INTERNAL AFFAIRS 26.01.2004 - Draskovics package in the making 28.01.2004 - Money laundering: suspicious what is not suspicious? 29.01.2004 - Highway M5: continuing negotiations 30.01.2004 - Fidesz gaining ground FOREIGN AFFAIRS 26.01.2004 - Critique from Strasbourg 29.01.2004 - OECD: Hungary can be an EMU member in 2008 already 30.01.2004 - EPP suggestion against ex-communists MACROECONOMY 26.01.2004 - Hungarian eurobond successful on London market 27.01.2004 - Active Hungarian investors - Interest rate cut forecast for spring - Swedish companies plan long-term 28.01.2004 - Foreign trade: smaller differences between exports and imports 29.01.2004 - Draskovics is optimistic 30.01.2004 - Austerity measure of HUF 120 not enough, forint getting weaker BANK 29.01.2004 - Interest rates increased significantly in December - OTP mortgage bonds for private investors - Takarékbank deal finalised INSURANCE 28.01.2004 - Live insurance in euro as well HEAVY INDUSTRY 26.01.2004 - This year Audi will spend 200 million euros on development 28.01.2004 - Csepel Holding to become more rationalised 30.01.2004 - Linamar is careful ENERGY INDUSTRY 29.01.2004 - Unipetrol: Mol and PKN are the winners? - Wind turbines in Záhony 30.01.2004 - Lukoil bringing Romanian petrol INFORMATION TECHNOLOGY 27.01.2004 - Sulinet Programme Will Be Changed 28.01.2004 - Oracle: lack of qualified developers PAPER- AND PRINTING INDUSTRY 30.01.2004 - Kartonpack withdrawal delays due to technical reasons FOOD INDUSTRY 27.01.2004 - Tobacco works in Debrecen to close down - Walmark comes to Hungary 28.01.2004 - Development at Cerbona - Wallis to get out of food industry 29.01.2004 - Hungarian Food Company going bankrupt - Kraft Foods to close Hungarian plants 30.01.2004 - Finomságok Kft. aiming to be a major player on the ice-cream market - Milk plant to be built in Kaposvár AGRICULTURE 27.01.2004 - Hajdú-Bét liquidation process to start within days 28.01.2004 - Calls for the abolishment of the meat import ban 29.01.2004 - Condemning EU agricultural report TRADE, FAIRS 26.01.2004 - Expansion at Schlecker - Retail stills still high 28.01.2004 - Renault Hungária posting a HUF 63 billion sales revenue in 2003 - Voluntary restrictions in car imports? 30.01.2004 - Registration fee will enter into force on Monday TRAFFIC, TRANSPORT 26.01.2004 - Czech Airlines in talks with Malév on co-operation 27.01.2004 - M5: final countdown has started 29.01.2004 - WIZZ Air planning to post profits TOURISM, HOSPITALITY 28.01.2004 - McDonald's recovered - Subway to open in April



INVESTMENT, DEVELOPMENT 26.01.2004 - Rolls-Royce factory in Debrecen? - Covent Garden in Közraktár? - New glass building in place of the ORI headquarters - New tenants in Oktogon House - OTP Real Estate following its parent bank 27.01.2004 - Lander Carlisle development in Mezőlak 28.01.2004 - Adventure city next to Sopron? 29.01.2004 - Auchan became a park developer SECURITIES’ MARKETS 26.01.2004 - PSzÁF blocks purchase of Indotek Befektetési stake by CDP MEDIA 27.01.2004 - Mai Budapesti Nap discontinued 28.01.2004 - Ringier Hungary to publish Mai Nap OTHER 27.01.2004 - Hungarian striker Miklós Fehér dies



INTERNAL AFFAIRS - 26.01.2004 Draskovics package in the making
Finance Minister designate Tibor Draskovics will soon send the latter of the Finance Ministry, containing its suggestions for cutting costs, to all other ministries. These measures are only suggestions, it is the Ministers that have to make the final decision, that is why for the time being it is not known from where the prescribed HUF 120 billion will be cut. What seems for sure is that it will be quite difficult to take away that sum of money: there is not enough money at present to pay salaries, not to speak about maintenance. Based on this, likely to be hit by the cost cutting program are application programs and public institutions. Chancellery Minster Péter Kiss welcomed the suggestion coming from politicians of junior coalition party Alliance of Free Democrats that would make Sulinetrelated expenditures stricter. (Under the suggestions, those earning more than five times the minimal salary would no longer be entitled to make use of discount while buying PC. Péter Kiss is of the opinion that that also through so-called PPP (Public Private Partnership Programs) investments, state expenditures could be lowered.) Financial experts think that besides lower spending of the state apparatus, the budget could save costs in drug-related expenditures and home loans. The latter one can be based on the fact that banks have already raised their interest rates nearing the centrallyregulated ceiling, otherwise they would not be interested in taking part in the business. Should other austerity measures be carried out, a part of banks would surely leave the market. (NSZ, 24 Jan, p 5, MH, 24-25 Jan, p 9, Nszab, p 24. P 1 and 17, VG, 26 Jan, p 1 and 4)

INTERNAL AFFAIRS - 28.01.2004 Money laundering: suspicious what is not suspicious?
Reports of suspicious money-laundering cases to the unit dealing with this area at National Police Headquarters ORFK has taken a large jump in numbers since the press published that it had questioned cashiers from Inter-Európa Bank and National Savings Bank OTP on charges of not meeting obligations in relation to reporting the police on money-laundering. Since then, an expert of the money-laundering unit has to check a number of 200-250 cases daily, which is impossible. All this is dangerous, since Hungary, despite its strict anti-money laundering laws, can become the paradise for those carrying out money laundering activities. Maybe there are problems with the law, since it orders to penalise those that fail to meet their obligation to report suspicious cases to the police, whilst at the same time it does not sanction those that report cases unnecessarily. Most credit institutions are having the practice that they are reporting all their large cash transactions to the police, irrespective of the fact whether they are suspicious or not. (Nszab, p 1 and 5)

INTERNAL AFFAIRS - 29.01.2004 Highway M5: continuing negotiations
Negotiations are still under way about the buy-out of AKA Rt., which operates Highway M5, under the leadership of the Ministry of Economy and Transport, but an agreement is expected within a few days – stated the cabinet spokesman after the cabinet session. Zoltán Gál J. said: the two legal offices representing the parties will initial the decision aiming buy-out this week already, that is, the involvement of the highway in the sticker system proceeds according to original plans. They plan to extend it to Highway M5 on March 12th. (VG p4, Nszab. p1, 4, NSZ p1, 3, 8, MH p9)

