7days, 2005. június 27

7/28/2019 7Days, 2005. június 27.

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

20 June 2005Business Natural gas to rise 7% for industry

Bp calls tender for metro carriagesSynergon Croat unit wins big ordersBoard hears out Stadler-Bombardier Freesoft wins Ft 92.8 mln contractOTP streamlines management structureNordsee to come to Budapest

Solution could be desulphurized dieselCashline fined Ft 5 mlnThe privatization process of MahartCadillac/Corvette dealership to open

Economics Apeh pays out VAT refundsJarai: change needed for euroMicroloan ceiling raisedSzéchenyi bad debts risingGuests nights up in BudapestEU Funded Trans-European networkZalaegerszeg in talks re Ft 2 bln spaWind power plant set up

Politics Parties reject MDF's call for screeningDomestic Attacker of Károly Szász sentenced

21 June 2005Business Price changes for 1,400 subsidized drugs500 Hungarian bank card holders affected5 bidders in 2nd round of metro tender BSE celebrates birthday with all-time high3 bids in for Nitrokémia assetsBalaBit looking to foreign marketsFHB considering regional expansionDámtej closes Tamási opens KecskemétSzigetvári Hús to close and expandHolcim founds company for alternative fuelDunakeszi industrial park seeks further investorsChaos eases at Ferihegy

Economics Central Bank cuts key interest rate to 7%

Winegrowers apply distilling subsidiesConstruction output up 20.2 % yr/yr in AprilGovernment proposal for haulage companiesProposal to rethink the VAT moveSun cream industry strengthensCorporate cunsumers resent gas priceConsumer-price growth slowed to 0.6%Kóka lobbies US businessFinMin not worried about speculation risk

Politics Parties agree on election law amendmentDomestic Roma slums to be eliminated

22 June 2005Business Veres says tax-cut plan to be postponed

Citibank cancels 150 credit cards

MOL completes Ft 70 bln projectsHer-Csi-Hús upgrades production lineZsolnay breaks even in 2004Insurers/car dealers under investigationMÁV considering PPP schemesPraktiker may operate independentlySiemens to extend subsidiaryGrid controller Mavir to be reintegratedGood Q2 results at RábaVolksbank Equity raisedCourt upholds PSzÁF ruling on Pannonplast Avis eyes BudapestJapanese keypad maker buys plant in Gyor

Economics Subsistence income rose with inflationFt 1.5 bln disbursed for job-creation

Overhaul of SME credit program dueFt 60 bln earmarked for reg. developmentSME’s growing pessimistic

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7/28/2019 7Days, 2005. június 27.



Politics Mádl sends law for an auditDomestic Jewish grave vandalism mafia ruse

23 June 2005Business M7 highway to be completed by 2007

Pannonmill opens Ft 2 bln mill224 Raiffeisen Bank cards compromisedState may scrap MOL stake saleZalahús on full capacity from Sept

Sky Europe stays in BudapestBáblona chair to step downNew MÁV offer to attract touristsMalév bumps up 1,000,000th passenger Raiffeisen reshuffles management Auchan finedBiopon back homeFilm studios will be privatizedChinese companies at Bp fair Rewico signs Ft 100 m contract to ship TVs

Economics MFB launches new Ft 2 bln loan programMore milk drunk as prices fallGoose liver industry under threat from ChinaEU subsidies for minesFinance companies top business tax list

60% of EU grants awardedPolitics Sólyom, green activist, to access secrets

Fidesz wants to set up National GuardDomestic Senior police accused of abuse of power

Old maps and travel books on display

24 June 2005Business Proposal to spend tax on viticulture

Bailiff rejects Parmalat bidBosnian PM says ING the problemWalmark fined Ft 3 millionPSzÁF fines OTP Garancia Ft 1 mlnMalév to re-launch flights to BangkokGeodis opens logistics center Dunaferr posts record profitsPSzÁF suspends Pick purchase offer 15% of OTP loan for nest buildersH and M coming to BudapestFAG builds ball bearing factory

Economics Bp local tax revenue on targetDrug prices to be listed on gov’t siteFt 58 billion in subsidiesUnemployment rate reached 7.2%Bank card damage totals euro 822,000 APEH refunds Ft 54 blnStudents start seasonal work searchPM: you’ve never had it so good Agri Min supports gradual sugar reformFX loans account for 98% of home loans

Politics Court rules allegations must be retractedDomestic Police to spend Ft 490 mln on renovation

Explosion at spa

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20 June 2005Business

Natural gas to rise 7% for industry Natural gas prices will be raised 7% for industrial users from August 1, but gas prices will remainunchanged for both household consumers and the district heating companies which serve the public,Economics Minister János Kóka said on Friday. At the same time the government will raise gas price

compensation for household users 31% to Ft 17.70 per cubic meter of gas from Ft13.50. Thecompensation will come entirely from the mining tax paid into state coffers by Hungarian oil and gascompany MOL Rt, Kóka added. Hungary last raised natural gas prices in January, when gas pricesrose 11.5% for industrial users. (Econews; NG 1,3)

Bp calls tender for metro carriagesThe City of Budapest has called a tender to supply 37 carriages for its underground lines, the Office of the Mayor said on Friday. The winner of the tender will supply 15 driverless multiple units -- rolling stockwithout a cab, with a motor mounted under the floor of the passenger compartment -- for the capital'sfourth underground line, still in the planning stages, and 22 standard carriages for the number two line.The winner will also have an option to supply a further 7 multiple units for line four. Line four projectmanager László Gulyás said on Friday that the order was worth tens of billions of forints, declining to

offer a more specific figure. (Econews; NG 5)Synergon Croat unit wins big ordersSynergon Rt, Hungary's biggest independent computer-services company, said it won orders fromcompanies including McDonald's Corp. and T-Mobile AG through its Croatian subsidiary. McDonald'swill pay the Synergon unit USD 200,000 a year to operate servers for its restaurants in 30 Europeancountries, the Budapest, Hungary-based company said in an e-mailed statement. The unit also has acontract worth an undisclosed sum to install Microsoft Corp. software for the local T-Mobile subsidiary.(Bloomberg; NG 7)

Board hears out Stadler-Bombardier Hungary's Public Procurement Arbitration Board heard arguments on Friday from Switzerland's Stadler and Canada's Bombardier over a disputed contract to deliver rolling stock to Hungarian railway

company MÁV Rt. After the hearing, the arbitration board said a decision on the case will be made byJuly 14. Stadler, in consortium with Hungary's Transelektro Rt, was announced the winner of the tender on June 1. Bombardier, the only other bidder, was disqualified because MÁV said expenses presentedin its bid were irrationally low. Bombardier said upkeep of the vehicles would cost just one eurocent per seat per year, a price MÁV said was unjustifiable from a cost-based point of view. (Econews; NG 5)

Freesoft wins Ft 92.8 mln contract Freesoft Rt, a Hungarian software developer, said it won an order worth Ft 92.8 million from the city of Bátonyterenye, Hungary. Budapest-based Freesoft will develop an e-government program for the cityof Bátonyterenye, 60 kilometers (37 miles) northwest of Budapest, the company said in a stock-exchange statement. Freesoft will account revenue from the contract in this year's books. The deal isFreesoft's third government order this year, after signing an agreement Jan. 26 to upgrade Hungary's

criminal records database, as part of a group led by France's Bull SA, and a May 30 contract to developregional public administration software for the town of Marcali in southwest Hungary. (Bloomberg; NG7)

OTP streamlines management structureOTP Bank Rt introduced new organizational and operating statues on June 15 which will streamline thebank's management structure, OTP Bank said on Friday. The new statutes will result in changes to thesales, network and group management structures. The Staff Division will no longer include a group andnetwork directorate; rather these tasks will be taken over by another organization. The scope of tasks of the sales and marketing division will expand significantly. The division will take over sales strategy,retail sales and small business sales. (Econews; NG 8)

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Nordsee to come to Budapest German fish restaurant chain Nordsee will open its first franchise in Hungary in the fall, business newsportal FigyelőNet reported quoting Wirtschaftsblatt Online. The brand's forthcoming debut in Budapest,as well as a market entry in Poland in 2006, will be coordinated by the Austrian Nordsee subsidiary.Unlike in Austria, however, the franchisor will have no restaurants of its own but work exclusively withfranchisees. Nordsee has been present in the Czech Republic for almost a year, where it is planning toopen a third eatery in the fall in addition to the two existing units in Prague and Brno. (NG 4) P.P.

Solution could be desulphurized diesel The introduction of desulphurized diesel oil by Hungarian oil and gas company Mol Rt could be the finalstep towards an agreement between the government and truckers, unnamed sources reported. Thesulphurless diesel oil falls into a different excise tax bracket, which could lower the price of diesel byroughly Ft 10. Today Mol will inaugurate its new refinery plant in Százhalombatta, just south of Budapest, where diesel oil and gasoline will be desulphurized. The company spent a total of Ft 55billion on the project, and plans to desulphurize all of the 2.3 million tons of diesel oil traded annually inthe near future. (MH 11) P.O.

