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2013.01.30. INTERNAL AFFAIRS 12.01.2004 - Emigrants left alone - Highway to the south 13.01.2004 - Hungarian „FBI“ in the making - Illegal action at Tilos Radio - Welfare system: change? 16.01.2004 - Football EC with Romania? - Immigrant program more important in Hungary FOREIGN AFFAIRS 14.01.2004 - Der Standard: mistake, then anger 16.01.2004 - Prodi in Budapest MACROECONOMY 12.01.2004 - Experts counting on a fragile forint market - Industry in recovery 13.01.2004 - Christmas-related imports deteriorating the trade deficit - Economic freedom on the decrease? 14.01.2004 - Draskovics announcing austerity measures 15.01.2004 - Less deficit than expected 16.01.2004 - Budget to have failed on the back of interest-related expenditures (, too) BANK 12.01.2004 - Jungle of interest rates on the home loan market 13.01.2004 - Correction 16.01.2004 - The mintage will move to Soroksár ENERGY INDUSTRY 12.01.2004 - Lengyel’s resignation to firm Pál’s position 13.01.2004 - Grainger Sawmills to build a wood waste power plant ELECTRONICS 15.01.2004 - Ajkai Elektronika becoming a Toyota supplier PAPER- AND PRINTING INDUSTRY 15.01.2004 - HUF 2,000 per share purchase offer for Kartonpack 16.01.2004 - Significant digital printing company in the making FOOD INDUSTRY 12.01.2004 - Globus: decreasing MAVA business share 14.01.2004 - Bonbonetti sold 15.01.2004 - Bread to cost HUF 200 per kilogram by February - Hungarian subsidiary of Parmalat to be bought by producers? 16.01.2004 - Several hundreds of millions of dollars went through Parmalat’s Hungarian offshore company AGRICULTURE 14.01.2004 - Hajdú-Bét nearing bankruptcy TRADE, FAIRS 12.01.2004 - Increasing turnover at Hungarian store chains - Used car importers can go bankrupt 13.01.2004 - Posches will be cheaper too 14.01.2004 - Foot Locker comes to Hungary? 15.01.2004 - Tesco’s Christmas-turnover increased - Hyundai goes to Slovakia? 16.01.2004 - Cigarettes more expensive only from February - Hungexpo to select a partner in March - Hungarian Suzuki selling 40,00 cars TRAFFIC, TRANSPORT 13.01.2004 - Malév saves money on board service 14.01.2004 - No Ryanair flights to Sármellék at the time being 15.01.2004 - Malév to restart Beijing flights form August INVESTMENT, DEVELOPMENT 12.01.2004 - Bau Holding may get motorway M5 - Invitation for bids for motorway M6 14.01.2004 - Interest breaking records for motorway construction - Kingspan Group builds factory - MKB credit to BILK 15.01.2004 - Heitman and Engel build jointly - Inner city of Pest side in demand SECURITIES’ MARKETS 12.01.2004 - Three Hungarian papers among the bests of Easter Europe OTHER 16.01.2004 - No Hungarian in Formula 1




INTERNAL AFFAIRS - 12.01.2004 Emigrants left alone Hungary will not sign the UN treaty about the protection of emigrant workers. According to the statement of UNESCO, the reason for this is that it does not want more emigrants, but the standpoint of the Ministry of Foreign Affairs is that the treaty that entered into force on July 1, 2003 is only an attempt of a few developing countries, which is doomed to failure. The treaty prescribes the same treatment for employees arriving from abroad as for the signing countries’ own citizens. (Nszab p1, 3)

Highway to the south The Prime Minister asked the Minister of Economy and Transport to ensure that Highway M7 is built to the Slovenian and Croatian border by 2006. Péter Medgyessy stated at the Somogy County Day: as a condition of successful EU accession more patience, savings and arguments are necessary instead of anger. According to the Prime Minister „now we do not have to be popular but foreseeing”. At the ceremony, Mónika Lamperth, Minister of Interior, was honoured with the Somogy Prize and thirty people received the „For Somogy’s citizens” Prize. (NSZ Jan. 10th p3, MN Jan. 10th p3)

INTERNAL AFFAIRS - 13.01.2004 Hungarian „FBI“ in the making Minister of the Interior Monika Lamperth said she had resolved to establish a National Bureau of Investigation (Nemzeti Nyomozó Iroda (NNI)), the so-called Hungarian „FBI“ within the National Police Force to take the place of the Organised Crime-Fighting Directorate (ORFK Szervezett Bûnözés Elleni Igazgatósága). To be integrated into the new establishment would be Financial Investigation Directorate (Pénzügyi Nyomozó Igazgatóság), transferred to the National Police Force from the Hungarian Tax Office APEH. Reacting to press information that the Interior Minister plans to carry out personal changes at the management of the National Police, she answered that she had total faith in National Police chief László Salgó, criminal affairs director at the National Police Headquarters László Ferenczi and head of the police directorate combating organised crime SZBEI Zoltán Bolcsik. Besides creating the new bureau, Lamperth announced three other tasks for the near future. Firstly, management at the national police force would be cut back by half through restructuring, secondly, its financial management should be upgraded and thirdly, a new duty will be inaugurated within Standby Police (Készenléti Rendõrség) and later motorway police and Airport Security Service (Repülõtéri Biztonsági Szolgálat) would also be included here together with police combating against terror. Concrete plans should be worked out by the management of the Police Force not later than 15 February and Deputy Human Policy State Secretary of the Interior Ministry will also take part in the process. According to daily Magyar Hírlap, the reform, the largest of its kind recently, will have a positive effect on the efficiency of the police. The reconstruction is likely to cost hundreds of millions of forints and will lead to many officers at the age of 45-50, with 25 years of service going to pre-pension. The National Police Force denied information coming from daily Népszabadság that the Attorney’s office is going to put the investigation of the K&H case under its own control. (MH, p 1 and 3, Nszab, p 5, NSZ, p 1 and 3)



