7days, 2005. március 7. (pdf-ből)

7/28/2019 7Days, 2005. március 7. (PDF-ből)

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

01 March 2005Business Five bidders interested in Malév

T-Cool to make forest machineryWaberer’s starts Ft 4.5 bln expansionGrundfos expands Tatabánya plantSkoglund and Sasad merger

MOL to take out Euro 500 mln loanHigh speed internetOTP enables online customs paymentCommerzbank Q4 figuresMerkantil, Suzuki Ft 20 bln dealFt 11.7 billion for SMEsHTCC completes PanTel acquisition Accor introduces health vouchersTitle deed may be forgerySynergon and Erste Bank sign new dealSWS Group applies for wind farm permits

Börgönd Airport to open 2008Economics Key rate may drop to 6.5% by July - Morgan StanleyPolitics Internet spy list sparks fiery debateDomestic Births up, deaths down in 2004 - KSH

IAEA satisfied with Paks nuclear safetyOEP cards not checkedKiskunhalas hospital renovatedBudapest council drive to repair roads

Stockwatch BUX Close: 18382.60 Change: +44.72 (+0.24)Exchange Fixed Middle RateWeather Tomorrow: cloudy

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02 March 2005Business Share turnover rockets in February

Fujitsu Siemens sales up 30% in 2004Malév carries 4% fewer Jan. passengersSybil Holding in Euro 120 mln real estateDemasz proposes Ft 4.74 bln dividend

CVO Group Q4 resultsCommittee mulls skipping procedureSony-Ericsson ups share of marketMedical SMEs shy away from loanLarge companies to make social reportsBIX index introduced for real estateStyl shares to be delisted from bourseCIB registers new investment fundHajtás Pajtás undertakes international deliveriesMalév names new CFO

Economics Farmers get another year’s grace to repay loans

Tax reform proposalsTax rules conflict with EU normsPMI drops to all-time low of adjusted 43.4% in FebNA vetos loanHungarian labor mobility lowOECD study finds Hungary lacking

Politics Draskovics appoints new APEH presidentEconMin downsizes

Domestic Hungary to observe EU’s open source projectUkrainian caught smuggling human beings

Stockwatch BUX Close: 18673.24 Change: +290.64 (+1.58%)Exchange Fixed Middle RateWeather Tomorrow: p/cloudy

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03 March 2005Business TvNetWork plans listing before yr-end

Bombardier cuts capital Abraxus to revamp property for GBP 6 mlnElmű may have reached profit limitTriGránit Euro 1 bln Romanian schemeNA fined for violating procurement rules

HVB Bank profits up 83% in 2004Tesco not violating competition lawsMTV calls tender to revamp companyFt 830 mln Spa to be built in Szigetvár Calida may increase revenues by 12%Generali-Providencia profit of Ft 4.2 blnThree banks cut rateseconet.hu CFO resigns

Economics Lab Min launches Ft 1.5 bln job schemeIndustrial producer prices rose 3.8% in Jan'05 home prices to rise with inflationBase rate drop may trigger capital outflowPSzÁF '04 fines total Ft 128.35

Chips to replace stickers for road tollsPolitics Ombudsman destroys list of informantsDomestic Farmers/officials complete issues review

4 party nod to less red tape for kinShop.hu sold to Swiss

Stockwatch BUX Close: 17782.75 Change: -890.49, (-4.77%)Exchange Fixed Middle RateWeather Tomorrow: snow

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04 March 2005Business Teva plans USD 100 mln project

FinMin instructs Airport to cancel property purchaseGlobus expects profit only in 2006MOL reorganizes upstream divisionErste Bank buys out Marriott hotel

Magyar Posta fined Ft 5 mlnHunting Council fined - againMÁV halts competitor train at border Dreher sales down, company optimisticCIB Bank to pay Ft 2.96 bln dividendJordan offering compensationPhilip Morris launches sales networkComGenex renews agreement with Bayer Zegna opens it’s doorsHungary looks to Svedlovsk to invest

Economics IBM to start Ft 6.5 bln project

Public sector payment faces major overhaulHeating prices set to drop6 ex FinMins attend conferenceHome building permits down 3%Number of land lines going down

Politics Bush may visit - U.S. ambassador Slovakia/Hungry restart dam talks

Domestic MTV show promotes readingStockwatch BUX Close: 17763.79 Change: -18.96 (-0.11%)Exchange Fixed Middle RateWeather Tomorrow: snow

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07 March 2005Business No agreement for ministry and farmers

IBM to invest further Ft 6.5 blnSubway to set up regional logistics center Record number of new flats built 2004 Advent, Warburg may bid for AntennaPotential in hyper market

SalgóSík adds acid glass to rangeEconMin subsidizes Roma venturesRaiffeisen Capital Management to introduce fundsMiskolc co. enters EstoniaIVG plans to invest another Euro 66m in InfoparkMatáv in MontenegroOTP may be mulling Turkey's DemizbankEgis dividends paid March 24Dresdner Bank Hungaria to convert to branch officeParking fees through T-Mobile phones from JuneInvestkredit Bank to open local office

Economics Number of internet users rises 9% in Q4 Eva is broad enough for EU

EU entry beneficial for foreign trade balanceDrug stockpiling puts OEP Ft 8 bln over budgetPolitics SzDSz says no to tax proposalsDomestic Pumps at work as ground waters rise

Equal Opportunities body: 50 complaints in 1 monthStockwatch BUX Close: 18061.84 Change: +298.05 (+1.68%)Exchange Fixed Middle RateWeather Tomorrow: cloudy

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01 March 2005BusinessFive bidders interested in MalévOf the nine companies that bought the tender documentation, five potential investors submitted a bid for a 99.95%stake in Malév Rt in a single-round public tender called by the State Privatization and Holding (ÁPV) Rt. Three of the five submissions qualify as a bid, while the other two can be classified as a statement of intent declaringinterest in the privatization, ÁPV said. The privatization agency decided to invite bids for the state-owned majoritystake in the ailing national airline and its Ft 30 billion debt for a second time. The final decision will be 80% basedon the price offered by each contender, while their long-term plans for the future of Malév, with a minimum timeframe of five years, will account for 20% of the total score. The identity of the bidders and the content of their applications will remain confidential until a decision is made, ÁPV said. The first attempt to sell Malév attractedone bid only, from Aviation Solution International, which was deemed invalid. (www.bbj.hu; MH 1, Nb 12, NG 1)

T-Cool to make forest machineryGerman-owned T-Cool Europe Kft said it will manufacture forestry machinery parts as of March after landingorders from several leading international forestry engineering companies. At the same time, the company will alsomount a major greenfield investment, worth several hundred million forints, to build a 2,000-sqm plant and anadjoining logistics center in the western Hungarian town of Tamási by the end of the year. Production will beginwith a staff of 20 at the company’s old plant next month, to be followed up at the upcoming new manufacturinghall, which will also be taking over most of the German production in future, T-Cool said. (NG 1) S.F.

Waberer’s starts Ft 4.5 bln expansionHungary’s Waberer’s Holding Logistics Rt, the biggest road haulage company in Central and Eastern Europe, isplanning to spend a further Ft 4.5 billion this year to expand its Budapest Intermodal Logistics Center (BILK),Waberer’s announced yesterday. Waberer’s aims to increase the space at BILK from 75,000 sqm to 120,000 sqm,including 10,000 sqm of office space. Waberer’s officially opened its most recent addition to BILK - a Ft 1.5 billion,15,000 sqm warehouse - yesterday. All but 2,000 sqm metres of the new warehouse is reserved for spirit-maker Zwack Rt. Work will begin this week on a Ft 1 billion, 9,000 sqm warehouse, to open in the middle of July.(Econews; NG 4, MH 12)

Grundfos expands Tatabánya plantGrundfos Hungary Manufacturer Kft, subsidiary of a Danish maker of pumps, is adding another 5,000 sqm to its10,0000 sqm plant in Tatabánya (north-western Hungary) to meet increasing demand, business dailyVilággazdaság reported yesterday. Grundfos set up its factory in Tatabánya at a cost of USD 18 million in 2000. In

2004 Grundfos Hungary Manufacturer spent Ft 2 billion on machinery, equipment and vehicles, and had sales of Ft 19.631 billion, Világgazdaság reported. In 2003 the company had revenue of Ft 13.620 billion. GrundfosHungária Kft CEO József Janvári said Grundfos made 35,000 pumps and 417,000 pump engines in Tatabánya in2004. (Monday’s Vg 7, Econews)

Skoglund and Sasad merger Shareholders of real estate companies Skoglund Holding Rt and Sasad Rt yesterday separately approved recentboard decisions on a strategic link-up between the two companies, which will see the merger of Sasad into itsexchange-listed peer. The decision to fuse Sasad, which has registered capital of Ft 4.4 billion, into the muchsmaller Skolund, rather than the other way around, came on considerations of the latter’s presence, thoughdormant, at the Budapest Stock Exchange. Following the merger, Sasad stockholders will get two Skolund sharesper head, while some Skoglund shareholders have decided to pull out. The new company, to be named Sasad,will have total owners’ equity of Ft 9.6 billion. Sasad currently has over 1,000 hectares of property in its real estateportfolio. (NG 11) S.F.

MOL to take out Euro 500 mln loanMOL Rt is planning to take out a Euro 500 million syndicated loan from foreign creditors, business news portalhvg.hu reported yesterday. Credit institutions interested in the deal are expected to make their bids by the end of the week. The loan would be for five years. The nine banks that extended a Euro 400 million bridging loan to MOLin October 2003 could participate in the deal again, hvg.hu said, adding that HSBC may also join the deal.(Econews; NG 12)

High speed internetMatáv Rt and Cisco Systems Hungary Kft have recently handed over the highest speed internet backbonenetwork in Hungary. The 10 gigabit/second system will connect the Budapest based center of the NationalInformation Infrastructure Development Office (NIIFI) with 7 universities that are functioning as regional centers,and with other research institutions. The previous version of the system was introduced in 2001 with a speed of 2.5 gigabit/second. According to Cisco Systems CEO Róbert Budafoki, ‘This development is like comparing theexpansion of an existing, 4-lane highway into 16-lane highway.’ (Monday’s Vg 7) E.C.