Cashline fined Ft 5 mlnThe State Financial Institutions Supervision (PSzÁF) has levied an unusually hefty fine of Ft 5 million

on Cashline Securities Rt, the brokerage that had the fourth largest stock turnover at the BudapestStock Exchange (BÉT) in May. Cashline violated several regulations in its daily activities, for instance, itfailed to separate the operation of various units within the company, submitted inaccurate trader lists tothe financial watchdog, infringed legal requirements on stocks owned by the brokerage itself, and failedto remedy the shortcomings of its IT system, the financial watchdog said. At the same time, PSzÁFfined another brokerage, namely Buda-Cash Rt, for Ft 800,000. (NG 8) P.P.

The privatization process of Mahart Throughout the the privatization process, State Privatization and Holding Rt (ÁPV) has been trying toraise the price offered for Mahart Passnave Kft, the state owned river shipping company in the secondround of its selling process. There are two investors interested in the company which operates 32ships, with an estimated market value of Ft 1.4-1.5 billion, of which 51%, Ft 187 million is marketed; thereal-estate company, Biggeorge's-NV Rt and Európa Events Rt. Európa, the biggest competitor of Mahart, participated in the unsuccessful previous round, the offered Ft 550 million price was declaredbelow market value and not supported by the trustee committee, which is not satisfied with he recentoffer either. The rights for preemption might be deciding, as Masped Rt owns 33% of the company. (Nb12) Sz. A.

Cadillac/Corvette dealership to openCadillac+Corvette Europe has chosen Polar Mobil as its importer in Hungary, business dailyVilággazdaság reported on Friday. Polar Mobil already imports Saabs. The first show room will open inBudapest in September. Polar Mobil is owned by Wallis, a holding company owned by Hungarianinvestors. Earlier this year Cadillac+Corvette set up a regional marketing office just outside of Budapest. (Econews; Fri Vg 13)

Economics

Apeh pays out VAT refundsThe State Tax Office (Apeh) has finally paid out all of the Ft 347 billion due to businesses with aEuropean tax ID VAT refunds in Q3 and Q4 2004 but retained beyond the payment deadline for review,the Finance Ministry said. Apeh decided to take a closer look at unexpectedly low VAT revenues inNovember when it claimed inspections revealed a discrepancy between corporate tax returns and EUcontrol data. The tax office duly paid the late interest on overdue refunds, the ministry has now said,adding that the resulting budget loss totaled Ft5 billion while the checks yielded a surplus state revenueof Ft 10 billion as not all corporate taxpayers were entitled to the VAT refunds they were claiming. Inaddition, the ‘VAT raid’ has successfully halted an unwelcome trend of tax evasion, bringing asignificantly steadier influx of revenues than before, according to the report. Over the months that havepassed since the announcement of the delay, many suggested that the real motive behind the time-consuming inspection was to improve the 2004 budget balance by bumping VAT refunds back a fewmonths. (NG 1) P.P.

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Jarai: change needed for euroHungary needs to inaugurate significant political and economic reforms if it wants to introduce Euro in2010, the president of the National Bank of Hungary (MNB) Rt, Zsigmond Járai, explained during aradio interview yesterday. Paperwork should be simplified and the number of civil servants should bereduced to stimulate economic growth, Járai added. The political elite are willing to introduce theseradical steps, according to the president of MNB. (MH 11) P.O.

Microloan ceiling raised Since the Economy Ministry raised the microloan ceiling from Ft 2 million to Ft 5 million and extendedthe term of the loans from 3 to 5 years back in February, a total of Ft 800 million worth of loans havebeen paid out to SMEs by the beginning of June. SMEs in Veszprém county received the largest chunkof money with Ft 101.8 million, while in Budapest, only Ft 6.5 million worth of loans have been granted.SMEs have submitted bids to preferential loans worth of Ft 2.5 billion, and Ft1.7 billion worth of loanshave been approved by local entrepreneurial development organizations, as well as the HungarianEntrepreneurial Development Kht, which oversees the microloan fund. (Nb 1) P.O.

Széchenyi bad debts rising Bad debts among SME's participating in the government's Széchenyi card subsidized loan programhave risen threefold since January, warned Hitelgarancia Rt, the state-owned company which standsas a guarantor behind the credit line. While small businesses were typically a model of prompt debtpayment, currently a total of 370 small businesses with debts of Ft 5 million or over to commercialbanks are in arrears with their installments, according to the records of Ka-Vosz Rt, the organizationthat coordinates the scheme. This is an increasing cause for concern at Hitelgarancia, for whichSzéchenyi loans account for 44% of 2005 liabilities, compared with 40% last year. (NG 1) P.P.

Guests nights up in Budapest Budapest showed the most dynamic increase in the average room revenues (12.9%) in the regionaccording to the recently published European market study of Jones Lang LaSalle. Budapest is amongthe top 4 destinations concerned the changes of the average room revenues with Prague, Moscow andDüsseldorf according to the survey. The guest nights of last year show an increase of 9.8 %; domestictourists made 12 % of the total 5.7 million guest nights. After a two years regression period mostEuropean cities finished 2004 with an upswing. Investment in the hotel segment increased recently and

that might lead to an oversupply and a decline in prizes following year. (Fri Vg 14) A SzEU Funded Trans-European network Hungary is eligible for a total amount of Euro 561 million from the Cohesion Funds of the EuropeanUnion between 2004 and 2006 to develop transport infrastructure, up to 20% of the total budget of thefunds. Supported projects are implemented within the framework of developing the trans-Europeannetwork. Projects of high importance are to build adequate infrastructure from EU member countries tothird countries, like Ukraine (construction works on Road 5 and Highway M3), Serbia and Croatia(continuous building of highway M7 and railway developments), to improve the navigation on theDanube, to develop Connect (public road information system) and to handle the shipping transportationof dangerous commodities. (Fri Vg 2) Sz. A.

Zalaegerszeg in talks re Ft 2 bln spaThe local municipality of Zalaegerszeg, western Hungary, is in talks with developer K+K Bau Kft abouta Ft 2 billion project, which would expand the town's public beach into a full-blown leisure facilitycomplete with sports facilities and a wellness center, mayor Endre Gyimesi said. Having no funds of itsown, the town council decided to invite developers to invest in the reconstruction and expansion of thespa, he explained, adding that the tender will be published in the near future. Current beach operator Strand Kft, which is owned by the local municipality, will be merged into a project company to beestablished by the tender winner. (NG 18) P.P.

Wind power plant set up A wind power plant was set up for more than Ft 250 million on the confines of Vép, a small settlementin Vas county, western Hungary. The plant produces 600 kilowatt of energy per hour, which istransferred to the network of regional electricity supplier E.ON Édász Rt. The price of electricity will

remain the same at Vép, however, the Ft 6 million annual cost of public lighting will be covered by thecompany. Three new wind power plants are already considered near Vép, and within two years,another sixteen plants are scheduled to supply energy for the region. (MH 3) P.O.

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Politics

Parties reject MDF's call for screening The small center-right opposition MDF party's demand that the other three parliamentary parties shouldscrutinize their MPs to see if they had co-operated with the secret services of the communist regimewas flatly rejected on Friday. The governing Socialist party, its partner SzSDz and main oppositionFidesz replied that their prominent politicians MPs had already undergone such a test. Deputy leader of the Socialist parliamentary group Sándor Burány said his party had already vetted its MPs. He addedthat it was regrettable that that MDF had started such an initiative instead of supporting the law to makeall secret service files public. (MTI)

Domestic

Attacker of Károly Szász sentenced A Budapest court sentenced one of two men, who had attacked and beaten up Károly Szász, a former head of Hungary's Financial Supervisory Authority (PSzÁF), two years ago to suspended imprisonmenton Friday. Zsolt Tibor Nemeth's accomplice, and a third person, charged with being an instigator in thecase, have still not been found, nor were their names disclosed in the procedure. In June 2003, twomen stopped Szász's car, feigning a bicycle accident, and when he got out, they beat him with a stickso hard that he had to be hospitalized. The official said at the time that he thought the incident to belinked to a PSzÁF report to be published in the coming days, revealing transactions involving allegedabuse of public funds. (MTI)Correction: Friday June 17th Hungary A.M. headline reported 'TVP to buy Philips in Székesfehérvár'.The company's name is, however, 'TPV'. Furthermore, although the Napigazdaság headline suggesteda monitor making factory had been bought, in fact only a division was acquired. Hungary A.M.apologises for any confusion caused.


