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hu 02/11/2004 02/11/2004 Business Business Magyar Hírlap to fold up K&H Bank picks KBC to arrange loan Passengers up 24.8% in Ferihegy Car insurance market: more competition Leisure investment Mortgage market BorsodChem buys treasury shares Plant to open nr Miskolc Plastic growth New pool on island New tender ISP spreads into broadband New Tv2 CEO State to sell Antenna Hungária stake by mid-year Ft 101 bln available for regional devel'mt in 2005 Suzuki to make Swift cars in Hungary BUX week: OTP pushes BUX to record over 13,200 Economy Economy Economic growth Company figures FinMin presents 2005 budget for debate Politics Politics Kovács stays put as commissioner candidate Domestic Domestic Authority allows further sprinkling of paprika Corn fuel gets go-ahead Unwanted baby left into life-saving incubator Mádl donates Bartók memorial 03/11/2004 03/11/2004 Business Business Satyam opens development center Five companies bid for 3G licenses OTP Slovakian subsidiary skyrocketing Post opens new fund End of "conditional influence" in TVK Betonút wins tender for M7 section Motorway reconstruction Mobile use rises to 83% 1

1051 Budapest, Hercegprímás utca 19 Tel: 354 3290 Fax: 354 0130 Mail: kiadvany@inetkft.hu TDC, Tele2 bid for UMTS licenses Plaza Centers sells shopping malls EU delves into paprika case Frozen foods liquidated EU may buy third of cereals crop Tv2 reports biggest profit ever in Q3 PM announces privatization plans HiSenses finds buyers for TVs Radios to break revenue records Arago may sell stake Economy Economy FinMin estimate realistic Gov't's inflation target Industrial producer prices up 0.3% m/m, up 3.3% Auction of 3-month bills Politics Politics Parliament votes down capital gains tax No new commissioner request from EC Domestic Domestic Close shaves Ferihegy Airport Warehouse fire investigations Hungarian aid to Iraqi and Palestinian elections 04/11/2004 04/11/2004 Business Business Ft 55 bln Budapest 'Docklands' Globus buys Austrian food distributor MOL to reduce pump prices on Friday Kirchoff to build another car plant Euro 10-15 mln investment eyes Gyor Ringier rejects Magyar Hírlap offer Complaint against Allianz Hungária MÁV announces suburban locomotive tender Praktiker opens 15th outlet MÁV to sell Andrassy 66 Private railroad company on track Cabinet to propose EU paprika testing Raiffeisen profit of nearly Ft 15 bln GenoID introduces cancer screening test Economics Economics Jarai willing to compromise Tax inspections to delay VAT refunds Ft 500 blocks agreement on minimum wage 2

1051 Budapest, Hercegprímás utca 19 Tel: 354 3290 Fax: 354 0130 Mail: kiadvany@inetkft.hu SAPARD money to go to 2,761 applicants Gov't has much to ponder for FHB sale Politics Politics Troops to be withdrawn from Iraq Kovács to receive tax job in Commission Fidesz to vote against prolonging Iraq Hungary to be partner of U.S.- FM Vajnai charged of red star use Call for easing of German employment law Domestic Domestic Healthcare workers stage 5th strike 05/11/2004 05/11/2004 Business Business Bp Airport 9-month profit up 260% yr/yr Ringier asked to give Hírlap respite Népszabadság lay offs expected New cell company hits market Internet speed wars begin 16 construction companies accused of cartel PSzÁF approves Forlev purchase offer for Konzum Inter-net-work Competition Office rejects complaint Work starts on Kelenföld power plant Richter Q3 Profit Seen Falling 8.1% Economics Economics 18% of work force are 'hidden' workers MOL finds buyer for gas assets More foreign investors in Hungary Environment: Ft 365 bln for projects Hungarians going deeper into debt Labor Min presents employment program Residential real estate boom still on Moody's maintain MFB rankings Retirement age could be lowered to 62 Politics Politics Barroso on Kovács as tax commissioner Gyurcsány congratulates Bush Domestic Domestic Healthcare demo onwards to the Parliament Gov't to design ethnic Hungarian program 3

1051 Budapest, Hercegprímás utca 19 Tel: 354 3290 Fax: 354 0130 Mail: kiadvany@inetkft.hu

02/11/2004
Business
Magyar Hírlap to fold up The publisher, Ringier Kiadó Kft will shut down Magyar Hírlap, one of Hungary's oldest daily newspapers, due to the paper's losses, Ringier CEO Bela Papp announced on Friday. "Despite all of our efforts, we were not able to raise the number of copies," he said, noting that the losses accumulated since 2001 are now nearing Ft 2 billion. Magyar Hírlap will be published for the last time on November 6, so there is still time for a last agreement with investors and to take a memorable leave from readers, Mr Papp said. He added that Ringier will continue to publish Magyar Hírlap's magazines. (Econews; MH 1, Nv 4, Vg 5) K&H Bank picks KBC to arrange loan Kereskedelmi & Hitel (K&H) Bank Rt, Hungary's second-biggest lender by assets, picked KBC Bank to arrange a euro 200 million five-year loan. K&H is 59.3 %-owned by KBC and 40.2 %-owned by ABN Amro Holding. KBC has underwritten the loan, the bank said. The interest margin on the credit, which is repayable in full when it matures, is 20 basis points over money market rates for the first three years and 22.5 basis points for the remaining period. Banks that agree to lend get a fee ranging from 15 basis points for providing euro 20 million euros, or euro 30,000, to 10 basis points for euro 10 million. (Bloomberg) Passengers up 24.8% in Ferihegy In September this year some 683,271 passengers turned up at Budapest's Ferihegy Airport, 24.8% more than a year before, the airport operator Budapest Airport (BA) Rt said. In January-September 2004 the company registered 4.8 million passengers, 1.1 million more than in the first three quarters of 2003, the company said. According to BA figures, one in every nine passengers arrives or leaves on board a no-frills flight. By late September Ferihegy Airport had registered over half a million discount airline passengers. (MTI; Nv 4, MH 10) Car insurance market: more competition More competition and better-informed consumers mean more people are looking for better deals on the car insurance market - and finding them. Last year 8.5% of compulsory third-party vehicle insurance policy-holders switched companies, three times the number in previous years, said Miklós Zsoldos, CEO of Union Biztosító, one of Hungary's fastest-growing car insurance providers. Zsoldos said up to 30%-60% of policy-holders could be changing policies within just a few years, a figure closer to that in many Western European countries. Policy-holders have seen the difference in prices offered by insurance companies widen, and it has also become easier for them to sign new policies. (Econews; MH 1, NG 1, Vg 7) Leisure investment The municipality of Veszprém, western Hungary, has given the formal go-ahead for a Ft 4 billion investment scheme to build a new leisure complex on the outskirts of the town. The first phase of the project will see the construction of a stateof-the-art ice hall on a 80,000-hectare site for Ft 600 million, which will be bankrolled through the municipality's own fund as well as through private capital. In addition, the leisure complex will accommodate a conference center, a water park, a golf course and a central building with a theater, several movie halls and restaurants. (NG 17) S.F. Mortgage market The total value of mortgage bonds issued in the Jan-Sept period of 2004 by Hungary's mortgage banks rose Ft 230 billion versus Ft 460 billion in the same period last year, which translates into a 50% fall in the value of outstanding loans extended by mortgage banks. The dramatic decline came about as clients have increasingly turned away from forintbased loans owing to higher interest rates on the national currency to plump for non-forint based loans. Hungary's mortgage segment is overwhelmingly dominated by OTP Mortgage Bank Rt, which holds 63.1% of the market, followed by FHB Bank Rt with 31.4 % and HVB Bank with the remaining 5.5%. (NG 1) S.F. BorsodChem buys treasury shares On October 28 chemicals company BorsodChem Rt bought 35,000 treasury shares for between Ft 1,895 and Ft 1,905 on the Budapest Stock Exchange (BSE), bringing its stock of treasury shares to 410,000, the company announced on Thursday. BorsodChem earlier said the deal would be managed by HSBC Bank. BorsodChem announced on October 20 that it would purchase up to 2 million treasury shares representing 2.36% of the company's Ft 15.39 billion registered capital, between October 20, 2004, and March 31 of next year. (Econews; NG 7) Plant to open nr Miskolc IMO Merseburg GmbH, a German construction company, will set up a plant in or near Miskolc, CEO Michael Schäfer announced. Specializing in prefabrication, installation and disassembly of industrial technologies, IMO is also expected to establish a Hungarian subsidiary, IMO Hungaria Kft, for the investment, and hopes to launch the new plant with some 500 staff next year.Depending on the success of the project, this would be followed by two more plants in the same area for the training of professional welders, Schäfer said. (NG 5) S.F