INTERNAL AFFAIRS - 30.01.2004 Fidesz gaining ground
Thinktank Szonda Ipsos writes in its January study that opposition party Fidesz has an 8 point advantage over senior governing party Hungarian Socialist Party (MSZP) when it comes to adult population, whilst the advantage reaches 9 percent in terms of those with a certain party choice. 32 percent of those interviewed would vote for Fidesz – Hungarian Civic Alliance, whilst Socialists have a support of 24 percent, should elections be held today. Backing of junior governing party Alliance of Free Democrats SZDSZ is at 4 percent, whilst figures for other parties are several percents down on the 5 percent needed to make it to the Parliament. 37 percent of hose taking part in the survey have not named a party they would vote for with the ratio of undecided at 18 percent. Another pollster Medián reports with those with a sure party preference, Fidesz has 45 percent of the votes with MSZP trailing at 31 percent. SZDSZ may count on 2 percent, whilst Hungarian Democratic Forum MDF on 2 percent. 64 percent of those asked are of the opinion that „things are going in the wrong direction“, whilst Prime Minister Péter Medgyessy has reached the negative record of his predecessor at 43 percent on the acceptance scale. Former Prime Minister Viktor Orbán has gained 7 percent in his popularity, occupying the fifth place in the rankings of politicians. Leader on the list is MDF Chairwoman Ibolya Dávid, followed by President Ferenc Mádl, Chairman and parliamentary group leader of junior government party SZDSZ G¹bor Kuncze and Budapest Mayor Gábor Demszky. (Nszab, p 1 and 5, MH, p 4, NSZ, p 3)



FOREIGN AFFAIRS, EUROPEAN UNION - 26.01.2004 Critique from Strasbourg
A draft report which German European People's Party (EPP) MP Elmar Brok is preparing for the EU Parliament, regarding the new member states, severely criticises Hungary for slowing economic growth, as well as corruption in the public sector that continues to be a major problem in Hungary, together with the country’s lack of agricultural preparedness for the impending European Union accession. The report will be debated at the foreign affairs committee of the European Parliament today and no major changes are expected in it. The document highlights as main problems lack in the country’s agricultural and regional systems, together with its foodstuff safety network. The report urges the Hungarian government to ensure the provision of sufficient funds for the judicial sector. On a positive note, it also welcomes the amendment of the Status Law and the fact that Hungary has adopted EU equal opportunities legislation, but warns that for such measures to be really useful, comprehensive social welfare programs are needed. Finally, the report calls on Hungarians to turn out as actively as possible for the European Parliament elections, and take the opportunity to engage in a debate on the future of Hungary in particular, and the EU in general. (MH, 23 Jan, p 8, NSZ, 24 Jan, p 2)

FOREIGN AFFAIRS, EUROPEAN UNION - 29.01.2004 OECD: Hungary can be an EMU member in 2008 already
According to OECD’s country report Hungary can joint the euro zone (EMU) in 2008 already. But in order to achieve this, the strengthening of competitiveness, the increase of employment (increase of labour market’s activity), the reform of the state budget and the reduction of inflation is necessary – states the international organisation’s analysis. Experts evaluated it favourably that Hungary has cut the GDP proportional state budget deficit from 9.2 percent in 2002 to 5.6 percent in 2003. At the same time OECD warns: in order to access the euro zone budgetary deficit has to decrease below 3 percent by 2006. The organisation suggests, among others, further restriction of the home loan system, review of income tax allowances and urges women’s labour market presence to be enhanced by the amendment of family tax allowances. According to OECD, in addition to this, introduction of municipality real estate tax and interest tax would also be necessary. According to analysts MNB’s (National Bank of Hungary) exchange rate policy determining the exchange rate target is appropriate, but it can cause a speculative attack, if the market learns how far the issuing bank is willing to go in order to protect the course. Furthermore, the dispute between the central bank and the financial cabinet causes uncertainty also. Since monetary targets can only be implemented under a good fiscal policy. Világgazdaság deals with the OECD report in a whole page compilation. (NSZ p5, NG p3, MH p11, VG p8)

FOREIGN AFFAIRS, EUROPEAN UNION - 30.01.2004 EPP suggestion against ex-communists
The European People's Party (EPP) approved a draft proposal for filtering out the one-time communist leaders from the senior officials of the EU institutions, set to be renewed shortly, on Wednesday. The draft will be debated in EPP‘s congress next week. Taking part in the session is Vikor Orbán, Chairman of opposition party Fidesz – Hungarian Civic Alliance. A harsh change of words is expected in the matter, which would call for all caucuses of the European Parliament not to receive excommunist politicians as their members. Several socialist politicians think that Fidesz is behind this action, however, József Szájer, the Brussels official observer at the European Parliament of Fidesz has denied this information. Szájer stated that the suggestion came from the Latvian premier and from German sources and Fidesz agrees to it. Viktor Orbán is of the opinion that this is a delicate matter and he would like to take a stand only after reading the text of the initiative. He went on to say that the European Union has been dealing with this question since 1990, namely that should former Soviet countries join the Union once, is not that necessary to exclude those that can not be accepted based on the European norms and on their pasts. „But we are far form this world, because in Hungary there is other economic structure and we are interested in weakening a government entitled to represent national interests even if we agree with the declaration in itself:” Foreign Minister and Chairman of MSZP László Kovács added that the declaration to condemn communist regimes is in line with the European Union’s democratic goals, but it is unprecedented that a caucus orders others whom they should accept as officials in advance. He added that unfortunately, this unacceptable step had a Hungarian connection, too, as József Szájer, a senior official of the opposition Fidesz party, had taken part in drafting the document. According to an article carried by daily Magyar Hírlap, the Fidesz observer suggests that a memorial day should be initiated for the memory of victims of the socialist system, together with a monument and a documentation and research centre should be set up. (Nszab, p 1 and 4, MH,p 6)



MACROECONOMY - 26.01.2004 Hungarian eurobond successful on London market
A new series of EUR 1 billion Hungarian bonds were 20 percent oversubscribed on the London market. Hungary has launched EUR 1 billion 10-year international bond on Friday at an issue price of 99.881 percent with a coupon of 4.5 percent. The spread is 41 basis points over the 4.25 percent German bund due in January 2014. BNP Paribas, mandated to carry out the subscription stated that interest for the Hungarian bonds were quite large. Investors are rather interested in long-term opportunities and not in current problems. (Nszab, 24 Jan, p 17, MN, 24 Jan, p 12, MH, 24-25 Jan, 12)

MACROECONOMY - 27.01.2004 Active Hungarian investors
Companies registered in Hungary have realised significant capital export in the last year with largest investments directed to Slovakia and Bulgaria. Hungarian oil and gas company Mol paid EUR 355.2 million for its Slovakian peer Slovnaft, whilst National Savings Bank OTP paid EUR 311 million for Bulgarian credit institution DSK. Also a part of Hungarian capital export is Mol’s transaction with Croatian counterpart INA: the Hungarian company has bought INA as a professional investor for USD 505 million. Besides the large deals, some international projects or stake purchases of enterprises operating near the border also played a part in Hungary’s capital exports. Analysts are of the opinion that this year can not see a significant capital investment: Mol’s transaction with Polish PKN is in the early stages, whilst OTP’s expansion in Romania is quite uncertain. In the first nine months of 2002, companies with foreign headquarters have invested a total of EUR 849.6 million capital in Hungary. First on the list is the Netherlands with EUR 293.2 million, followed by Germany at EUR 73.2 million and USA at EUR 54.9 million, respectively. French investors come next at EUR 36.8 million and Swiss ones at EUR 33.8 million.(NG, p 1 and 3)