Illegal action at Tilos Radio Budapest police began investigation against persons unknown for incitement against a community, following the burning of an Israeli flag at a Sunday demonstration at the headquarters of alternative non-profit Tilos Radio. Police sources confirmed that police on the scene did not realise that the flag was burnt and no information of this kind was received after the demonstration. However, Monday's media carried several photographs of an Israeli flag being burned. Based on these photos, police have started an investigation into the case. One of the main organisers of the event called the act as a provocation and so did Gábor Vona, Deputy Chairman of the Jobbik Magyaroroszágért movement. Also condemning the act is co-ordinator of the civic circles Csaba Hende and the cultural section of Fidesz Hungarian Civic Alliance. Csaba Hende thinks that the most important question is whose interest it could be to carry out this outrageous provocation against the civic circles. Meanwhile, the Young Left Wing - Young Socialists (Fiatal Baloldal - Ifjú Szocialisták), the youth arm of the Hungarian Socialist Party, senior member of the government coalition, announced that it was asking the Prosecutor General to determine whether the incident qualified as a felony, and if so, to specify the responsibility of the organisers. At the same time, they called on Viktor Orbán to announce what civic circles founded by him have to do with racism. . The Israeli Embassy in Budapest issued a statement of protest with the Foreign Ministry voicing its regret. The Federation of Hungarian Jewish Communities (Magyarországi Zsidó Hitközségek Szövetsége) condemned the burning of the Israeli flag and also the fact that demonstrators were invited through a program of the Hungarian Radio. It is worth to note that demonstrators came together to condemn one radio presenter of Tilos Radio, who said on Christmas Eve that he would wipe out all Christians. Zoltán Bajtai (Barangó) told daily Népszabadaság that he felt very sorry about it and had repeatedly asked for forgiveness from all those concerned. He added that noone wanted to listen his words. (MH, p 1 and 2, Nszab, p 1 and 4, NSZ, p 1 and 8)

Welfare system: change? Tibor Draskovics new Minister of Finance will lay open his conception by the today governmental spokesman press conference. His conception is probably based on the tight financial policy already mentioned by the prime minister Péter Medgyessy. Well controlled budget, decreasing budget deficit and inflation, the reform of public health- and administration system – these are the magic words according to politicians the welfare system-change can be continued with. Concerning „people in need” policy there is a significant conflict between the coalition parties: while SZDSZ (Federation of Free Democrats) would operate a social system, which is based solely on people’s needs, MSZP (Hungarian Socialist Party) is believer of supports based on civic right and they would give up this principle only after the implementation of the big provider systems’ reform. Socialists would give the savings arising from this policy and from the budget re-arrangement only to people in need. (Nszab, p1, p4)

INTERNAL AFFAIRS - 16.01.2004 Football EC with Romania? Upon the initiation of Ferenc Gyurcsány, sports minister, Hungary would apply for organising the 2012 football European championship jointly with Romania. The associations of the two countries like the idea. The leader of the Hungarian Football Association will travel to Bucharest at the end of January to conciliate with Romanian sports leaders. The two countries do not have a stadium appropriate for arranging the games yet, but according to the head of the Ministry of Youth and Sports the suitable facilities can be built until the start of the event. (MH p1, p22-23)

Immigrant program more important in Hungary Last year saw the number of illegal immigrants to the countries of the European Union going down by 50 percent and the same happened in Hungary, too. In a parallel development, allegedly on the back of the country’s European Union accession, the number of those asking for a residence permit went up by 70 percent and of those applying for a settlement permit increasing by 150 percent. After the European Union membership of Hungary, the number of asylum proceedings is set to increase. Already last year, the modernisation of refugee camps and stations has started. The first establishment where under-aged immigrants without an accomplice could be received opened in 2003 in Békéscsaba. A total of HUF 750 million was earmarked for the modernisation programme last year, whilst the corresponding figure stands at HUF 1 billion for 2003, with a significant part of this sum coming from Union funds. (NG, p 4, Nszab, p 5)



FOREIGN AFFAIRS - 14.01.2004 Der Standard: mistake, then anger The professional mistake made on Christmas Eve at alternative non-profit Tilos Radio threatens to further heat anti racist feelings present in ultra right circles, although some establishments distance themselves from what had taken place – Vienna newspaper Der Standard writes in an article on Hungarian racism. The daily reports on the demonstration for the ban of the radio station where an Israeli flag was burnt. Der Standard highlights that for several months debates have been going on in Hungary on how to handle the racist approach that could be seen at a series of racism cases at courts. (MH, p 4, Nszab, p 4)

FOREIGN AFFAIRS, EUROPEAN UNION - 16.01.2004 Prodi in Budapest European Commission President Romano Prodi ceremonially pushed a button, thus launching the first EU tender for Hungarian businesses. Economics and Transport Ministry would receive bids for HUF 40 billion worth of support on 22 accounts from Thursday onwards. Romano Prodi received the Order of Merit of the Republic of Hungary, Grand Cross, Enlargement Commissioner Gunter Verheugen received the Order of Merit of the Republic of Hungary, Middle Cross with Star, and Director-General for Enlargement Eneko Landaburu and Enlargement Director Pierre Mirel received the Order of Merit of the Republic of Hungary, Middle Cross from President Ferenc Mádl. The European Commission President expected candidate names for the EU Commissioner’s post, but he was not mentioned any. The Hungarian government has signalled that they would like to delegate a new commissioner not only staying in the position for the period of six months, but rather someone who would be fitted to take part in the work of the new commission to be formed in Brussels in November. Among candidates for the post, the names of Péter Balázs, the leader of Hungary's EU representation, Endre Juhász, Minister without Portfolio in charge of co-ordinating integration affairs, former Minister of Industry Szabolcs Fazekas and that of political state secretary Etele Baráth are in circulation. (Nszab, p 1 and 3, MH, p 1 and 9)

MACROECONOMY - 12.01.2004 Experts counting on a fragile forint market The Hungarian forint has taken a dip in the second part of last week with the eruo trading at a HUF/EUR rate of 270, compared to Monday and Tuesday when it was around 260. The weakening was in parallel with firming on the government securities market with reference yields standing 0.4-0.8 percent up on one day earlier. According to market information, unfavourable developments were caused by treasury bond and forint sales on the back of the Finance Minister’s dismissal. The forint rate was not helped by chancellery minister Péter Kiss’ announcement in which he said that the euro’s introduction could be delayed. Analysts say that Friday’s fall could be put down to several larger foreign investors closing their positions. Partly offsetting forint sales is that Hungarian credit institutions are buying forints commissioned by exporters to do so. For the latter ones, weak Hungarian currency is favourable, since their euro income means more in forints. There are signs that the market was not calmed down by the announcement of new Finance Minister Tibor Draskovics, either. The new finance minister-designate promised a predictable and credible economic policy, a strictly controlled budget, a shrinking budget deficit, a declining rate of inflation and reforms and also the review the euro accession timetable. Economist György Barcza from ING Bank said that the market accepts the euro delay, but it expects the related economic policy program to be credible. Raiffeisen analyst Zoltán Török is of the opinion that a new round is to come, since this week will see the publishing of the inflation date. Some experts do not exclude that should the data be worse than expected, then the euro rate can reach HUF 280. They agree in saying that the forint market will be nervous and fragile in the coming days. (MH, 10-11 Jan, p 9, NSZ, 10 Jan, p 5, Nszab, 10 Jan, p 19, NG, 12 Jan, p 1 and 3, VG, 12 Jan p 11)