Price changes for 1,400 subsidized drugsPrices for 1,200 subsidized drug products will rise and prices for 200 will be lowered from July 1, deputydirector of the National Health Insurance Fund (OEP) said yesterday. The change will come as a result

of the OEP adding 1,900 products to a list of drugs subsidized at a fix %age, Tamás Székely said. Thenew rules link subsidies to the price of a certain drug. This subsidy is then applied to all other drugswith the same ingredients or therapeutic effects, Székely said. (Econews; NG 1, MH 1, Nv 1, Nb 3)

500 Hungarian bank card holders affected About 500 banking cards issued in Hungary may be affected by the cracker attack on the Atlanta basedCardSystem Solutions. The largest Hungarian card issuer OTP Bank Rt has about 200 Mastercardsand 100 Visa cards in danger, the number of CIB Rt card holders is below 100, Inter-Europa Rt has 4such customers and K and H Bank Rt only a couple. The list is not yet complete, the information is stillunder analysis and foreign card issuers still keep sending data to the Hungarian partners. Erste BankRt , Raiffeisen Bank Rt, and Budapest Bank Rt confirmed to Napi Gazdaság that they are not aware of any leakage, while Citibank is still investigating. All financial institutions who were alerted have already

canceled all cards affected and immediately informed all cardholders. (NG 1, MH 1) E.C.5 bidders in 2nd round of metro tender Five of seven bidders have been selected to participate in the second round of a tender to build thetunnels of the first section of Budapest's new 4th underground line, The Mayor's office said yesterday.The five selected bidders are: - Taisei Corporation (Japan); - BAMCO consortium, of VINCI (France),Strabag AG (Germany), Strabag International (Austria), Strabag Rt (Hungary) and Hidepito Rt(Hungary). (Econews; MH 6)

BSE celebrates birthday with all-time high A pre-bell surge erased all of Friday's 206-point loss and lifted the BSE's headline BUX index to18,675.15 -- two points above its previous high-water mark set on March 1 of this year. A washboard-ribbed bull it was, but a bull nonetheless as investors shunned Deák Street in the morning to sip bubbly

and rub elbows at the Budapest Stock Exchange's 15th birthday shindig, then apparently foundsomething better to do than swap stocks in the afternoon as well, as the blue-chip BUX index closedMonday trade with a slight composite turnover of Ft 6.4 billion. (Econews; Nv 1, NG 11, Mon Vg 11)

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3 bids in for Nitrokémia assetsSome 3 bids have been received on the assets and realty of the once pioneer chemical corporationNitrokémia 2000 Rt by the noon deadline yesterday, liquidating company Vestigalis Rt's appointed CEOJen? Varga told Napi Gazdaság. The evaluation of the offers have already started, results are toappear sometime after mid-week. In the last few years, the company has accrued Ft 4 billion in debt,the winner is most likely to be the applicant who has offered Ft 5.5 billion for the purchase. Theliquidation process of the company started last December, when the number of employees was

reduced from 322 to 237 as a result of some efficiency measures that have been taken. (NG 4, Vg 12)E.C.

BalaBit looking to foreign marketsBalaBit IT Security Technology Kft plans to go on expanding abroad. The company, after a year'spresence on the market, opened its first foreign office in Munich to enhance efficiency in controlling itsGerman, Austrian and Swiss sales network. Next year will be devoted to strengthening its position onthe markets covered from Munich. Offices in Italy and the Benelux states are expected to be opened atthe beginning of 2007, said business development director Zoltán Györko. The company producesnetwork firewall softwares for companies. (Mon-Vg 10) K.H.

FHB considering regional expansionHungary's Land Credit and Mortgage Bank (FHB) is considering the possibility of expanding in theregion, FHB CEO Daniel Gyuris said yesterday. The bank is considering entering the Romanian,Russian and Ukrainian markets, Gyuris said. But the expansion will be problematic, considering thesecountries have no uniform real estate appraisal system, no property registration rules and noestablished mortgage lending practices. The second phase of the bank's privatization has just startedand the board of Hungary's State Privatization and Holding Company (ÁPV) will soon select an advisor to organize the sale of a state-owned 50%-plus-one-vote stake in FHB. (Econews; NG 12)

Dámtej closes Tamási opens Kecskemét As a response to the growing Western European demand in goat milk and long maturation periodcheese, Dámtej Kft is closing down its out of date Tamási-based factory by end year and opening anew production hall in Kecskemét. The Ft 1 billion investment resulted in a larger than planned, 20million liter/year production capacity factory, which is to operate at full speed by the end of this year.

Those willing to commute have been offered a job in the county capital where they are creating 130new jobs. Dámtej is calculating with a turnover of Ft 2.5 and is planning on achieving the Ft 2.5 billionturnover (NG 5) E.C.

Szigetvári Hús to close and expand Szigetvári Hús Kft is to invest Ft 350 million in building a new slaugtherhouse and a processing unit,CEO István Ingola confirmed company to Napi Gazdaság. The firm's profile so far has includedfattening, slaughtering and carcass meat trade reaching over Ft 2 billion in revenues last year, but after the completion of the expansion, Szigetvári Hús will appear on the market as a finished productprovider as well. Ingola added, the aim is to serve mainly the local customers of Baranya county andthe own stores of Szigetvári Hús, however, they are also planning on entering the foreign market. Thecompany is likely to reach a net turnover of Ft 2.5 billion this year and aims at Ft 3 billion next year.

( NG 5) E.C.Holcim founds company for alternative fuel Holcim Hungaria Rt founded a company called Ecorec Hungária Kft which will organize the collectionand delivery of alternative fuel materials. Two Holcim factories burn plastic, waste oil and paper sludge,which means considerable savings, as well as ‘recycling’ of hazardous and other waste materials, saidRóbert Üveg, managing director of Ecorec. He added that in the beginning they plan to gather andutilize 20,000 tons of waste material a year. At the same time the Holcim factory in Lábatlan wasapproved to use 15,000 tons of waste tyres as alternative fuel. Tyre delivery will also belong to Ecorec.(Mon-Vg 9) K.H.

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Dunakeszi industrial park seeks further investors About 50 hectares of land is not yet occupied in the 120 hectare industrial park in Dunakeszi. So far 16companies have settled here, the first of whom was French store chain Auchan with an 800 member staff. At present a do-it-yourself department store, a sporting trade company and a car saloon are beingbuilt. Logistic companies are strengthening, matching the sector's general boost and, at the same time,making service export more and more significant (Mon-Vg 7) K.H.

Chaos eases at Ferihegy In an attempt to divide it passenger traffic more evenly at its two terminals and thus ease the load of Ferihegy Airport, fourteen airlines have been moved from Terminal 2/B to Terminal 2/A, the operator Budapest Airport Rt said adding that thanks to the move, 195 flights has been relocated from the ‘B’terminal, which had handled 60% of passenger traffic, reducing its traffic by around 8%. (MH 3) S.F.

Economics

Central Bank cuts key interest rate to 7%The Central Bank lowered its benchmark interest rate, the EU's highest, by a quarter point to 7 %, citingslowing inflation. The 13-member Monetary Council cut the two-week deposit rate from 7.25 % at itsmonthly policy meeting on rates, the bank said. The decision was expected by all but one of 18economists surveyed by Bloomberg June 13-17. The Budapest-based Magyar Nemzeti Bank has

reduced borrowing costs at every rate meeting since September. (Bloomberg; MH 1, NG 3, Nb 14)Winegrowers apply distilling subsidiesHungary's winegrowers will apply for EU subsidies to cover some of the cost of distilling 500,000hectoliters of unwanted wine, or a little more than a tenth of Hungary's total cellar stock, governmentspokeswoman Boglar László said yesterday. The state will buy the wine from farmers and sell it tomakers of industrial alcohol. In turn, it will receive EU subsidies equivalent to 70% of last year's farmgate price for wine. Winegrowers will also apply for EU subsidies to permanently strip 5,000 hectares of vineyards of their vine stock, more than 5% of the total area on which wine is grown in Hungary, Lászlósaid. (Econews; MH 11, Nv 4)

Construction output up 20.2 % yr/yr in April Construction industry output rose 20.2% yr/yr in volume terms in April, the Central Statistics Office(KSH) said. Construction output rose a seasonally and working-day adjusted 6.3% in April from March.In the first four-month construction industry output rose 14.4% yr/yr. Output was up 9.4% yr/yr inJanuary, and a marked 25.1% yr/yr in February. The February increase was due in part to a low base.Construction industry output rose 5.3% in March from a year earlier, according to working-day adjustedfigures. Construction sector output rose 6.8% in 2004, after a 2% rise in 2003. (BBJ Online)

Government proposal for haulage companiesNo demostration is to be expected, said spokeswoman Júlia Rojkó following the general meeting of Road Haulage Companies Association (MKFE) at the weekend. At the meeting Tibor Szanyi, statesecretary of Economic Ministry handed over the 34 proposals made by the government. He said hehoped for a June 30 agreement on how to increase the sector's competitiveness. Experts andrepresentatives are to make known their position before Wednesday. The final standpoint will be

brought about on 27 June board meeting. Szanyi confirmed again that the 85 Ft per liter tax on pumpoil is not possible to lower because that is what the EU set as a minimum on 1 January in 2003. (Mon-Vg 3, Nb 13) K.H.

Proposal to rethink the VAT moveThe Economy and Transport Ministry will propose the government reinstate the option for companies todeclare their VAT on a biweekly or monthly basis, a ministry official said yesterday. The plannedamendment will reverse a decision made by the government last year which discontinued this option ina bid the boost the budget's tax revenues, however, the Ministry said it is hurting companies more thatit brings extra revenues to the states. The amendment is due to come into effect on July 1. (MH 2, Nv5) S.F.