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OTP enables online customs paymentOTP Bank Rt will launch a new Internet service in March through which clients can pay customs on importedgoods, Erzsébet Bárány, the leader of the bank’s customs division told Napi Gazdaság. According to Bárány,besides the easy and swift administration, the system’s other advantage is that the Customs and Excise Officecan also gather information on payments online. László Wolf, deputy CEO of OTP Bank Rt said that the companyholds 90% of the customs market at the moment. (NG 4) R.G.

Commerzbank Q4 figures

Commerzbank (Budapest) Rt had pre-tax profit of Ft 3.08 billion in 2004, up 33% from a year before,Commerzbank announced yesterday. The bank had after-tax profit of Ft 2.5 billion. Total assets amounted to Ft155.3 billion at the end of 2004, up from Ft 147.1 billion a year before. Loans rose from Ft 82.58 billion to Ft 99.59billion by the end of the year. The bank handled clients’ deposits of Ft 44.64 billion, down from Ft 53.21 billion ayear before. (Econews; NG 5)

Merkantil, Suzuki Ft 20 bln dealMerkantil Bank Rt, in cooperation with Suzuki Financial Services Rt, has agreed to take over the managementand financing of Magyar Suzuki Rt’s entire Hungarian automobile stock in a Ft 20 billion deal. Under theagreement, Merkantil will pay the carmaker for cars sold to some 140 Suzuki dealers, who will be then offeredspecial financing schemes by the bank. Suzuki Financial Services was set up jointly two years ago by Merkantil,Magyar Suzuki and Japan’s Itochu Corp. to offer financing programs for Suzuki dealers, which helped the bank toboost its share in Suzuki trading to 46% last year. (NG 7) S.F.

Ft 11.7 billion for SMEsToday is the first day of acceptance of applications for the 4 subsidies announced for the development of SMEs inthe framework of the Economic Competitiveness Operative Program (GVOP). The total GVOP budget is Ft 45.5billion, Ft 11.7 billion of which has been secured exclusively for the 4 tenders of SMEs, reported Monday’sVilággazdaság. Some Ft 6.8 billion is to be offered for the SMEs support of technology development, Ft 2.4 billionis to be spent on modern management systems, Ft 1.7 billion may be awarded for specific consulting, and Ft 900million will be transferred to those who wish to organize inter-SME cooperation. Applications are being acceptedon all 4 subsidies until September 30. (Monday’s Vg 6) E.C.

HTCC completes PanTel acquisitionHungarian Telephone and Cable Corp. (HTCC), the U.S.-based of owner of Hungarotel Rt, announced today thatit has completed its transaction with Royal KPN NV and acquired the remaining 75% of Hungary’s leadingalternative telecommunications provider PanTel Rt for Euro 17 million. Hungarian Telephone now has sole controland ownership of PanTel and has assumed substantially all of its liabilities, including its bank debt of Euro 62million. PanTel’s fiberoptic network, which covers all of Hungary and also connects into similar operations inneighboring countries, will enable HTCC to compete effectively for more business customers throughout Hungaryand also in bordering countries, HTCC President and CEO Ole Bertram said. (www.bbj.hu ; NG 5)

Accor introduces health vouchers Accor Services Hungary Kft’s recently-introduced new product, the health care voucher ‘Ticket Wellness’ has hada good reception. The Ticket Wellness, which may be a perk offered by employers to employees, is a voucher that may be used at any contracted health care facility ranging from pharmacies to dental surgeries. Anadvantage of the product is that while only Ft 63 of every Ft 100 salary finds its way into employee’s pockets, withthe Ticket Wellness, this figure is Ft 95. Using the Ticket Restaurant voucher introduced earlier, 500 thousandworkers have received a total amount of Ft 22 billion as a perk from their employers. (Vg 8) E.C.

Title deed may be forgeryOn the basis of a report by the Distr. 6th municipality the police has started an investigation in connection with aforged title deed of a plot of land near Nyugati railway station bought by Ballymore Properties Kft from MÁV Rt. According to the allegations, some copies of the property’s title deeds submitted to the municipality do not containreferences to an ongoing lawsuit between the seller, MÁV Rt and Pólus Holding Rt, a company led by real estatedeveloper Sándor Demján, who also wanted to buy the land. Recently a court of first instance decided in favor of Pólus Rt exercising its preemption rights to the area. (Nv 4) R.G.

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Synergon and Erste Bank sign new dealOne week after landing a contract for network maintenance, Synergon has signed a second memorandum of understanding with Erste Bank Rt to develop custom-made IT network solutions for the bank for one year.Synergon, which put its software development operations on the backburner for years, recruited a new team of software developers only last year. The IT company has won several IT upgrade contracts from financialinstitutions including Raiffeisen Rt, CIB Rt and the Hungarian Development Bank (MFB) Rt in the past year. Thevalue of the current deal was not disclosed. (NG 12) S.F.

SWS Group applies for wind farm permitsIreland’s SWS Group, an environmental and agriculture services company, has applied for permission to build 38turbines at a wind farm near Veszprém (north-western Hungary). The Euro 150 million wind farm - the biggestIrish investment in Hungary - will supply electricity to 60,000 homes. SWS started looking for wind energy projectsin new EU member states because it became frustrated with the slow pace of development in the Irish sector,according to Jim Galvin, a senior manager with SWS. ‘We looked at several countries - Slovakia, the CzechRepublic, Poland - before deciding on Hungary,’ Galvin told The Irish Times. (Econews)

Börgönd Airport to open 2008Former military base Börgönd Airport has been recently re-named Alba Airport. Alba Airport Kft CEO Ferenc Tóthtold Népszabadság that all construction is going as planned. The base is to open in 2008 and is planning onhaving over 1.8 million passengers a year, he said. The Ft 15 billion investment is to provide long-term jobopportunities for 1000 people. The airport will have a 2400 m long runway, which will be suitable to receive hugepassenger and freight carriers. The airport is 50% owned by Székesfehérvár local government, and 50% ownedby the London-based operator PlaneStation Group. (Nb 6) E.C.

EconomicsKey rate may drop to 6.5% by July - Morgan StanleyHungary’s central bank probably will accelerate its pace this year in cutting interest rates, the highest in the EU,as inflation slows, Morgan Stanley said in a report. Morgan Stanley lowered its base rate forecast for Hungary to6.5% by the end of June from 7.5% it predicted previously. The bank said that level could be ‘sustainable’ for therest of this year. By comparison, the European Central Bank’s key rate for the 12 countries sharing the euro is2%. (Bloomberg)

PoliticsInternet spy list sparks fiery debateDebate intensified around the alleged list of communist regime informants published on the Internet. Some on the

list objected to the exposure of their names, among them a former television reporter, who yesterday sent a letter to the prime minister, seen as a firm supporter of initiatives to open informant files, accusing him of ‘playing withpeople’s fates’. Speaking in parliament, Prime Minister Ferenc Gyurcsány rebuffed this and other charges, whichhe called ‘spiteful and shameful,’ and pointed to the responsibility of previous governments which had not openedthe files though that would have been their duty. Gyurcsány asked MPs to support the Socialist Party’s bill nowunder debate, which is aimed at complete openness in the disclosure of informants. (MTI; Nv 1, Nb 4)

DomesticBirths up, deaths down in 2004 - KSHThe number of births rose slightly and that of deaths went down in 2004, and the country’s downwarddemographic tendency was slower in comparison with 2003, the Central Statistics Office (KSH) said in a reportpublished yesterday. There was a considerable decrease in the number of infant mortality, and for the first time itwent down to 6.6 deaths per a thousand births, which indicated a 10% improvement compared to 2003. At the

end of the year the country had a total population of 10,096,000, KSH’s report said. (MTI; Nv 4, MH 7)IAEA satisfied with Paks nuclear safetyThe International Atomic Energy Agency (IAEA) closed its one-week inspection at the Paks Nuclear Plant Rt withhighly satisfactory results, company spokesman István Mittler said. The aim of the technical inspection was toestablish the extent to which the power plant followed the recommendations made by IAEA’s operation safetyreview group after a similar audit in 2001 and after 2003’s shutdown of one of the reactors. According to theinspection report, 71% of IAEA’s 80 recommendations have been implemented, and the management has takenadequate measures to meet all of the suggested operation safety requirements. (www.bbj.hu ; NG 4, Nv 5, MH 6)

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OEP cards not checked According to the National Health Fund’s (OEP) estimation, an approximate 100,000 - 200,000 people will not beeligible for the EU health care card, which will be available for Hungarians from October, because they are notentitled to hold their national social security number any more for some reason. Although people in Hungary haveto meet several conditions to be eligible to a social security number, once granted, no one checks the holder’sright to the number any more. Nevertheless, when applying for the EU card or its present equivalent the E111document, people have to prove that they are have a right to hold the number. (Nv 4, MH 1) R.G.

Kiskunhalas hospital renovatedKiskunhalas based, privately operated Semmelweis hospital is to spend Ft 700 million on renovation this year. Anunnamed group of private investors agreed with the Kiskunhalas local government to spend Ft 750 million onpurchasing medical equipment and Ft 1 billion on building reconstruction by 2007, and another Ft 800 by 2010.Hospital CFO Attila Füzes said that the workers will receive a 7.5% retrospective wage compensation and is towork out a new collective agreement, which will come into effect from June 2005. (Nb 7) E.C.

