAYS
WHILE WE MAY FALL BACK, CAN WE SPRING FORWARD? Perhaps it’s the natural melancholy of the fall mists finally creeping in, even as the year acts as if unwilling to let fully go of summer before embracing winter. Perhaps it’s the uncertainty of what lies ahead, the fear of another winter of rising energy costs, or the possibility of the conflict in Gaza spilling over into the broader Middle East. Perhaps it’s that, in a world that has repeatedly proven it can move at breakneck speed, we seem to have been living with high inflation forever. Whatever it is, the economy seems uncertain of where it is heading. If you look closely enough, there are positive signs to be read in the tea leaves at the bottom of the cup (other forms of rune-reading are available). Inflation is undeniably on the way down, and we are even, finally, into positive real wage territory. It is frustrating that the government seems unwilling to take part in any debate that asks why inflation was so high here, other than blaming the war, the Brussels sanctions packages against Russia and multinational retail chains. Those same criteria affected every other EU member, but Hungary’s inflation was noticeably head and shoulders above even its regional peers for long periods. As divorced couples will all too sadly confess, it is hard to have a conversation about anything if only one party is willing to engage, but how else do you learn for the future?
Talking about multinational retailers, the government has been touting the success of its price comparison platform this week, reckoning that it has removed 0.5 of a percentage point from headline inflation. That doesn’t seem like a huge amount, if I am brutally honest. But anything that helps the least well-off reduce the cost of their weekly shopping basket should be welcomed, and as a business publication, we commend anything that stimulates competition. Other signals seem equally mixed. European economic strength is hard to spot, and as the EU is still where Hungary does the bulk of its business (despite the famed “Opening to the East”), this, as a history book from my youth used to put it, “is not a good thing.” Hungary’s government augurs growth of 4.6% in 2024. That, we can all agree, is “a good thing.” Inflation of 6% by the end of 2024 is better than the 11% MBH Bank predicts for this year but is still some way from the MNB target corridor of 2-4%. You might be excused for wondering if we will ever see those low inflation days again. But perhaps that’s just the melancholy talking again. Robin Marshall Editor-in-chief
Why Support the BBJ? • Independence. The BBJ’s journalism is dedicated to reporting fact, not politics, and isn’t reliant on advertising from the government of the day, whoever that might be. • Community Building. Whether it is the Budapest Business Journal itself, the Expat CEO award, the Expat CEO gala, the Top Expat CEOs in Hungary publication, or the new Expat CEO Boardroom meeting, we are serious about doing our part to bind this community together.
• Crisis Management. We have all lived through a once-in-a-century pandemic. But we also face an existential threat through climate change and operate in a period where disruptive technologies offer threats and opportunities. Now, more than ever, factual business reporting is vital to good decision-making. For more information visit budapestbusinessjournal.com
Photo by Tibor Katona / MTI
• Value Creation. We have a nearly 30-year history of supporting the development of diversity and sustainability in Hungary’s economy. The fact that we have been a trusted business voice for so long, indeed we were the first English-language publication when we launched back on November 9, 1992, itself has value.
Photo by National Széchényi Library / Fortepan
THEN & NOW In the color photo from state news agency MTI, candles are seen burning in the public cemetery on Göcseji út, Zalaegerszeg (225 km southwest of Budapest by road), before All Saints’ Day (also knowns as the Day of the Dead), on Oct. 29. The black and white photo from the Fortepan public archive dates from on All Saints’ Day in 1916, and shows the unveiling of a monument in Budapest’s New Public Cemetery honoring soldiers who fell in the first two years of World War I.
1
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
News
• macroscope
National Bank of Hungary Cuts Base Rate
For the first time in three years, the Monetary Council of the National Bank of Hungary (MNB) has lowered the base rate, reducing the effective interest rate a touch more than was expected to 12.25%. The last time the MNB cut the base interest rate was in July 2020, during the coronavirus epidemic, to 0.6%. At the same time, the decision also means that the pace of interest rate cuts has slowed down, albeit only minimally. ZSÓFIA CZIFRA
In a move that surprised many, the MNB’s Monetary Council cut its base rate by 75 basis points; the majority of analysts had expected a 50-basis-point cut. According to the MNB’s briefing issued following the decision, the step was made possible by the strong disinflation process and the reduction of external vulnerabilities. Global risks and the volatility of international investor sentiment will continue to require a cautious and prudent approach in the near future, and the MNB will make its decisions in accordance with this and the incoming data, the central bank says. The retrospective real interest rate, which entered positive territory in September, may rise in the coming
Change in Average Earnings in Hungary: 2003-2023 (January-August)
The average net monthly earnings of full-time employees (excluding fostered public works employees), HUF/month
MNB is instead focusing on its primary task, the suppression of inflation, and the stability of the financial system. “Since the central bank’s expectations, similarly to our own, is that inflation may drop very sharply by the end of the year, and given the vulnerability of the domestic economy, we expect it to continue the reduction of the base interest rate in the last months of the year,” said Gergely Suppan, head analyst at MBH Bank. “It might drop to 11% by December, possibly with minimal downside risks.” He thinks that the reduction cycle may continue
in
2024.
Public sector Private sector
* Without benefits
As the central bank considers it necessary to maintain a positive real interest rate, Suppan expects the base interest rate to drop to 6% by the end of next year.
“Since the central bank’s expectations, similarly to our own, is that inflation for reducing inflation, Gyula Pleschinger, may drop very sharply by a member of the Monetary Council, told leading business news publication the end of the year, and Világgazdaság [Global Economy]. given the vulnerability of This may further increase tensions between the central bank and the the domestic economy, government. While the MNB sees a we expect it to continue positive real interest rate as a means of reducing inflation, according to Minister the reduction of the base of Economic Development Márton interest rate in the last Nagy (a former deputy governor of the central bank), this hinders the start of months of the year. It might consumption and growth. He believes that drop to 11% by December, the MNB only pays attention to inflation. Pleschinger believes that the exact possibly with minimal amount of real interest rate needed in downside risks.” Hungary largely depends on the global Source:
period, which, according to the MNB’s assessment, could help disinflation further. September was something of a milestone in the monetary policy; since May, the MNB had cut back the one-day deposit instrument, which was introduced as a guiding rate in the midst of the financial market turbulence last October, by
100
basis points
per month in five steps, the last element of which was the closing of the two interest rates. However, September was also important for another reason: it was the first month in seven years when the real interest rate returned to positive territory, meaning inflation was already lower (12.2%) than the base interest rate, which will surely determine the central bank’s actions in the next period.
Positive News in View
According to the forecasts, there will likely be a more significant positive real interest rate (in other words, the difference between inflation and the interest rate) in the economy by the end of the year: the rate of inflation is expected to decrease to around 7-8%, and the MNB may cut the base interest rate back to approximately 11%. Many, if not the majority, of the central banks of developed or developing countries, including the Hungarian national bank, consider the maintenance of a positive real interest rate an essential tool
environment. He recalled that when yields rise rapidly in large developed markets, the danger of fluctuation in emerging markets increases. He noted that a recently published study by the International Monetary Fund, analyzing more than 100 cases, showed that those central banks that applied a strict monetary policy and kept the exchange rate stable were successful in suppressing inflation. This requires a positive real interest rate.
No Stimulation Necessary The central bank previously launched credit and capital programs to stimulate the real economy, so the question now is whether similar steps can be expected next year. Pleschinger told Világgazdaság that incentive programs are not currently on the agenda; the
As for the expected 11% interest rate at the end of this year, Pleschinger of the MNB emphasized that this level could be reached if no unexpected events, such as the market turbulence of last fall, another war, or a drastic increase in energy prices, occurs and inflation actually falls to the 7-8% range by December. According to Pleschinger, in the third quarter, the signs of the return of growth were already visible, especially in certain areas of industry and agriculture. However, for consumption and investments to rise permanently, the current inflation rate, and even that expected by the end of the year, is too high, so disinflation must continue into 2024, he concluded.
4|1
News
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
Investment Volumes Fall Across Central Eastern Europe CBRE has recorded EUR 350 million in annual commercial real estate investment volume for Hungary as of October, representing a 43% year-on-year fall in volume. This compares to a CEE average decrease of 45%; the leading investment markets of Poland and the Czech Republic returned mixed results, with drops of 61% and 9%, respectively.
Graphic by Sunset Paper / Shutterstock.com
“Investment volume for the year is hard to predict. We are more conservative and say circa EUR 500 million for this year,” commented Gábor Borbély, research director at CBRE Hungary, at the recent CBRE Press Breakfast.
A biweekly look at real estate issues in Hungary and the region
Artist’s rendering of the mixed-use Zugló City Center project in Budapest by the developer Bayer Property Hungary. It will provide around 11,000 sqm of hypermarket and retail, cafes and restaurants in addition to 168 apartments and 130,000 sqm of office space. “Next year, it should pick up and be around EUR 700 mln-800 mln. This is mainly driven by offices and retail. Hotel deals are unlikely now, as most owners benefit from their current position. The industrial sales pipeline is quite limited, and I would not say an exact share now,” he explained. More expensive finance is seen as resulting in higher yields across Europe. CBRE puts prime Budapest office yields
at
GARY J. MORRELL
Real Estate Matters
6.5%,
compared to 5.75% for Poland, 5.25% for the Czech Republic and 7.5% for Romania. With regard to supply, office delivery has fallen by 30% year-onyear as “development has dynamically slowed down,” according to Anikó Kovács, head of office advisory
at CBRE Hungary. “New delivery in the Budapest office market for 2023 is put at 180,000 sqm. There is a need for ESG-compliant new and existing office stock,” she added. For 2024, the office pipeline is estimated at 120,000 sqm, 40% of which is pre-let. There is sizeable delivery estimated for 2026, 55% of which is as part of the Zugló City Center by the residential constructor and developer Bayer Property Hungary. The project will provide around 11,000 sqm of hypermarket and retail, cafes and restaurants in addition to 168 apartments and 130,000 sqm of office space.
Pessimistic Over Retail
Attitudes towards the retail sector in Hungary are the most pessimistic in the CEE region, according to the CBRE index. No new shopping centers are in the pipeline, with development limited to the renovation of existing centers or retail as a component part of mixed-use projects and retail parks and strip malls in regional cities. “The proportion of online shopping as a proportion of retail spending for Hungary stands at 8%; therefore, there is still strong demand for shopping in physical retail centers,” commented Erika Garbutt-Pál, head of retail at CBRE Hungary. “All new developments in Budapest are part of larger urban development and redevelopment projects. Vacancy in the top-tier Budapest shopping centers is low, and the sourcing of suitably sized spaces for retailers in these leading Budapest shopping centers can be difficult,” she said. “Shopping center owners are refurbishing centers to meet changing
“Investment volume for the year is hard to predict. We are more conservative and say circa EUR 500 million for this year. Next year, it should pick up and be around EUR 700 mln800 mln. This is mainly driven by offices and retail. Hotel deals are unlikely now, as most owners benefit from their current position. The industrial sales pipeline is quite limited.” consumption habits such as an improved F&B content, a focus on services and entertainment and more common areas and meeting points,” Garbutt-Pál added. Developer-led industrial stock in Greater Budapest
stands at
3.4 million sqm,
with a further 350,000 sqm under construction and another 520,000 sqm planned. In the Hungarian countryside, the total supply stands at 1.5 million sqm, with 140,000 sqm under construction and 80,000 sqm planned. Despite the upturn in industrial development, 75% of such projects are undertaken by the companies themselves rather than speculatively by developers.
1
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
News | 5
Ukraine Questions for Hungary on Funding Ukraine, Putin Handshake Crisis Roundup and Sweden’s NATO Aspirations
Leaders from the 27 member states of the European Union met at a summit on Oct. 27 to debate the disbursement of their shared budget over the next four years. Prime Minister Viktor Orbán opposed providing Ukraine with another EUR 50 billion in aid, with his newly elected Slovak counterpart (and old ally) Robert Fico citing corruption as a primary reason for withholding further financial support to Kyiv. NICHOLAS PONGRATZ
Orbán said Hungary could not support more aid for Ukraine unless presented with “a very well-justified proposal,” and a “clear strategy with objectives.” He said the policy Brussels had adopted, with Ukrainians fighting backed by financing and military equipment from the EU, had “failed.” “The Ukrainians will not win on the front,” Orbán said. “Every military expert says that, but the politicians won’t acknowledge that we picked a badstrategy,” he concluded. Ahead of the summit, Estonian Prime Minister Kaja Kallas had said Hungary under Orbán was “becoming a problem we have to address. We have had different opinions before and managed
This image released by the Press Office of the Prime Minister shows Viktor Orbán (left) and Slovak Prime Minister Robert Fico at the two-day summit of the European Union heads of state and government in Brussels on Oct. 26, 2023. MTI/ Benko Vivien Cher / Prime Minister’s Press Office / MTI to keep unity, but it’s getting more difficult regarding Hungary,” Kallas said. Nor was he alone. “We don’t really have a strong tool to address [what Hungary does].” Luxembourg’s Prime Minister Xavier Bettel said before the meeting. He argued that Hungary should not be allowed to hold out on providing further assistance to Ukraine to unblock its own frozen EU funds. “You can’t say: if you want money for Ukraine, we want money for us,” Bettel said. “We shouldn’t be the hostage of Orbán, and I’m convinced we will find a positive solution.” In addition to impeding further support for Ukraine, allies have also taken issue with Orbán’s choice to meet with Russian President Vladimir Putin in China on Oct. 17, becoming the first EU leader to do so since an international arrest warrant was issued in March over Putin’s alleged war crimes in Ukraine.