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1051 Budapest, Hercegprímás utca 19 Tel: 354 3290 Fax: 354 0130 Mail: kiadvany@inetkft.hu
Plastic growth The number of Visa premium cards, aimed at wealthier clients, increased by 19% between June 2003 and June 2004, according to recently published data of Visa Europe. However, the number of Visa Electron cards did not increase at the same pace. Although the total value of purchases by Visa cards increased by 36% to almost Ft 200 billion in the same period, the number of transactions increased only by 13%. (MH 11) R.G. New pool on island Next February is scheduled to see the launch of a landmark construction that will add a brand new swimming pool to Budapest's Margit Island for the upcoming 2006 European Swimming Championships, government commissioner György Gözödi said. The facility will be built according the design of the tender winner Építész Stúdió Kft. Pending a city council approval. The construction permit for the project is expected to be issued as early as next week. (NG 3) S.F. New tender The Financial Ministry (GKM) has called for a new tender to support the patent and foreign marketing of the inventions created by Hungarian micro, small, and medium enterprises. The total amount of the tender is Ft 80 million, and any one applicant may be awarded up to Ft 25 million. The deadline to submit the applications is November 25, 2004. (Vg 4) E.C. ISP spreads into broadband Fibernet Rt is to invest Ft 3 billion in transforming its entire network so customers will be able to access the internet via broadband connections. This major investment is backed by the new owner Warburg Pincus. Fibernet is to launch its new services in Q1 of 2005, when subscribers will be able to have a telephone, internet, and video connection in one package. The company, founded in 1999, has 150,000 cable and 8,500 internet subscribers and is present in over 90 locations. (Vg 5) E.C. New Tv2 CEO Effective from November 1, Dezso Pintér resigned as Tv2 CEO. The new CEO is Markus Tellenbach, main stakeholder of the channel and also CEO of SBS Broadcasting. Pintér had been the head of Tv2 for over 7 years, ever since the channel came to existence. From now on, he will be a strategic counselor at SBS, dealing with development opportunities in Central Europe. SBS has TV channels in other countries as well, and it was Tv2 that reached the highest growth rate, 33% (Ft 4.7 billion) in Q3. (Vg 5, Nb 7) E.C. State to sell Antenna Hungária stake by mid-year Hungary plans to sell its majority stake in broadcaster Antenna Hungária Rt by the middle of next year as the government sheds remaining state assets to cut its costs for running them. The government will offer its 75% stake in an open bidding in Antenna, which broadcasts signals for many Hungarian television stations and offers Internet and telecommunications backbone services, the government asset management company ÁPV Rt said on its Web site. It did not say when it will invite offers. (Bloomberg) Ft 101 bln available for regional devel'mt in 2005 A total of Ft 101 billion will be available in EU and domestic budget funding for regional development projects in 2005, minister in charge of regional development István Kolber said at a conference in Siófok on Friday. Around a third of the funds will come from the EU. Regional development councils will decide on more than half of the total funding, including Ft 11.9 billion allotted the North-Great Plains region, Ft 10.5 billion for the region of Central Hungary, Ft 9.5 billion for North Hungary, Ft 8.5 billion for the South Great Plains region, Ft 7.1 billion for South Transdanubia, Ft 5.1 billion Central Transdanubia and Ft 4.5 billion for Western Transdanubia. (Econews; ) Suzuki to make Swift cars in Hungary Suzuki Motor Corp said it will assemble Swift compact cars in Hungary, China and India to expand sales abroad. The carmaker is aiming to sell 3,000 units of the car a month in Japan. Suzuki, Japan's largest maker of minicars, said it will assemble Swift compact cars in Hungary at the end of this year and expand overseas production to China and India by 2005. "We will use the Swift as our model for entering the global markets," said Hiroshi Tsuda, Suzuki's President, at a press conference in Tokyo. "We are betting on stronger growth in overseas sales." (Bloomberg) BUX week: OTP pushes BUX to record over 13,200 A bullish OTP drove the BUX to new highs over the past trading week as investors refocused on the bank from oil major MOL Rt, with little in the way of corporate news all week ahead of mid-November's reporting season. The BUX gained 1.68% over the week and closed at the new record of 13,201 points on Friday. (Econews)

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1051 Budapest, Hercegprímás utca 19 Tel: 354 3290 Fax: 354 0130 Mail: kiadvany@inetkft.hu Economy
Economic growth According to a recent survey jointly prepared by research institute GKI Gazdaságkutató Rt and Erste Bank Rt September inflation was 6.6%, which is 1% point less than this year's record figure in May and also 0.5% point less than August inflation. The Hungarian economy is growing 2 percentage points faster than the EU average, according to the report but it is one of the slowest of the new member states. The growth in industrial production in H1 was over 10%, but in JulyAugust, it dropped to 5%, which correlates to the European tendency. Promising signs are that the processing industry has a sizeable amount of orders, and that energy consumption is less than last year, attributed mainly to the weather. (Vg 4, Nv 5) E.C., R.G. Company figures There were 1,280,956 operating businesses, including non-profit and budget-funded businesses, in Hungary at the end of September, up 2% from the same period a year earlier, the Central Statistics Office (KSH) reported on Friday. Of these businesses, 30,715 were under bankruptcy or liquidation at the end of September, 743 more than a year earlier. 451 thousand were sole traders and 405 thousand were micro enterprises. 71.1% of the total number of enterprises employ 1-9 people, which is a 99% growth in twelve months, and the number of businesses employing more than 250 fell. (Econews, Vg 4)E.C. FinMin presents 2005 budget for debate The government's 2005 budget clearly aims to encourage investment, create new jobs and cut taxes, Finance Minister Tibor Draskovics said in Parliament on Friday before the budget was introduced for debate. "The budget consistently enforces the principle of fairness," Draskovics said, adding that government administration would be the "biggest loser" in terms of the new budget. The government's 2005 budget, which was debated by parliament on Friday, contains no big surprises, nor does it anticipate any big surprises. Draskovics said that oil prices pose risks, but these would not have a substantial effect on the budget. The budget calculated with a price of less than $40 per barrel of crude. (Econews; NG 1)

