7days, 2005. július 11

7/28/2019 7Days, 2005. július 11.

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

04 July 2005 Business Bidders for Bp Airport announced

Chinoin opens Ft 11 bln center 1st Malév flight lands at BalatonFreesoft/Icarus sign coop memorandumT-Kábel to test fixed line phonesSAP Opens Ft 6.5 bln Research LabGermans acquire Elektro stakeRába eyes RussiaProcter and Gamble research in Hungary?MÁV's Ft 69 bln delivery sector

Economics Gov't to develop rental sector Gambling assoc to appealTax evasion directive a 'scarecrow'Osteoporosis centers to be wound upMOL says fuel prices could riseEconomy back on trackHungary's PMI drops to 48.1 in JuneDistrict XIII may see Ft 600 bln in investmentsScrap metal: only half sign contract

Woes of a bumper wheat cropPolitics SzDSz chair confirms 100 steps support Thirteen amendments to be passed today

Domestic Investigation of racist Internet game, over

05 July 2005 Business Nissan to set up regional sales company

Felsál opens center in VeszprémStrike threat in the air at FerihegyFairtrade shop may open in BudapestDresdner Bank transforms subsidiaryKartonpack operating with frozen assetsCsepel dockyards operator up for saleDuna TV gets green light to launch new channel

State to call tender soon for new MTV HQKnowledge center in DebrecenBunzl acquires food-service companyNafta Industrie for sale soonK and H Equities is number 1

Economics State must save Ft 400 billion Strengthening USD may hurt Hungarian economyInterest rate decision ignores temporary trendsHungary's investment popularity

Politics PM and Fidesz leader square up for TV debateDomestic Paks gets permission to remove damaged fuel rods

Logistics center in BiharkeresztesBKV strike called off

Three sirens fail test06 July 2005 Business PM announces agricultural steps

ÁPV receives three bids for MalévInfoRádió ownership simplifiedBudapest Leasing broadens loanDémász, Elmü on bourse’s liquid listMFB net profit Ft 10 bln in 2004Investors up Euroventure to Euro 51 mln Act to simplify setting up companyCartel may lead to prison sentenceOsteoperosis generic drug withdrawn

Adult Education Act amendedOracle revenue from applications up 75%Car sales down 8% in H1

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7/28/2019 7Days, 2005. július 11.



Arbitration Board nullifies MÁV procurement resultPaks Q1 production, sales better than plannedSAPU invests Ft 1.5 bln in nw Hungary

Economics FinMin says min. wage must rise under inflationNo economic crisis - BokrosJárai warns on Hungarian competitiveness ÁSz frowns on withheld VAT rebates

Politics Journalist’s sentence for libel reduced to fine

Domestic Gov’t curtails managed care07 July 2005 Business June public sector deficit Ft 150.4 bln

GL to invest euro 20 mln in HungexpoRába says Suzuki order to lift ’06 salesRaiffeisen Property Fund assets riseSmallholders to sell HQ buildingBp Lizing takes out Euro 5 mln loan Avalon fined for misleading advertPSzÁF fines 2 Pick Szeged shareholdersUniversal Foods acquire mineral water bottler Safety authorities close Szentendre Lidl

P.O. to announce tender for 1,000 vehiclesBudget airlines harming coach marketEUROVEGAS for Hungary

Economics Bourse measures to offset gains tax effectHospitality remains in 15% VAT bracketMOL raises fuel priceDefMin may privatize 3 defense contractorsService provider boom continuesNew film law encourages spending

Politics Gyurcsány is PM candidate in 2006Former PM appears before committee

Domestic No schooling needed for driver’s licenseCourt rulings to be published from 2007

08 July 2005 Business FM: Steps to contain deficit

New tourist center by DunapatajZwack Unicum opens Ft 1.7 bln plantEybl to doubleMÁV challenges board’s decisionBp bourse plunges amid terror Boom at Trenkwalder-MultimanHankook rejected in SlovakiaStill no radio chair MOL denies plan to boost TVK stake Airlines offer free rebooking for London

Economics MFB to refinance private loans

Industrial output in May up 12.9%Economy - 2 more years to boostKóka, former central bank head, spar PSZÁF report highlights deficiencies at MKBCompetition office fines graphic designersMicro companies to go onlineDebrecen city to support building of courtNew CEO at HitelgaranciaEuro 61 mln promised from EFTA countries

Politics Orbán sets date for discussionDomestic No bomb found in Bp shopping centers

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04 July 2005 Business

Bidders for Bp Airport announced ÁPV, the state privatization company, on Friday named the eleven companies that submitted letters of intent in the first round bidding for a 75 %-minus-one-vote stake in Budapest Airport Rt, the companythat operates the city's Ferihegy international airport. The eleven are Terra Firma Investment,

Copenhagen Airports, TAV Tepe-Akfen-Vie Yatirim Yapim Ve Isletme Anonim Sirketi, a consortium of Ferrovial Aeropuertos, Ferrovial Infraestructuras and Goldman Sachs, a consortium of Frankfurt airportoperator Fraport and Deutsche Bank, a consortium of Hochtief AirPort and Hochtief AirPort Capital, aconsortium of BAA International Holdings and Wallis Properties of Hungary, a consortium of Corporacion America and Stellaria Tanácsadó, the consortium of Ontario Teacher's Pension Plan, Abertis Group, Aena Internacional, ACDL and TBI, and a consortium of Euroinvest Rt, Aeroporto diVenezia Marco Polo, TriGránit Rt , OTP Bank Rt and MOL Rt. All of the bidders must show that theyoperate at least one airport with annual passenger traffic of 10 million people or more. (MTI; NG 1, Nb11)

Chinoin opens Ft 11 bln center Chinoin, the Hungarian unit of France's sanofi-aventis, the world's third largest pharmaceutical

company, opened a Ft 11 billion packaging and logistics facility at its factory north of Budapest onFriday. The packaging plant doubles Chinoin's capacity to 120m boxes a year. French Minister incharge of European Affairs Catherine Colonna, sanofi-aventis development director Gilles Lhernouldand Minister for Economic Affairs and Transport János Kóka were present at the opening. The U.S.'sFederal Drug Administration will conduct an audit at Chinoin's facilities, after which Chinoin will be ableto export its products to the U.S. (Econews; NG 5)

1st Malév flight lands at BalatonThe first scheduled flight of the Hungarian airline company Malév Rt landed on Fly Balaton Airport atSármellék (SW Hungary) Saturday night. The aircraft, flying from Stuttgart with fifty passengers aboard,was welcomed by István Kolber, Minister of Regional Development, who said that the new flight wouldcontribute to further encouraging and expanding tourism to the Lake Balaton region. The Fokker 70

was flown from Stuttgart by Malév's single woman pilot, Ildikó Czigány. Ágoston Gubicza, managingdirector of the Irish-Hungarian Cape Clear Aviation company which operates the airport, called theevent a milestone, turning Sármellék into a destination of scheduled Hungarian flights. (MTI; MH 12, Nb11)

Freesoft/Icarus sign coop memorandumSoftware developer FreeSoft Rt has signed a three-year agreement with Ireland's Icarus to distributethe IcarusCustoms online customs management software in Hungary, FreeSoft said on Friday. ‘Icarusprovides the software, we provide the expertise,’ FreeSoft marketing director Ilona Domák said. Domaksaid FreeSoft expected to see many companies using the system after its trial run in December andintroduction in January. Domak said the new system could reduce the customs procedure from 2-3days to a matter of 1-2 hours. FreeSoft, which listed its shares in September 2004, had net profit of Ft93 million on sales of Ft 825.7 million last year. (Econews; NG 7)

T-Kábel to test fixed line phonesCable operator T-Kábel Kft, a member of the Hungarian Telekom Group, has launched the commercialtest phase of its fixed-line phone service from mid-June, the company announced. The southern city of Szeged will be followed by major towns outside of Budapest, including Békéscsaba,Hódmezováráshely, and Makó, amongst others. With the use of the cable-based Voice over InternetProtocol (VoIP) technology, subscription fees can be as low as Ft 1,240 per month, there is noconnecting fee, and a call within the network can be for free of charge. (NG 4) P.O.

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SAP Opens Ft 6.5 bln Research LabSAP AG, the world's largest maker of business-management software, opened its newest research anddevelopment center in Budapest at a total cost of Ft 6.5 billion. Walldorf, Germany-based SAP todayopened SAP Labs Hungary, the 10th such research center on the world, which is expected to create asmany as 310 jobs by the end of next year, Hungary's Economy Ministry said in statement on its Website. The center starts operations with 100 employees. ‘We originally wanted to hire 50 people to startwith, but having seen the wealth of expertise and stable infrastructural background, we decided to raisethat to 100,’ Chief Executive Henning Kagermann said. (Bloomberg)

Germans acquire Elektro stakeThe Düsseldorf-based Electronic Partner Group has acquired a 25% stake in Elektro Computer Kft,operator of 54 Electro Pont stores in Hungary, Elektro Computer's founder, chairman and CEO Tibor Takács said. The German company has a pre-emptive right for another 25% stake, Takács added.Electronic Partner hopes to become a global player on the market, and in this region the company usesacquisition as a means to reach its goal, according to Takács. Elektro Computer had revenues of Ft 28billion last year, and besides its subscribed capital of Ft 47 million, its own capital totals Ft 600 million.(NG 5) P.O.