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Sun cream industry strengthensHungarians applied 1.3 million liters of tanning lotion costing Ft 1.01 billion last year, which is a 7%increase yr/yr, according to ACNielsen Data. Market leaders remain the products of Beiersdorf andL'Oreal, and the most popular SPF ranges between 11-20. Their own brand products have gone up by26 % in terms of quality and 22% in terms of value. Customers tend to turn towards the more specialproducts, such as hydrating products, and skin-flexibility products. 10% of tanning products weredeveloped for children. (NG 4) E.C.

Corporate cunsumers resent gas priceIndustrial consumers find gas price tremendously discriminative, said Mihály Szaniszló, president of theForum of Industrial Energy Consumers (IEF), and will protest in a letter to PM Ferenc Gyurcsány askinghim to revise the decision and cancel it. They are concerned about gas price being a political issue andso no professional points are taken into account, and are thus to cross-fund houshold prices. He addedthat there are nearly 1000 industrial consumers who were affected by the 43 % price hike in 2000. Their cost-disadvantage has kept growing ever since then. Also, other EU countries households pay aboutdouble the gas price set for industrial consumers, while in Hungary they pay only a slightly higher price.(Mon-Vg 8) K.H.

Consumer-price growth slowed to 0.6%

Hungarian consumer prices rose 0.6 % in May, slowing from April, as fuel costs fell and the strong forintreduced the costs of imported consumer electronics. Bonds and the forint surged on interest-rate cutexpectations. The annual inflation rate dropped to 3.6 % from 3.9 % in the previous month, theBudapest-based statistical office said. Prices were expected to rise 0.4 % from April and 3.4 % from ayear earlier, according to the median of eight economists' forecasts in a June 6-8 Bloomberg survey.(Bloomberg)

Kóka lobbies US businessEconomy and Transport Minister János Kóka is paying a visit to the United States to meet investorsand US government officials to discuss economic issues and investment opportunities in Hungary.Kóka yesterday spoke at the annual BIO 2005 biotechnology convention in Philadephia, Pennsylvaniaand met US Secretary of Commerce Carlos Gutierrez in Washington. Today he is due to meetSectretary of Energy Samuel Bodman, Hungarian-born California representative Tom Lantos and fly toSan Francisco to meet top business managers. (MH 2, Nv 3) S.F.

FinMin not worried about speculation risk Worrying about speculation is unnecessary since that is a normal part of the financial world, the financeminister said yesterday, but when speculators move ‘we need to respond.’ János Veres wasresponding to an article in yesterday's Vienna newspaper Kurier, in which Adam S Posen of theInstitute for International Economics in Washington, DC, suggested that the current EU crisis was jeopardizing East European currencies, particularly Hungary's forint. Posen said he thought Hungarycould be the most likely target because it had the least stable economy, the most highly over-ratedcurrency, and the least integrated banking system. (MTI)

Politics

Parties agree on election law amendment All four parties in parliament have agreed on amending the law on election procedures, party officialsand the interior minister said yesterday. The amendment, which the government submitted toParliament for discussion last week, stipulates new rules allowing Hungarian citizens to vote not only atembassies abroad but at consulates as well. It includes solutions for shortcomings indicated by theConstitutional Court and clarifies sanctions in cases of breaching the rules of political advertising duringthe election campaign. Commenting on the agreement, MP of the ruling Socialist party, György Wiener said there was hope of reaching an agreement on campaign financing. (MTI; Nb 3)

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Domestic

Roma slums to be eliminated The Welfare ministry announced a Ft 680 million action plan yesterday to eliminate Roma slums inHungary. Funding for the rehabilitation projects will be in the range of Ft 55-90 million for each village,and the projects should be finished within twelve months, the ministry said. The programme will involve4,500 Romas living under very poor circumstances in nine villages in north, northeastern and

southwestern parts of Hungary. As the reasons for the slums in each area are slightly different,individual solutions have been required, the ministry said. In the case of so-called wild slums, thecomplete demolition of shacks and relocation of families to newly built council housing will benecessary. In other places, existing homes and infrastructure will be modernised. (MTI; Nb 2, Nv 4)


Veres says tax-cut plan to be postponed Hungarian Finance Minister János Veres said the government won’t propose ‘radical’ tax cuts for 2006due to a lack of political support to overhaul spending needed to offset lower revenue, state newsagency MTI said. Companies have criticized various value-added tax cut proposals discussed by thegovernment, Veres said, MTI reported. Cutting the country’s top 25% VAT rate by a few percentage

points is futile, he said. Some advisers warned the government not to make bigger VAT cuts beforeHungary meets euro adoption conditions, Veres said, the news agency reported. (Bloomberg; NG 1,3,MH 12, Nb 13)

Citibank cancels 150 credit cardsThe credit cards of some 150 of Citibank’s Hungarian customers were compromised in a securitybreach in the United States and subsequently cancelled, Citibank Hungary Rt’s communicationsmanager Éva Hencz said yesterday. Both Visas and Mastercards were compromised, and the bank hasput a stop on all of them and is already in the process of issuing new ones, Hencz said. Cards issuedby a number of other Hungarian banks were also compromised. BudapestBank Rt reported finding 17compromised cards, OTP Bank Rt said it had cancelled about 300, Raiffeisen Bank Rt gave its figureas ‘several dozen’, CIB Bank Rt said the number was in the ‘double digits’, K and H Bank Rt said ‘a

few’ and Inter-European Bank Rt said it had 4 affected cards involved in the data theft, which occurredat Atlanta-based CardSystem Solutions last Friday. All involved banks say they have cancelled thetainted cards. (MTI; NG 1,4)

MOL completes Ft 70 bln projectsNew environmental facilities worth a total of Ft 70 billion have turned MOL Rt’s oil refinery atSzázhalombatta, south of Budapest, into one of the five most modern facilities in Europe, Zsolt Hernádi,CEO of fuels group MOL said yesterday, at the official opening of the projects. A new diesel and petrolsulphur removing facility, a hydrogen plant, a water treatment plant and a renovated diesel mixer andstorage facility will all help MOL in becoming a dominant regional multi-national, said Prime Minister Ferenc Gyurcsány, who attended the ceremony. (MTI; Nv 5, MH 13)

Her-Csi-Hús upgrades production line

According Napi Gazdaság, poultry processor Her-Csi-Hús Kft installed a Ft 52 million enterprisemanagement system with partial funding from the Competitiveness Operative Program of the EconomyMinistry. With the new system, the company, which controls 5% of the poultry processing market andexports 20% of its production, can bring basic administrative processes back in-house and takeadvantage of more sophisticated management functions as well. Overall, the company has invested Ft345 million in the past three years, partially financed by government funding of Ft 143 million. This year,part of the processing line has been replaced for Forint 203.3 million, paid for by Ft 81.3 in state fundingand Ft 60 million own capital with the rest financed from credit. (NG 5) M.H.

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Zsolnay breaks even in 2004Zsolnay Porcelain Rt, the state-owned porcelain maker which produces one of Hungary’s best-knownmarks, broke even in 2004 on record turnover of Ft 1.2 billion, CEO Gyula Kovács said yesterday. In2003, Zsolnay had losses of Ft 700 million on revenue of Ft 1.1 billion. Exports accounted for 10% of sales last year. Zsolnay employs 338 people at its factory in Pécs (SW Hungary), which produces400,000 objects a year. Zsolnay was transferred to the State Privatization and Holding Company (ÁPV)in 2003 in preparation for its privatization, but no plans for a sale were ever announced. Kovács said onTuesday that the state would sell Zsolnay when the government wished. (Econews; NG 4)

Insurers/car dealers under investigationOn Monday the Competition Office (GVH) initiated proceedings against the National Association of Car Dealers, Hungarian Opel Dealers Broker Kft, Hungarian Peugeot Dealers Insurance Broker Kft,Porsche Insurance Broker Kft and insurers Allianz Hungária and Generali-Providencia, Napi Gazdaságreports. According to GVH, preliminary information suggested that the companies engaged incompetition-limiting activities by discussing and fixing hourly overhead charges for claims-related car repairs. GVH stressed that initiating proceedings does not mean that the companies would havenecessarily breached the law. In fact, the practice has been known publicly for some time, and insurersclaim that it was necessary because the growth in service overhead charges has started to threaten theprofitability of the car insurance business. Insurers said they would fully cooperate with GVH in the

matter. (NG 4) M.H.MÁV considering PPP schemesState-owned Hungarian railway company MÁV Rt is considering using Public Private Partnership (PPP)schemes to build a rapid rail line between Budapest’s Ferihegy airport and the city center, renovate thecapital’s Kelenföld train station and convert a stretch of tracks in NW Hungary to an electrified rail line,Tamás Kozák, MÁV’s deputy-CEO in charge of strategy, said yesterday. MÁV could call tenders for theprojects next year and start work in 2007, Kozák said. He could not estimate the value of the projects,and added that all three are still in the planning stages; feasibility studies have just started. (Econews;MH 3, Nv 4, NG 5, Nb 1)

Praktiker may operate independently The Metro Group is looking into the possibility of divesting its DIY chain Praktiker in Hungary or alternatively its stock exchanging listing, the company said Praktiker is excellently positioned and wouldbe capable of operating independently, Metro head Hans-Joachim Körber explained. Praktiker storesrang up sales of Ft 44 billion last year, up from Ft 42.5 billion in 2003. However, revenues are expectedto be flat this year due to slack industry-wide sales in the construction material segment. In the past 7years a total Euro 150 million has been invested in Hungary by the chain’s German parent Praktiker AG, which today runs 15 stores with staff of 1,250. The company said it is planning to invest another Euro 15 million by the end of next year. (Tue Vg 1) S.F.