Interest rate cut forecast for spring
According to a Reuters poll of analysts published on Monday Hungary's central bank (NBH) will start to cut interest rates from the second quarter. Analysts interviewed think that a 100 basis point cut is the most likely, whilst projection for currency rates were quite differing. Analysts forecast the HUF/EUR rate to range from 259 to 268 at the end of February with the average coming to 263. The consensus for the end of the year may finish at HUF/EUR 261. Forecasts for the Hungary's euro entry date averaged 2009 in the survey, while the country is seen locking its forint into the Exchange Rate Mechanism (ERM-2), considered to be the last step before joining the eurozone, between the second part of this year and 2006. Analyst form ING György Barcza is of the opinion that the restoration of the creditability of fiscal policy is indispensable, since according to the most recent interest rate calculations, the modified, 4.6 percent GDP-proportionate general government deficit goal can not be met without further austerity measures implemented. Barcza added that inflation may go up to 7.6 percent in May and then is expected to go down slowly, however, it is not likely that it would decrease to less than 6.8 percent by December. Experts from economic research institute GKI Gazdaságkutató Rt. say that the Hungarian economy is in a much better position than domestic or international investors think. As for the current crisis of faith in economic policy, the institute states that inconsistent economic policy have led to the situation. The reason why there is a lack of confidence vis-à-vis the Hungarian economy is because in the past years a political culture has evolved which considered describing, evaluating and remedying the real economic problems a sin, whilst anti-market steps were thought to be a virtue. GKI saw this year's latest official deficit forecast of 4.6 percent of GDP as realistic and expects that the government is truly committed to this goal and is willing to prevent exceeding this even by way of further restrictions if necessary during the year. GKI General Manager András Vértes said about Hungary’s entrance to the eurozone that the reality of the 2008 goal should be reconsidered. (NG, p 1 and 3)

Swedish companies plan long-term
According to the CEO of Saab Holding that produces Gripen fighters Hungary’s capability for attracting foreign capital did not decrease in the past few years. Ake Svensson favoured Magyar Hírlap (Hungarian Journal) with an interview, among other things he said: the great advantage of Hungary is not inherent in the cheap labour, but in the significant value added. He also added that considering investments in Hungary Swedish companies have long–term plans, the reason why they settle factories to Hungary is not the obligation that arising from the compensation deal of buying Gripen fighters. These companies do not intend to move on in just a few years. Electrolux and Ericsson has been working here for several years and they will stay here – the CEO added. (MH p21)



MACROECONOMY - 28.01.2004 Foreign trade: smaller differences between exports and imports
Hungary's exports in January-November were up 7 percent in volume terms from a year earlier and import volumes were up 10 percent, the Central Statistical Office (KSH) reported. According to data, imports were up throughout the whole period, whilst exports started rising in the last months. Thanks to larger export figures, foreign trade balance has become better, thus the country’s external equilibrium position has not got worse. Turnover expansion was larger in both directions than a year earlier. In January-November the forint weakened by 3.5 percent against the euro, which has an 80 percent weight in the foreign trade currency basket and strengthened 14 percent against the dollar, boasting a 14 percent weight in the basket, compared to the first eleven months in 2002, KSH reported. (VG, p 5, NG, p 3, MH, p 9)

MACROECONOMY - 29.01.2004 Draskovics is optimistic
After the cabinet session yesterday Tibor Draskovics announced his savings plan of HUF 120 billion. The appointed minister of finance stated: this year’s GDP proportional state budget deficit can be kept at the set level of 4.6 percent, if the determined revenue figures can be fulfilled. There is no need to increase revenues, but there is no possibility for it either – he added. MoF made its suggestions for cost cuts in the ministry. According to these management costs, chapter-managed appropriations and budgetary investments shall be cut. The financial portfolio plan savings of more than HUF 3 billion. Draskovics, who formulated that the analysts asked by him consider euro accession in 2009 realistic, stated: restrictions do not apply to the Vásárhelyi plan, highway constructions and the sources necessary to obtain EU funds. In addition to this, the minister candidate asks courts, the Prosecution, the Parliament, the audit office and historical churches to pursue economical management. President of the State Audit Office, Árpád Kovács, will publish his savings proposals this morning on the organisation’s homepage. The market received the announcement of the Draskovics package favourably: after the announcement of the plan the forint started to strengthen, for one euro traders gave HUF 262.1, which is HUF 1 strengthening compared to the common currency. JP Morgan does not count on the reduction of the base interest rate this year and sets the degree of GDP proportional state budget deficit one percent higher than the governmental target, to 5.6 percent. According to the justification Draskovics will not reduce highway construction, social benefits and infrastructural investments, and the restrictive measures planned in the budgetary sphere can only result in 0.6 percent saving in the proportion of the GDP, thus the deficit will still remain above the planned 4.6 percent. (NG p1, 3, VG p1, 4, Nszab p1, 4, NSZ p1, 3, 8)

MACROECONOMY - 30.01.2004 Austerity measure of HUF 120 not enough, forint getting weaker
Several international financial institutions have condemned or termed as not enough the HUF 120+ 35 million austerity measure of Finance Minister designate Tibor Draskovics. Thanks to this, and also to a speculative attack, the EUR has firmed from the earlier rate of HUF/EUR under 263 to above 266, then coming back to under 265. Those voicing their negative opinion about the program are of the opinion that it serves the saving of this year’s budget and not long-term cost cutting. According to an analyst from Dresdner Kleinwort Wasserstein, on the long run a reform of the pension and the social system would be necessary, whilst an expert from JP Morgan is projecting a general government deficit of GDP-proportionate 5.6 percent and a HUF/EUR rate of 280. Analysts from Goldman Sachs are forecasting an economic growth of mere 2.4 percent and a 7 percent budget deficit, with an HUF/EUR rate of 295. The austerity measure of the Finance Ministry might hit public foundations and public institutions, mainly in the form of lower amounts available for telephone and car costs. State Audit Office (Állami Számvevőszék) is of the opinion that it is running against the constitution that a decision on this establishment and other public institutions has been made without a goal-oriented checking. ÁSZ suggests that the government should rather focus on a more precise planning of income projections and the supervision of the state debt portfolio. (NG, p 1 and 3)

BANK - 29.01.2004 Interest rates increased significantly in December
As a result of increasing the issuing bank’s base interest rate by 3 percentage points, last December household, non-financial corporate and interbank HUF interests increased in case of all expiries. The interest rate of retail current account credits rose by 46 base points to 19.1 percent and the average interest rate of home purpose loans by 23 base points to 12.28 percent. According to the data of December, financial institutes’ margin applied in case of retail loans has now decreased significantly after a long period of time, which unambiguously indicates sharpening competition. The difference fell from 13.06 percentage points in November to 11.35. (MH p12, NG p3, VG p14)