Rába eyes Russia

Rába engines might be produced in Russia in the futrure since Rába Engine Manufacturer Kft'sliquidation seems unavoidable. The company was outsourced by Rába Vehicle Holding two years ago.Rába Engine owns nothing but a patent for the EU conform Euro-4 engine they had developed, whichmay bring multi-billion forint worth orders per year. There is a contract already signed for the renovationof almost 1000 buses in Moscow, the transformation yieldig USD 15-20,000 per engine. While apreliminary agreement with the Likino bus factory means an order involving 500-700 Russian buses.Russian machine factory giant Kamaz seems to have the higher chance to get the patent. But theyshould settle production in Russia and the 180 workers of Rába Engine will be left unempoyed andunpaid due to a ‘naive’ contract they signed when outsourced. (MH 11) K. H.

Procter and Gamble research in Hungary? A Procter and Gamble innovation team has recently visited about 20 biotechnology research institutesand universities in Hungary. The bigger the company, the more innovation it needs, said developmentsector leader Stephen T. Meller as an explanation. János Pakucs, chairman of Hungarian Innovation Alliance, said a research task alone is of dubious advantage, in fact just a slavery work for Hungary if the profit due to the research result stays with P and G. Erno Duda, president-CEO of researchcompany Solvo Biotechnological Kft explained to daily Magyar Hirlap an example of having beingcontracted on a product development with a big pharmaceutical company. The company paid not onlyfor the development but also for using the product. Moreove, the royalty was left with them. He addedthat even with these expectations he was sure about them and P and G making a deal next year. (MH12) K.H.

MÁV's Ft 69 bln delivery sector MÁV Rt's goods delivery sector tends to carry out its transit transports in scheduled trains, said chief director Imre Kovács. At present there are 30 scheduled trains a day operated by this sector, covering90% of transit traffic. Their newest project is the so-called Adria Train, in the framework of which MÁVgathers all the transports from East Europe to Italy in Miskolc then forwards them to their destinations.Scheduled trains are reliable and also a means of not losing competitiveness, he added. MÁV Rt'sgoods delivery sector is expected to transport 44.6 million tons of goods this year and produce a Ft 69billion performance. (Nv 5, MH 11) K.H.

Economics

Gambling assoc to appeal The Hungarian Gambling Association (MSzSz) will appeal to the Constitutional Court should theParliament will vote to amend the current Gambling Law today, MSzSz secretary-general Sándor Balatonfüredi warned. While slot machine operators had to pay Ft53,000 flat rate per month after eachmachine last year, the amount will almost double to Ft 100,000 with the amendment. The move willbring to ruin a number of smaller operators on a market, which witnessed a decline of 4%-5% in thenumber of operators in recent times, Balatonfüredi added. (NG 1) P.O.

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Gov't to develop rental sector The government is planning to start a nationwide program for the development of the rental sector withthe aim of increasing the rate of non-owner-occupied homes from the current 9%, still a long way fromthe EU average of 36%. Estimated to cost Ft 11 billion to launch and a further Ft 750 million in eachsubsequent year, the program could help get Ft 150 billion-Ft 200 billion worth of projects off theground in 2005 and 2006, according to its originators. The five pillars of the program include a low-costcredit line for municipalities to develop council homes, a new investment fund managing a large stockof rental homes (to be launched with state money but open to investors and potentially floated on thestock exchange), subsidized loans for real estate developers to promote investment in the rental sector,non-refundable subsidies to small towns with a population of less than 2,000 to provide council homesto teachers and doctors, and a scheme which would encourage builders to rent newly developedhomes for 5-15 years before selling them. (Vg 3) P.P.

Tax evasion directive a 'scarecrow' A new EU directive requiring banks to provide account information to the tax authorities of their clients'home countries came into effect on July 1 in the interests of eliminating tax evasion. However, theefficacy of the directive is highly questionable, with many European tax havens inside and outside theEU (including Switzerland, Luxembourg and Lichtenstein, among others) remaining exempt from theobligation in exchange for a 15% surtax on the interest of bank deposits, tax consultants concurred.

The bulk of foreign assets will escape taxation anyway as the funds currently kept in deposits areexpected to be channeled into tax-free investment products, such as stocks, income tax specialistLorenz Jarass pointed out in German weekly Der Spiegel, describing the EU directive as a merescarecrow. (Vg 5) P.P.

Osteoporosis centers to be wound upThe nationwide network of osteoporosis centers, one of the few well functioning subsystems of Hungary's ailing healthcare system according to the doctors who work in them, will be wound up in linewith a Health Ministry decree adopted last week. The decision bars internists, trauma specialists andorthopedists, who typically make up the professional staff of such centers, from writing prescriptions for osteoporosis drugs, with the ministry arguing that the study of brittle bone disease is not anindependent field of medicine, and that therefore there is nothing to justify the current system.

According to Éva Kereszty, a department head with the ministry, the closure of osteoporosis centerswill save tens of thousands of patients the trouble of traveling to the nearest hub. The Hungariannetwork of osteoporosis centers has been cited among best practices in the EU several times, not onlyon account of the high professional standard it represents, but also because of its cost-effectiveness,President of the National Osteoporosis Center Péter Lakatos said. (Nb 4) P.P.

MOL says fuel prices could riseHungarian oil and gas company MOL Rt said on Friday it could raise the price of retail vehicle fuel asmuch as Ft 15 per liter in July or August, because of rising global oil prices. MOL sales director Lajos Alacs said that MOL was not announcing a price rise, but publishing a forecast. According to theforecast, the price of diesel oil could rise to Ft 270 per liter over the next two months, and the 95 octanepetrol could go up to Ft 275 per liter, Alacs said, adding that it was unlikely that the prices would go

higher. Alacs noted that the Ft 15 rise was forecast assuming a stable dollar. (Econews; NG 7)Economy back on track The Hungarian economy has managed to get back on a growth path since Q1 of this year, but thedevelopment falls behind compared to the same period of 2004, economic research company GKI Rtclaims in its latest report. The volume of the industrial production increased by 9%, while the volume of the building industry swelled by almost 20%. Export growth was 7% faster than import, andunemployment rose by 1.4% to 7.2% during the past 12 months. Real wages are projected to increaseby 7%-10% for the year, and an average 3.8% inflation is predicted by the end of December. (NG 4)P.O.

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Hungary's PMI drops to 48.1 in JuneHungary's Purchasing Manager Index (PMI) dropped 4.4 to a seasonally adjusted 48.1 in April, Halpim,the company which compiles the index, said. Unadjusted June PMI was 49.2, down 5.4 from May. APMI index over 50 reflects an expanding manufacturing sector and a PMI index under 50 means thesector is contracting. Among the indices which comprise the PMI, the stocks purchased index was 46.4,down 8.6. The new order volume index dropped 7.6 to 47.4, and the production index dropped 8.0 to46.2. The acquisition price index rose 2.4 slower, at 51. (Econews; Vg 2)

District XIII may see Ft 600 bln in investments As part of the government's Europe Plan, District 13 of Budapest hopes to witness investments worth atotal of Ft 500 billion-Ft 600 billion between 2007 and 2013, mayor József Tóth said during a pressconference last Friday. During the past two years more than 5,000 new flats were built, and another 20,000-25,000 are waiting to be constructed, Tóth added. The municipality has listed 10 major development issues for the future, including the setting up of district centers, the continuousrehabilitation of Váci út and its surroundings, and the utilization of the brown field areas currentlyoccupied by the state railways MÁV Rt. (NG 1) P.O.

Scrap metal: only half sign contract Only half of the 22 car manufacturers and importers active in Hungary signed an agreement with a

licensed scrap metal company by the deadline on July 1, in line with an EU directive on the disposal of end-of-life vehicles. In theory, those failing to enter into partnership with one of the three certified scrapmetal businesses lose their distribution licenses, however in reality the system is not functional,Managing Director Pál Lukács of the Hungarian Automotive Industry Association said. It is not realisticto threaten to take away a distributor's permit when the same models are available to Hungarian car buyers in neighboring EU countries, Lukács pointed out. Moreover, loopholes in the current regulationsallow 90% of the wrecks to end up with non-licensed scrap metal companies, he said, adding that30,000 thousand end-of-life cars did so in Q1. (Vg 1) P.P.

Woes of a bumper wheat cropThis year's bumper crop of wheat, estimated at only 10% less than 2004's record 6 million tons, is likelyto aggravate sales and storage problems for farmers in Hungary, producers reported. However, whiledemand from Austrian mills are expected to drive up farmgate prices in western Hungary, and a similar trend is likely in the southern regions due to poor harvests in Mediterranean Europe, farmers in easternHungary find themselves squeezed in between low bids from traders, excess wheat from last year, andshortage of grain storage space - and, as a result, they may settle for a lower price instead of waitingfor the start of EU intervention in November. Although the transportation of last year's interventioncrops to Spain and Portugal would alleviate problems in the region, neither of the two tenders has beenkicked off yet, the newspaper's sources added. (Vg 11) P.P.