Unpleasant to See
“It was very, very unpleasant to see that,” Estonian Prime Minister Kaja Kallas told international newswire Reuters in an interview in Paris on Oct. 18. “How can you shake a criminal’s hand, who has waged
the war of aggression, especially coming from a country that has a history like Hungary has?” Ambassadors to Hungary from members of the North Atlantic Treaty Organization convened a meeting in Budapest on Oct. 19 to discuss their concerns following the meeting.
“This changes nothing on our side. Hungary’s parliament is a sovereign parliament of a sovereign country and will take a sovereign decision in the matter.” “Alone among our allies, Hungary’s leader chooses to plead for business deals with a man whose forces are responsible for crimes against humanity in Ukraine,” David Pressman, the U.S. Ambassador to Hungary, said on the social media platform X (formerly Twitter) after the meeting.
Another lingering issue has been Hungary’s reluctance to ratify Sweden’s membership bid to join NATO. Before the summit, Kallas said she did not think Hungary would block Sweden’s membership of the military alliance for long. “I think when Türkiye goes [with us], we will probably find the way with Hungary as well,” she said. On Oct. 23, Turkish President Tayyip Erdoğan submitted a bill approving Sweden’s NATO membership bid to parliament for ratification. However, following this development, Minister of Foreign Affairs and Trade Péter Szijjártó said, “This changes nothing on our side. Hungary’s parliament is a sovereign parliament of a sovereign country and will take a sovereign decision in the matter.” After speaking with his Turkish counterpart, Hakan Fidan, who informed him that the bill on ratifying Sweden’s accession had been tabled, Szijjártó explained that Hungary’s government had submitted the bill on authorizing Sweden’s NATO membership to lawmakers months earlier. “Now, Türkiye’s parliament is where we were months ago,” he concluded.
6|1
News
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
Construction Industry Must Move Towards Carbon Neutrality
Green Matters A monthly look at environmental issues in Hungar y and the region
Debate continues about how international carbon emission reduction can best be achieved in the continuing struggle against climate change. Economic and financial mechanisms are seen as necessary to direct market actors toward activities that are less harmful to the environment and to underline the concept that there is more profit with sustainability. GARY J. MORRELL
The Hungarian Green Building Council’s 2023 Green Future Conference.
One thing is sure, as was made clear at the annual Hungarian Green Building Council (HuGBC) Green Future Conference, sponsored by the German Embassy in Budapest. Analysts and professionals agree that the built environment still has a long way to go to meet carbon emission reduction, sustainability and ESG goals. Climate protection is essential for creating a sustainable and livable environment for the next generation. This year’s conference subtitled Critical Crossroads: Towards Carbon Zero Buildings, focused on the carbon reduction roadmap, EU taxonomy, green real estate financing and international and national best practices. To become a competitive, resourceefficient real estate economy by 2050, we must move to net zero carbon operations, with sectorial cooperation, innovation, life-cycle thinking and renovation as critical elements. “The building and construction sector accounts for 37% of the global energyrelated emissions
and
34%
of global energy demand. The rebound in global buildings and construction emissions highlights the need for structural change,” commented Catriona Brady, director of strategy and development of WorldGBC, on why the built environment is imperative for Agenda 2030. The conference explored the international framework for building a zero-carbon 2050. The event also
introduced the national framework and situational picture towards zero-carbon 2050. Industry players showed what each sub-sector can contribute to the zero-carbon vision with concrete examples and results.
Climate-positive Buildings One of the keynote speakers, Christine Lemaitre, CEO of the German Sustainable Building Council (DGNB), gave a presentation on climatepositive buildings. She explained how the decarbonization roadmap helps to achieve the target and offered buildinglevel case studies with carbon reduction solutions and data on results. Dirk Bartsch, senior analyst at one of Germany’s leading real estate financers, spoke about green financing in the construction sector, what the zero carbon vision of 2050 means for a financial institution, and what a bank can do with its building portfolio and green finance to help the construction industry go carbon neutral. Daniella Huszár, head of HuGBC’s Advancing Net Zero project, presented the results of the Hungarian council’s Zero Carbon Recommendation industry consultations. “The aim of the consultation is to assess the awareness and current activity of the Hungarian construction market on the decarbonization of buildings and to lay the groundwork for the necessary next steps in the zero-carbon transformation, the zerocarbon roadmap and strategy for the construction industry,” she said.
“We think that there is so much happening on the market towards sustainability, especially in the financial sector, that it is now a crossing point for many stakeholders, as it is indeed a future-proofing issue that they have to undertake; otherwise they will have some major financial problems,” explained Zsombor Barta, a former president and now ambassador of the HuGBC. “We have seen some projects on the market that are very highly rated, but if you look at its decarbonization pathway and how it performs, then it turns out that this particular building or project is not performing very well because its emissions are too high and immediately investors and also financial institutions think the financial risk associated with these projects is very high,” he said.
Crossing Point
“Therefore, we are at a crossing point, and decision-makers have to decide in which direction they would like to go and if they would like to be futureproofed and mitigate their financial risk,” Barta explained. “We are talking not only about the benefits for the environment; these are nice things, but, in all honesty, in the real estate sector, profits and money are things that count in the end. If your profits and financial risks can be mitigated and reduced and your financial benefits from financial institutions can provide more incentives or more beneficial financial terms and conditions, then immediately you have
to move towards sustainability, Whether this is called ESG or EU Taxonomy or the Paris Agreement,” he added. In today’s landscape, investors are using ESG as a screening method for choosing whether to place their money. Therefore, the demand for delivering ESG-compliant products has accelerated
since
2014.
Thus, the EU Taxonomy works, as money only comes to ESG products, said Hubert Abt, founder & CEO OF Workcloud 24, at the CEO Networking Breakfast, part of the Europaproperty CRE Awards at the Intercontinental Budapest. “Properties which do not have any ESG efforts or activities are passed over for projects that are dedicated to ESG and which incorporate sustainable practices into their concept. The IRR [internal rate of return] can be doubled with due ESG compliance,” he said. The problem remains that, according to European building data, 97% of standing assets in the EU are not ESG compliant. However, by working towards an ESG framework, you will likely learn a lot about your operations and your customers’ needs. “Today’s ESG principles are becoming tomorrow’s laws. Complying with governmental regulations is a priority for any business. Having a strategy and being prepared for future regulations will improve your bottom line in the long run, as you can avoid fees and other noncompliancerelated adverse impacts,” Abt said.
1
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
WHO’S NEWS Do you know someone on the move? Send information to news@bbj.hu “We would like to express our thanks and gratitude to Alexander for his transformative leadership and commitment to Allianz Hungária Zrt. and wish him continued success in his future endeavors,” Petros Papanikolau, Allianz’ regional CEO for Central and Eastern Europe noted. “We are also delighted to welcome Gergely to our company, and we are confident that his arrival to the senior management of Allianz Hungária Zrt. will take transformational thinking to the next level and further strengthen Allianz’ position in the Hungarian market,” Papanikolau added.
Change at Helm of Wallis Asset Management Gergely Bacsó
Fresh CEO to Lead Allianz Hungária From January As of Jan. 1, 2024, Gergely Bacsó will take over the position of CEO and chairman of the board of directors at Allianz Hungária from Alexander V. Protsenko, according to a press release sent to the Budapest Business Journal. Bacsó started his career in consulting when he joined McKinsey in 2006. As head of McKinsey’s insurance practice in Hungary, he worked with several international clients, not only in his home country but also on the corporate transformation of banks and insurance companies in other European countries. He also held senior positions in McKinsey’s local digital and technology business at QuantumBlack and the FinTech & InsurTech Center of Excellence in Budapest. Protsenko has been CEO and chairman of the board of Allianz Hungária since 2019. During his tenure, he has achieved visible success in all areas of the company’s business and fostered a corporate culture based on innovation, mutual respect, and collaboration, the company says. He will continue his career within the Allianz Group in a new position to be announced shortly.
Zsolt Müllner is leaving his position as CEO of Wallis Asset Management at his own request and will focus on his duties as chairman of AutoWallis, the most prominent group member by turnover, and as vice chairman of Wallis Group. Gyula Mező, formerly the company’s deputy chief financial officer, has been appointed as the new CEO of Wallis Asset Management.
Mező has been managing the finances of the investment firm and supporting the companies of Wallis
News in Brief Navracsics: Hungary Could Unlock EU Funds by November Hungary could reach an agreement unlocking its European Union funding by the end of November, Minister of Regional Development Tibor Navracsics said after talks with European Commissioner for Justice Didier Reynders and Commissioner
buildings such as Mill Park, Krisztina Palace, Váci Utca Center, Deák Palota, and Myhive Haller Gardens. She gained valuable experience working alongside the top management of companies such as Orlen Unipetrol, Airbus, Hays, C&A, and Fiskars. “I am very proud to be able to enrich my professional knowledge at a domestic yet internationally renowned real estate developer and investor like ConvergenCE,” Beke noted after her first day. “I have joined a great community where my colleagues welcomed me immediately,” she added. “Based on feedback, our greatest advantage has always been flexibility, a high level of customer focus, and quick responses to requests and inquiries,” said Dóra Papp-Vas, Gyula Mező ConvergenCE’s leasing director. “With the increase in our responsibilities, we needed an Group as deputy chief financial officer experienced, proactive, and thorough for the past 15 years. He also sits on helping hand. In Bettina, we found the boards and supervisory boards the perfect addition, and her arrival of several portfolio companies. brings us great joy,” she concluded. Over the last decade and a half, he has played a crucial role in strengthening the group’s operations and executing several significant corporate transactions. As CEO of Wallis Asset Management, Müllner played a crucial role in the development of Wallis Group, including the acquisition of WestLB and its sale as Milton Bank, as well as the purchase of Praktiker and its integration into the Wallis Group. He also played an important role in the creation of Alteo, listed on the Budapest Stock Exchange, and in the IPO of the AutoWallis Group. As the chairman of AutoWallis, Müllner has been a significant contributor to the listed car company becoming the member of the Wallis Group with the largest turnover and most profit.
Bettina Beke Joins ConvergenCE Leasing Team Zsolt Müllner
for Budget and Administration Johannes Hahn in Brussels, according to portfolio.hu. Navracsics said the aim remained to conclude the talks successfully as soon as possible, adding that the “intensity” of the negotiations had been “stepped up” for that reason. “We trust that we’ll be able to work out an agreement with the European Commission that is suitable for both sides,” he said.
News | 7
Bettina Beke
Bettina Beke has joined ConvergenCE’s leasing team. Previously, she was part of Cushman & Wakefield’s office leasing department from 2019, where she worked on consulting and tenant and landlord representation. Beke has assisted clients in nearly 70 transactions in her previous roles, serving as a strategic advisor for
“There is excellent harmony within the leasing team; they all have strong networks and have previously worked with international commercial advisory firms,” added ConvergenCE CEO Csaba Zeley, the CEO of ConvergenCE. “I am delighted that our team has been strengthened by Bettina.”
VAT Compliance gap Falls to 4.4%
Szijjártó: 4 Hungarians Among Gaza Hostages
Hungary’s VAT compliance gap, a measure of the difference between VAT receipts and tax revenue that would be collected in the case of full compliance, has fallen to 4.4% from 22.3% in 2010, Minister of Finance Mihály Varga said in a post on Facebook on Oct. 27, citing the European Commission’s latest VAT gap report. Varga noted that the improvement was the fourth-biggest among European Union member states during the period. He added that the average for the region is 10.8%, and for the EU as a whole, it is 7.4%.
The government is aware of four people with Hungarian citizenship or Hungarian roots who have been taken hostage in Gaza, Minister of Foreign Affairs and Trade Péter said in a video message on his Facebook page on Oct. 27. Two of the four people are children, he added. Information on the hostages came from Israeli authorities and the hostages’ families, he said. The government is doing everything in its power to see the hostages get to safety as soon as possible, he added.
2
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
Business
Hungary Continues to Count on American Investor Activity
The main objective of Hungarian investment promotion is to secure future deals that help the economy step up the global value chain. U.S. companies can help accomplish that goal despite the challenging economic circumstances. That was the conclusion of the ninth edition of Business Meets Government, a flagship event jointly organized by the American Chamber of Commerce in Hungary and the Hungarian Investment Promotion Agency. BBJ STAFF
Although the volume of Asian investments has dominated Hungary’s FDI landscape in recent years, that does not mean Western partners get less attention. On the contrary, the Hungarian economy needs higher added value investments, and American companies can play a pivotal role in achieving that goal, insisted Deputy Minister of Foreign Affairs and Trade Levente Magyar in his keynote speech. He emphasized that U.S. investors have been crucial to Hungary’s development since the fall of communism. They now account for 9% of the total FDI stock. Between 2014 and 2023 alone, 107 large FDI deals worth EUR 1.8 billion were closed with them, creating 18,000 jobs. “We need to hold on to established relationships in politics and business, and we strive to create circumstances that help foreign investors thrive,” Magyar insisted. He acknowledged that it is becoming harder to find the
records year after year, and following the EUR 6.5 bln booked in 2022, deals worth EUR 8.1 bln had been closed by H1 2023. In her opening remarks, Írisz LippaiNagy, the CEO of AmCham Hungary, underlined that the summit served as a highlight of AmCham’s continuous advocacy efforts, which have involved ongoing consultations throughout the year, including a unique collaboration of several international chambers, resulting in joint policy positions on Education and Healthcare, as well a Business Forum with Minister of Interior Sándor Pintér to address these strategic areas and initiate regular consultations.