Industry in recovery In annual comparison, according to unclearified index, industrial production grew by 6.8 percent, while based on data adjusted seasonally and with working days, the expansion was 9.7 percent in November – turned out from KSH (Central Statistics Office) data. Monthly expansion was 1.8 percent, based on this value production of the first 11 months last year’s exceeded the figure registered in the basis period by 5.5. According to experts who assessed the hot data: the tempo of nearly 10 percent indicates consistent recovery. Experts say: additional slow recovery is expected in the fields of industry. (MH Jan 10-11, p10, MN Jan. 10, p11)



MACROECONOMY - 13.01.2004 Christmas-related imports deteriorating the trade deficit November 2003 saw trade deficit of EUR 22.3 million, thus the total deficit of the first eleven months amounted to EUR 3.99 billion, EUR 1.2 billion up on the base data. In line with expectations, exports on the back of impending Christmas were significantly up with the largest import expansion posted in this very month. Also contributing to the increase was larger investment-oriented imports and growing amount and prices of energy imports. (NG, p 3)

Economic freedom on the decrease? The last years have seen decreasing economic freedom in Hungary – the latest survey of Heritage Foundation writes. The American foundation is giving Hungary 2.6 points, compared to last year‘s 2.55 points. This way, Hungary is equal with Bolivia and the United Arab Emirates and scores better than France or Greece, but lags behind the Czech Republic and Slovakia. According to Heritage, Hungary has a bad position when it comes to commerce, monetary, fiscal, price and wage policy, whilst it is termed as outstandingly restrictive in government expenditures and income taxation, and it has a positive assignment in corporate taxes, government interventions, foreign investments, banking sector and property rights, Heritage writes. Canadian Fraser Institute published a differing report in this matter last summer. Then researches noted that Hungary had very good marks in currency regulations and business environment control. (VG, p 1 and 2)

MACROECONOMY - 14.01.2004 Draskovics announcing austerity measures Tibor Draskovics, the nominee for finance minister, speaking at his first conference since his nomination was announced, said that austerity measures, a predictable economic policy and a comprehensive healthcare reform are the key elements of his program. He went on to say that the government is counting on a deficit of 4.6 percent for this year, up on the earlier planned 3.8 percent figure and plans to achieve that without a supplementary budget. Austerity measures could result in savings of HUF 120 billion, he noted, adding that a decision on this matter was expected by the end of February. These measures will not include very important areas, so it is budget institutions and funds put aside earlier that can be hurt. The politician said that to achieve rapid growth, low inflation, low interest level and low fiscal deficit are necessary. He is of the opinion that Hungary has to join the eurozone, giving it larger safety and predictability, with a strong and competitive economy. Draskovics will continue talks with government officials, analysts, the central bank and market representatives to establish, by the end of March, whether or not Hungary's target date of 2008 for joining the EMU is viable. He would call for Hungary's entry into the ERM-II system after Hungary joined the European Union in May. He is of the opinion that a welfare-related shift has already been realised in Hungary, now the focus should be on the creation of a prudent economic policy. The new Finance Minister who takes his office on 15 February, is planning to have a comprehensive, well thought-out and harmonised economic policy, promising he would develop the economic cabinet into the government's economic policy workshop. Draskovics said he would strive for a balanced relationship with the National Bank of Hungary (MNB), and that the government and the central bank should hold regular consultations to carry out a co-ordinated economic policy. He also stressed the importance of regular meetings with enterprises and interest groups. In all, the market had a positive response to the entree of the new Finance Minister. The euro rate went from HUF 268 to HUF 266 during the speech, showing that investors speculating for a weaker forint started closing their positions. At the same time, the secondary government securities market has seen a continuous increase of yields yesterday. Observers, however, point to the fact that the modification of the general government deficit plan is a proof that the budget was in worse conditions than the market had thought. György Barcza from ING Bank is of the opinion that the near future is not going to bring stabilised forint rate. Gergely Forián Szabó from CA IB termed it as a bad message that Draskovics put growth in front of balance, and added that it is rather the improvement of balance investors are expecting from the government. He was also not satisfied with the uncertainty surrounding the introduction date of the euro. Gábor Széles, chair of the Association of Employers and Industrialists (MGYOSZ) criticised the speech that it did not contain anything in connection with suggestions on how to combat current account deficit, which would be quite important to restore the balance of exports and imports, he added. Senior governing party Hungarian Socialist Party MSZP and its junior partner Alliance of Free Democrats SZDSZ have said that they would support the new minister. Tibor Draskovics had talks yesterday with Socialist Chairman László Kovács, caucus leader Ildikó Lendvai and Chancellery Minister Péter Kiss and plans to have an informative meeting with members of the parliamentary group on Monday. Fidesz Member of Parliament Mihály Varga announced that Hungary’s 2004 budget had proved to be unrealistic and had already lost its creditability. As the chairman of the budget committee, he will initiate the hearing of the Prime Minister and outgoing Finance minister Csaba László in relation to the budget deficit. (VG, p 1 and 3, MH, p 1 and 2)



MACROECONOMY - 15.01.2004 Less deficit than expected Instead of the 369 million euros, as expected by analysts, deficit of current account in November aggregated merely 200 million euros. As a result of this deficit in the first 11 months added up HUF 4.2 billions – informed MNB (National Bank of Hungary). In the period between January and November 2002 there was a loss of 2.1 billion euros accrued. The favouring balance sheet data is owing to the recovery in export mainly. The shortage of commerce shows that the tempo of export growth did catch the tempo of import’s expansion. Deficit registered in this row did not exceed last year’s figure in October-November, which indicates an improvement in balance. According to Gábor Karsai managing director of GKI Gazdaságkutató (GKI Economic Research Co.) refer to a change in trends, on the contrary, other experts think it is too early to talk about recovery. According to Péter Duronelly Budapest Bank’s analyst and Zoltán Török of Raiffeisen, deficit of current balance can achieve its peak at the end of 2003 – beginning 2004, then a decrease is expected. Data published yesterday effected HUF favourable, the course of euro sunk from HUF 269 in the morning to under HUF 266. (NG p1, p3, MH p14, VG p5)