Budapest council drive to repair roadsThe municipal budget approved last week provides three times as much for fixing pavement defects as in 2004,Deputy Mayor Pal Vajda said yesterday. Vajda said that 15,000 minor defects out of a total of 16,800 reported thisyear had already been repaired, using some of the available Ft 3.6 billion budget allocation. Weather permitting,the number of remaining potholes can be brought down to 500, he added. (MTI; Nb 12)

Stocks

BUX Close: 18382.60 Change: +44.72 (+0.24)Stock Closing price Daily change (%) Average price VolumeMOL 16,050 0,3 16,094 634,818Matáv 950 1,4 937 1,709,999OTP 7,295 0,1 7,382 1,382,274Richter 27,995 0,0 27,147 80,125Egis 17,200 -1,7 17,328 28,939 Antenna 4,340 -1,4 4,357 11,424TVK 4,995 -3,2 5,021 7,037Rába 750 -0,7 747 36,647Budapest Stock Exchange

Exchange RatesFIXED MIDDLE RATE In forintsFeb 28, 2005 National Bank of HungaryEUR 1 242.13USD 1 182.59GBP 1 351.27CHF 1 157.27JPY 100 175.00CZK 1 8.15PLN 1 61.51

Weather Tomorrow: cloudy

High -1°C (30°F)Low -8°C (18°F)

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02 March 2005BusinessShare turnover rockets in FebruaryShare turnover on the Budapest Stock Exchange (BSE) jumped 62% from January to February as foreigninvestors went on a buying spree after the publication of annual reports for 2004 showing strong earnings.Double-counted (for buyer and seller) turnover on the BSE totaled Ft 857.37 billion in February. This translatesinto single-counted daily turnover of Ft 21.4 billion for the month, well over the daily average of Ft 12.6 billion inJanuary. With declining turnover in other securities - including government securities, mortgage and corporatebonds, investment fund shares and compensation coupons - overall spot market turnover rose 47% from Januaryto Ft 901.21 billion. February turnover - both overall and for shares - was more than double that a year earlier.The most active share trader in February was Erste Securities Rt, which produced deals worth Ft 181 billion.(Econews; NG 1, Vg 1)

Fujitsu Siemens sales up 30% in 2004Sales of Fujitsu Siemens computers in Hungary rose 30% last calendar year, giving it an 8.8% market share,Fujitsu Siemens Computers Kft announced yesterday. PC sales rose 43% - 20 percentage points over the marketaverage - making the company the second-biggest seller on the market. Notebook sales rose 98%, makingFujitsu Siemens market leader in Hungary. In the fourth quarter alone, notebook sales jumped 138%. FujitsuSiemens Computers had sales of Euro 26.9 million in its business year ended April 30. The company thentargeted a 25% revenue increase for its next business year. (Econews; NG 5)

Malév carries 4% fewer Jan. passengersMalév Rt carried 4% fewer passengers in January 2004 than one year earlier, sales division managing director József Tuboly said yesterday. Tuboly blamed the decline on increased competition. Malév’s rivals have nearlydoubled their capacity on flights to destinations Malév also flies to. The number of passengers increased 5% onflights to Eastern European destinations, and the share of business class passengers rose by more than 1percentage point, Tuboly said. (Econews)

Sybil Holding in Euro 120 mln real estateSybil Holding, an Israeli real estate developer, and Hungarian peer Sajó Befektetési Rt, are planning a Euro 120million residential, office and retail complex on an old industrial site in Budapest. The companies purchased thesite for Euro 14.5 million from Italy’s Pirelli, CB Richard Ellis, the real estate agent for the deal, announcedyesterday. The developers plan to build 1,500 flats, 30,000 sqm of office space and 15,000 sqm of retail space atthe site. Between 300 and 400 flats will be finished by the end of 2006, when the project’s first phase is

completed. (Econews)Demasz proposes Ft 4.74 bln dividendThe board of regional electricity distributor Demasz Rt will propose payment of a Ft 4.74 billion dividend from2004’s audited after-tax profits of Ft 5.29 billion, Demasz announced on the website of the Budapest StockExchange yesterday. The dividend fund amounts to 90% of last year’s after-tax profits and calculates into a Ft1,280 dividend per share. Demasz paid a 1,200 per share dividend on 2003’s profits. The dividend will come upfor approval by shareholders at Demasz’s AGM on April 1. (Econews)

CVO Group Q4 resultsThe Hungarian unit of the CVO Group, the largest recruitment company in Central and Eastern Europe, hadrevenue of Euro 600,000 last year, up 75% from 2003, the company announced yesterday. CV OnlineMagyarország Kft, the CVO Group’s online recruitment division in Hungary, brought in Euro 250,000, andProfessional People, the company’s recruitment consultancy division, generated Euro 350,000. CV Online aims to

take a 40% share of Hungary’s online recruiting market, and Professional People a 15 share of the recruitingconsultancy market. The CVO Group had combined revenue from operations in eleven CEE countries of Euro 3.3million last year, 55% more than in 2003. (Econews)

Committee mulls skipping procedureOpposition Fidesz said it would appeal to the National Security Supervision against a Foreign Affairs Committeedecision of yesterday, which gave its seal of approval to a Foreign Ministry request to use a ‘tender by invitation’system instead of the routine public procurement scheme to set up its new IT network. While Zsolt Németh, thecommittee’s Fidesz chairman maintained the decision could raise national security concerns, his Socialist deputy,József Kozma said the reason behind the decision was motivated out of national security concerns in the firstplace. (MH 8) S.F.

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Sony-Ericsson ups share of marketSony-Ericsson Kft, Hungary’s second largest seller of mobile phones, had a 25% share of the handset market lastyear, Sony Ericsson managing director for Central and Eastern Europe Tibor Wagner told reporters in Budapestyesterday. Last year about 2.1 million handsets were sold in Hungary, about the same as in 2003. Wagner said heexpected just a few thousand 3G handsets to be sold in Hungary this year, adding that sales of these handsetswould not pick up before 2006. Almost a tenth of Sony-Ericsson’s global sales last year were in the CEE region.The company boosted its share of the global market from 2% to 7%. (Econews)

Medical SMEs shy away from loanLoans of only Ft 1.5 billion have been granted from the Hungarian Development Bank (MFB) Rt’s subsidizedbudget to medical SMEs, said communications director Katalin Őry Kovács. The budget of Ft 15 billion was set uplast fall to help SMEs buying and renovating real estate or buying medical equipment. Companies are concernedabout not being able to pay back the loans from the operating incomes from the National Health Fund Administration (OEP), experts say. The required self-financing rate of 15% is also a restriction that makes takingthe loan unattractive for many companies. To date, 47 applications have been submitted, asking for a total of Ft1.949 billion, of which only two were rejected, while some of them are being considered now. The loan may bebetween Ft 5 million and Ft 250 million, and the duration between 4 and 15 years. (Vg 1) G.R.

Large companies to make social reportsMichael Lake, the former EU ambassador in Hungary has been invited by British-based companies operating inHungary to promote corporate social responsibility (CSR) in the country. At an event organized by the BritishChamber of Commerce, he pointed out that CSR is becoming a key success factor in corporate life, since itincludes immaterial values like environmental protection, business ethics and corporate citizenship. According toan EU directive from the beginning of 2005 medium and large size corporations will be obligated to issue socialreports, along with their annual financial reports. (NG 7) Sz.Fr.

BIX index introduced for real estateThe Association of Fund Management Companies in Hungary (Bamosz) introduced an index similar to the stockexchange index on the performance of real estate investment funds. Entitled BIX, it shows the average price of open-ended real estate investment funds. According to this index, returns made by real estate investment fundswere 11.5% in last two years on average. In 2003 this value was 10.4%, while in 2004 it was 12.8%. (Vg 13) G.R.

Styl shares to be delisted from bourseThe shares of clothing company Styl Rt, currently under liquidation, will be delisted from the Budapest StockExchange on March 8, according to an announcement on the website of the Budapest Stock Exchange yesterday.The share’s last trading day will be March 2. The Vas County Court declared Styl Rt insolvent on January 27.Insolvent companies must delist, according to stock exchange rules. Styl’s board blamed the company’s problemson the general crisis facing Hungary’s light industry. (Econews; Vg 13)

CIB registers new investment fundCIB Investment Fund Management Rt has registered its eighth fund, under the name CIB Betét Alap, withfinancial market regulator PSzÁF. The fund is starting out with Ft 500 million. The fund will invest 80% of itsassets in money market forint deposits, short-term government securities, National Bank of Hungary bonds andcorporate bonds. The Ft 1 nominal value units were offered for subscription between February 21 and 23. CIBInvestment Fund Management manages assets worth Ft 49 billion. The fund manager recorded after-tax profit of Ft 236 billion and total assets of Ft 1,026 billion in 2004. (Econews)

Hajtás Pajtás undertakes international deliveriesSince the beginning of January Hajtás Pajtás (HP) Bt, the Hungarian bicycle courier company has been makingdeliveries by cars, vans, and motorcycles to ten different countries in Europe, said company spokesman Gábor Kürti. HP’s rates make it competitive with companies like DHL and TNT. HP does not charge extra for fuel, andsets its prices based on weight, not on distance. A same-day delivery for 5 kilograms to Switzerland or Munich,Germany costs Ft 10,900. (NG 4) Sz.Fr.

Malév names new CFOGyorgy Geisz has been appointed CFO of Hungarian airline Malév Rt from March 1. Geisz replaces LászlóKakuk, whose mandate expired on February 28. Geisz has worked in the top management of K and H Bank Rt,and has been an auditor for consultancy PricewaterhouseCoopers Kft. (Econews)

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EconomicsFarmers get another year’s grace to repay loansFarmers who received development loans last year will not have to start servicing their debts before March 2006, Agriculture Minister Imre Németh said yesterday. In 2004, a total of Ft 230 billion was granted to farmers indevelopment loans aimed at streamlining their operations for the EU environment, to be repaid from March 2005on. The minister’s announcement was made amid massive demonstrations staged by farmers, demandingimmediate payments of EU direct farm subsidies, protection against cheap food imports and faster-moving

mechanisms to help producers sell excess grain. (MTI; Nb 1, NG 3)Tax reform proposalsThe Tax Reform Committee, set up by PM Ferenc Gyurcsány on Feb 9, has created a proposal that includesabolishing local business tax; municipalities would get the 18% personal income tax instead, according tounnamed sources. The remainder personal income tax on incomes above Ft 2.5 million (20%) would go to thestate budget. Corporate tax would also be two-tiered: 10% for annual profit up to Ft 5 million, and 16% above that.Current VAT rates of 15% and 25% would be unified to about 19% - 20%, while the 5% VAT rate would remainunchanged. Simplified Entrepreneurs Tax (EVA) would also have two tiers: 10% and 15% instead of the current15%. The tax changes would be introduced at the beginning of 2007. (Nb 1) G.R.