Unique Challenges
The Hungarian economy faces a mixture of unique challenges, such as record high inflation, suspended EU funds, high energy prices and a labor shortage, not to mention the critical circumstances in healthcare and education. All these issues need to be addressed for longterm competitiveness, AmCham president Zoltán Szabó warned. “We have voiced our concerns on various platforms that immediate measures are needed for that purpose, and this could be a great occasion to take the first step in that direction with the help of topnotch experts,” he said, referring to the breakout sessions in four vital fields that followed the morning section. “We have a bumpy road ahead, but we are keen to work with the ministry and Hipa together for a more resilient, competitive and sustainable Hungary.” Jeromin Zettelmeyer, the director Deputy Minister of Foreign Affairs and Trade Levente Magyar. of Bruegel, a renowned European think-tank specializing in economics, elaborated on why a higher priority is economy step up the global value chain appropriate workforce but said the needed for policies promoting economic so that the local talent pool stays in the country still has labor reserves of up to security in an era of uncertainty. On country and productivity surges,” she 300,000, even against the backdrop of the other hand, we need to understand said. American companies, the thirdrecord high employment of 4.7 million. and manage trade-offs between security largest investor community in Hungary, and other policy objectives, such as The deputy minister stressed that can and do help make this happen: the government expects growth to competitiveness or the protection of in the past nine years, they launched bounce back to 4.6% in 2024. Hungary’s the single market. He highlighted the most FDI projects in the business attractiveness as an investment location that “exposure analysis is needed, and services and ICT sectors. Last year remains undeniable, given that it offers economic security risks need to be better what he called the most investor-friendly alone, they announced the creation identified, for example, by stress testing.” of more than 1,000 new jobs, many in business environment in the region: the He concluded that creating domestic high-added value segments. lowest corporate tax, the most flexible capacities can help improve economic The overall FDI landscape looks labor code and a reorganized education security, supported by subsidies and promising, which is key to boosting system aligned with the needs of the regulation. Still, competition rules must growth, Szép-Tüske added. Hipa has business sector. be observed, and state captured by been breaking investment volume Magyar also noted that the special interests must be avoided. government is working hard to undo the termination by the U.S. administration of the double taxation treaty between the targets, and companies’ role Breakouts Sessions two countries. That is taking some time, Following the plenary section, in this transformative process. but he hoped it would be accomplished several breakout sessions covered The Healthcare session focused within a reasonable period. further ground. In Business on the status of the ongoing Environment, experts shared transformation in healthcare, Reaching New Heights their views on questions such as questions of supply security, “As to the FDI volume, we are more digitalization (AI), EU financial hospital debts, patients’ access than determined to reach new heights, resources, the global minimum to innovation, and the legal and in that effort, the contribution of tax, the prospects of a new U.S.and taxation environment for American businesses is vital. Therefore, Hungarian Double Taxation healthcare companies. we continue to be enthusiastic to see U.S. Treaty and the challenges Labor and Employment investments,” Magyar concluded. of ESG from the aspect of discussed the main challenges of Hipa deputy CEO Rita Szép-Tüske investments and manufacturing. the current labor market: skills further highlighted the agency’s Energy Security addressed shortages, the general scarcity of determination to support reinvestment the transition from fossil hard-to-find professionals, and the efforts, improve the status of local fuels, including Hungary’s employment of foreign (especially suppliers and focus on investments that short and mid-term energy third-country) guest workers in rely on highly skilled people. strategy, the EU’s 2040 climate blueand white-collar jobs. “In the longer run, the idea is to primarily secure deals that help the
2
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
Radisson-branded Hotel Opens in Budapest The Radisson Hotel Budapest BudaPart had its grand opening in the Újbuda District west of the Danube on Oct. 19, after a successful trial run that started during the World Athletics Championships this summer. The purposebuilt hotel serves as a comfortable retreat and business hub, adding new bar and restaurant options to a fast-developing area. BENCE GAÁL
The BudaPart hotel is the first Radisson in Budapest, but the fourth from the group brand portfolio, joining the Radisson Blu Béke Hotel, Budapest; Park Plaza Budapest; and Park Inn by Radisson Budapest. The 198 rooms and suites at Radisson Hotel Budapest BudaPart are designed in the signature Radisson style, the
Business | 9
neighborhood. Coffee, tea and a range of mixed drinks are served here, accompanied by light meals and snacks.
Practicality and Comfort
“The Radisson Hotel Budapest BudaPart combines the predictable practicality of a business hotel with the comfort of a wellness hotel, so we are confident that our business guests will return with their families. Our conference rooms and leisure facilities are designed to perfectly serve complex needs,” said hotel manager Carien Veldman. The BudaPart neighborhood also offers plenty of opportunities for those seeking an active lifestyle. The natural beach, From right: Ákos Kiss, CEO of Property Market, Gábor Nagy: CFO, Tamás park, and waterfront promenade with its Fodor, Kopaszi Gát Zrt. Chief Development Officer, Carien Veldman: jogging paths, provide an ideal setting for General Manager of Radisson Hotel Budapest, Budapart, and Veron Pecze, a morning run or leisurely stroll. The hotel director of sales and marketing, Radisson Hotel Budapest, Budapart. gym completes the fitness offer. “We are delighted to welcome the company says, with plastic minimized. complemented by high-speed Wi-Fi and Radisson to BudaPart, as the South Buda area has long lacked a business hotel. It is The rooms are equipped with plush modern audio-visual technology. also important feedback for us that a new mattresses, rain showers, multiple Inspired by the diverse flavors of Shanghai, USB ports, and complimentary Wi-Fi the hotel’s all-day dining option, the Shanghai Radisson business hotel has found a home here,” emphasized Ákos Kiss, managing to ensure connectivity. The hotel also Kitchen restaurant serves a variety of classic director of Property Market, the developer features spacious premium rooms and and contemporary Chinese dishes prepared of the BudaPart neighborhood project. junior suites with even more floor space from fresh, locally sourced produce. Meals “The essence of a 15-minute city is a and in-room espresso machines. can be paired with signature cocktails, full life, with work, services and relaxation, The Radisson BudaPart is also a selected wines, and traditional Chinese teas. within walking distance. Such a hotel destination for business gatherings with The lobby bar serves refreshments fits perfectly into this concept. As a four well-equipped meeting spaces, throughout the day, Chinese teas and business hotel, they also benefit from this flooded with natural light and adaptable for Shanghai Kitchen-inspired cocktails, as environment, where the ‘city within the various setups. With the capacity for up to well as cakes and desserts. The rooftop city’ is present, allowing guests to enjoy 228 attendees, a boardroom and breakout bar, which opened in October, is one of the both business services and the recreational areas, the conference space provides a hotel’s highlights, with its open-air terrace opportunities of the city center,” he added. suitable venue for productive meetings, and panoramic views of the BudaPart
PRESENTED CONTENT
The importance of sleep in our lives cannot be overstated. Have you been feeling sleepy and tired for a long time? Do you find it difficult to concentrate in your daily life? Perhaps you snore or experience shortness of breath? Sleep problems limit not only general well-being but can also lead to the development of serious illnesses. Lack of sleep can also negatively impact the quality of life and even relationships. BENCE GAÁL
Every minute of our day is determined by our night, how long and how well we sleep, Katalin Várdi, sleep diagnostics specialist at Doktor24, argues. “There are three important pillars of a healthy lifestyle: good nutrition, regular exercise and sleep of the right length, structure, and rhythm. Unfortunately, the latter is something many people tend to forget,” says Várdi.
Photo by tommaso79 / Shutterstock.com
The Power of Good Sleep Patterns
It is a question, of course, whether The sleep expert says the most it is possible to talk about universally important thing is to look at everything valid rules that apply equally to individually and try to help what is everyone. To varying degrees, the really bothering the patient. human brain can adapt to specific Different Rhythms situations in life. One need only think “Everyone has a different circadian of people working multiple shifts or rhythm, or in everyday language, mothers with small children who have a different biological clock. If you pay to get up several times a night. attention to this and know how your Obviously, there are broad individual body works, it is easier to organize differences in both the amount and your life according to this rhythm. timing of sleep. “Night owl” people work In Denmark, for example, many well at night. If they get up early, they workplaces take the biological clock get nowhere because their brains do not work in the same way in the morning. of their employees into account when setting working hours,” she says. At the other end of the imaginary Sleep apnea is high on the list of the scale are the “early bird” or “morning most common problems, affecting tens lark” personalities, who are in their of thousands of people in Hungary element early in the morning.
every year. This is a condition where breathing stops for a period during sleep, resulting in waking, oxygen deprivation or arrhythmia. Sufferers wake up, even unconsciously, to allow the body to restore its waking breathing rhythm and healthy oxygen levels. This leads to a breakdown in sleep structure. How can you ensure that snoring, for example, does not result from a pathological process? With an at-home polygraphic sleep apnea test (Polywatch), available from Doctor24, a small, multichannel monitor detects breathing movements, airflow at the nose and mouth, blood oxygen levels at the fingertips and heart rate during the night. Thanks to the wrist-worn design, testing can be conducted at home. The comprehensive diagnostic software provides accurate diagnosis. In all cases, the results are evaluated by a somatologist. If the evaluation of the sleep diagnostic measurement indicates a problem, the Doctor24 team of specialists, with the assistance of an ear, nose and throat specialist, will plan further diagnostic tests, help you develop a care plan and determine the treatment required. Since most people spend a good chunk of their lives sleeping, developing the right rhythm and sleep habits is crucial for each individual. Restful sleep recharges and regenerates the body, strengthens the immune system and memory, improves physical resilience and is, therefore, as much an integral part of a healthy lifestyle as regular exercise or good nutrition.
10 | 2
Business
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
Advancements in Battery Tech Propel Hungary’s Green Transition
Europe as their industrial investment hub and participate in the emergence of a European battery industry aligned with sustainability and circular economy principles,” de Almeida explained.
Significant Investment
The third Hungarian Battery Day, organized by the Hungarian Battery Association and White Paper Consulting, gathered business magnates and political architects to deliberate on the prospects and hurdles of the battery sector in Hungary and Europe. GERGELY HERPAI
The conference, held on Oct. 26 at the Hotel Marriott Budapest and for which the Budapest Business Journal was a media sponsor, was packed with insightful deliberations among business leaders and policymakers, focusing on the emerging trends and challenges in the battery industry in Hungary and across Europe. The event fostered a conducive environment for networking and exchanging ideas, underlining
In a significant recent investment move, Chinese manufacturer Catl is building its second European battery plant in Debrecen, Hungary. “Our goal is to use renewable energy sources, sustainable production and logistics in all our facilities,” said Jason Chen, general manager of operations at Catl Europe. “We are proud to have achieved carbon neutrality at four battery plants, and we are committed to replicating these global practices in Debrecen. This Hungarian venture will strengthen our ability to meet European market demands, expand our global manufacturing network and accelerate e-mobility and energy transition in Europe,” he added.
Ákos Nagy (with mic) speaks at a round table discussion at the third Hungarian Battery Day. the importance of the battery sector in steering the green energy transition. State Secretary for Industrial Policy and Technology Gergely Fábián of the Hungarian Ministry of Economic Development, opened the conference. “Electrification is one of the looming challenges ahead. As electric vehicles continue to conquer the roads, the appetite for batteries is growing. Batteries are not only the lynchpin of the transportation metamorphosis but will also become indispensable in the industrial and domestic sectors,” Fábián said. István Joó, CEO of the Hungarian Investment Promotion Agency, emphasized the blossoming of the Hungarian battery market. “Hungary is serving as a hub for Eastern and Western companies, making it a key player in the transformation of the automotive sector. Already
The Batteries Regulation: Secondary Legislation roundtable.
the world’s fourth largest battery manufacturer, the country is poised to maintain its position in this rapidly expanding global industry, fueled by new investments,” Joó said. He also revealed that a
HUF 60 billion program
for the electrification of transport is on the government’s immediate agenda. The Director of the European Commission’s Directorate General for Growth (DG Grow), Joaquim Nunes de Almeida, echoed similar sentiments. “The high-tech battery sector is a cardinal technology for the green energy transition. The European Union, through the newly enacted Battery Regulation and other legislative efforts such as the Net Zero Industry Act and the Critical Raw Materials Act, is trying to attract leading industry players to choose
“Hungary is serving as a hub for Eastern and Western companies, making it a key player in the transformation of the automotive sector. Already the world’s fourth largest battery manufacturer, the country is poised to maintain its position in this rapidly expanding global industry, fueled by new investments.” Thore Sekkenes, program director of the European Battery Alliance, assessed the global trends in the battery sector. “The introduction of the Inflation Reduction Act by the United States last year has significantly strained the European Union’s competitive position. Nonetheless, the EU has responded
The Third Battery Day conference was a sell-out, attracting a large and attentive audience.
2
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
promptly by adopting a number of favorable new regulations. The United States has emerged as a leader in this area, setting a commendable precedent. Cross-border cooperation is crucial for success in this endeavor,” Sekkenes emphasized.
“We are proud to have achieved carbon neutrality at four battery plants, and we are committed to replicating these global practices in Debrecen. This Hungarian venture will strengthen our ability to meet European market demands, expand our global manufacturing network and accelerate e-mobility and energy transition in Europe.” In analyzing the impact of the IRA on the European market, Bob L. Galyen, SAE international fellow and chairman of the Battery Standards Steering Committee, highlighted the potential impact of China’s recent kempi-BBJ-SPA-252x158-202311:Layout 1
ADVERTISEMENT
Business | 11
decree to restrict graphite exports to the U.S. battery industry, given China’s dominance in graphite production and processing.