Politics
Kovács stays put as commissioner candidate László Kovács has remained as Hungary's candidate for European commissioner, government spokesman András Batiz told the public Hungarian Television on Sunday evening. The spokesman was reacting to MEP József Szájer of the opposition Fidesz party who said in the same program that the European People's Party would by no means approve Kovács's nomination, since it considers him incompetent for any post in the European Commission. Incoming EC president José Manuel Durao Barroso assigned the post of energy commissioner to Kovács. (MTI)

Domestic
Authority allows further sprinkling of paprika Hungary's public health authority (ÁNTSz) allowed another 20 paprika products to go on sale yesterday. The famous Hungarian product had been adulterated by three companies: Kalocsai F?szerpaprika Rt, Szegedi F?szerpaprika Rt and Sükösdi Házi Pirospaprika Kft. The companies concerned failed to label the packages sufficiently to show the imported content. Consequently, the government ordered that all red paprika powder products be tested and only those found safe be allowed back on store shelves. Police, meanwhile, are carrying out investigations to ascertain how the toxic paprika entered Hungary. (MTI; NG 4, Vg 4) Corn fuel gets go-ahead The government has prepared a decree draft for making bio-diesel available for vehicles other than agricultural machines. According to plans, bio-diesel made of corn will be mixed to normal diesel oil from 2005. The mixing ratio is set at a maximum 5% since at this rate car engines would not have to be altered. An EU-directive sets the overall usage of bio-diesel in vehicles at 2% for 2005 and at 5.75% for 2010. Hungary aims to reach 0.3% in 2005 and 2-2.5% by 2010, according to Miklós Poós, department head at the Economic Ministry. According to experts, using bio-diesel reduces carbon-monoxide emission by 30%. (MH 4) R.G. Unwanted baby left into life-saving incubator A newly-born "unwanted" baby was left into a life-saving incubator at the gate of Szent György Hospital, Székesfehérvár, on Saturday morning. The little boy is doing well and in good condition healthwise, the nursing director said. The 3.5 kilogram abandoned baby was born in due time, and is believed to have been placed into the incubator at about 5.45AM. A few minutes later, the incubator alerted staff to the new occupant, Mrs Imre Egyed said. The newly born "unwanted" baby was named Gábor Szentgyörgyi, after the hospital. The incubator at the entrance to the hospital has so far saved four unwanted babies, including the new Gábor Szentgyörgyi. (MTI)

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Mádl donates Bartók memorial A memorial tablet dedicated to renowned Hungarian composer, folk music researcher and pianist Bela Bartók (18811945) was inaugurated at Saranac Lake, N.Y., on Saturday. The tablet, a donation by Hungarian President Ferenc Mádl, was unveiled by deputy State Secretary of Culture Marta Schneider on the wall of the house where Bartok spent the last summer before dying on September 26, 1945. It was in this building that Bartok his most popular work, the Concerto for Orchestra. (MTI)

03/11/2004
Business
Satyam opens development center Indian software giant, Satyam Computer Services opened a new development center yesterday employing 60 IT professionals in Budapest. Satyam chose Budapest in preference to Prague and Warsaw as the location of the company's first European base to back its expansion plans in the region. The center is purposefully located in the University district in Buda as Satyam expects new recruits from the Technical University, said CEO Ramalinga Raju. (Nb 16, Vg 1) A.K. Five companies bid for 3G licenses Five companies have bid for frequency bands to provide third-generation mobile services in Hungary. In addition to Hungary's three established mobile service providers, T-Mobile, Pannon GSM and Vodafone, newcomers TDC A/S of Denmark and Tele2 of Sweden bid for the four bands up for sale, National Communications Authority (NHH) head Daniel Pataki announced yesterday, the deadline for bidding. Pataki said the NHH will start negotiations with the bidders in a couple of days, after determining whether or not the bids are valid. The NHH is not obliged to sell all four of the frequency bands. (Econews; Vg 1, MH 9, Nb 16) OTP Slovakian subsidiary skyrocketing OTP Banka Slovensko, the Slovakian subsidiary of OTP Bank Rt registered a ten-fold yr/yr increase in its after-tax profit during the first nine months of the year. The bank had profits of 134.6 million Slovak korona and a balance sheet total of 30.872 billion Slovak korona up 38% compared to last year. (Vg 13) A.K. Post opens new fund The State Financial Institutions Supervision (PSZÁF) has given its consent to Magyar Posta Rt to found Magyar Posta Open-Ended Money Market Investment Fund. The fund management and distribution tasks will be handled by Erste Group's respective companies. Investment units of the fund will be available at post offices from the middle of November. (NG 12) R.G. End of "conditional influence" in TVK Raiffeisen Zentralbank of Austria no longer has conditional influence in Hungarian chemicals company TVK Rt through a stake it held as collateral for a loan, TVK announced on the website of the Budapest Stock Exchange yesterday. Raiffeisen loaned the Austrian company CE Oil and Gas (CEOG) money to purchase a 15.4% stake in TVK in October, and CEOG used the shares as collateral for the loan. TVK's announcement probably means that CEOG has paid back the loan. CEOG now has 31.39% of voting rights in TVK. The purchase of the shares was related to the successful sale of a 62.6% stake in BorsodChem by CEOG's owner Vienna Capital Partners. (Econews; Vg 13) Betonút wins tender for M7 section Construction company Betonút Rt has won a bid to build a 17.3 km section of the M7 motorway, Nemzeti Autópálya Rt, a state-owned company which organises road building projects, announced yesterday. The new stretch will connect Nagykanizsa and Becsehely, in the southwest of the country. Betonút said it could finish the motorway by the end of 2006 for Ft 35.9 billion. Nine companies bid in the open tender to build the road. (Econews; NG 4) Motorway reconstruction State motorway management company ÁAK Rt spent Ft 5 billion on motorway reconstruction and maintenance this year. The costs of the works were covered from income on motorway toll stickers both on paying and toll-free roads. As a result of a tightly scheduled reconstruction plan started in 2001 none of ÁAK Rt's roads have surfaces more than 10 years old. (NG 5) Mobile use rises to 83% Hungarian mobile-phone use rose to 83% of the population in September, with the local unit of Vodafone Group Plc still eating away at the market share of Telenor ASA's Pannon GSM Rt. The number of Hungarians with cellular phones rose from 82.3 % in August this year and 74.8 % in September last year, Budapest-based regulator NHH said on its Web site. The new EU member's three wireless companies struggled to add subscribers as 10.1 million Hungarians owned more than 8.3 million cellular subscriptions or pre-paid cards. T-Mobile Magyarország Rt, the mobile-phone unit of Deutsche Telekom's Matáv Rt, had the largest market share, ahead of Pannon GSM and Vodafone. (Bloomberg)