Tax rules conflict with EU normsHungarian tax regulations are often not in agreement with current EU tax laws and consequently liable to legalchallenges from companies which have already switched to operating on the basis of EU tax rules, a tax expert at

Deloitte Rt has warned. One such issue was the recently introduced car registration tax, which is interpreteddifferently in other EU states, but recent measures by the government to cut corporate telephone usage rebatesand the local business tax also run counter to EU norms. (Nv 5) S.F.

PMI drops to all-time low of adjusted 43.4% in FebHungary’s Purchasing Manager Index reached its lowest level ever in February, falling 4.7 points from January toa seasonally adjusted 43.4. Hungary’s PMI has never dipped below 45 since Halpim started compiling the indexin 1995. Hungary’s seasonally-adjusted PMI was over 50 in November and December of last year beforedropping to 48.1 in January. The unadjusted February PMI was 44.5, unchanged from January. (Econews; NG 2,4)

NA vetos loanThe national motorway construction program could hit a roadblock after the board of state-run National Motorway(NA) Rt vetoed a government decision requiring NA to take out a Ft 125 billion loan to bankroll ongoing

construction projects, unnamed sources reported. In early Feb. the government approved a new financingscheme for motorway construction putting the state motorway manager ÁAK Rt in charge of the management of future motorway projects including financing through bank loans and bond issues. Before this could take place,however, NA is required to take out a Ft 125 billion commercial loan to facilitate ongoing construction project. Noofficial comment on the board decision is available at this time. (MH 1) S.F.

Hungarian labor mobility lowThe mobility of Hungarian people is traditionally low, according to sociologists. Even the chance of finding a better job does not stimulate many people to move to another location to work. The reasons are not just cultural: mosthouses and flats are privately owned, rather than being rented, and are more difficult to get rid of. A second causeis the costliness of the traffic, sociologist Endre Sík said. The increasing number of flats for rent may ease theproblem in the future. (Nv 9) G.R.

OECD study finds Hungary lacking

Hungary’s GDP growth rate is 60% less than that of the US, a recent OECD study found. The country’s economiclag is due to low labor productivity and inefficient use of the labor force, which puts Hungary second in an OECDranking of countries with the lowest employment rate and the least active population. Economists argue thatreducing the role of state, liberalizing telecommunication, energy and national railway sector would accelerategrowth and diminish the role of the shadow economy. The convergence of wages and employers’ costs could alsoincrease willingness to work as a legally registered employee. (NG 3) Sz.Fr.

13




PoliticsDraskovics appoints new APEH presidentFinance Minister Tibor Draskovics yesterday appointed János Szikora to head the National Tax Office (APEH).Szikora’s appointment is effective immediately. ‘I expect to see firmer, more successful taxation from JánosSzikora,’ Draskovics said. Draskovics also said he had proposed to the prime minister the appointment of outgoing APEH president György László Király to the board of the Hungarian Financial Supervisory Authority(PSzAF) from May 1. (Econews; Nv 5, Nb 12, MH 13)

EconMin downsizesThe Economy and Transport Ministry is going to carry out restructuring and downsizing, said Deputy StateSecretary Ábel Garamhegyi. About 80 employees are to be laid off, 15% of the Ministry’s staff. Restructuring willinclude the subordinate institutes of the ministry, and Hungarian Investment and Trade Development Kht, too. Theaim of the measures is to create a smaller and more efficient organization Garamhegyi added. (Vg 5) G.R.

DomesticHungary to observe EU’s open source projectHungary’s e-government office has been awarded observer status in an EU project designed to facilitate the useof open-source computer software in public administration. The two-year project, called Consortium for OpenSource in the Public Administration (COSPA), has a budget of Euro 4 million and runs until the end of 2005.Observer status will allow Hungary’s e-government office to participate in pilot projects and access studies andreports. (Econews; NG 4)

Ukrainian caught smuggling human beings A human smuggler was caught in the border city Záhony yesterday as he wanted to smuggle back to Ukraine twoUkrainian women in his minivan, a spokesman for the Border Guards told MTI. Questioning revealed that theUkrainian man, 36, had taken the risk of smuggling the two women from Italy to Ukraine for 100 and 150 euros.The women had no passports and were 46 and 52 years of age, the spokesman of the local Border Guards said.Investigations against the man have started, and the two women were both expelled from Hungary for 5 years.(MTI)

StocksBUX Close: 18673.24 Change: +290.64 (+1.58%)Stock Closing price Daily change (%) Average price VolumeMOL 16,195 0.9 16,019 297,617Matáv 953 0.3 957 2,012,358OTP 7,550 3.5 7,372 742,498Richter 28,000 0.0 28,078 23,979Egis 17,570 2.2 17,280 38,665 Antenna 4,340 0 4,322 18,424TVK 4,995 0.0 5,015 2,661Rába 755 0.7 749 38,600Budapest Stock Exchange

Exchange RatesFIXED MIDDLE RATE In forintsMar 01, 2005 National Bank of HungaryEUR 1 241.94

USD 1 183.20GBP 1 352.04CHF 1 157.50JPY 100 175.55CZK 1 8.14PLN 1 61.99

Weather Tomorrow: p/cloudyHigh 0°C (32°F)Low -7°C (19°F)

14




03 March 2005Business

TvNetWork plans listing before yr-end

Telecommunications company TvNetWork Rt joined the Club of Quotables, a group of companies with definiteplans to list at the Budapest Stock Exchange (BÉT), yesterday. "We want to be the first to go public after FreeSoft," general deputy CEO Tamás Kabay said, adding that this will probably take place in Q2 or Q3 2005. As

the first step, TvNetWork will become a public shareholding company, with an IPO to follow to attract Ft 400million new capital to cover this year's expansion and acquisition plans. The management is expecting interestprimarily from the company's subscribers and private investors, but venture capital firms are also welcome. "TheIPO price will be lower than the real value of the stocks to give trading a jump start. The beginning is importantand we want this to be a success story," TvNetWork President Attila Nemes said. (BBJ Online; Nv 5, NG 11)

Bombardier cuts capital

Bombardier Hungary Kft, subsidiary of Canadian Bombardier Investments Inc, has recently cut its registeredcapital by Euro 250 million, equal to Ft 62.5 billion, company registry records show. Bombardier Kft was foundedin 2001 and credit services are listed as its main activity in the company registrar. The amount of the capitaldecrease is equal to 3.5-3.6% of the approximate Ft 7 billion current account deficit forecast for 2005. (NG 1) R.G.

Abraxus to revamp property for GBP 6 mln

UK-based Abraxus has acquired, through its new Hungarian subsidiary, First AB Kft., the freehold interest in abuilding in central Budapest with a view to converting it into an 80-100 room hotel, Abraxus said. The propertywas built at the end of the 19th century and has approximately 5,409 sqm floor space. The acquisition costsamounted to approximately Ł960,000 plus Ł170,000 VAT. The company estimates that total further investmentrequired for conversion of the building will amount to Ł6 million plus VAT. The acquisition will be financed through Abraxus's existing cash resources, while the development costs will be covered through bank finance in respectof at least 50% of the total costs and the balance through a further share issue. The company expects the hotel tobe ready in about two years. (BBJ Online)

Elmű may have reached profit limit

The 2004 profit of Budapest Electricity Works Rt (Elmű) from state-fixed prices may have exceeded the upper limitit is allowed to keep under current regulations, unnamed sources told daily newspaper Népszabadság. Therecently published earnings report of the company does not show how much of its Ft 16 billion net income came

from the regulated market. If an energy company makes profit in excess of the threshold, it is legally obligated toreturn half of the surplus to consumers. Regional gas supplier Tigáz Rt has had to do so twice in earlier years,however it chose to give a discount on the heating bills of hospitals and other public organizations instead of refunding a negligible amount to each and every consumer. Elm? is owned by the German RWE group. (Nb 13)P.P.

TriGránit Euro 1 bln Romanian scheme

Hungarian real estate developer TriGránit Rt will launch an almost Euro 1 billion project in Romania, according topart-owners of the company, Peter Munch and Lord Nathaniel Rothschild. Trigánit will set up a multifunctional citycenter in the capital of Bucharest. The 104,000-sq.m. area will be big enough for shopping centers, culturalinstitutes, office buildings, hotels and parking houses, amongst others. Peter Munch and Lord NathanielRothschild regard Romania as the Eastern gate of the expanding EU. At the end of January, Trigánit announcedthat it would invest Euro 1 billion in Poland to build shopping centers over the next five to ten years. (MH 3) P.?.

NA fined for violating procurement rules

The Public Procurement Arbitration Committee fined National Motorway Rt (NA Rt) for Ft 2 million for violatingpublic procurement regulations in connection with a tender regarding the last phase of the M5 motorway betweenSzeged and the border. The Committee claims that NA Rt unlawfully limited companies invited to the tender for consultant services to Euroút Kft, the constructor of the motorway's previous section between Kiskunfélegyházaand Szeged. (NG 9) R.G.

HVB Bank profits up 83% in 2004

HVB Bank Hungary Rt's consolidated after-tax profit rose 83% in 2004 to Ft 19.035 billion, according to auditedIFRS figures, the bank said. Consolidated total assets increased 28.6% to Ft 944.298 billion making HVBHungary the country's seventh biggest bank, HVB calculated. Return on equity, calculated on the basis of

consolidated net profits, was 21.63% last year, the third highest for the entire sector. HVB Hungary group's shareof the commercial banking market increased to 6%. HVB Hungary's pre-tax profit rose 78% to Ft 22 billion, a newrecord for the bank. (Econews; NG 4)

15




Tesco not violating competition laws

The Competition Office (GVH) has found that the hypermarkets of Tesco-Global Stores Rt are not violatingcompetition laws by significantly undercutting the gas prices of traditional filling stations, business dailyVilággazdaság said quoting unnamed sources. GVH has not reached an official decision yet. GVH's investigationwas initiated by a small competitor that, like several other market players, suspected that Tesco was selling gasbelow the purchase price and financing its loss-making filling stations from the profit of other retail activities, whichis illegal. The retail chain's Communications Director Emese Danks earlier said Tesco managed to keep prices Ft

4-Ft 7 per liter below those of market leader Mol Rt by buying cheap and keeping margins at a minimum. (Wed Vg12) P.P.