Politics

SzDSz chair confirms 100 steps support The junior government coalition SzDSz party supports the government's One Hundred Steps programbut has since the beginning insisted on making more resolute steps to reform the health sector and the

taxation system, chairman Gábor Kuncze said on Saturday. By enacting a five-year program for taxcuts this autumn, the government will truly confirm its commitment to reduce the tax burden and socialsecurity contributions, Kuncze said after his party's National Council discussed the One Hundred Stepsprogram. (MTI; Nb 2, Nv 3)

Thirteen amendments to be passed today Some 13 amendments are to be passed today, on the last day of the Parliament's special summer session. Issues requiring a final vote include taxation, election, catastrophes,municipalities andadministration. Some of the laws need a two-third majority. (Nv 4)

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Domestic

Investigation of racist Internet game, over Police have closed the investigation on an Internet game which had the objective of shooting Gypsies,spokesman for the Budapest police headquarters said on Friday. Police has examined the game andfound that none of its elements violated laws against incitement, Éva Tafferner said. The game, ‘Oláh Action’, flashes the message ‘White Hungary’ across its front page and is still available for play at

several websites, the Roma affairs media company and internet portal RomNet reported. RomNet,which had launched the investigation a month ago, said it would appeal the police decision. When thegame first appeared on an Internet website last February, Radio C, a Roma radio station, forced itsremoval, and the service provider said later on that they had halted access to the game as soon as theylearned of its racist content. (MTI)


Nissan to set up regional sales company Vehicle maker Nissan will set up a new company in Budapest to handle sales and distribution in theCentral and Eastern European region, Nissan announced yesterday. The centre, to be called NissanSales Central and Eastern Europe Kft, will oversee sales and distribution in Hungary, the Czech

Republic, Slovakia and later in Poland. Last year Nissan sold 15,903 vehicles in the CEE region. Thecentre will be headed by Francois Goupil de Bouille. In June this year, Nissan opened a Euro 13 millionparts distribution centre in Györ together with Renault, which owns nearly 45% of Nissan. The facilitysupplies spare parts for Renault, Dacia and Nissan's Austrian, Hungarian, Czech, Slovakian andSlovenian networks. (Econews; Mon. Vg 8, MH 11)

Felsál opens center in VeszprémMeat processor Felsál Kft is set to invest Ft 1 billion in a new fully EU-compliant production plant andlogistics center in Szabadságpuszta, Veszprém county, the company said. This is Felsál's largestinvestment since its inception in 1991 and it is aimed to double production, paving the way for thecompany's foreign expansion. The project, to be partially funded by the EU's Special AccessionProgram for Agriculture and Rural Development (SAPARD), is scheduled to finish by early fall. Felsál is

also expecting the investment to double its revenues, which it hopes will reach Ft 3 billion next year.(NG 1) S.F.

Strike threat in the air at Ferihegy Talks between Ferihegy airport operator Budapest Airport (BA) Rt and one labor union over thepotential outsourcing of certain service activities have been unsuccessful until now, Népszava reports. Attila Csorba, president of Air Traffic Workers' Independent Labor Union told the newspaper thatalthough they are open to suggestions by the employer in the next 24 hours, they might have to resortto calling a strike given that seven days of negotiations have not yielded results. The union's maindemand is that jobs should be guaranteed for 3-5 years after outsourcing, a period too long for thecompany to accept. (Nv 5, MH 2) M.H.

Fairtrade shop may open in Budapest

According to Magyar Hírlap, a Fairtrade shop may open in Budapest in the fall. The shop, whose idea isbacked by various civil groups and foundations, would sell third world products such as chocolate,brown sugar and folk art, featuring the Fairtrade logo. The logo certifies that growers give a fair deal totheir agricultural workers, and that processors guarantee a fair and steady price to growers. Althoughthe backers hope that the project will be self-sufficient, people like Ákos Kozák, director of GfKHungária Market Research Kft, caution that there are only a few thousand people in Hungary whowould be prepared to pay a hefty premium for socially conscious products, and it might take another 5-10 years before the notion of fair trade picks up. (MH 1, 13) M.H.

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Dresdner Bank transforms subsidiary Germany's Dresdner Bank AG has turned its Hungarian subsidiary into a branch office, takingadvantage of new rules which allow the branch to make full use of its parent bank's capital. The StateFinancial Institutions Supervision (PSzÁF) approved the transfer of the accounts from the subsidiary tothe branch on June 30, 2005. The move will not affect the structure of Dresdner Bank's operations inHungary, but it will allow the bank's clients to take out much bigger loans, because the branch's capitalwill be tied to that of its parent bank. (Econews; NG 5, MH 11)

Kartonpack operating with frozen assetsDespite a court decision last month which ordered the freezing of the assets of packaging companyKartonpack Rt in connection with the investigation into the K and H Equities Rt brokerage scandal, thecompany's daily operation has not been affected negatively, managing director Gábor Tóth said. EarlyJune the Pest Central District Court ruled to block Kartonpack and Britton C and C from accessing their bank accounts and assets until criminal investigation in the Kulcsár embezzlement case is concluded.The court said there was sufficient evidence to suggest that Kartonpack and Britton were related to thecase. Kartonpack then appealed against the decision, while yesterday it held an EGM to authorizemanagement to lease the company's assets. (NG 8) S.F.

Csepel dockyards operator up for sale

The State Privatization and Holding Company (ÁPV) has separated the dockyards from the dockyardoperations of Hungarian shipping company Mahart Rt, ÁPV announced yesterday. ÁPV is keeping thedockyards, but selling a 75-year concession to operate them. The concession contract comes with thepurchase of a 99% stake in Budapest Free Port Logisitics, a company set up by ÁPV to operate theshipyards on Budapest's Csepel Island. All of the property at the dockyards will remain with Mahart-Free Port, which is to remain state-owned. The buyer of Budapest Free Port Logistics will pay rent toMahart-Free Port for use of the property. (Econews; Nb 11, MH 12)

Duna TV gets green light to launch new channel State-owned Duna TV Rt may be allowed to launch its new Autonomia channel as early as Christmas,writes Népszava. The plans for the channel, which would feature programming on ethnic minorities,were received positively by the media authority ORTT, László Csányi, president of Duna TV told thenewspaper. Csányi added that the new channel would provide a platform for broadcasting archive andORTT-supported Hungarian programming as well. The company also applied for a subsidy of Ft 143million, mainly to cover the costs of building the technical infrastructure, and it expects a decision after the summer break. (Nv 4) M.H.

State to call tender soon for new MTV HQ A project company set up by the Treasury Asset Directorate (KVI) will soon call a tender to build a newheadquarters and production facility for Hungary's public television broadcaster MTV, Péter Barinkai,who heads the project company, said. Barinkai said the tender must be approved by EU authoritiesbecause of its size. He did not reveal the value of the project, but earlier estimates put the price at morethan Ft 50 billion. The tender winner must also supply the technical equipment for the building andoperate the building for 20 years. The project company, called Millenniumi Media Szolgáltató Központ,was given the authority to organize the tender in 2004. According to a preliminary invitation for applicants published on May 12, MTV requires a 41,000 sqm building, with 32,000 sqm of workingspace to be built at site in Budapest's District 3. (Econews)

Knowledge center in DebrecenWith the cooperation of 16 enterprises, the University of Debrecen has established a knowledge center after having won a Ft 1.7 billion subsidy. Although the Genomnanotech Knowledge Center will only befinished completely in September, academic László Fésüs has already held an open day there. Thecenter will provide a home for research in chemistry, genomics, agro-biotechnology, pharma-innovation, medicinal biology, and nanotechnology and is open to the surrounding research groups andenterprises to join in the work. (Nb 7) E.C.

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Bunzl acquires food-service company Bunzl Plc, a supplier of packaging and services to clients such as Wal-Mart Stores Inc, said it acquireda French food-service business to expand in central Europe. Bunzl paid an unspecified amount for Tecep France, which has operations in Hungary, Czech Republic, Slovakia, Romania and Poland,London-based Bunzl said in a statement yesterday. Tecep had sales of Euro 40.7 million in 2004.Shares in Bunzl have risen 23% this year, valuing the company at GBP 1.81 billion. (Bloomberg)

Nafta Industrie for sale soonThe Serbian government is expected this week to take a decision on bringing forward the sale of thestate-run oil company Nafta Industrie Serbije (NIS) to this year and MOL Rt may well be there to take apiece of the action, the business daily Napi Gazdaság reported, quoting Magyar Hírlap. However, theHungarian oil flagship will have to face a number of potential heavyweights in the fray such as Austria'sOMV or Russia's Lukoil with the latter already beating out MOL once in the battle for Serbian peer Beopetrol, the paper said. Another possible stumbling block for MOL in the tender could be a likely jointbid with Croatian INA, in which MOL has a 25% stake, as suggested by the dragging Energopetrol deal.The delay is widely believed to be due to the growing political opposition in Serbia to Croatianinvestments. (NG 7) S.F.

K and H Equities is number 1

Erste Bank Investment Hungary Rt has displaced from its throne in June as K and H Equities Rt - thefirst time since April 2003 - had the highest turnover of all broker companies. The duplicated totalturnover was Ft 757.5 billion in June, which is a 25% increase compared to May. Of the top 10 broker companies, only 4 were below average. The average growth rate was pulled down by Erste the most asits turnover dropped by 25% within a month. Cashline, however, closed with flying colors, increasing itsturnover by 64% in a month. (Mon. Vg 11) E.C.