OTP mortgage bonds for private investors
In Hungary OTP Jelzálogbank (OTPJ) will be the first to soon issue mortgage bonds for retail private investors exclusively. The papers that have a duration of one year will be introduced to BSE after subscription that will last from February 2nd until February 13th. The mortgage bond paying a fixed interest of 11.25 percent can be purchased in 219 branches of OTP. This year the bank will issue mortgage bonds for private persons in the value of HUF 15-20 billion; the current quantity is nearly 10 percent thereof. OTPJ currently manages a mortgage portfolio of HUF 620 billion, which can increase to 775-800 billion by the end of the year. (MH p12, NG p11, VG p13)

Takarékbank deal finalised
Hungarian savings co-operatives acquired a majority stake in local savings bank Takarékbank Rt, since an agreement was reached with majority owner DZ Bank on the purchase of a part of its share package – András Szőke, the Chairman of the National Association of Savings Co-operatives announced. Under the agreement, savings co-operatives will have a stake of 70 percent, up form the current 23.06 percent. The transaction will take place in several steps and cost EUR 28.5 million. Today will see the transfer of the first part of the purchase price, leading to the ownership stake growing to 48.5 percent, The whole transition will be finalised by December at the latest. DZ Bank is to keep 25 percent plus one vote in the credit institution, while insurance company Allianz Hungária Biztosító will have a 5 percent package. According to preliminary figures, total assets of integrated savings co-operatives exceeded HUF 770 billion at the end of last year, translating into an annual increase of 18.1 percent with the stock of loans expanding by more than 30 percent in the same period. (VG, p 1 and 15)

INSURANCE - 28.01.2004 Live insurance in euro as well
ING Biztosító Rt. (ING Insurance Co.) conditions introducing its latest product, the euro based unitlinked live insurance, to Hungary’s accession to the European Union. Considering this product the company would like to focus on private individuals possessing savings in euro. There will be no difference between euro or forint based insurances, the costs will be the same as well – however it will be indicated in euro. (VG p1, p18)

HEAVY INDUSTRY - 26.01.2004 This year Audi will spend 200 million euros on development
This year Audi Hungária Rt. will spend 200 million euros (almost HUF 50 billion) on the development of its engine factory in Győr. Within the frame of the investment programme they will increase capacity, and plans include the assembly of 5 percent more engines than last year. In addition to engine manufacturing, a decreasing number of cars will be produced in Győr, but TT sports cars will be manufactured here in the future as well. Otherwise, last year 4 percent more engines were produced in the plant than in the previous year. From the 1.3 million aggregates 520 thousand were four-cylinder gasoline, 528 thousand four-cylinder diesel, 239 thousand six and 48 thousand eightcylinder engines. Péter Lőre, communication director of the Audi subsidiary, said: in addition to the production capacity increasing developments the engine development centre’s current headcount of 50 will be increased to 150 persons. In Hungary last year 1175 Audi cars were sold, which is 9.3 percent growth compared to the base value and means 0.6 percent market share. This year, owing to the price reduction due to the introduction of registration tax, sales can increase, by which the company could get closer to its Western European share of 3.8 percent in Hungary as well. Audi considers Eastern European markets to be of emphasised importance. Ralph Weyler, marketing director of Audi, stated: in the region they expect 25 percent cummulated growth. (MH Jan. 24-25th p11, VG Jan. 26th p5)

HEAVY INDUSTRY - 28.01.2004 Csepel Holding to become more rationalised
Aiming to make it cost structure more rationalised, Csepel Holding has carried out restructuring at its subsidiaries, thus the core activity of Excel Európa and Excel Csepel Kft. has become the manufacturing of other metal machines instead of tool manufacturing. The General Managerial post of Robin Lau has been abolished at Excel Európa Kft., since Csepel Holding-owner Singapore-based Excel Machine Tools-t (EMT) has been directed by a management delegated by creditor banks for more than half a year. At the same time, Robin Lau’s positions at the parent company were also abolished. (NG, p 11)



HEAVY INDUSTRY - 30.01.2004 Linamar is careful
Linamar Hungary Autóipari és Gépgyártó (former Mezőgép) Rt. (Linamar Hungary Automobile Industry and Machine Producer Co.) counts on revenues essential equal to that of last year, HUF 20.5-21 billion. Yesterday the company inaugurated an investment of HUF one-and-a-half billion in Békéscsaba: the new plant is the first phase of the company’s development of HUF four billion. Owing to the investment the number of employees increased by 200 to 1900. The seven thousand square metre large plan hall and the service facilities were completed by December already; since then the components of high pressure diesel charger systems have been manufactured in the plant. Though the new projects can only compensate for decreasing orders and the weight of drawdowns, the profit of the company is expected to increase despite this, since exchange rate losses of 2003 presumably won’t happen again: this year the company considers a profit of HUF 700-1000 million realistic this year. (NG p12, VG p13, MH p13)

ENERGY INDUSTRY - 29.01.2004 Unipetrol: Mol and PKN are the winners?
The Czech Republic does not intend to sell Unipetrol to the applicant promising the most. According to market analysts, at least it refers to this that investors arriving from the area of the former Soviet Union, OAO Tatnyeft and the Kazakh KazMunaigaz, were excluded from the tender, though these companies offered a price higher than the others. This can primarily be accounted for Prague’s fear from Russian capital. Mol’s (Hungarian Oil) or PKN’s success is easily imaginable at the tender announced for the Czech oil company, even if the still standing Royal Dutch Shell offered more than us. It is said that Shell would spend 14, PKN 10 and Mol 9 billion crowns on Unipetrol. According to analysts Shell’s offer cannot be considered for the time being, since these are only preliminary proposals. Due diligence of the company offered for sale is under way right now and real offers will only be made by the applicants after that. Gossips, according to which Mol and PKN concluded a secret agreement at the Unipetrol and Petrom tender also presume the success of the two companies. Based on this Mol would not puff for PKN at the Unipetrol tender, while in exchange the Polish company would do a similar favour for Mol at the Petrom tender. If the companies would be successful at both tenders, the road would be open to the establishment of a real regional multinational. (NG p11, 12)

Wind turbines in Záhony
Spanish entrepreneurs plan to supply Záhony and the neighbouring villages with wind energy. Within the frame of the investment of 30 million euros to be started this year 25 wind turbines will be set up, which produce energy that is enough to supply 30-33 thousand people. A 3-hectare large area is necessary to establish the wind power plant park, which will be ensured by the municipality of Záhony. (Kelet-Magyarország, Jan. 26th p1)

ENERGY INDUSTRY - 30.01.2004 Lukoil bringing Romanian petrol
Russian Lukoil will focus on the sales of processed products in the future. The Russian company would like to have a significant stake of the US market, but plans to carry out significant investments in Hungary, too. Plans call for the foundation of a petrol station network of 120 in an investment of USD 150 million through its subsidiary Lukoil Downstream. These petrol stations would be provided with petrol form the oil refinery of Ploiesti, which is expected to restart operations this summer. At present it is not known where would be Lukoil stations, but the Russian firm can be helped by Agip’s eventual leaving the Hungarian market, about which information has been leaking recently. (VG , p 1 and 15)