Siemens to extend subsidiary Software development branch of the company group, Siemens Program and System Engineering(PSE) is to extend its Hungarian subsidiary in Szeged, the international head of PSE, Udo Scheiblauer announced. The number of engineers will grow by 100; in total 200 - 300 new employees will be hired.(MH 14) G.R.Grid controller Mavir to be reintegrated Grid controller Mavir will be reintegrated within a few months into Hungarian Electricity Works (MVM),the public electricity utility, Napi Gazdaság reports. According to the newspaper, Parliament haschanged the Privatization Act and the Electricity Act to allow the MVM-Mavir merger. Under the newlegislation, the share of MVM in the Paks Nuclear Power Plant, the National Grid Company and Mavir may not be less than 99%. Experts are divided over the move, as some see it as a necessary steptowards the Transmission System Operator (TSO) model, while others claim that giving control over Mavir to a major market player such as MVM fails to satisfy the EU requirement for organizing eachactivity into independent companies in the vertically integrated system. (NG 1,5) M.H.

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Good Q2 results at Rába According to Napi Gazdaság, Rába Rt CEO István Pintér confirmed the Ft 45 billion annual revenueplan in a phone interview with Bloomberg. Pintér said revenues in the second quarter were favorable inboth the US and European markets and order levels are satisfactorily as well. The management hopesthat by 2007 the Rába group could bring a profit on revenues of euro 200 million excluding theautomotive unit. Reaching this goal would be further supported if the recent firming of the dollar is hereto stay. (NG 11) M.H.

Volksbank Equity raised The equity of Volksbank Hungary Rt has been raised by Ft 2.4 billion to Ft 10.93 billion, vice-CEOMária Skonda submitted. The fresh fund will be used for developments, the company plans to increasethe number of its branches from 29 to 50 over the next three years. The development budget for 2005is Ft 1.5 billion. (MH 11) G.R.

Court upholds PSzÁF ruling on Pannonplast The Budapest Municipal Court upheld yesterday a ruling by financial market regulator PSzÁF that threecompanies linked to Attila Kulcsár, a former K and H Equities Rt broker suspected of embezzlingbillions of forints, illegally colluded to take over plastics company Pannonplast Rt. The decision may notbe appealed. In June 2003 PSzÁF ruled that Britton Kft, Pevdi Kft and Kartonpack Rt had illegally acted

in concert when attempting to take over Pannonplast at an AGM in April of the same year. PSzÁF finedBritton Ft 6 million and Pevdi Ft 5 million. In its investigation, PSzÁF found that several investors,apparently independent, but all K and H Equities clients bought a combined stake of 22.56% inPannonplast in a single week at the start of 2003. On two days in March the shares were thentransferred to Britton, Pevdi and Kartonpack. (Econews; NG 11,12, MH 11)

Avis eyes Budapest Rent-a-car company, Avis Europe is going to open one of its financial centers in Budapest. KFKI groupmember LNX Network Integration Rt has been chosen as subcontractor for setting up of the ITinfrastructure. The European call center of the company has already been established here andcurrently employs has 135. (MH 2) G.R.

Japanese keypad maker buys plant in Gyor

Japan’s Shin-Etsu Polymer, a maker of silicone keypads for mobile phones and other electronicdevices, has more than tripled its production area in Hungary with the purchase of a 3,300 sqm plant inthe Gyor industrial park, business daily Világgazdaság said yesterday. With the purchase, Shin-Etsuhas invested Ft 1.25 billion in its Hungarian unit since it was set up in March 2004. Shin-Etsu has beensupplying keypads for Nokia handsets under a just-in-time contract. With the new factory, Shin-Etsu willboost its capacity, take on more aspects of production and hire more workers. The factory, whichcurrently employs 100 people, will hire as many as 70 more by the end of the year, and another 50 after that. (Econews; Tue Vg 1)

Economics

Subsistence income rose with inflation According to KSH, the subsistence income in Hungary rose by 6.6% last year to Ft 53.3 thousand a

month for one adult, Napi Gazdaság reports. For the purposes of calculating the subsistence incomelevel, KSH takes into account basic necessities considered elemental for the conduct of life in today’ssociety. As usual, the larger the household, the less the subsistence income is per head. Therefore thelevel for a 2 adult - 2 children household was Ft 154.6 thousand, or Ft 38.65 thousand per person.Likewise, for pensioners, the subsistence level is Forint 48 thousand for a single person household andForint 41.3 thousand per head for a household of two. (NG 1,3) M.H.

Ft 1.5 bln disbursed for job-creationSome 68 businesses were awarded a combined Ft 1.5 billion in subsidies available by application inMarch and April for hiring new employees, the Ministry of Employment Policy and Labor Affairs said onTuesday. The subsidies, which must be spent on investments, were linked to the hiring of 1,704 people.The businesses received between Ft 800,000 and Ft 1,300,000 per new hire, depending on the location

of the business and the people hired. Altogether 225 businesses applied for the subsidies from theLabor Market Fund. (Econews; MH 3)

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Overhaul of SME credit program dueThe government is due to put forward a proposal for the complete overhaul of the credit programproviding financial help for SME’s spend on new development, business daily Világgazdaság said,quoting a government working paper. According to the proposal, non-fundable loans, which now makeup 71% of the fund, would be drastically reduced to be replaced mostly by regular loans. In addition,non-financial services would have a larger, 25% share in the program instead of the current 5%. Thenew model would give more incentive for companies to boost their margins thus allowing a much more

effective utilization of resources and a broader application of the program, while it would also improvecompanies’ job creation potential, the Economy Ministry said. (Tue Vg 1) S.F.

Ft 60 bln earmarked for reg. development This year seventy-eight new municipality devlopment projects will receive financial backing through thegovernment’s dedicated funds, according to a bill passed by Parliament yesterday. The total value of the investments, which will be realized over several years to come, is estimated at Ft 60 billion, of which Ft 46 billion will come from central funding with Ft 4.6 billion to be made available this year.Municipalities can receive funds for projects whose value exceed Ft 200 million. The main benefactorsof the program will be the towns of Aba, Barcs, Szigetvár, Komló and Balassagyarmat, which stand toget over Ft 8 billion in total for various projects including sewage development, hospital and schoolreconstruction. (Tue Vg 1) S.F.

SME’s growing pessimistic The joint SME business confidence index of K and H Bank Rt and GfK market research company wasdown -5.6 in the latest survey. It is the first time in the history of the index to show pessimisticexpectations. The research included leaders of 700 SMEs concerning their opinions about their competitors, customer and supplier relationships, burdens and opportunities in connection with the EU.The index decreased in all sectors except agriculture. In spite of this, the companies expect their turnover to increase by 9.5% in the next twelve months, in the previous survey this ratio was only 9.1%.Profit growth is estimated to 6.5%, which was 5.8% earlier. (Nv 5) G.R.

Politics

Mádl sends law for an audit President Ferenc Mádl did not sign the ethnic minorities’ election law, but sent it to the ConstitutionalCourt for an audit. According to the law, in some cases, a representative of the ethnic self-governmentwould become member of the local government, too. But this way, ethnic voters could indirectly havehigher influence on the local government elections, since they can also vote for a non-ethnic member.The law must take effect for the elections in May, 2006, therefore it will not be an obstacle should thelaw only be passed in the autumn session of the Parliament after revision by the Constitutional Court,the chairman of National and Ethnic Minorities’ Office, Antal Heiser said. (MH 7) G.R.

Domestic

Jewish grave vandalism mafia ruseSelfish business motives were behind the recent destruction of Jewish tombstones at Budapest’sKozma Street cemetery, or that is to say, the so-called grave-stone mafia were behind the attacks,according to police quoted by a national daily yesterday. In the last couple of days various leads havelent weight to a police supposition that a tombstone business or businesses lay in the background tothe destruction of 132 graves, said Magyar Hírlap, quoting a police source who spoke on condition of anonymity. Only the most expensive granite and marble graves that were damaged, and, moreover,many of them were new. This and the fact that slogans and signs were absent from the damagedgraves have led police to believe indirect extortion was going on. It was likely, said the paper, thatstonecutters believed well-heeled families would order new gravestones. Budapest’s mayor Gábor Demszky has offered a reward of Ft 1 million, or Euro 4,000, for information leading to theapprehension (MTI; Nv 12)

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M7 highway to be completed by 2007 The National Highway Company Rt announced the preliminary invitation to tender the publicprocurement of the highway construction between Balatonkeresztúr and Nagykanizsa. The estimatedcost of the investment is Ft 72 billion. The section is planned to be handed over in 2007. Building the

highway will ease movement between Debrecen or Nyíregyháza to the Slovenian or the Croatianborder. (NG 1, 7) É. V.