Economics

State must save Ft 400 billionSince the government officially announced that it would save Ft 200 billion, the state will in fact beforced to save Ft 400 billion to be able to stick to its plans of reducing the state deficit by 0.9% of GDP,writes daily Népszabadság. The 5-year tax reform, including the reduction of VAT from 25% to 20%,

and the reduction of the top rate of income tax from 38% to 36% will decrease state revenues by Ft 200billion, which means that it needs twice this amount to make up for it. The government is committed tobalancing this out. A saving of Ft 120 billion is expected from the ministries, who will be allowed todisburse only the Hungarian part of EU subsidies, and Ft 80 billion-Ft 120 billion is expected to besaved as a result of the rationalization process. The exact amount and the number of employees laidoff is not yet known. (Nb 11) E.C.

Strengthening USD may hurt Hungarian economy A further strengthening of the US dollar can be expected in the coming months, writes the dailyNépszava, which may have a negative effect on the Hungarian economy. This is mainly because themajority of Hungarian imports are dollar-denominated and they are not fully covered by dollar-denominated exports. With steadily rising oil prices, energy import is a case in point, where increasing

costs hurt profits and push up inflation too. With the euro at a 14-month low against the dollar, this trendis further augmented by the unfavorable exchange rate movement. (Nv 1, 5) M.H.

Interest rate decision ignores temporary trendsThe Monetary Council, the rate-setting body of the National Bank of Hungary, will disregard the one-off effect of next year's planned tax changes on inflation, and continue to look at medium-term trends whenmaking its rate decisions, the council announced yesterday. Last week, the government announced areduction in VAT from 25% to 20% as of January 2006, which will push the annual inflation rate down tobelow 2% next year. The Monetary Council does not plan to compensate for this one-off effect in anyway, according to a statement sent to MTI. The central bank's inflation target for December 2006 hasbeen set at 3.5% even though the finance minister announced last week that the 2006 inflation rateshould be below 2%. The Monetary Council did not alter its key interest rate, currently 7.0%. (MTI; Nv5, MH 11)

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Hungary's investment popularity At the Investment 2005 conference held in La Baule, France, representatives of the most influentialbusiness circles have found Hungary to be one of the most attractive destinations to invest. Participantsof one of the world's most significant assembly included top finance leaders such as the French and theJapanese finance minister, together with experts from Nokia, Fujitsu, Siemens, and Ernst and Young.Hungary's popularity appeared unquestionably through the panel discussions, said vice secretary of state Ábel Garamhegyi to Világgazdaság, and facts were there to support it: according to the latestresults of an Ernst and Young study, from last year's 7th place, Hungary has moved up to the 5th placeafter the UK, France, Germany, and Poland, and thus increased its market share from 4.4% to 4.8%.(Vg 2) E.C.

Politics

PM and Fidesz leader square up for TV debateCenter-right opposition Fidesz leader Viktor Orbán is ready to meet the prime minister and ‘talknumbers’ regarding Hungary's economy on television, Orbán said yesterday. Prime Minister FerencGyurcsány said in Parliament yesterday that he was inviting Orbán to a ‘duel of numbers’ anytimewithin the next two weeks. Orbán replied that Friday seemed to be a good day, as a meeting of Hungary's former prime ministers was already scheduled then. Orbán said he was happy to talk as longas the discussion did not become an empty exchange or a political boxing fight. ‘The country is in adifficult situation; it is worthwhile talking seriously about problems and how to resolve them,’ Orbán saidon Hungarian public radio. The government spokeswoman László Boglar said they would propose atelevision debate for Friday afternoon or evening. (MTI; MH 1, Nb 1, 2)

Domestic

Paks gets permission to remove damaged fuel rodsHungary's National Atomic Energy Agency's (OAH) has issued a preliminary permit to Paks Nuclear Power Plant for the removal of fuel rods damaged in an incident at reactor block II in April 2003, theOAH said yesterday. According to the statement, the permit gives the go-ahead for the main steps of the plan to remove the rods, and allows Paks to apply for the remaining necessary permits. The OAHruling lists some fifty security and environmental conditions which must be observed before and whenremoving the fuel rods. Paks requested the permit on February 28, 2005. The OAH said the permit isonly the first step towards removing the damaged fuel rods. (Econews; Nv 5 MH 2)

Logistics center in BiharkeresztesThe municipality of Biharkeresztes, eastern Hungary has given its go-ahead to projects on seweragedevelopment and construction of a new logistics center. The former will cost Ft 1.76 billion, 60% of which will be financed by central funds, while the latter will be managed by a company to be jointlyestablished by the town and neighboring Ártánd. The logistics center will accommodate a number of different facilities including, a truck terminal, warehouses, a cold storage building and a container terminal to service cross-border freight traffic. This second investment will also be partially funded fromregional development grants. (NG 14) S.F.

BKV strike called off

Talks between Budapest Transport Company (BKV Rt) and drivers' unions led to an agreementyesterday, albeit belatedly, Népszava reports, thus averting the threat of a city-wide transport strike.Drivers will be entitled to the previously requested extra rest periods starting September when servicetimetables will have been drawn up again. The change is estimated to cost BKV somewhere betweenFt 400 million-Ft 1.2 billion, and it is not yet known how the company will finance it, given that themunicipal government made clear that it would not provide any extra funding. (Nv 1, 4) M.H.

Three sirens fail test Three out of 227 sirens failed to go off yesterday in a nuclear warning test, held in the vicinity of Hungary's lone nuclear power plant, at Paks, about 100 km south of Budapest. The test was organisedin a zone covering about 30 kilometres around the power plant and three of the sirens, each in adifferent town, failed to go off, Lieutenant-Colonel György Szentes of the National Disaster

Management Agency reported. While acknowledging a success rate of 98.7%, Szentes said that workwas already underway to repair the faulty sirens. (MTI)

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PM announces agricultural stepsPrime Minister Ferenc Gyurcsány yesterday announced the government’s agricultural priorities as partof its 100 Steps Program. The proposed 20 measures are designed to assist the sector in generatinghigher incomes, the prime minister said in Gyöngyös, northern Hungary. The measures include setting

up an agricultural insurance fund, assistance in product marketing and organizing an advisory systemfor producers. Addressing the imbalance between vegetable farming and animal husbandry is crucial;animal farmers need more assistance, which, in turn, will provide vegetable producers with increasedmarkets, said Gyurcsány. (MTI; NG 1, Mon Vg 3, Nv 5, Nb 1, 10, MH 11)

ÁPV receives three bids for Malév The State Privatization and Holding Company (ÁPV) Rt announced it had received three bids for a99.95% stake in Hungarian airline Malév Rt by yesterday’s deadline. ÁPV said it would offer no further information on the bidders until it picks the best offer and decides to start negotiations with that bidder. ÁPV declared the previous, second privatization process for Malév unsuccessful on March 31, allowingit to select a buyer in a negotiated procedure. Russian airline alliance Airbridge and Aviation Solutions,a consortium of Hungarian investors both announced yesterday they had bid for Malév. The third bidder

is still unknown. (Econews; MH 2, NG 4, Nv 5, Tue. Vg 6)InfoRádió ownership simplified The ownership structure of InfoRádió Kft will be simplified from July. Majority owner László Mészárosannounced that London-based Achilles Trading Ltd, which he represents himself, bought 7.35% of theshares from minority owner Péter Heltai. Mészáros also transferred his 50.33% share to the company.The aim of the transactions is that a capital injection needed for technical developments of the radiocan be carried out more easily with a simpler ownership structure. Achilles Trading may also buy a15.85% share in Budapest School of Communication (BKF) in the future, Mészáros added, but this willnot disturb the cooperation of the school or the radio. (NG 4) G.R.

Budapest Leasing broadens loanBudapest Leasing Rt agreed with European Bank for Reconstruction and Development (EBRD) on

extending its subsidized loan for micro and small enterprises. The original credit line of Euro 20 millionwas increased by Euro 5 million, CEO Balázs Báti said. The European subsidy is to cover the higher credit risk of small enterprises. Almost all of original Euro 20 million has already been granted, involving1,100 micro and 300 small enterprises. The loan can be used for purchasing vehicles or machinery.The original duration of the cooperation has not been changed, and four years now remain. (NG 4)G.R.