INFORMATION TECHNOLOGY - 27.01.2004 Sulinet Programme Will Be Changed
As of 8 March, continuous power units, digital cameras and musical instruments will not be available through the government's Sulinet IT development program, but at the same time motherboard will be included in it. Companies taking part in the program do not count on a significant decrease in sale figures after the modifications take effect. The Ministry of Education is planning to carry out comprehensive changes in Sulinet, which would see the extension of those eligible for it, with those in need having easier access and the system of tax refunds used more effectively. Out of the 1.6-1.9 million entitled households, nearly 500,000 have taken part in the program. Besides teachers, students and their parents, every private person under the legislation of the personal income tax law could take part in the program as of July, with the wealthiest not getting tax refunds any longer. The HUF 60,000 in tax reductions can be used by those who earn less than gross HUF 3.4 million, with those earning between HUF 3.4-4 million seeing less tax reductions and those above the limit of HUF 4 million not being entitled to it. Consumers will have to undertake own sources to the tune of 30 percent from this summer. (VG, p 5, MH, 24-25 Jan, p 5)

INFORMATION TECHNOLOGY - 28.01.2004 Oracle: lack of qualified developers
Construction of Oracle’s Hungarian software development plant is going on in line with plans, however, hiring qualified staff takes longer than anticipated. There are not enough experts that could be included into international development project after a short training. The development centre, planned to employ a staff of 50, is going to be finalised in 2005 with the current number of employees standing at less than 10. Oracle Hungary, the Hungarian subsidiary of the American software giant, still gets two-third of its sale revenues form database-managing software, but the company plays an important role on the business software markets, namely on the market of integrated corporate management systems. Oracle will turn to medium-sized companies on the latter one and enters the market with a product that needs a short time to market and costs an investment of HUF 10-15 million. (VG, p 9)

PAPER- AND PRINTING INDUSTRY - 30.01.2004 Kartonpack withdrawal delays due to technical reasons
Though the withdrawal of Kartonpack shares from the stock exchange is still on the agenda, yesterday the largest owner, Britton C&C Kft., withdraw its public purchase offer. The company justified the surprising step with technical reasons. Main owners decided about withdrawal from the stock exchange at the general assembly of December 29th and requested withdrawal on January 12th this year. According to the latest flash report of Kartonpack only 700 shares are in the hands of private investors. (NG p11, VG p17, MH p13)

FOOD INDUSTRY - 27.01.2004 Tobacco works in Debrecen to close down
Reemtsma will reorganise its activity in Hungary and probably closes its tobacco works located in Debrecen – writes Népszabadság (People’s Freedom). According to the paper’s information the reason behind the termination is that the company, the market share of which adds up to 20 percent in the Hungarian tobacco market was especially badly effected by the drastic increase in cigarette prices. On top of all that the company’s brand products - West, Symphonia, Moon, Pakli, Mustang and Főnix – belong to the low-price category, this means consumers buying these brands are extremely price-sensitive. Cigarette brands mentioned above as well as the brand Davidoff, will not disappear from the Hungarian tobacco market in the future, because Reemtsma will supply the Hungarian market from one of the neighbouring countries.(Nszab, p1, p14)

Walmark comes to Hungary
The Czech Walmark will found daughter companies in Hungary, Ukraine and in one of the Baltic States. Beside founding subsidiaries the beverage and vitamin product manufacturer intends to develop its sales network in Poland and wants to expand its factory in Slovakia. After last the amount of CZK 110 – 120 million spent on expansion last year, the Czech group intends to spend 700 million koronas on development this year. (VG p5)



FOOD INDUSTRY - 28.01.2004 Development at Cerbona
in the framework of a green field investment Cerbona Élelmiszeripari és Kereskedelmi Rt. (Cerbona Food and Trading Co.) will construct a basic commodity warehouse by June, and a new production hall by the end of the year in Székesfehérvár. The development, the aggregated value of which adds up to 820 million forint is needed because of the preparetion for the European Union. After the accession to EU the company intends to enter into the markets of the neighbouring countries. However, according to information of Napi Gazdaság (Daily Economy journal), the export activity to Morocco will be launched soon. Cerbona expects a sales revenue that exceeds last year’s turnover (HUF 12 billion) by 4 percent, furthermore after the operation income of 900 million forints the company counts on a pre-tax-profit of 250 million forints. (NG p5)

Wallis to get out of food industry
In parallel with the decision made on the liquidation of poultry processor Hajdú-BÉT Rt., Hungarian investment and financial company Wallis Rt has decided to turn its back on food processing industry. Executives of the company, together with owner Wallis Rt., can not make a decision on the performance of meeting Hajdú-Bét’s obligations. Only the designated liquidator will have the power to make a decision on this matter. Wallis Rt. has had a majority ownership of Hajdú-Bét Rt., already fighting with financial problems, since 1999 and through the operation of the poultry processor, it has posted losses exceeding HUF 5 billion. Further increasing Wallis’ losses is the fact that there is small chance for the refund of ownership loans rendered to Hajdú-Bét Rt., plus the company has to cover obligations stemming from credits taken out by Hajdú-Bét Rt. (NG, p 4)

FOOD INDUSTRY - 29.01.2004 Hungarian Food Company going bankrupt
Hungarian Food Company (HFC) has gone bankrupt. The dismissal of the 150 employees of the Jászberény-based poultry processing company did not hit the regional labour market, since Swedish household appliances group Electrolux Lehel Kft is looking for 164 employees at labour offices at the same time. (Új Néplap, 27 Jan, p 5)

Kraft Foods to close Hungarian plants
Hungarian Kraft Foods subsidiary Kraft Foods Hungária will close its coffee and confectionery plants in Budapest. The coffee factory will be shut down in the month of April, whilst the confectionery plant in May. The relocation, announced yesterday, will affect some 320 employees in Budapest. Kraft Foods stated that the measure was necessary to increase competitiveness. The decision means that characteristic Hungarian products (e.g. Piros Mogyorós and Sport szelet) will be manufactured in Slovakia and coffee production with flagship product Jacobs will be relocated to Vienna. Kraft Foods Hungária is the market leader in the Hungarian confectionery segment with Nestlé and is the third largest company on the Hungarian coffee market. According to an announcement made by the General Manager of the parent company, quarterly results of the second largest foodstuff manufacturer in the world were in line with expectations, however, they were still unsatisfied with figures, that is why Kraft was forced to carry out a cost-cutting programme, which will see a total of 20 manufacturing plants sold or closed in the next three years and 6,000 employees given the axe. First step of the process is shutting down the Hungarian manufacturing plants, together with two American ones. (Nszab, p 13, VG, p 9, NG,. p 4, MH, p 10)

FOOD INDUSTRY - 30.01.2004 Finomságok Kft. aiming to be a major player on the ice-cream market
Finomságok Kft., operating in the Kaposvár industrial park since last September, is planning to be a major player on the Hungarian ice cream market within a short period. The company, relocated from Nagykanizsa, will start operating its own cooling house in February and may start working at full capacity from March, meaning that in the peak season it can employ a total of 80-100 people. The corresponding umber now stands at 35-40. The General Manager of the company said that they were going to extend the number of their products and will start distributing them also in hipermarkets, since they were in contact with almost all of multinational companies present in Hungary. (Somogyi Hírlap, 28 Jan, p 5)