MTV calls tender to revamp company

State-owned television MTV Rt is looking for a company to shape up a new, more efficient and feasible structureand operating model for the television through an EU public procurement tender. The winner will also have to getthe new system acquainted with the channel's staff, to create a new HR strategy for the TV and to integrate it intothe existing IT network. Application deadline for the tender is set at April 4. (NG 8) R.G.

Ft 830 mln Spa to be built in Szigetvár

The municipality of Szigetvár in southwestern Hungary has eventually broken ground on a Ft 830 million spareconstruction project scheduled to start five months ago. The delay was caused by too much red tape andsluggish pace of government grant procedures at the Hungarian Development Bank Rt (MFB), through which the

local government received Ft 200 million non-refundable state finance, Mayor József Paizs said. Apart from thegrant, the development will be mostly bankrolled through commercial loans. Scheduled for completion in mid-October and carried out by general contractor Geosaurus Kft, the project will make the local spa the secondlargest in southwestern Hungary. (Wed Vg 9) P.P.

Calida may increase revenues by 12%

The Hungarian subsidiary of Swiss underwear manufacturer Calida AG may continue to increase its revenues by12% this year after 2004's 18% as its parent company decided to move production from Switzerland to Hungary inits entirety, Calida Hungary Kft Managing Director Günther Thaler said. Based in Rajka near the Slovenian border,the factory will recruit 45-50 new workers to complement its staff of 320. In addition to contract work, the plant willalso boost its cutting, design and quality check departments, which will increase added value. (Wed Vg 10) P.P.

Generali-Providencia profit of Ft 4.2 bln

Insurer Generali-Providencia Rt had after-tax profit of Ft 4.2 billion in 2004, up 180% from a year before,chairman-CEO Mátyás Pálvölgyi said yesterday. Revenue from premiums rose 8% to Ft 102.4 billion, beating themarket, which expanded by 6.7%. This year Generali-Providencia (Hungary) expects pre-tax profit of more thanFt 5 billion, compared to pre-tax profit of Ft 4.8 billion in 2004, Pálvölgyi said. The company expects revenue frompremiums to rise 4%. In 2004, premiums from property and vehicle insurance rose 6.7% to Ft 69.6 billion.Property insurance premiums were helped by big corporate policies. (Econews, NG 4)

Three banks cut rates

Three banks, Raiffeisen Rt, CIB Bank Rt and Erste Bank Rt announced interest rate cuts on home loansyesterday. Raiffeisen Rt initiated a 1% cut both on Forint and foreign currency loans granted in March and April.CIB Bank decided to go on with a discount on its foreign currency loans maintaining the rates of foreign currencyloans 1% below the usual rate. Erste Bank lowered rates on its variable Forint loans by 0.5%. (NG 4) R.G.

econet.hu CFO resigns András Harangozó, CFO of econet.hu Informatikai, has resigned and will leave the company on April 30,econet.hu said yesterday. Harangozó has also resigned from his position as board member with effect from thecompany's AGM. The company will appoint a new CFO and a new board member by the time of the AGM.(Econews)Economics

Lab Min launches Ft 1.5 bln job scheme

Yesterday's cabinet meeting approved the allocation of Ft 1.5 billion for job creation programs, Labor Minister Gábor Csizmár said. Csizmár said the subsidies would be available between March 7 and April 29 for projects notyet started. The full application documentation is available online at www.fmm.gov.hu Csizmár said the subsidieswould help create 2,000 jobs. An Ft 800,000 grant will be available for projects in developed areas of the country,and an additional Ft 200,000 will be available for projects in underdeveloped areas. (Econews; Nv 3, MH 12, NG4, Nb 13)

Industrial producer prices rose 3.8% in Jan

16




Industrial producer prices rose 3.8% yr/yr in January, the Central Statistics Office (KSH) said yesterday. Industrialproducer prices for domestic sale increased 10.6% yr/yr in January, and producer prices in forint terms for exportsale fell 1.3% yr/yr. Industrial producer prices rose 0.7% from December, 2004. Industrial producer prices for domestic sale rose 1.3% in the month of January, and producer prices in forint terms for export sale increased0.3%. Producer prices for export goods rose by the same rate as the forint weakened in January. (Econews; MH13)

'05 home prices to rise with inflation

Most home prices in Hungary will rise at the same rate as inflation this year, but prices of new, smaller homes ingood locations could rise 6-10%, according to a real estate report prepared by economic research companyEcostat. The report says the increase of home constructions will slow this year, but infrastructure developmentsby local councils will continue to expand steadily. Ecostat CEO Pál Belyó said real estate agents reported fallingturnover and dampening enthusiasm each quarter in 2004 and expect the trend to continue in Q1 2005. Homebuyers will continue looking for new homes and for empty lots, resulting in a drop in demand for used homes, hesaid. Property developers have recognized the saturation of the market earlier than real estate agents, and havebeen gradually lowering their expectations. (Econews; Nv 5, MH 12)

Base rate drop may trigger capital outflow

The strengthening of the forint may force another base rate cut by the National Bank of Hungary (MNB) Rt in thenear future, but the sudden drop of the base rate can trigger an outflow of capital, analysts warned. MNB couldhave anticipated the current situation with a considerable base rate cut in January, analysts added. It is expected

that the during the next meeting of the Monetary Council, scheduled to take place on March 29, the base rate willbe cut by another 0.50%. Yet, should the exchange rate of the forint reach the intervention band prior to themeeting, a sudden drop of the base rate by 0.75%-1.25% is very likely, analysts claim. (Nv 1) P.?.

PSzÁF '04 fines total Ft 128.35

The State Financial Institutions Supervision (PSzÁF) imposed fines worth an aggregate Ft 128.35 million lastyear, compared to the Ft 137.5 million in 2003. Most of the amount was imposed on banks and leasingcompanies, with the most severe punishment going for Erste Bank Rt and General Banking and Trust Rt with Ft15 million respectively. Insurance companies and health funds were fined for Ft 5.4 million altogether, comparedto the Ft 3.57 million in 2003. (NG 5) R.G.

Chips to replace stickers for road tolls

An electronic system of road user charges will be introduced at motorways from January 2008, according to arecently approved schedule of the Economy and Transport Ministry. Trucks will be the first ones to use thesystem, while car owners are expected to say goodbye to motorway stickers from 2010. Drivers will be able topay the toll according to the length of road they cover. The Economy and Transport Ministry hopes to announcean international procurement tender for the development of the system in 2006. State Motorway Management(ÁAK) Rt put forward the proposition eight months ago, and the project just recently got the green light from theministry. (MH 12) P.?.Politics

Ombudsman destroys list of informants

Hungary's ombudsman for data protection yesterday publicly destroyed a list of Communist-era informers which aresearch firm had submitted to him for a legal opinion. Political Capital sent a request for an official position onwhether the names included could be disclosed in a legal way. "To learn names is not necessary for a theoretical

position," Attila Péterfalvi said. Political Capital's director Zoltán Somogyi said the list of over 1,000 names hadbeen compiled using the results of publicly available historical studies. (MTI; Nv 1, Nb 1, MH 6)Domestic

Farmers/officials complete issues review

Talks between government officials and farmers will continue this afternoon, the negotiating parties said after meeting yesterday. On the agenda yesterday were issues that could require changes to the law and theregrouping of items within the budget's farming section, a spokesman for the Agriculture Ministry said earlier inthe day. Police escorted some 200 tractors from the old parade ground near Heroes' Square to Parliamentyesterday evening. Farmers are demanding immediate payment of EU agricultural subsidies, speedier processingof grain for intervention storage and protection from cheap food imports. (Econews; Nv 1, MH 1, Nb 1)

17




4 party nod to less red tape for kin

The four parliamentary parties support a proposed amendment to the laws on citizenship and foreign citizens,which is intended to make it easier for ethnic kin to settle in Hungary, the government immigration commissioner said yesterday. The amendments, which will require a two-thirds majority in parliament to pass, will be put toparliament on April 1, Dezs? Avarkeszi said. Under the current law, ethnic Hungarians living in the country canapply for Hungarian citizenship after a year. The time required for the authorities to process relevant applicationswould now be reduced from an average of 42 months to 20 months. (MTI Nv 3, Nb 1)

Shop.hu sold to Swiss

Net Solution Kft sold Internet portal site shop.hu to an unnamed Swiss investor in mid-February, unnamedsources reported. Mátrix Holding Asset Management Kft had been operating the portal site since last June untilmid-February of this year. The owner and managing director of Mátrix Holding, Miklós Bonyár, previously acquiredfull share of Editorial Publishing House Kft and the publication rights of a number of magazines from theHungarian Book Club (MK) Rt. Last December, Bonyár sold Editorial Publishing House to Békés Project Kft andVK Kft for an undisclosed sum. (Nv 4) P.?.Stockwatch

BUX Close: 17782.75 Change: -890.49, (-4.77%)

Stock Closing price Daily change (%) Average price Volume MOL 15,600 -3.7 15,845 683,196 Matáv 915 -4 936 1,372,483 OTP 7,090 -6.1 7,301 1,369,661 Richter 26,400 -5.7 27,511 57,736 Egis 17,100 -2.7 17,306 19,035 Antenna 4,350 0.2 4,365 11,049 TVK 4,950 -0.9 5,017 4,428 Rába 740 -2 743 23,558Budapest Stock ExchangeExchange

Mar 2, 2005 National Bank of Hungary

EUR 1 242.22 USD 1 184.82 GBP 1 352.64 CHF 1 157.27 JPY 100 176.02 CZK 1 8.17 PLN 1 61.84Weather

Tomorrow: snow

High 0°C (32°F)Low -1°C (30°F)

18




04 March 2005BusinessTeva plans USD 100 mln projectThe Hungarian unit of Israeli drug maker Teva is planning a USD 100 million investment project at its plant inSajobabony, company spokesperson Gyöngyi Bende confirmed a report carried by the daily Világgazdaságyesterday. The company will announce further details of the project, as well as its business results, later on, shesaid. Teva Pharmaceuticals, which Teva created by merging its two Hungarian production units, Biogal andHuman, had sales of about Ft 100 billion in 2004, according to an earlier report by the business daily. (Econews;Thurs Vg 1)

FinMin instructs Airport to cancel property purchaseThe Finance Ministry instructed Ferihegy International Ariport operator Budapest Airport Rt (BA) to cancel a realestate purchase contract it signed with real estate developer Carion Group in early February, broadsheetNépszabadság reported without quoting a source. The agreement, which received wide publicity and criticism inthe last few weeks, concerned the acquisition of a 20-hectare property in Ecser near the airport where BA wasplanning to develop a new cargo base for Ft 5 billion-Ft 7 billion. Carion, which had bought the site for Ft2,500/sqm-Ft 5,000/sqm, resold the property to BA for Ft 24,000 Ft/sqm without having done any infrastructuredevelopment on it. BA CEO János Hárskuti claims he signed the agreement with the approval of the board of directors and that of the State Privatization and Holding Rt (ÁPV), which exercises the ownership rights in thestate-owned company. (Nb 1) P.P.