Démász, Elmü on bourse’s liquid list Shares of electricity distributors Démász Rt and Elmü Rt have met liquidity requirements that will allowinvestment funds to buy more of these shares, the Budapest Stock Exchange announced yesterday.Normally, shares may account for no more than 10% of investment funds’ portfolios, but shares thatrecord an average daily turnover of more than Ft 100 million may account for up to 15% of portfolio

weight. The Budapest Stock Exchange reviews share liquidity each quarter. Also meeting the liquidityrequirements in Q2 2005 for inclusion on the list were MOL Rt, OTP Rt, Magyar Telekom Rt, Richter Gedeon Rt, BorsodChem Rt, FHB Rt and Egis Rt. Not on the list were Antenna Hungária Rt, Fotex Rtor Synergon Rt. (Econews, NG 5)

MFB net profit Ft 10 bln in 2004The Hungarian Development Bank (MFB) Rt had consolidated after-tax profit of Ft 10.376 billion in2004, sharply up from Ft 1.621 billion in 2003, according to its consolidated annual report, preparedaccording to Hungarian Accounting Standards and published yesterday. MFB’s unconsolidated after-tax profit was Ft 11.341 billion. Consolidated total assets amounted to Ft 782 billion by the end of 2004,up 44% from the end of 2003, and 29% more than unconsolidated total assets of Ft 605.785 billion.MFB had consolidated net assets of Ft 115.259 billion at the end of 2004, up Ft 6.489 billion from 2003,

and Ft 9.767 billion more than unconsolidated net assets. (Econews)

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Investors up Euroventure to Euro 51 mlnEuroventures, an independent private equity company, attracted Euro 20 million during the secondsubscription period for its Euroventures Hungary III Limited Partnership fund, which ended in June, thecompany announced late on Monday. The fund now has capital of Euro 51 million. ABN Amro and theEuropean Bank for Reconstruction and Development (EBRD) were the two subscribers of the units.Both banks bought units during the first subscription period as well. Euroventures’ ongoing investmentsin Hungary include one in water cooler delivery company AP Aqua Rt and budget airline Skyeurope.(Econews; NG 1)

Act to simplify setting up company The recently completed draft of the new Companies Act will introduce radical changes to the system of company registration with the aim of offering new entrepreneurs a long-awaited alternative to thecurrent protracted and costly process of starting in business. Central to the proposal is to give theoption of using standardized legal documents instead of paying a lawyer to draft them. New businesseswill not be required to indicate their non-core activities in the articles of association (with the exceptionof licensed activities). The aim is to clear up the clutter of manifold activities listed on corporatedocuments and allow authorities to see clearly what businesses are actually doing. (Tue. Vg 2) P.P.

Cartel may lead to prison sentence

In order to promote transparency in the use of public funds and free competition, Parliament approvedan amendment to the Penal Code earlier this week raising the maximum punishment for price fixing tofive years of imprisonment. Those potentially subject to such a punishment include CEO’s andmanaging directors, other company officials, or even lower ranking employees in a position tomanufacture a cartel agreement, in addition to industry association or chamber officials. This penalty isapplicable only if the cartel is formed to influence the result of a concession tender or publicprocurement, which was not punishable by a jail sentence until now. In line with the general practice inHungarian competition law, perpetrators of a price fixing agreement can escape the prison sentence if they report to authorities before being discovered. (Tue. Vg 3) P.P.

Osteoperosis generic drug withdrawnTeva Hungary Kft has withdrawn the Hungarian registration of its generic product for the treatment of osteoporosis in order to let its mother company start the European registration of the product. Thealendronate-based medicine was launched in April in cooperation with Richter Gedeon Rt but US druggiant Merck and Co Inc. filed a lawsuit against Richter claiming that the product infringed its patentrights. While the suit is in progress, Richter had to suspend sales of its product. European registrationshould help Teva avoid this problem, the company announced. (Tue Vg 7) G.R.

Adult Education Act amended Companies training adults for occupations listed in the National Training Register (OKJ) will lose their eligibility for state subsidies unless they find employment for students for at least 6 months oncompletion of the course, an amendment to the Adult Education Act passed by Parliament last weekstipulates. Schools can meet the new requirement by signing an agreement with a company thatundertakes to employ their trainees. At the same time, the government launched a Ft 1.5 billion subsidyscheme which enables schools to offer free education for those studying towards their first OKJcertificate, retraining for a new occupation over age 50, and students with a disability. (Vg 3) P.P.Oracle revenue from applications up 75%The Hungarian unit of business software company Oracle saw its revenue from the sale of applicationsincrease 75% and revenue from consulting rise 25% in its financial year ended May 30, Oracle HungaryRt CEO Péter Füzes announced yesterday. Füzes said partnered companies accounted for more thanhalf of Oracle’s sales. Oracle remained the biggest seller of software for business databases, and alsosaw its market share in the applications segment expand, largely because of sales to big and medium-sized companies in the financial and telecommunications sectors. The public sector put off big projectsduring the year to cut costs. But, this year state institutions should spend more, Füzes said. (Econews)

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Car sales down 8% in H1The number of new cars sold decreased by 8% to 94,301 in H1 of this year, compared to the sameperiod of 2004. Sales of pickups and vans declined by 23% to 8,220. Analysts expect total car salesthis year to reach only 180,000 and sale of small transporters to be around 18,000. In June, over 20,000 cars were bought, more than in last June, but this could not prevent the total figures for the firstsix months from slumping. Suzuki is still leader among car manufacturers, with the Ignis being the mostpopular model and the Swift the second. (Nb 1) G.R.

Arbitration Board nullifies MÁV procurement result The Public Purchase Arbitration Board has nullified the results of a tender to supply suburban railvehicles to Hungarian railway company MÁV Rt. The results were announced on June 1. MÁV awardedthe contract to a consortium of Switzerland’s Stadler and Hungary’s Transelektro Transport Rt, after disqualifying the bid by Canada’s Bombardier because it was unrealistically low, according to MÁV.Bombardier appealed to the Arbitration Board after the results were announced. The Arbitration Courtsaid it would make a detailed statement on its decision in the afternoon. (Econews; NG 1, Nv 4, MH 2)

Paks Q1 production, sales better than planned The Paks nuclear power plant generated 6,419 GWh of electricity in the first quarter of the year, 1.2%more than planned. The Paks plant had Q1 revenue of Ft 52.5 billion, 1.7% more than planned, Paks

CEO József Kovács announced yesterday. Kovacs said the better than expected sales were a result of less lost production than anticipated, and extreme weather conditions. Kovacs said the annual pre-taxprofit target of Ft 1.5 billion was well within Paks’s sights on the basis of Q1 results. (Econews; NG 4,Nv 5, MH 12)

SAPU invests Ft 1.5 bln in nw Hungary German-owned automotive parts supplier Schefenacker Automotive Parts Ungarn Bt (SAPU) hasembarked on a Ft 1.5 billion investment in Mosonszolnok, northwestern Hungary, to create a plasticmolding plant for the manufacturing of rear-view mirrors. The project complements the company’srecently completed coating plant, built for Ft 2 billion, which is currently in the test phase and suppliedwith semi-finished products from Oberrot in Germany, Managing Director Antal Mihalicz said. At thesame time, the company will discontinue car lamp manufacturing as part of divesting its non-coreactivities. (Vg 7) P.P.

Economics

FinMin says min. wage must rise under inflationFinance Minister János Veres has told the country’s trade unions that they should expect only a modestincrease in the minimum wage next year, because a reduction in the personal income tax and lower inflation will boost real wages. ‘When negotiating wages, changes to taxation must also be considered,and a modest wage rise must be settled on,’ Veres told the Council of the National Association of Hungarian Trade Unions (MSzOSz) yesterday. Veres said that the reduction in the main VAT rate from25% to 20% would reduce next year’s inflation rate by 1.7 percentage points from this year’s targeted3.6%. He added that the state and the private sector would cooperate to see that the cut shows up inconsumer prices next year. (Econews)

No economic crisis - BokrosHungary’s economy shows a mixed picture with some players such as multinational companies, their local affiliates and export-oriented businesses doing well, while other segments of the economy,including agriculture, tourism and small- and medium-sized companies in the construction sector, arefaring worse, former finance minister Lajos Bokros said in a television interview yesterday. On thedownside, unemployment has risen significantly in recent years, the country’s internal as well asexternal financial position is unsatisfactory and Hungary’s projected 3.6% GDP growth this year will beone of the lowest among the EU newcomers, however, there is no crisis situation and therefore noemergency measures are needed, he said. Bokros stressed that reforming the pension system andintroducing individual savings accounts within the state pension fund framework must get specialpriority. (MH 3) S.F.

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Járai warns on Hungarian competitivenessNext year a Ft 500 billion cutback in government spending will be needed in order to reduce thecountry’s budget deficit, National Bank of Hungary (MNB) governor Zsigmond Járai said in a pressinterview. In terms of competitiveness, Járai also said earlier that if taxes and contributions exceed 30%of a country’s GDP than its economy will no longer be competitive. Today this ratio is around 46% inHungary, he warned, adding that Hungary needs a radical change in economic policy in order to meetthe Maastricht criteria. This year alone Hungary will spend Ft 877 billion to pay off debts almostequivalent to total expenditure on health care and education, which greatly hampers its economicdevelopment and people’s living standards, he noted. Measures are also needed to increaseemployment as only 38% of the entire population work actively, one of the lowest rates in the EU, whilethe rate of public jobs should also be reduced from the current 22% to 15%, Járai concluded. (MH 3)S.F.

ÁSz frowns on withheld VAT rebatesThe Finance Ministry’s decision earlier this year to withhold for investigation payments of VAT rebatesto companies with EU tax codes cost the state some Ft 5.8 billion, a draft report of the State AuditOffice (ÁSz) shows. Due to the delays, the government was forced to pay out billions of forints indefault interest to companies. Reacting to the ÁSz report, former finance minister Tibor Draskovics saidthe Ministry had in fact generated extra revenues thanks to the investigation, which was mounted to

filter out illegitimate tax rebate claims. The report also states that the withholding of refunds was bothwithout basis and unjustifiable. (MH 12) S.F.