New Directives
Ákos Nagy, senior counsel at Kinstellar, reflected on the evolving European regulatory framework. “The new directives will reverberate on a global scale, forcing the entire supply chain to scrutinize these regulations and their obligations. By the twilight of 2025,
nearly
70%
of lithium-based batteries will need to be recycled, a colossal obligation,” Nagy emphasized. Bernadett Papp, who leads market analysis at Pact Capital, emphasized the indispensable role of batteries in the green transition, while Andrea d’Alessandro, head of international centers at UniCredit Bank Hungary, recognized the burgeoning battery industry as a significant opportunity and affirmed the bank’s enthusiasm and capabilities as a steadfast and enduring ally. Tamás Bakos, regional general manager of CT Central South Europe, Atlas Copco, emphasized that vertical integration in battery production will require significant investment in R&D. “Companies may find it more viable to continue working with specialized 10/25/23
12:40 PM
Péter Kaderják, managing director of the Hungarian Battery Association, addresses the conference. He has academic and decision-making experience in energy sector regulation and energy- and climate policy, is Head of the Zero Carbon Hub at the Budapest University of Technology and Economics, and an executive of the Hungarian Battery Alliance. suppliers that can provide focused solutions, such as Atlas Copco’s compressed air, vacuum and nitrogen systems,” Bakos said. Péter Vermes, general manager of Éltex, expressed pride in the ability of his 100% Hungarian-owned company to serve as the leading waste service provider for LIB manufacturers. “Based on our more than 30 years of experience in waste management, we are confident that we will be able
Page 1
Be and stay well at Kempinski The Spa Find your path to radiating beauty: embark on one of the renewed Kempinski The Spa’s bespoke treatment JOURNEYS, a new concept for long-lasting wellness inside and out. Discover what our signature holistic Hungarymud and VOYA (an Irish luxury skincare brand inspired by ancient seaweed bathing) can do to keep you sparkling! ERZSÉBET TÉR 7-8 | 1051 BUDAPEST | +361 429 3585 S PA . C O R V I N U S @ K E M P I N S K I . C O M | K E M P I N S K I . C O M / B U D A P E S T
to meet the future legal and technical requirements of this emerging market segment and serve these manufacturers at the highest level,” said Vermes. Péter Kaderják, managing director of the Hungarian Battery Association, emphasized that its goal is to promote the development of an environmentally conscious, socially responsible, high-tech battery industry with strong local entrepreneurial and R&D participation.
12 | 2
Business
PRESENTED CONTENT
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
Novartis Hones its Innovation Focus in Hungary Novartis can traces its roots back more than 250 years, with a rich history of developing innovative products. From beginnings in the production of synthetic fabric dyes (even the red paint for Ferrari), the companies that eventually became Novartis branched out into producing chemicals and ultimately pharmaceuticals. In October, it announced the spin-off of Sandoz to allow Novartis to become a “pure play” innovative medicines company. Country president Europe central cluster and country president Hungary Matt Zeller tells the Budapest Business Journal what the move means locally. ROBIN MARSHALL
BBJ: This certainly seems a busy period for Novartis. Let’s start with the most recent news, the Oct. 4 spinoff of Sandoz to leave Novartis as a fully focused medicine company. What does this mean in practice, and does it directly affect Hungary? Matt Zeller: This spin-off of Sandoz is the last step of a lot of the actions we’ve taken over the last five years to now say, “We are a company that is now completely focused on bringing innovative medicines to the world.” It means we can focus on what we think we’re best at, unlocking improved business performance for the most exciting parts of science and impacting
structural and other elements need to be addressed for Hungary to be able to make real progress. One of the areas we focus on is that access to medications is not as high, especially for innovative medicines, but also in a few specific areas. Cardiovascular disease affects about one in five Hungarians, heart disease and stroke are responsible for about one-in-three deaths in Hungary, and roughly 20% of the overall spend is cardiovascular; in real numbers this is greater than 70,000 new cancer cases a year and greater than 70,000 heart attacks per year. On top of all that, COVID created a massive challenge to an already stretched health system. Much of our thinking was around how Novartis can work with everybody, whether that’s the health system, the government ecosystem, stakeholders, and patients. That’s the context and why we were so excited about announcing this partnership between Novartis, the Ministry of Innovation, and Semmelweis University. It represents a new way to approach this question of how can we all work together to make incremental gains in the short-, medium- and long-term for Hungary?
“Patients are being treated already. Whether it’s on a Novartis therapy or not is irrelevant. Patients are getting treated in new ways, and this partnership Matt Zeller, Novartis country president Europe is trying to impact the central cluster and country president Hungary. lives of, we hope, at least 25,000 Hungarians over the human health. We are the number one and biotherapeutics, and three platforms: next few years and help pharmaceutical company in Hungary. what we’re calling xRNA, radioligand them better manage their For us to be able to say we know therapy, and gene and cell therapy. Just where our value will be, that means being able to say that with confidence cardiovascular disease. we can narrow our focus in terms of and say our pipeline, our portfolio, our Ultimately, that’s our only the stakeholders we’re working with research, our efforts, and our people and where across the ecosystem we are all locked on this target is really value metric here: how can think we can make the most significant exciting for us. I think it’s going to allow we help patients avoid heart impact for the country moving forward. us to have a much more significant impact in those areas. attack, stroke and death?” BBJ: So, from a purely business point of view, you are simplifying the structure, the focus and the day-today activities. MZ: Exactly. Throughout our history, we’ve been a part of so many different things. We were in chemical dyes, then manufacturing; we even did the paint for the Ferrari car 50 years ago! Operating in all these aspects and all these different types of technologies takes a bit of the focus away, if you will. It’s just hard to do so many things well. We’ve been very intentional, both with Wall Street and the broader ecosystem to say there are now four therapeutic areas we focus on where we think we can make the biggest impact: cardiovascular, immunology, neuroscience, and oncology. And then what we’ve called the two by three; so, two primary product types, chemistry
BBJ: Since 2022, Novartis has had a ground-breaking agreement with Semmelweis University built around gene therapy, cardiovascular disease, and the use of AI in clinical research. What has been the progress here? MZ: Before we get into the details, I think it’s important to give some context on the impact of disease on healthcare. I’ve been in Hungary for about three and a half years; part of the reason I feel so strongly is that this is a real problem. From an outcomes perspective, life expectancy in Hungary is about five years less than the EU average, and the disease burden here is much higher. If you think about the state of healthcare in Hungary, there are many talented people trying absolutely as hard as they possibly can. But some
Moving to the details of the partnership, Semmelweis is one of the only institutions in the region that has access to two Novartis gene therapies, one for spinal muscular atrophy for babies and one for inherited retinal diseases. Today, we are at double digits in terms of treatments given by Semmelweis on those two therapies combined, which is just remarkable. Babies that are born with SMA are missing a copy of a gene, so they do not develop as they would if they had it. Novartis fixes this genetic abnormality to allow these babies to develop and hopefully lead a normal life. It’s truly science fiction! The fact that we now have double digits of
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
2
Business | 13
families treated means not just that we a feedback loop, with the intention being of setting the EU up to be competitive are bringing breakthrough innovation that we can combine all this great data and provide access to breakthrough “The government has to Hungary, it is most important for with artificial intelligence and machine medications these are big moments announced that it plans every single baby and their families. learning. With the outcome optimally approaching. We’ve been working very But it’s not just the therapy; it’s about being fresh insights and fresh answers hard and in collaboration with various to adopt a 10-year national how we work with all the stakeholders based on real data to the question of government ministries, including health plan. Much of the to ensure that any newborn born what interventions will make the biggest Deputy State Secretary Judit Bidló, who in Hungary is screened for genetic impact on CV disease in Hungary and has been tirelessly working to improve focus is on prevention abnormalities. We’ve been working hard then be able to scale those across the the healthcare model in Hungary, and the importance of on implementing a newborn screening country and beyond. and István Joó from the Hungarian program. Hundreds and hundreds of Patients are being treated already. Investment Promotion Agency to say, healthcare screening babies have been screened, and that Whether it’s on a Novartis therapy or not “How do we get these new breakthrough programs. We have also is helping to find those abnormalities is irrelevant. Patients are getting treated innovations onto the Hungarian market been working on this earlier and make it a part of the routine in new ways, and this partnership is in an economically sustainable way for processes in Hungary. And it’s the same trying to impact the lives of, we hope, at the patients who need them the most?” and have announced thing for inherited retinal diseases. least 25,000 Hungarians over the next Because, as I said, it means nothing cardiovascular screening So now we’ve had hundreds of patients few years and help them better manage if our breakthrough, next-generation screened by Semmelweis, which is trying their cardiovascular disease. Ultimately, programs in Székesfehérvár, technology innovations don’t get to the to understand one, if they have any of that’s our only value metric here: how patients who need them. Győr, and Szeged, where these genetic abnormalities and, two, can we help patients avoid heart attack, One final thing. Breast cancer how to treat those whether it’s a Novartis stroke and death? And then the other continues to be such a giant problem we’re helping educate therapy or not. From a gene therapy thing is tactical, tangible tools. We hope here in Hungary. And this will be a patients on the ground, perspective, it’s excellent progress: to launch clinical software tools in the focus area for Novartis as well to patients are being treated, new screening months ahead to help the physicians in say, “How can we help work across the screening for high-risk programs are in place, and we’re the room, whether that’s in Semmelweis ecosystem to help make progress?” factors, getting them access delighted with the progress. or elsewhere in Hungary, make better From a screening perspective, but The next piece of the partnership decisions and help them build better also to help make sure patients and to the system. To start, our is centered on cardiovascular disease. patient pathways for Hungarians as their families get access to the newest target is several thousand The scale of the problem here in they’re entering the system. therapies. We want to help identify the Hungary is so massive. What we disease earlier, get Hungarian women patients screened before wanted to do was not just say, “Let’s BBJ: What is next for Novartis access to the medications, and then, the end of the year at get another drug” because the impact in Hungary? hopefully, continue to contribute and be would be limited. We wanted to see MZ: We have a couple of exciting these three municipalities.” part of the solution. We have therapies how we could approach the problem things coming up that I want to share. on the market for breast cancer, but differently, together with Semmelweis One is that I expect to see even more this is a key focus area where Novartis Rector Professor Béla Merkely, who’s progress from continued efforts around expects to play a leadership role in been leading the charge against population health with the Semmelweis we’re helping educate patients on the the treatment of breast cancer moving cardiovascular disease and, frankly, project, as well as others. We’re also ground, screening for high-risk factors, forward. This is an area where, along with COVID and beyond in Hungary. A lot launching what we are calling multigetting them access to the system. cardiovascular disease and some of the of our discussions were about how we municipality screening programs. To start, our target is several thousand newer technologies, we think Novartis could, over the course of this partnership, The government has announced that it patients screened before the end of can really help Hungarian patients and figure out what interventions will have plans to adopt a 10-year national health the year at these three municipalities.” the broader Hungarian ecosystem take a the biggest impact on cardiovascular plan. Much of the focus is on prevention The other thing that I wanted to talk step forward. disease here in Hungary. and the importance of healthcare about is the EU Council presidency, Professor Merkely is a visionary leader, screening programs. We have also been which I think will be a crucial aspect of For more about the investments and he is so dedicated to advancing CV working on this and have announced what’s coming up in the months to come Novartis is making in Hungarian care in Hungary, we talked about setting cardiovascular screening programs in and Hungary’s role in 2024 shaping the healthcare, see our upcoming Investing up Semmelweis as a lipid management Székesfehérvár, Győr, and Szeged, where evolving healthcare legislation. In terms in Hungary publication. center of excellence. We already have more than 10 CV ongoing or completed clinical studies and engage in a wide range of research, but Semmelweis also launched a new clinical study using this lipid center of excellence model. And the other bit is around data analysis. Sitting on this mountain of data in Hungary, the idea was to mine the data, and figure out what the burden of disease for cardiovascular is in Hungary? So, we’ll talk about LDLC, which is bad cholesterol, and a highly modifiable risk factor, along with diet and exercise, for CV disease. We can ask question like what is the LDL-C cholesterol burden for different types of patient subgroups in Hungary? Or the cardiovascular events? Where are they getting lost in the system? How are they being treated? We have so much data here in Hungary, together with Professor Merkely’s team, we wanted to see how we can go backward and then, much more importantly, how we go forward with all this great data from the research we’re doing together. Because we now have this innovative set-up, the idea is that we can also pick and choose different things to try. We want not just to model what From left, university rector Professor Béla Merkely and Matt Zeller at the opening ceremony we think the impact will be but also to of Semmelweis University's certified ophthalmic gene therapy center in July 2022 make adjustments in real-time to build
14 | 2
Business
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
2023 Atlas Award to be Presented on Nov. 7 The third addition of the Atlas Award, organized by the ITL Group, will be presented on Tuesday, Nov. 7, at the Hungarian Academy of Sciences in Budapest. It will honor a “Hungarybased business hero” who shares the values of Ethics, Sustainability and Creativity in their professional life, in the words of the event website.
Dimitry Ljasuk, center, with the 2022 award. At the far right is the the Budapest-based Italian artist Marco Veronese, who sculpted the prize. Photo by ITL Group.
BBJ STAFF
The Atlas Award was created to “provide public recognition for leaders and business people who have distinguished themselves by making substantial efforts to render their enterprise sustainable, constantly
Company Shopper Park Plus Raises EUR 37.2 mln in IPO Shopper Park Plus, which owns a portfolio of retail properties in Hungary and the Czech Republic, has raised around EUR 37.2 million in an initial public offering, the company announced on the website of the Budapest Stock Exchange. Retail investors subscribed to 1,669,029 shares at EUR 10.8 per share during the IPO, which ran from Oct. 9-20. Institutional investors subscribed to 1,776,589 shares, also paying EUR 10.8/share. In a press release, Adventum Group, a stakeholder in the company, said Shopper Park Plus shares could trade on the bourse from the second half of November. The company aims to operate as the local form of a Real Estate Investment Trust (REIT). Shopper Park Plus has 14 retail properties in Hungary and four in the Czech Republic. Its portfolio has a combined leasable area of more than 320,000 sqm.