Globus expects profit only in 2006Canning company Globus expects market conditions to continue to remain unfavorable and does not plan to turna profit until 2006 or 2007, Globus’s management said yesterday. Globus ended 2004 with consolidated netlosses of Ft 812 million, according to Hungarian Accounting Standards, a significant deterioration from nine-monthnet profit of Ft 250 million. The losses were generated on the domestic market, because Globus’s Polish unit hadnet profit of Ft 145 million in 2004. Globus blamed last year’s surprise fourth-quarter loss on the strong forint,cheap food imports and the untimely introduction of a new accounting system at the height of the season.(Econews; NG 11)

MOL reorganizes upstream divisionHungarian oil and gas group MOL Rt has announced organizational changes in its Exploration and ProductionDivision as per 1 March. The reorganization was designed to provide a firm base for future success in the area of international growth, MOL said in a statement. „These measures should result in the creation of a dynamic,

flexible and project-oriented organization, follow the best practices of the industry and help utilize our existingtalent and knowledge base in the best possible way,” MOL said in a statement. The reorganization includes thecreation of four major sections under the direct control of Exploration and Production Managing Director.(Econews; NG 11-12)

Erste Bank buys out Marriott hotel Austria’s Erste Bank has bought out Budapest’s Marriott hotel, one of the city’s most prominent riverfront features,business weekly HVG reported in its latest issue. Erste Bank already owns a 51% stake in the company that ownsthe hotel, and bought the remaining stake from Marriott International. Marriott International will continue to operatethe hotel under a long-term management contract. Marriott’s fee for managing the hotel in 2003 was Ft 561million. (Econews; BBJ Online)

Magyar Posta fined Ft 5 mlnThe Competition Office (GVH) has fined Hungarian postal service Magyar Posta Rt Ft 5 million for misleading

consumers, GVH said yesterday. According to the GVH statement, Magyar Posta’s advertisements for its „priority”mailing service, introduced in March 2004, led consumers to believe that „priority” letters would be received by theaddressee on the day after posting them. In fact, the letters were still taking three days - standard delivery time for letters - to arrive at the end of August. When setting the fine, GVH considered Magyar Posta’s monopoly of themarket, the GVH ruling said. (Econews; Nv 4, MH 11)

Hunting Council fined - againCompetition Office (GVH) fined the Council of Game Products and Hunting Services (VTSzT) Ft 80 million for imposing a mandatory price determination for members thus restricting the competition, Napi Gazdaság reportedon the basis of the council’s press release. The Ft 1.7 billion hunting market has been violated 11 times between August 2000 and April 2004. This is the second time the council has been issued a fine within a short period of time, their previous penalty, Ft 150 million was imposed on them less than 3 months ago, on December 9, 2004for establishing a price cartel. (NG 5, BBJ Online) E.C.

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MÁV halts competitor train at border Hungarian railways MÁV Rt, which owns the tracks in Hungary, has been holding back a competitor train on theborder with Ukraine for the third day in a row, the Ministry of Economics said yesterday, adding that a ministryofficial was traveling to the border to learn more. The train is owned by a private Hungarian rail company calledMMV, and although it had been granted authorization to use public rails, MÁV argues that this did not includeindustrial track under its management. The ministry said MMV had offered to pay for track use, but MÁV had notresponded to the offer and had denied them access to the track. (MTI; NG 4)

Dreher sales down, company optimisticBrewery Dreher Rt’s sales dropped last year, however, the setback has been silenced by the improvement of thecompany’s customer relations management (CRM) strategy, explained chief SAP officer István Németh. Dreher produced and sold 2.2 million hectoliters of beer last year, which is 200 thousand less than the previous year,which is attributed to the invasion of the cheap foreign exports. The installation of the new CRM system had costthe company Ft 100 million, however, it has enabled them to acquire up to date information on their clients, thusfacilitating the maintenance, delivery, and other work phases. According to Németh, Dreher is now able to react tothe competition’s price changes in each outlet within 2-3 days. (NG 5) E.C.

CIB Bank to pay Ft 2.96 bln dividendCIB Bank Rt will pay a dividend of Ft 2.5 billion on ordinary shares to its 91.36% owner, Italy’s Intesa HoldingInternational SA, , and it will pay a dividend of Ft 466.754 million on employee shares , CIB Bank said yesterday.Payment of the dividends was approved by a shareholders’ meeting on March 1. The dividend corresponds to11.5% of the bank’s registered capital. Last year CIB Bank paid a dividend equivalent to 10% of registered capital.The bank’s employees acquired their shares last year, when the bank’s registered capital was raised from Ft 23.5billion to Ft 25.723 billion on December 9, 2004 through the issue of free employee shares against reserves.(Econews; NG 4) Jordan offering compensation After the Hungarian Trade Licensing Bureau recently revoked its operating permit not long ago, travel agencyJordan Tours is now offering to compensate a group of tourists who had paid for their trip but were not admitted to join the tour as the travel broker to which they made the payment went bankrupt in the meantime. Jordan, themarket leader for trips to Jordan in Hungary, has lost its permit since it was refusing to recognize its legalobligation to compensate the would-be passengers, and also because the amount of its bank deposit, whichserves as a financial guarantee in the event of insolvency, did not reach the minimum required by the law for acertain time. Owner Zaid Naffa, who is also Jordan’s honorary consul in Hungary, emphasized the fact that thepassengers lost their money due to the bankrupcy of travel broker Skylines, with which was not affiliated. (Nb 12)

P.P.Philip Morris launches sales networkPhilip Morris Hungary Kft has finished setting up its own Ft 2 billion direct sales network, corporate relationsmanager Zsolt Jamniczky said yesterday. Philip Morris decided to discontinue selling its cigarettes throughwholesalers last year and start building a direct sales network. Philip Morris now employs 300 people to distributeits cigarettes, a quarter of them formerly employed at the company’s cigarette factory in Eger, which shut down atthe end of last year. The company runs a fleet of 200 vehicles to deliver the cigarettes. Philip Morris controls 33%of the Hungarian market, more than 3 percentage points up from one year earlier, but the overall market isshrinking. (Econews; NG 5)

ComGenex renews agreement with Bayer Hungarian biotech company ComGenex Rt, which is a leading regional player in the sector, has renewed acooperation agreement it has had with Bayer Healthcare since 1998, President Ferenc Darvas said. The two

companies extended the agreement by another year. ComGenex brings the scientific knowledge and researchresults into the cooperation with one of the world’s leading pharmaceuticals in the field of drug research, he said.(Vg 7) P.P.

Zegna opens it’s doorsItalian fashion group Zegna has opened its first men’s fashion store in Budapest. The Ermenegildo Zegna shopoperates as a part of the franchise system, the establishment of which was a Ft 100 million investment. The targetgroup is the Hungarian businessmen, not the foreign businessmen visiting Hungary, explained E.Z. Fashion KftCEO János Janikovszky to Napi Gazdaság yesterday. According to his forecast, this segment is now wealthyenough to sustain the shop. The price of a pr ęt-a porter suit ranges between Ft 180-250 thousand, however theyhave a tailor on staff directly from Switzerland to produce unique fits on a 4-week deadline. (NG 5) E.C.

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Hungary looks to Svedlovsk to investDuring the Budapest visit of the Sverdlovsk regional foreign minister Viktor Koksarov, a mutual agreement wassigned to establish a Hungarian trade office in Ekaterinburg, Russia. Koksarov explained to Ekaterinburg Online,about Hungary’s continuing business presence in the region, and mentioned the possibility of re-scheduling theBudapest-Ekaterinburg direct flight. At the meeting, Finance Minister János Kóka and the ambassador of theRussian federation Valerij Musatov came to agreement on the preparation of a co operational agreement between Hungary and the Sverdlovsk region. (NG 3) E.C.

EconomicsIBM to start Ft 6.5 bln projectIBM will soon start a Ft 6.5 billion project in Hungary which will create 700 new jobs, Minister of Economics andTransport János Koka said yesterday. The company is getting a state subsidy for the project, the amount of whichwill be announced within 60 days, Koka said. IBM Hungary Kft CEO Peter Paál said IBM wanted to create the jobs quickly, adding that IBM would keep the positions for at least five years. Businesses are currently investing Ft200 billion in projects in Hungary, and these projects will result in the creation of 7,000 new jobs, Koka said.(Econews; Ng 5, Nv 6, MH 12, Thurs Vg 7, Nb 11)

Public sector payment faces major overhaulHungary’s 812,000 state sector employees, including civil servants and public service workers, may be facingextensive changes in their employment status and remuneration structure when the new public service act takeseffect in 2006. The current system of fixed salaries will probably be replaced by one in which no more than 65% of

wages is guaranteed and 20% is performance-related pay. It is also likely that the traditionally separateemployment categories of civil servant and public service worker will be merged, Government Commissioner János Vadász said. In Hungary, the state sector accounts for 22.5% of all employment, roughly halfway betweenthe average of the EU-15 (24.6%) and the new member states (20.5%). (Thurs Vg 1) P.P.