MACROECONOMY - 16.01.2004 Budget to have failed on the back of interest-related expenditures (, too) The general budget deficit minus local governments came to HUF 1,054.3 billion for 2003, HUF 22 billion more than the projection modified during the year. Both incomes and expenditures of the budget were rising last year. The inflow from VAT and excise tax was larger than expected, whilst corporate taxes were down more or less to the same extent as proceeds from simplified entrepreneurial tax increased. Income from customs tariffs and personal income taxes was significantly lower than anticipated. Income coming from social security funds was in line with projections. Home subsidies exceeded plans by HUF 56 billion last year, whilst debt service increased by HUF 86.5 billion. Drug subsidies were originally planned to reach HUF 217 billion, then modified to HUF 242 billion, only to finish at HUF 251.8 billion by the end of the year. In spite of cost-cutting measures implemented and savings started, the central budget saw HUF 23 billion more in subsidies for self-governments than planned, whilst ministries wee given HUF 30 billion more than projected. Expenditures in relation to pensions were up by HUF 36 billion and those on sick leave benefits increased by HUF 13 billion. The social security deficit amounted to HUF 74.9 billion more than anticipated. When it comes to self-governments, instead of a break-even expected by the Finance Ministry, a deficit of HUF 50 billion is foreseen now. The Finance Ministry stuck to its general government deficit forecast of a GDP-proportionate figure of 4.8 percent for 2003 and a 3.8 percent figure for 2004 in its September announcements, however, the deficit rose to 5.6 percent by the end of the year and projections for this year were in parallel modified to 4.6 percent, together with another austerity package to the tune of HUF 120 billion. What was really surprising is the fact that the Finance Ministry is of the opinion that general government deficit for January can be HUF 80-100 billion more than usual, totalling at HUF 230-250 billion. The reasons for the hike in the deficit are a payment made in connection with motorways, the lease charge paid for Gripen fighters and the payment of agricultural subsidies carried over from last year. The projected figure translates into onefourth of the increased annual plan. (NG, p 1 and 3, VG, p 5)



BANK - 12.01.2004 Jungle of interest rates on the home loan market Comparing interest rates of home loans is more difficult that it has ever been, since interest ceiling is not prescribed for credit institutions any longer. However, a careful inspection of all offers may lead to serious differences in spite of the harsh competition. The situation could be bettered if – like it is with consumption loans – total loan fee was subscribed in case of home loans, too. However, this can take place only if the Constitutional Court makes a decision in the so-called „lex Szász”. Stricter regulations led to more expansive home loans, thus many banks plan to come up with competitive interest rates and give different discounts to their clients. HVB Mortgage Bank (HVB Jelzálogbank) and General Banking and Trust Company Ltd (Általános Értékforgalmi Bank) are not asking for a fee for the credit judgement, translating into savings of HUF 10,000. Earlier there have been several types of handling charges for different periods, but credit institutions have simplified them by now. Land Credit and Mortgage Bank FHB charges 1.5 percent, National Savings Bank OTP, Commercial and Credit Bank K&H, Budapest Bank and CIB 2 percent, Postabank 2.04 percent and General Banking and Trust Company Ltd ÁÉB 2.5 percent as handling fee annually. Another difficulty in seeing clearly in this situation is the fact that banks, whilst announcing their terms, are calculating with different interest periods. Companies, as a rule, are offering fixed interest rates for 1 and 5 years, but at FHB there is an opportunity for a fixed interest rate even with a 10-year period, whilst OTP and ING are granting fixed interest rate only for 1 year. Fixed interest rates for this period are usually larger than the interest rate of 5-year loans, however, Hungarian Foreign Trade Bank (Magyar Külkereskedelmi Bank) keeps its one-year interest rate under that one for five-year. Based on the above information, it is quite difficult to find the way in the jungle of interest rates, and on top of all that, interest conditions are set to be modified in the future, since banks are re-pricing their products continuously. Thanks to this phenomenon, it is possible that those clients that wait for some months can get home loans cheaper – reveals daily Magyar Hírlap in it summary listing all different conditions of banks in this respect. (MH, 10-11 Jan)

BANK - 13.01.2004 Correction In our article entitled „Jungle of interest rates on the home loan market“, two figures were changed because of a mistake on the side of our source. Unlike what we wrote in this article, Hungarian Foreign Trade Bank MKB and Konzumbank, soon to be merged into the former one, have no cheaper rollover credit than the fixed one for five years. The two credit institutions are giving the credit with an interest rate of 5.81 percent in case of new homes and five year period, whilst the interest rate for resale homes for a one year period stands at 8.12 percent. (MH, p 13)

BANK - 16.01.2004 The mintage will move to Soroksár MNB (National Bank of Hungary) will establish its five-hectare logistics base in the Budapest Intermodal Logistics Centre (BILK) in Soroksár, which was handed over last year. The State Mintage will also move here from Könyves Kálmán körút and is expected to coin the Hungarian euro as of 2007. The issuing bank’s investment will be completed in three years for HUF 10 billion. The centre is necessary, because – due to accession to the EU and euro zone – double than the current cash circulation will have to be arranged: forint will have to be collected, which would no mean 244 million banknotes and the same amount of coins and this has to be exchanged to euros. (MH p15)

ENERGY INDUSTRY - 12.01.2004 Lengyel’s resignation to firm Pál’s position There are speculations on the market that General Manager of power wholesaler Magyar Villamos Mûvek László Pál can take over also as the chairman of the grid operator. Chairman of power wholesaler MVM Gyula Lengyel resigned from his post during a board meeting following the company's extraordinary general meeting on Thursday. Under the statues, the new chairman should be selected within 30 days. In related developments, the company entered into a loan of HUF 4 billion with Hungarian Foreign Trade Bank (Magyar Külkereskedelmi Bank). The money will be used for the modernisation of district heating works of MVM belonging to Vértesi Power Station (Vért). The latter power plant should be shifted to a gas-run one on the back of environment protection regulations. Tatabányai Power Plant Kft. (Tatabányai Erõmû Kft.), giving district heating to 22,000 homes will be taken under the ownership of MVM and Vért in a HUF 6 billion improvement with the power wholesaler getting 50 percent plus one vote. The investment is to run till the middle of October and those taking part in it include Ganz Danubius Hungarosteel Kft., EGI Rt., ER-BE Rt. and Finnish Wärtstilä. (MH, 10-11 Jan, p 10, NSZ, 10 Jan, p 5)



ENERGY INDUSTRY - 13.01.2004 Grainger Sawmills to build a wood waste power plant Irish Grainger Sawmills Ltd is planning a large-scale greenfield investment program in Lenti. In the first, HUF 4 billion step of the investment a power plant running on wood waste with an output of 8 MW and a plant with a capacity to process 20,000 cubic meters of wood annually would be constructed. The vast majority of products from the plant would be transported to Ireland for further processing. The electricity generated by the power plant would be bought by the local distributor, whilst the heat stemming from the waste would be used by the town’s district heating system. No final agreement has been made, but information has it that the investor has already agreed on the site of the investment with the local government. Should the investment get the go ahead, preparatory works may start already this year and the construction itself in 2005. Besides these development projects, the Irish company is likely to take part in the thermal project of Lenti. (NG, p 5)

ELECTRONICS - 15.01.2004 Ajkai Elektronika becoming a Toyota supplier Ajlai Elektonika Kft. is set to supply the Toyota plant in the Czech Republic with spare parts to the tune of HUF 80-100 million in an agreement signed in December. Should Toyota be satisfied with the product, the Hungarian company may count on further orders in the future. Ajkai Elektronika has started a development program of HUF 130 million recently with the Ministry of Economic and Transport contributing HUF 20 million on the back of larger orders and meeting quality-related specifications. Largest partner of the Ajka-based factory is Magyar Suzuki Rt., but Knorr Bremse, Valeo, Opel and Otter Controls are also important partners. The latter one accounts for 15 percent of sales revenues. The number of employees went up by 180 last year to reach 560. Ajkai Elektronika counts that this year can see sales revenue reaching HUF 3.2 billion after last year’s figure of HUF 2.8 billion, the latter one translating into a HUF 1 billion expansion. (NG, p 5)