Politics

Journalist’s sentence for libel reduced to fineHungary’s Supreme Court ruled yesterday to reduce a 10-month suspended prison sentence againstright-wing journalist András Bencsik to a fine of Ft 60,000. The case was brought by liberal MP ImreMécs, after Demokrata, the weekly paper of which Bencsik is editor-in-chief, wrote that testimony byMécs had played a major role in sentencing four people to death after the 1956 revolution. The lower court imposed a 10-month prison sentence on Bencsik which was then suspended by an appeals court,which found that Demokrata had in fact committed libel since there was no cause and effectrelationship between any testimony Mecs may have made and the sentence which led to the execution

of four people. Defence attorney Barnabás Futó, who represented Bencsik in the case, appealed to theSupreme Court. The Supreme Court now ruled that the statement that ‘Mécs had served as a witnessagainst his associates’ was not defamatory. (MTI; MH 2)

Domestic

Gov’t curtails managed careThe government has decided to suspend the widening of managed care next year. In 2004, 2 millionpeople were involved in the program. According to original plans, by this year 5 million citizens shouldhave been covered by the system but only a further 500,000 were included. From next January, thesystem will not be extended further but reports will be made on the experiences and the efficiency of the program, says the government decree, which was passed at the end of June. Positive attributes of the system should be preserved but it cannot be adopted in an unchanged form, chairman of

Parliament’s health committee, Tibor Schwarz said. (NG 1) G.R.07 July 2005 Business

June public sector deficit Ft 150.4 blnHungary’s public sector deficit was Ft 150.4 billion in June, the Finance Ministry said yesterday. Thefigure, which excludes local governments, and is based on Government Finance Statistics (GFS) cashflow accounting, exceeds the ministry’s earlier forecast by Ft3.1 billion. The six-month fiscal deficitcame to Ft988.1 billion, or 96.6 % of the full-year target. The six-month deficit was 3.1 % of GDP withEU accounting methodology, or 4.4 %, using a pre-EU method that does not make adjustments for local government expenditure and money transferred to private pension funds, the ministry said. (MTI;

NG 1,3, MH 11; Nb 13)

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GL to invest euro 20 mln in HungexpoFrance’s GL Events plans to invest Euro 20 million at Budapest’s Hungexpo convention and trade fair complex between 2005 and 2009, and more between 2009 and 2015, GL Events’ CEO Olivier Ginonsaid yesterday. GL Events won the privatization tender for Hungexpo together with TriGránit Rt, aconstruction company owned by Sándor Demján, Hungary’s richest man. The consortium signed thecontract for the sale of the 77% stake on Monday. The consortium paid Ft 8 billion for the stake, andpromised to spend Ft 5 billion, or about Euro 20 million, in the five years to 2009, and another Ft 2.5billion after that, Econews reported earlier. (Econews; NG 4, Nv 5, MH 11)

Rába says Suzuki order to lift ’06 salesRába Rt, a Hungarian maker of automotive parts and trucks, expects a new order for car seat partsfrom Suzuki Motor Corp. to add as much as Ft 2.5 billion to revenue next year. Rába will supplySuzuki’s factory in Esztergom, northern Hungary, with parts worth Ft 5 billion forint this year and Ft 7billion in 2006, Rába said in a stock exchange statement yesterday. Suzuki posted net income of Ft1.82 billion on revenue of Ft 40.2 billion last year. (Bloomberg; NG 7, MH 11)

Raiffeisen Property Fund assets rise Assets invested with the Raiffeisen Property Fund Rt increased Ft 6 billion in June 2005 to Ft 64 billion,the fund said yesterday. The fund closed three property transactions in June. The fund bought a 7,700-

square-metre property in the Pécs industrial park for which British American Tobacco Hungary Rt hasalready signed a 10-year lease. The fund also bought buildings in Szerencs and Miskolc. Both 1,000-square metre properties will be rented by Spar Hungary Rt. (MTI; NG 8)

Smallholders to sell HQ building The Independent Smallholders’s Party (FKGP) plans to sell its major headquarters building in Belgrádrakpart, Dist. 5, this summer, chairman of the party István József Kovács said. The minimum price of the building will be Ft 950 million, from which first of all FKGP’s Ft 400 million debt will be settled,Kovács said. FKGP earlier sold the sales rights of the building to investor Huba Szeremley, nowSzeremley must also receive Ft 320 million from the party, Kovács said. FKGP was Fidesz’ coalitionpartner in government between 1998-2002, when the party was headed by József Torgyán. (Nv 3) M.K.

Bp Lizing takes out Euro 5 mln loan

Budapest Bank Rt’s equipment leasing arm, Budapest Lizing, has taken out a Euro 5 million loan fromthe European Bank of Reconstruction and Development (EBRD, on top of its 5-year revolving loan of Euro 20 million taken out from EBRD last year. Budapest Lízing CEO Balázs Bati said the Euro 20million has been mostly used up for 1,400 leasing contracts. Last year half of Budapest Lízing’s leaseswere for trucks and other commercial vehicles. This year the company expects to see a big increase inleases of heavy machinery for motorway construction work. Budapest Lízing was the first to join an EU-EBRD SME financing program, which provides loans to local leasing companies or other financialintermediaries to help SMEs finance purchases, borrow or acquire new capital. (Econews; Vg 9)

Avalon fined for misleading advert According to Napi Gazdaság, the Competition Office has fined Avalon Team Kft., a marketer of dietarysupplements, for misleading statements concerning the curative effect of its products. Beside paying

the Ft 30 million fine, the company is required to announce the finding in paid advertisements. According to the Competition Office, the CEO of Avalon Team used to be an executive officer atanother company fined for a similar offence earlier, which was considered an aggravatingcircumstance. Under current laws, dietary supplements may not be advertised with references to their potential curative effects. (NG 4) M.H.

PSzÁF fines 2 Pick Szeged shareholdersFinancial market regulator PSzÁF has fined two Hungarian investors Ft 50 million each for colluding toobtain stakes in Pick Szeged Rt, Hungary’s best-known sausage maker. The two men, József Brazsakand János Csarodai, who each own just under a third of Pick Szeged shares, may not exercise their ownership rights and must sell their stakes within 60 days under PSzÁF’s resolution. Regardless of theresolution, PSzÁF said it would continue its investigation to find if takeover rules had been violated in

the case of Pick Szeged. (Econews; NG 7)

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Universal Foods acquire mineral water bottler According to Napi Gazdaság, Universal Foods Kft, owned by the former CEO of Friesland Hungária Rt.Kornél Temesvári, has bought mineral water bottler Mohai Ágnes Kft from Karsai Holding Rt. Universalfoods plans to revive Hungary’s oldest mineral water brand by capitalizing on the pick-up in mineralwater consumption in Hungary. Talking to Napi Gazdaság, Temesvári likened the task to the revival of Pöttyös Túró Rudi, Hungary’s traditional sweet dairy bar. Although the purchase price was not madepublic, experts say it must have been higher than the Ft 217 million share capital of the company. (NG4) M.H.

Safety authorities close Szentendre Lidl Hungary’s food safety authorities have shut down a Lidl discount supermarket in Szentendre, north of Budapest, after finding several irregularities at the store, including frozen chicken which could becontaminated with salmonella. György Visinger, the head of the Pest County Animal Health and FoodInspection Station, said an inspection of the store revealed a deep freeze which had been installedwithout the necessary permits and a supply of frozen chicken suspected to be tainted with Salmonella.While inspectors brought the suspect chicken to be tested at a laboratory, the supply was illegallyremoved from Lidl’s deep freeze, Visinger said. The authorities immediately requested that the cityauthorities withdraw the supermarket’s licenses, forcing it to close (Econews; NG , MH 13)

P.O. to announce tender for 1,000 vehicles According to Napi Gazdaság, Magyar Posta Rt. will select suppliers for 1,097 light duty commercialvehicles and 50 heavy lorries within the framework of an open public procurement tender. Thecompany, which wants to replace its fleet of 10-14 years old pick-ups, will consider purchase price, pre-delivery and operational efficiency as the key factors in the evaluation. The deadline for submittingoffers is the 29th of July. (NG 5) M.H.

Budget airlines harming coach market Low cost budget airlines take passengers from bus companies and have caused a setback of up to 40% to local companies concerning mid haul destinations like Paris, London. Low profit routes will berescheduled with less frequent lines, new destinations lacking an airport will be developed IstvánSohár, Vice President of Volánbusz Rt. said. Price reductions of up to 50% did not succeed to recover passengers to the 15 international destinations serviced currently, however new target destinations,such as in Coatia and long haul cultural and sight seeing tours might be profitable in 2005. (VG 6) A.SZ.