Stellantis Investing HUF 20 bln in aiMotive Multinational automaker Stellantis says it will invest HUF 20 billion into Budapest-based aiMotive,
News
which develops artificial intelligence and autonomous driving software, Deputy Minister of Foreign Affairs and Trade Levente Magyar said on Oct. 30, according to forbes.hu. Hungary’s government is supporting the investment with a HUF 5 bln grant, he added. Stellantis, which designs, manufactures and sells 14 automotive brands, acquired aiMotive last year and has chosen Hungary as its center of self-driving technology and electric vehicles, Magyar said. Heiko Schilling, senior VP of software and AI engineering at Stellantis, said aiMotive’s developments could be integrated into cars across the Stellantis brands by 2026. AiMotive employs more than 200 people; this will increase by 40 for the time being.
MBH Bank Spending HUF 10 bln on ATMs MBH Bank, Hungary’s secondlargest commercial lender, is spending close to HUF 10 billion on “several hundred” ATMs, the bank said in a press release on Oct. 27. The additions will “nearly double” the number of MBH Bank ATMs in Hungary to over 1,600 by the end of 2024.
coming up with new and innovative ideas, all of this by keeping in mind the wellbeing of their partners and employees.” Nominations for the 2023 event closed on Oct. 15, with the awards jury due to meet yesterday (Thursday, Nov. 2). The 2022 award went to Dimitry Ljasuk, founder of Pozitivo Digital,
Aldi Inaugurates HUF 1.2 bln IT Services Center German discount chain Aldi inaugurated a HUF 1.2 billion IT services center in Debrecen (225 km east of Budapest) on Oct. 30, creating 50 highly qualified jobs, according to origo.hu. The government supported the investment with a HUF 120 million grant, Minister of Foreign Affairs and Trade Péter Szijjártó said at the ceremony. The office will serve Aldi's global network of 200,000 workers, more than 7,000 stores and 80 logistics centers, he said.
Continental Investing HUF 18.8 bln in R&D Activities in Hungary German-owned automotive industry company Continental yesterday announced plans to invest HUF 18.8 billion to expand its R&D activities in Hungary by the end of 2024, according to portfolio.hu. The investment, in three big projects, will create 280 engineering jobs, Deputy Minister of Foreign Affairs and Trade Levente Magyar said. Continental has plowed close to HUF 100 bln into its operations in Hungary since 2010, he added.
BMW Inaugurates Training Center at Debrecen Plant German automaker BMW inaugurated a training center at the EUR 1 billion factory it is building in Debrecen (225 km east of Budapest) yesterday, according
for his ethical, sustainable, and creative approach, and his company’s commitment to shaping a better world. ITL Group says the aim of the award “is to inspire others navigating these times of rapid change, and contributing positively to our society.” The prize is an artwork by the Budapest-based Italian artist Marco Veronese, a fusion of Atlas and Vitruvian Man. “The business community is evolving thanks to you [the voting public]; join us! Together for a better world,” says Alessandro Farina, managing director of ITL Group. Speaking of the inspiration behind the foundation of the award, Farina says he drew on his roots. “I come from an Italian family with a long entrepreneurial tradition that goes back two centuries. From a young age, I learned that entrepreneurs have a moral obligation to their predecessors and to future generations for building a better world,” he explained. “We call this moral obligation an “E.S.C. approach,” standing for Ethics, Sustainability and Creativity and these are the values that inspired the foundation of Atlas World whose projects we hope will inspire other people facing this era of lightning-fast change to make a positive impact on our society.”
to origo.hu. Speaking at the ceremony, Minister of Foreign Affairs and Trade Péter Szijjártó said the first 100 students who started their three-year studies in September, current and future employees of the BMW plant in Debrecen, will learn to use the most up-to-date technologies available. “The government has provided HUF 25 bln to the university to expand the capacities of the technical engineering faculty, and to establish a new vehicle technology research institute,” the minister said. “Also, they now work together with more than 12,000 students at the vocational training center,” he added. Szijjártó noted that the output of Hungary’s automotive sector exceeded HUF 10 trillion last year and grew by 20% in January-August this year.
Veolia Water Hungary Inaugurates HUF 10 bln Investment French-owned Veolia Water Hungary, which makes water filtration membranes, inaugurated a HUF 10 billion investment at its base in Oroszlány (70 km west of Budapest) Oct. 16, according to uzletem. hu. Veolia Water Technologies and Solutions CEO Vincent Caillaud said the investment would boost capacity by 30%. Headcount at the base in Oroszlány, the group’s biggest water filtration membrane plant, will rise to 1,200 by 2024, he added. The investment created 100 jobs. A state subsidy covered 35% of the cost of the project which added 8,000 sqm to the existing 25,000 sqm of production area.
2
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
Is the Global Economy Reaching a Tipping Point? The U.S. economy is powering forward with almost 5% GDP growth as per the last measured quarter. Global GDP growth is in the range of 3%. Finance Matters columnist Les Nemethy explores whether we are reaching (or have already passed) a tipping point.
Business | 15
Finance Matters A biweekly look at f inancial issues in Hungar y and the region
Global Debt Growth (USD trillion) 2022:
238
300
2020 (Covid-19):
258
250
2019:
229
2022 Public debt:
200
92 150
100
2022 Private debt:
146
50
0
I’ll start by recalling some of the tailwinds the global economy has experienced since 1990, then look at some of the headwinds we are beginning to experience this decade. Some of the tailwinds over the past few decades: • The end of the Cold War in 1990 gave the world a peace dividend. • Globalization, including bringing cheap (primarily Chinese) labor into the global economy, kept inflation down and contributed to low consumer prices. • Increasing levels of trade allowed all countries to exploit their relative advantages, raising standards of living. • Levering up balance sheets from initially low debt levels contributed to GDP growth. From 1990-2008, the leveraging happened mainly in Europe and the United States; by the 2008 financial crisis, the Chinese economy was the only relatively unleveraged significant economy. Perhaps fortunately for the world, the Chinese began rapidly ramping up their debt in 2008, triggering the importation of vast amounts of commodities, machinery and luxury goods, acting as an engine of global growth. • Interest rates have declined steadily since the early 1980s right through to the early 2020s. This has helped keep debt service costs in line despite burgeoning debt. Some of the current emerging formidable headwinds: • Global debt is growing out of control and is approaching USD 250 trillion; the public debt portion is increasing particularly rapidly (see below).
1950
1960 Public debt
1970
1980
Household debt
Very few governments pay down debt. Austerity and growth restraint are unpopular. Inflating it away seems to be the strategy of choice. This is partly why inflation is so baked into our system. In some countries, debt service is squeezing out other budgetary items, whereas, in most countries, growth in interest coverage costs swells the deficit and accelerates national debt accumulation. Compounding interest is an exponential curve, and we are approaching the steeper part of the curve. All of the above is detrimental to growth. China has become one of the most over-levered nations, overbuilt with real estate and infrastructure; hence, the Chinese economy is likely to be a much weaker engine of global growth in the coming decade. • Climate change seems to be accelerating, with increasing numbers of hurricanes, droughts, forest fires etc., making many types of risk uninsurable. Climate-induced natural disasters have tremendous economic costs and reduce many people to poverty. Governments are forced to raise debt to alleviate the hardship of those affected and to fund reconstruction. • A unipolar world and Pax Americana have given way to a multipolar world, bringing political instability. Not only does this put a damper on global trade and investment flows, but we now have two significant conflicts raging (in Ukraine and Gaza), several smaller ones, and at least one other
1990
2000
Non-financial corporate debt
potential major threat on the horizon, namely Taiwan. War contributes to poverty, waves of refugees, instability, populism, rising military spending, etc. An ever-increasing portion of the world’s population is living in war zones. • Demographics. Throughout most of the world, every working person will have to support more and more retirees over the coming decades. • Populism is spreading. It contributes to the polarization of societies, diminution of dialogue, and decisions being made on ideological lines, resulting in sub-optimal economic management. The above headwinds often reinforce each other. For example, thanks to the new multipolar world order and great power competition, the Chinese are no longer parking their savings in U.S. Treasuries: lower demand for U.S. Treasuries means the U.S. Fed must offer higher interest rates to fund the U.S. deficit, thereby increasing funding costs (and deficits) the world over. I’d like to finish this article on a more positive note, however. While the world is going through a very rough patch, I offer a few reasons for not losing hope: 1. Innovation and Technology: To illustrate with a dramatic example, imagine that at some point in the future, we were suddenly to have cheap fusion energy. That would be a development
2010
2020 Source: IMF
of such magnitude, reducing energy costs, increasing standards of living and ushering in a new era of sustainable growth. Closer to current reality: there are thousands of smaller innovations in the world every year, which have a similar beneficial cumulative effect. While technology poses challenges, it is also the hope of the future. 2. Good Governance: The quality of decisions in governments and corporations can make the difference between superior performance and default. I am inspired by the recent electoral victory in Poland. The upcoming U.S. elections will have a much more significant impact for the world. More than perhaps at any time in the past, there is a crying need for excellence in leadership.
Les Nemethy is CEO of EuroPhoenix Financial Advisers Ltd. (www.europhoenix.com), a Central European corporate finance firm. He is a former World Banker, author of Business Exit Planning (www. businessexitplanningbook.com), and a previous president of the American Chamber of Commerce in Hungary.
3
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
Special Report Telecoms
MTel, Municipal Library to Bridge Generational Digital Divide Magyar Telekom and the Metropolitan Ervin Szabó Library, the most extensive library network in Budapest, have launched a joint Netrevalók (Net worthy) program, which introduces older people to digital solutions that can help them in their everyday lives. GERGELY HERPAI
According to 2022 census data from the Central Statistical Office, more than 32% of the Hungarian population aged 18 and over, around 2.5 million people, are older than 60, but there is a very significant gap in the use of digital devices between these and those aged 70 and over. While 77% of the former use smartphones and 68% regularly use the Internet, 26% of the over70s do not use a mobile phone at all, only a quarter have a smartphone, and 63% do not even send SMS messages from their phone. The Ervin Szabó library network has for years supported the acquisition and development of digital literacy and digital culture through its initiatives, services and programs. It is vital to ensure that groups with less digital literacy, such as elders, are aware of and have access to the opportunities offered by technology. However, many of them need support and guidance to do so. The obvious place to get this help is from those most familiar with technology: young people who are happy to spend their time providing useful and enjoyable support. This was the idea behind MTel’s 2019 Become a Generation Now! scheme, which has been providing digital training to older people in the capital and seven regions across the country in collaboration with secondary schools and regional civil society partners as part of the school community service program. Since its launch, the initiative has reached approximately 59,000 participants: 6,900 face-to-face and 52,100 online. This initiative has been renewed and expanded by MTel in partnership with
understanding and acceptance,” Zoltán Pereszlényi, deputy chief commercial officer of Magyar Telekom, said at the official launch on Oct. 25. “Not only do young people pass on knowledge to older people, but they also learn a lot by working together: empathy, communication and cooperation skills can be developed, as well as skills such as critical thinking, complex problem solving and creativity,” he pointed out. “We learn a lot from the participants’ feedback, both from a business point of From left: Zoltán Pereszlényi, deputy CCO of Magyar Telekom, view and as an employer, because, on the program ambassadors Judit Endrei (a retired TV personality) and one hand, we can gain direct insight into Dániel Ungvárszki (a popular young influencer), and Dr. Péter the mindset of Generation Z, and on the Fodor, director general of the Metropolitan Ervin Szabó Library. other hand, by digitally empowering the elderly, we can develop the services they need most,” Pereszlényi added. in Budapest. Students will introduce older For Metropolitan Ervin Szabó Library, the Metropolitan Ervin Szabó Library people to active device and internet use the link up with MTel helps it achieve a with the launch of the Netrevalók and digital solutions that may be useful to fundamental goal in supporting digital program. Experience has shown that, inclusion and literacy. for young and old to meet, there needs to them, tailored to their level of knowledge “Our aim is to develop the digital be a permanent physical space accessible and interest. They will cover topics such as using social media, e-books, internet skills of different target groups through to all and where they feel at home. safety, connecting and managing online, experiential learning, which is why Familiar Meeting Place entertainment, hobbies, transportation, we launched the Library Pro program Libraries are a common meeting place for travel planning, photo editing and digital this year, programming, robotics, and the age groups. This is not only because photography, health and exercise. reading sessions for children and the of the large number of children and During the sessions, topics of interest elderly, who make up about 20% of our elders who already use libraries but also to older people will be explored online readers and users, and why we consider because it was in these buildings that together with young people, using the it important to implement the Netrevalók the Metropolitan Ervin Szabó Library smart devices that older people often program with Telekom, following similar organized the first basic internet training carry in their pockets but do not know initiatives in the past,” says Péter Fodor, courses two decades ago. the full potential of. director general of the library network. In the years since, thousands of The program’s ambassadors represent “A good IT infrastructure and the people, mainly the elderly, have attended the two generations targeted by the development of our services based on it the sessions, initially with the help of initiative: Judit Endrei, a retired are essential - that is why we recently librarians, but in recent years, increasingly television personality, and Daniel equipped our new Soroksár Library with the involvement of community Ungvárszki, a popular young influencer. [District XXIII] with smart desks, lowservice students. The library network floor workstations and self-service has been working with educational lending tools, but it is also important Intergenerational institutions on school community service that the public is able to use digital tools Communication for 10 years, and this year has already and services,” he adds. “The Netrevalók program proves partnered with more than 220 schools. that digitalization is not necessarily The free Netrevalók sessions will occur Students and senior citizens can register alienating, but can be an effective way to for the Netrevalók program online on the second Wednesday of each month foster intergenerational communication, at a fixed time in 24 designated libraries at www.helloszulo.hu/netrevalok.