PAPER- AND PRINTING INDUSTRY - 15.01.2004 HUF 2,000 per share purchase offer for Kartonpack Britton Capital and Consulting Kft, the majority owner of packaging materials company Kartonpack, is offering HUF 2,000 per share for each shares with a nominal value of HUF 200 to make the delisting of shares possible - the application for delisting to the Budapest Stock Exchange and the related purchase offer writes. The transaction is not likely to cost a lot for Britton, since small investors have a total of less tan 700 shares. Besides this, the company would like to include the 11 shares of unknown origin on the agenda of the extraordinary general meeting of 2 February. (NG, p 11)

PAPER- AND PRINTING INDUSTRY - 16.01.2004 Significant digital printing company in the making To better meet Union demand, Prime Rate Kft. has merged with PXP Elsõ Magyar Digitális Nyomda Rt. The new company that is to have sales revenue of HUF 2 billion is going to play an important regional role in the digital printing business. The group is planning to found a printing service house that is capable of coming up with tailored-made material and can grant logistic background, even to foreign transports, all this basing on the management of client databases. The primary goal is to make it possible that the client can get everything form preparatory steps to unique digital and traditional printing to logistic services in one place. A sing of the company’s competitive rates is the fact that many multinational companies, known for their cost efficiency, are among its customers. (NG, p 4)

FOOD INDUSTRY - 12.01.2004 Globus: decreasing MAVA business share Hungarian-American Enterprise Fund’s (MAVA) business share in Globus decreased from 14.49 percent to 11.84 percent. MAVA sold 263 thousand Globus shares in the last quarter of 2003, however the quotation of shares in not known. The German DEG is the most significant owner of Globus at the time being. (MH Jan. 10-11, p12, VG Jan. 12, p10)

FOOD INDUSTRY - 14.01.2004 Bonbonetti sold Vienna based Raiffeisen Private Equity Fund Management (RPEM) seated in Vienna bought Bonbonetti Kft (seated in Nagykanizsa) from Previdum Invest Kft. The sales revenue of the sweet food industrial company founded last year exceeded one billion forint. RPEM invests its capital of 83 million euros in Central-Eastern-European companies. (VG p9)



FOOD INDUSTRY - 15.01.2004 Bread to cost HUF 200 per kilogram by February Bread has become a matter of politics. Leaflets distributed by Fidesz Hungarian Civic Alliance say that a kilogram of bread is to go up to HUF 212 from the current rate of HUF 145. According to experts interviewed by daily Népszabadság, this price is an exaggeration, however, they do state that a price hike of 15-20 percent is quite possible. This would translate into prices exceeding HUF 200 per kilo. Bread and bakery goods account for a mere 2 percent stake of domestic expenditures in the customer basket. (Nszab, p 1 and 13)

Hungarian subsidiary of Parmalat to be bought by producers? Executives of Parmalat Hungária Rt (Parmalat Magyarország) are having talks in the company’s Italian headquarters on the future of the Hungarian subsidiary with the bankruptcy commissioner of the Italian dairy giant. At the same time, they would like to ask permission to carry on negotiations on the sale of the Hungarian subsidiary. Selling Parmalat Hungária Rt. is what Italian executives would also like. They are of the opinion that the ailing giant can be saved through selling its foreign interests. The case surrounding the Italian company has hardly hit the milk plant in Székesfeghérvár, which has not paid its suppliers since last November. Daily Magyar Hírlap writes that the reason can be that CIB Bank has blocked all the company’s bank accounts, not accepting the parent company’s guarantees. Parmalat Hungária Rt is owing its suppliers HUF 720 millions. The latter ones, however, would not put their claims on the presently unencumbered real estates of the dairy plant, since they would be last on the list in an eventual bankruptcy proceeding. They are rather considering forming a consortium and try and buy the well-equipped Székesfehérvár plant. As potential buyer for the Hungarian subsidiary, the names of French giant Danone and Italian-owned Sole were also circulating earlier. Officials at both companies, however, denied this information. (MH, p 11)

FOOD INDUSTRY - 16.01.2004 Several hundreds of millions of dollars went through Parmalat’s Hungarian offshore company The Italian Parmalat, which is accused of balance counterfeit of 10 billion euros, also has an offshore company registered in Szombathely with capital of several billion forints. Through Canadian and Dutch companies the Italian firm has 100 percent ownership in PDBI Likviditás Menedzsment Magyarország Kft. (PDBI Liquidity Management Hungary Ltd.) that was founded in 1999 with capital of 50 thousand dollars. Since then the company’s capital has increased a lot; in 2002 it amounted to 220 and according to the latest information, to 132 million dollars. The domestic company that provided financial help to various subsidiaries of the Parmalat group was operated in Hungary due to favourable Hungarian tax conditions. A former executive of the firm stated: it is excluded that PDBI Kft. would play a role in the Parmalat scandal. But the testimony of Fausto Tonna (financial director of the corporate group who was dismissed last year) at the Italian prosecution, according to which all Parmalat daughters are concerned with the balance sheet counterfeit, contradicts this. Parmalat Hungária engaged in milk production, which was put on sale as a result of the mother company’s scandal, stated in relation to the case: the company has no ownership share in PDBI Kft., thus it cannot declare about the operation thereof. According to the latest news Austria’s determining milk producer, Nöm AG, which considers European expansion, is also interested in the Székesfehérvár based company that employs 500 people and processes 112 million litres of milk annually. (VG p1, 7)



AGRICULTURE - 14.01.2004 Hajdú-Bét nearing bankruptcy One of the most significant players on the Hungarian poultry market, Hajdú-Bét Rt., 100 percent owned by Wallis, is nearing bankruptcy. As daily Magyar Hírlap has learnt it, its creditors, among them largest one Raiffeisen have terminated the loans of the company headquartered in Debrecen and have started making use of the bails detailed in their contracts. As part of this process, parts of HajdúBét real estates were taken away from it. (Production tools stayed in the ownership of Hajdú-Bét.) At the same time, Hungarian Tax Office APEH has initiated a prompt collection order for the bank accounts of the company, which, in turn, would be unable to pay, thus putting its business to a halt. Hajdú-Bét plants are operating continuously, since negotiations with utility companies are going on. The daily goes on to write that the management would like to continue operations so that equipment should not be sold at a low rate. To this end, a part of this year’s supplier contracts have already been signed. The ailing firm has earlier rented its poultry processing plant in Debrecen, accounting for 40 percent of its total production to poultry company Bábolna Rt. and its Mezõkovácsháza plant to an unknown company. The plant in Zagyvarékas was stopped and negotiations are going on on renting plants in Törökszentmiklós and Kisvárda. Hajdú-Bét has already paid for 80 percent of poultry processed last year, but there is no chance to have the money for the remaining 20 percent, a cost of HUF 1 billion. A positive sign for small producers, however, is the fact that the company has a positive equity capital, that is, its assets exceed the total of its claims. (MH, p 9, NG; p 4)