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1051 Budapest, Hercegprímás utca 19 Tel: 354 3290 Fax: 354 0130 Mail: kiadvany@inetkft.hu
TDC, Tele2 bid for UMTS licenses TDC A/S, Denmark's largest phone company and Tele2 AB, Sweden's second-largest phone company, are bidding to become Hungary's fourth mobile-phone provider, vying for a high-speed cellular-phone license. Deutsche Telekom AG, Telenor ASA and Vodafone Group Plc, which already provide mobile-phone services in Hungary, also applied for three high-speed licenses reserved for them, while TDC and Tele2 are competing for the fourth spot, said Daniel Pataki, head of the country's phone regulator. (Bloomberg; NG 1, Nv 5) Plaza Centers sells shopping malls Shopping center operator Plaza Centers signed a pre-purchase agreement with British Dawnay Day Europe group on the sale of four shopping plazas in Hungary for euro 56.5 million. Plaza Centers sold 12 of its 16 malls to the French Klepierre group in July. The success of the sale of the remaining malls located in Veszprém, Pécs, Sopron and Szombathely depends on Klepierre, as the company has a preemptive option for their purchase. (Nb 16) A.K. EU delves into paprika case The EU health and consumer protection authority will start a five-day food safety investigation in Hungary on November 15 to verify how adulterated paprika powder could be marketed in the country, Chief Medical Officer László Bujdosó told a special session of Parliament's Health Committee yesterday. "Hungary will request that the EU should make the importation of ground paprika subject to itemized checks and toxic fungus screening," he said. "The current rules enable importers to circumvent the rules and the authorities are used to carry out merely random checks," Bujdosó said, pointing out that government agencies are not in a position to check all food products. (MTI; Nv 1, Nb 7, MH 20) Frozen foods liquidated Bankrupt frozen food company Arvit Rt said it is due to wind up production altogether by the end of November. Bowed under a Ft 900 million debt burden, the Győr-based company decided to close up shop in early fall and put up its assets for sale on Sept. 30, part of which has already been sold. Arvit, which posted revenues of Ft 2.5 billion but eventually ran up a net loss of Ft 158 million last year, blamed its woes on drought, high raw material costs and competition from Poland and Serbia. (Vg 12) S.F. EU may buy third of cereals crop Hungarian farmers could ask the EU to buy up to a third of 2004's bumper cereals crop, instead of selling it on the market, because the EU is offering more than the going market rate. Farmers are expected to offer between 2.5 million and 5 million tons of cereals for the EU intervention price, Chairman of the Agriculture and Rural Development Bureau (MVH) Miklós Szoke said on Tuesday. Hungary's entire cereal harvest is expected to be about 15 million tons. The EU intervention price for a tonne of wheat is the equivalent of about Ft 25,400, some Ft 3,000 more than the price for December deliveries on the Budapest Commodities Exchange. (Econews) Tv2 reports biggest profit ever in Q3 Hungary's commercial television broadcaster Tv2 Rt, which is owned by Europe's second-largest broadcaster SBS, reported a 33% sales rise in the third quarter of 2004, compared to the same period a year earlier, giving TV2 its best results ever. Tv2 reported revenue of Ft 4.7 billion in Q3, bringing nine-month revenue to Ft 16.2 billion, up 21% yr/yr. Tv2 had operating profit of Ft 3.24 billion in the first nine months. Tv2 CEO Gábor Kereszty said the broadcaster should close the year with a record profit. (Econews; Vg 10) PM announces privatization plans PM Ferenc Gyurcsány announced the government's privatization plans in parliament yesterday. The plan includes the sale of the government's 12% stake in fuel monopoly MOL Rt and the further privatization of the Land Credit and Mortgage Bank Rt (FHB). Gyurcsány dispelled fears of the opposition party Fidesz by declaring that postal carrier Magyar Posta Rt, gambling monopoly Szerencsejáték Rt and power supplier MVM Rt will not be privatized in the near future. The PM also mentioned broadcaster Antenna Hungária Rt, saying that it will not be sold until its contract with the state television MTV Rt is secured. (Vg 13) A.K. HiSenses finds buyers for TVs HiSense Electric, a big Chinese electronics maker, has found buyers for 150,000 flats panel televisions it is making at a plant run by Flextronics in Hungary. Details of the purchase will not be announced until after the final contracts are signed sometime in March of next year, but buyers include France's Carrefour, Europe's biggest retailer, and TESCO of the UK, Europe's second-biggest retailer. Flextronics' Hungarian unit will turn out 150,000 of the HiSense flat panel TVs in 2004 and 300,000 in 2005. (Econews; Vg 1) Radios to break revenue records Commercial radio stations closed a record Q3 in terms of advertising revenue led by Danubius Rádió with Sláger Rádió coming second with Ft 3.43 billion. The stations expect a further increase based upon the results of a recent survey by pollster Szonda Ipsos, which showed that radio adverts are in some cases better means of reaching young consumers than TV advertising. Radio currently represents 6.7% of the total advertising market of Ft 134.9 billion. (Vg 10) A.K.

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1051 Budapest, Hercegprímás utca 19 Tel: 354 3290 Fax: 354 0130 Mail: kiadvany@inetkft.hu
Arago may sell stake Holding company Arago is pondering over the sale of its 49.98% stake in Hunguest Hotels Rt (HH), the hotel chain operator, unnamed sources reported. HH, which runs 29 hotels across Hungary, is jointly owned by Arago and Hunguest Asset Management Rt. With a 49.16% holding in HH, the latter is, in turn, owned by the Hungarian National Holiday Foundation (MNÜA). The move is believed to be in connection with MNÜA's plan to bring in nine new small investors and their assets into HH, who would acquire stakes worth Ft 8 billion in the hotel chain. This would allow the foundation to spend ten times more on subsidized holiday programs, said Mihály Karácsony, chairman of MNÜA's board of trustees. (MH 1) S.F.

Economy
FinMin estimate realistic The Finance Ministry's 4% GDP growth forecast for 2005 announced last Friday by Finance Minister Tibor Draskovics was viewed by experts as realistic, reports economic daily Napi Gazdaság. However, experts also think that the government's estimation for the 2005 average oil price of USD 40 is too optimistic. György Kovács of Budapest Economics Kft predicts the 2005 average oil price around USD 45 and thinks that the 10% difference could lead to a 45% rise in gas prices next year. (NG 1) R.G. Gov't's inflation target The Monetary Council of the National Bank of Hungary (MNB) set the inflation target at 3.5% ą1% for Dec. 2006 in a statement supporting the government's target announced by Finance Minister Tibor Draskovics last week. The Monetary Council has also reviewed the first draft of the inflation report to be issued on Nov. 22. According to Erste analyst Orsolya Nyeste, MNB might somewhat decrease its 6.1% December inflation forecast. (NG 3) R.G. Industrial producer prices up 0.3% m/m, up 3.3% Industrial producer prices rose 0.3% in the month of September and were up 3.3% in the twelve months to September, the Central Statistics Office (KSH) announced yesterday. Industrial producer prices for domestic sale rose by 0.4% in September, while producer prices were 0.3% higher in forint terms for export sales. Twelve-month domestic sale prices were up by 9.1% and forint-term export prices decreased by 1.3%. January-September industrial producer prices were up 3.9% from a year earlier. (Econews) Auction of 3-month bills Hungary's borrowing costs declined at a sale of Ft 25 billion of three-month bills. The securities were sold at an average yield of 10.40%, 1 basis point less than at a sale a week ago, the government's Debt Management Agency said on its Bloomberg page. The maximum yield at yesterday's auction was 10.41% and the minimum 10.15%. The agency received 153 bids worth Ft 87.7 billion and accepted 73 of them. (Bloomberg)