Heating prices set to dropDistrict heating prices will decline by 3% next summer, thanks to ongoing modernization, vice-CEO of districtheating company F?táv Rt, Gábor Hován said. Further decreases could be available if the company buy naturalgas at lower price than commercial competitors. This would mean Ft 20,000 saving for an average family yearly,head of the Budapest organization of SzDSz, Imre Lakos added. Economy and Transport Ministry sets differentgas prices for different power plants in Hungary now. (Nv 4) G.R.

6 ex FinMins attend conferenceSix out of ten Finance Ministers in the past 15 years and several further experts attended the conference

„Taxation and Competition” held by economy research company Pénzügykutató Rt and Allianz HungáriaInsurance Rt yesterday. Tax cuts may create motivation for the restructuring of the administration, FinanceMinister Tibor Draskovics said. Former Central Bank chairman, Imre Surányi suggested radical simplification of the taxation system, removing all welfare measures. He also proposed the equalizing of the tax levels of capitaland labor revenues. (MH 11) G.R.

Home building permits down 3%The number of new building permits was 57,459 last year, 3% down from 2003, the Central Statistical Office(KSH) said yesterday. KSH reported that 43,913 homes were completed in 2004, up 23.5% from the precedingyear. In the fourth quarter alone 7% more new homes were completed and 15% less building permit were issuedthan in the last three months of 2003. (Econews; NG 4, Nv 5, MH 13)

Number of land lines going downThe number of operating fixed line phones decreased by 15,000 in January. There are 3.54 million active

subscribers in Hungary, according to report of the National Communications Authority (NHH). That means 35.15lines per 100 citizens on average; a year before this rate was 35.57. The share of ISDN lines among phone linestotal increased from 16.66% of December to 16.72%. (Nv 6, MH 11) G.R.

PoliticsBush may visit - U.S. ambassador U.S. President George W. Bush could visit Hungary before the end of the year, the U.S. ambassador saidyesterday. Ambassador George Herbert Walker said he was strongly hopeful regarding a possible visit this year,Hungarian radio reported. Plans are in the pipeline for Prime Minister Ferenc Gyurcsány to visit Washington butthe official invitation has not yet been made and the date of the visit has still to be fixed, he said. The ambassador confirmed that Hungarian Foreign Minister Ferenc Somogyi would meet Secretary of State Condoleezza Rice inWashington on April 1 to discuss a variety of issues, including Iran, plans to lift the arms embargo on China, theMiddle East, bilateral economic ties and easing the U.S. visa regulations. (MTI; Nv 1, MH 1)

21




Slovakia/Hungry restart dam talksTalks between Slovakia and Hungary concerning the dam system of B?s-Nagymaros have been restarted. For Slovakia the most important aim is to keep the Danube navigable, while Hungary’s key issue is to improve theecological status of the river. Slovakia still expects Hungary to build the Nagymaros-section of the dam,government commissioner Dominik Kocinger said. Hungary is not even willing to discuss this option, Hungariangovernment commissioner György Erdey replied. The security of the navigation can be assured with traditionalriver regulating methods, he added. Still the two representatives agreed that they want to continue negotiationsand do not intend to turn to the International Court again. The original contract between the two countries includedthe building of the dam at Nagymaros; but Hungary denounced it in 1989 following civil protests. (MH 3) G.R.

DomesticMTV show promotes readingMTV’s new program The Big Read (Nagy Könyv) is now on. The year-long show aims to bring back the passionfor reading by hosting stars who talk about their favorite books and viewers can cast their vote on the best novelof the year. MTV has bought the license from the BBC for GBP 20 thousand. The total costs of realization is Ft 1-1.1 billion, Ft 80-100 million is to be provided by the public channel. The Culture Ministry provides Ft 500 million inthe frameworks of the National Cultural Program, and it has agreed to provide all 2000 public libraries with themost popular novels in the show. (NG 10) E.C.

StocksBUX Close: 17763.79 Change: -18.96 (-0.11%)

Stock Closing price Daily change (%) Average price VolumeMOL 15,485 -0.7 15,467 452,802Matáv 941 2.8 938 2,473,691OTP 6,998 -1.3 7,048 1,803,223Richter 26,500 0.4 26,635 51,147Egis 17,390 1.7 17,043 19603 Antenna 4,355 0.1 4,344 10,385TVK 4,860 -1.8 4,859 6,720Rába 745 0.7 740 10,305Budapest Stock Exchange

Exchange RatesFIXED MIDDLE RATE In forintsMar 3, 2005 National Bank of HungaryEUR 1 242.25

USD 1 184.16

GBP 1 351.67

CHF 1 156.83

JPY 100 175.59

CZK 1 8.17

PLN 1 61.79

Weather Tomorrow: snowHigh 1°C (34°F)

Low -4°C (25°F)

22




07 March 2005Business

No agreement for ministry and farmers

Though talks between the Ministry of Agriculture and representatives of demonstrating farmers continuedyesterday, neither party believes that negotiations will be concluded any time soon. Leader of the farmers'delegation István Jakab said that Prime Minister Ferenc Gyurcsány's Saturday statement, in which he refused to

provide additional funds to meet farmer demands, foreshadowed that Sunday would be just one more day of talkswithout an agreement. During a break in talks, Agriculture Minister Imre Németh said that the authorities hadforwarded 80% of available EU funds to the farmers and confirmed that all subsidies would be paid before the April 30 deadline set by law. (MTI; MH1, Nv 1, NG 3)

IBM to invest further Ft 6.5 bln

American IBM plans to invest Ft 6.5 billion into the extension of its regional services branch in Hungary, generalmanager of the Hungarian subsidiary Péter Paál said. IBM also plans to hire 700 new workers, mainly freshgraduates, Paál said. IBM's new investment will receive a budget subsidy as well; talks are going on about theamount, Economy Minister János Kóka said. The Economy Ministry signed subsidy agreements with four companies last year, which brought a total Ft 93 billion to Hungary and established 5,090 jobs. (Fri Vg, 13) M.K.

Subway to set up regional logistics center

Restaurant chain Subway plans to establish a regional logistics center in Hungary, if the local taxationenvironment is favorable enough, managing director of Székelyföld Kft John D. Holmes announced. Székelyföld isresponsible for Subway's business development in Hungary. Subway will add two new restaurants in the comingweeks to its current two facilities, when the restaurants at Móricz Zsigmond körtér, Dist. 11 and Mammut shoppingmall, Dist. 2 open, Holmes said. Subway aims to have 48 restaurants in Budapest and 86 in other towns of Hungary in the next ten years, Holmes said. (Fri Vg 13) M.K.

Record number of new flats built 2004

More new flats were constructed in Hungary last year than in any year since 1989, the Central Statistics Office(KSH) reported. The number of new flats built in 2004 reached 44,000, having steadily grown from 20,000 in1998. The number of construction permits issued is also on the rise. Last year 57,000 were issued, while in 1998this figure was only 23,000. In Budapest 60% more flats were built last year than the year before. (Fri Vg 5) M.K.

Advent, Warburg may bid for Antenna Antenna Hungária Rt said U.S. investment company Advent International Corp. and venture capital firm WarburgPincus LLC are interested in buying a majority stake in the company, Vilaggazdaság reported. Hungary wants tosell its 75% stake in an open bidding for Antenna, which broadcasts signals for Hungarian television stations andoffers Internet and telecommunications backbone services, by the middle of 2005. Antenna's management is alsoin talks with AIG Global Investment Corp, an Australian private equity firm, France Telecom SA's Telediffusion deFrance broadcasting unit, Grupo Auna's Retevision business, and Czech Radiokomunikace, the newspaper said,without citing anyone. (Bloomberg; Fri Vg 1, NG 5)

Potential in hyper market

Although the number of hypermarkets increased by 160% in the past four years and their market share increasedfrom 11% to 26% at the same time, there is still huge potential in this retail sector, according to a survey by marketresearch company ACNielsen Kft. The company based its prediction on the fact that currently only 56% of Hungarians do their shopping at large retail facilities, while in the other Visegrád countries the equivalent rate isapproximately 66%. Hungarians typically look for a wide product range when they go to a hypermarket, asopposed to some other countries in the region where proximity is the key factor. The study also found that theaverage Hungarian shopper is more conservative than consumers in the Czech Republic or in Slovakia, with 11%of the population avoiding hypermarkets altogether. (NG 5) P.P.

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SalgóSík adds acid glass to range

Yesterday saw plate glass manufacturer SalgóSík Kft open a new unit within its manufacturing plant inSalgótarján, northern Hungary, where the company set up a facility for the production of acid glass. SalgóSík isthe first company in Hungary to manufacture acid glass, an opaque product primarily used in interior design andhitherto only available as an import product, Managing Director Géza Fejérvári told BBJ Online. SalgóSík, whosepreliminary 2004 report shows Ft 1.2 billion revenue and Ft 70 million profit, expects turnover to reach Ft 1.4billion-Ft 1.5 billion this year, of which the new product may bring in approximately Ft 150 million, Fejérvári added.

(BBJ website)EconMin subsidizes Roma ventures

The Economic Ministry has decided to launch a Ft 200 million program aimed at boosting Roma enterprises,Minister János Kóka said in Salgótarján, northern Hungary, on Friday. The ministry program aims to assist smalland medium-size Roma ventures through development or investment projects improving the company's marketposition and competitiveness, Kóka said. Projects are eligible for a grant of 65% of their overall budgets, but notmore than Ft 3 million each. (MTI)

Raiffeisen Capital Management to introduce funds

The State Financial Institutions Supervision PSzÁF has given Raiffeisen Capital Management (RCM) AG the go-ahead to start selling units in ten of its investment funds in Hungary, Raiffeisen Bank announced on Friday. Theunits will be sold starting March 7. RCM offers share-based and bond-based investment funds suitable for one-off

investments and regular savings. Raiffeisen Bank's Hungarian fund manager, Raiffeisen Befektetési AlapkezeloRt, managed assets worth Ft 64.13 billion at the end of 2004, including Ft 44.837 billion in investment funds. Thefund manager recorded after-tax profit of Ft 77 million in 2004, 71% more than in 2003. (Econews)

Miskolc co. enters Estonia

Miskolc-based Fux Rt, a leading supplier of electrical cables to Hungarian power distributors, has recently enteredthe Estonian market where it secured a Ft 1.5 billion contract for 3,000 tons of cables, owner and President-CEOIstván Barkóczi said. The company has representative offices in Bulgaria, Romania and Slovakia, with plans toexpand production as well as sales in these countries to take advantage of lower taxes. Fux products are alsoavailable in Germany and the Czech Repulic through local partners. Barkóczi expects turnover to increase fromthis year's Ft 3 billion to Ft 4 billion next year. (NG 1) P.P.