TRADE, FAIRS - 12.01.2004 Increasing turnover at Hungarian store chains Small food shops those were organised into a store chain achieved a market share of 14 percent in the market of daily consumption goods in the first ten months last year. This ratio is 4 percent higher than two years before. Based on data of GfK Hungária Piackutató (GfK Hungary Market Research) company store chains, including multinational companies as well, handled 69 percent of the turnover of HUF 1594 billion in the first ten months. Beside Reál Rt. and Honiker supplying partnership, Co-op Hungary Rt. and CBA, that focuses mainly on Budapest, managed to increase their turnover significantly. CBA operates 900 stores throughout the country. According to data had been registered in the first half of last year, 44 percent of households did buy goods in a CBA store at least one time. Co-op that operates 1900 stores throughout the country achieved an even better figure, 56 percent of the pollees has done their shopping at least one time in units of this chain. The ratio was only 52 percent two years before. According to GfK’s calculation the expansion of hypermarkets did slow down last year: after the 16 percent achieved in 2001, the market share of hypermarkets grew to18 percent in 2002, however they could increase their market shares by merely 1 percent in 2003. The Cash & carry type stores’ market share of 4 percent did not change compared to last year’s figure, however it decreased by 1 percent compared to the year 2001. Supermarkets and discount stores managed to sustain their market shares of 15-15 percent - achieved in the previous years - in the first ten months of 2003 as well. (NG p5)

TRADE, FAIRS, CAR - 12.01.2004 Used car importers can go bankrupt According to certain estimations, 350-450 used car importers can get into a difficult situation due to the introduction of the registration tax. Due to the tax that was originally planned to enter into force at the beginning of May but to be introduced as of February 1st already because of budgetary considerations, the price of used cars will increasing significantly. The current price of an Opel Vectra from 1996 is HUF 1.5 million, to which HUF 1.6 million of registration tax and VAT will be added as of February. The new tax increases the sales price of 25-30 thousand vehicles. Dealers protest against the introduction of the tax in a declaration. The document has already been signed by 90 enterprises and their number is expected to increase to 200 in recent days. The concerned parties ask the Minister of Finance to ensure time for preparation, that the registration fee only enters into force as of May, furthermore, they would like to achieve that vehicles, for which VAT has already been paid, are released from the new tax after the first of May also. (MN Jan. 10th p11, MH Jan. 10-11th p10)



TRADE, FAIRS, CAR - 13.01.2004 Posches will be cheaper too Beside Audi passenger cars also Porsche models will be less expensive owing to the registration tax. The new registration fee that replaces duty of excise effects all vehicles traded by Porsche Hungarian (PH), although its introduction allows significant price decrease in the premium categories only. Porsche 911 GT2 9 the price of which was HUF 73.5 million earlier, just like Porsche Cayenne T, the listed price of which was HUF 35 million will be HUF 3.6 million less expensive as of February 1. The price of Porsche Boxster HUF 14.7 million will be HUF 966 thousand cheaper. Géza Aradi brand director said: Porsches will be generally 7-12 percent cheaper. He added: since all Porsche vehicles were charged by a duty of excise of 20 percent, concerning certain models the price decrease could be even more significant, but as a result of the changes in quotations in the last few days this step could not be implemented. Aradi counts on selling 8-10 Porsches in February, wich is approximately 15 percent of the quantity sold last year. (NG p1, p5)

TRADE, FAIRS - 14.01.2004 Foot Locker comes to Hungary? According to’s information Hungary is one of the possible targets of Foot Locker Inc.’s European expansion. Beside this, the leading sport shoes trader of the United States analyses the possibility of entering into the markets of Ireland and the Czech Republic as well. Looking back to the past five years, the company that operates 3600 stores expects the best profit from last year’s fourth quarter. (NG p4)

TRADE, FAIRS - 15.01.2004 Tesco’s Christmas-turnover increased Compared to the figures of the year before last year 29 percent more people visited the stores of Tesco-Globál Áruházak Rt. (Tesco Global Stores Co.) in the Christmas season of 2003. The number of visitors added up altogether 12 million. This increase in turnover is derived from the seven new units opened last year. (NG p5)

TRADE, FAIRS, CAR - 15.01.2004 Hyundai goes to Slovakia? Contradictory news arrived from Soul and Bratislava about Hyundai’s planned development. According to information published by Reuters Slovakia will be the winner, however the final decision will be announced in February only. Pavol Rusko Minister of Economic Affairs said: the delegation of the car producing company is still negotiating in Slovakia, the top management of Hyundai is expected to arrive to Bratislava on Thursday. At the same time, French Les Echos business journal writes that Slovakia has obliged itself to PSA Peugeot-Citroën that no one of its competitors will receive permits to settle down in a circle of 100 kilometres of PSA’s factory located in Nagyszombat. If it’s true, the only towns could serve as possible locations for Hyundai’s investment are Zsolna, Zólyom, Losonc and Kassa. (VG 7. old.)

TRADE, FAIRS - 16.01.2004 Cigarettes more expensive only from February Cigarettes are not more expensive in shops although Hungarian manufacturers play 35 percent larger excise tax to the budget from 1 January. Information has it that smokers will not pay more till at least the beginning of February, since manufacturers are afraid that a price hike of around 15-20 percent would result in losing a part of their clients, so they rather wait with increasing prices as long as possible and rather pay the tax themselves. Their fear is well-founded: starting from 1999, mainly on the back of continuous tax hikes, Hungarian cigarette sales decreased by 15 percent (Nszab, p 13)



Hungexpo to select a partner in March Yesterday marked the deadline of the international bidding process to include a professional investor into the activities of convention and exhibition organiser Hungexpo Vásár és Reklám Rt.. Only those who had earlier published a letter of intent could take part in the application. According to sources, there were eight companies taking part in the competition, 2 of them from Hungary and six international ones. Hungexpo, citing secrecy, did not give information on the bids received, but it announced that official results are expected on 12 March. Earlier London-based Expomedia Group Plc has announced that it would take part in the bidding. Another London-headquartered company, largest fair organiser of the world Reed Exhibition Co., which has taken part in many unsuccessful privatisation processes of Hungexpo back in the nineties, this time resigned from taking part on the back of strict investment-related regulations. Wallis Rt. is also thought to have entered the race, applying together with a fair organiser company. The winning bidder will have to provide the current Hungexpo, and the national exhibition and event centre that has not yet been established with HUF 2.5 billion in credit for the developments they need to undertake. The development program is to take eight years and costs HUF 10 billion to realise. The current Hungexpo has registered capital of HUF 3.13 billion. It posted a HUF 31 million loss on sales revenue to the amount of HUF 5.05 billion in 2002, whilst plans for 2003 called for sales revenue at HUF 5 billion and profits to run at HUF 200 million. (NG, p 4)