Pannonmill opens Ft 2 bln mill Austrian-owned milling company Pannonmill Kft opened a new Ft 2 billion mill in Csorna yesterday. TheSwiss company Buhler outfitted the mill. Pannonmill paid for the mill, which has a 300-tonne-per-daycapacity, with its own resources, loans and a Ft 465 million subsidy from the Agricultural and RuralDevelopment Operative Program, CEO S Tibor Csordás said at the opening. The mill is expected totake deliveries from farmers in a 100km radius. Pannonmill expects revenue of Ft 15 billion this year, Ft5 billion less because of a fall in flour prices, Csordás said. (Econews; NG 5, MH 11)

224 Raiffeisen Bank cards compromised Raiffeisen Bank Rt in Hungary will replace a total of 224 bankcards after a security breach in the UnitedStates allowed access to cardholder information, the bank said yesterday. Though the bank reportedthat neither the bank nor cardholders had been shortchanged, all the 36 MasterCards and 188 Visacards involved were cancelled, said the bank’s statement. Cardholders have been notified and will beable to pick up a replacement card at the bank branch of their choice, the statement said. (MTI; MH 11)

State may scrap MOL stake saleThe state may decide to scrap plans to sell its remaining 11.8% stake in Hungarian oil and gascompany MOL Rt this year, Prime Minister Ferenc Gyurcsány said in yesterday’s issue of Népszabadság, Hungary’s biggest daily. The sale of the stake was slated for this year under thegovernment’s original privatization plan, but just a few days earlier Tamás Mészáros, who headsHungary’s privatization agency ÁPV, said the state’s privatization revenue target of Ft 300 billion couldbe met without the sale, if other big sales generate enough proceeds. (Econews; NG 11)

Zalahús on full capacity from Sept Vectigalis Rt, working on the liqudation of Zalahús Rt, will invite applications for tender while the plant isin an operable state. Zalahús debt is Ft 3.5 million and the cost of liquadtion may reach Ft 1.3 million.From the beginning of July, Zalahus products will return to the market under the original barnd name,Zala-baromfi, and from August the plant will produce monthly 500 tonnes of finished product. (NG 7) É.V.

Sky Europe stays in Budapest From it’s appearance in Hungary in November 2003 to the end of May 2005 Sky Europe has carried430,000 passengers from Budapest, more than any other passenger airline. Sky Europe and Budapest Airport Rt are negotiating the cost and the starting time of Ferihegy I airport, which is planned to be

open in September. Should the airline move to the renovated Ferihegy I. which will deal with budgetairlines, Sky Europe will refund the difference to passengers who have already bought tickets, asFerihegy I will be a cheaper airport. (NG 5) É. V.

Báblona chair to step downThe chairman of state-owned agricultural firm Bábolna Rt, Zoltán Velez, will step down at thecompany’s subsequent EGM, unnamed sources reported. Velez confirmed the news reports, andadded that he did not agree with plans to sell the profit-making subsidiaries of Bábolna, which weretransferred to Bábolna Food Industrial (BÉ) Rt, separately. Velez hoped to get rid of the BÉ companiesas one package, while Bábolna, which amassed Ft 40 billion in debt, would get its accounts squared for good. (Nb 13) P.O.

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New MÁV offer to attract touristsBy introducing the newest program called IC-package Hungarian Railway Company MÁV Rt aims toboost its traffic on weekdays and to reach a passenger number of 7.5 million this year. The railwaycompany prepared the program together with tourist and holiday resort companies and offers bothtravel, in fist class carriages of IC trains, and accomodation at a discount price. The hotels taking part inthe program let out their rooms at a pre-seasonal price, which includes the journey and extra servicesas well, such as thermal baths and sauna. At present there are 32 towns where the IC-package can beused. (MH 13) K.H.

Malév bumps up 1,000,000th passenger Hungarian airline Malév Rt welcomed its one-millionth passenger of the year yesterday. Malévrewarded the passenger by offering them a seat in business class, the airline said. Malév reached themark almost a year to the day after it carried its millionth passenger in 2004, showing that passenger numbers are stagnating. Still, the airline said in a statement that passenger numbers increasedsignificantly on a number of its flights. (Econews; MH 11)

Raiffeisen reshuffles management Raiffeisen Bank Rt deputy-CEO István Gara will not renew his contract with the bank, and will bereplaced as head of Raiffeisen’s sales network by deputy-CEO Robert Huszár, Raiffeisen Bank said.

Huszár has worked for Raiffeisen Bank since 1995. Initially he worked in the corporate segment, butsince 2002 he has led the bank’s retail division. Gara, a law graduate, has worked for Raiffeisen Banksince the early nineties. (Econews; Vg 13)

Auchan fined Hungarian subsidy Auchan Hungary Trade and Service Kft was fined by the Economic CompetitionOffice (GVH) for Ft 4 million because its behaviour proved to be suitable for deceiving consumers. Thestore chain’s magazine appearing every fortnight provided information which was not in line with reality.(MH 3) K.H.

Biopon back homeBiopon, a detergent brand known in Hungary for 40 years is being produced in Hungary again. InMarch the Competition Office (GVH) allowed Henkel Hungary Kft to purchase the Biopon business of

Unilever Hungary Kft. The latter company had owned it since 1992 and placed production abroad so ithad to be imported in Hungary. The new owner Henkel has now started home production. In Szolnok,the powder, while in Korösladány, in southern Hungary the liquid version of Biopon is beingmanufactured. The company had a sales revenue of Ft 62.5 billion and 1100 employees last year. (Nv5) K.H.

Film studios will be privatized ÁPV Rt intends to accomplish the privatization of its film producing and distributing companies in 3steps. The first step will be the selling of Budapest, Hunnia, Objektív and Pannónia film studios, later the distributor Mokép will be implemented still in 2005 and Dialóg film studio in the beginning of 2006. ÁPV Rt. invited for public procurement tender, the allocation of real market value of the film studios. Inthe case of the privatization tender of Mokép Rt, ÁPV Rt will consider the professional references and

the contract the enterprise agreed with the employees. (NG 7) É. V.Chinese companies at Bp fair Seventy Chinese state-owned companies presented themselves yesterday at Budapest’s expo park for a four-day fair organized by China’s Ministry of Economy. The companies, from the construction, water services, transport, energy, petrochemical, telecommunications, railway, aeronautics and metalsindustries, are in Hungary for the first time. The Ministry of Economy also invited ministries fromneighboring countries to the fair. Chinese deputy Trade Minister Chi-an Chen, former Prime Minister Péter Medgyessy and Investment and Trade Development Hungary (ITDH) CEO György Rétfalvi werepresent at the opening of the fair. (Econews)

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Rewico signs Ft 100 m contract to ship TVsThe Hungarian unit of Germany’s Rewico Logistics has signed a contract worth an annual Ft 100million to ship television sets produced in Hungary by China’s Hisense to Western Europe, Rewicobusiness development director József Tóth said. Rewico will transport the TV sets to customers inFrance, Germany, Italy, Spain, and the UK. Hisense’s factory in Sárvár (NW Hungary) startedproduction last year. This year, the factory’s 150 workers will turn out 500,000 TV sets. Rewico hadturnover of Ft 2.2 billion in 2004, and is planning Ft 3 billion in 2005. (Econews)

Economics

MFB launches new Ft 2 bln loan programThe Hungarian Development Bank (MFB) has signed a contract with Budapest Enterprise DevelopmentFoundation (BVK) subsidiary Enterprise ’94 to launch the Micro Loan Plus credit program for businesses in Budapest and Pest County. The program will be gradually available throughout thecountry. MFB managing director János Eros said the program would allow micro businesses, of whichthere are many, but which enjoy few market opportunities, to receive development funds. About Ft 2billion in financing is available to micro businesses under the program. The 10-year loans are availableat the central bank’s base rate, currently 7%. The loans are available through Local BusinessDevelopment Centers (HVK). (Econews; NG 1, 4, MH 11)

More milk drunk as prices fall Hungarians are drinking more milk as it becomes cheaper. In the first quarter, milk purchases rose 7%from the same period in 2004, according to a survey by GfK Hungária Kft. The increase was more thantwice that in 2004, when Hungarians drank 3% more milk compared to 2003, according to figures fromthe Dairy Products Council. UHT milk was 14% cheaper in the first quarter than in the same period in2004, and fresh milk in cartons was 12% cheaper, according to GfK. UHT milk accounted for 25.8% of all milk purchased, up from 18.5% a year before. Less well-off Hungarians started buying more UHTmilk after farmers’ protests resulted in the pulling of most cheap milk permeate products fromsupermarket shelves. (Econews; NG 1, 15)

Goose liver industry under threat from ChinaHungarian Goose liver may lose its Western European markets to Chinese imports, unnamed sources

reported. Companies raising and processing geese in China are mushrooming, and in a couple of years, they are projected to push their Hungarian competitors away from the lucrative market of gooseliver. Former Prime Minister Péter Medgyessy, currently an ambassador at large, helped setting up aChinese-Hungarian joint venture operating in Mongolia. Mongo Goose Industrial Kft hopes to raise andprocess 60 million livestock by 2010, worth Ft 94.7 billion, which equals the current total output of Hungary and Poland. (Nb 13) P.O.