IVG plans to invest another Euro 66m in Infopark

Germany's IVG Immobilien, one of Europe's biggest real estate stock corporations, plans to invest a further Euro66 million (Ft 16.5 billion) in Budapest's Infopark, a research and office complex, by the end of 2007, IVGImmobilien president John von Freyend said at a press conference on Friday. IVG is currently building Infopark's12,700 sqm "C" building and will finish by April. The Euro 25 million building's first tenant, Freesoft, has alreadysigned a contract to rent 1,400 sqm, and a preliminary contract to rent 3,500 sqm has been signed with T-Systems, the IT company of Deutsche Telekom. DT subsidiaries Axelero Rt and Matáv Rt already have offices inInfopark. IVG expects to recoup its investment in Infopark in about 13 years. (Econews; NG 5)

Matáv in Montenegro

Hungarian telecom Matáv Rt has agreed on the terms of the privatization of Montenegro's Telekom Crne Gorewith representatives of the country's government in Budapest this Saturday, according to unnamed news sources.Montenegro's government is expected to give the green light to the agreement at the cabinet's next meeting.

Hungary's leading fixed-line telephone company will acquire a majority 51.12% stake in Telekom Crne Gore for Euro 114 million, and has offered to invest another Euro 67.3 million in the company during the next five years.(MH 11, Nv 5) P.O.

OTP may be mulling Turkey's Demizbank

By 2008, 35%-40% of OTP Rt's profit will probably come from foreign subsidiaries, Deputy CEO László Wolf saidin an interview with wire agency Reuters. In addition to OTP's widely known acquisition plans to buy three banksworth Euro 100 million-Euro 150 million each in Serbia, two more of a similar size in Romania and Slovakia, andone of an undisclosed value in Ukraine, Hungary's leading financial institution is eyeing another large and fast-growing market where the country risk is expected to diminish in the coming years, according to Wolf. Thisinformation coincides with speculation about OTP's alleged intention to buy Turkey's Demizbank, which sent thelatter's stocks on a steep growth curve recently and may have also contributed to the unbroken success of OTP atthe Budapest Stock Exchange (BÉT). (NG 7) P.P.

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Egis dividends paid March 24

Publicly traded drugmaker Egis Rt will start paying dividends on March 24, with Ft 120 per share to be paid tostockholders, the company said. The final day of trading with a dividend coupon is March 11, and entitlement todividends will be based on ownership on March 18 after trading hours at the Budapest Stock Exchange (BÉT).Individual tax-payers in Hungary are required to pay 20% tax on dividends, while this type of income is tax-free for companies and other legal entities. (NG 7) P.P.

Dresdner Bank Hungaria to convert to branch officeDresdner Bank Hungária Rt will convert from a subsidiary of its parent bank into a branch office from the secondhalf of this year, president and CEO György Mesterházy said in Friday's issue of business daily Napi Gazdaság.The change will not affect Dresdner Bank's clients or the range of services its offers, but it will give the bankaccess to much more capital. Dresdner Bank Hungária will be able to provide much bigger loans after it becomesa branch office. Other banks considering turning their Hungarian subsidiaries into branch offices include CalyonBank Hungary Rt, BNP Paribas Hungary Rt, WestLB Hungary Rt and Deutsche Bank Rt. (Econews)

Parking fees through T-Mobile phones from June

T-Mobile Hungary Rt will allow its customers to pay their parking fees in Budapest through their mobile phonesfrom June, deputy general manager Zsigmond Bodnár said. The payment option is part of T-Mobile's m-compackage, Bodnár said. T-Mobile has signed an agreement with Centrum Parking Kft, which means parking feescan be paid from mobile phones in seven downtown districts, Bodnár said. In related news, T-Mobile has also

recently launched its e-mail service. E-mails sent to mobile phones can be received without downloading and theycan contain attachments or pictures too. (Fri Vg 13) M.K.

Investkredit Bank to open local office

Austrian Investkredit Bank AG is to open a representation office in Budapest, CEO Wilfried Stadler said. Thecompany's real estate fund Europolis has been present on the Hungarian market since last November, but nowInvestkredit wants to make all its service available, Stadler said. Investkredit is mainly active in corporate finance,municipality financing and real estate development, Stadler said. The Budapest office will be managed by BenceNádasdy. (Fri Vg, 19) M.K.Economics

Number of internet users rises 9% in Q4

There were 741,771 internet subscriptions in Hungary at the end of the fourth quarter last year, 9% more than atthe end of September and up 17.7% from one year earlier, the Central Statistics Office (KSH) reported on Friday.Internet service providers (ISP) recorded net sales revenue of Ft 12.8 billion in the fourth quarter, 13.3% morethan in the previous quarter and 47.8% more than one year earlier. KSH noted that figures for the third quarter have been revised because ISPs provided incorrect data. Mobile phone subscriptions pegged in at 86.3 per 100residents at the end of the year. (Econews)

Eva is broad enough for EU

The EU is hardly likely to approve Hungary's plans to raise the annual revenue limit for SME's paying a simplifiedbusiness tax (EVA) from Ft 25 million to Ft 50 million, news of which has been leaked from the Finance Ministrysoon after the recent EU nod of approval to the EVA concept, Napi Gazdaság reported citing unnamed sources inBrussels. Several members of the VAT committee that examined the legitimacy of this unique form of SMEtaxation at the request of former European Commissioner for internal markets Frits Bolkestein said the approval in

late February was a "near miss". However, the extension of the EVA system would constitute such a substantialinterference with macroeconomic processes that the committee would probably refuse to endorse it, one of thenewspaper's sources said. (NG 1) P.P.

EU entry beneficial for foreign trade balance

In the preliminary figures of the Central Statistics Office (KSH), Hungary's foreign trade grew at a faster pace in2004 than in previous years, with a 17% increase in export volume and 14% rise in imports. The growth rate of exports was higher than that of imports in each of the four quarters. The value of exported goods totaled Ft11.094 billion, 15% higher than in 2003, while imports rose by 13% to Ft 12.064 billion. The country's foreign tradebalance improved by Ft 82 billion to Ft 970 billion. At 92%, the relative value of exports and imports has never been so high since 1992. (BBJ website)

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Drug stockpiling puts OEP Ft 8 bln over budget

The National Health Fund Administration (OEP) was already Ft 8 billion over budget at the end of February, ahealth fund official told a business daily on Friday. The fund saw a big rise in spending at the end of January aspeople stocked up on subsidized drugs before a 7.5% price rise in February, while the recent flu epidemic hasalso boosted the fund's spending, OEP department head Gábor Lengyel told business daily Világgazdaság.Under an agreement signed by drugmakers and the government, if the OEP runs up to Ft 30 billion over its Ft 284billion budget, drugmakers must cover half of the cost. Above this figure, drug companies must finance all

subsidies. At the end of February the fund had already spent Ft 50.9 billion. (MTI)PoliticsSzDSz says no to tax proposals

The chairman of the Alliance of Free Democrats (SZDSZ), Gábor Kuncze, called the proposals of theparliamentary tax reform committee "unacceptable", claiming the planned changes would make the currenttaxation system more complicated. According to the proposals, the simplified entrepreneurial tax (eva) wouldhave two brackets, which, Kuncze claims, would encourage companies to swell their costs. The move to abolishthe local business tax is a welcomed by the SzDSz, but the party have gone about it differently. The FreeDemocrats would also pull the plug on the system of welfare grants, which the tax reform committee leftunchanged. (MH 3) P.O.DomesticPumps at work as ground waters rise

With over ten thousand hectares of land under water in eastern Hungary, operations to clear the water tables andhalt further flooding are underway, the chief of area flood defense operations said yesterday. "Level two (mid-level) defenses are in place along seven sections of the land, and level one (lowest level) are underway in twofurther areas, László Kóthay said. Sixteen pumps are running, he added, lifting 1.3 million cubic meters of water aday off the land and into creeks and rivers. Over 130 people spent the weekend doing flood defense work in thearea, Kóthay confirmed. (MTI)

Equal Opportunities body: 50 complaints in 1 month

The Equal Opportunities Authority received 50 complaints, principally regarding job discrimination, in the monthsince February 1 when it began working, chairperson Judit Demeter said. Most of the complaints concerneddiscrimination in the hiring process and most submissions came from ethnic Roma, but people were alsodiscriminated against because of disabilities, illness and family status, she said. Until now, a person sufferingdiscrimination had to turn to a specific authority depending on the type of discrimination. This limited their options,

since sometimes the body itself was involved in the discrimination. (MTI; MH 2)StockwatchBUX Close: 18061.84 Change: +298.05 (+1.68%)Stock Closing price Daily change (%) Average price Volume MOL 16,000 3.3 15,661 368,400 Matáv 952 1.2 949 1,582,689 OTP 7,050 0.7 6,996 1,284,116 Richter 26,900 1.5 26,583 53,375 Egis 17,700 1.8 17,559 35,356 Antenna 4,515 3.7 4,512 24,532 ExchangeMar 04, 2005 National Bank of Hungary

EUR

1

242.58

USD 1 184.78 GBP 1 352.41 CHF 1 156.61 JPY 100 175.40 Weather Tomorrow: cloudyHigh 2°C (36°F)Low -1°C (31°F)

7days, 2005. március 7. (pdf-ből)

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