Politics
Parliament votes down capital gains tax MPs yesterday voted down the reintroduction of a 25% capital gains tax in 2005, with the junior coalition partner Free Democrats voting with the opposition against the cabinet's proposal. The result means that the capital gains tax motion has been removed from the tax amendment proposals for 2005. The cabinet proposed the reintroduction of the capital gains tax, abolished in 2003, arguing that incomes and capital gains would be taxed in about the same way. Most economic commentators opposed the reintroduction of the tax from the very beginning, saying it would hurt investments and long-term savings would also deteriorate. (MTI; MH 1, NG 1, Nb 1) No new commissioner request from EC The incoming president of the European Commission (EC) has not asked Hungary to withdraw its EC commissionercandidate and name someone else, a Hungarian source in Brussels told the AFP news agency yesterday. The source, who wished to remain anonymous, said Hungary believed the current candidate, former Foreign Minister László Kovács, "has genuinely acceptable and sufficient abilities that make him suitable as a European commissioner. Kovács has come under criticism both from the Hungarian opposition and the European Parliament's largest group, the European People's Party, for lack of expertise. (MTI)

Domestic
Close shaves Ferihegy Airport Aircraft flew too close to each other on seven occasions over the past two months in the airspace surrounding Budapest's Ferihegy Airport, the head of Union of Air Control Services said yesterday. György Metes said the main reason for the potentially dangerous incidents was the heavy workload of air controllers. He also said technical equipment at HungaroControl was also lacking. The Hungarian Civilian Aviation Authority (PLH) on Friday reported it had suspended the permit of an air controller who two weeks ago gave an incorrect order to a flight to begin take-off, resulting in the plane coming too close to another aircraft in a re-start maneuver. (MTI)

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Warehouse fire investigations The cause of a fire that gutted a warehouse in an outer district of Budapest on Monday evening is still unclear, with investigations set to begin only today. Materials including hydrochloric acid were engulfed in the fire that started in a 300 sqm warehouse that stored household chemicals, batteries, paint derivatives and refrigerator spare parts, National Disaster Management Center spokesman Tibor Dobson said. He said residents in the vicinity of the warehouse were advised to avoid eating food stored out in the open and to wash their cars and any clothes hung out to dry, but were not otherwise deemed to have been in any danger. The fire did not claim any lives since Monday was a holiday and no one was in the building. (MTI) Hungarian aid to Iraqi and Palestinian elections Hungary is offering euro 100,000 towards Iraq's general elections and euro 60,000 to help develop Palestinian electoral infrastructure, a senior Foreign Ministry official said yesterday. State Secretary András Bársony said Hungary wanted to assist Iraq with its democratic process, including an assessment of earlier initiatives to train policemen and a civic program, and how these might be extended. Having sent a transport unit to Iraq as a member of the international coalition, Hungary was not in a position to provide further contributions in UN missions, Bársony said. (MTI)

04/11/2004
Business
Ft 55 bln Budapest 'Docklands' Real estate developer Gropius Rt will embark on a Ft 55 billion mixed-use project in Dist. 9 within a few weeks, according to Richard Hazzel of Colliers International Kft, the company that will act as exclusive leasing agent for the property. The 200,000-sqm Duna-Liget project, which Hazzel compared to the extensive development that took place in London's Docklands area in the 1990s, will occupy a 20-hectare lot and comprise several thousand apartments of 50,000 sqm total floor space, in addition to an office, hotel and retail complex. Gropius named Hungarian Foreign Trade Bank Rt (MKB) as a likely financing partner. (Vg 1) P.P. Globus buys Austrian food distributor Hungary's Globus Rt, the second- biggest seller of canned and frozen corn in Germany, bought 49.9 % of Austria's Vital Food GmbH, a food distributor, MTI news agency said, citing Globus. Budapest-based Globus bought the stake for an undisclosed price and will change the company's name to Globus Konzerven und Tiefkuhlproduktions GmbH to use its brand in Austria, MTI said. Vital had sales of Euro 6 million last year, according to the news agency. (MTI 113,Bloomberg; Ng 11, Vg 14) MOL to reduce pump prices on Friday Oil and Gas Company MOL Rt, the country's major fuel distributor, will cut retail petrol prices by Ft 6/litre and the retail price of diesel by Ft 3/litre on November 5, Friday, a MOL spokesman said yesterday. MOL said the new price would be Ft 247.5/litre for 95-octane unleaded and Ft 237/litre for diesel. Explaining the measure, MOL cited a decline in international crude prices over the past week. (MTI; Nv 5, Vg 5, Nb 17) Kirchoff to build another car plant Car parts manufacturer Kirchoff Hungária Kft has recently finished a new 1,800 sq m plant in the Esztergom industrial park, North of Budapest and has already decided to continue development by constructing another one on the same site, announced the plant's director Szabolcs Sólyom. Construction will start next February, while production in the recently finished plant will be launched in December manufacturing car bodies for Magyar Suzuki Rt. (NG 1) R.G. Euro 10-15 mln investment eyes Gyor U.S.-based tool manufacturing giant Kennametal Inc. is planning on a major investment in Hungary, the Czech Republic or Poland, Slovakian and Polish newspapers reported. The company is eyeing Gyor as a potential location for the project, according to Sales Director György Rábel of Kennametal Hungaria Kft, a local trading subsidiary. The value of the investment is estimated at Euro 10 million-15 million by the Slovak Spectator, which could go up to Euro 50 million later, according to the Warsaw Business Journal. Present in Hungary since the 1970s, Kennametal is currently ranked third in terms of market share. The company posted Ft 700 million in revenues last year. (Vg 9) P.P. Ringier rejects Magyar Hírlap offer The owner of daily Magyar Hírlap, Ringier Kft has turned down the editorial's offer to work one month without a salary until they find a new investor. As reported earlier, Ringier decided to stop the publication of Magyar Hírlap and will not finance printing costs. According to the present state of affairs, Magyar Hírlap, which was launched in 1968, will appear on Saturday for the last time. (MH 1) M.K.