Metropolitan Ervin Szabó Library The Fővárosi Szabó Ervin Könyvtár was established as the Metropolitan Library in 1903 and opened in 1904 under its first director, Ervin Szabó (described by Wikipedia as a “Hungarian social scientist, librarian and anarcho-syndicalist”). He modeled a network on the British public library system and even had plans for a central “library palace,” but World War I disrupted these, and he died in 1918.
The plans were not abandoned, however, and the Metropolitan Library acquired its current HQ in 1927. It was originally built in 1889 for Count Frigyes Wenckheim (a wealthy landowner and MP) and his wife Krisztina. The couple were well known for their parties and charity events; Emperor Franz Joseph is said to have attended one here. When the count died without an heir, the city bought the building.
After four years of reconstruction, the library opened in 1931. In May 1946, the institution adopted the name of its founding director general. This building has been featured as a backdrop in several movies, including “The Phantom of the Opera” and “Red Sparrow.” The fourth floor features rooms with original fittings, and the building is open to the general public both as a library and for tourist visits (provided you are quiet!) for HUF 1,700 / person.
3
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
4iG Signs MoU With Telecom Egypt Listed Hungarian ICT company 4iG signed a memorandum of understanding with Telecom Egypt on constructing a high-capacity submarine fiber-optic cable between Albania and Egypt, 4iG said. By setting up a new European submarine cable entry point with a transit path that is different from the existing Mediterranean routes, 4iG aims to gain a share of the “huge and rapidly growing” market for data traffic between Europe and Asia as well as Europe and East Africa. 4iG owns a telco in Albania.
Cetin Appoints Commercial Director Telecommunications infrastructure provider Cetin Hungary Zrt. has strengthened its team with a new commercial director, according to profitline.hu. Tamás Bóday has more than 20 years of experience in the telecommunications and IT sector. As the director of the commercial activities of Cetin Hungary, Bóday will play a significant role in the implementation of the company’s strategy, which aims to provide client-oriented, secure and complex digital network solutions in an agile manner, in addition to traditional data connection and infrastructure services.
Vodafone Making Sub-inflation Fee Rise
Graphic by karelnoppe / Shutterstock.com
Thanks to the favorable economic effects of the past months, such as the decrease in inflation and the gradual elimination of the utility tax charged to telecommunications service providers and the additional telecoms tax, Vodafone Hungary announced it would take an unexpected step
to reduce the financial burden on customers, according to business daily Világgazdaság [Global Economy]. Instead of an inflationtracking 22.01% rate adjustment based on the consumer price index of the Central Statistical Office (KSH), Vodafone Hungary will apply a more favorable rate adjustment of only 15.4% for the monthly subscription fees of residential and small business customers using public tariffs, the company said. This will be the first time the service provider will not activate the inflation-tracking fee adjustment in the subscriber bills from March 2024, but rather in January.
MTel Creating Internet Connections For 1 mln Extra Households Magyar Telekom will create gigabit wired Internet connections for an additional one million households in the next four years and accelerate the development of 5G coverage in the country, according to profitline. hu. The total cost of this will be about HUF 123 billion, Erste Bank analysts calculated. The news came after the Hungarian government confirmed a previous promise to abolish the additional telecommunications tax from January 2025 and to cancel the utility tax payment obligation for telecommunications lines from January 2024.
4iG H1 Profits Rise to HUF 7.8 bln Listed ICT company 4iG had a firsthalf after-tax profit of HUF 7.8 billion, improving from a HUF 2.8 bln loss in the base period, supported by its acquisition of a controlling stake in Continued on page 19 ›››
INSIDE VIEW
Impending Regulatory Skyline: Mega-constellations and the Digital Divide Eszter Csapó
Péter Homoki
Senior Counsel, Technology, Media and Telecommunications
Senior Counsel, Technology, Media and Telecommunications
CMS
CMS
Eliminating the digital divide and providing broadband access to everyone is one of today’s priorities, especially in the most powerful countries like the United States and China. Even if the number of people who do not currently have access to copper, fiber, or mobile broadband is relatively low in these countries, fulfilling their needs is so high on the agenda that mega-constellations of satellites are to be launched for this purpose. These constellations, consisting of hundreds to tens of thousands of satellites, orbit the Earth between 328-2,000 km above sea level (in low Earth orbit (LEO) at speeds exceeding 27,000 km/h, linked with each other, with ground stations, and with end users. SpaceX has cited the public interest of “quickly delivering broadband to more Americans in remote areas of the United States,” while other players claim their system will help close the digital divide globally. Although the EU is also launching a smaller constellation of 170 satellites (the new IRIS² project, Regulation (EU) 2023/588), this will be dedicated to governmental services and secure communications. However, specific EU projects earlier, such as BRESAT, investigated the role of satellite broadband in bridging the digital divide. Many may remember providers like Teledesic and Celestri from the end of the 1990s, which tried to provide “internet in the sky.” Due to the consistent growth in the space economy, launch costs have fallen, and it is feasible to put orders of magnitude more satellites in orbit. Currently, there are 5,000 Starlink units from SpaceX above us. According to a European Space Agency (ESA) forecast, more than 75,000 satellites will be in orbit by the end of 2032. That may mean dozens of shiny new objects visible to the naked eye in the night sky. LEO will be a busy place, and this surge in new constellations is also expected to leave its mark on the red tape needed for operators to proceed. For these global endeavors, the primary authority for licensing satellite frequencies
and setting orbital parameters is the International Telecommunication Union (ITU). Commercial operators must apply to the ITU with the involvement of national authorities. The number of filings (coordination requests and notifications) to use these limited resources has shot up in the last few years. Apart from being allocated resources by the ITU, operators must also comply with considerable extra paperwork set out in different international space law instruments (mainly administered by the United Nations). These include the obligation to register space objects with a UN Office for Outer Space Affairs and measures to mitigate space debris. However, the national rules underlying these requirements are not harmonized, and in many countries, including Hungary, there are no specific “space law” provisions in place. With the increasing congestion in LEO, space debris measures and “situational awareness” (space traffic management) are expected to become another significant regulatory area. Unfortunately, when a registered space object collides with anything at the relativistic speed of 35,000 km/h, it tends to break into tiny fragments, regardless of regulations. Another problem is the re-entry of LEO satellites. The thin atmosphere drags these objects back into the denser atmosphere in a year or so, hopefully burning these up as planned. Nevertheless, it is inevitable that a few components will survive re-entry, and casualty figures may become too high to be ignored for those on the ground or in the air. Based on the number of satellites to be launched, fierce competition is guaranteed in satellite broadband. This might drive prices and bandwidth to a level that will be appealing to more users than ten years ago. However, the problems arising from a crowded orbit will lead not only to new research but also, in time, to new and more accessible regulation. While the essential laws will remain at the international level, national administrations will still have to provide first-line support.
cms.law
NOTE: ALL ARTICLES MARKED INSIDE VIEW ARE PAID PROMOTIONAL CONTENT FOR WHICH THE BUDAPEST BUSINESS JOURNAL DOES NOT TAKE RESPONSIBILITY
News in Brief Telecom
Special Report | 17
18 | 3
Special Report
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
State of the Race for Lightning-fast Internet The European Commission is looking to boost the digitalization of EU member states with its Digital Decade 2030 strategy. A vital point of this is the improvement of digital connectivity, with an ambitious target of gigabit coverage to all EU households by 2030. How does Hungary measure up against other EU members with its current state of connectivity? According to research by Ookla, the answer is quite well. BENCE GAÁL
A significant milestone the EC determined on the way to breakneck internet speeds for everyone is ensuring that all households, businesses, and
One of the reasons behind this disparity, according to the company, is that in markets where advanced connections are replacing legacy broadband technology, wireless performance tends to lag behind ethernet, as typical Wi-Fi speeds may range between 30-40% of ethernet. Median speeds are a standard metric for measuring performance, but there’s more to the story for the end-user experience. Access technology, be it DSL, cable, or fiber, as well as the equipment at customer premises and end-user devices, significantly influence the user experience, Ookla notes. According to the company’s data from Q3 2023, across Europe, Denmark had the fastest median download speed for fixed broadband (196.43 Mbps), followed by Spain (176.08 Mbps), France (170.51 Mbps), and Romania (166.39 Mbps). Hungary did decently well here, too, clocking in
at
public institutions should have access to “high internet speeds” of at least 100 Mbps by the end of 2025. The availability of such speeds is excellent across the EU, as 86.6% of households had access to broadband services exceeding 100 Mbps, EC data from 2022 says. However, availability does not mean adoption. The Digital Economy and Society Index (Desi) 2023 dashboard for the Digital Decade reveals that some 55.08% of EU households had already subscribed to fixed broadband services with speeds of at least 100 Mbps. It is also important to note that having a subscription does not automatically equate to actually achieving such connection speeds. In some countries like Spain, Sweden, and Romania, more than 80% of households subscribe to broadband
exceeding 100 Mbps. Hungary is also well above the EU average,
with
69.8%
of households having subscribed to such services, yet the proportion of users achieving 100 Mbps+ speeds stands at only 55.24%, Ookla says. In the longer run, the key to achieving gigabit coverage across the cContinent is the rollout of fiber networks. Compared to copper networks, fiber offers superior internet speeds, lower latency, enhanced security, and better environmental sustainability. Hungary’s “fiber to home” accessibility stood at 73% last year. While that may be lagging behind the famously fast internet of Romania, where fiber coverage reached 97.7%, it was still ahead of the likes of Poland (63.3%), Italy (58.5%), and Germany (with a shocking 21.3%). The aforementioned Desi 2023 dashboard shows just 13.76% of households in the EU have subscribed to fixed broadband with at least 1 Gbps as of 2022. Hungary performs very well at these upper margins as one of five countries surpassing the EU average. France leads the pack at 39.94%, with Hungary in second at 29.81%, followed by Romania at 23.35%, Denmark 18.66%, and Spain 14.57%.
High Percentage, Low Speed However, Ookla notes that the high percentages might make people think that many households have Gigabit speeds. The proportion of Ookla Speedtest users registering median download speeds of at least 1 Gbps in many countries is relatively low. For example, France only had 1.42%, Hungary 0.54%, and Romania 0.1%.
140.82 Mbps,
behind Romania but ahead of the Netherlands. However, in terms of median upload speed, Hungary stood at 36.73 Mbps, which is in the bottom half of the surveyed countries. The type of broadband technology implemented can heavily influence the divergence between download and upload performance, Ookla notes.
In some countries like Spain, Sweden, and Romania, more than 80% of households subscribe to broadband exceeding 100 Mbps. Hungary is also well above the EU average, with 69.8% of households having subscribed to such services, yet the proportion of users achieving 100 Mbps+ speeds stands at only 55.24%, Ookla says. One way to more accurately determine the performance of internet services across different countries is to look at the range of speeds that the majority of users experience. According to Speedtest Intelligence data from Q3 2023, the lower quartile download speed across European countries ranged from 28.15 Mbps to 81.48 Mbps, while upper quartile speeds ranged between 166.16 Mbps and 441.38 Mbps. In Hungary, upper quartile speeds reached 401.96 Mbps, behind only France and Romania, while lower quartile speeds stood at 46.85 Mbps (a mid-table result).
3
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
Special Report | 19
Internet Service Providers Ranked by total net revenue in 2022 meanS oF aCCeSS
no. oF SubSCRIbeRS on July 1, 2023
746,000
approx. 6 million
yeaR eStablISHed no. oF Full-tIme emPloyeeS on July 1, 2023
oWneRSHIP (%) HungaRIan non-HungaRIan
toP loCal exeCutIve CFo maRketIng dIReCtoR
addReSS PHone emaIl
1991 5,393 (2023. May)
Free float (34.33), own shares (4.28) Deutsche Telekom Europe B.V. (59.21)
tibor Rékasi Daria Dodonova Zoltán Pereszlényi
1097 Budapest, Könyves Kálmán körút 36. 1414 sajto@telekom.hu
Antenna Hungária Zrt. (51), Corvinus Nemzetközi Befektetési Zrt. (49) –
lászló blénessy Csaba Thurzó Hajnalka Mester
1112 Budapest, Boldizsár utca 2. (70) 700-1270 sajto@vodafone.com
✓
✓
✓
–
✓
✓
✓
3
yettel magyaRoRSzág zRt. www.yettel.hu
217,488
3,354,808
✓
✓
–
–
–
✓
✓
1993 1,880
Corvinus Zrt. (25) PPF Group (75)
Igor Prerovsky József Takács Nemanja Zilovic
2045 Törökbálint, Pannon út 1. (20) 200-0000 –
4
dIgI távközléSI éS Szolgáltató kFt. www.digi.hu
78,901
A
✓
✓
✓
✓
–
✓
✓
2004 1,974
Antenna Hungária Zrt. (100) –
tamás tábori Sándor Gurbán –
1134 Budapest, Váci út 35. (1) 707-0707 ugyfelszolgalat@digi.hu
5
InvIteCH ICt SeRvICeS kFt. www.invitech.hu
31,748
A
✓
✓
✓
✓
✓
–
–
2016 626
Antenna Hungária Zrt. (100) –
Csaba bőthe Dániel Majubu –
1013 Budapest, Krisztina körút 39. (80) 820-082 vip@invitech.hu
6
aCe teleCom kFt. www.acetelecom.hu
2,139
A
–
✓
–
✓
✓
–
–
Individuals (68) ThreeF Kft. (32) –
attila Farmosi, gábor varga Gábor Varga Péter Németh
1037 Budapest, Zay utca 3. (1) 999-1000 office@acetelecom.hu
7
netFone teleCom kFt. www.netfone.hu
2,065
A
–
–
–
✓
–
–
–
Datamachine Kft., István Kun (100) –
István kun, lászló mészáros – –
8900 Zalaegerszeg, Nefeljcs utca 2/A (1) 878-1800 info@netfone.hu
Continued from page 17 ››› Vodafone Hungary, according to an earnings report published on the website of the Budapest Stock Exchange. 4iG closed the purchase of a 51% stake in Vodafone Hungary on Jan. 31. It raised its stake in the telco to 70.5% through a share swap on March 20. The report shows net sales revenue climbed 119% to HUF 266.2 bln. EBITDA jumped 190% to HUF 95.3 bln. 4iG noted that Vodafone Hungary contributed HUF 42.5 bln to group-level EBITDA despite booking a HUF 51 bln standalone loss due mainly to interest payments on an intercompany loan from the U.K.’s Vodafone group that was dissolved after the sale of the Hungarian business was closed. 4iG said its telecommunications activities generated 87% of net sales revenue, and the IT business accounted for 13%. Geographically, 86% of net sales were generated in Hungary, 10% in Albania and 4% in Montenegro.