EU subsidies for minesThe European Commision approved euro15 billion in support for the coal industries of Germany,Poland and Hungary. Although most mines in Hungary were previously closed and only one is working,the country is to get Ft 64.3 billion in support by 2010 for modernization. Germany has to close 4 minesout of the still functioning 10 and for this gets approximatly euro 12 billion, Poland has 40 mines and

yearly produces 100 million tonnes of coal and gets approximatly euro 2.7 billion. (NG 4) É. V.Finance companies top business tax list Banks, insurance companies, and brokerage firms are topping the list of local business tax payers inBudapest, according to Lajos Deli, head of the tax department at the Budapest Municipality. A total of Ft 64.1 billion were collected in local business tax by June 20, surpassing the amount from the previousyear, Deli added. At this rate, the local government can achieve the projected income of Ft 149 billionfrom the local business tax. Around 80% of the tax collected comes from 15% of the local ventures.(Wed. Vg 3) P.O.

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60% of EU grants awarded More than 60% of the available 675 billion in EU-grants, earmarked for 2004-2006, have been awardedto local applicants in over 1,300 settlements of the country, according to representatives of theRegional Development Operative Program (RFOP) of the National Development Plan. A total of 21,908applications have been submitted so far, many of them after the government eased the conditions backin March. Applicants have received a total of Ft 413.6 billion in grants so far, which have been roundedoff from their own resources to more than Ft 520 billion. (Wed. Vg 6) P.O.

Politics

Sólyom, green activist, to access secretsLászló Sólyom, designated president of the republic, has the right to know all state secret informationconcerning NATO’s radar locator to be set up on the top of Zengo, the highest peak of the Mecsekmountains in Southern Hungary. He as a civil green activist had no access to this information. Not onlyhe is authorized but also obliged to know the security politics arguments in favor of erecting the radar,said Defense Minister Ferenc Juhász. Sólyom, as the president of NGO Védegylet said that as theCommander-in-Chief of the army he could exercise influence on the case. (MH 2)

Fidesz wants to set up National Guard The main opposition Fidesz party does not want to re-introduce compulsory military service but it does

plan to set up a voluntary national guard if it comes to power, an MP from the party said in Debrecen, EHungary, yesterday. István Simicskó, deputy chairman of Parliament’s defense committee, noted thatall nine NATO member states that had suspended but not terminated conscription had established akind of regional defense force or national guard. To enhance Hungary’s defense and disaster management capabilities, Fidesz considers it important to set up a national guard composed of volunteers and ‘thus complement the strength of the decimated armed forces,’ he said. Hungary endedcompulsory military service in 2004, with its last conscript being discharged in November. The country’sarmed forces are now composed of about 33,000 professional and contract soldiers. (MTI)

Domestic

Senior police accused of abuse of power A former county police chief and three other senior police officers are among nine people accused of

abuse of authority and tax evasion inEastern Hungary, the spokesman of the Chief Prosecutor’s Office said. Charges including abuse of authority, misuse of guns, tax evasion, negligence and forgery of personal documents have beenbrought up against former police chief of Hajdú-Bihar County Sándor Sutka, his two former deputies,the current head of the Debrecen Police Headquarters, a department head, a driver and three civilians,Zoltán Borbély said. They are accused of committing these acts between 2001 and 2003 and the Chief Prosecutor’s Office first announced that investigations had been started in the case in October 2003.(MTI)

Old maps and travel books on display A collection of fifty rare old maps and travel books in both English and Hungarian are on display at acartography exhibition that opened at the Budapest’s ELTE University yesterday. The oldest item in the

exhibition is Hartmann Schedel’s Chronicle of the World printed in Nuremberg in 1493. Also on displayis a printed description of the New World by Amerigo Vespucci, issued in 1504, as well as an illustratedvolume on Captain James Cook’s voyage to the South Pacific in 1772-1775. Other volumes include thefirst editions of astronomy works by Nicolaus Copernicus from 1543 and by Johannes Kepler from1606. The exhibition will remain open to the public until September 20. (MTI)

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Proposal to spend tax on viticultureThe government is expected to approve a proposal to eliminate excise tax on wine before the end of this year, secretary of the national council of wine-growers (HNT) András Urban said yesterday. Theequivalent to the excise tax, worth Ft 8 per liter, will instead go towards better wine marketing rather

than into government coffers. The farm minister announced the move yesterday, and wine-growers alsowelcomed the move to transfer around Ft 1.5 billion, or Euro 6 million, each year to marketing andquality control schemes. Money saved will finance stricter quality control schemes to squeeze low-quality products out of the market, Urban said. (MTI; NG 1, Nb 1, Nv 5, MH 13)

Bailiff rejects Parmalat bid A single bid for the former Hungarian unit of troubled Italian dairy giant Parmalat was rejectedyesterday. A new bid for the company will be called next week with a deadline sometime in the middleof July, Parmalat Hungária Rt’s bailiff Ferenc Somogyi said yesterday. Because of the lack of interest,the price for the company will be halved to Ft 4 billion plus VAT, and the company’s supplies will besold separately for Ft 1 billion-1.4 billion, Somogyi said. The rejected offer was from A-Tej Tejipari, aHungarian dairy owned by dairy farmers (60%) and Italian refrigerated truck company Catone (40%),

Somogyi said. (Econews; NG 1)Bosnian PM says ING the problemHungarian oil and gas company MOL Rt’s bid together with Croatian peer INA for a stake in Bosnia’sEnergopetrol was hurt by the participation of INA, Bosnia’s Prime Minister Adnan Terzic told PrimeMinister Ferenc Gyurcsány on an official visit yesterday. Bosnia’s government has repeatedly sentsignals that it is wary of the participation of a Croatian company in the bid for Energopetrol because of the possibility the stake could be used for political leverage. Gyurcsány said he had asked Terzic todeal with Hungarian companies on equal footing, following the rule of transparency which are the normamong European businesses. (Econews)

Walmark fined Ft 3 million At yesterday’s trial, the Competition Office (GVH) fined Walmark Kft Ft 3 million for misleading

advertisements regarding the company’s food supplements. The company has associated the kids’multivitamin product Marslakók with medicinal power, has stated that it is the most popular of suchproducts, and it has suggested that food products don’t contain the vitamins necessary for the body.GVH emphasized that medicinal power may not be attributed to the product, is not allowed to suggestthat a healthy diet does not contain all vitamins and minerals necessary, and may only claim popularityif it can be proven. (MH 11, NG 5, Nv 11) E.C.

PSzÁF fines OTP Garancia Ft 1 mlnFinancial market regulator PSzÁF said yesterday it fined insurer OTP Garancia Rt, part of OTP group,Ft 1m for several shortcomings discovered after an on-site audit. PSzÁF ordered OTP Garancia tocome into full compliance with legislation on the content of insurance contracts, to correct omissions insome of its insurance product contracts and to provide information without fail to clients with unit-linked

insurance deals. PSzÁF said it also found irregularities in OTP Garancia’s business records, andinsurance agents’ and outsourcing contracts. (Econews; NB 11)

Malév to re-launch flights to Bangkok Hungarian national airline Malév Rt said yesterday it will re-launch a scheduled flight to Bangkok fromDecember 2. The flight will operate three times a week until late March to enable travelers to reachSydney and Hong-Kong, the company said. Malév operated scheduled flights to Bangkok between1996 and 2001 and charters flights from 2001 to 2005. (MTI; MH 12, NG 5)

Geodis opens logistics center Logistics company Geodis officially opened its new 29,000 sqm logistics center in Budaörs on theoutskirts of Budapest. The center was originally built to be smaller, but was recently expanded in order to accommodate increasing demand. (NG 4) A.K.

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Dunaferr posts record profitsSteel manufacturer Dunaferr Rt posted record profits for 2004 , as the company achieved Ft 17.4 billionin profit after tax. The management of Dunaferr Rt submitted the consolidated financial statements for approval by shareholders with a balance sheet figure of Ft 157 billion said Zsolt Várkonyi, PR director.The Dunaferr group had Ft232 billion turnover last year. (NG 5) A.K.

PSzÁF suspends Pick purchase offer

The State Finanancial Institution Supervision (PSzÁF) suspended the approval process of the purchaseoffer presented by meat processor Dél-Hús Rt for the outstanding shares of Pick Szeged Rt for 30days. PSzÁF intends to conduct an investigation into the ownership structure of Pick to determinewhether an illicit and unlawful takeover of control has already taken place in the company. Dél-Hús hasa 33% stake in Pick and two private entrepreneurs János Csarodai and József Brazsák recentlypurchased a 33% stake. PSzÁF will seek to determine whether the parties acted in unison in whichcase the purchase offer should have been submitted much earlier as Dél-Hús and the private investorstogether own more than 33% of outstanding shares, making the issue of a public purchase offer mandatory. (NG 11) A.K.