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Complaint against Allianz Hungária Hungarian insurers have accused peer Allianz Hungária Rt of unfair market practice for failing to announce new premiums on car insurance policies for the company's existing clients. The insurance companies decided to bring their case to the Competition Office (GVH). All car insurance companies were required to publish their new premium rates for 2005 at the end of October. Increasing competition and better informed clients mean that as many as 800,000 car insurance policy holders could switch companies this year, more than double the number last year. Allianz Hungária published premiums for new clients, signing policies in 2005, but failed to specify whether the new rates apply to clients who already have policies. (Econews; Vg 14) MÁV announces suburban locomotive tender Four companies have applied for MÁV Rt's tender to supply 60 suburban locomotives for the company, each in the value of Ft 1.1-1.3 billion. The four bidders are German Siemens, Swiss Stadler, French Alstom and Canadian Bombardier. Earlier, Spanish CAF and Japanese Mitsui were also interested, but did not finally appeal. MÁV will have detailed negotiations with the four bidders and the winner may be announced at the end of this year. (MH 11) M.K. Praktiker opens 15th outlet DIY chain Praktiker opened its 15th store in Szolnok, East Hungary yesterday. The new 6,100 sq m store employs 72 people and was constructed with an investment of Ft 1.2 billion, announced the chain. With the new opening the total space of Praktiker stores increased to 123,300 sq meters and the number of their employees to 1,400. (NG 5, Vg 9) R.G. MÁV to sell Andrassy 66 MÁV Rt has issued a purchase tender for the headquarters of its pension fund at Andrássy út 66. in Distr. 6 of Budapest again. The building was previously appraised at Ft 1 billion but tenders were unsuccessful because of the inadequate offers. This time MÁV would rent the 3-storey, 4,026 sq m building from the future owner by Dec. 31 2007 and asks a renting option for another 3 years. (NG 10) R.G. Private railroad company on track Floyd Kft, a privately owned Hungarian upstart railroad transportion company, successfully completed a test run of its second train engine that will be used for hauling transit shipments between Orasul Curtici in Romania and Hegyeshalom on the Hungarian-Austrian border starting next week, CEO András Bogdán said after the test yesterday. Floyd is leasing the engines from Romanian SoftTrans, with ambitious plans to put another two engines into operation before the end of the year and some 10 more next year, he added. (Vg 9) P.P. Cabinet to propose EU paprika testing Testing for mycotoxin in ground paprika should be carried out when the product enters the EU, according to a government proposal to be submitted to the EU, the government spokesperson said yesterday. So far only peanuts and pistachios have been tested for toxins, spokesperson Boglar László told reporters after the cabinet session. She said Hungarian police have begun investigations into how ground paprika spice containing higher than allowed amounts of toxin materials had come to be marketed by distributors. (MTI; Nb 6, 15) Raiffeisen profit of nearly Ft 15 bln Raiffeisen Bank Rt had after-tax profit of Ft 14.967 billion in Jan-Sept, 2004, up 38% on the same period in 2003, deputy CEO Krisztina Horvath said yesterday. The bank expects after-tax profit of Ft 19 billion-20 billion for the whole of 2004. Total assets were Ft 992 billion at the end of Sept, up 28% from Sept 2003. Pre-tax profit was Ft 20.519 billion in Q1-Q3 2004, up 40% yr/yr. Raiffeisen's stock of loans was Ft 766.081 billion at the end of Sept, up 24% from a year before. (Econews; MH 13, Vg 14) GenoID introduces cancer screening test GenoID , a Hungarian biotechnology company, has started patenting in several countries, including China, a method of screening for cancer of the cervix. The EU's Patent Office has already completed a preliminary report on the method, GenoID CEO Attila Erdos said. He added that GenoID has already contracted a company to help with the introduction of the product on the market. GenoID's method can identify 51 different kinds of human papilloma virus (HPV), which are linked to cervical cancer. GenoID is owned by Csaba Jenei, head of research at the company, and Viktor Nyiro. (Econews)

Economics
Jarai willing to compromise Zsigmond Járai, who heads Hungary's central bank, said he could not accept proposed changes to the law governing the central bank which would allow the prime minister to pick almost half of the bank's rate-setting Monetary Council, but would agree to the prime minister nominating Monetary Council members after consulting with him. Mádl could have a potentially crucial role in the debate over the changes. He has the power to send any amendment to the Central Bank Act approved by parliament back to MPs or to the Constitutional Court. Járai stressed that his proposal only stands if all of the current members of the Monetary Council are allowed to sit out their terms. (Econews; Nv 5, Vg 5, Nb 7, MH 10)

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Tax inspections to delay VAT refunds VAT refunds totaling up to Ft 100 billion will be halted until next year due to extensive tax inspections ordered by the Finance Ministry to detect the causes behind unexpectedly low VAT revenues. This may affect more than 10,000 businesses holding a European tax ID. The government is justified in using stringent measures as Q2 inspections revealed a discrepancy between corporate tax returns and EU control data in more than half of the cases, State Tax Office (APEH) spokesman György Lovas said, adding that APEH will pay the due interest rate on late refunds. The real motive behind the time-consuming VAT inspection is to improve the 2004 budget balance at the expense of 2005 revenues, commented László Zara, president of the Hungarian Association of Tax Advisors and Accounting Service Providers. (Vg 1) P.P. Ft 500 blocks agreement on minimum wage Members of the National Interest Coordination Council could not come to an agreement over the issue of the minimum wage in Hungary next year. The ideas of employers and employees got close enough, but a Ft 500 gap could not be overcome after employers suggested Ft 57,000 and employees Ft 57,500. Both sides claimed this was their ultimate offer. Labor minister Gábor Csizmár said the government has done all it could to reach an agreement between the two sides. (Nv 1) M.K. SAPARD money to go to 2,761 applicants The Ft 65.5 billion in SAPARD funds - EU money for agricultural and rural development - available to Hungary will go to 2,761 applicants. Hungary's Office of Agriculture and Rural Development (MVH) picked the winners from 8,827 applications, said Zsuzsa Pásztor Tóth, who is in charge of rural development at MVH. The Ft 65.5 billion includes 10 billion in government co-financing. So far, Ft 11 billion of the total has been paid out. The funding will go toward projects worth a total of Ft 217 billion. SAPARD funds, which were a pre-accession construction, are being replaced by the Operative Program for Agricultural and Rural Developments (AVOP). (Econews; Vg 3) Gov't has much to ponder for FHB sale Prime Minister Ferenc Gyurcsány statement to parliament yesterday that the state could sell a part of its stake in land credit and mortgage bank FHB Rt has stirred speculation as to how and how much of the bank could be sold. Any options which are discussed will have to take into consideration FHB's role as Hungary's biggest mortgage bank as well as the revenue a sale would generate. The state currently owns 53.2% of FHB and a statutory instrument stipulates that it must retain a 50%-plus-one-vote stake in the bank, but a new statutory instrument could be created eliminating this requirement. The state already sold a 46.8% stake in the bank on the stock exchange for Ft 11.7billion in 2003 and FHB's privatization, at least in the mid-term, has been widely expected. Selling the entire stake might cost the bank its strong ratings. (Econews)

Politics
Troops to be withdrawn from Iraq Hungary will withdraw its 300-strong contingent from Iraq by the end of March, Prime Minister Ferenc Gyurcsány said. The Hungarian soldiers, which have been based in Hillah in the Polish-controlled sector south of Baghdad since September 2003 carrying out transportation and humanitarian duties, will stay until Iraqi elections scheduled for January have been held, Gyurcsány said. "We have the most important condition of Iraqi political consolidation ahead of us: the Iraqi election in January, he said. "It is an obligation to stay until the end of the election, while staying much longer is impossible." (Bloomberg; MH 1, Vg 1, Nb 1,9, Nv 3,) Kovács to receive tax job in Commission Ex-Foreign Minister László Kovács may swap positions with his Latvian colleague in the European Commission, according to press information. Latvia was recently asked to recall their candidate who should have been responsible for tax issues, and the new Latvian candidate is likely to be given the task of energy issues. Thus, Kovács may become tax issues commissioner in the EC. Prime Minister Ferenc Gyurcsány has confirmed the government still nominates Kovács to be member of the EC on behalf of Hungary. (Nv 2) M.K. Fidesz to vote against prolonging Iraq The two opposition parties will vote against extending the stay of Hungarian soldiers in Iraq until March 31, as proposed by the government yesterday, their officials said. "The overwhelming majority, or three-quarters of Hungarians, earlier indicated their wish to see Hungarian troops brought home from Iraq," the parliamentary group leader of the main opposition Fidesz party said. János Áder said Fidesz requested the withdrawal of Hungarian troops by the end of 2004 six months ago. (MTI; Nv 3) Hungary to be partner of U.S.- FM Hungary intends to remain a predictable partner of the United States, both in bilateral relations and in the handling of global challenges within NATO, Foreign Minister Ferenc Somogyi said yesterday. The new foreign minister, who was sworn in on Tuesday, was speaking to MTI after the re-election of George W Bush as President of the United States yesterday. Somogyi said he did not expect any changes in Hungarian-American relations. (MTI)