TRADE, FAIRS, CAR - 16.01.2004 Hungarian Suzuki selling 40,00 cars Hungarian car maker Magyar Suzuki, a subsidiary of the Japanese Suzuki Motor Co. posted a successful year in 2003 with its new brand Ignis, replacing Swift becoming the most popular brand in Hungary. A total of 13,813 Ignis models were sold, whilst the corresponding figure stands at 12,328 for Swift and 10,408 for Wagon R+. Other, imported models accounted for 3,199. Last year’s sales figures of nearly 40,000 cars sold, an increase of 9 percent, keeps Suzuki in the first place on the Hungarian new car market. Foreign sales also did well, the export figure of 50,000 is in line with expectations. Magyar Suzuki started a HUF 100 million development project in 2003, which will allow the increase of the capacity of the factory to 200,000 annually and the production of the new make. The increase of capacity will result in the creation of 600 jobs. (NG, p 5, VG, p 7)

TRAFFIC, TRANSPORT - 13.01.2004 Malév saves money on board service Malév (Hungarian Airlines) expects a saving of HUF 800 million a year owing to the reorganisation of its board service. Zoltán Vermes customer service director said: the company spends approximately HUF 4 billion on waiting. Concerning board service the airways classifies its flights into four time zones and passengers will be served in accordance with these categories, that means the zones determine the portions of food served. The company does not intent to introduce a pay-service. Beside Pannónia, Honet Rt. and London Szendvics Kft. delivers food for tourist class, passengers on business class will be served with food from Pannónia Rt. in the future as well. Air passengers travelling on tourist class will get no newspapers on board, on other hand they will be able to by them at many places within the airport. Passengers on business class can choose from four national political- and two economic papers, furthermore a weekly journal. According to plans tickets for cultural programmes or CDs will be sold on the flights. (VG p7, NG p4)

TRAFFIC, TRANSPORT - 14.01.2004 No Ryanair flights to Sármellék at the time being In order to finance the necessary technical developments, including the subsidy from the state budget, Sármellék airport can count on a financial support of HUF 780 million. HUF 670 million thereof will be granted by GKM, however it is not known yet when the amount is accessible. The delay of developments effects the implementation of Balaton West Airport’s plans badly and as a result of this there is still no agreement concluded aiming the launch of Ryanair flights to Sármellék. The low service company would start flights to six European cities one time a weak, but to make this happen the conditions of landing at night an in bad weather must be ensured. This would mean an investment cost of one billion forints. To find the money for the project, enterprises and municipalities were called, but no one found the development challenging at the time being. According to all indications Budapest Airport will not overtake the running of the aerodrome. Sármellék airport closed its last business year with achieving break even point. (VG p5)



TRAFFIC, TRANSPORT - 15.01.2004 Malév to restart Beijing flights form August Hungarian airline Malév will launch at least three Budapest-Beijing direct flights per week in cooperation with Hainan Airlines Company (HNA) starting in August. HNA is the fourth largest airline of the Chines domestic market with a fleet of 91 planes. The final contract will be signed in February or March 2004. Thanks to the direct flight to the Chines capital, Budapest’s role as a hub – functioning as a central distributor – may get stronger, since Malév can transport passengers to other destinations of Europe from yet another continent. (NG, p 5, Nszab, p13)

INVESTMENT, DEVELOPMENT - 12.01.2004 Bau Holding may get motorway M5 According to daily Népszabadság, the 45-kilometre stretch of motorway M5, going from Kiskunfélegyháza to Szeged, can be built without a public procurement, in a legal process of several steps. Plans call for the government to buy out motorway operator Alföldi Concession Motorway (Alföldi Koncessziós Autópálya, AKA) and undertake to pay back its debt amounting to HUF 50 billion. Later, in return for the construction of the above-mentioned stretch, the government is set to give AKA to German Bau Holding, one of current owners, and would pay disposal fee to the company. This construction would be favourable to the state, since it could integrate M5 into the sticker-based system in line with its election promises and would put costs of building it further to budgets after the year of 2006. The other party can also be satisfied, since one of the owners could build the new stretch in a reconstructed concession contract, without the necessity of a public procurement process. Information has it that AKA owners Bau Holding and French Bouygues are asking for HUF 73 billion for the motorway operator, with the latter one getting out of M5 for good after the buyout takes place. Government officials and AKA owners have been in negotiations on the future of M5 since last summer and under the current draft Bau Holding would be the majority owner of the Kiskunfélegyháza-Szeged stretch through the AKA ownership stake it gets for the construction of the new part. The government would have to cover the yearly instalments of the loan taken out for the stretch built earlier, together with operational and maintenance-related expenditures. The new stretch would be operated by AKA Rt. and it would be given a significant state subsidy for 20-25 years. The exact sum of the disposal fee, ensuring the payment of the loans taken out by investors and also the 12 percent refund, is not known. The stretch running from Budapest to Kiskunfélegyháza is expected to be operated by National Motorway Management Rt. (Állami Autópálya-kezelõ Rt) in the future. Earlier Bau Holding was willing to earmark HUF 90 billion for the construction of the new stretch, whilst the government puts a price tag of HUF 70-75 billion for the job. For the time being it is not known which of the parties gave concessions for the agreement to be realised. Deutsche Bank would finance the implementation, for which all licences are already in place,, with the credit institution already having sent its project financing letter of intent to the Finance Ministry. (Nszab, 10 Jan, p 10, MH, 10-11 Jan, p 11, Mn, 10 Jan, p 11, NG, 12 Jan, p 4)

Invitation for bids for motorway M6 National Motorway Rt. (Nemzeti Autópálya Rt.) is expected to issue a tender in January for building of a section of the M6 motorway from Budapest to Dunaújváros on a concession contract. Thus, the HUF 70-80 billion investment is not going to be realised in a public procurement. Contracts are set to be signed at the end of summer with construction works to be finalised by the end of 2006 at the latest. The winner of the tender should build the stretch from own sources and has to undertake the operation and maintenance of it for 25 years. The concession company has to guarantee that the road can be used by cars with stickers. The operator is to cover operational cost from the subsidy given from the government. This sum is coming from prices of stickers and budget sources. According to some sources, concession-based construction is 20 percent more expensive than state one with additional costs coming from the fact that – unlike in the practise of Western Europe – the concession company is taking part in the construction so it is getting the investment without competition, thus increasing costs. Construction entrepreneurs are using a 20 percent profit margin in Hungary, compared to a corresponding figure of 4-5 percent in Western Europe. The construction itself is already bringing profits for the winner of the tender process, and later it can ask for a larger subsidy from the government, citing high construction costs and ensuring returns. Further increasing expenditures is the fact that private companies can only get more expensive loans than the state. (NSZ, 10 Jan, p 5, MH, 10-11, p 11)