Milk plant to be built in Kaposvár
Dámtej Rt. will build its milk plant in Kaposvár within the frame of a HUF one billion investment. According to plans the investment will be completed this year already. Up to now the company has processes 12 million litres of milk annually and they plan to increase this quantity to 20 million litres by the end of 2005. 90 percent of this will be purchased from producers in Somogy county. (Somogyi Hírlap, Jan. 28th p1)



AGRICULTURE - 27.01.2004 Hajdú-Bét liquidation process to start within days
According to information from daily Magyar Hírlap, the liquidation process, initiated by unpaid producers, may start against Hajdú-Bét, one of Hungary’s largest poultry processing companies, already this week. The firm owes its contractors with millions of forints and its credits have been terminated by its banks (mainly by Raiffeisen and K&H) in mid-January, and credit institutions started making use of the contractual security rights. In the meantime, Hungarian Tax Office APEH has started an investigation against Hajdú-Bét to collect public money owed and has given a prompt order for collection for the company’s bank accounts. The extraordinary general meeting of Hajdú-Bét has decided for liquidation last week. The poultry processor found itself in a difficult situation on the back of price decreases on international markets, lower exports, weaker forint, continuously increasing energy and animal feed price and overproduction. Already last year it has leased its Debrecen plant to its largest competitor Bábolna, whilst it Mezőkovácsháza plant has been rented by another company. Its modern plant in Zagyvarékas has been stopped, whilst it is in talks on the lease of its plants in Törökszentmiklós and Kisvárda, although chances for a fast solution are not large. According to an earlier announcement, the company is giving collateral in the form of its equity capital and assets, which exceed the amount of the money owed, to cover demands of its suppliers. (MH, p 1 and 12)

AGRICULTURE - 28.01.2004 Calls for the abolishment of the meat import ban
Hungary's foreign and agriculture ministers have called on US authorities to take speedy measures to lift a ban on Hungarian meat imports introduced on January 13 in a letter that is signed by foreign minister László Kovács and the minister for agriculture and regional development Imre Németh. The letter is addressed to the American secretaries of agriculture and commerce. It was handed over to US Ambassador George Herbert Walker by Foreign Minister László Kovács on Tuesday. Kovács asked that U.S. animal hygiene experts urgently visit the Hungarian meat plants in question, and see for themselves that the problems have been remedied, and lift the import ban as quickly as possible. (VG, p 4, NSZ, p 3)

AGRICULTURE - 29.01.2004 Condemning EU agricultural report
The report examining the preparedness of newcomers’ agricultural sector, which was accepted by the European Parliament’s agricultural committee, formulates strong critics only in case of Hungary among accessing countries. According to the material prepared by Karl Erik Olson, Swedish representative, Hungary will not be able to receive support that arrives from community sources, because the control and payment mechanisms are still not built out for this, the food security and animal health control systems are not operating appropriately, the establishment of animal and plant health border stations is late and there is a lag in the execution of rural development programmes as well. (NSZ p5)

TRADE, FAIRS - 26.01.2004 Expansion at Schlecker
Schlecker plans to open more than a thousand new stores in Central-Eastern-Europe. The German perfume trading company intends to implement expansions in Hungary, Slovakia, Slovenia, Poland an in the Czech Republic. Due to the expansion the annual sales revenue of the group can add up to 7 billion euros. Also Rossmann and Drogerie Markt plan to open additional stores in Hungary. (VG p5)

Retail stills still high
Hungary's retail sales in November 2003 were up 8.1 percent from a year earlier, and in the first eleven months rose 8.4 percent from the same period of last year - working-day adjusted figures of the Central Statistical Office (KSH) show. Retail turnover at current prices totalled HUF 4,260 billion in the first eleven months, and was HUF 430 billion in November alone. Figures show that public consumption does not decrease and calculations call for a record-breaking December retail sales figure at HUF 600 billion. Experts are of the opinion that public consumption will go down only this year. (MH, 24-25 Jan, p 9, MN, 24 Jan, p 11, NSZ, 24 Jan, p 5, NG, 26 p 3, VG, 26 Jan, p 4)



TRADE, FAIRS, CAR - 28.01.2004 Renault Hungária posting a HUF 63 billion sales revenue in 2003
Renault Hung¹ria had revenue of HUF 63 billion in 2003 from car and spare parts sales. The company expects much slower sales growth than last year’s 16.7 percent on the new vehicles market in Hungary this year. Renault's aim is to match or slightly increase last year's 9.9 percent market share achieved through the sales of 19,830 new Renault models, giving it a third position in the brand competition. (Renault has been holding on to this position for the third year running.) General Manager Serge Yoccoz is calculating that this year can see 4-5 percent more new cars sold in Hungary, whilst Renault is counting on figures 1-2 percent exceeding it for their own models. Distribution of the new, Renault-developed Dacia is not part of this year’s plans. The new model will be manufactured in the Pitest plant in Romania and will be sold in 60 Renault outlets all around the country. (NG, p 4)

Voluntary restrictions in car imports?
Several world-known brands are considering suspending the import of new cars on the back of uncertainties in relation to the administrative problems of registration fee – daily Népszabadság writes. Besides 30,000 cars that have gone through the customs process, but have not been marketed yet, dealers have 20,000 new cars and under the regulations, starting from 1 February registration fee, to succeed consumption tax, should be paid for these vehicles, too. Dealers would be ready to do it, since the difference is not that significant, however, it is very difficult for them to cope with the construction and the practical realisation, thus many importers are on the brink of suspending imports for a period of some weeks. (Nszab, p 13)

TRADE, FAIRS, CAR - 30.01.2004 Registration fee will enter into force on Monday
Registration fee that replaces value added tax is due as of Monday. This means that as of the first of February a fixed fee has to be paid for purchased cars depending on the vehicle’s engine performance and the environment protection ranking. The introduction of the new tax type generally causes price increase in case of small and medium category passenger cars, but a price decrease in case of large cars. Yesterday the National Headquarters of the Customs and Finance Guard announced the regulation related to the registration fee, which, among others, includes the uniform customs goods declaration that is the same as the previous version, so there is no obstacle to obtaining the licence number in document offices as of next week in possession of this customs office decree. The NHCFG announcement states that putting into traffic means the car’s first domestic registration and recording in the licence. Under the regulation the registration fee shall be paid by the dealer pursuing sale directly in the form of tax advance. In certain cases leading dealerships can partly or fully take over this charge. It is said that the majority of general importers will do this. Those, who are not natural persons with VAT payment obligation, who paid value added tax related to their car before February 1st, but only put the vehicle into traffic as its own property after this, do not have to pay the registration fee. According to the information of Napi Gazdaság, president of the Association of Hungarian Vehicle Importers, Gábor Győző, and the financial directors of several brand importers and the representative of NHCFG negotiated about the tax of new cars imported before the first of February. Parallel to this, used car dealers met with the competent persons of the Ministry of Finance about the financial disadvantages drawn down by the introduction of the registration fee. Concerned parties did not provide information about the result of discussion. (NG p1, 4, VG p1, 5)