4g/5g
A
mobIle
295,263
mICRoWave
2
vodaFone magyaRoRSzág zRt. www.vodafone.hu
adSl
magyaR telekom nyRt. www.telekom.hu
Cable
1
leaSed lIne
ComPany WebSIte
modem
Rank
total net Revenue In 2022 (HuF mln)
–
✓
✓
✓
–
✓
✓
50 Telcos on E-reporting Interface for Public Utilities There are already more than 100,000 users of the e-reporting interface, which enables the notification of data changes to utility companies and the administration of utility transcriptions via the Internet, State Secretary Responsible for Territorial Administration István György of the Prime Minister’s Office announced in Budapest on Oct. 18. According to the leading business daily Világgazdaság [Global Economy], the e-reporting interface was implemented with HUF 1.8 billion from European Union funds under the Public Administration and Public Service Development Operative Program. When the interface was launched in February 2022, 31 utility providers were available on the platform; today, more than 180 companies have
1999 A
1997 A
2012 A
joined: 131 utility providers and more than 50 telecommunications companies.
pharmaceuticals and medical equipment, SMEs, the green economy and artificial intelligence, among others, he added.
Econ Development Minister Signs 4 Agreements in China
Orbán Talks Telecoms With Dodik
Minister of Economic Development Márton Nagy signed four agreements in China on Oct. 16, after talks between Prime Minister Viktor Orbán and Chinese Premier Li Qiang, his ministry said in a release on its website. “Hungary’s goal is to be a part of technological advances in the global economy, and that requires a deepening of economic cooperation between the two countries, especially concerning digitalization and the development of the Digital Silk Road,” Nagy said. The agreements aim to boost cooperation in the digital economy, new energy carriers, emissions reductions, 5G and 6G telecommunications technologies, the manufacture of
The telecommunications sector was an area of discussion when Prime Minister Viktor Orbán met with Milorad Dodik, the president of Republika Srpska, at his office in Budapest early in October, the PM’s press chief Bertalan Havasi said, according to state news agency MTI. The sides discussed the potential benefits of investment by Hungarian companies in the telecommunications sector, as well as in the financial and energy fields. Hungary sees Bosnia and Herzegovina in general, and particularly Republika Srpska, as “honorary neighbors,” Orbán said. The European integration of the Western Balkans will be a focus of Hungary’s presidency of the Council of the European Union in the second half of 2024, he added.
20 | 3
Special Report
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
Telecommunications Equipment Manufacturers Ranked by total net revenue in 2022
dual band mobile pHones (900/1800 Hz)
tRi-band mobile pHones
analog pHones
isdn pHones
ansWeRing maCHines
business pHone systems/pbx
Call/ContaCt CenteR
vsat system
voip
CtC/CRm solution
1
samsung eleCtRoniCs magyaR zRt. www.samsung.com
1,180,925
✓
✓
–
–
–
✓
✓
–
✓
–
2
Cloud netWoRk teCHnology kFt. www.foxconn.hu
651,750
–
–
–
–
–
–
–
–
–
–
3
panasoniC maRketing euRope gmbH soutH-east euRope Fióktelepe www.panasonic.com
601,638
A
A
A
A
A
A
A
A
A
A
4
HuaWei teCHnologies HungaRy kFt. www.huawei.hu
5
eRiCsson magyaRoRszág kommunikáCiós RendszeRek kFt. www.ericsson.hu
57,311
A
A
A
A
A
A
A
A
A
A
6
nokia solutions and netWoRks kFt. www.nokia.com
45,066
A
A
A
A
A
A
A
A
A
A
7
neC easteRn euRope kFt. www.hu.nec.com
8
CisCo systems magyaRoRszág kFt. www.cisco.hu
73,122
5117
3,942
A
–
–
A
–
✓
A
–
–
A
–
–
–
–
✓
A
✓
✓
A
✓
✓
A
–
–
A
–
✓
A
–
✓
industRy speCiFiC solution
Company Website
total net Revenue in 2022 (HuF mln)
message Handling system
Rank
types oF equipment
yeaR establisHed no. oF Full-time employees on aug. 1, 2023
oWneRsHip (%) HungaRian non-HungaRian
top loCal exeCutive CFo maRketing diReCtoR
addRess pHone email
–
–
1989 1,260
– Samsung Electronics Co. Ltd. (100)
Joseph Rhee Wonju Kim Gerda Witch
5126 Jászfényszaru, Samsung tér 1. (80) 726-7864 –
–
✓
2017 742
– Focus PC Enterprises Ltd. (100)
péter tálos Gabriella Pistauer –
2900 Komárom, Bánki Donát utca 1. (34) 886-055 komarom@ emea.foxconn.com
A
A
2010 29
– Hideki Katayama (100)
thibaut Clement vincent marsol – –
1117 Budapest, Alíz utca 4. (1) 382-6060 –
A
2005 137
– Huawei Technologies Cooperatief U. A. (100)
xie qiulian – –
1133 Budapest, Váci út 116–118. (1) 555-2300 –
A
A
1990 1,984
– Telefonaktiebolaget LM Ericsson (100)
edina Rózsa, zoltán takács – –
1117 Budapest, Magyar Tudósok körútja 11. (1) 437-7100 ericsson.hungary@ ericsson.com
A
A
2006 2,121
– Nokia Solutions and Networks Oy (100)
béla zagyva Erzsébet Tóth –
1083 Budapest, Bókay János utca 36–42. (20) 977-7797 nokia.hungary@nokia.com
✓
2002 26
– NEC Europe Ltd. (100)
lászló magyar, edit Cserháti Hontiné – –
1142 Budapest, Rákos tér 34. (1) 814-6424 –
– Cisco Systems Inc. (A), CISCO Systems Management B.V. (A)
ottó zoltán dalos – –
1123 Budapest, Csörsz utca 45. (1) 225-4600 –
andrás turai, györgy gombár – –
1062 Budapest, Váci út 1–3. (1) 238-8200 ggombar@avaya.com
zoltán Havasi Norbert Szabó –
1152 Budapest, Telek utca 7-9. (1) 271-1141 info@mohanet.com
A
–
✓
✓
1997 A
9
avaya magyaRoRszág kFt. www.avaya.com
2,923
–
–
–
–
–
–
✓
–
–
–
–
–
1990 84
– Sierra Communications International LLC (A), AVAYA Emea Ltd. (A)
10
moHanet mobilsystems zRt. www.mohanet.hu
284
✓
✓
–
✓
–
✓
✓
–
–
✓
✓
✓
2009 18
Zoltán Havasi (100) –
A = would not disclose,
NR = not ranked, NA = not appliacable
This list was compiled from responses to questionnaires received by October 31, 2023, and publicly available data. To the best of the Budapest Business Journal’s knowledge, the information is accurate as of press time. The list is based on companies’ voluntary data submissions. While every effort is made to ensure accuracy and thoroughness, omissions and typographical errors may occur. Additions or corrections to the list should be sent on letterhead to the research department, Budapest Business Journal, 1075 Budapest, Madách Imre út 13–14, or faxed to (1) 398-0345. The research department can be contacted at research@bbj.hu
4
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
Socialite
Not so long ago, I interviewed the son of the great Hungarian jazz guitarist Gábor Szabó. The musician had escaped to the United States with his family in 1956. His brother had already told me they had embraced America and its culture with open arms and turned their back on “Hungarianness.” DAVID HOLZER
So, I was surprised when Szabó’s son told me he remembered driving around Los Angeles with his father in the 1970s, desperately searching for a tub of sour cream that approximated the taste of the Hungarian tejföl he’d been raised on. In our house, my partner and her daughter don’t just use tejföl in cooking. They smear it onto bread and crackers, eat it by the spoon, and, for all I know, rub it into their faces as part of their beauty routine. I, on the other hand, have yet to learn to love tejföl. But that doesn’t stop me being fascinated by the stuff. One of my backburner projects is a book on the place of tejföl in Hungarian culture, along the lines of such works of genius as Mark Kurlansky’s “Cod: A Biography of the Fish That Changed the World” and Elizabeth David’s masterly “Harvest of the Cold Months: The Social History of Ice and Ices.” Until my study of tejföl hits the bookstores, I hope you enjoy these notes on a work in progress. Tejföl is a form of sour cream, which can be traced back to Russia, where
Photo by Raketir/Shutterstock.com
Tejföl: Is This the Very Essence of Hungarianness?
they had copied the Mongols’ practice of adding bacteria to mare’s milk to thicken it. Russians call sour cream “smetana.” From Russia, sour cream spread all over Central and Eastern Europe.
American Conquest
Sour cream was introduced to America by immigrants from CEE around the end of the 19th and the start of the 20th century. Given that a fair number of these immigrants, including Michael Curtiz (born Manó Kaminer in 1886 but, from 1905, known as Mihály Kertész), who moved to the States in 1926 and was the director of “Casablanca,” settled in Los Angeles and helped give birth to the film industry, it’s reasonable to imagine that Szabó found his sour cream. But it probably wouldn’t have been tejföl. The Hungarian Food Codex (Codex Alimentarius Hungaricus) tells us that tejföl, which translates as “sour cream,” can only be made by adding cream or butter and then a lactic acid bacteria culture to milk. Its fat content must be more than 16% but less than 20%. What follows is translated from an article in Hungarian by Dr. Bélá Német. I used the power of Google Translate, so please don’t take it as gospel. After the fat and bacteria culture are added to the milk to ferment it, it’s heated to around 75°F (24°C) in glass containers and homogenized at a pressure of 100-160 bar to prevent foaming and achieve the desired consistency. It’s the bacteria that thickens the milk. The tejföl is heated one last time at temperatures of between 95-100°F (35-38°C)
to get rid of any unwanted bacteria, and then it’s ready to be chilled, cold aged and shipped to stores. Tejföl lends itself to being used in cooking or added to dishes such as gulyás (goulash) because it’s rich enough in fat not to curdle at higher temperatures. In case you were wondering, the origins of goulash lie in stews eaten by Hungarian shepherds in the 10th century. Meat previously cooked and flavored was dried in the sun and stuffed into bags made from sheep’s stomachs. When the wandering shepherds were hungry, they just added water to make their gulyás.
Paprika-free
These early versions of goulash didn’t include paprika because it wasn’t introduced to Europe until after Columbus brought it back from America in the early part of the 16th century. Somewhat confusingly, given its origins in shepherding, the word gulyás can mean cowboy. “Gulya” means herd of cattle in Hungarian. Up until the 19th century, the Hungarian Puszta, that area of grassland in the east of Hungary that lies around the River Tisza, was home to vast herds of cattle. From there, they were driven to enormous cattle markets in Moravia, Vienna, Nuremberg and Venice. Some cattle were slaughtered along the way to make goulash. Presumably, the cowboys bought a supply of tejföl with them. Being rather Budapest-centric in my cultural exploration of Hungary, I had no idea there were Hungarian cowboys. They are called csikós;
I won’t inflict another digression on you, but I do wonder if Hungarian cowboy culture is a secret influence on that of the United States. To be honest, I’ve yet to find significant references to tejföl in Hungarian literature, art, music and film, although I’m sure they exist. So far, I’ve discovered various superstitions that pertain to milk in general. It was considered bad luck to chop bread into milk using a knife. If a cow gave bloody milk, it was believed that it had been bewitched by a “boszorkány” or witch. A fire caused by lightning could only be put out by milk. On April 24, the feast day of St. George (the dragon-slayer), Hungarians traditionally carried out magical ceremonies to protect their animals, keep them fertile and ensure they gave plenty of milk. St. George, or more accurately, Szent György, has also been the patron saint of the Hungarian police since 1992.
Tejföl and jazz: a coda
A friend of mine is a superb bass player named Steve Bergendy. I didn’t know this until his father passed away, but Bergendy Jnr. is the son of the great Hungarian jazz composer and musician István Bergendy. Steve lives most of the time in Mallorca. When we met there this summer, he was chatting with my Hungarian partner when he suddenly became excited. “Listen,” he said, beaming from ear to ear. “I’ve discovered how to make tejföl. You just put a tub of yogurt in the sun for a while, and it ferments!”