INVESTMENT, DEVELOPMENT - 14.01.2004 Interest breaking records for motorway construction A total of 17 companies (8 with foreign headquarters and 9 registered also in Hungary) have applied in the 8 pre-qualification public procurement tenders of National Motorway Rt. (Nemzeti Autópálya Rt.) for the total of 166 kilometres of motorway. The large number of bidders mean that the judgement process of their qualifications will take longer than expected, so the pre-qualification process of different investments is expected to take place in the middle of February. Applying for all construction works is Portugal Mota-Engil S.A, excluded form the earlier tenders on the lack of Hungarian references, Austrian-owned Strabag Építõ Rt, Vegyépszer Rt. and Hídépítõ Rt, the latter one in French ownership. Bidding for seven projects are Betonút Rt., Austrian Habau GmbH, Egút Rt., owned by French Colas. The Czech subsidiary of Swedish Skanska, German Walter-Heilit GmbH. and Slovakian Inzinierski Stavby a.s. have all applied for the construction of 5 stretches. New entrant in the bidding process is Russian Engeocom Spetstroy Llc, Austrian Porr AG and Greek Aktor S.A., all of them with 2 applications. Last but not least, Swietelsky Kft., Mélyépítõ Budapest Kft. and Hoffmann Rt. are bidding for one project. The next weeks can see the bidding for the ninth stretch for the construction of the northern bridge on ringroad M0. The nine projects cost a total of HUF 400 billion. (NG, p 4, VG, p 4)

Kingspan Group builds factory Kingspan Group will soon start its investment in Hungary in a value of 10 million euros, in the framework of which a factory will be erected in the neighbourhoods of Budapest. The plant will be able to produce 2.5 million square metres of sandwich panel building material annually. The factory that will supply Hungarian, Croatian, Romanian and Serbian markets will be finished by 2005. The reason why the Irish company, specialised in producing special panels, decided to construct the factory was that 90 percent of the panel used in the region arises from import. Kingspan has been present to Hungary since 1998 through its commercial distribution, which achieved increasing turnover from year to year. (NG p5, VG p5)

MKB credit to BILK Waberer's group will construct BILK Logisztikai Rt.’s additional buildings from Magyar Külkereskedelmi Bank Rt.’s (Hungarian Bank for Foreign Trade Co.) credit of HUF 3 billion. The complex will include a warehouse, the groud space of which will add up to 24 thousand square metres and a related office building of 2500 square metres. Owing to the agreements the buildings will be erected until the end of the year. BILK concluded lease contract with NYK Logistics (Hungary) Kft., the Hungarian subsidiary of the Japanese NYK Line in the past days. As of July the company rents 4 thousand square metres warehouse and logistics area, as well as 700 square metres office spaces. (NG p4, MH p11, VG p1, p8)

INVESTMENT, DEVELOPMENT, REAL ESTATE - 15.01.2004 Heitman and Engel build jointly The newly founded joint venture of the companies Heitman and Engel constructs more thousand new flats in Budapest, Prague and Warsaw. The new company spends 240 million euros on building 5 thousand homes. The fund will appear by time in Slovakia, Slovenia and in the Baltic States as well. The company Heitman has been invested more than one billion euros in the region and they intend to spend 300 million euros on logistical buildings. (VG p1, p 10)



Inner city of Pest side in demand Interest for real estates in Budapest has hit unprecedented levels this year. It is mainly British and Irish citizens that would like to buy, but there are Norwegian, French and Spanish ones among those interested. According to market information, Irish investors have a commission to buy several hundred flats in the Hungarian capital. Most of eventual buyers have founded a company to carry out the transactions. Experts are of the opinion that the invasion of foreign investors may last till May. Foreigners are mainly interested in flats of the 6th and 7th district with an area between 70 and 140 square meters, possibly furbished ones. Prices are ranging between HUF 20 million and HUF 60 million. The total area of real estates bought by foreigners in Budapest amounted to 154,000 square meters last year. In 17 cases, foreigners have bought empty plots of land. Buyers were favouring real estates in the centre of the town already last year. A total of 109 real estates were bought by them in the 5th district, with the corresponding figure standing at 12 for the 6th, at 92 for the 7th and at 69 in the 8th district, but 1st, 13th and 14th districts were also quite popular. Latter ones had 59, 88 and 53 real estates sold to foreigners, respectively. When it comes to nationalities of buyers, Germans are first with 136 transactions with the Irish coming second at 106 and Romanians making it to the third place with 69 transactions concluded. The Interior Ministry is already working on modifying the regulations of foreigners buying a real estate, but only the land law can give the power for modifications. The ministry says that the new rules may contain technical ad formal novelties alike. (NG, p 1 and 4)

SECURITIES’ MARKETS - 12.01.2004 Three Hungarian papers among the bests of Easter Europe Among the six most attractive Eastern European shares three belong to Hungarian issuers – established Wirtschaftsblatt. The ranking is led by Cesky Telekom, then the Estonian Hansabank, the Czech Komercní Banka and the Hungarian OTP Bank (National Savings Bank), Matáv (Hungarian Telecommunications) and Mol (Hungarian Oil). 78.6 percent of respondents recommended the Hungarian bank’s papers for purchase. The main argument is regional expansion, while the uncertain economic political environment is against it. Based on the share price projected to the result Matáv is one of the cheapest telecommunications companies of Europe and Mol plays an increasingly serious role in the international market. (VG p12)

OTHER - 16.01.2004 No Hungarian in Formula 1 Yesterday negotiations between the managers representing Zsolt Baumgartner and the representatives of Mol Rt. closed unsuccessfully, thus the pilot will hardly be there at the Formula 1 championship series’ start on March 7th. The oil industry company set conditions that could not be accepted by the persons proceeding in the interest of the racer: Mol intended to transfer less to Baumgartner than the sponsorship amount included in the earlier letter of intent, and certain instalments thereof would only have been ensured if the competitor finishes each race and probably even gains a point. Tamás Frank, manager of the racer, stated – since the first instalment of 2 million dollars should have been transferred yesterday – that in half-a-day they could hardly find a sponsor who would pay the missing item, though Minardi granted a one-week moratorium during the earlier agreement. Thus the Hungarian government granted half of the eight million dollars requested by Minardi from the general reserves of the budget to no avail, the missing four million dollars were not gathered from sponsors. (NG p5, Nszab. p1, 24, MH p22)

7Days, 2004. január 16.  

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