15% of OTP loan for nest buildersState-subsidized home loans available since February under the government’s ‘Nest-building’ programnow account for 15% of all home loan applications at OTP Bank Rt, Hungary’s biggest commercialbank, managing director Éva Hegedus said yesterday. Under the program, the state guarantees andpays part of the interest on home loans taken out by young couples. The bank has extended onaverage 800 of the Nest-building loans a month since their inception, or about half of all Nest-buildingloans in the country. About 85% of the young couples who take out the Nest-building loans use them tobuy resale homes. The rest use the loans to buy or build new homes. (Econews)

H and M coming to Budapest Europe’s largest clothing retail chain Hennes and Mauritz (H and M) is going to open its first store inHungary in September. The 300 sqm shop is to be located in Váci Street. The second, 2,000 sqm storewill be opened at Vörösmarty Square next year. The Swedish company has 1,121 shops worldwide.( Thurs Vg 12) G.R.

FAG builds ball bearing factory FAG Hungary Kft, owned by Germany’s Schaeffler group, is building a Ft 10 billion ball bearing factoryon a 12ha site in the Debrecen (E Hungary) industrial park, Debrecen Mayor Lajos Kosa saidyesterday. The factory will open in two years time. The factory will make ball bearings for gear shifts.Kosa said the industrial park had now been filled, but would be extended by 16ha. FAG has beenproducing ball bearings at a leased site in Debrecen since 1999 at which it currently employs 750people. When the new factory opens, FAG will hire 350 more people. FAG Hungary supplies all of Europe’s big carmakers. (Econews; MH 3, NG 4)

Economics

Bp local tax revenue on target Local tax revenues are flowing in according to plans said Lajos Deli, head of the tax department of the

Municipality of Budapest. Up to June 20, Ft 64 billion was received in local business tax - up Ft 5 billionvs the same period last year - representing 43% of the total Ft 149 billion expected for the year..Tourism tax revenues are also on target as 39% or Ft 388 million was already collected of the expectedtotal of Ft 990 million, Deli said. (NG 4) A.K.

Drug prices to be listed on gov’t siteThe government medical information website, Doktorinfo, will carry the exact prices people are going tohave to pay for medications after a July 1 price change, Health Minister Jen? Rácz said yesterday. Atelephone answering service also goes into operation, he said, which will respond to members of thepublic from 8 a.m. to 6 p.m. local time. Services will include detailed information on brand name drugs,their active ingredients, what the generic equivalents are, and where allergies can occur. (MTI; MH 7)

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Ft 58 billion in subsidiesIn the frameworks of the so-called committed subsidies, 78 municipalities may start a development for atotal of Ft 58 billion, István Kolber, minister without portfolio who is responsible for regionaldevelopment, said. Ft 46 billion is to come from the central budget, whereas the rest, Ft 12 billion is tobe provided by the municipalities. Education and water management top the list of areas grantedsubsidy to, with Ft 16.7 billion and Ft 14.4 billion, respectively. Major educational investments includethe renovation and extension of the Barcs and a Miskolc high school. Ft 7.1 billion will be spent onhealthcare, Ft 6.5 billion on cultural investments, and Ft 1.7 on education. Some 322 applications for the 2006 tender have already arrived to the ministry aiming at Ft 300 billion, however, the total amountwill only be around Ft 50 billion next year. (NV 3, NG 3) E.C.

Unemployment rate reached 7.2%Unemployment rate reached 7.2% in May, according to the report of Central Statistics Office (KSH).The number of unemployed people increased by 60,000 to 303,000 from March. 3,886,000 people areemployed; this is almost same level as a year ago. This means that more people are looking for a jobamongst those who were inactive earlier. The rising rate of unemployment in Hungary is worrying,opposition Fidesz MP István Balsai said in response to the March-May unemployment figures. Thefigure was unchanged from February-April, but up sharply from 5.8 % a year earlier, said KSH. (MTI;Nv 5, NG 3, Nb 11, G.R.)

Bank card damage totals euro 822,000 Damages from bank-card abuse totaled Ft 204 million, or euro 822,300 last year, up 1 % from 2003, areport by the central bank published yesterday said. Total turnover from bank card use was Ft 4,769billion in 2004. 44% of that was stolen as a result of criminal access to accounts using forged bankcards, the report said. There were 5,167 cases of unauthorized bank card use registered last year --2,852 cases involved MasterCards, 2,541 were Visa cards, while Amex and other cards accounted for the rest—with an average of Ft 39,484 gained on each transaction. (MTI; NG 4, Nv 9)

APEH refunds Ft 54 blnTaxpayers claimed a combined Ft 61.5 billion in refunds on their 2004 income tax payments, tax office APEH deputy chairman István Juhász said yesterday. Juhász said APEH has already paid back Ft 54billion of the claims. APEH still owes taxpayers Ft 4 billion, as taxpayers chose to apply Ft 3.3 billion of refunds to their other tax or duty obligations, Juhász said. He added that the tax office is stillconsidering some of the remaining Ft 4 billion claims for refunds, noting that especially large claimswere scrutinized more closely. About 2.3 million people working in Hungary filed personal income taxreturns in 2005. Last year, more than 1.1 million taxpayers received combined refunds of Ft59.3 billionfrom their 2003 personal income tax. (Econews; Nv 5)

Students start seasonal work search150-180 000 students a year do some kind of a part time job over in Hungary. It is important that theCode of Labor be applied to them in such cases, explained labor secretary of state László Kordás. Headded, those students who work illegally may find themselves unpaid at the end. The Ministry of labor,therefore, urges students to work through a student network where a valid contract is signed. Theaverage wages range from Ft 500 to Ft 2500 per hour. (NV 4) E.C.

PM: you’ve never had it so good Things in Hungary have never been as good as they have been between 2002 and 2005, the primeminister told a residential forum in Szolnok, E Hungary, yesterday. Noting that the purchasing power of pensions and incomes had gone up by 20 % during that time, Prime Minister Ferenc Gyurcsány said itwas also easy to get used to declining inflation, down from nearly 10 % in 2002 to the current 3-3.5 %.In addition, he added, in 2002 we paid Ft 26 in taxes out of every 100, and now we pay 21. (MTI)

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Agri Min supports gradual sugar reformThe Ministry of Agriculture said it recognizes the need for reforming the EU’s sugar industry, but viewsthat reforms should take place gradually, in steps. The ministry said yesterday following a EuropeanCommission decision on Wednesday to propose to EU agriculture ministers that sugar price subsidiesbe reduced 39%. The changes would replace the current price regime, expiring on July 1, 2006. Theministry voiced support to the European Commission’s proposal to compensate for the reduction in theprice subsidy with a direct payment to farmers and by raising the country’s quota for other sweeteners,such as isoglucose. (MTI)

FX loans account for 98% of home loansForeign currency-denominated loans now account for 98% of Raiffeisen Bank Rt’s new commercialhome loans, Patrick Boczen, who heads the bank’s product development department, said yesterday.Of the forex home loans, Swiss franc-denominated are the most popular, as they are available for similar conditions as state-subsidized home loans, and, according to Boczen, at present carry relativelylittle risk. Both Hungary’s central bank and financial market watchdog have warned retail clients andlenders against the high risk of forex-based loans. Boczen said that the forint would have to weaken to270 against the Swiss franc before Raiffeisen Bank’s forex home loans became less attractive thanstate-subsidised forint-based home loans. (Econews)

Politics

Court rules allegations must be retracted A Budapest court yesterday overturned an earlier court ruling and accepted the demand of a companyassociated with former prime minister Viktor Orbán’s wife that a weekly retracts statements it publishedsuggesting Orbán had used his position to benefit his wife’s business. The court’s decision is final andcannot be appealed. The weekly Élet és Irodalom (ÉS) said that Orbán, while in office, had attendedmeetings of Tokajhegyalja Kft, a wine-growing and trading company, in which his wife, Anikó Levai,was a partner. The weekly suggested that, as PM, Orbán had assisted the company with advice on aprivatization deal and helped it to obtain a subsidy from the central budget. (MTI)

Domestic

Police to spend Ft 490 mln on renovation

Somogy county police department has carried out the largest investment of the past few years as theyhave spent Ft 490 million on the police building’s complex renovation. Balaton-region crime rate isdown: there are less crimes committed, the discovery index is up and guests may feel more secure onboth the land and the water, explained minister of the Interior Mónika Lampert in her speech at theopening ceremony of the new police department. Lampert has also called for the police’s help tocontribute to making the family holidays and children’s vacation safe and relaxing. (NV 3) E.C.

Explosion at spa An explosion broke down a wall hurting four people at the thermal spa in Csokonyavisonta(Southwestern Hungary) yesterday evening. Natural gas comes from the earth together with thermalwater. It is separated by a machine, which in this case, seems to have broken down. The gasaccumulated at a service area and exploded. A 74-years-old woman was burnt seriously; three other

people were taken to hospital with fractures. Police are inspecting the circumstances of the accident.(Nb 19) G.R.



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