TRAFFIC, TRANSPORT - 26.01.2004 Czech Airlines in talks with Malév on co-operation
Hungarian airline Malév's top management is in talks with Czech airline CSA, which is aiming to strengthen its position in Central Europe, Malév confirmed the news reports published in a Czech newspaper. Representatives of above-mentioned national airlines had talks on Friday on the formation of the partnership and on details of Malév’s entering SkyTeam alliance as an associate member. The Czech carrier is already a member of the association, whilst for the Hungarian peer the associate member status would mean that it is entitled to use the SkyTeam logo, but does not have voting rights. Information has it that should the deal be realised, CSA and Malév would both fly passengers to SkyTeam’s hubs of Amsterdam and Paris. The two carriers are aiming to cut costs and to this end, they are planning to carry out certain operational tasks together. In the meantime, the inflow of budget airlines to the Hungarian market shows no signs of abating. As economic daily Világgazdaság has learnt, British-Hungarian WizzAir would designate Budapest as its second European hub. General Manager József Váradi said that they had started operations with four planes from the Katowice base and are planning to use six others this year. According to Polish press information, there are a total of 10 towns in possible destinations, among them Western European and South European ones. WizzAir is to have new hubs in the next years and plans to have 2 million passengers this year. Czech-owned Travel Service, operating under the name of Smart Wings after the impending European Union accession, is to fly budget flights to five European destinations. Tickets can be booked already in March. Smart Wings plans are going to start from Budapest in 2005. In the running for Smart Wings is also CSA, which, besides this, would like to have a significant expansion on the charter market, too. Sármellék- based Balaton-West Airport is in developed talks with a subsidiary of KLM and with Italian Volare Airlines, (Nszab, 24 Jan, p 17, MH, 24-25, p 11, VG, 26 Jan, p 5)

TRAFFIC, TRANSPORT - 27.01.2004 M5: final countdown has started
Minister of Economy and Transportation István Csillag has only four days to tell the government about the final schedule of the buyout process of the motorway operator Alföld Motorway Concession Rt. (Alföldi Koncessziós Autópálya Rt.). Prime Minister Péter Medgyessy has earlier given a deadline of 31 January for Csillag to come to an agreement on the purchase of the motorway company. Governing Hungarian Socialist Party (Magyar Szocialista Párt) would like to announce on its congress in Szeged on 12 March that the motorway is included into the sticker-based system and also that it will be built further. It would be quite uncomfortable if this announcement can not take place in Szeged, the town most interested in extending the motorway. Putting off the HUF 120 billion investment would be an enormous loss of prestige for the government. Costs are to be covered from the privatisation process of Postabank Rt., which had proceeds at HUF 101 billion. However, it is not known at present who will buy AKA Rt. in the name of the government. A possible solution can be if Hungarian Post (Magyar Posta Rt.), boasting income from Postabank and being an outsider in the motorway business is the buyer, but to be able to do this based on the decision coming from the economic ministry or the government, it has to be given a significant amount of capital first. However, there is no information on it. Experts are of the opinion that the contract on the buyout agreement can not take place fast also because a permission from Economic Competition Office GVH would also be necessary, since the deal is considered as a merger. In cases like this, the competition office process may take 45 days in simple cases and can go up to 180 day in more complex cases. Since there is no buyer acting on behalf of the government, it makes no senses to invite bids for the next, 45-kilometere stretch of motorway M5 to be built without a public procurement. Plans call for the right of construction to be granted to Strabag, but first the government is going to buy AKA Rt. for the price of HUF 70 billion prescribed by Bouygues and Bau Holding. Following this, the concession contract of the motorway operator would be made „softer” with the point defining that AKA has lost its rights to construct the motorway further last December to be deleted. In return for the construction of the new stretch, priced at around HUF 90 billion, the government would give the company to Bau Holding for free. Information has it that the operation of M5 would still be in the hands of the concession company, whilst debt of AKA, reaching around HUF 50 billion at present, would be paid by the budget, which would in turn pay a so-called disposal fee for at least 20-25 years from 2006 to owners of AKA Rt. for the inclusion of the motorway into the sticker-based system. (Nszab, p 1 and 13)



TRAFFIC, TRANSPORT - 29.01.2004 WIZZ Air planning to post profits
British-Hungarian low-cost airline Wizz Air, flying from May this year, plans to be profitable already this year. The airline would like to have its second Central European hub airport in Budapest and is already in talks with airport operator Budapest Airport Rt. – General Manager József Váradi said. He went on to say that should negotiations be not successful, then they would look for another airport in the region, with Debrecen mentioned as a possible destination. Besides the two base airports in Katowice and Budapest, further subcentres are also planned, together with the expansion of the current fleet of planes, numbering nine leased Airbus A320. To this end, the budget airline plans to increase its registered capital from the current EUR 9 million to EUR 40-60 million. At present, Wizz Air’s capacity stands at 4.5 million seats annually and plans call for an increase to 10 million by 2005. The Hungarian-registered subsidiary of Wizz Air is owned by a holding registered in London (97 percent), together with Swing Management Co. (3 percent), the latter founded by former employees of Hungarian national carrier MALÉV. Executives of the firm are Polish and Hungarian experts form areas of aviation and financial. (VG, p 9)

TOURISM, HOSPITALITY - 28.01.2004 McDonald's recovered
After the 343 million dollars loss last year, the American McDonald's Corp. reported a profit of 125 million dollars, and an increase in sales revenue of 17 percent. The company operates 85 restaurant in Hungary and has a market share of 85 percent in the market of fast food restaurant networks. The number of customers was 20 percent higher in the restaurants of the Hungarian subsidiaries, and the sales revenue increased by 10 percent in the first nine months of 2003. (NG p5)

Subway to open in April
Subway, the biggest sandwich restaurant network in the world will open its first Hungarian unit in the inner city of Budapest. The company operates more than 20 thousand restaurants in 72 counties. Subway that achieved a sales revenue of 5.6 billion dollars in 2002, intends to find franchise partners for additional 5-7 units this year, and the company would increase the number of its restaurant to 50 in Hungary in seven years. Beside the capital Subway will appear in Debrecen, Győr and Pécs. The main target locations are railway-stations, main streets, shopping centres, hospitals and they would like to open restaurants even at certain military bases. (VG p1, p9)

INVESTMENT, DEVELOPMENT - 26.01.2004 Rolls-Royce factory in Debrecen?
Rolls-Royce builds airplane power-plant in Eastern-Europe, beside Poland Hungary is also considered as a possible location for the project. Regarding the location of the investment in Hungary the industrial park of Debrecen is likely. Népszabadság (People’s freedom) learned that the company’s representatives already led negotiations in the past few days in Debrecen with the asset manager holding of the town. The company received a written documentation from the asset manager firm about the capabilities and possibilities offered by the town. The representatives meet authorised members of the government in Budapest today. (Nszab., p13)