EUROVEGAS for Hungary After the recent modifications of the Hungarian gambling regulations the project of creating a casinoand entertainment city at Bezenye and Hegyeshalom, located at the borders of Hungary, Austria andSlovakia, can be launched in October 2005 as planned by Hans Asamer and the Lukale Investmentand Development Rt. The parliament inducted the category of Casino facilities listed among theentertaining and tourism facilities with two different categories (according to the extent of investment)and the concession period of large scale investments has been raised as well. The planned Mini-LasVegas complex of 5 different entertainment segments will be accomplished from Euro 228 million andwill offer employment to 12, 000, compared to the total inhabitants of 5,300 of the two towns. (NB 6) A.Sz.Economics

Bourse measures to offset gains tax effect The Budapest Stock Exchange (BSE) has responded to the proposed introduction of a capital gains taxin 2007, asking the government to impose the tax gradually and introduce capital market-boostingmeasures by the start of 2006 to offset the effect of the tax. Budapest Stock Exchange (BSE) chairman Attila Szalay-Berzeviczy presented the bourse’s proposals to Prime Minister Ferenc Gyurcsány onTuesday, and published them yesterday. Gyurcsány agreed to respond in written form to the proposalsby July 31, after which a committee of experts will work out the details, allowing a final decision on theproposals to be made by September, according to the statement. The BSE proposed introducingindividual retirement accounts from the start of 2006. The state would match 30% of annual paymentsinto the accounts, or up to Ft 100,000. (Econews; NG 1,7, MH 11)

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Hospitality remains in 15% VAT bracket Recent government statements suggest that, contrary to earlier expectations, the VAT on hospitalityservices will not be decreased, Ákos Nikla, president of the Hungarian Hotel Association told NapiGazdaság. As part of the planned tax reform, the government wanted hospitality services to be in thelowest, 5% VAT bracket; however, the Finance Ministry has declined to comment on whether this willbe included in the final draft of the legislation. According to Niklai, lowering the VAT would enhance thecompetitiveness of Hungarian hotels as they would likely pass it on to their customers. On the other hand, under the current regime, Hungarian hotels have to face the highest VAT rate in Europe. (NG1,3) M.H.

MOL raises fuel priceMOL Rt raised fuel prices with Ft 4 without prior announcement yesterday (Gasoline ’95 to Ft 267 andDiesel oil to Ft 260) due to rising world fuel prices. New York fuel prices are up to USD 61 owing to thedistractions of the oil refinery capacities of the Mexican Gulf area (because of hurricanes in Louisiana).The planned VAT reduction by 5 points will allow a Ft 10 reduction of prices by January according tothe Ministry of Finance as MOL prices reflect four major factors: global market prices, fuel pricesregistered in the ports of the Mediterranean Sea, exchange rates and domestic demand-supplyrelations. (NB 13) A.Sz.

DefMin may privatize 3 defense contractors According to Napi Gazdaság, the Defense Ministry is deliberating the sale of three defense suppliers,HM Currus Gödöllo Military Vehicle Technologies Co., HM ArmCom Communication Technology Co.,and HM Arsenal Electro-mechanics Co. Out of the three, HM Currus with revenues of Ft 3.9 billion lastyear may be the most interesting for investors as the company can expect a steady long term incomefrom the modernization of the military’s BTR-80 personnel carriers. However, in general it is true for allthree that their revenues are highly volatile and dependent on military spending cycles. (NG 4) M.H.

Service provider boom continues A further boom of regional service provider centers is expected in the second term of 2005 in Hungary.Since 2002, 26 regional centers have been established in Hungary, up to one third of the total 91facilities launched in the region. The service providing sector - with a dynamic yearly growth rate of 10% - is composing 62 % of GDP and 60 % of employment. 20 further projects ranging between Euro 700thousand and 4 million are negotiated currently with German, Dutch, Belgian and US companies,covering the most popular areas of financial, HR, call-center, client service and back office facilities andeven information technology services. Attracting advantages are low corporate tax level, wages,qualified workforce and governmental support, disadvantages heavy social security payments andpersonal income taxes, the rate of employment and general health structure. (VG 2) A.Sz.

New film law encourages spending Since Hungary’s new film law took effect late last year, foreign film-makers have spent billions of forintsmore in the country than previously, an official of the National Film Office said yesterday. Although thenumber of foreign films has not increased, their budgets have gotten fatter, Judit Sós said. Hungary’sattractiveness as a destination for film-makers is in large part thanks to a law, passed in December 2004, which gives Hungary a vital advantage over its regional competitors, by offering a 20 % rebate toforeign productions on all spending in Hungary, provided a local partner is involved. (MTI)Politics

Gyurcsány is PM candidate in 2006 Current Prime Minister Ferenc Gyurcsány will be the Prime Minister candidate of the HungarianSocialist Party (MSzP) at the next general elections in 2006, chairman of the party István Hiller announced. MSzP wants to continue the coalition government with the Alliance of Free Democrats(SzDSz) and establish a second Gyurcsány government in 2006. Hiller said. Gyurcsány will most likelybe challenged by former Prime Minister Viktor Orbán, chairman of Fidesz-Hungarian Civic Alliance. (Nv3) M.K.

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Former PM appears before committeeOpposition leader Viktor Orbán appeared before a parliamentary committee on Wednesday, set up atthe initiative of Socialist MPs, to investigate if Orbán had used his official position to assist his wife’sbusiness when prime minister between 1998 and 2002. At the hearing Orbán denied any wrongdoing,and said that he had never attended any business meetings, contrary to allegations published in aseries of articles by the weekly Élet és Írodalom). Answering a question, he confirmed that a company,partly owned by his wife, had been awarded state subsidies in 1997 and in 2001, the latter having beenpaid out by the Socialist government succeeding the Orbán administration in 2002, the former PM said.(MTI; Nv 8)

Domestic

No schooling needed for driver’s licenseThe Economy and Transportation Ministry has modified the decree on the conditions of getting driver’slicenses in Hungary to meet EU criteria. Previously Hungarian law prescribed that only people with aprimary school certificate can receive driver’s licenses, but according to EU law no certificate will benecessary for that in the future. The age limit of car driving licenses has not changed, one must be atleast 17 to get a license. Specialists are divided over the issue, some think the number of accidentscould grow, others believe the number of illegal drivers will decline. (Nv 1) M.K.

Court rulings to be published from 2007 Court rulings will be published on the Internet from 2007 to make them available for everyone,chairman of the Supreme Court Zoltán Lomnici said. The decisions will first be edited and also checkedfor data protection aspects, Lomnici said. The publishing of court decrees is based on a new law on thefreedom of electronic information that will enhance courts’ prestige, Lomnici said. (Nv 4) M.K.


FM: Steps to contain deficit The government has taken the necessary measures to contain Hungary’s public sector deficit at thetargeted level of 3.6 % of GDP, and it has informed the European Commission (EC) of these measureson a regular basis, Finance Ministry cabinet chief Ferenc Pichler said yesterday. A spokeswoman for the European Commission yesterday said Hungary had submitted information about steps it has takento narrow the deficit, and the European Commission would publish an assessment of the measures byJuly 20. The assessment follows the July 8 deadline given to Hungary by the European Commission inMarch to describe additional measures it would take to reduce its deficit. (MTI; NG 3, Nv 5)

New tourist center by Dunapataj InterControll Project Development and Contracting Kft is to invest Euro 79 million (about Ft 19.5 billion)by Lake Szelidi, according to Napi Gazdaság infromation. The Dunapataj board of representatives hasauthorized Town Mayor, Antal Nagy to sign the contract with the company about a regional touristiccenter, further figures, however, will only be disclosed afterwards. The development consists of a healthand wellness center, a 150-room hotel, a camping, and an entertainment complex along with shops andsports facilities. The investment is also comprised of a gas turbine power plant, which not only will

serve the new leisure complex but the public institutions of Dunapataj as well. (NG 1) E.C.Zwack Unicum opens Ft 1.7 bln plant Zwack Unicum Rt, Hungary’s best known spirits maker, opened its new Ft 1.7 billion plant south of Budapest yesterday. The 11,000sqm plant will produce 15 million liters of alcohol and alcoholic drinkseach year, but capacity could be increased to as much as 30 million-40 million liters. Zwack wanted tobuild additional capacity because it counts on increasing sales, CEO Frank Odzuk said. He added thatthe company, which paid for the plant with its own resources, planned to recoup its investment in 5 or 6years. Zwack will produce all of its more than sixty brands of alcoholic drinks at the new plant, with theexception of Unicum, its flagship product, and palinka, which the law requires to be made only fromdistilled fruit. (Econews; Nv 5, NG 7)

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Eybl to doubleTextile manufacturer Eybl Kft is to more than double its workforce at its Körmend factory, according toNapi Gazdaság information confirmed by unnamed company representative. The factory expansionand modernization will cost Ft 77 million, which has been granted to them by the Employment Ministryas a non-refundable subsidy. To the current staff of 141, another 191 more will be hired, amongst whichover a hundred people were unemployed. The Krems-based mother factory Eybl International AGproduces seat covers mainly for BMW and to other market leading automobile producers. (NG 4) E.C.

MÁV challenges board’s decisionHungarian railway company MÁV Rt will turn to the courts to challenge the legality of a decision by theProcurement Arbitration Board nullifying the results of tender it called for rail vehicles, MÁV saidyesterday. The board said Tuesday it had nullified the results of a tender for railway vehicles won bySwitzerland’s Stadler. The only other bidder in the tender, Canada’s Bombardier, was disqualifiedbecause MÁV deemed the price the company offered to maintain the vehicles unrealistically low. The Arbitration Board said Bombardier should reformulate its offer, changing some parts, but keeping theoverall offer the same. MAV argues that this implies that Bombardier’s original offer was invalid.(Econews; NB 1, NG 5)

Bp bourse plunges amid terror

Early morning investor jitters over record-high crude-oil prices degenerated into a full-blown stock-market panic after terrorists launched a coordinated attack on the London transportation system justafter 10 am Deak-Street time. The Budapest bourse headline BUX index recovered to close down205.07 points. Hurricane Dennis and Tropical Storm Cindy continued to disrupt the flow of oil from theGulf of Mexico, driving the price of crude to all-time highs above 61 dollars a barrel yesterday morningand the Budapest Stock Exchange, already in a corrective mode following Wednesday 405.42-pointgain, to mild early losses before news of the London blasts hit Deak Street, sending the BUX on aforenoon nosedive that bottomed out around 1pm at around the minus-800 mark. (Econews; MH 4, Nv2, NG 7)

Boom at Trenkwalder-MultimanOne of Hungary’s top outsourcing and consulting company Trenkwalder-Multiman Kft is expandingdynamically as it will soon open a new office in Kaposvár. According to the company’s latestannouncement, it has recently opened its 17th office in Veszprém. Last year, they outsourced over 6,500 workers to firms mainly with industrial producer profile turning over Ft 6.7 billion, this year,however, they hope to outsourcing 10 000 people and have a revenue of Ft 9.5 billion. Such a dynamicexpansion is attributed increasing demand to employ flexible workforce. The mother companyTrenkwalder Personaldienste, market leader in Austria, is present in 10 European countries. (NG 4)E.C.