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1051 Budapest, Hercegprímás utca 19 Tel: 354 3290 Fax: 354 0130 Mail: kiadvany@inetkft.hu
Vajnai charged of red star use Vice-chairman of minor left wing Workers' Party has been charged of the violation of a law, because he put the red star as well as sickle and hammer on the party's website. According to Hungarian law, the symbols of oppressive regimes, such as the arrow cross and the red star can only be used for educational purposes. The Workers' Party uses symbols, which are well-known party symbols in other EU countries, Vajnai said. (Nv 4) M.K. Call for easing of German employment law Foreign Minister Ferenc Somogyi called for the earliest possible re-examination of rules that restrict the employment of Hungarians in Germany during a meeting with Wolfgang Schauble, deputy leader of the German CDU/CSU parliamentary group yesterday. Schauble said that although no exception can be made for Hungary, "dialogue on the issue is continuous with the Berlin federal government". (MTI)

Domestic
Healthcare workers stage 5th strike Healthcare workers staged their fifth nationwide strike yesterday to demand better wages and working conditions. On this occasion, eight hospitals throughout the country that had taken part in the earlier strikes announced by the Democratic Union of Healthcare and Social Workers (EDDSZ) stopped work from 8 a.m. to 4 p.m. CET. Union leader Ágnes Cser said the strikes, begun on Oct 7, would continue until an agreement was reached with the government, with the next one slated for November 11. (MTI; Nb 7)

05/11/2004
Business
Bp Airport 9-month profit up 260% yr/yr Budapest Airport, the operator of Ferihegy international airport, had pre-tax profit of Ft 8.5 billion in the first nine months of 2004, up 260% from the same period last year. Profits were boosted by increased traffic, lower costs, a shift toward more profitable activities and exchange rate gains. Operating profit was Ft 5.7 billion during the period, up 247% from a year before. Net sales rose 19% to Ft 24.8 billion. Budapest Airport CEO János Harskúti said he expects the company to end 2004 with pre-tax profit of Ft 10.4 billion, well over the company's original target of Ft 7.3 billion. (Econews; Ng 5, Nv 5, MH 10) Ringier asked to give Hírlap respite The European Federation of Journalists (EFJ) called upon the Swiss-based Ringier Publishers not to close down but to give a respite to the national independent daily Magyar Hírlap. A federation statement issued yesterday said that ending the publication of the paper would be "a catastrophe for independent journalism in Hungary and its region". "This paper is a flagship of the free press in the region, one that made a name for itself with its high journalistic style and unbiased tone on this overly politicized media market," EFJ General Secretary Aidan White said. (MTI; Nb 8, Nv 3) Népszabadság lay offs expected The publisher of daily political newspaper Népszabadság, which has the largest print run in its category, has announced plans to lay off several dozen of its 140 employees. Népszabadság Rt will also restructure its network of foreign correspondents, CEO László L. Lengyel said. The changes are part of a major reorganization plan the publisher embarked on two years ago, during which 50-60 staff members were made redundant, he added. Although the newspaper's readership has been dwindling for years and is currently standing at 162,343, it was expected that severe staff cuts might not be necessary as 49% owner Ringier Kft decided to keep the company while closing down rival Magyar Hírlap. (Vg 1) P.P. New cell company hits market Dow Jones-listed Primus Telecom is planning to enter the Hungarian cell phone market in December as an alternative provider of low-rate international calls, the company said. Primus decided to use an area code of its own to direct calls to its network after talks failed with existing market players about shared use of the latter's network. The services offered by Primus will be available to users of all three mobile communication companies currently present in Hungary but require the use of Primus cellular phones and price plans. The prospective new competitor is seeking retail partners to market the service. (Vg 1) P.P. Internet speed wars begin Matáv Rt announced yesterday that it would increase the maximum speed of ASDL internet, first in the East, then in Western Hungary, effective from November 16. As a result of this, clients who subscribe to the smallest package will have a 30% increase in downloading speed, the increase will be two fold for all other packages. Axelero Internet Rt is also providing increased bandwidth for its customers at the same price and conditions. UPC Hungary Kft is to pump up its speed of data transmission from December 1: Chello Classic will double, Chello Plus will triple its velocity. GTS-Datanet Kft and Externet Kft will also keep its old prices but double data transmission. (NG 4) E.C.

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1051 Budapest, Hercegprímás utca 19 Tel: 354 3290 Fax: 354 0130 Mail: kiadvany@inetkft.hu
16 construction companies accused of cartel The Competition Office is investigating 16 road construction companies who are suspected of forming a cartel in regard to public procurements. According to unnamed sources, the companies premises were searched and some of their employees were interviewed. The result of the inquiry is expected by January. Meanwhile the legal proceedings against another five motorway construction companies accused of forming a cartel is ongoing. The Court of Appeals will decide next month, whether these companies will have to pay the fine that was imposed on them immediately or following appeals which could take many years. Betonút Rt, Strabag Rt, Hídépíto Rt, Egút Rt and Debmút Rt were fined to Ft 7 billion in total, but appealed to court to postpone the execution of the verdict. (Nv 1) G.R. PSzÁF approves Forlev purchase offer for Konzum Financial market regulator PSzÁF has approved Forlev Kft public purchase offer for Konzum Rt shares, one of the Budapest Stock Exchange's (BSE) mid-caps, according to an announcement in capital market gazette Magyar Tokepiac. The offer must still be approved by the Competition Office. The offer, which will be open between November 8 and December 8, is for Ft 90 per share, 11.2% more than the average turnover-weighted price over the preceding 180 days. Forlev announced the public purchase offer for Konzum on October 11. (Econews; MH 13) Inter-net-work Those bewailing the lack of convenient Internet access in Hungary will be enthused to learn that Inter.net Media Kft is planning on putting 200 new public internet terminals into operation by next January, András Kormanik, business development manager, told Napi Gazdaság. The company started setting up these new stations in 2001, now having about 50 at Burger King restaurants and Jet gas stations. The decision on expansion, however, requires a significant investment, thus Inter.net Hungary Kft has joined forces with Information Technology Venture Capital Management Fund Rt. The new company, Inter.net Media Kft, which is responsible for the development and maintenance of the new terminals, has been funded with a capital of Ft 600 million, Ft 334 of which is cash, the rest is apportion. (NG 5) E.C. Competition Office rejects complaint The Competition Office (GVH) will not take any action on a complaint filed by insurance companies against Allianz Hungária Rt for failing to publish new rates for clients who already have third-party compulsory car insurance. GVH said that because a statutory instrument obliges companies to publish their rates, Allianz Hungária's failure to publish its rates for existing clients is outside of GVH's jurisdiction. GVH may only take action if a company is thought to be abusing its market position or misleading consumers, which Allianz Hungária is not, according to GVH. (Econews; Vg 19) Work starts on Kelenföld power plant Power company Budapesti Eromu Rt, owned by Electricite de France, has started building an addition onto its Kelenföld power plant in Budapest as well as replacing the plant's steam turbines and steam boilers. Alstom Power Hungária Kft and Schneider Hungária Villamossági Rt are in charge of the Ft 13.7 billion project, which will be completed in the middle of 2006. Budapest Eromu is paying for 70% of the cost with loans. The plant will not have to shut down during the project, which will add another 14MW to the plant's capacity, bringing it to 186MW. (Econews) Richter Q3 Profit Seen Falling 8.1% Gedeon Richter Rt, the biggest drugmaker in the 10 new EU member countries, may say third-quarter profit fell 8.1 %, as a government-imposed price cut reduced revenue in Hungary. Budapest-based Richter will probably say net income fell to Ft 8.68 billion from Ft 9.45 billion in the year-earlier period, according to the median estimate of six analysts polled by Bloomberg News. The company is expected to report earnings tomorrow, before the market opens. (Bloomberg)