INVESTMENT, DEVELOPMENT, REAL ESTATE - 26.01.2004 Covent Garden in Közraktár?
According to plans of the Budapest self-government, a cultural and entertainment quarter similar to Covent Garden can be built on the Danube bank in the Ferencváros part of Budapest, in the empty building of the Közraktár (public warehouse). Plans call for chamber halls for 50-100 people to be constructed, together with shops and galleries. Deputy Mayor János Schiffer is of the opinion that investors show interest for the project. (NG, p 13 and 17)

New glass building in place of the ORI headquarters
In the hope of engineers, the facility to be built in place of the former ORI headquarters, at Vörösmarty square, will be one of the new symbols of Budapest. In the glass building to be completed by 2005 offices will be established on 5.7 thousand square metres, commercial units and a parking lot of 252 on 6 thousand square metres, but two-storey luxury apartments will also be housed in the building. The latter were planned based on the advices of Paul Viguier, president of the French Architectural Academy. ING Real Estate Developer Ltd. is behind the investment of 50 million euros. For the duration of works the company overtook the operational costs of the building’s owner Art and Free Culture Foundation. The latter agreed to the investment after the ING daughter contributed to the reconstruction of Vígadó, but the source of the HUF 500-600 million still necessary to start the development of this latter is uncertain for the time being. (NG p18)



New tenants in Oktogon House
Storck and Resilux moved in to Oktogon office building. Bischoff Hungary Kft. the investor of the project spent HUF 3.5 billion on development. Spaces of the centre comprises three buildings are almost completely leased. (NG p17)

OTP Real Estate following its parent bank
OTP Real Estate Rt. (OTP Ingatlan Rt.) is to found a company in Slovakia in the first quarter of 2003. The subsidiary will be building quality housing parks and joint houses. The company in considering the possibility of entering the Bulgarian market, too. OTP Ingatlan has finalised more than 500 flats in Hungary last year with a further 700 started and 820 in the process of preparation. This year will see the construction of 1,700 homes started with 760 of them to be sold already this year. (NG, p 13 and 16)

INVESTMENT, DEVELOPMENT - 27.01.2004 Lander Carlisle development in Mezőlak
Lander Carlisle Holding Ltd. builds an additional production hall in Mezőlak. As a subcontractor of major vehicle producers the company supplies them with different products. Lander Carlisle Automata Alkatrész Gyártó és Kereskedelmi Kft. (Lander Carlisle Atomised Spare Part Producing and Trading Ltd.) the daughter company of Lander Carlisle Holding Ltd., which principally deals with producing plastic spare parts, in the framework of a green field investment of five hundred million forints builds a production hall with a ground space of 1600 square metres next to its existing factory of similar extent. Due to the investment the company’s sales revenue of HUF 2 billion will be doubled, and the number of workers employed will increase from 150 to 220. (NG p1, p5.)

INVESTMENT, DEVELOPMENT - 28.01.2004 Adventure city next to Sopron?
Austrian WinterWerbubg GmbH would build a adventure city and a related shopping centre in Slovakia or near to Hungary’s western border. The value of the investment would add up to 400 million euros (one hundred billion forints). The company will arrive at a decision at the end of January. If they will pitch upon Hungary, the probable location of the project would be in the neighbourhood of Sopron. The business men from Vienna have already handed over a detailed business plan to the economic portfolio, where the plan is being studied at the present time. (Nszab., p13)

INVESTMENT, DEVELOPMENT - 29.01.2004 Auchan became a park developer
The French Auchan chain plans an additional commercial park in Budapest. Its real estate division, Immochan, purchased a 40-hectare area in an outskirts zone and prepares for a significant development there. Balázs Málik, the company’s executive responsible for commercial park development, did not reveal the purchasing price, but said that already many potential buyers or tenants applied at the company. But an environment protection type investment and infrastructural development of HUF several billion have to be executed on the area. The company tries to provide space in the new park to a store selling furniture, one trading with electronic articles and with one doit-yourself products, and one 8-10 thousand square metre large unit, where several tenants want to settle who need medium or large areas, with stores of 500-1500 square metres each. (VG p19)

SECURITIES’ MARKETS - 26.01.2004 PSzÁF blocks purchase of Indotek Befektetési stake by CDP
The financial market regulator PSzÁF has blocked the purchase of a stake in the assets manager CDP Capital Közép-Európa Vagyonkezelő by investment firm Indotek Befektetési Rt. and its American owner Britex International LLC. PSzÁF blocked the transaction because Indotek Befektetési Rt. lacked the capital required by law and its 99 percent owner Britex International LLC could not satisfactorily prove the origin of the funds to be used for the purchase. The target of the purchase, CDP Capital Közép-Európa Vagyonkezelő Rt., is the legal successor of Stabilitás Első Pénztári Vagyonkezelő (Stability First Cash Asset Manager). (VG, p 10)



MEDIA - 27.01.2004 Mai Budapesti Nap discontinued
Daily journal Mai Budapesti Nap („Budapest Today”) was published for last. Zoltán Kárpáti responsible editor, majority owner of Budapesti Nap Kft. said: due to the lag of the expected revenues they can not finance the activity of the daily journal in the future. The publishing company dismisses 50 of its actually employed 60 people. With the help of the people still employed the company plans to launch a weakly paper in March. Budapesti Piac Rt. (Budapester Market Co.) founder of Budapesti Nap, intends to focus on its advertisement papers in the future. The company spent HUF 2 billion on running the daily paper in the past one year. (VG p5, NG p5)

MEDIA - 28.01.2004 Ringier Hungary to publish Mai Nap
Hungarian publishing house Ringier Kft, a subsidiary of Swiss media group Ringier AG, will start publishing in February 2004 daily tabloid Mai Nap. The tabloid was bought by Ringier and the company leased the tabloid's publishing rights to local company Som-Media (SM) Rt two years later. Since the latter company did not exercise its option to extend the contract, it went back to Ringier Kft., which think that publishing the daily makes sense, despite the fact that another tabloid Blikk also belongs to it. Tibor Kovács, the Human Political Director of Ringier Kft said when asked about Mai Nap that he was not thinking about a change, but the decision should be made by two parties. (Nszab, p 5, NG, p 4)

OTHER - 27.01.2004 Hungarian striker Miklós Fehér dies
Benfica's Hungarian international player Miklós Fehér died after collapsing from a heart attack on the field during a Portuguese league match against Guimares on Sunday evening. The striker fell to the ground in injury time. Medical personnel managed to restart his heart both on the field and in the ambulance but failed for the third time in hospital. Thousands of supporters went to the Benfica stadium in Lisbon, where the striker will be transported to a chapel and supporters may pay their last respects and farewells to the player. The Hungarian Football Association paid tribute to Fehér at a memorial near Budapest's Puskás Ferenc Stadium. The Hungarian international will be buried in his hometown, Győr, on Wednesday. The Lisbon-based team leased a plane for the funeral of the Hungarian striker, who played 25 times in the national eleven. In a related development, daily Magyar Hírlap is carrying a summary of similar cases of sportsmen dying and on the possible causes of them. (Nszab, p 1 and 8, MH, p 2 and 3)