Hankook rejected in SlovakiaThe Hungarian government is willing to restart negotiations with Korean tire manufacturer Hankookregarding a possible green field investment in Hungary, said Economy and Transport Minister JánosKóka. Hankook previously agreed to build its 500 million euro plant in Slovakia, but the Slovakeconomic committee rejected the Economy Ministry’s draft contract that promised Ft 26 billion in statesubsidy to the company. Kóka said that Hungary would restart talks only if Hankook is willing to settlefor much less in subsidies as to what Slovakia offered. (Vg Thurs. 1) A.K.

Still no radio chair The Board of Trustees of The Hungarian Radio Foundation failed for the second time to nominatesomeone for to chair the radio. Even the most successful candidate got only five votes instead of necessary six. So the Board will offer the third round next week, spokesman Gábor Gellért Kis said.Deadline of application will be Aug 23 and the next nomination round will be in September. Mandate of chairwoman Katalin Kondor will be over on July 31, after that one of the two vice chairmen will take thelead as long as the new chairman will be elected. (MH 6, Nv 4) G.R.

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MOL denies plan to boost TVK stakeMOL Rt, the largest oil company in the 10 new EU countries, denied a report that it plans to boost its52.3 % stake in TVK Rt, Hungary’s biggest chemicals maker. ‘There’s no such plan,’ said Sándor Kántor, a MOL spokesman. CE Oil and Gas AG rejected MOL’s bid in July 2001 to buy all the shares inTVK it doesn’t own, saying the offer of Ft 4,814 a share was too low. TVK shares yesterday closed at Ft5,745. MOL said that offer has expired and it doesn’t intend to make another one. (Bloomberg)

Airlines offer free rebooking for LondonSeveral airlines have offered passengers who are traveling on flights to or from London to makechanges to their travel plans free of charge following the blasts in London yesterday, MTI learnt.Hungarian airlines Malév Rt offers passengers rebooking on this week’s flights to London to a later London flight free of charge, communication director Krisztina Németh said. Malév has earlier said itsflights to London are operating on schedule. The UK airline British Airways will allow tickets for yesterday and today’s London flights to be rebooked for another service, regardless of the ticket class,Marketing Director for the airline’s Hungarian branch Ferenc Molnár said. (MTI)

Economics

MFB to refinance private loans As a result of a new government decree published last week, Hungarian Development Bank (MFB) Rt

has been granted the right to refinance individuals’ loans as well. Earlier regulations have allowed thebank to finance municipalities only, which did not facilitate the prompt intervention in disaster situationssuch as in the flood-stricken town of Mátrakeresztes. A new element of the law relevant toentrepreneurial financing is that banks may also undertake current assets financing, which is a greatease to enterprises. Current assets loans may be applied for in both forint and foreign currency up to40% of the value of the investment. (NG 1) E.C.

Industrial output in May up 12.9%Hungary’s unadjusted industrial output in May rose 12.9 % year-on-year and 10.1 % in working dayadjusted terms, the Central Statistics Office (KSH) said yesterday, quoting preliminary data. Industrialoutput was up 1.4 % in May from April, according to seasonally and working day adjusted figures. In thefirst five months of the year, output was up 5.4 % compared to the same period last year. In April 2005,

industrial output was up 3.1 % from March according to seasonally and working day adjusted figuresand rose 8.9 % year on year, according to working day adjusted figures. (MTI; NG 3, MH 11)

Economy - 2 more years to boost Tax experts say, after tax reform planned by the government are up and running, 2 years will beneeded for the effects to be visible in the economy. According to ex finance minister Csaba László, theVAT reduction will not increase competitiveness, and he also projected that in 2 years, Hungary mayhave serious difficulties meeting the Maastricht inflation criteria. Gábor Oblath, member of the monetarycouncil fears that the artificial inflation reduction would strike-back and the country would run out of ammunition by the beginning of the ERM II in 2007-2008, right when it would be needed the most.Ecostat, along with many experts, however, welcome the cancellation of local business tax. (NG 3) E.C.

Kóka, former central bank head, spar

Minister of Economic Affairs and Transportation János Kóka and former central bank governor Péter Ákos Bod agreed at a debate yesterday that there is a greater need for national consensus on basiceconomic issues in order to improve the country’s competitiveness. Kóka said the government iscommitted to Hungary’s convergence program and will stand by the 2010 target to adopt the euro, evenif budget cuts and corrections must be made. But Bod said the date could not be kept if currentmacroeconomic trends continue. (Econews; Nv 5)

PSZÁF report highlights deficiencies at MKBThe State Financial Institutions Supervision (PSZÁF) issued a report scolding commercial bank MKB Rtfor its faulty accounting system. PSZÁF compelled MKB to develop an action plan to create abookkeeping system fully complying with accounting legislation and to improve the supporting ITinfrastructure. (Vg Thurs. 13) A.K.

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Competition office fines graphic designersThe Competition Office fined Association of Hungarian Creative Artists (MAOE) Ft 18 million, The Association of Hungarian Graphic Designers (MTE) Ft 6 million and The Association of Hungarian Fine Artists and Artisans (MKISZ) Ft 2.5 million, for restraining competition. According to the verdict, MTEhad set a chart of minimum prices for its members from Jan 1, 1997; which was also adopted by thetwo other associations from Apr 1, 2000. Such price fixing is illegal even if its only a reference, theOffice explained. The associations will appeal against the decision, since they are unable to pay thefine. (NG 5, Nb 12) G.R.

Micro companies to go onlineThe Economy and Transport Ministry announced a Ft 250 million tender to promote the appearance of micro- and small enterprises on the internet. The ministry will finance up to 40% of the total websitedesign costs with a maximum of Ft 300,000 per company. The deadline to submit applications isSeptember 30. The ministry expects 900-1000 applicants. (Vg Thurs. 8) A.K.

Debrecen city to support building of court The Chairwoman of Debrecen Court of Appeals, Judit Szabó Kerékgyártó signed agreement with CityMayor, Lajos Kósa, that Debrecen municipality will support the construction of a new building for theCourt with Ft 600 million and a building site worth of also Ft 600 million. Ft 950 million was offered

previously from the state budget but that is not enough for the investment. The city will give Ft 250million this year and the rest from next year’s budget. (Nv 4) G.R.

New CEO at HitelgaranciaThe annual general meeting of state owned financial institution Hitelgarancia Rt elected György Radnaito become the company’s new CEO. Radnai replaced Elemér Terták in the position, who will move toBrussels continuing his career in Hungary’s EU apparatus. Radnai previously held the position of statesecretary in the Finance Ministry. (Vg Thurs. 10) A.K.

Euro 61 mln promised from EFTA countriesHungary signed an agreement with Iceland, Norway, and Liechtenstein yesterday offering it Euro 61million in support within the framework of European Economic Area (EEA) cooperation, the EFTA(European Free Trade Association) secretariat said in Brussels yesterday. Tibor Kiss, head of

Hungary’s permanent EU mission signed the memorandum of understanding, which allows the fundingto be used for environmental, cultural, healthcare, and research purposes. The EEA, which is made upof the EU-25 plus Iceland, Norway, and Liechtenstein, maintains a financial mechanism designed toreduce economic and social differences between the member countries. (MTI)

Politics

Orbán sets date for discussionFormer Prime Minister Viktor Orbán has agreed to meet with Prime Minister Ferenc Gyurcsány at 5 pmtomorrow for a discussion, an official of Orbán’s opposition Fidesz party said yesterday. Theannouncement, by deputy parliamentary group leader Antal Rogan, follows days of opposition foot-dragging over issues such as broadcasting and media presence, whether or not to have a moderator,and what time to hold the meeting. (MTI; Nb 1, NG 4, MH 6)

Domestic

No bomb found in Bp shopping centersNo bombs were found in the three major shopping centers in Budapest that were evacuated earlyafternoon as a result of bomb threats, a spokeswoman of the Budapest police headquarters saidyesterday. A thorough search of the affected buildings has been completed and the Árkád, theWestEnd and the Mammut shopping centers are again open to the public, Stefania Csontos said. Sheadded that one of the three shopping centers, the Mammut offered a reward of Ft 2 million for information on the anonymous caller who reported the bomb threat yesterday morning. Earlier, theminister of the interior said that police searched the three shopping centers, checked the recordings of security cameras and took finger prints, and added that bus and tram stops and cars parked in theareas of the shopping centers were being searched. (MTI; Nb 4, NG 4, MH 4, Nv 2)



7days, 2005. július 11

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