22 | 4
Socialite
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
Making Customers Look in Proportion, Even if They Aren’t Born That Way Stepping into Simon Skottowe’s shop, not far from the Hungarian Parliament, one enters a world of immaculate suits, shirts, ties and all the trappings of an exclusive London club. KESTER EDDY
This being one of the last hot days of September, your correspondent, in shorts, a t-shirt and an aging, made-in-China safari waistcoat, felt embarrassingly under-dressed. Skottowe’s Facebook page introduction line is: “The ultimate in luxury menswear, both bespoke and specialist ready-to-wear.” But if this bespoke tailor had any disdain for journalists with the fashion tastes of a 1970s barbarian, he certainly didn’t show it. Not that it’s always been like this. Little more than a decade ago, “we were working in pretty tiny” premises in Budapest’s District VI, where “you couldn’t swing a kitten, let alone a cat,” the bearded tailor candidly admits as we sink into comfy armchairs, coffee being served. Skottowe finished a decade-long stint in Milan to arrive in Budapest in 1998 as the design chief for the former Vörös Október Férfiruhagyár, a striking name to have on one’s CV, meaning “Red October Men’s Clothes Factory.” Re-christened Elit Clothing by the then-new British owners, its 1,700 workers spread out across five sites in Hungary cut, sowed, pressed and despatched 12,000 suits a week. “This was the first time I’d worked for a really big company. Most of the clients were British High-Street companies, like Moss Bros and Cecil Gee [...] so it was, sort of slightly better than average industrial tailoring,” he recalls. But three years on, having just put down the deposit on an apartment in Budapest, a round of corporate cost-cutting saw the designer-inchief made redundant. He could return to his beloved crafting world of bespoke tailoring in the Hungarian capital as a sole freelancer, but that would take courage.
Daring to Win
Skottowe dared, and arguably against the odds, has won. Today, he employs three sowers and two part-time assistants.
Simon Skottowe “So it’s not a tiny operation, though it’s not massive. By comparison [to Elit], you can knock off all the zeros on the 12,000 suits, plus something else, because what we do is more or less completely handmade,” he says. And with his suits routinely retailing at around EUR 3,500, inevitably, his clients tend to be relatively wealthy. It’s all rather anonymous, however. “It’s not done to give names, but I can say our clients include owners and directors of some of Hungary’s well-known, historical and most successful companies, senior people in finance, banking, top lawyers, some from Austria, Switzerland, Germany,” he reveals when pressed. Naturally, in 2001, it didn’t start out that way. “At that point, it [marketing] was mostly the ex-pat community, word of mouth, friends of friends,” he acknowledges. He remembers BBJ mixers around the early millennium. “Oooh, weren’t they lovely in the good old days! But for a certified introvert,
BBJ mixers were something more like torment than fun, not my cup of tea at all, though I’ve got better at it over the years,” he says. Slowly but surely, his perseverance, dedication and innovation paid dividends. Such professionalism was, of course, not acquired overnight. Skottowe had started young. His mother, perhaps desperate to keep two young sons out of harm’s way on holiday in England, gave them “a couple of tapestries to do [….] I don’t know what went through her mind, boys sowing,” he says. But before she knew it, young Simon was hooked. By 13 or 14, he was making things for family and friends and reaping rewards. “I got into making curtains in a big way, English-style curtains, with linings and pattern-matching fabrics [...] It was a good little money-earner; I had a very solid bank account back in those days for a 13-year-old!” he chuckles.
Go Bespoke For the Environment It may not be the foremost reason his customers have in mind when ordering custom-made clothes, but bespoke tailoring is environmentally good for you, Skottowe enthuses when the subject is raised. “The clothing business is one of the most polluting in the world. This is partly due to the preparation
of the materials [including the dyes], but largely because of the many unsold garments from fast-fashion lines that are now creating huge waste issues,” he says. In stark contrast, a uniquely made, bespoke garment is ordered, carefully cut, and sold, creating far less wastage. Moreover,
Soaking up Skills
His course set, Skottowe left school to study at Harrow College of Art and Design, where he soaked up skills and knowledge from his tutor, a former Savile Row tailor. However, in 1988, though armed with a degree and significant practical experience, bespoke tailoring was going through hard times, even in London. “Everybody was wanting Versace and Armani suits. Savile Row was seriously suffering,” he recalls. And so, like many others at the time, Skottowe packed his bags and flew to Milan to try his luck. In Italy, he gained more experience, learned the vernacular and picked up scores of contacts. “I got into pattern cutting and tailoring for manufacturers working for Katharine Hamnett, a famous designer in London, but with her production in Italy,” he says. This all proved invaluable when, after being headhunted for the Elit job, he later found himself starting out alone once more in Budapest, where the craft of hand tailoring was still recovering from the mass-production mindset of the communist era. “You don’t have the suppliers here from whom you can easily get stuff [of the right quality], but from working in Italy with the bigger companies, I know how to approach them. I’m trying to buy rolls of 50 meters of canvas, which is, for them, absolutely nothing, but because they know what we do, and they respect it, the camaraderie kicks in, and it’s all sorted,” he says. The challenges even come down to items like buttons. “There is no supplier of high-quality buttons; they don’t exist. You have to import them from Italy, or via wholesalers in the U.K., or buy them in Vienna. You can’t just put synthetic buttons on a EUR 3,000 suit.” Despite the hurdles, the satisfaction of helping to recreate an all-but-lost craft industry, even if only in a small way, is a reward in itself for those like Skotttowe, who delight in the world of high-quality fabrics and the finest of cuts. And in this ever faster-moving world, there is no chance for any Johnny-come-lately out for quick success in bespoke tailoring. “If there’s a problem with a textile, it’s twisted, shrinking, [….] how to make the fitting on the customer properly, so as to make the best of their good features, make them look in proportion, even when they aren’t [.…] This all really takes an enormous accumulation of knowledge and skills. You can’t pick that up in six months.”
the construction techniques of highquality tailoring mean that this suit will last as much as eight or even 10 times longer than an average quality, confection-made garment. “Consequently, the pollution and wastage created by one highquality bespoke suit is about onefifth to one-tenth of that created by confection garments worn over the equivalent period,” Skottowe argues.
4
www.bbj.hu
Budapest Business Journal | November 3 – November 16, 2023
Chamber of Commerce Corner
Socialite | 23
This regular section of the Budapest Business Journal features news and events from various international business chambers. For further information and to register for specific events, visit the website of the organizing chamber. If you have information for inclusion on this page, send an email in English to Annamária Bálint at annamaria.balint@bbj.hu
Belgium Business Club in Hungary (Belgabiz)
Italian Chamber of Commerce for Hungary (CCIU)
Belgabiz and Dutcham, in cooperation with the Business Council for Sustainable Development in Hungary (BCSDH), will organize a seminar titled “CSRD: Transforming Businesses, Impacting Futures” on Tuesday, Nov. 21, in the K&H Auditorium. This event will delve into the implications and opportunities the Corporate Sustainability Reporting Directive presents as industry leaders converge to shape a more sustainable future.
By the time this issue is published, the CCIU will have taken six Hungarian buyers to the “B2B Sardinian Food 2023” fair on Monday, Oct. 30, in Cagliari. The event is part of a project called “Preparing SMEs for International Markets,” promoted by the Cagliari-Oristano Chamber of Commerce, which aims to support Sardinian SMEs in approaching foreign markets. The “B2B Sardinian Food” fair includes a day of B2B meetings between participating Sardinian companies and interested foreign buyers.
Joint Venture Association (JVSz) The third occasion of the JVSZ Country Ride series will be held in Kecskemét on Thursday, Nov. 23. The opening speaker will be Minister of Energy Csaba Lantos. The event will focus on the current energy challenges, the latest trends in energy efficiency and savings opportunities. Business leaders of Bács-Kiskun, Csongrád-Csanád and Békés counties are invited to attend. Program details and registration: jegy.jointventure.hu
American Chamber of Commerce in Hungary (AmCham) On Wednesday, Oct. 25, AmCham welcomed three guests from the Ministry of Energy: Deputy State Secretary for Energy Policy Márk Dezső AlföldyBoruss, Deputy State Secretary for Climate Policy Daniella Deli, and Deputy State Secretary for Energy Transition Viktor Horváth, to its Policy Forum. AmCham members discussed with the deputy state secretaries the current status of the European Union’s Fit for 55 package and how the revised National Energy and Climate Plan supports achieving shared European goals. Paramount questions about international and EU climate policy and the ministry’s plans for improving energy efficiency were also addressed. The deputy state secretaries stated that nuclear energy, including the extended operation of Paks I and later Paks II, will play a significant role in reaching the EU’s decarbonization targets. In line with the EU’s climate targets, renewable sources, especially solar energy and biogas, will also be pivotal in the energy mix in the upcoming years. It was also noted that the share of solar power plants in the total energy generation is already above the EU average. As it is included in the EU taxonomy, natural gas will serve as a transitional energy resource but will be gradually reduced over time. Regarding plans for improving energy efficiency, the government’s main focus would be on properties: this is supported by the fact that the operations of buildings on a global level account for 30% of global final energy consumption. The objective is firstly to improve the insulation of buildings and secondly by other developments such as heat pumps.
Swiss-Hungarian Chamber of Commerce (Swisscham) Swisscham members were able to pick and choose from several events in October. First was the “Let’s speak AI” workshop at Sigma Technologies with partner chambers as part of Netzwerk Digital. The latest HR Café was held at the Information Center of the University of Hagen in Budapest, with guest speakers and industry professionals sharing a stimulating roundtable discussion on the importance of training. Lastly, we held a second round of the Joint Afterwork Networking event at the Paulaner Beer House, jointly organized with two partners, the Netherlands-Hungarian Chamber of Commerce and the Swedish Chamber of Commerce in Hungary.
French-Hungarian Chamber of Commerce and Industry (CCIFH) CCIFH is providing a playful collaborative workshop on sustainable development as a simple way of raising employees’ awareness of the challenges of climate change. Employees can learn in small groups and immerse themselves in the “Climate Fresco” workshop. The workshop animators are from AIR FranceKLM, Decathlon and Michelin, the professional partners of the event. • When: Wednesday, Nov. 15, 9 a.m.-noon. • Where: Milestone Intézet W17, Wesselényi u. 17, 1077 Budapest • Fee: members HUF 9,900 (+ VAT); non-members HUF 14,900 (+ VAT) The French Chamber is also inviting guests to a Beaujolais Nouveau Wine Party to celebrate this typical and friendly French event. • When: Thursday, Nov. 16, 6-8 p.m. • Where: Le Troquet Winebar (French Institute), Fő u 17, 1011 Budapest • Fee: members HUF 9,900 (+ VAT); non-members HUF 14,900 (+ VAT)
German-Hungarian Chamber of Industry and Commerce (DUIHK) The joint event of the DUIHK and the Budapest Stock Exchange on Tuesday, Nov. 14, offers Hungarian companies the exclusive opportunity to learn first-hand about the ESG expectations of large German companies from ESG and procurement managers at the head offices. At the same time, the stock exchange and the chamber will present already available services and programs that SMEs in Hungary can use to prepare for the new ESG era. On Tuesday, Nov. 21, DUIHK is organizing a business forum with Minister of Construction and Transport János Lázár. The minister’s portfolio is of enormous importance for business enterprises; his area of responsibility includes not only the construction industry, rail transport and road building, but also state investments and infrastructure projects. In his presentation and the subsequent panel discussion, Minister Lázár will give chamber members an insight into the Hungarian government’s transport, construction and investment policy and will also be available to answer questions from the audience.
Canadian Chamber of Commerce in Hungary (CCCH) The CCCH will host its 29th traditional Canadian Lobster Dinner on Nov. 11, one of the most prominent business events of the year. A portion of the raffle proceeds will go to SOS Children’s Village, a foundation that works in 136 countries to support families and help children at risk grow up in a loving home. Participants will be entertained by live music, exhibitors, a silent auction and raffle prizes. Unlimited cocktails and alcoholic beverages are included in the entry tickets. The Canadian lobster is little different from its European cousin but has a slightly wider claw. It is exported to Europe in large quantities, and its quality is not compromised by professional transport. Its meat is delicate, and if not handled properly, it quickly loses its flavor and aroma. The seafood, now a luxury item, was considered a “mass food” in the 17th and 19th centuries, not least because it did not cost the people living by the sea any effort to obtain it. • When: Saturday, Nov. 11 • Where: Hotel Intercontinental Budapest, Apáczai Csere János u. 12-14, Budapest • Fee: members HUF 69,723 (+ VAT); non-members HUF 88,773 (+ VAT)
British Chamber of Commerce in Hungary (BCCH) The BCCH invites guests to join it for one of the best-known and most successful events on the expat calendar, the St. Andrew’s Ball celebrating Scotland’s national day, sponsored by long-standing BCCH member Budapest British International School. Experience authentic Scottish entertainment with Craig Weir, one of Scotland’s leading bagpipers, and dance with the fabulous Liam Smith Ceilidh Band. There will be a three-course meal from the Marriott,
along with wine, beer and (naturally) whisky, courtesy of Diageo. There will also be a charity tombola for the benefit of Tabitha Haz Children’s Hospice, followed by disco hits to keep the dancing going until the early hours. Törley will be the official sparkling wine supplier for the event. Dress Code: Black tie or Highland dress. • When: Saturday, Nov. 25, 6 p.m. • Where: Budapest Marriott Hotel, Apáczai Csere János u. 4, 1052 Budapest. • Fee: HUF 39,000 per person (+ VAT)
Boost your business with space technology esatechbroker.designterminal.org