Economics
18% of work force are 'hidden' workers According to a survey conducted by the EU, 18% of the GDP in Hungary is produced by "hidden" workers. With this figure, Hungary is topped only by Greece, where the ratio is 20%. Some estimates even reach upwards of 7,000. The majority of these illegal employees are men between the age of 25-45 working mostly as construction workers, but there is a significant amount of "invisible" workers in the agriculture and in the hospitality industry. The reason is believed to lie in the lack of flexibility of the labor market and high tax rates. The government is dedicated to claiming 100-150 thousand more legally working employees by 2006. (NG 1) E.C. MOL finds buyer for gas assets MOL Hungarian Oil and Gas Rt sealed an agreement with German gas industry giant E.On Ruhrgas yesterday regarding the sale of its Ft 150 billion-Ft 200 billion natural gas-related assets, Világgazdaság reported. The package includes 75% minus one share of MOL's gas storage and trading companies, with an option for a 25% stake plus one share in MOL's gas distribution subsidiary and 50% ownership of Panrusgáz Rt, which distributes Russian imports and is jointly owned with OAO Gazprom. While Ruhrgaz was the only potential investor to submit a bid, MOL has also been in talks with other candidates behind the scenes, the newspaper claimed. (Vg 1) P.P.

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1051 Budapest, Hercegprímás utca 19 Tel: 354 3290 Fax: 354 0130 Mail: kiadvany@inetkft.hu
More foreign investors in Hungary A report by Ernst and Young, a big consultancy, shows Hungary was number one in the region in the first half of the year in terms of new projects funded with foreign capital. Hungary was number three in this respect in all of Europe. The report shows a changing trend, with foreign direct investment (FDI) in Europe increasing, secretary of state at the Ministry of Economy and Transport Gyula Gaál told a conference of the Hungarian Atlantic Council in Budapest yesterday. FDI in Hungary fell from USD 2.8 billion in 2002 to USD 2.5 billion in 2003. Hungary has remained attractive to foreign investors because of its relatively low wages, good infrastructure, excellent location and improving business environment, Gaál said. (Econews; Ng 3, Vg 3, Nv 5) Environment: Ft 365 bln for projects Some Ft 365 billion, including EU funds, will be devoted to environment-related projects through the end of 2006, the environment said yesterday. Miklós Persányi said the ISPA framework made available as a pre-accession fund before Hungary joined the EU in May included Ft 150 billion in environmental resources between 1999 and 2004, and since it has been a member it has had access to cohesion funds assisting major projects, which totals Ft 177 billion, and to structural funds aimed at reducing regional inequalities, which amounts to Ft 38.5 billion. (MTI; Ng 3, MH 4) Hungarians going deeper into debt The stock of household loans increased by 21% from Ft 2,121 billion to Ft 2,838 billion to Sept 30 within a year. About 1.5 million people have loan hanging over them, according to market research company GfK Hungária Kft. Most of them spend about 25% of their monthly incomes on installments, researcher Zoltán Varga said. Two years ago, this rate was only 10%. Number of people saving money decreased at the same time, although in last few months a slight increase happened. Most people still keep their money in deposits and this is changing very slowly. (MH 9) G.R. Labor Min presents employment program Labour Minister Gábor Csizmar has outlined changes to the government's labor policy which aim to boost employment by between 50,000 and 60,000 people in 2005. The government intends to increase employment by between 100,000 and 150,000 during its term from 2002 to 2006. In addition to tax breaks for employers who hire school-leavers and women returning to work after child leave, the changes includes a measure which lets some public sector workers continue to work part time after they are let go. The 2005 budget allocates Ft 88.3 billion for employment programs, well over this year's allocation of Ft 67.2billion, Csizmar said. (Econews; Ng 1) Residential real estate boom still on According to the latest report of the Central Statistic Office (KSH), there were 22 339 new apartments snapped up in the first 3 quarters, which is a 45% increase yr/yr, whereas the number of construction permits issued are up 2.3% totaling 42 276. The most dynamic movement took place in Budapest, where the increase in newly built apartments in the first 9 months reached 81% yr/yr. There were more properties built in all counties this year than in 2003, the smallest increase took place in Nograd county, 7%, and the highest jump materialized in Vas county 116%. (NG 4) E.C. Moody's maintain MFB rankings Moody's Investors Service has confirmed the deposit ratings of state-owned Hungarian Development Bank (MFB). The long-term rating of the bank is A1, the short-term rating is Prime 1. The ratings assigned to MFB correspond to Hungary's sovereign rating by Moody's. The institute first assigned a rating to MFB May 2003, giving the same rankings. The state gives a direct guarantee to MFB's deposits, which allows this positive rating. (Nv 5, MH 13) G.R. Retirement age could be lowered to 62 A retirement age for civil servants of 62 instead of the current 70 was outlined in a modification proposal submitted by the socialists regarding next year's budget,. The measure could be effective from July 2005, the only exceptions to the rule would be judges and Constitutional Court judges. There would also be restrictions imposed on civil servants being that they could only work in the designated office building as state employed, not as a self-employed contractor. With regards public service workers, the retirement age limit would also remain 62. (NG 3) E.C.

Politics
Barroso on Kovács as tax commissioner Incoming European Commission President Jose Manuel Barroso said the field of taxation and customs selected for László Kovacs "stands closer to the political experience of the Hungarian candidate, who is expected to perform better during his next hearing". Barroso talked to the press about the changes in his nominated EC team on the sidelines of an EU summit and said, "I cannot accept the withdrawal of any candidate because of his or her political past or party affiliation." Barroso recalled that he had decided to give Kovács a new portfolio after Hungarian Prime Minister Ferenc Gyurcsány confirmed the nomination of Hungary's former foreign minister as EU commissioner. (MTI; Ng 2, Nb 1,2)

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Gyurcsány congratulates Bush Prime Minister Ferenc Gyurcsány has congratulated George W. Bush on his re-election as president of the United States of America, the government spokesman's office said yesterday. "It is important for Hungary that bilateral relations based on common values should develop dynamically," the prime minister said in a letter addressed to the U.S. president. Gyurcsány confirmed that Hungary would remain a close ally of the United States in the global fight against international terrorism, and informed the president about his government's plan on Hungary's role in Iraq peacekeeping. (MTI; Nv 2, Nb 3, MH 6)

Domestic
Healthcare demo onwards to the Parliament Healthcare workers will hold another demonstration near the Parliament on Nov 20 between 9am and 4pm. The demo is to be organized by The Hungarian Medical Chamber and trade union EDDSz, chairman of the Chamber István Éger said. They are urging the government to start negotiations on their claims. The trade union will start weekly two-hour-long strikes until the talks will start, head of the trade union, Ágnes Cser said. (Nv 4, MH4) G.R Gov't to design ethnic Hungarian program The government is working on a program to help ethnic Hungarians living in neighboring countries, irrespective of the outcome of the upcoming referendum which may grant them dual citizenship, Foreign Minister Ferenc Somogyi said at a press conference yesterday. The package, aimed at assisting Hungarians in neighboring countries to prosper at home, requires both funds and changes in regulations, Somogyi said. The Hungarian Permanent Conference, consisting of leaders of ethnic Hungarian groups in neighboring countries and of government officials in Hungary proper, meets in November and will be able to discuss the planned package at that time, he added. (MTI)

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